Exhibit 99.5
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re )
)
)
ARMSTRONG WORLD INDUSTRIES, ) Chapter 11
INC., et al., ) Case No. 00-4471 (RJN)
) (Jointly Administered)
Debtors )
- ------------------------------------- )
EXHIBIT 1.90
FORM OF NEW LONG-TERM INCENTIVE PLAN
FORM OF NEW LONG-TERM INCENTIVE PLAN (SEPT. 5, 2003)
----------------------------------------------------
ARMSTRONG WORLD INDUSTRIES, INC.
2003 LONG-TERM INCENTIVE PLAN
EFFECTIVE AS OF _________, 2003
INDEX OF DEFINED TERMS
----------------------
TERM SECTION WHERE DEFINED OR FIRST USED
Beneficial Owner........................................14(C)(II)
Benefits................................................4
Cash Awards.............................................10
Change in Control.......................................14(C)(III)
Code....................................................2(A)
Committee...............................................2(A)
Common Stock............................................5(A)
Company.................................................1
Dividend Equivalent Right...............................9(C)
Effective Date..........................................24
Exchange Act............................................2(A)
Fair Market Value.......................................17
Incentive Stock Option..................................6(A)
Injurious Conduct.......................................13
Non-Employee Director...................................2(A)
Nonqualified Stock Option...............................6(A)
Parent Corporation......................................6(F)
Performance-Based Awards................................11(A)
Person..................................................14(C)(IV)
Plan....................................................1
Restoration Stock Options...............................6(E)
Restricted Stock Award..................................8
Stock Appreciation Rights...............................7
Stock Options...........................................6
Stock Unit..............................................9(C)
Subsidiary Corporation..................................6(F)
ARMSTRONG WORLD INDUSTRIES, INC.
2003 LONG-TERM INCENTIVE PLAN
1. PURPOSE. Armstrong World Industries, Inc. 2003 Long-Term Incentive
Plan (the "Plan") is intended to provide incentives which will attract, retain
and motivate highly competent persons as officers and key employees of Armstrong
World Industries, Inc., a Pennsylvania corporation (the "Company"), and its
subsidiaries and affiliates, by providing them with appropriate incentives and
rewards to encourage them to enter into and continue in the employ of the
Company, to acquire a proprietary interest in the long-term success of the
Company and to reward the performance of individuals in fulfilling their
personal responsibilities for long-range achievements.
2. ADMINISTRATION.
(a) Committee. The Plan will be administered by a committee (the
"Committee") appointed by the Board of Directors of the Company from among its
members (which may be the Management Development and Compensation Committee) and
shall be comprised, unless otherwise determined by the Company's Board of
Directors, solely of not less than two (2) members who shall be (i)
"Non-Employee Directors" within the meaning of Rule 16b-3(b)(3) (or any
successor rule) promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and (ii) "outside directors" within the meaning of
Treasury Regulation Section 1.162-27(e)(3) under Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code").
(b) Authority. The Committee is authorized, subject to the provisions
of the Plan, to establish such rules and regulations as it deems necessary for
the proper administration of the Plan and to make such determinations and
interpretations and to take such action in connection with the Plan and any
Benefits granted hereunder as it deems necessary or advisable. All
determinations and interpretations made by the Committee shall be binding and
conclusive on all participants and their legal representatives.
(c) Indemnification. No member of the Committee and no employee of
the Company shall be liable for any act or failure to act hereunder, except in
circumstances involving his or her bad faith or willful misconduct, or for any
act or failure to act hereunder by any other member or employee or by any agent
to whom duties in connection with the administration of this Plan have been
delegated. The Company shall indemnify members of the Committee and any agent of
the Committee who is an employee of the Company, a subsidiary or an affiliate
against any and all liabilities or expenses to which they may be subjected by
reason of any act or failure to act with respect to their duties on behalf of
the Plan, except in circumstances involving such person's bad faith or willful
misconduct.
(d) Delegation and Advisers. The Committee may delegate to one or
more of its members, to management or to or to one or more agents, such
administrative duties as it may deem advisable; provided, such delegation does
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not adversely effect the exemption provided by Rule 16b-3 of the Exchange Act,
prevent a Benefit from qualifying as a Performance-Based Award, if so intended,
and complies with applicable law. The Committee, or any person to whom it has
delegated duties as aforesaid, may employ one or more persons to render advice
with respect to any responsibility the Committee or such person may have under
the Plan. The Committee may employ such legal or other counsel, consultants and
agents as it may deem desirable for the administration of the Plan and may rely
upon any opinion or computation received from any such counsel, consultant or
agent. Expenses incurred by the Committee in the engagement of such counsel,
consultant or agent shall be paid by the Company, or the subsidiary or affiliate
whose employees have benefited from the Plan, as determined by the Committee.
