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Exhibit 10.27
Tollgrade Communications, Inc.
1998 Employee Incentive Compensation Plan
ARTICLE 1. ESTABLISHMENT, OBJECTIVES AND DURATION.
1.1 ESTABLISHMENT OF THE PLAN. Tollgrade Communications, Inc., a
Pennsylvania corporation (hereinafter referred to as the "Company"),
hereby establishes an incentive compensation plan for all employees
excluding officers and directors of the Company, to be known as the
"Tollgrade Communications, Inc. 1998 Employee Incentive Compensation
Plan" (hereinafter referred to as the "Plan"), as set forth in this
document. The Plan permits the grant of Nonqualified Stock Options,
Stock Appreciation Rights, Restricted Stock, Performance Shares and
Performance Units. The Plan shall be effective as of January 29, 1998
(the "Effective Date") and shall remain in effect as provided in
SECTION 1.3 hereof.
1.2 OBJECTIVES OF THE PLAN. The objectives of the Plan are to optimize the
profitability and growth of the Company through incentives which are
consistent with the Company's goals and which link the personal
interests of Employees to those of the Company's stockholders; to
provide Employees with an incentive for excellence in individual
performance; and to promote teamwork among Employees. The Plan is
further intended to provide flexibility to the Company in its ability
to motivate, attract, and retain the services of Employees who make
significant contributions to the Company's success and allow Employees
to share in the success of the Company.
1.3 DURATION OF THE PLAN. The Plan was adopted by the Board of Directors on
January 29, 1998, and shall commence on the Effective Date, as
described in SECTION 1.1 hereof, and shall remain in effect, subject to
the right of the Board of Directors to amend or terminate the Plan at
any time pursuant to ARTICLE 14 hereof, until all Shares subject to it
shall have been purchased or acquired according to the Plan's
provisions. However, in no event shall an Award be granted under the
Plan on or after January 29, 2008.
ARTICLE 2. DEFINITIONS
Whenever used in the Plan, the following terms shall have the meanings set forth
below, and when the meaning is intended, the initial letter of the word shall be
capitalized:
2.1 "AWARD" means, individually or collectively, a grant under this Plan of
Nonqualified Stock Options, Stock Appreciation Rights, Restricted
Stock, Performance Shares or Performance Units.
2.2 "AWARD AGREEMENT" means an agreement entered into by the Company and
each Employee setting forth the terms and provisions applicable to
Awards granted under this Plan.
2.3 "BENEFICIAL OWNER" OR "BENEFICIAL OWNERSHIP" shall have the meaning
ascribed to such term in Rule 13d-3 of the General Rules and
Regulations under the Exchange Act.
2.4 "BOARD" OR "BOARD OF DIRECTORS" means the Board of Directors of the
Company.
2.5 "CHANGE IN CONTROL" of the Company shall be deemed to have occurred (as
of a particular day, as specified by the Board) if the Board, by a
majority vote, agrees that a Change in Control has occurred, or is
about to occur. Such a change shall not include, however, a
restructuring, reorganization, merger or other change in capitalization
in which the Persons who own an interest in the Company on the
Effective Date (the "Current Owners") (or any individual or entity
which received from a Current Owner an interest in the Company through
will or the laws of descent and distribution) maintain more than a
fifty percent (50%) interest in the resultant entity.
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Regardless of the Board's vote, a Change in Control will be deemed to
have occurred as of the first day any one (1) or more of the following
paragraphs shall have been satisfied:
(a) Any Person (other than the Person in control of the Company as
of the Effective Date of the Plan, or other than a trustee or
other fiduciary holding securities under an employee benefit
plan of the Company, or a corporation owned directly or
indirectly by the stockholders of the Company in substantially
the same proportions as their ownership of stock in the
Company), becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing more
than fifty percent (50%) of the combined voting power of the
Company"s then outstanding securities; or
(b) The stockholders of the Company approve:
(i) A plan of complete liquidation of the Company; or
(ii) An agreement for the sale or disposition of all or
substantially all of the Company"s assets (other than
one in which the stockholders of the Company, as
determined immediately prior to such transaction,
hold, directly or indirectly, as determined
immediately following such transaction, a majority of
the voting power of each surviving, resulting or
acquiring corporation which, immediately following
such transaction, holds more than 10% of the
consolidated assets of the Company immediately prior
to the transaction); or
(iii) A merger, consolidation, or reorganization of the
Company with or involving any other corporation,
other than a merger, consolidation, or reorganization
that would result in the voting securities of the
Company outstanding immediately prior thereto
continuing to represent (either by remaining
outstanding or by being converted into voting
securities of the surviving entity) at least fifty
percent (50%) of the combined voting power of the
voting securities of the Company (or such surviving
entity) outstanding immediately after such merger,
consolidation or reorganization.
However, in no event shall a Change in Control be deemed to have
occurred, with respect to a Employee, if that Employee is part of a
purchasing group which consummates the Change in Control transaction.
