NORWOOD FINANCIAL CORP.
2006 STOCK OPTION PLAN
1. PURPOSE OF PLAN.
The purpose of this 2006 Stock Option Plan is to provide incentives and rewards
to officers, employees and directors that contribute to the success and growth
of Norwood Financial Corp., and its Affiliates, and to assist all these entities
in attracting and retaining directors, executives and other key employees with
experience and ability.
2. DEFINITIONS.
"AFFILIATE" means any "PARENT CORPORATION" or "SUBSIDIARY CORPORATION" of the
Company, as such terms are defined in Sections 424(e) and 424(f) of the Code,
including the Bank.
"AWARD" means Stock Options, as set forth in Section 6 of the Plan.
"BANK" means Wayne Bank, and any successors thereto.
"BENEFICIARY" means the person or persons designated by the Participant to
receive any benefits payable under the Plan in the event of such Participant's
death. Such person or persons shall be designated in writing by the Participant
and addressed to the Company or the Committee on forms provided for this purpose
by the Committee, and delivered to the Company or the Committee. Such
Beneficiary designation may be changed from time to time by similar written
notice to the Committee. A Participant's last will and testament or any codicil
thereto shall not constitute written designation of a Beneficiary. In the
absence of such written designation, the Beneficiary shall be the Participant's
surviving spouse, if any, or if none, the Participant's estate.
"BOARD OF DIRECTORS" means the board of directors of the Company.
"CAUSE" means the personal dishonesty, incompetence, willful misconduct, breach
of fiduciary duty involving personal profits, intentional failure to perform
stated duties, willful violation of a material provision of any law, rule or
regulation (other than traffic violations and similar offense), or a material
violation of a final cease-and-desist order or any other action which results in
a substantial financial loss to the Company or its Affiliates.
"CHANGE IN CONTROL" shall mean: (i) the sale of all, or a material portion, of
the assets of the Company or its Affiliates; (ii) the merger or recapitalization
of the Company whereby the Company is not the surviving entity; (iii) a change
in control of the Company, as otherwise defined or determined by the
Pennsylvania Department of Banking, the Federal Reserve Board or other
applicable banking regulatory agency ("Regulators") or regulations promulgated
by such Regulators; or (iv) the acquisition, directly or indirectly, of the
beneficial ownership (within the meaning of that term as it is used in Section
13(d) of the Securities Exchange Act of 1934 and the rules and regulations
promulgated thereunder) of more than 19.9% of the outstanding voting securities
of the Company by any person, trust, entity or group. This limitation shall not
apply to the purchase of shares by underwriters in connection with a public
offering of Company stock. The term "person" refers to an individual or a
corporation, partnership, trust, association, joint venture, pool, syndicate,
sole proprietorship, unincorporated organization or any other form of entity not
specifically listed herein.
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"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITTEE" means the Board of Directors of the Company or the administrative
committee designated, pursuant to Section 3 of the Plan, to administer the Plan.
"COMMON STOCK" means the common stock of the Company.
"COMPANY" means Norwood Financial Corp., and any successor entity or any future
parent corporation of the Bank.
"DIRECTOR" means a person serving as a member of the Board of Directors of the
Company from time to time.
"DIRECTOR EMERITUS" means a person serving as a director emeritus, advisory
director, consulting director or other similar position as may be appointed by
the Board of Directors of the Company or the Bank from time to time.
"DISABILITY" means (a) with respect to Incentive Stock Options, the "permanent
and total disability" of the Employee as such term is defined at Section
22(e)(3) of the Code; and (b) with respect to other Awards, any physical or
mental impairment which renders the Participant incapable of continuing in the
employment or service of the Company or its Affiliates in his or her then
current capacity as determined by the Committee.
"EFFECTIVE DATE" shall mean the date of stockholder approval of the Plan by the
stockholders of the Company.
"ELIGIBLE PARTICIPANT" means an Employee or Outside Director who may receive an
Award under the Plan.
"EMPLOYEE" means any person employed by the Company or an Affiliate. Directors
who are also employed by the Company or an Affiliate shall be considered
Employees under the Plan.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXERCISE PRICE" means the price at which an individual may purchase a share of
Common Stock pursuant to an Option.
