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EXHIBIT 10.5
THE PNC FINANCIAL SERVICES GROUP, INC.
1997 LONG-TERM INCENTIVE AWARD PLAN
(As amended as of March 27, 2000)
1. DEFINITIONS
In this Plan, except where the context otherwise indicates, the
following definitions apply:
1.1. "Agreement" means a written agreement implementing a grant of an
Option, Right or Performance Unit or an award of Incentive Shares.
1.2. "Board" means the Board of Directors of the Corporation.
1.3. "Code" means the Internal Revenue Code of 1986, as amended, and
the rules and regulations promulgated thereunder.
1.4. "Committee" means the committee appointed by the Board to
administer the Plan, all of the members of which shall be "non-employee
directors" as defined in Rule 16b-3 (b)(3)(i) under the Exchange Act or any
similar successor rule and "outside directors" as defined in Treas. Reg. Section
1.162-27(e)(3) or any similar successor regulation. Unless otherwise determined
by the Board, the Personnel and Compensation Committee of the Board shall be the
Committee.
1.5. "Common Stock" means the common stock, par value $5.00 per
share, of the Corporation.
1.6. "Corporation" means The PNC Financial Services Group, Inc.
1.7. "Date of Exercise" means the date on which the Corporation
receives notice of the exercise of an Option, Right or Performance Unit in
accordance with the terms of Article 9.
1.8. "Date of Grant" means the date on which an Option, Right or
Performance Unit is granted or Incentive Shares are awarded by the Committee or
such later date as may be specified by the Committee in authorizing the grant or
award.
1.9. "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
1.10. "Fair Market Value" of a Share means the amount equal to the
fair market value of a Share as determined pursuant to a reasonable method
adopted by the Committee in good faith for such purpose.
1.11. "Grantee" means a Senior Executive to whom Incentive Shares
have been awarded pursuant to Article 12.
1.12. "Incentive Shares" means Shares awarded pursuant to the
provisions of Article 12.
1.13. "Incentive Stock Option" means an Option granted under the Plan
that qualifies as an incentive stock option under Section 422 of the Code and
that the Corporation designates as such in the Agreement granting the Option.
1.14. "Nonstatutory Stock Option" means an Option granted under the
Plan that is not an Incentive Stock Option.
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1.15. "Option" means an option to purchase Shares granted under the
Plan in accordance with the terms of Article 6.
1.16. "Option Period" means the period during which an Option may be
exercised.
1.17. "Option Price" means the price per Share at which an Option may
be exercised. The Option Price shall be determined by the Committee, but unless
otherwise determined by the Committee pursuant to Section 3.7, in no event shall
the Option Price be less than the Fair Market Value per Share determined as of
the Date of Grant.
1.18. "Optionee" means a Senior Executive to whom an Option, Right or
Performance Unit has been granted.
1.19. "Performance Period" means the period or periods during which
each performance criterion of a Performance Unit will be measured against the
performance standards established by the Committee and specified in the
Agreement relating thereto.
1.20. "Performance Unit" means a performance unit granted under the
Plan in accordance with the terms of Article 8.
1.21. "Performance Unit Exercise Period" means the period during
which a Performance Unit may be exercised.
1.22. "Plan" means The PNC Financial Services Group, Inc. 1992
Long-Term Incentive Award Plan, as amended, restated, and renamed The PNC
Financial Services Group, Inc. 1997 Long-Term Incentive Award Plan.
1.23. "Related Option" means an Option granted in connection with a
specified Right or Performance Unit.
1.24. "Related Performance Unit" means a Performance Unit granted in
connection with a specified Option.
1.25. "Related Right" means a Right granted in connection with a
specified Option.
1.26. "Right" means a stock appreciation right granted under the Plan
in accordance with the terms of Article 7.
1.27. "Right Period" means the period during which a Right may be
exercised.
1.28. "Senior Executive" means any officer or key employee of the
Corporation or a Subsidiary who is designated as a "Senior Executive" by the
Committee.
1.29. "Share" means a share of authorized but unissued Common Stock
or a reacquired share of Common Stock.
