TF FINANCIAL CORPORATION
2005 STOCK-BASED INCENTIVE PLAN
1. DEFINITIONS.
"Affiliate" means any "parent corporation" or "subsidiary corporation"
of the Corporation, as such terms are defined in Sections 424(e) and 424(f) of
the Code.
"Award" means, individually or collectively, a grant under the Plan of
Non-Statutory Stock Options, Incentive Stock Options and Stock Awards.
"Award Agreement" means an agreement evidencing and setting forth the
terms of an Award.
"Bank" means Third Federal Savings Bank, Newtown, Pennsylvania
"Board of Directors" means the board of directors of the Corporation.
"Change in Control" of the Corporation or the Bank shall mean an event
of a nature that: (i) would be required to be reported in response to Item 5.01
of the current report on Form 8-K, as in effect on the date hereof, pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act");
(ii) involves the sale of all, or a material portion, of the assets of the
Corporation or the Bank; (iii) involves the merger or re-capitalization of the
Corporation whereby the Corporation is not the surviving entity; (iv) results in
a change in control of the Corporation, as otherwise defined or determined by
the Office of Thrift Supervision ("OTS") or regulations promulgated by it; or
(v) without limitation, such a Change in Control shall be deemed to have
occurred at such time as (A) any "person" (as the term is used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
the Bank or the Corporation representing 10% or more of the Bank's or the
Corporation's outstanding securities except for any securities of the Bank
purchased by the Corporation and any securities purchased by any tax qualified
employee benefit plan of the Bank or the Corporation; or (B) individuals who
constitute the Board of Directors on the date hereof (the "Incumbent Board")
cease for any reason to constitute at least a majority thereof, provided that
any person becoming a director subsequent to the date hereof whose election was
approved by a vote of at least three-quarters of the directors comprising the
Incumbent Board, or whose nomination for election by the Corporation's
stockholders was approved by the same Nominating Committee serving under an
Incumbent Board, shall be, for purposes of this clause (B), considered as though
he were a member of the Incumbent Board; or (C) a plan of reorganization,
merger, consolidation, sale of all or substantially all the assets of the Bank
or the Corporation or similar transaction occurs in which the Bank or
Corporation is not the resulting entity; or (D) solicitations of shareholders of
the Corporation, by someone other than the current management of the
Corporation, seeking stockholder approval of a plan or reorganization, merger of
consolidation of the Corporation or Bank or similar transaction with one or more
corporations as a result of which the outstanding shares of the class of
securities then subject to the plan or transaction are exchanged for or
converted into cash or property or securities not issued by the Bank or the
Corporation shall be distributed; or (E) a tender offer is made for 10% or more
of the voting securities of the Bank or the Corporation, other than by the
Corporation.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the committee designated by the Board of Directors,
pursuant to Section 2 of the Plan, to administer the Plan.
"Common Stock" means the Common Stock of the Corporation.
"Corporation" means TF Financial Corporation.
"Date of Grant" means the effective date of an Award.
"Director" means a member of the Board of Directors.
"Disability" means any mental or physical condition with respect to
which the Participant qualifies for and receives benefits for under a long-term
disability plan of the Corporation or an Affiliate, or in the absence of such a
long-term disability plan or coverage under such a plan, "Disability" shall mean
a physical or mental condition which, in the sole discretion of the Committee,
is reasonably expected to be of indefinite duration and to substantially prevent
the Participant from fulfilling his duties or responsibilities to the
Corporation or an Affiliate.
"Effective Date" means the date of approval of the Plan by a vote of
the stockholders of the Corporation.
"Employee" means any person employed by the Corporation or an
Affiliate. Unless otherwise noted herein, a Director who is also employed by the
Corporation or an Affiliate shall be considered an Employee under the Plan.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exercise Price" means the price at which a Participant may purchase a
share of Common Stock pursuant to an Option.