3. PARTICIPANTS. Participants will consist of such officers and key
employees of the Company and its subsidiaries and affiliates as the Committee in
its sole discretion determines to be significantly responsible for the success
and future growth and profitability of the Company and whom the Committee may
designate from time to time to receive Benefits under the Plan. Designation of a
participant in any year shall not require the Committee to designate such person
to receive a Benefit in any other year or, once designated, to receive the same
type or amount of Benefit as granted to the participant in any other year. The
Committee shall consider such factors as it deems pertinent in selecting
participants and in determining the type and amount of their respective
Benefits.
4. TYPE OF BENEFITS. Benefits under the Plan may be granted in any
one or a combination of (a) Stock Options, (b) Stock Appreciation Rights, (c)
Restricted Stock Awards, (d) Stock Units and (e) Cash Awards (each as described
below, and collectively, the "Benefits"). Restricted Stock Awards, Stock Units
and Cash Awards may, as determined by the Committee in its discretion,
constitute Performance-Based Awards, as described in Section 11 hereof. Benefits
granted under the Plan shall be evidenced by an agreement (which need not be
identical) that may provide additional terms and conditions associated with such
Benefits, as determined by the Committee in its sole discretion, provided,
however, that in the event of any conflict between the provisions of the Plan
and any such agreement, the provisions of the Plan shall prevail.
5. COMMON STOCK AVAILABLE UNDER THE PLAN.
(a) Basic Limitations. The aggregate number of shares of common stock
of the Company (the "Common Stock") that may be subject to Benefits, granted
under this Plan shall be 5,349,000 shares of Common Stock, which may be
authorized and unissued shares or treasury shares or may be purchased on the
open market or by private purchase, subject to any adjustments made in
accordance with Section 14(a) hereof. The maximum number of shares of Common
Stock with respect to which Benefits may be granted or measured to any
individual participant under the Plan in any one calendar year shall not exceed
750,000 (subject to adjustments made in accordance with Section 14(a) hereof).
(b) Additional Shares. Any shares of Common Stock subject to (or
referenced by) a Benefit which are not ultimately used to settle a Benefit shall
again be available for Benefits under this Plan and any shares of Common Stock
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delivered to the Company as part or full payment for the exercise of a Stock
Option, Stock Appreciation Right, or Restricted Stock Award or to satisfy a tax
obligation shall also be available for Benefits under this Plan. This includes
shares of Common Stock that are: (i) covered by a Stock Option or referenced by
a Stock Appreciation Right which for any reason is cancelled or terminated
without having been exercised, (ii) subject to Restricted Stock Awards or Stock
Units which are forfeited, and (iii) not delivered to a participant because all
or a portion of a Benefit is settled in cash. The preceding sentences of this
Section shall apply only for purposes of determining the aggregate number of
shares of Common Stock subject to Benefits but shall not apply for purposes of
determining the maximum number of shares of Common Stock with respect to which
Benefits (including the maximum number of shares of Common Stock subject to
Stock Options and Stock Appreciation Rights) that may be granted to any
individual participant under the Plan.
(c) Acquisitions. In connection with the acquisition of any business
by the Company or any of its subsidiaries or affiliates, any outstanding grants,
awards or sales of options or other similar rights pertaining to such business
may be assumed or replaced by Benefits under the Plan upon such terms and
conditions as the Committee determines in its sole discretion.
6. STOCK OPTIONS.
(a) Generally. Stock Options will consist of awards from the Company
that will enable the holder to purchase a number of shares of Common Stock, at
set terms. Stock Options may be "incentive stock options" ("Incentive Stock
Options"), within the meaning of Section 422 of the Code, or Stock Options which
do not constitute Incentive Stock Options ("Nonqualified Stock Options"). The
Committee will have the authority to grant to any participant one or more
Incentive Stock Options, Nonqualified Stock Options, or both types of Stock
Options (in each case with or without Stock Appreciation Rights). Each Stock
Option shall be subject to such terms and conditions, including vesting,
consistent with the Plan as the Committee may impose from time to time, subject
to the following limitations.
(b) Exercise Price. Each Nonqualified Stock Option granted hereunder
shall have a per-share exercise price as the Committee may determine on the date
of grant.