1.30. "Subsidiary" means a corporation at least 80% of the total
combined voting power of all classes of stock of which is owned by the
Corporation, either directly or through one or more other Subsidiaries, except
that with respect to Nonstatutory Stock Options, Rights, Performance Units and
Incentive Shares granted or awarded after March 27, 2000, such term shall mean a
corporation, bank, partnership, business trust, limited liability company or
other form of business organization which is a consolidated subsidiary of the
Corporation under generally accepted accounting principles.
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2. PURPOSE
The Plan is intended to assist in attracting, retaining, and
motivating Senior Executives of outstanding ability and to promote the
identification of their interests with those of the shareholders of the
Corporation.
3. ADMINISTRATION
The Plan shall be administered by the Committee or by the Chairman of
the Committee in the exercise of such authority as the Committee may delegate to
him or her from time to time, provided that Section 162(m)(4)(C) of the Code
does not require action by the Committee as a whole. In addition to any other
powers granted to the Committee, it shall have the following powers, subject to
the express provisions of the Plan:
3.1. to determine in its discretion the Senior Executives to whom
Options, Performance Units or Rights shall be granted and to whom Incentive
Shares shall be awarded, the number of Shares to be subject to each Option,
Right, Performance Unit grant or Incentive Share award, and the terms upon which
Options, Rights or Performance Units may be acquired, exercised, or forfeited
and the terms and conditions of Incentive Share awards;
3.2. to determine all other terms and provisions of each Agreement,
which need not be identical;
3.3. without limiting the generality of the foregoing, to provide in
its discretion in an Agreement:
(i) for an agreement by the Optionee or Grantee to render
services to the Corporation or a Subsidiary upon such terms and
conditions as may be specified in the Agreement, provided that the
Committee shall not have the power under the Plan to commit the
Corporation or any Subsidiary to employ or otherwise retain any
Optionee or Grantee;
(ii) for restrictions on the transfer, sale or other
disposition of Shares issued to the Optionee upon the exercise of an
Option, Right or Performance Unit, or for conditions with respect to
the issuance of Incentive Shares;
(iii) for an agreement by the Optionee or Grantee to resell to
the Corporation, under specified conditions, Shares issued upon the
exercise of an Option, Right or Performance Unit or awarded as
Incentive Shares;
(iv) for the payment of the Option Price upon the exercise of
an Option otherwise than in cash, including without limitation by
delivery of Shares valued at Fair Market Value on the Date of Exercise
of the Option or a combination of cash and Shares; by means of any
attestation procedure approved or ratified by the Committee; or by
delivery of a properly executed exercise notice together with
irrevocable instructions to a broker to promptly deliver to the
Corporation the amount of sale or loan proceeds to pay the exercise
price;
(v) for the deferral of receipt of amounts that otherwise
would be distributed upon exercise of a Performance Unit, the terms and
conditions of any such deferral and any interest or dividend equivalent
or other payment that shall accrue with respect to deferred
distributions, subject to the provisions of Article 11;
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(vi) for the forfeiture by any Optionee or Grantee of any
Option, Right, Performance Unit, or Incentive Shares upon such terms
and conditions as the Committee may deem advisable from time to time;
and
(vii) for the effect of a "change in control," as defined in
the Agreement, of the Corporation on the rights of an Optionee or
Grantee with respect to any Options, Rights, Performance Units or
Incentive Shares.
