Exhibit 10.50
INTERDIGITAL COMMUNICATIONS CORPORATION
2002 Stock Award and Incentive Plan
1. Purpose. The purpose of this 2002 Stock Award and Incentive Plan (the
"Plan") is to aid InterDigital Communications Corporation, a Pennsylvania
corporation (the "Company"), in attracting, retaining, motivating and rewarding
employees and other persons who provide services to the Company or its
subsidiaries or affiliates, to provide for equitable and competitive
compensation opportunities, to encourage long-term service, to recognize
individual contributions and reward achievement of Company goals, and to promote
the creation of long-term value for shareholders by closely aligning the
interests of Participants with those of shareholders. The Plan authorizes
stock-based and cash-based incentives for Participants.
2. Definitions. In addition to the terms defined in Section 1 above and
elsewhere in the Plan, the following capitalized terms used in the Plan have the
respective meanings set forth in this Section:
(a) "Award" means any Non-qualified Stock Option, SAR, Restricted
Stock, Deferred Stock, Stock granted as a bonus or in lieu of another
award, Dividend Equivalent, Other Stock-Based Award, or Performance Award,
together with any related right or interest, granted to a Participant under
the Plan.
(b) "Beneficiary" means the legal representatives of the Participant's
estate entitled by will or the laws of descent and distribution to receive
the benefits under a Participant's Award upon a Participant's death,
provided that, if and to the extent authorized by the Committee, a
Participant may be permitted to designate a Beneficiary, in which case the
"Beneficiary" instead shall be the person(s) (if any are then surviving),
trust(s) or entity(ies) which have been designated by the Participant in
his or her most recent written beneficiary designation filed with the
Committee to receive the benefits specified under the Participant's Award
upon such Participant's death.
(c) "Board" means the Company's Board of Directors.
(d) "Change in Control" and related terms have the meanings specified
in Section 8.
(e) "Code" means the Internal Revenue Code of 1986, as amended.
(f) "Committee" means a committee of two or more directors designated
by the Board to administer the Plan. The full Board may perform any
function of the Committee hereunder, in which case the term "Committee"
shall refer to the Board. Initially, the Compensation and Stock Option
Committee of the Board of Directors will be designated as the "Committee"
under the Plan.
(g) "Deferred Stock" means a right, granted to a Participant under
Section 6(e), to receive Stock or other Awards or a combination thereof at
the end of a specified deferral period.
(h) "Dividend Equivalent" means a right, granted to a Participant
under Section 6(g), to receive cash, Stock, other Awards or other property
equal in value to all or a specified portion of the dividends paid with
respect to a specified number of shares of Stock.
(i) "Effective Date" means the effective date specified in Section
10(r).
(j) "Eligible Person" has the meaning specified in Section 5.
(k) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(l) "Fair Market Value" means the fair market value of Stock, Awards
or other property as determined by the Committee or under procedures
established by the Committee. Unless otherwise determined by the Committee,
the Fair Market Value of Stock shall be the closing sale price reported on
the composite tape of the principal stock exchange on which the Stock is
listed on the day as of which such value is being determined or, if there
is no sale on that day, then on the last previous day on which a sale was
reported.
(m) "Non-qualified Stock Option" means an option to purchase Stock or
other Awards pursuant to Section 6(b), which option is designated as a
non-qualified stock option and is not intended to qualify as an incentive
stock option within the meaning of Code Section 422.
(n) "Other Stock-Based Awards" means Awards granted to a Participant
under Section 6(h).
(o) "Participant" means a person who has been granted an Award under
the Plan which remains outstanding, including a person who is no longer an
Eligible Person.
(p) "Performance Award" means a conditional right, granted to a
Participant under Section 6(i), to receive cash, Stock or other Awards or
payments, as determined by the Committee, based upon performance criteria
specified by the Committee.
(q) "Restricted Stock" means Stock granted to a Participant under
Section 6(d) which is subject to certain restrictions and to a risk of
forfeiture.
(r) "Stock" means the Company's Common Stock, and any other equity
securities of the Company that may be substituted or resubstituted for
Stock pursuant to Section 10(c).
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(s) "Stock Appreciation Rights" or "SAR" means a right granted to a
Participant under Section 6(c).
3. Administration.
(a) Authority of the Committee. The Plan shall be administered by the
Committee, which shall have full and final authority, in each case subject
to and consistent with the provisions of the Plan, to select Eligible
Persons to become Participants; to grant Awards; to determine the type and
number of Awards, the dates on which Awards may be exercised and on which
the risk of forfeiture or deferral period relating to Awards shall lapse or
terminate, the acceleration of any such dates, the expiration date of any
Award, whether, to what extent, and under what circumstances an Award may
be settled, or the exercise price of an Award may be paid, in cash, Stock,
other Awards, or other property, and other terms and conditions of, and all
other matters relating to, Awards; to prescribe documents evidencing or
setting terms of Awards (such Award documents need not be identical for
each Participant), amendments thereto, rules and regulations for the
administration of the Plan and amendments thereto, and standardized terms
and conditions of awards and amendments thereto (which, if so specified by
the Committee, shall be deemed to be incorporated into and a part of this
Plan); to construe and interpret the Plan and Award documents and correct
defects, supply omissions or reconcile inconsistencies therein; and to make
all other decisions and determinations as the Committee may deem necessary
or advisable for the administration of the Plan. Decisions of the Committee
with respect to the administration and interpretation of the Plan shall be
final, conclusive, and binding upon all persons interested in the Plan,
including Participants, Beneficiaries, transferees under Section 10(b) and
other persons claiming rights from or through a Participant, and
shareholders.
