1993 LONG-TERM STOCK INCENTIVE PLAN
ARTICLE I - GENERAL PROVISIONS
1.1 PURPOSES
The purposes of the 1993 Long-Term Stock Incentive Plan (the "Plan") are to
advance the long-term success of Armstrong World Industries, Inc. (the
"Company"), and to increase shareholder value by providing the incentive of
long-term stock-based rewards to officers, directors and key employees. The Plan
is designed to: (1) encourage stock ownership by Participants to further align
their interest in increasing the value of the Company; and (2) to assist in the
attraction and retention of key employees vital to the Company's success.
1.2 DEFINITIONS
For the purpose of the Plan, the following terms shall have the meanings
indicated:
(a) "Board" means the Board of Directors of the Company.
(b) "Change in Control" means a situation where: (1) any person acquires
beneficial ownership of 28 percent or more of the then outstanding voting
stock of the Company and within five years thereafter disinterested
directors no longer constitute at least a majority of the Board, or (2) a
business combination with an interested shareholder occurs which has not
been approved by a majority of disinterested directors. The terms person,
beneficial ownership, voting stock, disinterested director, business
combination, and interested shareholder are defined in Article 7 of the
Company's Articles of Incorporation.
(c) "Code" means the Internal Revenue Code of 1986, as amended, including any
successor law thereto.
(d) "Company" means Armstrong World Industries, Inc. and solely for purposes of
determining (i) eligibility for participation in the Plan; (ii) employment;
and (iii) the establishment of performance goals, shall include any
corporation, partnership, or other organization of which Armstrong owns or
controls, directly or indirectly, not less than 50 percent of the total
combined voting power of all classes of stock or other equity interests. For
purposes of this Plan, the terms "Armstrong" and "Company" shall include any
successor to Armstrong World Industries, Inc.
(e) "Committee" means the Management Development and Compensation Committee of
the Board or the full Board, as the case may be.
(f) "Common Stock" means the Common Stock of the Company, par value $1.00 per
share.
(g) "Disability" means total and permanent disability within the meaning of
Section 22 (e) (3) of the Code.
(h) "Dividend Equivalent" means an amount equal to the cash dividend paid on one
share of Common Stock for each Performance Restricted Share granted during
the Performance Period. All Dividend Equivalents will be reinvested in
Performance Restricted Shares at a purchase price equal to the Fair Market
Value on the dividend date.
(i) "Employee or employment" means with respect to any Non-Employee Director (as
defined herein), service on the Board.
(j) "Fair Market Value" means the closing price of the Common Stock as reported
on the New York Stock Exchange Composite Transactions reporting system on
the applicable date or, if no sales were made on such date, on the next
preceding date on which sales of the Common Stock were made.
(k) "Incentive Stock Option" means a Stock Option which meets the definition
under Section 422 of the Code.
(l) "Nonstatutory Stock Option" means a Stock Option which does not meet the
definition of an Incentive Stock Option.
(m) "Participant" means any officer, director or key employee who has met the
eligibility requirements set forth in Section 1.6 hereof and to whom a grant
has been made and is outstanding under the Plan.
(n) "Performance Period" means, in relation to Performance Restricted Shares,
any period for which performance goals have been established.
(o) "Performance Restricted Share" means a right granted to a Participant
pursuant to Article IV.
(p) "Restricted Stock Award" means an award of Common Stock granted to a
Participant pursuant to Article V.
(q) "Restriction Period" means (1) in relation to Performance Restricted Shares,
the period of time, beginning at the end of the Performance Period, during
which the Participant shall not be permitted to sell, assign, transfer,
pledge, or otherwise dispose of such shares, and (2) in relation to
Restricted Stock Awards, the period of time during which such shares are
subject to forfeiture pursuant to the Plan.
(r) "Retirement" means termination from employment with the Company after the
Participant has attained age 55 and has completed five years of service with
the Company or termination of employment under circumstances which the
Committee deems equivalent to retirement.
(s) "Stock Appreciation Right" means a right granted to a Participant pursuant
to Article III to surrender to the Company all or any portion of the related
Stock Option and to receive in shares of Common Stock an amount equal to the
excess of the Fair Market Value over the option price on the date of such
exercise.
(t) "Stock Option" means a right, granted to a Participant pursuant to Article
II, to purchase, before a specified date and at a specified price, a
specified number of shares of Common Stock.
