CBS
EXHIBIT 10(k)
CBS CORPORATION
DEFERRED COMPENSATION AND STOCK PLAN
FOR DIRECTORS
(AS AMENDED AS OF JULY 28, 1999)
SECTION 1. INTRODUCTION
1.1 ESTABLISHMENT. CBS Corporation, a Pennsylvania corporation
formerly known as Westinghouse Electric Corporation (the "Company"), has
established the Deferred Compensation and Stock Plan for Directors, as amended
from time to time (the "Plan"), for those directors of the Company who are
neither officers (other than non-executive officers) nor employees of the
Company. The Plan provides, among other things, for the payment of specified
portions of the Annual Director's Fee and the Annual Board Chairman's Fee, if
applicable, in the form of Stock Options and Restricted Stock, the payment of
the Annual Committee Chair's Fee in the form of Restricted Stock, the granting
of Stock Options and Restricted Stock as additional Director compensation, and
the opportunity for the Directors to defer receipt of all or a part of their
cash compensation. Unless otherwise provided for herein, the term Company
includes CBS Corporation and its subsidiaries.
1.2 PURPOSES. The purposes of the Plan are to encourage the Directors
to own shares of the Company's stock and thereby to align their interests more
closely with the interests of the other shareholders of the Company, to
encourage the highest level of Director performance, and to provide a financial
incentive that will help attract and retain the most qualified Directors.
SECTION 2. DEFINITIONS
2.1 DEFINITIONS. The following terms will have the meanings set forth
below:
(a) "ANNUAL BOARD CHAIRMAN'S FEE" means the annual amount (which
may be prorated) established from time to time by the Board as the annual fee to
be paid to the Board Chairman, if any, for his or her services as Board
Chairman.
(b) "ANNUAL COMMITTEE CHAIR'S FEE" means the annual amount (which
may be prorated for a Director serving as a committee chair for less than a full
year) established from time to time by the Board as the annual fee to be paid to
Directors for their services as chairs of standing committees of the Board.
(c) "ANNUAL DIRECTOR'S FEE" means the annual amount (which may be
prorated for a Director serving less than a full calendar year, as in the case
of a Director who will be
-1-
retiring or not standing for reelection at the annual meeting of shareholders or
a Director joining the Board (or otherwise first becoming a Director) after the
beginning of the year) established from time to time by the Board as the annual
fee to be paid to Directors for their services as directors.
(d) "ATTENDANCE PERCENTAGE" for a Director with respect to a
particular Grant Year means the percentage of the aggregate of all meetings of
the Board and committees of which the Director was a member held during the
Grant Year (or, for Directors who join the Board or otherwise first become
Directors after the beginning of the Grant Year, Directors who retire at the
annual meeting of shareholders (as described in the Company's By-laws) held
during the Grant Year, Directors who do not stand for reelection at the annual
meeting of shareholders held during the Grant Year, or Directors who die during
the Grant Year, the aggregate of all such meetings held for the portion of the
Grant Year during which the Director served as a director), excluding any
meeting(s) not attended because of illness, which were attended by the Director.
Except as otherwise provided below, in the event that a Director ceases to be a
director at any time during the Grant Year for any reason other than retirement
at the annual meeting of shareholders, not standing for reelection at the annual
meeting of shareholders, or death, all meetings held during the Grant Year of
the Board and committees of which he was a member at the time of termination of
service will continue to be included as meetings when calculating the Attendance
Percentage.
(e) "BOARD" means the Board of Directors of the Company.
(f) "BOARD CHAIRMAN" means the director who is the non-employee,
non-executive chairman of the Board, if any.
(g) "CASH ACCOUNT" means the account established by the Company
in respect of each Director pursuant to Section 6.3(a) hereof and to which
deferred cash compensation has been or will be credited pursuant to the Plan.
(h) "CAUSE" means any act of (i) fraud or intentional
misrepresentation or (ii) embezzlement, misappropriation or conversion of assets
or opportunities of the Company or any of its direct or indirect majority-owned
subsidiaries.
(i) "CHANGE IN CONTROL" will have the meaning assigned to it in
Section 9.2 hereof.
(j) "COMMITTEE" means the Compensation Committee of the Board (or
any subcommittee thereof) or any successor committee established by the Board,
or any subcommittee thereof, in each case consisting of two or more members each
of whom is a "non-employee director" as that term is defined by Rule 16b-3 under
the Exchange Act, as such rule may be amended, or any successor rule.
(k) "COMMON STOCK EQUIVALENT" means a hypothetical share of Stock
which will have a value on any date equal to the mean of the high and low prices
of the Stock as
-2-
reported by the composite tape of the New York Stock Exchange on that date,
except as otherwise provided under Section 9.1.
(l) "COMMON STOCK EQUIVALENT AWARD" means an award of Common
Stock Equivalents granted to a Director pursuant to Section 5 of the Plan prior
to its amendment as of April 26, 1995.
(m) "DEBENTURE" means a hypothetical debenture of the Company
that has a face value of $100, bears interest at a rate equal to the ten-year
U.S. Treasury Bond rate (prior to January 1, 1995, the seven-year U.S. Treasury
Bond rate) in effect the week prior to the regular January meeting of the Board
(or, if no such meeting is held, the week prior to the first trading day of the
New York Stock Exchange in February) in the year in respect of which deferred
amounts are earned, and is convertible into Stock at a conversion rate
determined by dividing $100 by the mean of the high and low prices of the Stock
as reported by the composite tape of the New York Stock Exchange on the date the
Debenture is credited to the Deferred Debenture Account pursuant to Section 6.3
hereof.
(n) "DEFERRED DEBENTURE ACCOUNT" means the account established by
the Company pursuant to Section 6.3(c) hereof in respect of each Director
electing to defer cash compensation under the Plan for 1997 and/or for an
earlier year or years and to which has been or will be credited Debentures and
other amounts pursuant to the Plan.
(o) "DEFERRED STOCK ACCOUNT" means the account established by the
Company in respect of each Director pursuant to Section 5.2 hereof and to which
has been or will be credited Common Stock Equivalents pursuant to the Plan.
(p) "DIRECTOR" means a member of the Board who is neither an
officer nor an employee of the Company. For purposes of the Plan, an employee is
an individual whose wages are subject to the withholding of federal income tax
under Section 3401 of the Internal Revenue Code, and an officer is an individual
elected or appointed by the Board or chosen in such other manner as may be
prescribed in the By-laws of the Company to serve as such, other than a
non-executive officer (such as the Board Chairman).
(q) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time.