(b) Manner of Exercise of Committee Authority. The express grant of
any specific power to the Committee, and the taking of any action by the
Committee, shall not be construed as limiting any power or authority of the
Committee. The Committee may delegate to officers or managers of the
Company or any subsidiary or affiliate, or committees thereof, the
authority, subject to such terms as the Committee shall determine, to
perform such functions, including administrative functions.
(c) Limitation of Liability. The Committee and each member thereof,
and any person acting pursuant to authority delegated by the Committee,
shall be entitled, in good faith, to rely or act upon any report or other
information furnished by any executive officer, other officer or employee
of the Company or a subsidiary or affiliate, the Company's independent
auditors, consultants or any other agents assisting in the administration
of the Plan. Members of the Committee, any person acting pursuant to
authority delegated by the Committee, and any officer or employee of the
Company or a subsidiary or affiliate acting at the direction or on behalf
of the Committee or a delegate shall not be personally liable for any
action or determination taken or made in good faith with respect to the
Plan, and shall, to the extent permitted by law, be fully indemnified and
protected by the Company with respect to any such action or determination.
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4. Stock Subject to Plan.
(a) Overall Number of Shares Available for Delivery. Subject to adjustment
as provided in Section 10(c), the total number of shares of Stock reserved and
available for delivery in connection with Awards under the Plan shall be one
million five hundred thousand. Any shares of Stock delivered under the Plan
shall consist of authorized and unissued shares or treasury shares.
(b) Share Counting Rules. The Committee may adopt reasonable counting
procedures to ensure appropriate counting, avoid double counting (as, for
example, in the case of tandem or substitute awards) and make adjustments if the
number of shares of Stock actually delivered differs from the number of shares
previously counted in connection with an Award. Shares subject to an Award that
is canceled, expired, forfeited, settled in cash or otherwise terminated without
a delivery of shares to the Participant will again be available for Awards, and
shares withheld in payment of the exercise price or taxes relating to an Award
and shares equal to the number surrendered in payment of any exercise price or
taxes relating to an Award shall be deemed to constitute shares not delivered to
the Participant and shall be deemed again to be available for Awards under the
Plan. In addition, in the case of any Award granted in substitution for an award
of a company or business acquired by the Company or a subsidiary or affiliate,
shares issued or issuable in connection with such substitute Award shall not be
counted against the number of shares reserved under the Plan, but shall be
available under the Plan by virtue of the Company's assumption of the plan or
arrangement of the acquired company or business.
5. Eligibility. Awards may be granted under the Plan only to Eligible
Persons. For purposes of the Plan, an "Eligible Person" means an employee of the
Company or any subsidiary or affiliate, or a consultant or other person who
provides substantial services to the Company or subsidiary or affiliate, but
excluding any person who (i) is the Company's president, principal financial
officer, principal accounting officer (or, if there is no such accounting
officer, the controller), any vice-president of the Company in charge of a
principal business unit, division or function (such as sales, administration or
finance), any other person who performs a policy-making function for the
Company, (ii) is an officer of one or more of the Company's subsidiaries to the
extent that he or she performs such policy-making functions identified in clause
(i) for the Company, or (iii) is a member of the Board. The term "Eligible
Person" shall also include any person who has been offered employment by the
Company or a subsidiary or affiliate, provided that such prospective employee
may not receive any payment or exercise any right relating to an Award until
such person has commenced employment with the Company or a subsidiary or
affiliate of the Company. An employee on leave of absence may be considered as
still in the employ of the Company or a subsidiary or affiliate for purposes of
eligibility for participation in the Plan, if so determined by the Committee. A
joint venture in which the Company or a subsidiary has a substantial direct or
indirect equity investment may be deemed an affiliate, if so determined by the
Committee, but such determination shall be solely for purposes of this Plan.
6. Specific Terms of Awards.
(a) General. Awards may be granted on the terms and conditions set forth in
this Section 6; provided that no Award may be granted after the close of
business on the date of the Company's annual meeting of shareholders held in
2003. In addition, the Committee may impose on any Award or the exercise
thereof, at the date of grant or thereafter (subject to Section 10(e)), such
additional terms and conditions, not inconsistent with the provisions of the
Plan, as the Committee shall determine, including terms requiring forfeiture of
Awards in the event of termination of employment or service by the Participant
and terms permitting a Participant to make elections relating to his or her
Award. The Committee shall retain full power and discretion with respect to any
term or condition of an Award that is not mandatory under the Plan. The
Committee may require payment of consideration for an Award, except as otherwise
limited by the Plan.
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(b) Non-qualified Stock Options. The Committee is authorized to grant
Non-qualified Stock Options to Participants on the following terms and
conditions:
(i) Exercise Price. The exercise price per share of Stock purchasable
under a Non-qualified Stock Option shall be determined by the Committee,
but such exercise price shall be not less than the Fair Market Value of a
share of Stock on the date of grant of such Non-qualified Stock Option,
subject to Sections 6(f) and 8(a), unless the Committee finds there to
exist extraordinary circumstances such that the grant of a Non-Qualified
Stock Option with an exercise price less than such Fair Market Value is
appropriate.