"FAIR MARKET VALUE" means the closing sales price reported on the Nasdaq
National Market (as published by The Wall Street Journal, if published) on such
date or, if the Common Stock was not traded on such date, on the immediately
preceding day on which the Common Stock was traded thereon or the last previous
date on which a sale is reported.
"INCENTIVE STOCK OPTION" means a Stock Option granted under the Plan, that is
intended to meet the requirements of Section 422 of the Code.
"NON-STATUTORY STOCK OPTION" means a Stock Option granted to an individual under
the Plan that is not intended to be and is not identified as an Incentive Stock
Option, or an Option granted under the Plan that is intended to be and is
identified as an Incentive Stock Option, but that does not meet the requirements
of Section 422 of the Code.
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"OPTION" or "STOCK OPTION" means an Incentive Stock Option or a Non-Statutory
Stock Option, as applicable.
"OUTSIDE DIRECTOR" means a member of the Board of Directors of the Company who
is not also an Employee.
"PARENT" means any present or future corporation which would be a "parent
corporation" of the Bank or the Company as defined in Sections 424(e) and (g) of
the Code.
"PARTICIPANT" means an individual who is granted an Award pursuant to the terms
of the Plan.
"PLAN" means this Norwood Financial Corp. 2006 Stock Option Plan.
3. ADMINISTRATION.
(a) The Committee shall administer the Plan. The Committee shall consist
of two or more disinterested directors of the Company, who shall be
appointed by the Board of Directors. A member of the Board of
Directors shall be deemed to be disinterested only if he or she
satisfies: (i) such requirements as the Securities and Exchange
Commission may establish for non-employee directors administering
plans intended to qualify for exemption under Rule 16b-3 (or its
successor) of the Exchange Act and (ii) and to the extent deemed
appropriate by the Board of Directors, such requirements as the
Internal Revenue Service may establish for outside directors acting
under plans intended to qualify for exemption under Section
162(m)(4)(C) of the Code; provided, however, a failure to comply with
the requirements of this subparagraph (ii) shall not disqualify any
actions taken by the Committee. A majority of the entire Committee
shall constitute a quorum and the action of a majority of the members
present at any meeting at which a quorum is present shall be deemed
the action of the Committee. In no event may the Committee revoke
outstanding Awards without the consent of the Participant. All
decisions, determinations and interpretations of the Committee shall
be final and conclusive on all persons affected thereby.
(b) Subject to paragraph (a) of this Section 3, the Committee shall:
(i) select the individuals who are to receive grants of Awards under
the Plan;
(ii) determine the type, number, vesting requirements and other
features and conditions of Awards made under the Plan;
(iii) interpret the Plan and Award Agreements (as defined below); and
(iv) make all other decisions related to the operation of the Plan.
(c) Each Award granted under the Plan shall be evidenced by a written
agreement (i.e., an "Award Agreement"). Each Award Agreement shall
constitute a binding contract between the Company or an Affiliate and
the Participant, and every Participant, upon acceptance of an Award
Agreement, shall be bound by the terms and restrictions of the Plan
and the Award Agreement. The terms of each Award Agreement shall be
set in accordance with the Plan, but each Award Agreement may also
include any additional provisions and restrictions determined by the
Committee. In particular, and at a minimum, the Committee shall set
forth in each Award Agreement:
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(i) the type of Award granted;
(ii) the Exercise Price for any Option;
(iii) the number of shares or rights subject to the Award;
(iv) the expiration date of the Award;
(v) the manner, time and rate (cumulative or otherwise) of exercise
or vesting of the Award; and
(vi) the restrictions, if any, placed on the Award, or upon shares
which may be issued upon the exercise or vesting of the Award.
The Chairman of the Committee and/or the President of the Company are
hereby authorized to execute Award Agreements on behalf of the Company or
an Affiliate and to cause them to be delivered to the Participants granted
Awards under the Plan.
(d) Six Month Holding Period. Subject to vesting requirements, if
applicable, except in the event of death or Disability of the
Participant or a Change in Control of the Company, a minimum of six
months must elapse between the date of the grant of an Option and the
date of the sale of the Common Stock received through the exercise of
such Option.
4. ELIGIBILITY.
Subject to the terms of the Plan, Employees and Outside Directors, as the
Committee shall determine from time to time, shall be eligible to receive Awards
in accordance with the Plan.