3.4. to construe and interpret the Agreements and the Plan;
3.5. to require, whether or not provided for in the pertinent
Agreement, of any person exercising an Option, Right or Performance Unit or
acquiring Incentive Shares, at the time of such exercise or acquisition, the
making of any representations or agreements which the Committee may deem
necessary or advisable in order to comply with applicable securities, tax, or
other laws;
3.6. to provide for satisfaction of an Optionee's or Grantee's tax
liabilities arising in connection with the Plan through, without limitation,
retention by the Corporation of shares of Common Stock otherwise issuable on the
exercise of a Nonstatutory Stock Option, Right or Performance Unit or pursuant
to an award of Incentive Shares or through delivery of Common Stock to the
Corporation by the Optionee or Grantee under such terms and conditions as the
Committee deems appropriate, including but not limited to any attestation
procedure approved or ratified by the Committee;
3.7. to provide with respect to any Option, including those outstanding
on February 20, 1997, that, if the Optionee, while a Senior Executive, exercises
the Option or satisfies any related tax withholding obligation in whole or in
part by surrendering already-owned shares of Common Stock, the Optionee will,
subject to this Section 3.7 and such other terms and conditions as may be
imposed by the Committee, receive an additional option ("Reload Option"). The
Reload Option will be to purchase, at Fair Market Value as of the date the
original Option was exercised, a number of shares of Common Stock equal to the
number of whole shares surrendered by the Optionee to exercise the original
Option or to satisfy any related tax withholding obligation. The Reload Option
will be exercisable only between its Date of Grant and the date of the
expiration of the original Option. A Reload Option shall be subject to such
additional terms and conditions as the Committee shall approve, which terms may
provide that the Committee may cancel the Optionee's right to receive the Reload
Option and that the Reload Option will be granted only if the Committee has not
canceled such right prior to the exercise of the original Option.
3.8. to make all other determinations and take all other actions
necessary or advisable for the administration of the Plan; and
3.9. to delegate to officers or managers of the Corporation or any
Subsidiary the authority to perform administrative functions under the Plan,
provided that Section 162(m)(4)(C) of the Code does not require action by the
Committee as a whole with respect to such function.
Any determinations or actions made or taken by the Committee pursuant
to this Article shall be binding and final.
4. ELIGIBILITY
Options, Rights, Performance Units and Incentive Shares may be granted
or awarded only to Senior Executives; provided, that the members of the
Committee are not eligible to receive Options, Rights, Performance Units or
Incentive Shares.
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5. STOCK SUBJECT TO THE PLAN
5.1. The maximum number of Shares that may be issued or as to which
grants or awards may be made under the Plan (excluding Shares issued pursuant to
grants or awards made prior to February 20, 1997) shall not exceed the sum of
(i) 10,141,853 Shares plus (ii) as of January 1 of each calendar year commencing
with 1998 an additional number of Shares (which shall be cumulative from year to
year) equal to one and one-half percent (1.5%) of the total issued shares of
Common Stock (including reacquired Shares) at the end of the immediately
preceding calendar year. Notwithstanding the foregoing, in no event shall more
than three percent (3%) of the total issued shares of Common Stock (including
reacquired Shares) at the end of the immediately preceding calendar year be
cumulatively available for grants and awards made in any calendar year. The
maximum number of Shares as to which grants or awards may be made under the Plan
to one Optionee or Grantee with respect to one calendar year shall be 250,000
Shares. The limitation provided in the first sentence of this Section 5.1 is
hereinafter called the "Cumulative Limitation"; the limitation provided in the
second sentence is hereinafter called the "Annual Limitation"; and the
limitation provided in the third sentence is hereinafter called the "Individual
Limitation."
5.2. If an Option, Right or Performance Unit expires or terminates for
any reason (other than termination by virtue of the exercise of a Related
Option, Related Right or Related Performance Unit, as the case may be) without
having been fully exercised, or if Shares covered by an Incentive Share award
are not issued or are forfeited Shares which had been subject to the Agreement
relating thereto shall for purposes of the Cumulative Limitation (and if granted
or awarded in the same calendar year, then also for purposes of the Annual
Limitation) again become available for the grant of other Options, Rights and
Performance Units or for the award of additional Incentive Shares.
5.3. The Shares issued upon the exercise of a Right or Performance Unit
(or if cash is payable in connection with such exercise, that number of Shares
having a Fair Market Value equal to the cash payable upon such exercise), shall
be charged against the number of Shares issuable under the Plan and shall not
become available for the grant of other Options, Rights and Performance Units or
for the award of Incentive Shares. If the Right referred to in the preceding
sentence is a Related Right, or if the Performance Unit referred to in the
preceding sentence is a Related Performance Unit, the Shares subject to the
Related Option, to the extent not charged against the number of Shares subject
to the Plan in accordance with this Section 5.3, shall for purposes of the
Cumulative Limitation (and if granted in the same calendar year, then also for
purposes of the Annual Limitation) again become available for the grant of other
Options, Rights or Performance Units or for the award of additional Incentive
Shares.