(u) "Vesting Period" means the period of time, beginning at the end of the
Performance Period, during which Performance Restricted Shares are subject
to forfeiture pursuant to the Plan.
1.3 ADMINISTRATION
The Plan shall be administered by the Management Development and Compensation
Committee of the Board which shall consist of not less than three directors of
the Company; provided, however, that the Board shall administer the Plan as it
relates to the terms, conditions and grant of awards to Non-Employee Directors.
For purposes of the Plan, the term Committee shall refer to the Management
Development and Compensation Committee of the Board or the full Board, as the
case may be. A majority of the Committee shall constitute a quorum, and the acts
of a majority of the members present at any meeting at which a quorum is
present, or acts approved in writing by a majority of the Committee, shall be
deemed the acts of the Committee. Subject to the provisions of the Plan and to
directions by the Board, the Committee is authorized to interpret the Plan, to
adopt administrative rules, regulations, and guidelines for the Plan, and to
impose such terms, conditions, and restrictions on grants as it deems
appropriate. The Committee, in its discretion, may allow certain optionees
holding unexercised Incentive Stock Options to convert such options to
Nonstatutory Stock Options. The Committee may, with respect to Participants who
are not subject to Section 16 (b) of the Exchange Act, delegate such of its
powers and authority under the Plan as it deems appropriate to designated
officers or employees of the Company.
1.4 TYPES OF GRANTS UNDER THE PLAN
Grants under the Plan may be in the form of any one or more of the following:
(a) Nonstatutory Stock Options
(b) Incentive Stock Options
(c) Stock Appreciation Rights
(d) Performance Restricted Shares
(e) Restricted Stock Awards
1.5 SHARES SUBJECT TO THE PLAN AND INDIVIDUAL AWARD LIMITATION
(a) A maximum of 4,300,000 shares of Common Stock may be issued under the Plan
provided, however, that no more than 430,000 shares may be granted in the
form of Restricted Stock Awards. The total number of shares authorized is
subject to adjustment as provided in Section 7.1 hereof. Shares of Common
Stock issued under the Plan may be treasury shares or authorized but
unissued shares. No fractional shares shall be issued under the Plan.
(b) If any Stock Option granted under the Plan expires or terminates, the
underlying shares of Common Stock may again be made available for the
purposes of the Plan. Any shares of Common Stock that have been granted as
Restricted Stock Awards, or that have been reserved for distribution in
payment for Performance Restricted Shares but are later forfeited or for any
other reason are not payable under the Plan, may again be made available for
the purposes of the Plan.
(c) The aggregate maximum number of shares of Common Stock that may be granted
to any Participant in the form of Stock Options, Stock Appreciation Rights,
Performance Restricted Shares and Restricted Stock Awards in any one
calendar year is 300,000.
1.6 ELIGIBILITY AND PARTICIPATION
Participation in the Plan shall be limited to officers, who may also be
members of the Board, other key employees of the Company and directors who are
not employees of the Company ("Non-Employee Directors").
ARTICLE II - STOCK OPTIONS
2.1 GRANT OF STOCK OPTIONS
The Committee may from time to time, subject to the provisions of the Plan,
grant Stock Options to such Participants. The Committee shall determine the
number of shares of Common Stock to be covered by each Stock Option and shall
have the authority to grant Incentive Stock Options, Nonstatutory Stock Options,
or a combination thereof. Furthermore, the Committee may grant a Stock
Appreciation Right in connection with a Stock Option, as provided in Article
III.
2.2 INCENTIVE STOCK OPTION EXERCISE LIMITATIONS
The aggregate Fair Market Value (determined at the time an Incentive Stock
Option is granted) of the shares of Common Stock with respect to which an
Incentive Stock Option is exercisable for the first time by a Participant during
any calendar year (under all plans of the Company) shall not exceed $100,000 or
such other limit as may be established from time to time under the Code.
2.3 OPTION DOCUMENTATION
Each Stock Option shall be evidenced by a written stock option agreement
between the Company and the Participant to whom such option is granted,
specifying the number of shares of Common Stock that may be acquired by its
exercise and containing such terms and conditions consistent with the Plan as
the Committee shall determine.