(r) "FAIR MARKET VALUE" means the mean of the high and low prices
of the Stock as reported by the composite tape of the New York Stock Exchange
(or such successor reporting system as the Committee may select) on the relevant
date or, if no sale of the Stock has been reported for that day, the average of
such prices on the next preceding day and the next following day for which there
were reported sales.
(s) "GRANT DATE" means, as to a Stock Option Award, the date of
grant pursuant to Section 7.1 and as to a Restricted Stock Award, the date of
grant pursuant to Section 8.1.
-3-
(t) "GRANT YEAR" means, as to a particular award, the calendar
year in which the award was granted.
(u) "INTERNAL REVENUE CODE" means the Internal Revenue Code of
1986, as amended from time to time.
(v) "OPTION VESTING DATE" will have the meaning assigned to it in
Section 7.2.
(w) "RESTRICTED STOCK" means shares of Stock awarded to a
Director pursuant to Section 8 and subject to certain restrictions in accordance
with the Plan.
(x) "RESTRICTED STOCK AWARD" means an award of shares of
Restricted Stock granted to a Director pursuant to Section 8 of the Plan.
(y) "STOCK" means the common stock, $1.00 par value, of the
Company.
(z) "STOCK OPTION" means a non-statutory stock option to purchase
shares of Stock for a purchase price per share equal to the Exercise Price (as
defined in Section 7.2(a)) in accordance with the provisions of the Plan.
(aa) "STOCK OPTION AWARD" means an award of Stock Options granted
to a Director pursuant to Section 7 of the Plan.
(bb) "STOCK OPTION VALUE" means the value of a Stock Option for
one share of Stock on the relevant date as determined by an outside firm
selected by the Company.
2.2 GENDER AND NUMBER. Except when otherwise indicated by the context,
the masculine gender will also include the feminine gender, and the definition
of any term herein in the singular will also include the plural.
SECTION 3. PLAN ADMINISTRATION
(a) The Plan will be administered by the Committee. The members
of the Committee will be members of the Board appointed by the Board, and any
vacancy on the Committee will be filled by the Board or in a manner authorized
by the Board.
The Committee will keep minutes of its meetings and of any action taken
by it without a meeting. A majority of the Committee will constitute a quorum,
and the acts of a majority of the members present at any meeting at which a
quorum is present will be the acts of the Committee. Any action that may be
taken at a meeting of the Committee may be taken without a meeting if a consent
or consents in writing setting forth the action so taken is signed by all of the
members of the Committee. The Committee will make appropriate reports to the
Board concerning the operations of the Plan.
(b) Subject to the limitations of the Plan, the Committee and/or
the Board, will have the sole and complete authority: (i) to impose such
limitations, restrictions and
-4-
conditions upon such awards as it deems appropriate; (ii) to interpret the Plan
and to adopt, amend and rescind administrative guidelines and other rules and
regulations relating to the Plan; and (iii) to make all other determinations and
to take all other actions necessary or advisable for the implementation and
administration of the Plan. The Committee's or the Board's determinations on
matters within its authority will be conclusive and binding upon the Company and
all other persons.
(c) The Company will be the sponsor of the Plan. All expenses
associated with the Plan will be borne by the Company.
SECTION 4. STOCK SUBJECT TO THE PLAN
4.1 NUMBER OF SHARES. 600,000 shares of Stock are authorized for
issuance under the Plan in accordance with the provisions of the Plan, subject
to adjustment and substitution as set forth in this Section 4. This
authorization may be increased from time to time by approval of the Board and,
if such approval is required, by the shareholders of the Company. The Company
will at all times during the term of the Plan retain as authorized and unissued
Stock at least the number of shares from time to time required under the
provisions of the Plan, or otherwise assure itself of its ability to perform its
obligations hereunder.
4.2 OTHER SHARES OF STOCK. Any shares of Stock that are subject to a
Common Stock Equivalent Award, a Stock Option Award, a Restricted Stock Award or
a Debenture and which are forfeited, any shares of Stock that for any other
reason are not issued to a Director, and any shares of Stock tendered by a
Director to pay the Exercise Price of a Stock Option will automatically become
available again for use under the Plan if Rule 16b-3 under the Exchange Act, as
such rule may be amended, or any successor rule, and interpretations thereof by
the Securities and Exchange Commission or its staff permit such share
replenishment.
4.3 ADJUSTMENTS UPON CHANGES IN STOCK. If there is any change in the
Stock of the Company, through merger, consolidation, division, share exchange,
combination, reorganization, recapitalization, stock dividend, stock split,
spin-off, split up, dividend in kind or other change in the corporate structure
or distribution to the shareholders, appropriate adjustments may be made by the
Committee (or, if the Company is not the surviving corporation in any such
transaction, the board of directors of the surviving corporation) in the
aggregate number and kind of shares subject to the Plan, and the number and kind
of shares which may be issued under the Plan. Appropriate adjustments may also
be made by the Committee in the terms of any awards or Debentures under the Plan
to reflect such changes and to modify any other terms of outstanding awards on
an equitable basis as the Committee in its discretion determines.
SECTION 5. COMMON STOCK EQUIVALENT AWARDS
5.1 GRANTS OF COMMON STOCK EQUIVALENT AWARDS. Common Stock Equivalents
equal to a fixed number of shares of Stock were granted automatically to
Directors on a formula basis under Section 5.1 of the Plan prior to its
amendment as of April 26, 1995. All Common Stock Equivalents granted pursuant to
Section 5.1 prior to its amendment as of April 26, 1995 are subject to
adjustment as provided in Section 4.3.
-5-
5.2 DEFERRED STOCK ACCOUNT. A Deferred Stock Account has been
established for each Director elected prior to the annual meeting of
shareholders held in 1995. The Deferred Stock Account consists of compensation
in the form of Common Stock Equivalents which have been awarded to the Director
hereunder by the Company plus Common Stock Equivalents credited to the Deferred
Stock Account in respect of dividends and other distributions on the Stock
pursuant to Sections 5.3 and 5.4.
5.3 HYPOTHETICAL INVESTMENT. Compensation awarded hereunder in the
form of Common Stock Equivalents is assumed to be a hypothetical investment in
shares of Stock, and is subject to adjustment to reflect stock dividends, splits
and reclassifications and as otherwise set forth in Section 4.3.