(c) Payment of Exercise Price. The option exercise price may be paid
in cash or, in the discretion of the Committee, by the delivery of shares of
Common Stock of the Company then owned by the participant, provided such shares
have been held by such participant for at least six (6) months. In the
discretion of the Committee, payment may also be made by delivering a properly
executed exercise notice to the Company together with a copy of irrevocable
instructions to a broker to deliver promptly to the Company the amount of sale
or loan proceeds to pay the exercise price as long as such transaction does not
constitute an impermissible loan to an executive officer under the
Sarbanes-Oxley Act of 2002. To facilitate the foregoing, the Company may enter
into agreements for coordinated procedures with one or more brokerage firms. The
Committee may prescribe any other method of paying the exercise price that it
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determines to be consistent with applicable law and the purpose of the Plan,
including, without limitation, in lieu of the exercise of a Stock Option by
delivery of shares of Common Stock of the Company then owned by a participant,
providing the Company with a notarized statement attesting to the number of
shares owned, where upon verification by the Company, the Company would issue to
the participant only the number of incremental shares to which the participant
is entitled upon exercise of the Stock Option.
(d) Exercise Period. Stock Options granted under the Plan shall be
exercisable at such time or times and subject to such terms and conditions,
including vesting, as shall be determined by the Committee; provided, however,
that no Stock Option shall be exercisable later than ten (10) years after the
date it is granted. All Stock Options shall terminate at such earlier times and
upon such conditions or circumstances as the Committee shall in its discretion
set forth in such option agreement on the date of grant.
(e) Restoration of Stock Options. The Committee may, at the time of
grant of an option, provide for the grant of a subsequent Restoration Stock
Option if the exercise price is paid for by delivering previously owned shares
of Common Stock of the Company. Restoration Stock Options (i) may be granted in
respect of no more than the number of shares of Common Stock tendered in
exercising the predecessor Stock Option, (ii) shall have an exercise price equal
to the Fair Market Value (as defined in Section 16 below) on the date the
Restoration Stock Option is granted, and (iii) may have an exercise period that
does not extend beyond the remaining term of the predecessor Stock Option. In
determining which methods a participant may utilize to pay the exercise price,
the Committee may consider such factors as it determines are appropriate.
(f) Limitations on Incentive Stock Options. Incentive Stock Options
may be granted only to participants who are employees of the Company or of a
"Parent Corporation" or "Subsidiary Corporation" (as defined in Sections 424(e)
and (f) of the Code, respectively) on the date of grant. The aggregate Fair
Market Value (determined as of the time the Stock Option is granted) of the
Common Stock with respect to which Incentive Stock Options are exercisable for
the first time by a participant during any calendar year (under all option plans
of the Company and of any Parent Corporation or Subsidiary Corporation) shall
not exceed one hundred thousand dollars ($100,000), provided, however, that if
such $100,000 limit is exceeded, the excess Incentive Stock Options shall be
treated as Nonqualified Stock Options. For purposes of the preceding sentence,
Incentive Stock Options will be taken into account in the order in which they
are granted. The per-share exercise price of an Incentive Stock Option shall not
be less than one hundred percent (100%) of the Fair Market Value of the Common
Stock on the date of grant, and no Incentive Stock Option may be exercised later
than ten (10) years after the date it is granted.
(g) Additional Limitations on Incentive Stock Options for Ten Percent
Shareholders. Incentive Stock Options may not be granted to any participant who,
at the time of grant, owns stock possessing (after the application of the
attribution rules of Section 424(d) of the Code) more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company or any
Parent Corporation or Subsidiary Corporation, unless the exercise price of the
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option is fixed at not less than one hundred ten percent (110%) of the Fair
Market Value of the Common Stock on the date of grant and the exercise of such
option is prohibited by its terms after the expiration of five (5) years from
the date of grant of such option.
7. STOCK APPRECIATION RIGHTS.
(a) Generally. The Committee may, in its discretion, grant Stock
Appreciation Rights, including a concurrent grant of Stock Appreciation Rights
in tandem with any Stock Option grant. A Stock Appreciation Right means a right
to receive a payment in cash, Common Stock or a combination thereof, as
determined by the Committee, in an amount equal to the excess of (i) the Fair
Market Value, or other specified valuation, of a specified number of shares of
Common Stock on the date the right is exercised over (ii) the Fair Market Value
of such shares of Common Stock on the date the right is granted, or other
specified amount, all as determined by the Committee; provided, however, that if
a Stock Appreciation Right is granted in tandem with or in substitution for a
Stock Option, the designated Fair Market Value in the award agreement shall
reflect the Fair Market Value on the date such Stock Option was granted. Each
Stock Appreciation Right shall be subject to such terms and conditions,
including vesting, as the Committee shall impose from time to time, provided,
however, that if a Stock Appreciation Right is granted in connection with a
Stock Option, the Stock Appreciation Right shall become exercisable, be
transferable and shall expire according to the same vesting, transferability and
expiration rules as the corresponding Stock Option.