5. SHARES OF COMMON STOCK SUBJECT TO THE PLAN; SHARE LIMITS.
5.1 Shares Available. Subject to the provisions of Section 7, the Common Stock
that may be delivered under this Plan shall be shares of the Company's
authorized but unissued Common Stock, shares of Common Stock purchased in the
open-market by the Company and any shares of Common Stock held as treasury
shares.
5.2 Share Limits. The maximum number of shares of Common Stock that may be
delivered pursuant to Awards granted under this Plan (the "Share Limit") equals
250,000 shares. The following limits also apply with respect to Awards granted
under this Plan:
(a) The maximum number of shares of Common Stock that may be delivered
pursuant to the exercise of Stock Options granted under this Plan to
Outside Directors in the aggregate shall be 40,000 shares of Common
Stock.
(b) The maximum number of shares of Common Stock that may be delivered
pursuant to the exercise of Stock Options granted under this Plan to
any one individual shall not exceed 50,000 shares of Common Stock.
5.3 Awards Settled in Cash, Reissue of Awards and Shares. To the extent that an
Award is settled in cash or a form other than shares of Common Stock, the shares
that would have been delivered had there been no such cash or other settlement
shall be counted against the shares available for issuance under this Plan.
Shares that are subject to or underlie Awards which expire or for any reason are
cancelled or terminated, are forfeited, fail to vest, or for any other reason
are not paid or delivered under this Plan shall again be available for
subsequent Awards under this Plan.
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5.4 Reservation of Shares; No Fractional Shares; Minimum Issue. The Company
shall at all times reserve a number of shares of Common Stock sufficient to
cover the Company's obligations and contingent obligations to deliver shares
with respect to Awards then outstanding under this Plan. No fractional shares
shall be delivered under this Plan. The Committee may pay cash in lieu of any
fractional shares in settlements of Awards under this Plan. No fewer than 100
shares may be purchased on exercise of any Stock Option unless the total number
purchased or exercised is the total number at the time available for purchase or
exercise by the Participant.
6. AWARDS.
6.1 Stock Options. Except as otherwise detailed herein, the Committee shall
determine the type or types of Award(s) to be made to each Eligible Participant
or Outside Director. Awards may be granted singularly, in combination or in
tandem. Awards also may be made in combination or in tandem with, in replacement
of, as alternatives to, or as the payment form for grants or rights under any
other employee or compensation plan of the Company. The types of Awards that may
be granted under this Plan are Stock Options, either Incentive Stock Options
and/or Non-Statutory Stock Options.
(a) The Committee may, subject to the limitations of this Plan and the
availability of shares of Common Stock reserved but not previously
awarded under the Plan, grant Stock Options to Employees and Outside
Directors, subject to terms and conditions as it may determine, to the
extent that such terms and conditions are consistent with the
following provisions:
(i) EXERCISE PRICE. The Exercise Price of Stock Options shall not be
less than one hundred percent (100%) of the Fair Market Value of
the Common Stock on the date of grant.
(ii) TERMS OF OPTIONS. In no event may an individual exercise an
Option, in whole or in part, more than ten (10) years from the
date of grant.
(iii) NON-TRANSFERABILITY. Unless otherwise determined by the
Committee, an individual may not transfer, assign, hypothecate,
or dispose of an Option in any manner, other than by will or the
laws of intestate succession. The Committee may, however, in its
sole discretion, permit the transfer or assignment of a
Non-Statutory Stock Option, if it determines that the transfer or
assignment is for valid estate planning purposes and is permitted
under the Code and Rule 16b-3 of the Exchange Act. For purposes
of this Section 6.1(a)(iii), a transfer for valid estate planning
purposes includes, but is not limited to, transfers:
(1) to a revocable INTER VIVOS trust, as to which an individual
is both settlor and trustee;
(2) for no consideration to: (a) any member of the individual's
Immediate Family; (b) a trust solely for the benefit of
members of the individual's Immediate Family; (c) any
partnership whose only partners are members of the
individual's Immediate Family; or (d) any limited liability
corporation or other corporate entity whose only members or
equity owners are members of the individual's Immediate
Family.