5.4 HYPOTHETICAL DIVIDENDS. Dividends and other distributions on
Common Stock Equivalents will be deemed to have been paid as if such Common
Stock Equivalents were actual shares of Stock issued and outstanding on the
respective record or distribution dates. Common Stock Equivalents will be
credited to the Deferred Stock Account in respect of cash dividends and any
other securities or property issued on the Stock in connection with
reclassifications, spin-offs and the like on the basis of the value of the
dividend or other asset distributed and the value of the Common Stock
Equivalents on the date of the announcement of the dividend or asset
distribution, all at the same time and in the same amount as dividends or other
distributions are paid or issued on the Stock. Such Common Stock Equivalents are
subject to adjustment as provided in Section 4.3. Fractional shares will be
credited to a Director's Deferred Stock Account cumulatively but the balance of
shares of Common Stock Equivalents in a Director's Deferred Stock Account will
be rounded to the next highest whole share for any payment to such Director
pursuant to Section 5.6.
5.5 STATEMENT OF ACCOUNT. A statement will be sent to each Director as
to the balance of his Deferred Stock Account at least once each calendar year.
5.6 PAYMENT OF DEFERRED STOCK. Upon termination of services as a
Director, the balance of the Director's Deferred Stock Account will be paid to
such Director in Stock in January of the year following the year of termination
of services as a director on the basis of one share of Stock for each Common
Stock Equivalent in such Director's Deferred Stock Account.
5.7 PAYMENTS TO A DECEASED DIRECTOR'S ESTATE. In the event of a
Director's death before the balance of his or her Deferred Stock Account is
fully paid to the Director, payment of the balance of the Director's Deferred
Stock Account will then be made to the beneficiary properly designated by the
Director pursuant to Section 5.8, if any, or to his or her estate in the absence
of such a beneficiary designation, in the time and manner selected by the
Committee. The Committee may take into account the application of any duly
appointed administrator or executor of a Director's estate and direct that the
balance of the Director's Deferred Stock Account be paid to his or her estate in
the manner requested by such application.
5.8 DESIGNATION OF BENEFICIARY. A Director may designate a beneficiary
in the event of the Director's death in a form approved by the Company.
-6-
SECTION 6. DEFERRAL OF COMPENSATION
6.1 AMOUNT OF DEFERRAL. A Director may elect to defer receipt of all
or a specified portion of the cash compensation otherwise payable to the
Director for services rendered to the Company in any capacity as a director.
6.2 MANNER OF ELECTING DEFERRAL. A Director will make elections
permitted hereunder by giving written notice to the Company in a form approved
by the Committee and in compliance with Section 6.4. The notice will include:
(i) the percentage of cash compensation to be deferred, which amount must be
stated in whole increments of five percent; and (ii) the time as of which
deferral is to commence.
6.3 ACCOUNTS.
(a) CASH ACCOUNT. A Cash Account has been or will be established
for each Director electing to defer hereunder. Each Cash Account will be
credited with the amounts deferred on the date such compensation is otherwise
payable and will be debited with the amount of any such compensation forfeited
in accordance with applicable Board policy.
(b) INTEREST. Deferred amounts in the Cash Account will accrue
interest from time to time as follows:
(1) PRE-1998. For deferred amounts credited to the Cash
Account prior to January 1, 1998 (including but not limited to
Annual Director's Fees for the calendar year 1997), such deferred
amounts will accrue interest from time to time at a rate equal to
the ten-year U.S. Treasury Bond rate (prior to January 1, 1995,
the seven-year U.S. Treasury Bond rate) in effect the week prior
to the regular January meeting of the Board (or, if no such
meeting is held, the week prior to the first trading day of the
New York Stock Exchange in February) in the year in respect of
which such deferred amounts are earned until the last trading day
of the New York Stock Exchange prior to the regular January
meeting of the Board (or, if no such meeting is held, until the
first trading day of February) in the year following the year in
respect of which deferred amounts are earned, at which time such
deferred amounts, including interest, will be invested in
Debentures and credited to the Deferred Debenture Account.
Deferred amounts will be credited to the Deferred Debenture
Account only in $100 amounts. Fractional amounts of $100 will
remain in the Cash Account and continue to accrue interest.
(2) 1998 AND THEREAFTER. For deferred amounts credited to the
Cash Account on or after January 1, 1998 (and any fractional
amounts remaining in the Cash Account from prior deferrals),
unless otherwise determined by the Board or the Committee prior to
the deferral date such deferred amounts will accrue interest from
time to time at the Interest Credit Rate then in effect,
compounded annually. The "Interest Credit Rate" will be reset by
the Company on an annual
-7-
basis in January of the year, and will equal the then current
one-year U.S. Treasury Bill rate or such other fixed rate as the
Committee may from time to time determine.
(c) DEFERRED DEBENTURE ACCOUNT. A Deferred Debenture Account has
been established for each Director electing to defer cash compensation hereunder
for the calendar year 1997 and/or for an earlier year or years. Deferred amounts
credited to the Cash Account prior to January 1, 1998 will be invested in
Debentures and credited to the Deferred Debenture Account at the time and in the
manner set forth in Section 6.3(b)(1). Deferred amounts credited to the Cash
Account on or after January 1, 1998 will NOT be invested in Debentures but will
remain in the Cash Account and accrue interest until payment hereunder.
6.4 TIME FOR ELECTING DEFERRAL. Any election to (i) defer cash
compensation, (ii) alter the portion of such amounts deferred, or (iii) revoke
an election to defer such amounts, must be made prior to the time such
compensation is earned by the Director and otherwise in compliance with any
deadline which the Company may from time to time impose and in the manner set
forth in Section 6.2.
6.5 PAYMENT OF DEFERRED AMOUNTS. Payments from a Deferred Debenture
Account and/or from a Cash Account will be made in five consecutive annual
installments beginning in the January following the Director's termination of
service.
Payments from a Deferred Debenture Account will consist of accumulated
interest on the Debentures (which amount will only be payable in cash) plus the
greater value of (i) the face value of the Debentures or (ii) the shares of
Stock into which the Debentures are convertible. In the event the value of the
payment is determined by the amount referred to in clause (i), payment will be
made in cash. In the event such value is determined by clause (ii), such payment
will be made in Stock, other than the value of fractional shares which will be
paid in cash.
Payments from a Cash Account will consist of the deferred cash
compensation and accumulated interest in said account and will be made in cash.
6.6 PAYMENTS TO A DECEASED DIRECTOR'S ESTATE. In the event of a
Director's death before the balance of his or her Cash Account or Deferred
Debenture Account is fully paid to the Director, payment of the balance of the
Cash Account or Deferred Debenture Account will then be made to the beneficiary
properly designated by the Director pursuant to Section 6.7, if any, or to his
or her estate in the absence of such a beneficiary designation, in the time and
manner selected by the Committee. The Committee may take into account the
application of any duly appointed administrator or executor of a Director's
estate and direct that the balance of the Director's Cash Account or Deferred
Debenture Account be paid to his or her estate in the manner requested by such
application.