2.4 EXERCISE PRICE
The price at which each share covered by a Stock Option may be acquired shall
be determined by the Committee at the time the option is granted and shall not
be less than the Fair Market Value of the underlying shares of Common Stock on
the day the Stock Option is granted. The exercise price will be subject to
adjustment in accordance with the provisions of Section 7.1 of the Plan.
2.5 EXERCISE OF STOCK OPTIONS
(a) Exercisability. Stock Options shall become exercisable at such times and
upon the satisfaction of such conditions and in such installments as the
Committee may provide at the time of grant.
(b) Option Period. For each Stock Option granted, the Committee shall specify
the period during which the Stock Option may be exercised, provided that no
Stock Option shall be exercisable after the expiration of ten years from the
date the option was granted.
(c) Exercise in the Event of Termination of Employment.
(i) Death: Unless otherwise provided by the Committee at the time of grant,
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in the event of death of the Participant, the option must be exercised
by the Participant's estate or beneficiaries prior to its expiration.
Each option may be exercised as to all or any portion thereof regardless
of whether or not fully exercisable under the terms of the grant.
(ii) Disability: Unless otherwise provided by the Committee at the time of
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grant, in the event of the Disability of the Participant, the option
must be exercised prior to its expiration. An unexercised Incentive
Stock Option will cease to be treated as such and will become a
Nonstatutory Stock Option twelve months following the date of
termination due to Disability. Each option may be exercised as to all
or any portion thereof regardless of whether or not fully exercisable
under the terms of the grant.
(iii) Retirement: Unless otherwise provided by the Committee at the time of
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grant, in the event of the Retirement of the Participant the option
must be exercised prior to its expiration. An unexercised Incentive
Stock Option will cease to be treated as such and will become a
Nonstatutory Stock Option three months following the date of
Retirement.
(iv) Other Terminations: Unless otherwise provided by the Committee at the
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time of grant, in the event a Participant ceases to be an employee of
the Company for any reason other than death, Disability, or
Retirement, options which are exercisable on the date of termination
must be exercised within three months after termination. All options
which are not exercisable on the date of termination shall be
cancelled.
(v) Extension of Exercise Period: Notwithstanding all other provisions
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under Section 2.5(c), in the event a Participant's employment is
terminated, the Committee may, in its sole discretion, extend the post
termination period during which the option may be exercised, provided
however that such period may not extend beyond the original option
period.
(d) Exercise in the Event of Change in Control. In the event of any Change in
Control, all Stock Options shall immediately become exercisable without
regard to the exercise period set forth in 2.5(a).
2.6 METHOD OF EXERCISE
The option may be exercised in whole or in part from time to time by written
request received by the Treasurer of the Company. The option price of each share
acquired pursuant to an option shall be paid in full at the time of each
exercise of the option either (1) in cash, or (2) by delivering to the Company
shares of Common Stock or any combination of shares and cash having an aggregate
Fair Market Value equal to the option price of the shares being acquired.
However, shares of Common Stock previously acquired by the Participant under the
Plan or any other incentive plan of the Company shall not be utilized for
purposes of payment upon the exercise of an option unless those shares have been
owned by the Participant for a twelve-month period or such longer period as the
Committee may determine.
ARTICLE III - STOCK APPRECIATION RIGHTS
3.1 GRANT OF STOCK APPRECIATION RIGHTS
The Committee may, in its discretion, grant Stock Appreciation Rights in
connection with all or any part of an option granted under the Plan. Any Stock
Appreciation Right granted in connection with an option shall be governed by the
terms of the Stock Option agreement and the Plan.
3.2 EXERCISE OF STOCK APPRECIATION RIGHTS
Stock Appreciation Rights shall become exercisable under the Stock Option
terms set forth in Section 2.5 but shall be exercisable only when the Fair
Market Value of the shares subject thereto exceeds the option price of the
related option.
3.3 METHOD OF EXERCISE
(a) Stock Appreciation Rights shall permit the Participant, upon exercise of
such rights, to surrender the related option, or any portion thereof, and to
receive, without payment to the Company (except for applicable withholding
taxes), an amount equal to the excess of the Fair Market Value over the
option price. Such amount shall be paid in shares of Common Stock valued at
Fair Market Value on the date of exercise.
(b) Upon the exercise of a Stock Appreciation Right and surrender of the related
option, or portion thereof, such option, to the extent surrendered, shall be
terminated, and the shares covered by the option so surrendered shall no
longer be available for purposes of the Plan.