The Employee shall be deemed "part of a purchasing group" for purposes
of the preceding sentence if the Employee is an equity participant or
has agreed to become an equity participant in the purchasing company or
group (except for (i) passive ownership of less than five percent (5%)
of the voting equity securities of the purchasing company; or (ii)
ownership of equity participation in the purchasing company or group
which is otherwise deemed not to be significant, as determined prior to
the Change in Control by a majority of the nonemployee continuing
Directors).
2.6 "CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
2.7 "COMMITTEE" means the Compensation Committee of the Board, as specified
in ARTICLE 3 herein, or such other Committee appointed by the Board to
administer the Plan with respect to grants of Awards.
2.8 "COMPANY" means Tollgrade Communications, Inc., a Pennsylvania
corporation, any successor thereto as provided in ARTICLE 17 herein.
2.9 "DIRECTOR" means any individual who is a member of the Board of
Directors of the Company.
2.10 "EFFECTIVE DATE" shall have the meaning ascribed to such term in
SECTION 1.1 hereof.
2.11 "EMPLOYEE" means any full-time active employee of the Company who is
not an Officer, as defined in SECTION 2.17 hereof. Directors shall not
be considered employees under the Plan.
2.12 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor act thereto.
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2.13 "FAIR MARKET VALUE" shall be the mean between the following prices, as
applicable, for the date as of which fair market value is to be
determined as quoted in The Wall Street Journal (or in such other
reliable publication as the Committee, in its discretion, may determine
to rely upon): (i) if the Common Stock is listed on the New York Stock
Exchange, the highest and lowest sales prices per share of the Common
Stock as quoted in the NYSE Composite Transactions listing for such
date, (ii) if the Common Stock is not listed on such exchange, the
highest and lowest sales prices per share of Common Stock for such date
on (or on any composite index including) the principal united States
securities exchange registered under the 1934 Act on which the Common
Stock is listed or (iii) if the Common Stock is not listed on such
exchange, the highest and lowest sales prices per share of the Common
Stock for such date on the National Association of Securities Dealers
Automated Quotations System or any successor system then in use
("NASDAQ"). If there are no such sale price quotations for the date as
of which fair market value is to be determined but there are such sale
price quotations within a reasonable period both before and after such
date, then fair market value shall be determined by taking a weighted
average of the means between the highest and lowest sales prices per
share of the Common Stock as so quoted on the nearest date before and
the nearest date after the date as of which fair market value is to be
determined. The average should be weighted inversely by the respective
number of trading days between the selling dates and the date as of
which fair market value is to be determined. If there are no such sale
prices quotations on or within a reasonable period both before and
after the date as of which fair market value is to be determined, then
fair market value of the Common Stock shall be the mean between the
bona fide bid and asked prices per share of Common Stock as so quoted
for such date on NASDAQ, or if none, the weighted average of the means
between such bona fide bid and asked prices on the nearest trading date
before and the nearest trading date after the date as of which fair
market value is to be determined, if both such dates are within a
reasonable period. The average is to be determined in the manner
described above in this SECTION 2.13. If the fair market value of the
Common Stock cannot be determined on any basis previously set forth in
this SECTION 2.13 for the date as of which fair market value is to be
determined, the Committee shall in good faith determine the fair market
value of the Common Stock on such date. Fair market value shall be
determined without regard to any restriction other than a restriction
which, by its terms, will never lapse.
2.14 "FREESTANDING SAR" means an SAR that is granted independently of any
Options, as described in ARTICLE 7 herein.
2.15 "INSIDER" shall mean an individual who, immediately prior to the grant
of any Award, owns stock possessing more than ten percent (10%) of the
total combined voting power of all classes of stock for the Company.
For purposes of this SECTION 2.15, an individual (i) shall be
considered as owning not only Shares of Stock owned individually but
also all Shares of stock that are at the time owned, directly or
indirectly, by or for the spouse, ancestors, lineal descendants and
bothers and sisters (whether by whole or half blood) of such individual
and (ii) shall be considered as owning proportionately any Shares
owned, directly or indirectly, by or for any corporation, partnership,
estate or trust in which such individual is a stockholder, partner or
beneficiary.
2.16 "NONQUALIFIED STOCK OPTION" OR "NQSO" means an option to purchase
Shares granted under ARTICLE 6 herein and which is not intended to meet
the requirements of Code Section 422.
2.17 "OFFICER" means any person serving as an officer on behalf of the
Company, as defined in the Company"s bylaws and by requirements of
Pennsylvania corporate law, and by the requirements of the rules of the
National Association of Securities Dealers, Inc.
2.18 "OPTION" means a Nonqualified Stock Option, as described in ARTICLE 6
herein.
2.19 "OPTION PRICE" means the price at which a Share may be purchased by a
Employee pursuant to an Option.
2.20 "PERFORMANCE-BASED EXCEPTION" means the performance-based exception
from the tax deductibility limitations of Code Section 162(m).
2.21 "PERFORMANCE SHARE" means an Award granted to an Employee, as described
in ARTICLE 9 herein.