6.7 DESIGNATION OF BENEFICIARY. A Director may designate a beneficiary
in the event of the Director's death in a form approved by the Company.
-8-
SECTION 7. STOCK OPTION AWARDS
7.1 GRANTS OF STOCK OPTION AWARDS.
(a) For calendar year 1995, Stock Options for a fixed number of
shares of Stock were granted automatically to Directors on a formula basis under
Section 7.1(a) of the Plan.
(b) For calendar year 1995, Stock Options for a fixed number of
shares of Stock were granted automatically on a formula basis under Section
7.1(b) of the Plan to Directors serving as chairs of standing committees of the
Board.
(c) For calendar years 1996 and 1997, Stock Options were granted
automatically under Section 7.1(c) of the Plan to Directors for one-fourth of
the value of their Annual Director's Fees.
(d) ANNUAL DIRECTOR'S FEE GRANTS. Beginning with calendar year
1998, unless otherwise determined by the Board or the Committee each Director
will receive 5/16ths (31.25%) of the value of his or her Annual Director's Fee
in the form of a Stock Option Award. Such Stock Options will be granted
automatically each year on the last Wednesday in January of such year to each
Director in office on such Grant Date.
If a person joins the Board or otherwise first becomes a Director at
any time after the last Wednesday in January of a given calendar year (beginning
with 1998) but before the end of that calendar year, whether by action of the
shareholders of the Company or the Board or otherwise, unless otherwise
determined by the Board or the Committee such person upon becoming a Director
will be granted automatically 5/16ths (31.25%) of the value of his or her Annual
Director's Fee for that calendar year (which may be prorated) in the form of a
Stock Option Award on the last Wednesday of the calendar month in which such
person first becomes a Director (or in the next following calendar month if such
person first becomes a Director after the last Wednesday of the month). The
total number of shares of Stock subject to any such Stock Option Award will be
the number of shares determined by dividing the amount of the Annual Director's
Fee to be paid in the form of a Stock Option Award by the Stock Option Value on
the Grant Date, rounded up to the nearest whole share.
(e) ANNUAL BOARD CHAIRMAN'S FEE GRANTS. Beginning with calendar
year 1999, unless otherwise determined by the Board or the Committee, the Board
Chairman, if any, will receive 5/16ths (31.25%) of the value of his or her
Annual Board Chairman's Fee in the form of a Stock Option Award, and such Stock
Options will be granted automatically each year on the last Wednesday in January
of such year to the Board Chairman in office on such Grant Date, if any.
If a director becomes Board Chairman at any time after the last
Wednesday in January of a given calendar year (beginning with calendar year
1999) but before the end of that calendar year, whether by action of the Board
or otherwise, unless otherwise determined by the Board or the Committee such
director upon so becoming the Board Chairman will be granted
-9-
automatically 5/16ths (31.25%) of the value of his or her Annual Board
Chairman's Fee for that calendar year (which may be prorated) in the form of a
Stock Option Award on the last Wednesday of the calendar month in which such
person first becomes Board Chairman (or in the next following calendar month if
such person first becomes Board Chairman after the last Wednesday of the month).
The total number of shares of Stock subject to any such Stock Option Award will
be the number of shares determined by dividing the amount of the Annual Board
Chairman's Fee to be paid in the form of a Stock Option Award by the Stock
Option Value on the Grant Date, rounded up to the nearest whole share.
(f) OTHER STOCK OPTION GRANTS. Beginning with calendar year 1999,
the Board or the Committee may, from time to time, grant Stock Option Awards to
one or more Directors or to the Board Chairman for such number of shares as the
Board or the Committee may determine as additional compensation to such Director
or Directors or to such Board Chairman for their services as such.
(g) All Stock Options granted pursuant to Section 7.1 are subject
to adjustment as provided in Section 4.3.
7.2 TERMS AND CONDITIONS OF STOCK OPTIONS. Unless otherwise determined
by the Board or the Committee, Stock Options granted under the Plan will be
subject to the following terms and conditions:
(a) EXERCISE PRICE. Beginning with Stock Options granted in
calendar year 1998 and thereafter, the purchase price per share at which a Stock
Option may be exercised ("Exercise Price") will be equal to the Fair Market
Value of a share of Stock on the Grant Date. Notwithstanding anything herein to
the contrary, in no event may the Board or the Committee establish an Exercise
Price that is less than the Fair Market Value of a share of Stock on the Grant
Date.
For Stock Options granted in 1995, 1996 and 1997, the Exercise Price
was determined as follows: on any Grant Date, (1) Stock Options for two-thirds
of the option shares granted on the Grant Date had an Exercise Price per share
equal to 100% of the Fair Market Value of a share of Stock on the Grant Date;
and (2) Stock Options for the remaining one-third of the option shares granted
on the Grant Date had an Exercise Price per share equal to 125% of the Fair
Market Value of a share of Stock on the Grant Date.
(b) EXERCISABILITY. Subject to the terms and conditions of the
Plan and of the agreement referred to in Section 7.2(j), a Stock Option may be
exercised in whole or in part upon notice of exercise to the Company: (1) as to
any Stock Option granted in calendar year 1995, commencing on the first day
after the Grant Date and until it terminates; and (2) as to any Stock Option
granted after January 1, 1996 that vests as provided in Section 7.2(c)(2),
7.2(c)(3) or 7.2(c)(4), commencing on January 1 of the calendar year next
following the Grant Year (the "Option Vesting Date") or, if so provided in the
relevant Stock Option Agreement, upon the occurrence of a Change in Control, if
earlier, and until it terminates. During a Director's lifetime, a Stock Option
may be exercised only by the Director or the Director's guardian or legal
-10-
representative. The Committee or the Board may at any time and from time to time
accelerate the time at which all or any part of a Stock Option may be exercised.
(c) VESTING OF STOCK OPTION AWARDS.
(1) Stock Options granted in calendar year 1995 vested
immediately on grant.
(2) ANNUAL DIRECTOR'S FEE GRANTS. Except as otherwise set forth
in Section 7.1(c)(4), Stock Options granted as part of a Director's Annual
Director's Fee after January 1, 1996 will vest on the Option Vesting Date if the
Director has an Attendance Percentage of at least seventy-five percent (75%) for
the Grant Year. The Committee or the Board may at any time or from time to time
accelerate the vesting of all or any part of a Stock Option.
In the event that a Director has an Attendance Percentage of less than
seventy-five percent (75%) for a Grant Year, Stock Options granted in that Grant
Year for a number of shares equal to the Director's Attendance Percentage for
that year multiplied by the total number of option shares granted for that year
(rounded up to the nearest whole share) will vest on the Option Vesting Date,
and Stock Options granted in that Grant Year as to the remaining option shares
will be forfeited and will terminate as of the Option Vesting Date.