ARTICLE IV - PERFORMANCE RESTRICTED SHARES
4.1 GRANT OF PERFORMANCE RESTRICTED SHARES
The Committee may from time to time grant Performance Restricted Shares to
Participants under which payment may be made in shares of Common Stock if the
performance of the Company meets certain goals established by the Committee.
Such Performance Restricted Shares shall be subject to the provisions of the
Plan terms and conditions, and, if earned, a Vesting Period and a Restriction
Period as the Committee shall determine.
4.2 PERFORMANCE RESTRICTED SHARE AGREEMENT
Each grant of Performance Restricted Shares shall be evidenced by a written
agreement between the Company and Participant to whom such shares are granted.
The agreement shall specify the number of Performance Restricted Shares granted,
the terms and conditions of the grant, the duration of the Performance Period,
the performance goals to be achieved, and the Vesting Period and the Restriction
Period applicable to shares of Common Stock earned.
4.3 COMMON STOCK EQUIVALENT
Each Performance Restricted Share shall be credited to an account to be
maintained for each such Participant during the Performance Period and shall be
deemed to be the equivalent of one share of Common Stock. At the conclusion of
the Performance Period, Performance Restricted Shares earned, if any, shall be
converted to shares of Common Stock subject to a Vesting Period and a
Restriction Period.
4.4 PERFORMANCE GOALS
Performance Restricted Share awards shall be conditioned upon the Company's
attainment of a specified goal with respect to one or more of the following
performance measures: (i) total shareholder return; (ii) EVA as defined below;
(iii) return on shareholders' equity; (iv) return on capital; (v) earnings per
share; (vi) sales; (vii) earnings; (viii) cash flow; and (ix) operating income.
EVA equals the dollar amount arrived at by taking net operating profit after
taxes and subtracting a charge for the use of the capital needed to generate
that profit. The Committee shall determine a minimum performance level below
which no Performance Restricted Shares shall be payable and a performance
schedule under which the number of shares earned may be less than, equal to, or
greater than the number of Performance Restricted Shares granted based upon the
Company's performance. The Committee may adjust the performance goals and
measurements to reflect significant unforeseen events; provided, however, that
the Committee may not make any such adjustment with respect to any award of
Performance Restricted Shares to an individual who is then a "covered employee"
as such term is defined in Regulation 1.162-27(c)(2) promulgated under Section
162(m) of the Code ("Section 162(m)"), if such adjustment would cause
compensation pursuant to such Performance Restricted Share award to cease to be
performance-based compensation under Section 162(m).
4.5 PERFORMANCE PERIOD
The Committee shall establish a Performance Period applicable to each grant of
Performance Restricted Shares. Each such Performance Period shall commence on
January 1 of the calendar year in which grants are made. There shall be no
limitation on the number of Performance Periods established by the Committee,
and more than one Performance Period may encompass the same calendar year. The
Committee may shorten any Performance Period if it determines that unusual or
unforeseen events so warrant.
4.6 DIVIDEND EQUIVALENTS DURING PERFORMANCE PERIOD
During the Performance Period, a Participant shall be entitled to receive
Dividend Equivalents which shall be deemed to have been reinvested in additional
Performance Restricted Shares at the same time as such underlying Common Stock
cash dividend is paid. Performance Restricted Shares granted through such
reinvestment shall be credited to the Participant's account and shall be payable
to the Participant in the same manner and at the same time as the Performance
Restricted Shares with respect to which such Dividend Equivalents were issued.
4.7 RIGHT TO PAYMENT OF PERFORMANCE RESTRICTED SHARES
(a) At the conclusion of the Performance Period, the Committee shall determine
the number of Performance Restricted Shares, if any, which have been earned
on the basis of Company performance in relation to the established
performance goals. In no event shall such number exceed 300% of the shares
contingently granted.
(b) Performance Restricted Shares earned shall be converted to shares of Common
Stock and shall be represented by a stock certificate registered in the name
of the Participant. Certificates evidencing such shares shall be held in
custody by the Company until the restrictions thereon are no longer in
effect. After the lapse or waiver of the restrictions imposed, the Company
shall deliver in the Participant's name one or more stock certificates, free
of restrictions, evidencing the shares of Common Stock to which the
restrictions have lapsed or been waived.