6. OPTIONS
6.1. The Committee is hereby authorized to grant Nonstatutory Stock
Options and Incentive Stock Options to Senior Executives, provided that the
number of Options granted to a Senior Executive during a calendar year shall not
exceed the Individual Limitation when aggregated with other grants or awards
made to that Senior Executive during that calendar year.
6.2. All Agreements granting Options shall contain a statement that the
Option is intended to be either (i) a Nonstatutory Stock Option or (ii) an
Incentive Stock Option.
6.3. The Option Period shall be determined by the Committee and
specifically set forth in the Agreement, provided that an Option shall not be
exercisable until the expiration of at least six months from the Date of Grant
(except that this limitation need not apply in the event of the death or
disability of the Optionee or as otherwise permitted by the Agreement
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upon a change in control of the Corporation) or after ten years from the Date of
Xxxxx.
6.4. All Incentive Stock Options granted under the Plan shall comply
with the provisions of the Code governing incentive stock options and with all
other applicable rules and regulations.
6.5. All other terms of Options granted under the Plan shall be
determined by the Committee in its sole discretion.
7. RIGHTS
7.1. The Committee is hereby authorized to grant Rights to Senior
Executives, provided that the number of Rights granted to a Senior Executive
during a calendar year shall not exceed the Individual Limitation when
aggregated with other grants or awards made to that Senior Executive during that
calendar year.
7.2. Right may be granted under the Plan:
(i) in connection with, and at the same time as, the grant
of an Option to a Senior Executive;
(ii) by amendment of an outstanding Nonstatutory Stock Option
granted under the Plan to a Senior Executive; or
(iii) independently of any Option granted under the Plan.
A Right granted under clause (i) or (ii) of the preceding sentence is a
Related Right. A Related Right may, in the Committee's discretion, apply to all
or a portion of the Shares subject to the Related Option.
7.3. A Right may be exercised in whole or in part as provided in the
Agreement, and, subject to the provisions of the Agreement, entitles its
Optionee to receive, without any payment to the Corporation (other than required
tax withholding amounts), either cash or that number of Shares (equal to the
highest whole number of Shares), or a combination thereof, in an amount or
having a Fair Market Value determined as of the Date of Exercise not to exceed
the number of Shares subject to the portion of the Right exercised multiplied by
an amount equal to the excess of the Fair Market Value per Share on the Date of
Exercise of the Right over either (i) the Fair Market Value per Share on the
Date of Grant of the Right or the base price determined by the Committee
pursuant to Section 3.7 if the Right is not a Related Right, or (ii) the Option
Price as provided in the Related Option if the Right is a Related Right.
7.4. The Right Period shall be determined by the Committee and
specifically set forth in the Agreement, provided, however:
(i) a Right may not be exercised until the expiration of at
least six months from the Date of Grant (except that this limitation
need not apply in the event of the death or disability of the Optionee
or as otherwise permitted by the Agreement upon a change in control of
the Corporation);
(ii) a Right will expire no later than the earlier of (A) ten
years from the Date of Grant, or (B) in the case of a Related Right,
the expiration of the Related Option; and
(iii) a Right that is a Related Right may be exercised only
when and to the extent the Related Option is exercisable.
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7.5. The exercise, in whole or in part, of a Related Right shall cause
a reduction in the number of Shares subject to the Related Option equal to the
number of Shares with respect to which the Related Right is exercised.
Similarly, the exercise, in whole or in part, of a Related Option shall cause a
reduction in the number of Shares subject to the Related Right equal to the
number of Shares with respect to which the Related Option is exercised.
8. PERFORMANCE UNITS
8.1. The Committee is hereby authorized to grant Performance Units to
Senior Executives, provided that the number of Performance Units granted to a
Senior Executive during a calendar year shall not exceed the Individual
Limitation when aggregated with other grants or awards made to that Senior
Executive during that calendar year.
8.2. Performance Units may be granted under the Plan:
(i) in connection with, and at the same time as, the grant of a
Nonstatutory Stock Option to a Senior Executive;
(ii) by amendment of an outstanding Nonstatutory Stock Option granted
under the Plan to a Senior Executive; or
(iii) independently of any Option granted under the Plan.