(3) ANNUAL BOARD CHAIRMEN'S FEE GRANTS AND OTHER GRANTS. Except
as otherwise set forth in Section 7.1(c)(4), Stock Options granted as part of an
Annual Board Chairman's Fee, if any, or granted to a Director or to the Board
Chairman, if any, pursuant to Section 7.1(f) will vest on the Option Vesting
Date.
(4) Notwithstanding anything to the contrary herein, (i) in the
event that a director is removed for Cause from office as a director of the
Company (and/or, in the case of Stock Options granted to a director in his or
her capacity as Board Chairman, from office as Board Chairman, if applicable),
all outstanding Stock Options will be forfeited immediately as of the time the
grantee is so removed from office, and (ii) if so provided in the relevant Stock
Option Agreement or if the Committee or the Board so determines with respect to
a Stock Option or Options, upon the occurrence of a Change in Control, all such
outstanding Stock Options will vest and become immediately exercisable.
(d) MANDATORY HOLDING OF STOCK. Except as otherwise provided in
Section 7.5 or Section 10 or unless waived by the Committee or the Board, any
Stock acquired on exercise of a Stock Option must be held by the grantee for a
minimum of: (1) three years from the date of exercise; (2) two years from the
date the grantee ceases to be a director of the Company; or (3) if so provided
in the relevant Stock Option Agreement or if the Committee or the Board so
determines with respect to a Stock Option or Options, until the occurrence of a
Change in Control, whichever first occurs (the "Option Shares Holding Period").
(e) OPTION TERM. The term of a Stock Option (the "Option Term")
will be the shorter of: (1) the period of ten years from its Grant Date; (2) the
period from the Grant Date
-11-
until the Option Vesting Date for a Stock Option that does not vest and is
terminated on said date as provided in Section 7.2(c)(2), if applicable (or with
respect to any portion of a Stock Option that does not vest on the Option
Vesting Date and is terminated as provided in Section 7.2(c)(2), if applicable);
(3) the period from the Grant Date until the time the Stock Option is forfeited
as provided in Section 7.2(c)(4)(i) in the event a director is removed from
office as a director of the Company and/or as Board Chairman, if applicable, for
Cause; or (4) the period from the Grant Date until the date the Stock Option
ceases to be exercisable as provided in Section 7.2(h).
(f) PAYMENT OF EXERCISE PRICE. Stock purchased on exercise of a
Stock Option must be paid for as follows: (1) in cash or by check (acceptable to
the Company), bank draft or money order payable to the order of the Company, (2)
through the delivery of shares of Stock which are then outstanding and which
have a Fair Market Value on the date of exercise equal to the Exercise Price per
share multiplied by the number of shares as to which the Stock Option is being
exercised (the "Aggregate Exercise Price"); (3) by delivery of an unconditional
and irrevocable undertaking by a broker to deliver promptly to the Company
sufficient funds to pay the Aggregate Exercise Price, or (4) by a combination of
the permissible forms of payment; PROVIDED, HOWEVER, that any portion of the
Exercise Price representing a fraction of a share must be paid in cash and no
share of Stock held for less than six months may be delivered in payment of the
Aggregate Exercise Price.
(g) RIGHTS AS A SHAREHOLDER. The holder of a Stock Option will
not have any of the rights of a shareholder with respect to any shares of Stock
subject to the Stock Option until such shares are issued by the Company
following the exercise of the Stock Option.
(h) TERMINATION OF ELIGIBILITY. If a grantee ceases to be a
director and/or ceases to be Board Chairman, if applicable, for any reason, any
outstanding Stock Options will be exercisable according to the following
provisions:
(1) If a grantee ceases to be a director and/or ceases to be
Board Chairman, if applicable, for any reason other than removal for Cause or
death, any outstanding Stock Options held by such grantee which are vested or
which thereafter vest will be exercisable by the grantee in accordance with
their terms at any time prior to the expiration of the Option Term;
(2) If a grantee is removed from office as a director of the
Company and/or as Board Chairman, if applicable, for Cause, any outstanding
vested Stock Options held by such grantee will be exercisable by the grantee in
accordance with their terms at any time prior to the earlier of (a) the time the
grantee is so removed from office and (b) the expiration of the Option Term; and
(3) Following the death of a grantee while a director and/or
while Board Chairman, if applicable, or after the grantee ceased to be a
director and/or ceased to be Board Chairman, if applicable, for any reason other
than removal for Cause, any Stock Options that are outstanding and exercisable
by such grantee at the time of death or which thereafter vest will be
exercisable in accordance with their terms by the person or persons entitled to
do so under the grantee's will, by a beneficiary properly designated by the
director in the event of death pursuant to Section 7.4, if any, or by the person
or persons entitled to do so under the applicable laws of
-12-
descent and distribution at any time prior to the earlier of (a) the expiration
of the Option Term and (b) two years after the date of death.
(i) TERMINATION OF STOCK OPTION. A Stock Option will terminate on
the earlier of (1) exercise of the Stock Option in accordance with the terms of
the Plan, and (2) expiration of the Option Term as specified in Sections 7.2(e)
and 7.2(h).
(j) STOCK OPTION AGREEMENT. All Stock Options will be confirmed
by an agreement, or an amendment thereto, which will be executed on behalf of
the Company by the Chief Executive Officer, the President or any Vice President
and by the grantee.
(k) GENERAL RESTRICTIONS.
(1) The obligation of the Company to issue Stock pursuant to
Stock Options under the Plan will be subject to the condition that, if at any
time the Company determines that (a) the listing, registration or qualification
of shares of Stock upon any securities exchange or under any state or federal
law, or (b) the consent or approval of any government or regulatory body is
necessary or desirable, then such Stock will not be issued unless such listing,
registration, qualification, consent or approval has been effected or obtained
free from any conditions not acceptable to the Company.
(2) Shares of Stock for use under the provisions of this Section
7 will not be issued until they have been duly listed, upon official notice of
issuance, upon the New York Stock Exchange and such other exchanges, if any, as
the Board may determine, and a registration statement under the Securities Act
of 1933 with respect to such shares has become, and is, effective.
Subject to the foregoing provisions of this Section 7.2 and the other
provisions of the Plan, any Stock Option granted under the Plan will be subject
to such restrictions and other terms and conditions, if any, as the Board and/or
the Committee may determine, in its or their discretion, and as are set forth in
the agreement referred to in Section 7.2(j), or an amendment thereto; PROVIDED,
HOWEVER, that in no event will the Committee or the Board have any power or
authority which would cause transactions pursuant to the Plan to cease to be
exempt from the provisions of Section 16(b) of the Exchange Act pursuant to Rule
16b-3, as such rule may be amended, or any successor rule.