For purposes of this Section 6.1, "Immediate Family"
includes, but is not necessarily limited to, a Participant's
parents, grandparents,
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spouse, children, grandchildren, siblings (including half
brothers and sisters), and individuals who are family
members by adoption. Nothing contained in this Section 6.1
shall be construed to require the Committee to give its
approval to any transfer or assignment of any Non-Statutory
Stock Option or portion thereof, and approval to transfer or
assign any Non-Statutory Stock Option or portion thereof
does not mean that such approval will be given with respect
to any other Non-Statutory Stock Option or portion thereof.
The transferee or assignee of any Non-Statutory Stock Option
shall be subject to all of the terms and conditions
applicable to such Non-Statutory Stock Option immediately
prior to the transfer or assignment and shall be subject to
any other conditions prescribed by the Committee with
respect to such Non-Statutory Stock Option.
(iv) SPECIAL RULES FOR INCENTIVE STOCK OPTIONS. Notwithstanding the
foregoing provisions, the following rules shall further apply to
grants of Incentive Stock Options:
(1) If an Employee owns or is treated as owning, for purposes of
Section 422 of the Code, Common Stock representing more than
ten percent (10%) of the total combined voting securities of
the Company at the time the Committee grants the Incentive
Stock Option (a "10% Owner"), the Exercise Price shall not
be less than one hundred and ten percent (110%) of the Fair
Market Value of the Common Stock on the date of grant.
(2) An Incentive Stock Option granted to a 10% Owner shall not
be exercisable more than five (5) years from the date of
grant.
(3) To the extent the aggregate Fair Market Value of shares of
Common Stock with respect to which Incentive Stock Options
are exercisable for the first time by an Employee during any
calendar year, under the Plan or any other stock option plan
of the Company, exceeds $100,000, or such higher value as
may be permitted under Section 422 of the Code, Incentive
Stock Options in excess of the $100,000 limit shall be
treated as Non-Statutory Stock Options. Fair Market Value
shall be determined as of the date of grant for each
Incentive Stock Option.
(4) Each Award Agreement for an Incentive Stock Option shall
require the individual to notify the Committee within ten
(10) days of any disposition of shares of Common Stock under
the circumstances described in Section 421(b) of the Code
(relating to certain disqualifying dispositions).
(5) Incentive Stock Options may only be awarded to an Employee
of the Company or its Affiliates.
(v) OPTION AWARDS TO OUTSIDE DIRECTORS. Subject to the limitations of
Section 5.2(a), Non-Statutory Stock Options to purchase Five
Hundred (500) shares of Common Stock will be granted to each
Outside Director of the Company as of the Effective Date, at an
Exercise
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Price equal to the Fair Market Value of the Common Stock on such
date of grant. Additionally, Non-Statutory Stock Options may be
granted on an annual basis, at a date established by the
Committee, to each Outside Director of the Company for each of
the next nine years, at an Exercise Price equal to the Fair
Market Value of the Common Stock on such date of grant. Such
Options will be first exercisable as of the one year anniversary
of the respective date of grant. Such Options shall continue to
be exercisable for a period of ten years following the date of
grant without regard to the continued services of such Director
as a Director or Director Emeritus. In the event of the
Director's death, such Options may be exercised by the
Beneficiary or the personal representative of his estate or
person or persons to whom his rights under such Option shall have
passed by will or by the laws of descent and distribution.
Options may be granted to newly appointed or elected Outside
Directors within the sole discretion of the Committee. The
Exercise Price per share of such Options granted shall be equal
to the Fair Market Value of the Common Stock at the time such
Options are granted. All outstanding Awards shall become
immediately exercisable in the event of a Change in Control of
the Bank or the Company. Unless otherwise inapplicable, or
inconsistent with the provisions of this paragraph, the Options
to be granted to Outside Directors hereunder shall be subject to
all other provisions of this Plan.
6.2 Award Payouts. Awards may be paid out in the form of cash, Common Stock, or
combinations thereof as the Committee shall determine, and with such
restrictions as it may impose.
6.3 Consideration for Stock Options. The Exercise Price for any Stock Option
granted under this Plan may be paid by means of any lawful consideration as
determined by the Committee, including, without limitation, one or a combination
of the following methods:
(a) cash, check payable to the order of the Company, or electronic funds
transfer;
(b) the delivery of previously owned shares of Common Stock; or
(c) subject to such procedures as the Committee may adopt, pursuant to a
"cashless exercise" with a third party who provides financing for the
purposes of (or who otherwise facilitates) the purchase or exercise of
such Stock Option.