A Performance Unit granted under Subparagraph (i) or (ii) of the
preceding sentence is a Related Performance Unit. A Related Performance Unit
may, in the Committee's discretion, apply to all or a portion of the Shares
subject to the Related Option. A Performance Unit may not be granted in
connection with, or by amendment to, an Incentive Stock Option.
8.3. A Performance Unit may be exercised in whole or in part as
provided in the Agreement, and, subject to the provisions of the Agreement,
entitles its Optionee to receive, without any payment to the Corporation (other
than required tax withholding amounts), cash, Shares or a combination of cash
and Shares, based upon the degree to which performance standards established by
the Committee and specified in the Agreement have been achieved. During the
Performance Period, such performance standards may be particular to a Senior
Executive or the department, branch, Subsidiary or other unit in which he works,
or may be based on the performance of the Corporation generally. The performance
standards may be based on earnings or earnings growth; return on assets, equity
or investment; regulatory compliance; satisfactory internal or external audits;
improvement of financial ratings; reduction of nonperforming loans; achievement
of balance sheet or income statement objectives; or any other objective goals
established by the Committee, and may be absolute in their terms or measured
against or in relationship to other companies comparably, similarly or otherwise
situated.
8.4. The Performance Unit Exercise Period shall be determined by the
Committee and specifically set forth in the Agreement, provided, however:
(i) A Performance Unit may not be exercised until the expiration of at
least six months from the Date of Grant (except that this limitation need
not apply in the event of the death or disability of the Optionee or as
otherwise permitted by an Agreement upon a change in control of the
Corporation); and
(ii) a Performance Unit will expire no later than the earlier of (A)
ten years from the Date of Xxxxx, or (B) in the case of a Related
Performance Unit, the expiration of the Related Option.
8.5. Each Agreement granting Performance Units shall specify the number
of Performance Units granted; provided, that the maximum number of Related
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Performance Units may not exceed the maximum number of Shares subject to the
Related Option and the number of Performance Units may not exceed the maximum
number of Shares subject to the Related Option and the maximum value of a
Related Performance Unit may not exceed the Fair Market Value of a Share subject
to the Related Option.
8.6. The exercise, in whole or in part, of Related Performance Units shall
cause a reduction in the number of Shares subject to the Related Option and the
number of Performance Units in accordance with the terms of the Agreement.
Similarly, the exercise, in whole or in part, of a Related Option shall cause a
reduction in the number of Related Performance Units equal to the number of
Shares with respect to which the Related Option is exercised.
9. EXERCISE; PAYMENT OF WITHHOLDING TAXES
An Option, Right or Performance Unit may, subject to the provisions of the
Agreement under which it was granted, be exercised in whole or in part by the
delivery to the Corporation of written notice of the exercise, in such form as
the Committee may prescribe, accompanied, in the case of an Option, by full
payment for the Shares with respect to which the Option is exercised, and in the
case of an Option, Right or Performance Unit, full payment for related
withholding taxes, if any. The receipt of Incentive Shares shall be subject to
full payment by the Grantee of any withholding taxes then required to be paid.
10. NONTRANSFERABILITY
Except as the Committee may expressly provide otherwise in or with respect
to an Agreement, including any Agreement in effect as of February 20, 1997,
Options, Rights and Performance Units granted under the Plan shall not be
transferable otherwise than by will or the laws of descent and distribution, and
an Option, Right or Performance Unit may be exercised during his or her lifetime
only by the Optionee or, in the event of his or her legal disability, by his or
her legal representative. A Related Right or Related Performance Unit is
transferable only when the Related Option is transferable and only with the
Related Option and under the same conditions. An Optionee may also designate a
beneficiary to exercise his or her Options after the Optionee's death, provided
that the Committee has first expressly approved the procedures and forms
necessary to effect such a designation.
11. DEFERRAL OF AWARDS
If an Optionee so elects in accordance with the terms of an Agreement, the
Optionee may defer any or all of the amount otherwise payable on the exercise of
Performance Units in accordance with the provisions of a deferred compensation
plan maintained by the Corporation or a Subsidiary, provided:
(i) that the Optionee makes such election by delivering to the
Corporation written notice of such election, in such form as the Committee
may from time to time prescribe, prior to the beginning of the Performance
Period;
(ii) that such election shall be irrevocable until at least six months
after termination of the Optionee's employment; and
(iii) that such deferred payment shall be made in accordance with the
provisions of such deferred compensation plan.