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2.22 "PERFORMANCE UNIT" means an award granted to an Employee, as described
in ARTICLE 9 herein.
2.23 "PERIOD OF RESTRICTION" means the period during which the transfer of
Shares of Restricted Stock is limited in some way (based upon the
passage of time, the achievement of performance goals, or upon the
occurrence of other events as determined by the Committee, at its
discretion), and the Shares are subject to a substantial risk of
forfeiture, as provided in ARTICLE 8 herein.
2.24 "PERSON" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
thereof, including a "group" as defined in Section 13(d) thereof.
2.25 "RESTRICTED STOCK" means an award granted to an Employee pursuant to
ARTICLE 8 herein.
2.26 "RETIREMENT" shall mean any voluntary termination of employment by an
Employee following the attainment of age 65.
2.27 "SHARES" means the shares of Common Stock of the Company.
2.28 "STOCK APPRECIATION RIGHT" OR "SAR" means an Award, granted alone or in
connection with a related Option, designated as an SAR, pursuant to the
terms of ARTICLE 7 herein.
2.29 "TANDEM SAR" means an SAR that is granted in connection with a related
Option pursuant to ARTICLE 7 herein, the exercise of which shall
require forfeiture of the right to purchase a Share under the related
Option (and when a Share is purchased under the Option, the Tandem SAR
shall similarly be canceled).
ARTICLE 3. ADMINISTRATION
3.1 THE COMMITTEE. Except as set forth in SECTION 3.5 below, the Plan shall
be administered by the Compensation Committee of the Board, or by any
other Committee appointed by the Board consisting of not less than two
(2) Directors who (i) are "non-employee" directors and otherwise meet
the "disinterested administration" rules of Rule 16b-3 under the
Exchange Act and (ii) are "outside directors" under Section
162(m)(4)(C) of the Code, or any successor provision. The members of
the Committee shall be appointed from time to time by, and shall serve
at the discretion of, the Board of Directors.
3.2 AUTHORITY OF THE COMMITTEE. Except as set forth in SECTION 3.4 below,
except as limited by law or by the Articles of Incorporation or Bylaws
of the Company, and subject to the provisions herein, the Committee
shall have full power to grant Options (with or without SARs) and to
award Restricted Stock, Performance Shares and Performance Units as
described herein and to determine the Employees to whom any such award
shall be made and the number of Shares to be covered thereby; determine
the sizes and types of Awards; determine terms and conditions of Awards
in a manner consistent with the Plan; construe and interpret the Plan
and any agreement or instrument entered into under the Plan as they
apply to Employees; and (subject to the provisions of ARTICLE 14
herein) amend the terms and conditions of any outstanding Award to the
extent such terms and conditions are within the discretion of the
Committee as provided in the Plan. Further, the Committee shall make
all other determinations which may be necessary or advisable for the
administration of the Plan, as the Plan applies to Employees. As
permitted by law the Committee may delegate its authority as identified
herein.
3.3 DECISIONS BINDING. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan and all related orders
and resolutions of the Board shall be final, conclusive and binding on
all persons, including the Company, its stockholders, Employees, and
their estates and beneficiaries.
3.4 NON-COMPETITION. If a grantee of an Option, Restricted Stock,
Performance Units or Performance Shares (i) engages in the operation or
management of a business (whether as owner, partner, officer, director,
employee or otherwise and whether during or after employment) which is
in competition with the Company, (ii) induces or attempts to induce any
customer, supplier, licensee or other individual, corporation or other
business organization having a
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business relationship with the Company to cease doing business with the
Company or any in any way interferes with the relationship between any
such customer, supplier, licensee or other person and the Company or
(iii) solicits any employee of the Company to leave the employment
thereof or in any way interferes with the relationship of such employee
with the Company, the Committee, in its discretion, may immediately
terminate all outstanding Options held by the grantee, declare
forfeited all Restricted Stock held by the grantee as to which the
restrictions have not yet lapsed and/or immediately cancel any award of
Performance Units or Performance Shares. Whether a grantee has engaged
in any of the activities referred to in the preceding sentence which
would cause the outstanding Options to be terminated, and/or the
Restricted Stock to be forfeited and/or any award of Performance Units
or Performance Shares to be canceled shall be determined, in its
discretion, by the Committee, and any such determination by the
Committee shall be final and binding.
ARTICLE 4. SHARES SUBJECT TO THE PLAN
4.1 NUMBER OF SHARES AVAILABLE FOR GRANTS. Subject to adjustment as
provided in SECTION 4.3 herein, the number of Shares hereby reserved
for issuance to Employees under the Plan shall be 100,000; provided
that, of that total, the maximum number of Shares of Restricted Stock
granted pursuant to ARTICLE 8 herein, shall be 50,000.
4.2 LAPSED AWARDS. If any Award granted under this Plan is canceled,
terminates, expires or lapses for any reason (with the exception of
termination of a Tandem SAR upon exercise of the related Option, or the
termination of a related Option upon exercise of the corresponding
Tandem SAR), any Shares subject to such Award shall again be available
for the grant of an Award under the Plan.