(b) Exercise Period. Stock Appreciation Rights granted under the Plan
shall be exercisable at such time or times and subject to such terms and
conditions, including vesting, as shall be determined by the Committee;
provided, however, that no Stock Appreciation Rights shall be exercisable later
than ten (10) years after the date it is granted. All Stock Appreciation Rights
shall terminate at such earlier times and upon such conditions or circumstances
as the Committee shall in its discretion set forth in such right at the date of
grant.
8. RESTRICTED STOCK AWARDS.
(a) Generally. The Committee may, in its discretion, grant Restricted
Stock Awards consisting of Common Stock issued or transferred to participants
with or without other payments therefor. Each participant granted a Restricted
Stock Award shall execute and deliver to the Company an agreement with respect
to the Restricted Stock setting forth the restrictions applicable to such
Restricted Stock. If a participant fails to execute such an agreement, the
Restricted Stock Award shall be null and void.
(b) Payment of the Purchase Price. If the Restricted Stock Award
requires payment therefor, the purchase price of any shares of Common Stock
subject to a Restricted Stock Award may be paid in any manner authorized by the
Committee, which may include any manner authorized under the Plan for the
payment of the exercise price of a Stock Option. Restricted Stock Awards may
also be made in consideration of services rendered to the Company or its
subsidiaries or affiliates.
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(c) Additional Terms. Restricted Stock Awards may be subject to such
terms and conditions, including vesting, as the Committee determines
appropriate, including, without limitation, (i) restrictions on the sale or
other disposition of such shares, and (ii) the right of the Company to reacquire
such shares for no consideration upon termination of the participant's
employment within specified periods, the participant's competition with the
Company, or the participant's breach of other obligations to the Company.
Restricted Stock Awards may constitute Performance-Based Awards, as described in
Section 11 hereof. The Committee may require the participant to deliver a duly
signed stock power, endorsed in blank, relating to the Common Stock covered by
such an Award. The Committee may also require that the stock certificates
evidencing such shares be held in custody or bear restrictive legends until the
restrictions thereon shall have lapsed.
(d) Rights as a Shareholder. The participant shall have, with respect
to the shares of Common Stock subject to a Restricted Stock Award, all of the
rights of a holder of shares of Common Stock of the Company, including the right
to vote the shares. At the discretion of the Committee, cash dividends and stock
dividends with respect to the Restricted Stock may be either currently paid to
the participant or withheld by the Company for the participant's account, and
interest may be credited on the amount of cash dividends withheld at a rate and
subject to such terms as determined by the Committee. The cash dividends or
stock dividends so withheld by the Committee and attributable to any particular
share of Restricted Stock (and earnings thereon, if applicable) shall be
distributed to the participant upon the release of restrictions on such shares
and, if such share is forfeited, the participant shall have no right to such
cash dividends or stock dividends.
9. STOCK UNITS.
(a) Generally. The Committee may, in its discretion, grant Stock
Units (as defined in subsection (c) below) to participants hereunder. Stock
Units may be subject to such terms and conditions, including vesting, as the
Committee determines appropriate. Stock Units may constitute Performance-Based
Awards, as described in Section 11 hereof. A Stock Unit granted by the Committee
shall provide payment in shares of Common Stock at such time as the award
agreement shall specify. Shares of Common Stock issued pursuant to this Section
9 may be issued with or without other payments therefor as may be required by
applicable law or such other consideration as may be determined by the
Committee. The Committee shall determine whether a participant granted a Stock
Unit shall be entitled to a Dividend Equivalent Right (as defined in subsection
(c) below).
(b) Settlement of Stock Units. Shares of Common Stock representing
the Stock Units shall be distributed to the participant unless the Committee
provides for the payment of the Stock Units in cash equal to the value of the
shares of Common Stock which would otherwise be distributed to the participant
or partly in cash and partly in shares of Common Stock.
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(c) Definitions. A "Stock Unit" means a notional account representing
one (1) share of Common Stock. A "Dividend Equivalent Right" means the right to
receive the amount of any dividend paid on the share of Common Stock underlying
a Stock Unit, which shall be payable in cash or in the form of additional Stock
Units.
10. CASH AWARDS.
The Committee may, in its discretion, grant awards to be settled
solely in cash ("Cash Awards"). Cash Awards may be subject to such terms and
conditions, including vesting, as the Committee determines appropriate. Cash
Awards may constitute Performance-Based Awards, as described in Section 11
hereof. The maximum Cash Award that may be paid to any participant is
$3,000,000.