(ii) Option Term; Time and Method of Exercise. The Committee shall
determine the term of each Non-qualified Stock Option. The Committee shall
determine the time or times at which or the circumstances under which a
Non-qualified Stock Option may be exercised in whole or in part (including
based on achievement of performance goals and/or future service
requirements), the methods by which such exercise price may be paid or
deemed to be paid and the form of such payment (subject to Section 10(k)),
including, without limitation, cash, Stock, other Awards or awards granted
under other plans of the Company or any subsidiary or affiliate, or other
property (including notes and other contractual obligations of Participants
to make payment on a deferred basis, such as through "cashless exercise"
arrangements, to the extent permitted by applicable law), and the methods
by or forms in which Stock will be delivered or deemed to be delivered in
satisfaction of Non-qualified Stock Options to Participants (including
deferred delivery of shares representing the Non-qualified Stock Option
"profit," at the election of the Participant or as mandated by the
Committee, with such deferred shares subject to any vesting, forfeiture or
other terms as the Committee may specify).
(c) Stock Appreciation Rights. The Committee is authorized to grant SARs to
Participants on the following terms and conditions:
(i) Right to Payment. An SAR shall confer on the Participant to whom
it is granted a right to receive, upon exercise thereof, the excess of (A)
the Fair Market Value of one share of Stock on the date of exercise (or, in
the case of a "Limited SAR," the Fair Market Value determined by reference
to the Change in Control Price, as defined under Section 8(d) hereof) over
(B) the grant price of the SAR as determined by the Committee.
(ii) Other Terms. The Committee shall determine at the date of grant
or thereafter, the time or times at which and the circumstances under which
a SAR may be exercised in whole or in part (including based on achievement
of performance goals and/or future service requirements), the method of
exercise, method of settlement, form of consideration payable in
settlement, method by or forms in which Stock will be delivered or deemed
to be delivered to Participants, and whether or not a SAR shall be
free-standing or in tandem or combination with any other Award. Limited
SARs that may only be exercised in connection with a Change in Control or
other event as specified by the Committee may be granted on such terms, not
inconsistent with this Section 6(c), as the Committee may determine.
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(d) Restricted Stock. The Committee is authorized to grant Restricted Stock
to Participants on the following terms and conditions:
(i) Grant and Restrictions. Restricted Stock shall be subject to such
restrictions on transferability, risk of forfeiture and other restrictions,
if any, as the Committee may impose, which restrictions may lapse
separately or in combination at such times, under such circumstances
(including based on achievement of performance goals and/or future service
requirements), in such installments or otherwise and under such other
circumstances as the Committee may determine at the date of grant or
thereafter. Except to the extent restricted under the terms of the Plan and
any Award document relating to the Restricted Stock, a Participant granted
Restricted Stock shall have all of the rights of a shareholder, including
the right to vote the Restricted Stock and the right to receive dividends
thereon (subject to any mandatory reinvestment or other requirement imposed
by the Committee).
(ii) Forfeiture. Except as otherwise determined by the Committee, upon
termination of employment or service during the applicable restriction
period, Restricted Stock that is at that time subject to restrictions shall
be forfeited and reacquired by the Company; provided that the Committee may
provide, by rule or regulation or in any Award document, or may determine
in any individual case, that restrictions or forfeiture conditions relating
to Restricted Stock will lapse in whole or in part, including in the event
of terminations resulting from specified causes.
(iii) Certificates for Stock. Restricted Stock granted under the Plan
may be evidenced in such manner as the Committee shall determine. If
certificates representing Restricted Stock are registered in the name of
the Participant, the Committee may require that such certificates bear an
appropriate legend referring to the terms, conditions and restrictions
applicable to such Restricted Stock, that the Company retain physical
possession of the certificates, and that the Participant deliver a stock
power to the Company, endorsed in blank, relating to the Restricted Stock.
(iv) Dividends and Splits. As a condition to the grant of an Award of
Restricted Stock, the Committee may require that any dividends paid on a
share of Restricted Stock shall be either (A) paid with respect to such
Restricted Stock at the dividend payment date in cash, in kind, or in a
number of shares of unrestricted Stock having a Fair Market Value equal to
the amount of such dividends, or (B) automatically reinvested in additional
Restricted Stock or held in kind, which shall be subject to the same terms
as applied to the original Restricted Stock to which it relates, or (C)
deferred as to payment, either as a cash deferral or with the amount or
value thereof automatically deemed reinvested in shares of Deferred Stock,
other Awards or other investment vehicles, subject to such terms as the
Committee shall determine or permit a Participant to elect. Unless
otherwise determined by the Committee, Stock distributed in connection with
a Stock split or Stock dividend, and other property distributed as a
dividend, shall be subject to restrictions and a risk of forfeiture to the
same extent as the Restricted Stock with respect to which such Stock or
other property has been distributed.