4.3 ADJUSTMENTS IN AUTHORIZED SHARES. In the event of any change in
corporate capitalization, such as a stock split, or a corporate
transaction, such as any merger, consolidation, separation, including a
spin-off, or other distribution of stock or property of the Company,
any reorganization (whether or nor such reorganization comes within the
definition of such term in Code Section 368) or any partial or complete
liquidation of the Company, such adjustment shall be made in the number
and class of Shares which may be delivered under SECTION 4.1 and in the
number and class of and/or price of Shares subject to outstanding
Awards granted under the Plan, and in the number and class of and/or
price of Shares subject to outstanding Awards granted under the Plan,
as may be determined to be appropriate and equitable by the Committee,
in its sole discretion, to prevent dilution or enlargement of rights;
provided, however, that the number of Shares subject to any Award shall
always be a whole number.
ARTICLE 5. ELIGIBILITY AND PARTICIPATION
5.1 ELIGIBILITY. Persons eligible to participate in this Plan shall include
all Employees of the Company, excluding Officers and Directors.
5.2 ACTUAL PARTICIPATION. Subject to the provisions of the Plan, the
Committee may, from time to time, select from all eligible Employees
those to whom Awards shall be granted and shall determine the nature
and amount of each Award.
ARTICLE 6. STOCK OPTIONS
6.1 GRANT OF OPTIONS. Subject to the terms and provisions of the Plan, the
Committee may grant Nonqualified Stock Options in such number, and upon
such terms, and at any time and from time to time as shall be
determined by the Committee.
6.2 AWARD AGREEMENT. Each Option shall be evidenced by an Award Agreement
that shall specify the Option Price, the duration of the Option, the
number of Shares to which the Option pertains, and such other
provisions as the Committee shall determine.
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6.3 OPTION PRICE. The Option Price at which each Option may be exercised
shall be no less than one hundred percent (100%) of the fair market
value per share of the Common Stock covered by the Option on the date
of grant. For purposes of this SECTION 6.3, the fair market value of
the Common Stock shall be as determined in SECTION 2.14.
6.4 DURATION OF OPTIONS. Each Option granted to an Employee shall expire at
such time as the Committee shall determine at the time of grant;
provided, however, that no Option shall be exercisable after the
expiration of ten years from the date of grant.
6.5 EXERCISE OF OPTIONS. Options granted under this Article 6 shall be
exercisable at such times and be subject to such restrictions and
conditions as the Committee shall in each instance approve, which need
not be the same for each grant or for each Employee.
6.6 PAYMENT. Options granted under this Article 6 shall be exercised by the
delivery of a written notice of exercise to the Company, setting forth
the number of Shares with respect to which the Option is to be
exercised, accompanied by full payment for the Shares.
The Option Price upon exercise of the Option shall be payable to the
Company in full either: (a) in cash in United States Dollars (including
check, bank draft or money order), or (b) by tendering previously
acquired Shares having an aggregate Fair Market Value at the time of
exercise equal to the total Option Price, or (c) by a combination of
(a) and (b).
The Company will also cooperate with any person exercising an Option
who participates in a cashless exercise program of a broker or other
agent under which all or part of the Shares received upon exercise of
the Option are sold through the broker or other agent or under which
the broker or other agent makes a loan to such person. Notwithstanding
the foregoing, unless the Committee, in its discretion, shall otherwise
determine at the time of grant the exercise of the Option shall not be
deemed to occur and no Shares of Common Stock will be issued by the
Company upon exercise of the Option until the Company has received
payment of the Option Price in full.
6.7 RESTRICTIONS ON SHARE TRANSFERABILITY. The Committee may impose
restrictions on any Shares acquired pursuant to the exercise of an
Option granted under this ARTICLE 6 as it may deem advisable,
including, without limitation, restrictions under applicable Federal
securities laws, under the requirements of any stock exchange or market
upon which such Shares are then listed and/or traded, and under any
blue sky or other state securities laws applicable to such Shares.