11. PERFORMANCE-BASED AWARDS.
(a) Generally. Any Benefits granted under the Plan may be granted in
a manner such that the Benefits qualify for the performance-based compensation
exemption of Section 162(m) of the Code ("Performance-Based Awards"). As
determined by the Committee in its sole discretion, either the granting or
vesting of such Performance-Based Awards shall be based on achievement of
performance objectives that are based on one or more of the business criteria
described below that apply to the individual participant, one or more business
units or the Company as a whole.
(b) Business Criteria. The business criteria shall be as follows,
individually or in combination: (i) net earnings; (ii) earnings per share; (iii)
sales; (iv) operating income; (v) earnings before interest and taxes (EBIT);
(vi) earnings before interest, taxes, depreciation and amortization (EBITDA);
(vii) cash flow; (viii) working capital targets; (ix) return on equity; (x)
return on capital; (xi) market price per share; and (xii) total return to
shareholders. In addition, Performance-Based Awards may include comparisons to
the performance of other companies, such performance to be measured by one or
more of the foregoing business criteria.
(c) Establishment of Performance Goals. With respect to
Performance-Based Awards, the Committee shall establish in writing (i) the
performance goals applicable to a given period, and such performance goals shall
state, in terms of an objective formula or standard, the method for computing
the amount of compensation payable to the participant if such performance goals
are obtained and (ii) the individual employees or class of employees to which
such performance goals apply; provided, however, that such performance goals
shall be established in writing no later than ninety (90) days after the
commencement of the applicable performance period (but in no event after
twenty-five percent (25%) of such performance period has elapsed).
(d) Certification of Performance. No Performance-Based Awards shall
be payable to or vest with respect to, as the case may be, any participant for a
given period until the Committee certifies in writing that the objective
performance goals (and any other material terms) applicable to such period have
been satisfied.
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(e) Modification of Performance-Based Awards. With respect to any
Benefits intended to qualify as Performance-Based Awards, after establishment of
a performance goal, the Committee shall not revise such performance goal or
increase the amount of compensation payable thereunder (as determined in
accordance with Section 162(m) of the Code) upon the attainment of such
performance goal. Notwithstanding the preceding sentence, the Committee may
reduce or eliminate the number of shares of Common Stock or cash granted or the
number of shares of Common Stock vested upon the attainment of such performance
goal.
12. FOREIGN LAWS. The Committee may grant Benefits to individual
participants who are subject to the tax laws of nations other than the United
States, which Benefits may have terms and conditions as determined by the
Committee as necessary to comply with applicable foreign laws. The Committee may
take any action which it deems advisable to obtain approval of such Benefits by
the appropriate foreign governmental entity; provided, however, that no such
Benefits may be granted pursuant to this Section 12 and no action may be taken
which would result in a violation of the Exchange Act, the Code or any other
applicable law.
13. CERTAIN TERMINATIONS OF EMPLOYMENT; FORFEITURES.
(a) Forfeiture of Unsettled Benefits. Unless the Committee or any
agreement providing for Benefits under this Plan shall otherwise provide, a
participant shall forfeit all Benefits, which have not been settled under this
Plan (other than fully vested Restricted Stock Awards) if:
(i) the participant's employment with the Company or with any Parent
Corporation or Subsidiary Corporation is terminated for willful,
deliberate, or gross misconduct, as determined by the Committee, in its
sole discretion, or
(ii) following the participant's termination of employment with the
Company (or with any Parent Corporation or Subsidiary Corporation) and for
a period of two (2) years thereafter, the participant engages in any
business or enters into any employment relationship which the Committee in
its sole discretion determines to be either directly or indirectly
competitive with the business of the Company or substantially injurious to
the Company's business interest.
The activities described in (i) and (ii) above are hereafter referred to as
"Injurious Conduct".
(b) Forfeiture of Settled Benefits. If the Committee determines that
a participant has engaged in Injurious Conduct during the course of his
employment (or during the two (2) year period following his or her termination
of employment), the Committee may in its discretion require the participant to
return to the Company any Common Stock or cash received in settlement of any
Benefit under this Plan. If the Common Stock acquired in settlement of a Benefit
has been disposed of by the participant, then the Company may require the
participant to pay to the Company the economic value of the Common Stock as of
the date of disposition.
1.90-8
(c) Timing. The Committee shall exercise the right of forfeiture
provided to the Company in this Section 13 within ninety (90) days after the
discovery of the activities giving rise to the Company's right of forfeiture,
which activities must have occurred no later than twenty-four (24) months after
the participant's termination of employment.
(d) Determination from the Committee. A participant may make a
request to the Committee in writing for a determination regarding whether any
proposed business or activity would constitute Injurious Conduct. Such request
shall fully describe the proposed business or activity. The Committee shall
respond to the participant in writing and the Committee's determination shall be
limited to the specific business or activity so described.