In no event shall any shares newly-issued by the Company be issued for less than
the minimum lawful consideration for such shares or for consideration other than
consideration permitted by applicable state law. In the event that the Committee
allows a Participant to exercise an Option by delivering shares of Common Stock
previously owned by such Participant, any such shares delivered which were
initially acquired by the Participant from the Company (upon exercise of a stock
option or otherwise) must have been owned by the Participant for at least six
months prior to such date of delivery. Shares of Common Stock used to satisfy
the Exercise Price of an Option shall be valued at their Fair Market Value on
the date of exercise. The Company will not be obligated to deliver any shares
unless and until it receives full payment of the Exercise Price and any related
withholding obligations under Section 9.5 have been satisfied, or until any
other conditions applicable to exercise or purchase have been satisfied. No
Shares of Common Stock shall be issued until full payment has been received by
the Company, and no Participant shall have any of the rights of a stockholder of
the Company until shares of Common Stock are issued upon the exercise of such
Stock Options. Unless expressly provided otherwise in the applicable Award
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Agreement, the Committee may at any time within its sole discretion eliminate or
limit a Participant's ability to pay the purchase or Exercise Price of any Award
by any method other than a cash payment to the Company.
6.4 Limitations on Awards.
(a) Vesting of Awards. Except as otherwise provided by the terms of the
Plan or by action of the Committee at the time of the grant of an
Award, Stock Options will be first exercisable at the rate of 100% of
such Award on the one year anniversary of the date of grant during
such periods of service as an Employee, Director or Director Emeritus.
7. EFFECT OF TERMINATION OF SERVICE ON AWARDS.
7.1 General. The Committee shall establish the effect of a termination of
employment or service on the continuation of rights and benefits available under
an Award, and, in so doing, may make distinctions based upon, INTER ALIA, the
recipient of such Award, the cause of termination and the type of the Award.
Notwithstanding the foregoing, the terms of Awards shall be consistent with the
following, as applicable:
(a) Termination of Employment. In the event that any Participant's
employment with the Company shall terminate for any reason, other than
Disability or death, all of any such Participant's Incentive Stock
Options, and all of any such Participant's rights to purchase or
receive shares of Common Stock pursuant thereto, shall automatically
terminate on (A) the earlier of (i) or (ii): (i) the respective
expiration dates of any such Incentive Stock Options, or (ii) the
expiration of not more than three (3) months after the date of such
termination of employment; or (B) at such later date as is determined
by the Committee at the time of the grant of such Award based upon the
Participant's continuing status as a Director or Director Emeritus of
the Bank or the Company, but only if, and to the extent that, the
Participant was entitled to exercise any such Incentive Stock Options
at the date of such termination of employment, and further that such
Award shall thereafter be deemed a Non-Statutory Stock Option.
(b) Disability. In the event that any Participant's employment with the
Company shall terminate as the result of the Disability of such
Participant, such Participant may exercise any Incentive Stock Options
granted to the Participant pursuant to the Plan at any time prior to
the earlier of (i) the respective expiration dates of any such
Incentive Stock Options or (ii) the date which is one (1) year after
the date of such termination of employment, but only if, and to the
extent that, the Participant was entitled to exercise any such
Incentive Stock Options at the date of such termination of employment.
(c) Death. In the event of the death of a Participant, any Incentive Stock
Options granted to such Participant may be exercised by the
Participant's Beneficiary or the person or persons to whom the
Participant's rights under any such Incentive Stock Options pass by
will or by the laws of descent and distribution (including the
Participant's estate during the period of administration) at any time
prior to the earlier of (i) the respective expiration dates of any
such Incentive Stock Options or (ii) the date which is two (2) years
after the date of death of such Participant, but only if, and to the
extent that, the Participant was entitled to exercise any such
Incentive Stock Options at the date of death. For purposes of this
Section 7.1(c), any Incentive Stock Option held by an Participant
shall be considered exercisable at the date of his death if the only
unsatisfied condition
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precedent to the exercisability of such Incentive Stock Option at the
date of death is the passage of a specified period of time. At the
discretion of the Committee, upon exercise of such Options, the
Beneficiary may receive Shares or cash or a combination thereof. If
cash shall be paid in lieu of shares of Common Stock, such cash shall
be equal to the difference between the Fair Market Value of such
Shares and the exercise price of such Options on the exercise date.