6.8 TERMINATION OF EMPLOYMENT. Unless the Committee, in its discretion,
shall otherwise determine:
(i) If the employment of an Employee who is not disabled within the
meaning of Section 422(c)(6) of the Code (a "Disabled Grantee") is
voluntarily terminated with the consent of the Company or an Employee
retires under any retirement plan of the Company, any Option held by
such Employee shall be exercisable by the Employee (but only to the
extent exercisable by the Employee immediately prior to the termination
of employment) at any time prior to the expiration date of such Option
or within one year after the date of termination, whichever is the
shorter period;
(ii) If the employment of an Employee who is a Disabled Grantee is
voluntarily terminated with the consent of the Company, any outstanding
Option held by such Employee shall be exercisable by the Employee in
full (whether or not so exercisable by the Employee immediately prior
to the termination of employment) at any time prior to the expiration
date of such Option or within one year after the date of termination of
employment, whichever is the shorter period;
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(iii) Following the death of an Employee during employment, any
outstanding Option held by the Employee at the time of death shall be
exercisable in full (whether or not so exercisable by the Employee
immediately prior to the death of the Employee) by the person entitled
to do so under the Will of the Employee, or, if the Employee shall fail
to make testamentary disposition of the stock option or shall die
intestate, by the legal representative of the Employee at any time
prior to the expiration date of such stock option or within one year
after the date of death of the Employee, whichever is the shorter
period;
(iv) Following the death of an Employee after termination of employment
during the period when an Option is exercisable, the Option shall be
exercisable by such person entitled to do so under the Will of the
Employee by such legal representative (but only to the extent
exercisable by the Employee immediately prior to the termination of
employment) at any time prior to the expiration date of such Option or
within one year after the date of death, whichever is the shorter
period;
(v) Unless the exercise period of a stock option following termination
of employment has been extended as provided in SECTION 13.1, if the
employment of an Employee terminates for any reason other than
voluntary termination with the consent of the Company, retirement under
any retirement plan of the Company or death, all outstanding Options
held by the Employee at the time of such termination of employment
shall automatically terminate.
Whether termination of employment is a voluntary termination with the
consent of the Company shall be determined, in its discretion, by the
Committee and any such determination by the Committee shall be final
and binding.
6.9 NONTRANSFERABILITY OF OPTIONS. No Option granted under the Plan may be
sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by Will or if the Employee dies intestate by
the laws of descent and distribution of the state of domicile of the
Employee at the time of death. Further, all Options granted to an
Employee under the Plan shall be exercisable during his or her lifetime
only by the Employee.
ARTICLE 7. STOCK APPRECIATION RIGHTS
7.1 GRANT OF SARS. Subject to the terms and conditions of the Plan, SARs
may be granted to Employees at any time and from time to time as shall
be determined by the Committee. The Committee may grant Freestanding
SARs, Tandem SARs, or any combination of these forms of SARs. The
Committee shall have complete discretion in determining the number of
SARs granted to each Employee (subject to ARTICLE 4 herein) and,
consistent with the provisions of the Plan, in determining the terms
and conditions pertaining to such SARs. The grant price of a
Freestanding SAR shall equal the Fair Market Value of a Share on the
date of grant of the SAR. The grant price of Tandem SARs shall equal
the Option Price of the related Option, as provided in SECTION 6.3.
7.2 EXERCISE OF TANDEM SARS. Tandem SARs may be exercised for all or part
of the Shares subject to the related Option upon the surrender of the
right to exercise the equivalent portion of the related Option. A
Tandem SAR may be exercised only with respect to the Shares for which
its related Option is then exercisable.
7.3 EXERCISE OF FREESTANDING SARS. Freestanding SARs may be exercised upon
whatever terms the Committee, in its sole discretion, imposes upon
them.
7.4 SAR AGREEMENT. Each SAR grant shall be evidenced by an Award Agreement
that shall specify the grant price, the term of the SAR, and such other
provisions as the Committee shall determine.
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7.5 TERM OF SARs. The term of an SAR granted under the Plan shall be
determined by the Committee, in its sole discretion; provided however,
that such term shall not exceed ten (10) years.
7.6 PAYMENT OF SAR AMOUNT. Upon exercise of an SAR, an Employee shall be
entitled to receive payment from the Company in an amount determined by
multiplying:
(a) the difference between the Fair Market Value of a Share on the date
of exercise over the grant price; by
(b) the number of Shares with respect to which the SAR is granted.
At the discretion of the Committee, the payment upon SAR exercise may
be in cash, in Shares of equivalent value, or in some combination
thereof.
7.7 RULE 16b-3 REQUIREMENTS. Notwithstanding any other provision of the
Plan, the Committee may impose such conditions on the exercise of an
SAR as may be required to satisfy the requirements of Section 16 of the
Exchange Act (or any successor rule).
7.8 TERMINATION OF EMPLOYMENT. Each SAR Award Agreement shall set forth the
extent to which the Employee shall have the right to exercise the SAR
following termination of the Employee's employment with the Company
and/or its Subsidiaries. Such provisions shall be determined in the
sole discretion of the Committee, shall be included in the Award
Agreement entered into with Employees, need not be uniform among all
SARs issued pursuant to the Plan, and may reflect distinctions based on
the reasons for termination of such employment.
7.9 NONTRANSFERABILITY OF SARs. No SAR granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than by will or, if the grantee dies intestate, by the laws of
descent and distribution of the state of domicile of the grantee at the
time of death. Further, all SARs granted to an Employee under the Plan
shall be exercisable during his or her lifetime only by such Employee.
ARTICLE 8. RESTRICTED STOCK
8.1 GRANT OF RESTRICTED STOCK. Subject to the terms and provisions of the
Plan, the Committee, at any time and from time to time, may grant
Shares of Restricted Stock to Employees in such amounts as the
Committee shall determine.
8.2 RESTRICTED STOCK AGREEMENT. Each Restricted Stock grant shall be
evidenced by a Restricted Stock Award Agreement that shall specify the
Period(s) of Restriction, the number of Shares of Restricted Stock
granted, and such other provisions as the Committee shall determine.