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(e) Deferred Stock. The Committee is authorized to grant Deferred Stock to
Participants, which are rights to receive Stock, other Awards, or a combination
thereof at the end of a specified deferral period, subject to the following
terms and conditions:
(i) Award and Restrictions. Issuance of Stock will occur upon
expiration of the deferral period specified for an Award of Deferred Stock
by the Committee (or, if permitted by the Committee, as elected by the
Participant). In addition, Deferred Stock shall be subject to such
restrictions on transferability, risk of forfeiture and other restrictions,
if any, as the Committee may impose, which restrictions may lapse at the
expiration of the deferral period or at earlier specified times (including
based on achievement of performance goals and/or future service
requirements), separately or in combination, in installments or otherwise,
and under such other circumstances as the Committee may determine at the
date of grant or thereafter. Deferred Stock may be satisfied by delivery of
Stock, other Awards, or a combination thereof (subject to Section 10(k)),
as determined by the Committee at the date of grant or thereafter.
(ii) Forfeiture. Except as otherwise determined by the Committee, upon
termination of employment or service during the applicable deferral period
or portion thereof to which forfeiture conditions apply (as provided in the
Award document evidencing the Deferred Stock), all Deferred Stock that is
at that time subject to such forfeiture conditions shall be forfeited;
provided that the Committee may provide, by rule or regulation or in any
Award document, or may determine in any individual case, that restrictions
or forfeiture conditions relating to Deferred Stock will lapse in whole or
in part, including in the event of terminations resulting from specified
causes.
(iii) Dividend Equivalents. Unless otherwise determined by the
Committee, Dividend Equivalents on the specified number of shares of Stock
covered by an Award of Deferred Stock shall be either (A) paid with respect
to such Deferred Stock at the dividend payment date in cash or in shares of
unrestricted Stock having a Fair Market Value equal to the amount of such
dividends, or (B) deferred with respect to such Deferred Stock, either as a
cash deferral or with the amount or value thereof automatically deemed
reinvested in additional Deferred Stock, other Awards or other investment
vehicles having a Fair Market Value equal to the amount of such dividends,
as the Committee shall determine or permit a Participant to elect.
(f) Bonus Stock and Awards in Lieu of Obligations. The Committee is
authorized to grant Stock as a bonus, or to grant Stock or other Awards in lieu
of obligations of the Company or a subsidiary or affiliate to pay cash or
deliver other property under the Plan or under other plans or compensatory
arrangements, subject to such terms as shall be determined by the Committee.
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(g) Dividend Equivalents. The Committee is authorized to grant Dividend
Equivalents to a Participant, entitling the Participant to receive cash, Stock,
other Awards, or other property equivalent to all or a portion of the dividends
paid with respect to a specified number of shares of Stock. Dividend Equivalents
may be awarded on a freestanding basis or in connection with another Award. The
Committee may provide that Dividend Equivalents shall be paid or distributed
when accrued or shall be deemed to have been reinvested in additional Stock,
Awards, or other investment vehicles, and subject to restrictions on
transferability, risks of forfeiture and such other terms as the Committee may
specify.
(h) Other Stock-Based Awards. The Committee is authorized, subject to
limitations under applicable law, to grant to Participants such other Awards
that may be denominated or payable in, valued in whole or in part by reference
to, or otherwise based on, or related to, Stock or factors that may influence
the value of Stock, including, without limitation, convertible or exchangeable
debt securities, other rights convertible or exchangeable into Stock, purchase
rights for Stock, Awards with value and payment contingent upon performance of
the Company or business units thereof or any other factors designated by the
Committee, and Awards valued by reference to the book value of Stock or the
value of securities of or the performance of specified subsidiaries or
affiliates or other business units. The Committee shall determine the terms and
conditions of such Awards. Stock delivered pursuant to an Award in the nature of
a purchase right granted under this Section 6(h) shall be purchased for such
consideration, paid for at such times, by such methods, and in such forms,
including, without limitation, cash, Stock, other Awards, notes, or other
property, as the Committee shall determine. Cash awards, as an element of or
supplement to any other Award under the Plan, may also be granted pursuant to
this Section 6(h).
(i) Performance Awards. The Committee is authorized to grant
Performance Awards on the terms and conditions specified in this Section
6(i). Performance Awards may be denominated as a cash amount, number of
shares of Stock, or specified number of other Awards (or a combination)
which may be earned upon achievement or satisfaction of performance
conditions specified by the Committee. In addition, the Committee may
specify that any other Award shall constitute a Performance Award by
conditioning the right of a Participant to exercise the Award or have it
settled, and the timing thereof, upon achievement or satisfaction of such
performance conditions as may be specified by the Committee. The Committee
may use such business criteria and other measures of performance as it may
deem appropriate in establishing any performance conditions, and may
exercise its discretion to reduce or increase the amounts payable under any
Award subject to performance conditions.
7. Certain Provisions Applicable to Awards.
(a) Stand-Alone, Additional, Tandem, and Substitute Awards. Awards granted
under the Plan may, in the discretion of the Committee, be granted either alone
or in addition to, in tandem with, or in substitution or exchange for, any other
Award or any award granted under another plan of the Company, any subsidiary or
affiliate, or any business entity to be acquired by the Company or a subsidiary
or affiliate, or any other right of a Participant to receive payment from the
Company or any subsidiary or affiliate. Awards granted in addition to or in
tandem with other Awards or awards may be granted either as of the same time as
or a different time from the grant of such other Awards or awards. Subject to
Section 10(k), the Committee may determine that, in granting a new Award, the
in-the-money value of any surrendered Award or award may be applied to reduce
the exercise price of any Non-qualified Stock Option, grant price of any SAR, or
purchase price of any other Award.
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(b) Term of Awards. The term of each Award shall be for such period as may
be determined by the Committee.