7.2 Events Not Deemed Terminations of Employment or Service. Unless Company
policy or the Committee provides otherwise, the employment relationship shall
not be considered terminated in the case of (a) sick leave, (b) military leave,
or (c) any other leave of absence authorized by the Company or the Committee;
provided that, unless reemployment upon the expiration of such leave is
guaranteed by contract or law, such leave is for a period of not more than 90
days. In the case of any Employee on an approved leave of absence, continued
vesting of the Award while on leave may be suspended until the Employee returns
to service, unless the Committee otherwise provides or applicable law otherwise
requires. In no event shall an Award be exercised after the expiration of the
term set forth in the Award Agreement.
7.3 Effect of Change of Affiliate Status. For purposes of this Plan and any
Award, if an entity ceases to be an Affiliate of the Company, a termination of
employment or service shall be deemed to have occurred with respect to each
individual who does not continue as an Employee or Outside Director with another
entity within the Company after giving effect to the Affiliate's change in
status.
8. ADJUSTMENTS; ACCELERATION UPON A CHANGE IN CONTROL.
8.1 Adjustments. Upon any reclassification, recapitalization, stock split
(including a stock split in the form of a stock dividend) or reverse stock split
("stock split"); any merger, combination, consolidation, or other
reorganization; any spin-off, split-up, or similar extraordinary dividend
distribution with respect to the Common Stock (whether in the form of securities
or property); any exchange of Common Stock or other securities of the Company,
or any similar, unusual or extraordinary corporate transaction affecting the
Common Stock; or a sale of all or substantially all the business or assets of
the Company in its entirety; then the Committee shall, in such manner, to such
extent (if any) and at such times as it deems appropriate and equitable under
the circumstances:
(a) proportionately adjust any or all of: (1) the number and type of
shares of Common Stock (or other securities) that thereafter may be
made the subject of Awards (including the specific Share Limits,
maximums and numbers of shares set forth elsewhere in this Plan); (2)
the number, amount and type of shares of Common Stock (or other
securities or property) subject to any or all outstanding Awards; (3)
the grant, purchase, or Exercise Price of any or all outstanding
Awards; (4) the securities, cash or other property deliverable upon
exercise or payment of any outstanding Awards; or (5) the performance
standards applicable to any outstanding Awards; or
(b) make provision for a cash payment or for the assumption, substitution
or exchange of any or all outstanding Awards, based upon the
distribution or consideration payable to holders of the Common Stock.
8.2 The Committee may adopt such valuation methodologies for outstanding Awards
as it deems reasonable in the event of a cash or property settlement and, in the
case of Options, may base such settlement solely upon the excess, if any, of the
per share amount payable upon or in respect of such event over the Exercise
Price or base price of the Award. With respect to any Award of an Incentive
Stock
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Option, the Committee may make an adjustment that causes the Option to
cease to qualify as an Incentive Stock Option without the consent of the
affected Participant.
8.3 Upon any of the events set forth in Section 8.1, the Committee may take such
action prior to such event to the extent that the Committee deems the action
necessary to permit the Participant to realize the benefits intended to be
conveyed with respect to the Awards in the same manner as is or will be
available to stockholders of the Company generally. In the case of any stock
split or reverse stock split, if no action is taken by the Committee, the
proportionate adjustments contemplated by Section 8.1(a) above shall
nevertheless be made.
8.4 Automatic Acceleration of Awards. Unless otherwise determined by the
Committee, upon the death or Disability of an Award recipient or upon a Change
in Control of the Company or the Bank, each Stock Option then outstanding shall
become fully vested and exercisable and remain exercisable for its remaining
term.
8.5 Acceleration of Vesting. The Committee shall at all times have the power to
accelerate the exercise date of Options with respect to previously granted
Awards.