8.3 TRANSFERABILITY. Except as provided in this ARTICLE 8, the Shares of
Restricted Stock granted herein may not be sold, transferred, pledged,
assigned or otherwise alienated or hypothecated until the end of the
applicable Period of Restriction established by the Committee and
specified in the Restricted Stock Award Agreement, or upon earlier
satisfaction of any other conditions, as specified by the Committee in
its sole discretion and set forth in the Restricted Stock Award
Agreement. All rights with respect to the Restricted Stock granted to
an Employee under the Plan shall be available during his or her
lifetime only to such Employee.
8.4 OTHER RESTRICTIONS. Subject to ARTICLE 10 herein, the Committee shall
impose such other conditions and/or restrictions on any Shares of
Restricted Stock granted pursuant to the Plan as it may deem
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advisable including, without limitation, a requirement that Employees
pay a stipulated purchase price for each Share of Restricted Stock,
restrictions based upon the achievement of specific performance goals
(Company-wide, divisional, and/or individual), time-based restrictions
on vesting following the attainment of the performance goals, and/or
restrictions under applicable Federal or state securities laws. The
Company shall retain the certificates representing Shares of Restricted
Stock in the Company's possession until such time as all conditions
and/or restrictions applicable to such Shares have been satisfied.
Except as otherwise provided in this ARTICLE 8, Shares of Restricted
Stock covered by each Restricted Stock grant made under the Plan shall
become freely transferable by the Employee after the last day of the
applicable Period of Restriction.
8.5 VOTING RIGHTS. During the Period of Restriction, Employees holding
Shares of Restricted Stock granted hereunder may exercise full voting
rights with respect to those Shares.
8.6 DIVIDENDS AND OTHER DISTRIBUTIONS. During the Period of Restriction,
Employees holding Shares of Restricted Stock granted hereunder may be
credited with regular cash dividends paid with respect to the
underlying Shares while they are so held. The Committee may apply any
restrictions to the dividends that the Committee deems appropriate. In
the event that any dividend constitutes a "derivative security" or an
"equity security" pursuant to Rule 16(a) under the Exchange Act, such
dividend shall be subject to a vesting period equal to the remaining
vesting period of the Shares of Restricted Stock with respect to which
the dividend is paid.
8.7 TERMINATION OF EMPLOYMENT. Each Restricted Stock Award Agreement shall
set forth the extent to which the Employee shall have the right to
receive unvested Restricted Shares following termination of the
Employee's employment with the Company. Such provisions shall be
determined in the sole discretion of the Committee, shall be included
in the Award Agreement entered into with each Employee, need not be
uniform among all Shares of Restricted Stock issued pursuant to the
Plan, and may reflect distinctions based upon the reasons for
termination of such employment.
ARTICLE 9. PERFORMANCE UNITS AND PERFORMANCE SHARES
9.1 GRANT OF PERFORMANCE UNITS/SHARES. Subject to the terms of the Plan,
Performance Units and/or Performance Shares may be granted to Employees
in such amounts and upon such terms, and at any time and from time to
time, as shall be determined by the Committee.
9.2 VALUE OF PERFORMANCE UNITS/SHARES. Each Performance Unit shall have an
initial value that is established by the Committee at the time of
grant. Each Performance Share shall have an initial value equal to the
Fair Market Value of a Share on the date of grant. The Committee shall
set performance goals in its discretion which, depending upon the
extent to which they are met, will determine the number and/or value of
Performance Units/Shares that will be paid out to the Employee. For
purposes of this ARTICLE 9, the time period during which the
performance goals must be met shall be called a "Performance Period."
9.3 EARNING OF PERFORMANCE UNITS/SHARES. Subject to the terms of this Plan,
after the applicable Performance Period has ended, the holder of
Performance Units/Shares shall be entitled to receive payout on the
number and value of Performance Units/Shares earned by the Employee
over the Performance Period, to be determined as a function of the
extent to which the corresponding performance goals have been achieved.
9.4 FORM AND TIMING OF PERFORMANCE UNITS/SHARES. Payment of earned
Performance Units/Shares shall be made in a single lump sum within
seventy-five (75) calendar days following the close of the applicable
Performance Period. Subject to the terms of this Plan, the Committee,
in its sole discretion, may pay
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earned Performance Units/Shares in the form of cash or Shares (or a
combination thereof) which have an aggregate Fair Market Value equal to
the value of the earned Performance Units/Shares at the close of the
applicable Performance Period. Such Shares may be granted subject to
any restrictions deemed appropriate by the Committee.
At the discretion of the Committee, Employees may be entitled to
receive any dividends declared with respect to Shares which have been
earned in connection with grants of Performance Units and/or
Performance Shares which have been earned, but not yet distributed to
Employees (such dividends shall be subject to the same accrual,
forfeiture, and payout restrictions as apply to dividends earned with
respect to Shares of Restricted Stock, as set forth in SECTION 8.6
herein). In addition, Employees may, at the discretion of the
Committee, be entitled to exercise their voting rights with respect to
such Shares.