4.8 VESTING PERIOD
At the time a Performance Restricted Share grant is made, the Committee shall
establish a period of time (the "Vesting Period") applicable to such shares
earned, if any, which shall begin at the end of the Performance Period. During
the Vesting Period, Performance Restricted Shares shall be subject to the risk
of forfeiture. The Committee may provide for the lapse of such restrictions in
installments and may accelerate or waive such restrictions, in whole or in part,
based on service and such other factors as the Committee may determine.
4.9 RESTRICTION PERIOD
At the time a Performance Restricted Share grant is made, the Committee shall
establish a period of time (the "Restriction Period") applicable to such shares
earned, if any, which shall begin at the end of the Performance Period. During
the Restriction Period, the Participant shall not be permitted to sell, assign,
transfer, pledge or otherwise dispose of Performance Restricted Shares that have
been earned. The Committee may provide for the lapse of such restrictions in
installments, in whole or in part, based on service and such other factors as
the Committee may determine.
4.10 OTHER TERMS AND CONDITIONS
Performance Restricted Shares earned and restricted shares received with
respect to such shares shall be subject to the following terms and conditions:
(a) Except as otherwise provided in the Plan or in the Performance Restricted
Share agreement, the Participant shall have all the rights of a shareholder
of the Company, including the right to vote the shares.
(b) Cash dividends paid with respect to Performance Restricted Shares shall be
reinvested to purchase additional shares of Common Stock that shall be
subject to the same terms, conditions, and restrictions that apply to the
Performance Restricted Shares with respect to which such dividends were
issued.
(c) Except as otherwise provided in the Plan or in the Performance Restricted
Share agreement, upon termination of a Participant's employment, all
unvested shares subject to restriction shall be forfeited by the
Participant.
4.11 TERMINATION OF EMPLOYMENT - PROVISIONS DURING A PERFORMANCE PERIOD
(a) In the event a Participant terminates employment during a Performance Period
by reason of death, Disability, or Retirement, the Participant shall be
entitled to the full number of shares earned, if any, as long as the
Participant had completed a minimum of one year of employment during the
Performance Period. If the termination of employment is by reason of death
or Disability, all other restrictions shall lapse and shares of Common Stock
shall be issued to the Participant or the Participant's designated
beneficiary following the Performance Period. If the termination of
employment is by reason of Retirement, any applicable Restriction Period
shall continue in effect, but in no event beyond the end of the three-year
period following the Participant's Retirement. Following the expiration of
such Restriction Period, shares of Common Stock shall be issued to the
Participant. In the event the Participant had not completed one year of
employment during the Performance Period, the Participant shall forfeit all
rights to earn such Performance Restricted Shares.
(b) If a Participant terminates employment for any reason other than death,
Disability, or Retirement, the Participant shall forfeit all rights to earn
such Performance Restricted Shares.
(c) Notwithstanding Sections 4.11(a) and 4.11(b), in the event a Participant's
employment is terminated under special circumstances, the Committee may, in
its sole discretion, continue a Participant's rights to earn any or all
Performance Restricted Shares and waive in whole or in part any or all
remaining restrictions.
4.12 TERMINATION OF EMPLOYMENT - PROVISIONS FOLLOWING A PERFORMANCE PERIOD
(a) In the event a Participant terminates employment following a Performance
Period by reason of death, Disability, or Retirement, all Performance
Restricted Shares earned shall immediately vest. If the termination of
employment is by reason of death or Disability, all other restrictions shall
lapse and shares of Common Stock shall be issued to the Participant or the
Participant's designated beneficiary. If the termination of employment is by
reason of Retirement, any applicable Restriction Period shall continue in
effect, but in no event beyond the end of the three-year period following
the Participant's Retirement. Following the expiration of such Restriction
Period, shares of Common Stock shall be issued to the Participant.
(b) If a Participant terminates employment for any reason other than death,
Disability, or Retirement, the Participant shall forfeit all Performance
Restricted Shares subject to the Vesting Period. Any applicable Restriction
Period shall continue in effect, but in no event beyond the end of the
three-year period following the Participant's date of termination of
employment. Following the expiration of such Restriction Period, shares of
Common Stock shall be issued to the Participant.
(c) Notwithstanding Sections 4.12 (a) and 4.12 (b), in the event a Participant's
employment is terminated under special circumstances, the Committee may, in
its sole discretion, waive in whole or in part any or all remaining
restrictions.