"Fair Market Value" means the market price of Common Stock, determined
by the Committee as follows:
(i) if the Common Stock is traded otherwise than on a national
securities exchange, then the Fair Market Value per Share shall be equal to the
mean between the last bid and ask price of such Common Stock on such date or, if
there is no bid and ask price on said date, then on the immediately prior
business day on which there was a bid and ask price. If no such bid and ask
price is available, then the Fair Market Value shall be determined by the
Committee in good faith; or (ii) if the Common Stock is listed on a national
securities exchange, including the Nasdaq National Market, then the Fair Market
Value per Share shall be not less than the average of the highest and lowest
selling price of such Common Stock on such exchange on such date, or if there
were no sales on said date, then the Fair Market Value shall be not less than
the mean between the last bid and ask price on such date. If no such bid and ask
price is available, then the Fair Market Value shall be determined by the
Committee in good faith.
Whenever possible, the determination of Fair Market Value by the
Committee shall be based on the prices reported in The Wall Street Journal. The
Committee=s determination of Fair Market Value shall be conclusive and binding
on all persons.
"Incentive Stock Option" means a stock option granted to a Participant,
pursuant to Section 7 of the Plan, that is intended to meet the requirements of
Section 422 of the Code.
"Non-Statutory Stock Option" means a stock option granted to a
Participant pursuant to the terms of the Plan but which is not intended to be
and is not identified as an Incentive Stock Option or a stock option granted
under the Plan which is intended to be and is identified as an Incentive Stock
Option but which does not meet the requirements of Section 422 of the Code.
"Option" means an Incentive Stock Option or Non-Statutory Stock Option.
"Outside Director" means a member of the board(s) of directors of the
Corporation or an Affiliate who is not also an Employee of the Corporation or an
Affiliate.
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"Participant" means any person who holds an outstanding Award.
"Plan" means this TF Financial Corporation 2005 Stock-Based Incentive
Plan.
"Retirement" means retirement from employment or service with the
Corporation or an Affiliate following attainment of not less than age 55 and
completion of not less than ten years of service with the Corporation or
Affiliate, as applicable.
"Stock Award" means an Award granted to a Participant pursuant to
Section 8 of the Plan.
"Termination for Cause" shall mean termination because of a
Participant's personal dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, willful violation of any law, rule or regulation (other than traffic
violations or similar offenses) or material breach of any provision of any
employment agreement between the Corporation and/or any subsidiary of the
Corporation and a Participant.
"Trust" means a trust established by the Board of Directors in
connection with this Plan to hold Common Stock or other property for the
purposes set forth in the Plan.
"Trustee" means any person or entity approved by the Board of Directors
or its designee(s) to hold any of the Trust assets.
2. ADMINISTRATION.
(a) The Committee shall administer the Plan. The Committee shall
consist of two or more disinterested Directors of the Corporation, who shall be
appointed by the Board of Directors. A member of the Board of Directors shall be
deemed to be "disinterested" only if he satisfies (i) such requirements as the
Securities and Exchange Commission may establish for non-employee directors
administering plans intended to qualify for exemption under Rule 16b-3 (or its
successor) under the Exchange Act and (ii) such requirements as the Internal
Revenue Service may establish for outside directors acting under plans intended
to qualify for exemption under Section 162(m)(4)(C) of the Code. The Board of
Directors may also appoint one or more separate committees of the Board of
Directors, each composed of one or more directors of the Corporation or an
Affiliate who need not be disinterested, that may grant Awards and administer
the Plan with respect to Employees, Outside Directors, and other individuals who
are not considered officers or directors of the Corporation under Section 16 of
the Exchange Act or for whom Awards are not intended to satisfy the provisions
of Section 162(m) of the Code.
(b) The Committee shall (i) select the individuals who are to receive
Awards under the Plan, (ii) determine the type, number, vesting requirements and
other features and conditions of such Awards, (iii) interpret the Plan and Award
Agreements in all respects and (iv) make all other decisions relating to the
operation of the Plan. The Committee may adopt such rules or guidelines as it
deems appropriate to implement the Plan. The Committee's determinations under
the Plan shall be final and binding on all persons.