(c) Form and Timing of Payment under Awards; Deferrals. Subject to the
terms of the Plan (including Section 10(k)) and any applicable Award document,
payments to be made by the Company or a subsidiary or affiliate upon the
exercise of a Non-qualified Stock Option or other Award or settlement of an
Award may be made in such forms as the Committee shall determine, including,
without limitation, cash, Stock, other Awards or other property, and may be made
in a single payment or transfer, in installments, or on a deferred basis. The
settlement of any Award may be accelerated, and cash paid in lieu of Stock in
connection with such settlement, in the discretion of the Committee or upon
occurrence of one or more specified events (subject to Section 10(k)).
Installment or deferred payments may be required by the Committee (subject to
Section 10(e)) or permitted at the election of the Participant on terms and
conditions established by the Committee. Payments may include, without
limitation, provisions for the payment or crediting of reasonable interest on
installment or deferred payments or the grant or crediting of Dividend
Equivalents or other amounts in respect of installment or deferred payments
denominated in Stock.
(d) Loan Provisions. With the consent of the Committee, and subject at all
times to, and only to the extent, if any, permitted under and in accordance
with, laws and regulations and other binding obligations or provisions
applicable to the Company, the Company may make, guarantee, or arrange for a
loan or loans to a Participant with respect to the exercise of any Non-qualified
Stock Option or other payment in connection with any Award, including the
payment by a Participant of any or all federal, state, or local income or other
taxes due in connection with any Award. Subject to such limitations, the
Committee shall have full authority to decide whether to make a loan or loans
hereunder and to determine the amount, terms, and provisions of any such loan or
loans, including the interest rate, if any, to be charged in respect of any such
loan or loans, whether the loan or loans are to be with or without recourse
against the borrower, the terms on which the loan is to be repaid and
conditions, if any, under which the loan or loans may be forgiven.
8. Change in Control.
(a) Effect of "Change in Control" on Non-Performance Based Awards. In the
event of a "Change in Control," the following provisions shall apply to
non-performance based Awards, including Awards as to which performance
conditions previously have been satisfied or are deemed satisfied under Section
8(b), unless otherwise provided by the Committee in the Award document:
(i) All deferral of settlement, forfeiture conditions and other
restrictions applicable to Awards granted under the Plan shall lapse and
such Awards shall be fully payable as of the time of the Change in Control
without regard to deferral and vesting conditions, except to the extent of
any waiver by the Participant or other express election to defer beyond a
Change in Control and subject to applicable restrictions set forth in
Section 10(a);
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(ii) Any Award carrying a right to exercise that was not previously
exercisable and vested shall become fully exercisable and vested as of the
time of the Change in Control and shall remain exercisable and vested for
the balance of the stated term of such Award without regard to any
termination of employment or service by the Participant other than a
termination for "cause" (as defined in any employment or severance
agreement between the Company or a subsidiary or affiliate and the
Participant then in effect or, if none, as defined by the Committee and in
effect at the time of the Change in Control), subject only to applicable
restrictions set forth in Section 10(a); and
(iii) The Committee may, in its discretion, determine to extend to any
Participant who holds a Non-qualified Stock Option the right to elect,
during the 60-day period immediately following the Change in Control, in
lieu of acquiring the shares of Stock covered by such Non-qualified Stock
Option, to receive in cash the excess of the Change in Control Price over
the exercise price of such Non-qualified Stock Option, multiplied by the
number of shares of Stock covered by such Non-qualified Stock Option, and
to extend to any Participant who holds other types of Awards denominated in
shares the right to elect, during the 60-day period immediately following
the Change in Control, in lieu of receiving the shares of Stock covered by
such Award, to receive in cash the Change in Control Price multiplied by
the number of shares of Stock covered by such Award.
(b) Effect of "Change in Control" on Performance-Based Awards. In the event
of a "Change in Control," with respect to an outstanding Award subject to
achievement of performance goals and conditions, such performance goals and
conditions shall be deemed to be met or exceeded if and to the extent so
provided by the Committee in the Award document governing such Award or other
agreement with the Participant.