9. MISCELLANEOUS PROVISIONS.
9.1 Compliance with Laws. This Plan, the granting and vesting of Awards under
this Plan, the offer, issuance and delivery of shares of Common Stock, the
acceptance of payment of money under this Plan or under Awards are subject to
compliance with all applicable federal and state laws, rules and regulations
(including, but not limited to, state and federal securities laws) and to such
approvals by any listing, regulatory or governmental authority as may, in the
opinion of counsel for the Company, be necessary or advisable in connection
therewith. The person acquiring any securities under this Plan will, if
requested by the Company, provide such assurances and representations to the
Company as may be deemed necessary or desirable to assure compliance with all
applicable legal and accounting requirements.
9.2 Claims. No person shall have any claim or rights to an Award (or additional
Awards, as the case may be) under this Plan, subject to any express contractual
rights to the contrary (set forth in a document other than this Plan).
9.3 No Employment/Service Contract. Nothing contained in this Plan (or in any
other documents under this Plan or in any Award Agreement) shall confer upon any
Participant any right to continue in the employ or other service of the Company,
constitute any contract or agreement of employment or other service or affect an
Employee's status as an employee-at-will, nor interfere in any way with the
right of the Company to change a Participant's compensation or other benefits,
or terminate his or her employment or other service, with or without cause.
Nothing in this Section 9.3, however, is intended to adversely affect any
express independent right of such Participant under a separate employment or
service contract other than an Award Agreement.
9.4 Plan Not Funded. Awards payable under this Plan shall be payable in shares
of Common Stock or from the general assets of the Company. No Participant,
beneficiary or other person shall have any right, title or interest in any fund
or in any specific asset (including shares of Common Stock, except as expressly
provided otherwise) of the Company by reason of any Award hereunder. Neither the
provisions of this Plan (or of any related documents), nor the creation or
adoption of this Plan, nor any action taken pursuant to the provisions of this
Plan shall create, or be construed to create, a trust of any kind or a fiduciary
relationship between the Company and any Participant, Beneficiary or other
person. To the extent that a Participant, Beneficiary or other person acquires a
right to receive payment pursuant to any
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Award hereunder, such right shall be no greater than the right of any unsecured
general creditor of the Company.
9.5 Tax Withholding. Upon any exercise, vesting, or payment of any Award, the
Company shall have the right, within its sole discretion, to:
(a) require the Participant (or the Participant's personal representative
or Beneficiary, as the case may be) to pay or provide for payment of
at least the minimum amount of any taxes which the Company may be
required to withhold with respect to such Award or payment; or
(b) deduct from any amount otherwise payable in cash to the Participant
(or the Participant's personal representative or Beneficiary, as the
case may be) the minimum amount of any taxes which the Company may be
required to withhold with respect to such cash payment, or
(c) in any case where tax withholding is required in connection with the
delivery of shares of Common Stock under this Plan, the Committee may,
in its sole discretion, pursuant to such rules and subject to such
conditions as the Committee may establish, reduce the number of shares
to be delivered to the Participant by the appropriate number of
shares, valued in a consistent manner at their Fair Market Value as
necessary to satisfy the minimum applicable withholding obligation. In
no event shall the shares withheld exceed the minimum whole number of
shares required for tax withholding under applicable law.
9.6 Effective Date, Termination and Suspension, Amendments.
(a) This Plan is effective upon the later of approval of the Plan by the
Board of Directors of the Company or the vote of approval by the
stockholders of the Company ("Approval Date"). Unless earlier
terminated by the Board, this Plan shall terminate at the close of
business on the day before the tenth anniversary of the Approval Date.
After the termination of this Plan either upon such stated expiration
date or its earlier termination by the Board, no additional Awards may
be granted under this Plan, but previously granted Awards (and the
authority of the Committee with respect thereto, including the
authority to amend such Awards) shall remain outstanding in accordance
with their applicable terms and conditions and the terms and
conditions of this Plan.
(b) Board Authorization. Subject to applicable laws and regulations, the
Board of Directors may, at any time, terminate or, from time to time,
amend, modify or suspend this Plan, in whole or in part; provided,
however, that no such amendment may have the effect of repricing the
Exercise Price of Options. No Awards may be granted during any period
that the Board of Directors suspends this Plan.