4.13 CHANGE IN CONTROL PROVISIONS
In the event of any Change in Control, all Performance Restricted Shares
earned shall immediately vest and restrictions shall lapse on all shares subject
to restrictions as of the date of such Change in Control. Further, all
Performance Restricted Shares granted, including those granted pursuant to
Dividend Equivalents, shall be deemed to have been earned to the maximum extent
permitted pursuant to Section 4.4 for any Performance Period not yet completed
as of the effective date of such Change in Control.
ARTICLE V - RESTRICTED STOCK AWARDS
5.1 AWARD OF RESTRICTED STOCK
The Committee may authorize awards of Common Stock to officers and key
employees subject to terms, conditions, and a Restriction Period as the
Committee shall determine. Restricted Stock Awards shall be used for the
purposes of recruitment, recognition, and retention of key employees vital to
the Company's success.
5.2 RESTRICTED STOCK AWARD AGREEMENT
Each Restricted Stock Award shall be evidenced by a written agreement between
the Company and the Participant to whom such award is granted. The agreement
shall specify the number of shares awarded, the terms and conditions of the
award, the Restriction Period, the rights of the Participant, and the
consequences of forfeiture consistent with the Plan as the Committee shall
determine.
5.3 AWARDS AND CERTIFICATES
Shares of Common Stock awarded pursuant to a Restricted Stock Award shall be
registered in the name of the Participant. Certificates evidencing such shares
shall be held in custody by the Company until the restrictions thereon are no
longer in effect. After the lapse or waiver of the restrictions imposed, the
Company shall deliver in the Participant's name one or more stock certificates,
free of restrictions, evidencing the shares of Common Stock to which the
restrictions have lapsed or been waived.
5.4 RESTRICTION PERIOD
At the time a Restricted Stock Award is made, the Committee shall establish a
period of time (the "Restriction Period") applicable to such award during which
the shares of restricted stock are subject to the risk of forfeiture and the
Participant shall not be permitted to sell, assign, transfer, pledge, or
otherwise dispose of such shares. The Committee may provide for the lapse of
such restrictions in installments and may accelerate or waive such restrictions,
in whole or in part, based on service and such other factors as the Committee
may determine.
5.5 OTHER TERMS AND CONDITIONS
Shares of restricted stock awarded and restricted shares received with respect
to such shares shall be subject to the following terms and conditions:
(a) Except as otherwise provided in the Plan or in the Restricted Stock Award
agreement, the Participant shall have all the rights of a shareholder of the
Company, including the right to vote the shares.
(b) Cash dividends paid with respect to restricted shares shall be reinvested to
purchase additional shares of Common Stock that shall be subject to the same
terms, conditions, and restrictions that apply to the Restricted Stock Award
with respect to which such dividends were issued.
(c) Except as otherwise provided in the Plan or in the Restricted Stock Award
agreement, upon termination of a Participant's employment, all shares
subject to restriction shall be forfeited by the Participant.
5.6 TERMINATION OF EMPLOYMENT
(a) In the event a Participant terminates employment during the Restriction
Period by reason of death or Disability, restrictions shall lapse on all
shares subject to restriction at the time of such termination.
(b) In the event a Participant terminates employment during the Restriction
Period by reason of Retirement, restrictions shall lapse on a proportion of
any shares subject to restriction at the time of such Retirement. Any
applicable Restriction Period shall continue in effect, but in no event
beyond the end of the three-year period following the Participant's
Retirement. The number of shares upon which the restrictions shall lapse
shall be prorated for the number of months of employment during the
Restriction Period prior to the Participant's termination of employment.
(c) If a Participant terminates employment for any reason other than death,
Disability, or Retirement, the Participant shall forfeit all shares subject
to restriction.
(d) Notwithstanding Sections 5.6 (a), 5.6 (b) and 5.6 (c), in the event a
Participant's employment is terminated under special circumstances, the
Committee may, in its sole discretion, waive in whole or in part any or all
remaining restrictions.
5.7 CHANGE IN CONTROL PROVISIONS
In the event of any Change in Control, restrictions shall lapse on all shares
subject to restrictions as of the date of such Change in Control.
ARTICLE VI - SHARE TAX WITHHOLDING AND DEFERRAL OF PAYMENT
6.1 SHARE TAX WITHHOLDING
(a) At the discretion of the Committee, share tax withholding may be included as
a term of any grant of Stock Options, Stock Appreciation Rights, Performance
Restricted Shares, and Restricted Stock Award.