(c) Definition of "Change in Control." A "Change in Control" shall be
deemed to have occurred if, after the Effective Date, there shall have occurred
any of the following:
(i) Any "person," as such term is used in Section 13(d) and 14(d) of
the Exchange Act (other than the Company, any trustee or other fiduciary
holding securities under an employee benefit plan of the Company, or any
company owned, directly or indirectly, by the shareholders of the Company
in substantially the same proportions as their ownership of stock of the
Company), acquires voting securities of the Company and immediately
thereafter is a "50% Beneficial Owner." For purposes of this provision, a
"50% Beneficial Owner" shall mean a person who is the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Company representing 50% or more of the combined
voting power of the Company's then-outstanding voting securities;
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(ii) During any period of two consecutive years commencing on or after
the Effective Date, individuals who at the beginning of such period
constitute the Board, and any new director (other than a director
designated by a person (as defined above) who has entered into an agreement
with the Company to effect a transaction described in subsections (i),
(iii), (iv) or (v) of this definition) whose election by the Board or
nomination for election by the Company's shareholders was approved by a
vote of at least two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose election or
nomination for election was previously so approved (the "Continuing
Directors") cease for any reason to constitute at least a majority thereof;
(iii) The shareholders of the Company have approved a merger,
consolidation, recapitalization, or reorganization of the Company, or a
reverse stock split of any class of voting securities of the Company, or
the consummation of any such transaction if shareholder approval is not
obtained, other than any such transaction which would result in at least
50% of the combined voting power of the voting securities of the Company or
the surviving entity outstanding immediately after such transaction being
beneficially owned by the persons who were shareholders of the Company
immediately prior to the transaction in substantially the same proportion
as their ownership of the voting power immediately prior to the
transaction; provided that, for purposes of this Section 8(c)(iii), such
continuity of ownership (and preservation of relative voting power) shall
be deemed to be satisfied if the failure to meet such 50% threshold (or to
substantially preserve such relative ownership of the voting securities) is
due solely to the acquisition of voting securities by an employee benefit
plan of the Company, such surviving entity or a subsidiary thereof; and
provided further, that, if consummation of the corporate transaction
referred to in this Section 8(c)(iii) is subject, at the time of such
approval by shareholders, to the consent of any government or governmental
agency or approval of the shareholders of another entity or other material
contingency, no Change in Control shall occur until such time as such
consent and approval has been obtained and any other material contingency
has been satisfied;
(iv) The shareholders of the Company accept shares in a share exchange
in which the shareholders of the Company immediately before such share
exchange do not or will not own directly or indirectly immediately
following such share exchange more than 50% of the combined voting power of
the outstanding voting securities of the corporation resulting from or
surviving such share exchange in substantially the same proportion as the
ownership of the Voting Securities outstanding immediately before such
share exchange;
(v) The shareholders of the Company have approved a plan of complete
liquidation of the Company or an agreement for the sale or disposition by
the Company of all or substantially all of the Company's assets (or any
transaction having a similar effect); provided that, if consummation of the
transaction referred to in this Section 8(c)(v) is subject, at the time of
such approval by shareholders, to the consent of any government or
governmental agency or approval of the shareholders of another entity or
other material contingency, no Change in Control shall occur until such
time as such consent and approval has been obtained and any other material
contingency has been satisfied; and
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(vi) Any other event which the Board of Directors of the Company
determines shall constitute a Change in Control for purposes of this Plan.
(d) Definition of "Change in Control Price." The "Change in Control Price"
means an amount in cash equal to the higher of (i) the amount of cash and fair
market value of property that is the highest price per share paid (including
extraordinary dividends) in any transaction triggering the Change in Control or
any liquidation of shares following a sale of substantially all assets of the
Company, or (ii) the highest Fair Market Value per share at any time during the
60-day period preceding and 60-day period following the Change in Control.
9. Additional Award Forfeiture Provisions.
(a) Events Triggering Forfeiture. Notwithstanding any other provision of
this Plan, the forfeitures specified in this Section 9(a) will be triggered if
the Participant's employment or engagement is terminated by the Company and the
Board makes a determination that the Participant, at any time during the
Participant's employment with or engagement by the Company or a subsidiary or
affiliate of the Company or at any time during the one-year period following
such employment or engagement (i) has engaged in any type of disloyalty to the
Company, including without limitation, insubordination, fraud, embezzlement,
theft or dishonesty in the course of his employment or engagement, or (ii) has
been convicted of a felony, or (iii) has disclosed any confidential or
proprietary information without the consent of the Company or (iv) has breached
the terms of any written confidentiality agreement or any non-competition
agreement with the Company in any material respect. In the event of a
termination and Board determination described in the preceding sentence, all
unexercised Non-qualified Stock Options and unexercised or otherwise unsettled
Awards held by the Participant shall terminate upon the earlier of the date of
termination of employment or engagement or the date of the Board's
determination.
(b) Committee Discretion. The Committee may, in its discretion, waive in
whole or in part the Company's right to forfeiture under this Section, but no
such waiver shall be effective unless evidenced by a writing signed by a duly
authorized officer of the Company. In addition, the Committee may impose
additional conditions on Awards by inclusion of appropriate provisions in the
document evidencing or governing any such Award.
10. General Provisions.
(a) Compliance with Legal and Other Requirements. The Company may, to the
extent deemed necessary or advisable by the Committee, postpone the issuance or
delivery of Stock or payment of other benefits under any Award until completion
of such registration or qualification of such Stock or other required action
under any federal or state law, rule or regulation, listing or other required
action with respect to any stock exchange or automated quotation system upon
which the Stock or other securities of the Company are listed or quoted, or
compliance with any other obligation of the Company, as the Committee may
consider appropriate, and may require any Participant to make such
representations, furnish such information and comply with or be subject to such
other conditions as it may consider appropriate in connection with the issuance
or delivery of Stock or payment of other benefits in compliance with applicable
laws, rules, and regulations, listing requirements, or other obligations. The
foregoing notwithstanding, in connection with a Change in Control, the Company
shall take or cause to be taken no action, and shall undertake or permit to
arise no legal or contractual obligation, that results or would result in any
postponement of the issuance or delivery of Stock or payment of benefits under
any Award or the imposition of any other conditions on such issuance, delivery
or payment, to the extent that such postponement or other condition would
represent a greater burden on a Participant than existed on the 90th day
preceding the Change in Control.