9.5 TERMINATION OF EMPLOYMENT DUE TO DEATH, DISABILITY OR RETIREMENT.
Unless otherwise determined by the Committee and set forth in the
Employee's Award Agreement, in the event the employment of an Employee
is terminated by reason of death, disability or Retirement during a
Performance Period, the Employee shall receive a payout of the
Performance Units/Shares which is prorated, as specified by the
Committee in its discretion. Payment of earned Performance Units/Shares
shall be made at a time specified by the Committee in its sole
discretion and set forth in the Employee's Award Agreement.
9.6 TERMINATION OF EMPLOYMENT FOR OTHER REASONS. In the event that an
Employee's employment terminates for any reason other than those
reasons set forth in SECTION 9.5 herein, all Performance Units/Shares
shall be forfeited by the Employee to the Company unless determined
otherwise by the Committee, as set forth in the Employee's Award
Agreement.
9.7 NONTRANSFERABILITY. Performance Units/Shares may not be sold,
transferred, pledged, assigned or otherwise alienated or hypothecated,
other than by will or if the grantee dies intestate by the laws of
descent and distribution of the state of domicile of the grantee at the
time of death. Further, an Employee's rights under the Plan shall be
exercisable during the Employee's lifetime only by the Employee or the
Employee's legal representative.
ARTICLE 10. BENEFICIARY DESIGNATION
Each Employee under the Plan may, from time to time, name any beneficiary or
beneficiaries (who may be named contingently or successively) to whom any
benefit under the Plan is to be paid in case of his or her death before he or
she receives any or all of such benefit. Each such designation shall revoke all
prior designations by the same Employee, shall be in a form prescribed by the
Company, and will be effective only when filed by the Employee in writing with
the Company during the Employee's lifetime. In the absence of any such
designation, benefits remaining unpaid at the Employee's death shall be paid to
the Employee's estate.
ARTICLE 11. DEFERRALS
The Committee may permit or require an Employee to defer such Employee's receipt
of the payment of cash or the delivery of Shares that would otherwise be due to
such Employee by virtue of the exercise of an Option or SAR, the lapse or waiver
of restrictions with respect to Restricted Stock, or the satisfaction of any
requirements or goals with respect to Performance Units/Shares. If any such
deferral election is required or permitted, the Committee shall, in its sole
discretion, establish rules and procedures for such payment deferrals.
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ARTICLE 12. RIGHTS OF EMPLOYEES
12.1 EMPLOYMENT. Nothing in the Plan shall interfere with or limit in any
way the right of the Company to terminate any Employee's employment at
any time, nor confer upon any Employee any right to continue in the
employ of the Company.
12.2 PARTICIPATION. No Employee shall be entitled to have the right to be
selected to receive an Award under this Plan, or having been so
selected, to be selected to receive a future Award.
ARTICLE 13. CHANGE IN CONTROL
13.1 TREATMENT OF OUTSTANDING AWARDS. Upon the occurrence of a Change in
Control, unless otherwise specifically prohibited under applicable
laws, or by the rules and regulations of any governing governmental
agencies or national securities exchanges:
(a) Any and all Options and SARs granted hereunder shall become
immediately exercisable, and shall remain exercisable throughout their
entire term;
(b) Any restriction periods and restrictions imposed on Restricted
Shares shall lapse;
(c) The target payout opportunities attainable under all outstanding
Awards of Restricted Stock, Performance Units and Performance Shares
shall be deemed to have been fully earned for the entire Performance
Period(s) as of the effective date of the Change in Control. The
vesting of all Awards denominated in Shares shall be accelerated as of
the effective date of the Change in Control, and there shall be paid
out in cash to Employees within thirty (30) days following the
effective date of the Change in Control an amount equal to one hundred
percent (100%) of all targeted cash payout opportunities associated
with outstanding cash-based Awards; and
(d) Subject to ARTICLE 14 herein, the Committee shall have the
authority to make any modifications to the Awards as determined by the
Committee to be appropriate before the effective date of the Change in
Control.
13.2 ACCELERATION OF AWARD VESTING. Notwithstanding any provision of this
Plan or any Award Agreement provision to the contrary, the Committee,
in its sole and exclusive discretion, shall have the power at any time
to accelerate the vesting of any Award granted under the Plan to any
Employee, including without limitation acceleration to such a date that
would result in said Awards becoming immediately vested.
13.3 TERMINATION, AMENDMENT AND MODIFICATIONS OF CHANGE IN CONTROL
PROVISIONS. Notwithstanding any other provision of this Plan or any
Award Agreement provision, the provisions of this ARTICLE 13 may not be
terminated, amended or modified on or after the date of a Change in
Control to affect adversely any Award theretofore granted under the
plan without the prior written consent of the Employee with respect to
said Employee's outstanding Awards; provided, however, the Board of
Directors, upon recommendation of the committee, may terminate, amend,
or modify this ARTICLE 13 at any time and from time to time prior to
the date of a Change in Control.