7.3 ANNUAL STATEMENT. A statement will be sent to each Director as to
the status of his or her Stock Options at least once each calendar year.
7.4 DESIGNATION OF A BENEFICIARY. A Director may designate a
beneficiary to hold and exercise outstanding Stock Options in accordance with
the Plan in the event of the Director's death in a form approved by the Company.
7.5 HOLDING PERIOD APPLICABLE TO A DECEASED GRANTEE'S ESTATE. As long
as at least six months have elapsed since the Grant Date, a beneficiary properly
designated by the Director pursuant to Section 7.4, if any, or a person holding
a Stock Option under a deceased grantee's
-13-
will or under the applicable laws of descent or distribution, exercising a Stock
Option in accordance with Section 7.2(h) will not be subject to the Holding
Period with respect to shares of Stock received on exercise of a Stock Option.
SECTION 8. RESTRICTED STOCK AWARDS.
8.1 GRANTS OF RESTRICTED STOCK AWARDS.
(a) ANNUAL DIRECTOR'S FEE GRANTS. For calendar years 1996 and
1997, each Director received one-fourth of the value of his or her Annual
Director's Fee in the form of a Restricted Stock Award.
Beginning with calendar year 1998, unless otherwise determined by the
Board or the Committee each Director will receive 5/16ths (31.25%) of the value
of his or her Annual Director's Fee in the form of a Restricted Stock Award, and
such Restricted Stock will be granted automatically each year on the last
Wednesday in January of such year to each Director in office on such Grant Date.
If a person joins the Board or otherwise first becomes a Director at
any time after the last Wednesday in January of a given calendar year (beginning
with 1998) but before the end of that calendar year, whether by action of the
shareholders of the Company or the Board or otherwise, unless otherwise
determined by the Board or the Committee such person upon becoming a Director
will be granted automatically 5/16ths (31.25%) of the value of his or her Annual
Director's Fee for that calendar year (which may be prorated) in the form of a
Restricted Stock Award on the last Wednesday in the calendar month in which such
person first becomes a Director (or in the next following calendar month if said
person first becomes a Director after the last Wednesday of the month).
(b) ANNUAL COMMITTEE CHAIR'S FEE GRANTS. Beginning with calendar
year 1996, unless otherwise determined by the Board or the Committee each
Director who is the chair of a standing committee of the Board will receive the
full value of his or her Annual Committee Chair's Fee in the form of a
Restricted Stock Award, and such Restricted Stock will be granted automatically
each year immediately following the annual meeting of shareholders and the
organization meeting of the Board related to such annual meeting of
shareholders, beginning with the annual meeting of shareholders and related
organization meeting held in 1996, to each Director who is elected at such
organization meeting to serve as the chair of a standing committee of the Board.
Beginning after the 1998 organization meeting of the Board, if a
Director is elected to serve as the chair of a standing committee of the Board
at any time after the organization meeting of the Board held in connection with
the annual meeting of shareholders for a given year but before the next
organization meeting of the Board is held, unless otherwise determined by the
Board or the Committee such Director will, upon so becomming a committee chair,
receive the value of his or her Annual Committee Chair's Fee for that year
(which may be prorated) in the form of a Restricted Stock Award on the later of:
(1) the last Wednesday in the calendar month in which such Director becomes a
standing committee chair (or in the next following calendar
-14-
month if said Director becomes a standing committee chair after the last
Wednesday of the month); and (2) January 27, 1999.
(c) ANNUAL BOARD CHAIRMAN'S FEE GRANTS. Beginning with calendar
year 1999, unless otherwise determined by the Board or the Committee, the Board
Chairman, if any, will receive 5/16ths (31.25%) of the value of his or her
Annual Board Chairman's Fee in the form of a Restricted Stock Award, and such
Restricted Stock will be granted automatically each year on the last Wednesday
in January of such year to the Board Chairman in office on such Grant Date, if
any.
If a director becomes Board Chairman at any time after the last
Wednesday in January of a given calendar year (beginning with calendar year
1999) but before the end of that calendar year, whether by action of the Board
or otherwise, unless otherwise determined by the Board or the Committee such
director upon so becoming the Board Chairman will receive 5/16ths (31.25%) of
the value of his or her Annual Board Chairman's Fee for that year (which may be
prorated) in the form of a Restricted Stock Award on the last Wednesday in the
calendar month in which such director becomes the Board Chairman (or in the next
following calendar month if said director becomes Board Chairman after the last
Wednesday of the month.
(d) The total number of shares of Stock representing any such
Restricted Stock Award will be the number of shares determined by dividing the
amount of the Annual Director's Fee, the Annual Committee Chair's Fee or the
Annual Board Chairman's Fee, as the case may be, to be paid in the form of a
Restricted Stock Award by the Fair Market Value of a share of Stock on the Grant
Date, rounded up to the nearest whole share.
(e) OTHER RESTRICTED STOCK GRANTS. Beginning with calendar year
1999, the Board or the Committee may, from time to time, grant Restricted Stock
Awards to one or more Directors or to the Board Chairman for such number of
shares of Restricted Stock as the Board or the Committee may determine as
additional compensation to such Director or Directors or to such Board Chairman
for their services as such.
(f) Restricted Stock granted pursuant to Section 8.1 is subject
to adjustment as provided in Section 4.3.
8.2 TERMS AND CONDITIONS OF RESTRICTED STOCK. Unless otherwise
determined by the Board or the Committee, Restricted Stock granted under the
Plan will be subject to the following terms and conditions:
(a) RESTRICTION PERIOD. Restricted Stock will be subject to a
Restriction Period ("Restriction Period") beginning on the Grant Date and
continuing through December 31 of the Grant Year.
-15-
(b) VESTING.
(1) ANNUAL DIRECTOR'S FEE GRANTS. Except as set forth in Section
8.2(b)(3), a Director's right to ownership in shares of Restricted Stock granted
to a Director pursuant to Section 8.1(a) will vest on the January 1 immediately
following the expiration of the Restriction Period for such shares (the
"Restricted Stock Vesting Date") if the Director has an Attendance Percentage of
at least seventy-five percent (75%) for the Grant Year. The Committee or the
Board may at any time or from time to time waive the Restriction Period or
accelerate the vesting of shares of Restricted Stock.