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(b) Limits on Transferability; Beneficiaries. No Award or other right or
interest of a Participant under the Plan shall be pledged, hypothecated or
otherwise encumbered or subject to any lien, obligation or liability of such
Participant to any party (other than the Company or a subsidiary or affiliate
thereof), or assigned or transferred by such Participant otherwise than by will
or the laws of descent and distribution or to a Beneficiary upon the death of a
Participant, and such Awards or rights that may be exercisable shall be
exercised during the lifetime of the Participant only by the Participant or his
or her guardian or legal representative, except that Awards and other rights may
be transferred to one or more transferees during the lifetime of the
Participant, and may be exercised by such transferees in accordance with the
terms of such Award, but only if and to the extent such transfers are permitted
by the Committee, subject to any terms and conditions which the Committee may
impose thereon (including limitations the Committee may deem appropriate in
order that offers and sales under the Plan will meet applicable requirements of
registration forms under the Securities Act of 1933 specified by the Securities
and Exchange Commission). A Beneficiary, transferee, or other person claiming
any rights under the Plan from or through any Participant shall be subject to
all terms and conditions of the Plan and any Award document applicable to such
Participant, except as otherwise determined by the Committee, and to any
additional terms and conditions deemed necessary or appropriate by the
Committee.
(c) Adjustments. In the event that any large, special and non-recurring
dividend or other distribution (whether in the form of cash or property other
than Stock), recapitalization, forward or reverse split, stock dividend,
reorganization, merger, consolidation, spin-off, combination, repurchase, share
exchange, liquidation, dissolution or other similar corporate transaction or
event affects the Stock such that an adjustment is determined by the Committee
to be appropriate under the Plan, then the Committee shall, in such manner as it
may deem equitable, adjust any or all of (i) the number and kind of shares of
Stock which may be delivered in connection with Awards granted thereafter, (ii)
the number and kind of shares of Stock subject to or deliverable in respect of
outstanding Awards and (iii) the exercise price, grant price or purchase price
relating to any Award or, if deemed appropriate, the Committee may make
provision for a payment of cash or property to the holder of an outstanding
Non-qualified Stock Option (subject to Section 10(k)). In addition, the
Committee is authorized to make adjustments in the terms and conditions of, and
the criteria included in, Awards (including Performance Awards and performance
goals and any hypothetical funding pool relating thereto) in recognition of
unusual or nonrecurring events (including, without limitation, events described
in the preceding sentence, as well as acquisitions and dispositions of
businesses and assets) affecting the Company, any subsidiary or affiliate or
other business unit, or the financial statements of the Company or any
subsidiary or affiliate, or in response to changes in applicable laws,
regulations, accounting principles, tax rates and regulations or business
conditions or in view of the Committee's assessment of the business strategy of
the Company, any subsidiary or affiliate or business unit thereof, performance
of comparable organizations, economic and business conditions, personal
performance of a Participant, and any other circumstances deemed relevant.
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(d) Tax Provisions.
(i) Withholding. The Company and any subsidiary or affiliate is
authorized to withhold from any Award granted, any payment relating to an
Award under the Plan, including from a distribution of Stock, or any
payroll or other payment to a Participant, amounts of withholding and other
taxes due or potentially payable in connection with any transaction
involving an Award, and to take such other action as the Committee may deem
advisable to enable the Company and Participants to satisfy obligations for
the payment of withholding taxes and other tax obligations relating to any
Award. This authority shall include authority to withhold or receive Stock
or other property and to make cash payments in respect thereof in
satisfaction of a Participant's withholding obligations, either on a
mandatory or elective basis in the discretion of the Committee. Other
provisions of the Plan notwithstanding, only the minimum amount of Stock
deliverable in connection with an Award necessary to satisfy statutory
withholding requirements will be withheld.
(ii) Required Consent to and Notification of Code Section 83(b)
Election. No election under Section 83(b) of the Code (to include in gross
income in the year of transfer the amounts specified in Code Section 83(b))
or under a similar provision of the laws of a jurisdiction outside the
United States may be made unless expressly permitted by the terms of the
Award document or by action of the Committee in writing prior to the making
of such election. In any case in which a Participant is permitted to make
such an election in connection with an Award, the Participant shall notify
the Company of such election within ten days of filing notice of the
election with the Internal Revenue Service or other governmental authority,
in addition to any filing and notification required pursuant to regulations
issued under Code Section 83(b) or other applicable provision.
(e) Changes to the Plan. The Board may amend, suspend or terminate the Plan
or the Committee's authority to grant Awards under the Plan without the consent
of shareholders or Participants; provided, however, that any amendment to the
Plan shall be submitted to the Company's shareholders for approval not later
than the earliest annual meeting for which the record date is after the date of
such Board action if such shareholder approval is required by any federal or
state law or regulation or the rules of any stock exchange or automated
quotation system on which the Stock may then be listed or quoted, and the Board
may otherwise, in its discretion, determine to submit other amendments to the
Plan to shareholders for approval; and provided further, that, without the
consent of an affected Participant, no such Board action may materially and
adversely affect the rights of such Participant under any outstanding Award.
With regard to other terms of Awards, the Committee shall have no authority to
waive or modify any such Award term after the Award has been granted to the
extent the waived or modified term would be mandatory under the Plan for any
Award newly granted at the date of the waiver or modification.