(b) Share tax withholding shall entitle the Participant to elect to satisfy, in
whole or in part, any tax withholding obligations in connection with the
issuance of shares of Common Stock earned under the Plan by requesting that
the Company either:
(i) withhold shares of Common Stock otherwise issuable to the Participant,
or
(ii) by accepting delivery of shares of Common Stock previously owned by
the Participant.
In either case, the Fair Market Value of such shares of Common Stock will
generally be determined on the date of exercise for Stock Options and Stock
Appreciation Rights and on the date following the Restriction Period for
Performance Restricted Shares and Restricted Stock Awards. Notwithstanding the
foregoing, in the case of a Participant subject to the reporting requirements of
Section 16(a) of the Exchange Act, no such election shall be effective unless
made in compliance with any applicable requirements of Rule 16b-3(e) or any
successor Rule under the Exchange Act.
(c) Shares of Common Stock previously acquired by the Participant under the Plan
or any other incentive plan of the Company shall not be utilized for
satisfaction of any withholding obligation unless those shares have been
owned by the Participant for a twelve-month period or such longer period as
the Committee may determine.
(d) Notwithstanding any other provision hereof to the contrary, the Committee,
in its sole discretion may at any time suspend, terminate, or disallow any
or all entitlements to share tax withholding previously granted or extended
to any Participant.
6.2 DEFERRAL OF PAYMENT
At the discretion of the Committee, a Participant may be offered the right to
defer the receipt of all or any portion of Performance Restricted Shares or
Restricted Stock Awards otherwise distributable to such Participant. Such right
shall be exercised by execution of a written agreement by the Participant (1),
with respect to Restricted Stock Awards, prior to the expiration of the
applicable Restriction Period and (2), with respect to Performance Restricted
Shares, prior to the expiration of the applicable Vesting Period. Upon any such
deferral, the number of shares of Common Stock subject to the deferral shall
remain in the custody of the Company. Cash dividends paid with respect to these
shares shall be reinvested to purchase additional shares of Common Stock that
shall be subject to the same deferral provisions. All other terms and conditions
of deferred payments shall be as contained in said written agreement.
ARTICLE VII - OTHER PROVISIONS
7.1 ADJUSTMENT IN NUMBER OF SHARES AND OPTION PRICES
Grants of Stock Options, Stock Appreciation Rights, Performance Restricted
Shares, and Restricted Stock Awards shall be subject to adjustment by the
Committee as to the number and price of shares of Common Stock or other
considerations subject to such grants in the event of changes in the outstanding
shares by reason of stock dividends, stock splits, recapitalizations,
reorganizations, mergers, consolidations, combinations, exchanges, or other
relevant changes in capitalization occurring after the date of grant. In the
event of any such change in the outstanding shares, the aggregate number of
shares available under the Plan may be appropriately adjusted by the Committee.
7.2 NO RIGHT TO EMPLOYMENT
Nothing contained in the Plan, nor in any grant pursuant to the Plan, shall
confer upon any Participant any right with respect to continuance of employment
by the Company or its subsidiaries, nor interfere in any way with the right of
the Company or its subsidiaries to terminate the employment or change the
compensation of any employee at any time.
7.3 NONTRANSFERABILITY
A Participant's rights under the Plan, including the right to any shares or
amounts payable, may not be assigned, pledged, or otherwise transferred except,
in the event of a Participant's death, to the Participant's designated
beneficiary or, in the absence of such a designation, by will or by the laws of
descent and distribution; provided, however, that the Committee may, in its
discretion, at the time of grant of a Nonstatutory Stock Option or by amendment
of an option agreement for an Incentive Stock Option or a Nonstatutory Stock
Option, provide that Stock Options granted to or held by a Participant may be
transferred, in whole or in part, to one or more transferees and exercised by
any such transferee, provided further that (i) any such transfer must be without
consideration, (ii) each transferee must be a member of such Participant's
"immediate family" or a trust established for the exclusive benefit of one or
more members of the Participant's immediate family; and (iii) such transfer is
specifically approved by the Committee following the receipt of a written
request for approval of the transfer (no approval shall be required for
Non-Employee Director transfers); and provided further that any Incentive Stock
Option which is amended to permit transfers during the lifetime of the
Participant shall, upon the effectiveness of such amendment, be treated
thereafter as a Nonstatutory Stock Option. In the event a Stock Option is
transferred as contemplated in this Section, such transfer shall become
effective when approved by the Committee and such Stock Option may not be
subsequently transferred by the transferee other than by will or the laws of
descent and distribution. Any transferred Stock Option shall continue to be
governed by and subject to the terms and conditions of this Plan and the
relevant option agreement, and the transferee shall be entitled to the same
rights as the Participant as if no transfer had taken place. As used in this
Section, "immediate family" shall mean, with respect to any person, any spouse,
child, stepchild or grandchild, and shall include relationships arising from
legal adoption.