In the event that a Director has an Attendance Percentage of less than
seventy-five percent (75%) for a Grant Year, a number of shares of Restricted
Stock equal to the Director's Attendance Percentage for the Grant Year
multiplied by the total number of shares of Restricted Stock granted pursuant to
Section 8.1(a) during the Grant Year (rounded up to the nearest whole share)
will vest on the Restricted Stock Vesting Date and the remaining shares of
Restricted Stock granted pursuant to Section 8.1(a) during the Grant Year will
be forfeited as of the Restricted Stock Vesting Date.
(2) ANNUAL COMMITTEE CHAIR'S FEE GRANTS, ANNUAL BOARD CHAIRMAN'S
FEE GRANTS, AND OTHER GRANTS. Except as set forth in Section 8.2(b)(3) below, a
Director's right to ownership in shares of Restricted Stock granted to a
Director pursuant to Section 8.1(e), to a committee chair pursuant to Section
8.1(b), or to the Board Chairman, if any, pursuant to Section 8.1(c) will vest
on the Restricted Stock Vesting Date.
(3) Notwithstanding anything to the contrary herein, (i) in the
event that a director is removed for Cause from office as a director of the
Company (and/or in the case of Restricted Stock granted to a director in his or
her capacity as Board Chairman, from office as Board Chairman, if applicable)
prior to the Restricted Stock Vesting Date, all of said Director's shares of
Restricted Stock that have not yet vested will be forfeited immediately as of
the time the grantee is so removed from office and the Company will have the
right to complete the blank stock power described below with respect to such
shares, and (ii) if so provided in the relevant Restricted Stock Agreement or if
the Committee or the Board so determines with respect to a share or shares of
Restricted Stock, upon the occurrence of a Change in Control, all such shares of
Restricted Stock that have not yet vested will immediately vest.
(c) ISSUANCE OF SHARES. On or about the Grant Date, a certificate
representing the shares of Restricted Stock will be registered in the Director's
name and deposited by the Director, together with a stock power endorsed in
blank, with the Company. Subject to the transfer restrictions set forth in
Section 8.2(d) and to the last sentence of this Section 8.2(c), the Director as
owner of shares of Restricted Stock will have the rights of the holder of such
Restricted Stock during the Restriction Period. On the Restricted Stock Vesting
Date following expiration of the Restriction Period, vested shares of Restricted
Stock will be redelivered by the Company to the Director, and non-vested shares
of Restricted Stock will be forfeited and the Company will have the right to
complete the blank stock power with respect to such non-vested shares; PROVIDED,
HOWEVER, with respect to shares of Restricted Stock granted in
-16-
1996 prior to shareholder approval of an amendment to the Plan on April 24,
1996, no certificates were issued, such shares were not issued and outstanding,
and the Directors did not have any of the rights of an owner of the shares until
the date such shareholder approval occurred.
(d) TRANSFER RESTRICTIONS; MANDATORY HOLDING OF STOCK. Except as
otherwise provided in Section 8.5 or Section 10, shares of Restricted Stock are
not transferable during the Restriction Period. Once the Restriction Period
lapses and shares vest, except as otherwise provided in Section 8.5 or Section
10 or unless waived by the Committee or the Board, shares acquired as a
Restricted Stock Award must be held by the grantee for a minimum of: (1) three
years from the Grant Date; (2) two years from the date the grantee ceases to be
a director of the Company; or (3) if so provided in the relevant Restricted
Stock Agreement or if the Committee or the Board so determines with respect to a
share or shares of Restricted Stock, until the occurrence of a Change of
Control, whichever first occurs (the "Restricted Shares Holding Period").
(e) RESTRICTED STOCK AGREEMENT. All Restricted Stock Awards will
be confirmed by an agreement, or an amendment thereto, which will be executed on
behalf of the Company by the Chief Executive Officer, the President or any Vice
President and by the grantee.
(f) GENERAL RESTRICTION.
(1) The obligation of the Company to issue shares of Restricted
Stock under the Plan will be subject to the condition that if, at any time, the
Committee determines that (a) the listing, registration or qualification of
shares of Restricted Stock upon any securities exchange or under any state or
federal law or (b) the consent or approval of any government or regulatory body
is necessary or desirable, then such Restricted Stock will not be issued unless
such listing, registration, qualification, consent or approval has been effected
or obtained free from any conditions not acceptable to the Company.
(2) Shares of Stock for use under the provisions of this Section
8 will not be issued until they have been duly listed, upon official notice of
issuance, upon the New York Stock Exchange and such other exchanges, if any, as
the Board may determine, and a registration statement under the Securities Act
of 1933 with respect to such shares has become, and is, effective.
Subject to the foregoing provisions of this Section 8.2 and the other
provisions of the Plan, any shares of Restricted Stock granted under the Plan
will be subject to such restrictions and other terms and conditions, if any, as
the Board or the Committee may be determine, in its discretion, and as are set
forth in the agreement referred to in Section 8.2(e), or an amendment thereto;
PROVIDED, HOWEVER, that in no event will either the Committee or the Board have
any power or authority which would cause transactions pursuant to the Plan to
cease to be exempt from the provisions of Section 16(b) of the Exchange Act
under Rule 16b-3, as such rule may be amended, or any successor rule.
-17-
8.3 ANNUAL STATEMENT. A statement will be sent to each Director as to
the status of his or her Restricted Stock at least once each calendar year.
8.4 DESIGNATION OF A BENEFICIARY. A Director may designate a
beneficiary to hold shares of Restricted Stock in accordance with the Plan in
the event of the Director's death in a form approved by the Company.
8.5 HOLDING PERIOD APPLICABLE TO A DECEASED GRANTEE'S ESTATE. As long
as at least six months have elapsed since the Grant Date, a beneficiary properly
designated by the Director pursuant to Section 8.4 in the event of death, if
any, or a person holding shares of Restricted Stock under a deceased grantee's
will or under the applicable laws of descent or distribution, will not be
subject to the Restricted Shares Holding Period with respect to such shares of
Restricted Stock.