12. INCENTIVE SHARE AWARDS
The Committee may, in its sole discretion, grant Incentive Share awards to
Senior Executives, provided that the number of Incentive Share awards granted to
a Senior Executive during a calendar year shall not exceed the Individual
Limitation when aggregated with other grants or awards made to that
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Senior Executive during that calendar year. Incentive Share awards shall entitle
a Senior Executive to receive Shares, to be issued at such times, subject to the
achievement of such performance standards or other goals, in recognition of such
performance or other achievements or for such other purposes, and on such other
terms and conditions, if any, as the Committee shall deem appropriate.
Performance standards may be based on earnings or earnings growth; return on
assets, equity or investment; regulatory compliance; satisfactory internal or
external audits; improvement of financial ratings; reduction of nonperforming
loans; achievement of balance sheet or income statement objectives; or any other
objective goals established by the Committee, and may be absolute in their terms
or measured against or in relationship to other companies comparably, similarly
or otherwise situated. The number of Incentive Share awards made to a Senior
Executive during a calendar year shall not exceed the Individual Limitation when
aggregated with other grants or awards made to that Senior Executive during that
calendar year.
13. CAPITAL ADJUSTMENTS
The number and class of Shares (or the Performance Unit equivalent)
subject to each outstanding Option, Right or Performance Unit or Incentive Share
award, the Option Price and the aggregate number and class of Shares for which
grants or awards thereafter may be made, and the Individual Limitation provided
for in Section 5.1, shall be subject to such adjustment, if any, as the
Committee in its sole discretion deems appropriate to reflect such events as
stock dividends, stock splits, recapitalizations, mergers, consolidations or
reorganizations of or by the Corporation.
14. TERMINATION OR AMENDMENT
The Board or the Committee may amend, alter or terminate this Plan in any
respect, at any time; provided, however, that, after this Plan has been approved
by the Shareholders of the Corporation, no amendment, alteration or termination
of this Plan shall be made by the Board or the Committee without approval of (i)
the Corporation's shareholders to the extent shareholder approval of the
amendment is required by applicable law or regulations or the requirements of
the principal exchange or interdealer quotation system on which the Common Stock
is listed or quoted, and (ii) each affected Optionee if such amendment,
alteration or termination would adversely affect his or her rights or
obligations under any grant or award made prior to the date of such amendment,
alteration or termination.
15. MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS, RIGHTS AND PERFORMANCE UNITS
Subject to the terms and conditions and within the limitations of the
Plan, the Committee may modify, extend or renew outstanding Options, Rights and
Performance Units, or accept the surrender of outstanding options, rights and
performance units (to the extent not theretofore exercised) granted under the
Plan or under any other plan of the Corporation, a Subsidiary or a company or
similar entity acquired by the Corporation or a Subsidiary, and authorize the
granting of new Options, Rights and Performance Units pursuant to the Plan in
substitution therefor (to the extent not theretofore exercised), and the
substituted Options, Rights and Performance Units may specify a longer term than
the surrendered Options, Rights and Performance Units or have any other
provisions that are authorized by the Plan; provided, however, that the
substituted Options, Rights and Performance Units may not specify a lower
exercise price than the surrendered options, rights and performance units.
Subject to the terms and conditions and within the limitations of the Plan, the
Committee may modify the terms of any outstanding Agreement providing for awards
of Incentive Shares. Notwithstanding the foregoing, however, no modification of
an Option, Right or Performance Unit granted under the Plan, or an award of
Incentive Shares, shall, without the consent of the Optionee or Grantee,
adversely affect the rights or obligations of the Optionee or Grantee.