(e) Condition Precedent. Unless the Committee or any agreement
providing for Benefits under this Plan shall otherwise provide, no Benefit shall
be deemed awarded to any participant under this Plan unless and until the
participant agrees to the applicability of this Section 13.
(f) Enforceability. The purpose of this Section 13 is to protect the
Company (and any Parent and Subsidiaries) from Injurious Conduct. To the extent
that this Section 13 is not fully enforceable as written, the unenforceable
provisions shall be modified so as to provide the Company with the fullest
protection permitted by law.
14. ADJUSTMENT PROVISIONS; CHANGE IN CONTROL.
(a) Adjustment. Benefits granted under the Plan and any agreements
evidencing such Benefits, the maximum number of shares of Common Stock subject
to all Benefits stated in Section 5(a) and the maximum number of shares of
Common Stock with respect to which Benefits may be granted to any one person
during any period stated in Section 5(a) shall be subject to adjustment or
substitution, as determined by the Committee in its sole discretion, as to the
number, price or kind of a share of Common Stock or other consideration subject
to such Benefits or as otherwise determined by the Committee to be equitable (i)
in the event of changes in the outstanding Common Stock or in the capital
structure of the Company by reason of stock or extraordinary cash dividends,
stock splits, reverse stock splits, recapitalization, reorganizations, mergers,
consolidations, combinations, exchanges, or other relevant changes in
capitalization occurring after the date of grant of any such Benefit or (ii) in
the event of any change in applicable laws or any change in circumstances which
results in or would result in any substantial dilution or enlargement of the
rights granted to, or available for, participants, or which otherwise warrants
equitable adjustment because it interferes with the intended operation of the
Plan. Any adjustment in Incentive Stock Options under this Section 14 shall be
made only to the extent not constituting a "modification" within the meaning of
Section 424(h)(3) of the Code, and any adjustments under this Section 14 shall
be made in a manner which does not adversely affect the exemption provided
pursuant to Rule 16b-3 under the Exchange Act. Further, with respect to Benefits
intended to qualify as "performance-based compensation" under Section 162(m) of
the Code, such adjustments or substitutions shall be made only to the extent
1.90-9
that the Committee determines that such adjustments or substitutions may be made
without causing the Company to be denied a tax deduction on account of Section
162(m) of the Code. The Company shall give each participant notice of an
adjustment hereunder and, upon notice, such adjustment shall be conclusive and
binding for all purposes.
(b) Effect of a Change in Control. Notwithstanding any other
provision of this Plan, if there is a Change in Control (as defined in
subsection (c) below) of the Company, all then outstanding Stock Options, Stock
Appreciation Rights and Stock Units shall immediately vest and become
exercisable and any restrictions on Restricted Stock Awards or Stock Units shall
immediately lapse. Thereafter, insofar as any Benefit is provided in shares of
stock of the Company or in Stock Options or Stock Appreciation Rights or is
determined based on the value or other attributes of a share of stock of the
Company, such Benefit shall be subject to the same terms to which a share of
stock of the Company is subject in accordance with any agreement effecting the
Change in Control, which agreement, may provide, without limitation, that each
Stock Option and Stock Appreciation Right outstanding hereunder shall terminate
within a specified number of days after notice to the holder, and that such
holder shall receive, with respect to each share of Common Stock subject to such
Stock Option or Stock Appreciation Right, an amount equal to the excess of the
Fair Market Value of such shares of Common Stock immediately prior to the
occurrence of such Change in Control over the exercise price per share
underlying such Stock Option or Stock Appreciation Right with such amount
payable in cash, in one or more kinds of property (including the property, if
any, payable in the transaction) or in a combination thereof, as the Committee,
in its discretion, shall determine.
(c) Definitions. For purposes of this Section 14, the following words
shall have the meaning ascribed to them below:
(i) "Affiliate' means (i) any entity that directly or indirectly is
controlled by, controls or is under common control with the Company and
(ii) any entity in which the Company has a significant equity interest, in
either case as determined by the Committee.
(ii) "Beneficial Owner" shall have the meaning set forth in Rule 13d-3
under the Exchange Act.