(c) Each Award shall be evidenced by a written agreement ("Award
Agreement") containing such provisions as may be required by the Plan and
otherwise approved by the Committee. Each Award Agreement shall constitute a
binding contract between the Corporation or an Affiliate and the Participant,
and every Participant, upon acceptance of an Award Agreement, shall be bound by
the terms and restrictions of the Plan and the Award Agreement. The terms of
each Award Agreement shall be in accordance with the Plan, but each Award
Agreement may include any additional provisions and restrictions determined by
the Committee, in its discretion, provided that such additional provisions and
restrictions are not inconsistent with the terms of the
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Plan. In particular, and at a minimum, the Committee shall set forth in each
Award Agreement: (i) the type of Award granted; (ii) the Exercise Price of any
Option; (iii) the number of shares subject to the Award; (iv) the expiration
date of the Award; (v) the manner, time, and rate (cumulative or otherwise) of
exercise or vesting of such Award; and (vi) the restrictions, if any, placed
upon such Award, or upon shares which may be issued upon exercise of such Award.
The President of the Corporation, the Chairman of the Committee and such other
directors and officers as shall be designated by the Committee is hereby
authorized to execute Award Agreements on behalf of the Corporation or an
Affiliate and to cause them to be delivered to the recipients of Awards.
(d) The Committee may delegate all authority for: (i) the determination
of forms of payment to be made by or received by the Plan and (ii) the execution
of any Award Agreement. The Committee may rely on the descriptions,
representations, reports and estimates provided to it by the management of the
Corporation or an Affiliate for determinations to be made pursuant to the Plan,
including the satisfaction of any conditions of an Award; provided, however,
only the Committee or a portion of the Committee may certify the attainment of
any conditions of an Award intended to satisfy the requirements of Section
162(m) of the Code.
3. TYPES OF AWARDS.
The following Awards may be granted under the Plan:
(a) Non-Statutory Stock Options.
(b) Incentive Stock Options.
(c) Stock Awards.
4. STOCK SUBJECT TO THE PLAN; AWARD MAXIMUMS.
Subject to adjustment as provided in Section 13 of the Plan, the
maximum number of shares reserved for Awards under the Plan is 240,000. Subject
to adjustment as provided in Section 14 of the Plan, the maximum number of
shares reserved hereby for purchase pursuant to the exercise of Options,
including Incentive Stock Options, granted under the Plan is 240,000, reduced by
the issuance of any Stock Awards. The maximum number of the shares reserved for
Stock Awards is 40,000 in the aggregate. The maximum number of shares that may
be delivered to any person in accordance with Awards under the Plan shall not
exceed 120,000 shares of Common Stock. No individual shall be granted an amount
of Stock Options which exceeds 50% of the total shares reserved for Awards under
the Plan. No individual shall be granted an amount of Stock Awards in excess of
50% of the total number of the shares reserved for Stock Awards under the Plan.
The shares of Common Stock issued under the Plan may be either authorized but
unissued shares or authorized shares previously issued and acquired or
reacquired by the Trustee or the Corporation, respectively. To the extent that
Options and Stock Awards are granted under the Plan, the shares underlying such
Awards will be unavailable for any other use including future grants under the
Plan except that, to the extent that Stock Awards or Options terminate, expire
or are forfeited without having vested or without having been exercised, new
Awards may be made with respect to these shares. [Notwithstanding anything
herein to the contrary, no Awards shall be made under the Plan prior to June 1,
2005].
5. ELIGIBILITY.
Subject to the terms of the Plan, all Employees and Outside Directors
shall be eligible to receive Awards under the Plan.
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6. NON-STATUTORY STOCK OPTIONS.
The Committee may, subject to the limitations of this Plan and the
availability of shares of Common Stock reserved but not previously awarded under
the Plan, grant Non-Statutory Stock Options to eligible individuals upon such
terms and conditions as it may determine to the extent such terms and conditions
are consistent with the following provisions:
(a) Exercise Price. The Committee shall determine the Exercise Price of
each Non-Statutory Stock Option. However, the Exercise Price shall not be less
than 100% of the Fair Market Value of the Common Stock on the Date of Grant.