(c) Stockholder Approval. Stockholder approval of such Plan shall be
determined by an affirmative vote of a majority of the votes cast on
the matter at a meeting of stockholders of the Company. Any material
amendment to the Plan deemed to require a ratification vote of
stockholders shall be ratified by an affirmative vote of a majority of
the votes cast on the matter at a meeting of stockholders of the
Company.
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(d) Limitations on Amendments to Plan and Awards. No amendment, suspension
or termination of this Plan or change affecting any outstanding Award
shall, without the written consent of the Participant, affect in any
manner materially adverse to the Participant any rights or benefits of
the Participant or obligations of the Company under any Award granted
under this Plan prior to the effective date of such change. Changes,
settlements and other actions contemplated by Section 8 shall not be
deemed to constitute changes or amendments for purposes of this
Section 9.6.
9.7 Governing Law; Compliance with Regulations; Construction; Severability.
(a) This Plan, the Awards, all documents evidencing Awards and all other
related documents shall be governed by, and construed in accordance
with, the laws of the United States and the laws of the Commonwealth
of Pennsylvania to the extent not preempted by Federal law.
(b) Severability. If a court of competent jurisdiction holds any provision
invalid and unenforceable, the remaining provisions of this Plan shall
continue in effect.
(c) Plan Construction; Rule 16b-3. It is the intent of the Company that
the Awards and transactions permitted by Awards be interpreted in a
manner that, in the case of Participants who are or may be subject to
Section 16 of the Exchange Act, qualify, to the maximum extent
compatible with the express terms of the Award, for exemption from
matching liability under Rule 16b-3 promulgated under the Exchange
Act. Notwithstanding the foregoing, the Company shall have no
liability to any Participant for Section 16 consequences of Awards or
events affecting Awards if an Award or event does not so qualify.
(d) Shares of Common Stock shall not be issued with respect to any Award
granted under the Plan unless the issuance and delivery of such shares
shall comply with all relevant provisions of applicable law,
including, without limitation, the Securities Act of 1933, as amended,
the rules and regulations promulgated thereunder, any applicable state
securities laws and the requirements of any stock exchange upon which
the shares may then be listed.
(e) The inability of the Company to obtain any necessary authorizations,
approvals or letters of non-objection from any regulatory body or
authority deemed by the Company's counsel to be necessary to the
lawful issuance and sale of any shares of Common Stock issuable
hereunder shall relieve the Company of any liability with respect to
the non-issuance or sale of such shares.
(f) As a condition to the exercise of any Option or the delivery of shares
in accordance with an Award, the Company may require the person
exercising the Option or receiving delivery of the shares to make such
representations and warranties as may be necessary to assure the
availability of an exemption from the registration requirements of
federal or state securities laws.
(g) Upon the exercise of an Option, the Committee, in its sole and
absolute discretion, may make a cash payment to the Participant, in
whole or in part, in lieu of the delivery of shares of Common Stock.
Such cash payment to be paid in lieu of delivery of Common Stock shall
be equal to the difference between the Fair Market Value of the Common
Stock on the date of the Option exercise and the exercise price per
share of the Option.
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Such cash payment shall be in exchange for the cancellation of such
Option. Such cash payment shall not be made in the event that such
transaction would result in liability to the Participant or the
Company under Section 16(b) of the Exchange Act and regulations
promulgated thereunder, or subject the Participant to additional tax
liabilities related to such cash payments pursuant to Section 409A of
the Code.
9.8 Captions. Captions and headings are given to the sections and subsections of
this Plan solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction or
interpretation of this Plan or any provision thereof.
9.9 Non-Exclusivity of Plan. Nothing in this Plan shall limit or be deemed to
limit the authority of the Board of Directors or the Committee to grant Awards
or authorize any other compensation, with or without reference to the Common
Stock, under any other plan or authority.
9.10 Limitation on Liability. No Director, member of the Committee or the
Trustee shall be liable for any determination made in good faith with respect to
the Plan or any Awards granted thereunder. If a Director or a member of the
Committee is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by any reason of anything done or not done by
him in such capacity under or with respect to the Plan, the Company shall
indemnify such person against expenses (including attorney's fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by him or
her in connection with such action, suit or proceeding if he or she acted in
good faith and in a manner he or she reasonably believed to be in the best
interests of the Company and its Affiliates and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his or her conduct was
unlawful.
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