(iii) "Change in Control" of the Company, with respect to any
participant, shall be deemed to have occurred upon any of the following
events (unless another definition is provided in any applicable individual
change in control agreement between the Company and the participant, in
which case such agreement shall govern):
(A) Any Person becomes the Beneficial Owner, directly or
indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities acquired
directly from the Company or its affiliates) representing twenty
percent (20%) or more of either the then outstanding shares of Common
Stock or the combined voting power of the Company's then outstanding
securities, excluding any Person who becomes such a Beneficial Owner
in connection with a transaction described in clause (i) of Paragraph
(C) below;
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(B) The following individuals cease for any reason to constitute
a majority of the number of directors then serving: individuals who,
on the Effective Date (as defined in Section 24 below), constitute the
Board of Directors and any new director (other than a director whose
initial assumption of office is in connection with an actual or
threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Company)
whose appointment or election by the Board of Directors or nomination
for election by the Company's shareholder's was approved by a vote of
least two-thirds (2/3) of the directors then still in office who
either were directors on the Effective Date or whose appointment,
election or nomination for election was previously so approved; or
(C) There is consummated a merger or consolidation of the Company
(including a triangular merger to which the Company is a party) with
any other corporation other than (i) a merger or consolidation which
would result in the voting securities of the Company outstanding
immediately prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity or any parent thereof) at
least sixty-six and two-thirds percent (66-2/3%) of the combined
voting power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation; or
(ii) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction in which no
Person is or becomes the Beneficial Owner, directly or indirectly, of
securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired directly
from the Company or its subsidiaries) representing twenty percent
(20%) or more of either the then outstanding shares of Common Stock or
the combined voting power of the Company's then outstanding
securities;
(D) The shareholders of the Company approve a plan of complete
liquidation or dissolution of the Company or there is consummated an
agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets, other than a sale or
disposition by the Company of all or substantially all of the
Company's assets to an entity at least seventy-five percent (75%) of
the combined voting power of the voting securities of which are owned
by shareholders of the Company in substantially the same proportions
as their ownership of the Company immediately prior to such sale.
Notwithstanding the foregoing, no "change in Control" shall be deemed
to have occurred if there is consummated any transaction or series of
integrated transactions immediately following which the record holders
of the Common Stock immediately prior to such transaction or series of
transactions continue to have substantially the same proportionate
ownership in the entity which owns all or substantially all of the
assets of the Company immediately following such transaction or series
of transactions.
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(iv) "Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Section 13(d) and 14(d) thereof,
except that such term shall not include (A) the Company or any of its
subsidiaries, (B) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of its subsidiaries, (C) an
underwriter temporarily holding securities pursuant to an offering of such
securities, (D) a corporation owned, directly or indirectly, by the
shareholders of the Company in substantially the same proportion as their
ownership of the Common Stock, or (E) an entity or entities which are
eligible to file and have filed a Schedule 13G under Rule 13d-1(b) under
the Exchange Act, which Schedule indicates beneficial ownership of fifteen
percent (15%) or more of the outstanding shares of Common Stock or of the
combined voting power of the Company's then outstanding securities.
15. NONTRANSFERABILITY. Each Benefit granted under the Plan to a
participant (other than awards of unrestricted Stock Awards, vested restricted
Stock Awards and vested Cash Awards) shall not be transferable otherwise than by
will or the laws of descent and distribution, and shall be exercisable, during
the participant's lifetime, only by the participant. In the event of the death
of a participant, each Stock Option or Stock Appreciation Right theretofore
granted to him or her shall be exercisable during such period after his or her
death as the Committee shall in its discretion set forth in such option or right
at the date of grant and then only by the executor or administrator of the
estate of the deceased participant or the person or persons to whom the deceased
participant's rights under the Stock Option or Stock Appreciation Right shall
pass by will or the laws of descent and distribution. Notwithstanding the
foregoing, at the discretion of the Committee, an award of a Benefit other than
an Incentive Stock Option may permit the transferability of a Benefit by a
participant solely to the participant's spouse, siblings, parents, children and
grandchildren or trusts for the benefit of such persons or partnerships,
corporations, limited liability companies or other entities owned solely by such
persons, including trusts for such persons, subject to any restriction included
in the award of the Benefit.
16. OTHER PROVISIONS. The award of any Benefit under the Plan may
also be subject to such other provisions (whether or not applicable to the
Benefit awarded to any other participant) as the Committee determines
appropriate, including, without limitation, for the forfeiture of, or
restrictions on resale or other disposition of, Common Stock acquired under any
form of Benefit, for the acceleration of exercisability or vesting of Benefits,
or to comply with federal and state securities laws, or understandings or
conditions as to the participant's employment in addition to those specifically
provided for under the Plan.
17. FAIR MARKET VALUE. For purposes of this Plan and any Benefits
awarded hereunder, Fair Market Value on any given date means (i) if the Common
Stock is listed on a national securities exchange or is quoted in the National
Market System of the National Association of Securities Dealers Automated
Quotation System ("NASDAQ") on a last sale basis, the closing price reported as
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having occurred on the such date, or, if there is no sale on such date, then on
the last preceding date on which such a sale was reported, or (ii) if the Common
Stock is not listed on a national securities exchange nor quoted in NASDAQ on a
last sale basis, the amount determined by the Committee to be the fair market
value based upon a good faith attempt to value the Common Stock accurately.