ARTICLE 14. AMENDMENT, MODIFICATION AND TERMINATION
14.1 ADMENDMENT, MODIFICATION AND TERMINATION. The Board may at any time and
from time to time, alter, amend, suspend, or terminate the Plan in
whole or in part.
14.2 ADJUSTMENT OF AWARDS UPON THE OCCURRENCE OF CERTAIN UNUSUAL OR
NONRECURRING EVENTS. The Committee may make adjustments in the terms
and conditions of, and the criteria included in, Awards in recognition
of unusual or nonrecurring events (including, without limitation, the
events described in SECTION 4.3 hereof) affecting the Company or the
financial statements of the Company or of changes in
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applicable laws, regulations, or accounting principles, whenever the
Committee determined that such adjustments are appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan; provided that no such
adjustment shall be authorized to the extent that such authority would
be inconsistent with the Plan's meeting the requirements of Section
162(m) of the Code, as from time to time amended.
14.3 AWARDS PREVIOUSLY GRANTED. No termination, amendment, or modification
of the Plan shall adversely affect in any material way any Award
previously granted under the Plan, without the written consent of the
Employee holding such Award.
14.4 COMPLIANCE WITH CODE 162(m). At all times when Code Section 162(m) is
applicable, all Awards granted under this Plan shall comply with the
requirements of Code Section 162(m); provided, however, that in the
event the Committee determines that such compliance is not desired with
respect to any Award or Awards available for grant under the Plan, then
compliance with Code Section 162(m) will not be required. In addition,
in the event that any changes are made to Code Section 162(m) to permit
greater flexibility with respect to any Award or Awards available under
the Plan, the Committee may, subject to this ARTICLE 14, make any
adjustments it deems appropriate.
ARTICLE 15. WITHHOLDING
15.1 TAX WITHHOLDING. The Company shall have the power and the right to
deduct or withhold, or require any Employee to remit to the Company, an
amount sufficient to satisfy Federal, state and local taxes, domestic
or foreign, required by law or regulation to be withheld with respect
to any taxable event arising as a result of this Plan.
15.2 SHARE WITHHOLDING. With respect to withholding required upon the
exercise of Options or SARs, upon the lapse of restrictions on
Restricted Stock, or upon any other taxable event arising as a result
of Awards granted hereunder, Employees may elect, subject to the
approval of the Committee, to satisfy the withholding requirement, in
whole or in part, by having the Company withhold Shares having a Fair
Market Value on the date the tax is to be determined equal to the
minimum statutory total tax which could be imposed on the action. All
such elections shall be irrevocable, made in writing, signed by the
Employee, and shall be subject to any restrictions or limitations that
the Committee, in its sole discretion, may determine.
ARTICLE 16. INDEMNIFICATION
Each person who is or shall have been a member of the Committee, or of the
Board, shall be indemnified and held harmless by the Company against and from
any loss, cost, liability or expense that may be imposed upn or reasonably
incurred by him or her in connection with or resulting from any claim, action,
suit or proceeding to which he or she may be a party or in which he or she may
be involved by reason of any action taken or failure to act under the Plan and
against and from any and all amounts paid by him or her in settlement thereof,
with the Company's approval, or paid by him or her in satisfaction of any
judgment in any such action, suit or proceeding against him or her, provided he
or she shall give the Company an opportunity at its own expense, to handle and
defend the same before he or she undertakes to handle and defend it on his or
her own behalf. The foregoing right of indemnification shall not be exclusive of
any other right of indemnification to which such persons may be entitled under
the Company's Articles of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.
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ARTICLE 17. SUCCESSOR
All obligations of the Company under the Plan with respect to Awards granted
hereunder shall be binding upon any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company.
ARTICLE 18. LEGAL CONSTRUCTION
18.1 GENDER AND NUMBER. Except where otherwise indicated by the context, any
masculine term used herein shall also include the feminine; the plural
shall include the singular and the singular shall include the plural.
18.2 SEVERABILITY. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall
not affect the remaining parts of the Plan, and the Plan shall be
construed and enforced as if the illegal or invalid provision had not
been included.
18.3 REQUIREMENTS OF LAW. The granting of Awards and the issuance of Shares
under the Plan shall be subject to all applicable laws, rules, and
regulations, and to such approvals by governmental agencies or national
securities exchanges as may be required.
18.4 SECURITIES LAW COMPLIANCE. With respect to (i) any person who is
required to file reports pursuant to the rules promulgated under
Section 16 of the Exchange Act and (ii) insiders, transactions under
this Plan are intended to comply with all applicable conditions of Rule
16b-3 or its successors under the Exchange Act. To the extent any
provision of the Plan or action by the Committee fails to so comply, it
will be deemed null and void to the extent permitted by law and deemed
advisable by the Committee.
18.5 GOVERNING LAW. To the extent not preempted by Federal law, the Plan and
all agreements hereunder, shall be construed in accordance with and
governed by the laws of the Commonwealth of Pennsylvania.
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