(b) Terms of Non-Statutory Stock Options. The Committee shall determine
the term during which a Participant may exercise a Non-Statutory Stock Option,
but in no event may a Participant exercise a Non-Statutory Stock Option, in
whole or in part, more than ten (10) years from the Date of Grant. The Committee
shall also determine the date on which each Non-Statutory Stock Option, or any
part thereof, first becomes exercisable and any terms or conditions a
Participant must satisfy in order to exercise each Non-Statutory Stock Option.
The shares of Common Stock underlying each Non-Statutory Stock Option may be
purchased in whole or in part by the Participant at any time during the term of
such Non-Statutory Stock Option, or any portion thereof, once the Non-Statutory
Stock Option becomes exercisable.
(c) Non-Transferability. Unless otherwise determined by the Committee
in accordance with this Section 6(c), a Participant may not transfer, assign,
hypothecate, or dispose of in any manner, other than by will or the laws of
intestate succession, a Non-Statutory Stock Option. The Committee may, however,
in its sole discretion, permit transferability or assignment of a Non-Statutory
Stock Option if such transfer or assignment is, in its sole determination, for
valid estate planning purposes and such transfer or assignment is permitted
under the Code and Rule 16b-3 under the Exchange Act. For purposes of this
Section 6(c), a transfer for valid estate planning purposes includes, but is not
limited to: (a) a transfer to a revocable intervivos trust as to which the
Participant is both the settlor and trustee, or (b) a transfer for no
consideration to: (i) any member of the Participant's Immediate Family, (ii) any
trust solely for the benefit of members of the Participant's Immediate Family,
(iii) any partnership whose only partners are members of the Participant's
Immediate Family, and (iv) any limited liability corporation or corporate entity
whose only members or equity owners are members of the Participant's Immediate
Family. For purposes of this Section 6(c), "Immediate Family" includes, but is
not necessarily limited to, a Participant's parents, grandparents, spouse,
children, grandchildren, siblings (including half bothers and sisters), and
individuals who are family members by adoption. Nothing contained in this
Section 6(c) shall be construed to require the Committee to give its approval to
any transfer or assignment of any Non-Statutory Stock Option or portion thereof,
and approval to transfer or assign any Non-Statutory Stock Option or portion
thereof does not mean that such approval will be given with respect to any other
Non-Statutory Stock Option or portion thereof. The transferee or assignee of any
Non-Statutory Stock Option shall be subject to all of the terms and conditions
applicable to such Non-Statutory Stock Option immediately prior to the transfer
or assignment and shall be subject to any other conditions proscribed by the
Committee with respect to such Non-Statutory Stock Option.
(d) Termination of Employment or Service (General). Unless otherwise
determined by the Committee, upon the termination of a Participant's employment
or other service for any reason other than Retirement, disability or death, or
Termination for Cause, the Participant may exercise only those Non-Statutory
Stock Options that were immediately exercisable by the Participant at the date
of such termination and only for a period of three (3) months following the date
of such termination, or, if sooner, until the expiration of the term of the
Option.
(e) Termination of Employment or Service (Retirement). Unless otherwise
determined by the Committee, in the event of a Participant's Retirement, the
Participant may exercise only those Non-Statutory Stock Options that were
immediately exercisable by the Participant at the date of Retirement and only
for a
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period of one (1) year following the date of Retirement, or, if sooner, until
the expiration of the term of the Non-Statutory Stock Option.
(f) Termination of Employment or Service (Disability or Death). Unless
otherwise determined by the Committee, in the event of the termination of a
Participant's employment or other service due to disability or death, all
Non-Statutory Stock Options held by such Participant shall immediately become
exercisable and remain exercisable for a period one (1) year following the date
of such termination, or, if sooner, until the expiration of the term of the
Non-Statutory Stock Option.
(g) Termination of Employment or Service (Termination for Cause).
Unless otherwise determined by the Committee, in the event of a Participant's
Termination for Cause, all rights with respect to the Participant's Non-
Statutory Stock Options shall expire immediately upon the effective date of such
Termination for Cause.
(h) Acceleration Upon a Change in Control. In the event of a Change in
Control, all Non-Statutory Stock Options held by a Participant as of the date of
the Change in Control shall immediately become exercisable.
(i) Delivery of Shares. Upon the exercise of a Non- Statutory Stock
Option, payment by the Corporation shall be made in the form of shares of Common
Stock.