(f) Right of Setoff. The Company or any subsidiary or affiliate may, to the
extent permitted by applicable law, deduct from and set off against any amounts
the Company or a subsidiary or affiliate may owe to the Participant from time to
time, including amounts payable in connection with any Award, owed as wages,
fringe benefits, or other compensation owed to the Participant, such amounts as
may be owed by the Participant to the Company, including but not limited to
amounts owed under Section 10(a), although the Participant shall remain liable
for any part of the Participant's payment obligation not satisfied through such
deduction and setoff. By accepting any Award granted hereunder, the Participant
agrees to any deduction or setoff under this Section 10(f).
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(g) Unfunded Status of Awards; Creation of Trusts. The Plan is intended to
constitute an "unfunded" plan for incentive and deferred compensation. With
respect to any payments not yet made to a Participant or obligation to deliver
Stock pursuant to an Award, nothing contained in the Plan or any Award shall
give any such Participant any rights that are greater than those of a general
creditor of the Company; provided that the Committee may authorize the creation
of trusts and deposit therein cash, Stock, other Awards or other property, or
make other arrangements to meet the Company's obligations under the Plan. Such
trusts or other arrangements shall be consistent with the "unfunded" status of
the Plan unless the Committee otherwise determines with the consent of each
affected Participant.
(h) Nonexclusivity of the Plan. The adoption of the Plan by the Board shall
not be construed as creating any limitations on the power of the Board or a
committee thereof to adopt such other incentive arrangements, apart from the
Plan, as it may deem desirable.
(i) Payments in the Event of Forfeitures; Fractional Shares. Unless
otherwise determined by the Committee, in the event of a forfeiture of an Award
with respect to which a Participant paid cash consideration, the Participant
shall be repaid the amount of such cash consideration. No fractional shares of
Stock shall be issued or delivered pursuant to the Plan or any Award. The
Committee shall determine whether cash, other Awards or other property shall be
issued or paid in lieu of such fractional shares or whether such fractional
shares or any rights thereto shall be forfeited or otherwise eliminated.
(j) Certain Limitations Relating to Accounting Treatment of Awards. Other
provisions of the Plan notwithstanding, the Committee's authority under the Plan
(including under Sections 7(c), 10(c) and 10(d)) is limited to the extent
necessary to ensure that any Non-qualified Stock Option or other Award of a type
that the Committee has intended to be subject to fixed accounting with a
measurement date at the date of grant or the date performance conditions are
satisfied under APB 25 shall not become subject to "variable" accounting solely
due to the existence of such authority.
(k) Governing Law. The validity, construction, and effect of the Plan, any
rules and regulations relating to the Plan and any Award document shall be
determined in accordance with the laws of the Commonwealth of Pennsylvania,
without giving effect to principles of conflicts of laws, and applicable
provisions of federal law.
(l) Awards to Participants Outside the United States. The Committee may
modify the terms of any Award under the Plan made to or held by a Participant
who is then resident or primarily employed outside of the United States in any
manner deemed by the Committee to be necessary or appropriate in order that such
Award shall conform to laws, regulations, and customs of the country in which
the Participant is then resident or primarily employed, or so that the value and
other benefits of the Award to the Participant, as affected by foreign tax laws
and other restrictions applicable as a result of the Participant's residence or
employment abroad shall be comparable to the value of such an Award to a
Participant who is resident or primarily employed in the United States.
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(m) Limitation on Rights Conferred under Plan. Neither the Plan nor any
action taken hereunder shall be construed as (i) giving any Eligible Person or
Participant the right to continue to provide services to the Company or a
subsidiary or affiliate, (ii) interfering in any way with the right of the
Company or a subsidiary or affiliate to terminate the employment or engagement
of any Eligible Person at any time, (iii) giving an Eligible Person or
Participant any claim to be granted any Award under the Plan or to be treated
uniformly with other Participants, employees or service providers, or (iv)
conferring on a Participant any of the rights of a shareholder of the Company
unless and until the Participant is duly issued or transferred shares of Stock
in accordance with the terms of an Award or a Non-qualified Stock Option is duly
exercised. Except as expressly provided in the Plan and an Award document,
neither the Plan nor any Award document shall confer on any person other than
the Company and the Participant any rights or remedies thereunder.
(n) Severability; Entire Agreement. If any of the provisions of this Plan
or any Award document is finally held to be invalid, illegal or unenforceable
(whether in whole or in part), such provision shall be deemed modified to the
extent, but only to the extent, of such invalidity, illegality or
unenforceability, and the remaining provisions shall not be affected thereby;
provided, that, if any of such provisions is finally held to be invalid,
illegal, or unenforceable because it exceeds the maximum scope determined to be
acceptable to permit such provision to be enforceable, such provision shall be
deemed to be modified to the minimum extent necessary to modify such scope in
order to make such provision enforceable hereunder. The Plan and any Award
documents contain the entire agreement of the parties with respect to the
subject matter thereof and supersede all prior agreements, promises, covenants,
arrangements, communications, representations and warranties between them,
whether written or oral with respect to the subject matter thereof.
(o) References to Legal and Regulatory Provisions. References in this Plan
to any provision of law, including the Code and the Exchange Act, or rule or
regulation (including accounting principles and interpretations) shall include
subsequently adopted amendments and any successor provisions, rules or
regulations.
(p) Plan Effective Date and Termination. The Plan shall become effective
upon its adoption by the Board. Unless earlier terminated by action of the Board
of Directors and subject to Section 6(a), the Plan will remain in effect until
such time as no Stock remains available for delivery under the Plan and the
Company has no further rights or obligations under the Plan with respect to
outstanding Awards under the Plan.
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