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16. EFFECTIVENESS OF THE PLAN AND AMENDMENTS
The effective date of the Plan was December 17, 1987. The effective date
of the Plan amendments contained herein is February 20, 1997 unless otherwise
set forth herein. Any amendments to the Plan requiring shareholder approval
pursuant to Article 14 are subject to approval by vote of the shareholders of
the Corporation within 12 months after their adoption by the Board or the
Committee. Subject to that approval, any amendments are effective on the date on
which they are adopted by the Board. Options, Rights, Performance Units or
Incentive Shares may be granted or awarded prior to shareholder approval of
amendments, but each Option, Right, Performance Unit or Incentive Share grant or
award requiring such amendments shall be subject to the approval of the
amendments by the shareholders. The date on which any Option, Right, Performance
Unit or Incentive Shares granted or awarded prior to shareholder approval of the
amendment shall be the Date of Grant for all purposes of the Plan as if the
Option, Right, Performance Unit or Incentive Shares had not been subject to
approval. No Option, Right or Performance Unit granted subject to shareholder
approval of an amendment may be exercised prior to such shareholder approval,
and any Incentive Share award subject to shareholder approval of an amendment
and any dividends payable thereon are subject to forfeiture if such shareholder
approval is not obtained.
17. TERM OF THE PLAN
Unless sooner terminated by the Board or the Committee pursuant to Article
14, the Plan shall terminate on February 20, 2007, and no Options, Rights,
Performance Units or Incentive Share awards may be granted or awarded after
termination. The termination shall not affect the validity of any Option, Right,
Performance Unit or Incentive Share awards outstanding on the date of
termination.
18. INDEMNIFICATION OF COMMITTEE
In addition to such other rights of indemnification as they may have as
directors or as members of the Committee, the members of the Committee shall be
indemnified by the Corporation against the reasonable expenses, including
attorneys' fees, actually and reasonably incurred in connection with the defense
of any action, suit or proceeding, or in connection with any appeal therein, to
which they or any of them may be a party by reason of any action taken or
failure to act under or in connection with the Plan or any Option, Right,
Performance Unit or Incentive Shares granted or awarded hereunder, and against
all amounts reasonably paid by them in settlement thereof or paid by them in
satisfaction of a judgment in any such action, suit or proceeding, if such
members acted in good faith and in a manner which they believed to be in, and
not opposed to, the best interests of the Corporation.
19. COMPLIANCE WITH SECTION 162(m) OF THE CODE
To the extent that any provision of the Plan or an Agreement, or any
action of the Committee, may result in the application of Section 162(m)(1) of
the Code to compensation payable to a Grantee or Optionee, such provision or
action shall be deemed to be null and void, to the extent permitted by law and
deemed advisable by the Committee. The Committee shall have the authority to
override the application of this Article by an action duly approved or ratified
by the Committee and reflected in the Committee's records.
20. GENERAL PROVISIONS
20.1. The establishment of the Plan shall not confer upon any Senior
Executive any legal or equitable right against the Corporation, any Subsidiary
or the Committee, except as expressly provided in the Plan.
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20.2. Neither the Plan nor any Agreement constitutes inducement or
consideration for the employment of any Senior Executive, nor are they a
contract between the Corporation or any Subsidiary and any Senior Executive.
Participation in the Plan shall not give a Senior Executive any right to be
retained in the service of the Corporation or any Subsidiary.
20.3. The Corporation and its Subsidiaries may assume options, warrants,
or rights to purchase stock issued or granted by other corporations whose stock
or assets shall be acquired by the Corporation or its Subsidiaries, or which
shall be merged into or consolidated with the Corporation or its Subsidiaries.
Neither the adoption of this Plan, nor its submission to the shareholders, shall
be taken to impose any limitations on the powers of the Corporation or its
affiliates to issue, grant, or assume options, warrants, or rights, otherwise
than under this Plan, or to adopt other stock option or restricted stock plans
or to impose any requirement of shareholder approval upon the same.
20.4. Except as the Committee may otherwise provide pursuant to Article
10, or as otherwise required by a deferral election pursuant to Article 11, the
interests of any Senior Executive under the Plan are not subject to the claims
of creditors and may not, in any way, be assigned, alienated or encumbered.
20.5. The Plan shall be governed, construed and administered in accordance
with the laws of the Commonwealth of Pennsylvania, and it is the intention of
the Corporation that Incentive Stock Options granted under the Plan qualify as
such under Section 422 of the Code.