7.4 COMPLIANCE WITH GOVERNMENT REGULATIONS
(a) The Company shall not be required to issue or deliver shares or make payment
upon any right granted under the Plan prior to complying with the
requirements of any governmental authority in connection with the
authorization, issuance, or sale of such shares.
(b) The Plan shall be construed and its provisions enforced and administered in
accordance with the laws of the Commonwealth of Pennsylvania applicable to
contracts entered into and performed entirely in such State.
7.5 RIGHTS AS A SHAREHOLDER
The recipient of any grant under the Plan shall have no rights as a
shareholder with respect thereto unless and until certificates for shares of
Common Stock are issued to such recipient.
7.6 UNFUNDED PLAN
Unless otherwise determined by the Committee, the Plan shall be unfunded and
shall not create (or be construed to create) a trust or separate funds. With
respect to any payment not yet made to a Participant, nothing contained herein
shall give any Participant any rights that are greater than those of a general
creditor of the Company.
7.7 FOREIGN JURISDICTION
The Committee shall have the authority to adopt, amend, or terminate such
arrangements, not inconsistent with the intent of the Plan, as it may deem
necessary or desirable to make available tax or other benefits of the laws of
foreign countries in order to promote achievement of the purposes of the Plan.
7.8 OTHER COMPENSATION PLANS
Nothing contained in this Plan shall prevent the Company from adopting other
or additional compensation arrangements, subject to shareholder approval if such
approval is required.
7.9 TERMINATION OF EMPLOYMENT - CERTAIN FORFEITURES
Notwithstanding any other provision of the Plan (other than provisions
regarding Change in Control, including without limitation Sections 2.5, 4.13 and
5.7 which shall apply in all events) and except for Performance Restricted
Shares or Restricted Stock Awards which would otherwise be free of restrictions
and the receipt of which has been deferred pursuant to Section 6.2, a
Participant shall have no right to exercise any Stock Option or Stock
Appreciation Right or receive payment of any Performance Restricted Share or
Restricted Stock Award if: (1) the Participant is discharged for willful,
deliberate, or gross misconduct as determined by the Committee in its sole
discretion or (2) if following the Participant's termination of employment with
the Company, and within a period of three years thereafter, the Participant
engages in any business or enters into any employment which the Committee in its
sole discretion determines to be (a) directly or indirectly competitive with the
business of the Company or (b) substantially injurious to the Company's
financial interest. A Participant may request the Committee in writing to
determine whether any proposed business or employment activity would justify
such a forfeiture. Such a request shall fully describe the proposed activity and
the Committee's determination shall be limited to the specific activity so
described.
ARTICLE VIII - AMENDMENT AND TERMINATION
8.1 AMENDMENT AND TERMINATION
The Board of Directors may modify, amend, or terminate the Plan at any time
except that, to the extent then required by applicable law, rule, or regulation,
approval of the holders of a majority of shares of Common Stock represented in
person or by proxy at a meeting of the shareholders will be required to increase
the maximum number of shares of Common Stock available for distribution under
the Plan (other than increases due to adjustments in accordance with the Plan).
No modification, amendment, or termination of the Plan shall adversely affect
the rights of a Participant under a grant previously made to him without the
consent of such Participant.
ARTICLE IX - EFFECTIVE DATE AND DURATION OF PLAN
9.1 EFFECTIVE DATE AND DURATION OF PLAN
The Plan shall become effective immediately upon the approval and adoption
thereof at the Annual Meeting of the shareholders on April 26, 1993. All rights
granted under the Plan must be granted within ten years from its adoption date
by the shareholders of the Company. Any rights outstanding ten years after the
adoption of the Plan may be exercised within the periods prescribed under or
pursuant to the Plan.