18. WITHHOLDING. All payments or distributions of Benefits made
pursuant to the Plan shall be net of any amounts required to be withheld
pursuant to applicable federal, state and local tax withholding requirements. If
the Company proposes or is required to distribute Common Stock pursuant to the
Plan, it may require the recipient to remit to it or to the corporation that
employs such recipient an amount sufficient to satisfy such tax withholding
requirements prior to the delivery of any certificates for such Common Stock. In
lieu thereof, the Company or the employing corporation shall have the right to
withhold the amount of such taxes from any other sums due or to become due from
such corporation to the recipient as the Committee shall prescribe. The
Committee may, in its discretion and subject to such rules as it may adopt
(including any as may be required to satisfy applicable tax and/or non-tax
regulatory requirements), permit an optionee or award or right holder to pay all
or a portion of the federal, state and local withholding taxes arising in
connection with any Benefit consisting of shares of Common Stock by electing to
have the Company withhold shares of Common Stock having a Fair Market Value
equal to the amount of tax to be withheld, such tax calculated at minimum
statutory withholding rates.
19. EMPLOYMENT RIGHTS. Neither the Plan nor any action taken
hereunder shall be construed as giving any participant the right to be retained
in the employ or service of the company or any of its subsidiaries or
affiliates.
20. UNFUNDED PLAN. Participants shall have no right, title, or
interest whatsoever in or to any investments which the Company may make to aid
it in meeting its obligations under the Plan. Nothing contained in the Plan, and
no action taken pursuant to its provisions, shall create or be construed to
create a trust of any kind, or a fiduciary relationship between the Company and
any participant, beneficiary, legal representative or any other person. To the
extent that any person acquires a right to receive payments from the Company
under the Plan, such right shall be no greater than the right of an unsecured
general creditor of the Company. All payments to be made hereunder shall be paid
from the general funds of the Company and no special or separate fund shall be
established and no segregation of assets shall be made to assure payment of such
amounts except as expressly set forth in the Plan. The Plan is not intended to
be subject to the Employee Retirement Income Security Act of 1974, as amended.
21. NO FRACTIONAL SHARES. No fractional shares of Common Stock shall
be issued or delivered pursuant to the Plan or any Benefit. The Committee shall
determine whether cash, or Benefits, or other property shall be issued or paid
in lieu of fractional shares or whether such fractional shares or any rights
thereto shall be forfeited or otherwise eliminated.
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22. DURATION, AMENDMENT AND TERMINATION. No Benefit shall be granted
more than ten (10) years after the Effective Date. The Company may amend the
Plan from time to time or suspend or terminate the Plan at any time. No
amendment of the Plan may be made without approval of the majority of the
shareholders of the Company if the amendment will: (i) increase the aggregate
number of shares of Common Stock that may be delivered through Stock Options
under the Plan; (ii) increase the maximum number of shares that may be awarded
to any participant under Section 5 hereof or the maximum Cash Award that can be
paid to any individual under Section 10 hereof; (iii) change the types of
business criteria on which Performance-Based Awards are to be based under the
Plan; or (iv) modify the requirements as to eligibility for participation in the
Plan.
23. GOVERNING LAW. This Plan, Benefits granted hereunder and actions
taken in connection herewith shall be governed and construed in accordance with
the laws of the Commonwealth of Pennsylvania (regardless of the law that might
otherwise govern under applicable Pennsylvania principles of conflict of laws).
24. EFFECTIVE DATE. This Plan is adopted by the Company in
anticipation of its emergence from chapter 11 of title 11 of the United States
Bankruptcy Code, as a publicly-owned SEC reporting issuer. Stock Options and
Restricted Stock Awards provided for in the Company's plan of reorganization
will be provided under this Plan. The Plan shall be effective as of the date on
which all the conditions to the effectiveness of the Company's plan of
reorganization (the "Effective Date"), provided that the Plan is approved by a
majority of the Company's shareholders within twelve (12) months of the
Effective Date. Such shareholder approval shall be a condition to the right of
each participant to receive any Benefits hereunder. Any Benefits granted under
the Plan prior to such shareholder approval shall be effective as of the date of
grant (unless, with respect to any Benefit, the Committee specifies otherwise at
the time of grant), but no such Benefit may be exercised or settled and no
restrictions relating to any Benefit may lapse prior to such shareholder
approval, and if such shareholder approval is not obtained as provided
hereunder, any such Benefit shall be cancelled.
1.90-14