SECTION 9. CHANGE IN CONTROL
9.1 SETTLEMENT OF COMPENSATION. In the event of a Change in Control of
the Company as defined herein: (a) with respect to awards and other benefits
made or granted pursuant to the Plan prior to July 28, 1999, to the extent not
already vested, all Stock Option Awards, Restricted Stock Awards and other
benefits hereunder will be vested immediately (provided, however, that with
respect to awards and other benefits made or granted pursuant to the Plan on or
after July 28, 1999, the occurrence of a Change in Control will have no effect
on such outstanding awards or benefits pursuant to the Plan unless otherwise
provided in an agreement governing the award or other benefit or unless the
Committee or the Board determines otherwise); and (b) the value of all unpaid
Common Stock Equivalents and deferred amounts (whether deferred before or after
July 28, 1999) will be paid in cash to PNC Bank, National Association, the
trustee pursuant to a trust agreement dated as of June 22, 1995, as amended from
time to time, or any successor trustee, or otherwise on such terms as the
Committee may prescribe or permit. For purposes of this Section 9.1: the value
of unpaid Common Stock Equivalents and deferred amounts will be equal to the sum
of (i) the value of all Common Stock Equivalent Awards then held in such
Director's Deferred Stock Account (the value of which will be based upon the
highest price of the Stock as reported by the composite tape of the New York
Stock Exchange during the 30 days immediately preceding the Change in Control),
(ii) the value of the Director's Cash Account, and (iii) the greater value of
(x) the cash amount equal to the face value of the Debentures in the Director's
Deferred Debenture Account plus cash equal to accrued interest on the Debentures
or (y) the number of shares of Stock into which the Debentures in the Director's
Deferred Debenture Account are convertible (the value of which will be based
upon the highest price of the Stock as reported by the composite tape of the New
York Stock Exchange during the 30 days immediately preceding the Change in
Control), plus cash equal to accrued interest on the Debentures.
9.2 DEFINITION OF CHANGE IN CONTROL. A Change in Control will mean the
occurrence of one or more of the following events:
(a) there shall be consummated (i) any consolidation or merger of
the Company in which the Company is not the continuing or surviving corporation
or pursuant to
-18-
which shares of the Company's Stock would be converted into cash, securities or
other property, other than a merger of the Company in which the holders of the
Company's Stock immediately prior to the merger have the same proportionate
ownership of common stock of the surviving corporation immediately after the
merger, or (ii) any sale, lease, exchange or other transfer (in one transaction
or a series of related transactions) of all, or substantially all, of the assets
of the Company; or
(b) the shareholders of the Company shall approve of any plan or
proposal for the liquidation or dissolution of the Company; or
(c) (i) any person (as such term is defined in Section 13(d) of
the Exchange Act), corporation or other entity shall purchase any Stock of the
Company (or securities convertible into the Company's Stock) for cash,
securities or any other consideration pursuant to a tender offer or exchange
offer, unless, prior to the making of such purchase of Stock (or securities
convertible into Stock), the Board shall determine that the making of such
purchase shall not constitute a Change in Control, or (ii) any person (as such
term is defined in Section 13(d) of the Exchange Act), corporation or other
entity (other than the Company or any benefit plan sponsored by the Company or
any of its subsidiaries) shall become the "beneficial owner" (as such term is
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing twenty percent or more of the combined
voting power of the Company's then outstanding securities ordinarily (and apart
from any rights accruing under special circumstances) having the right to vote
in the election of directors (calculated as provided in Rule 13d-3(d) in the
case of rights to acquire any such securities), unless, prior to such person so
becoming such beneficial owner, the Board shall determine that such person so
becoming such beneficial owner shall not constitute a Change in Control; or
(d) at any time during any period of two consecutive years,
individuals who at the beginning of such period constituted the entire Board
shall cease for any reason to constitute at least a majority thereof, unless the
election or nomination for election of each new director during such two-year
period is approved by a vote of at least two-thirds of the directors then still
in office who were directors at the beginning of such two-year period.
SECTION 10. ASSIGNABILITY
10.1 The right to receive payments or distributions hereunder
(including any "derivative security" issued pursuant to the Plan, as such term
is defined by the rules promulgated under Section 16 of the Exchange Act), any
shares of Restricted Stock granted hereunder during the Restriction Period, and
any Stock Options granted hereunder will not be transferable or assignable by a
Director other than by will, by the laws of descent and distribution, to a
beneficiary properly designated by the Director pursuant to the appropriate
section of the Plan in the event of death, if any, or pursuant to a domestic
relations order as defined by Section 414(p)(1)(B) of the Internal Revenue Code
or the rules thereunder that satisfies Section 414(p)(1)(A) of the Internal
Revenue Code or the rules thereunder.
10.2 In addition, Stock acquired on exercise of a Stock Option will not
be transferable prior to the end of the applicable Option Shares Holding Period,
if any, set forth in Sections
-19-
7.2(d) and 7.5, and Stock acquired as Restricted Stock will not be transferable
prior to the end of the applicable Restricted Shares Holding Period, if any, set
forth in Sections 8.2(d) and 8.5, in either case other than by will, by transfer
to a beneficiary properly designated by the Director pursuant to the appropriate
section of the Plan in the event of death, if any, by the applicable laws of
descent and distribution, or pursuant to a domestic relations order as defined
by Section 414(p)(1)(B) of the Internal Revenue Code or the rules thereunder
that satisfies Section 414(p)(1)(A) of the Internal Revenue Code or the rules
thereunder.
SECTION 11. RETENTION; WITHHOLDING OF TAX
11.1 RETENTION. Nothing contained in the Plan or in any Stock Option
Award or Restricted Stock Award granted under the Plan will interfere with or
limit in any way the right of the Company to remove any director from the Board
or to remove the Board Chairman, if any, from office as such pursuant to the
Restated Articles of Incorporation and the By-laws of the Company, nor confer
upon any Director any right to continue in the service of the Company.
11.2 WITHHOLDING OF TAX. To the extent required by applicable law and
regulation, each Director must arrange with the Company for the payment of any
federal, state or local income or other tax applicable to any payment or any
delivery of Stock hereunder before the Company will be required to make such
payment or issue (or, in the case of Restricted Stock, deliver) such shares
under the Plan.
SECTION 12. PLAN AMENDMENT, MODIFICATION AND TERMINATION
The Board may at any time terminate, and from time to time may amend or
modify the Plan, PROVIDED, HOWEVER, that no amendment or modification may become
effective without approval of the amendment or modification by the shareholders
if shareholder approval is required to enable the Plan to satisfy any applicable
statutory or regulatory requirements.
SECTION 13. REQUIREMENTS OF LAW
13.1 FEDERAL SECURITIES LAW REQUIREMENTS. Implementation and
interpretations of, transactions pursuant to, the Plan will be subject to all
conditions required under Rule 16b-3, as such rule may be amended, or any
successor rule, to qualify such transactions for any exemption from the
provisions of Section 16(b) of the Exchange Act available under that rule, or
any successor rule.
13.2 GOVERNING LAW. The Plan and all agreements hereunder will be
construed in accordance with and governed by the laws of the Commonwealth of
Pennsylvania.
SECTION 14. OTHER COMPENSATION
Nothing contained in the Plan will be deemed to limit or restrict the
right of the Company to compensate directors for their services in any capacity
in whole or in part under separate compensation or deferral plans or programs
for directors or under other compensation arrangements.
-20-