7. INCENTIVE STOCK OPTIONS.
The Committee may, subject to the limitations of the Plan and the
availability of shares of Common Stock reserved but unawarded under this Plan,
grant Incentive Stock Options to an Employee upon such terms and conditions as
it may determine to the extent such terms and conditions are consistent with the
following provisions:
(a) Exercise Price. The Committee shall determine the Exercise Price of
each Incentive Stock Option. However, the Exercise Price shall not be less than
100% of the Fair Market Value of the Common Stock on the Date of Grant;
provided, however, that if at the time an Incentive Stock Option is granted, the
Employee owns or is treated as owning, for purposes of Section 422 of the Code,
Common Stock representing more than 10% of the total combined voting securities
of the Corporation ("10% Owner"), the Exercise Price shall not be less than 110%
of the Fair Market Value of the Common Stock on the Date of Grant.
(b) Amounts of Incentive Stock Options. To the extent the aggregate
Fair Market Value of shares of Common Stock with respect to which Incentive
Stock Options that are exercisable for the first time by an Employee during any
calendar year under the Plan and any other stock option plan of the Corporation
or an Affiliate exceeds $100,000, or such higher value as may be permitted under
Section 422 of the Code, such Options in excess of such limit shall be treated
as Non-Statutory Stock Options. Fair Market Value shall be determined as of the
Date of Grant with respect to each such Incentive Stock Option.
(c) Terms of Incentive Stock Options. The Committee shall determine the
term during which a Participant may exercise an Incentive Stock Option, but in
no event may a Participant exercise an Incentive Stock Option, in whole or in
part, more than ten (10) years from the Date of Grant; provided, however, that
if at the time an Incentive Stock Option is granted to an Employee who is a 10%
Owner, the Incentive Stock Option granted to such Employee shall not be
exercisable after the expiration of five (5) years from the Date of Xxxxx. The
Committee shall also determine the date on which each Incentive Stock Option, or
any part thereof, first becomes exercisable and any terms or conditions a
Participant must satisfy in order to exercise each Incentive Stock Option. The
shares of Common Stock underlying each Incentive Stock Option may be purchased
in whole or in part at any time during the term of such Incentive Stock Option
after such Option becomes exercisable.
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(d) Non-Transferability. No Incentive Stock Option shall be
transferable except by will or the laws of descent and distribution and is
exercisable, during his lifetime, only by the Employee to whom the Committee
grants the Incentive Stock Option. The designation of a beneficiary does not
constitute a transfer of an Incentive Stock Option.
(e) Termination of Employment (General). Unless otherwise determined by
the Committee, upon the termination of a Participant's employment or other
service for any reason other than Retirement, disability or death, or
Termination for Cause, the Participant may exercise only those Incentive Stock
Options that were immediately exercisable by the Participant at the date of such
termination and only for a period of three (3) months following the date of such
termination, or, if sooner, until the expiration of the term of the Incentive
Stock Option.
(f) Termination of Employment (Retirement). Unless otherwise determined
by the Committee, in the event of a Participant's Retirement, the Participant
may exercise only those Incentive Stock Options that were immediately
exercisable by the Participant at the date of Retirement and only for a period
of one (1) year following the date of Retirement, or, if sooner, until the
expiration of the term of the Incentive Stock Option. Any Option originally
designated as an Incentive Stock Option shall be treated as a Non-Statutory
Stock Option to the extent the Participant exercises such Option more than three
(3) months following the Participant's cessation of employment.
(g) Termination of Employment (Disability or Death). Unless otherwise
determined by the Committee, in the event of the termination of a Participant's
employment or other service due to disability or death, all Incentive Stock
Options held by such Participant shall immediately become exercisable and remain
exercisable for a period one (1) year following the date of such termination,
or, if sooner, until the expiration of the term of the Incentive Stock Option.
(h) Termination of Employment (Termination for Cause). Unless otherwise
determined by the Committee, in the event of an Employee's Termination for
Cause, all rights under such Employee's Incentive Stock Options shall expire
immediately upon the effective date of such Termination for Cause.
(i) Acceleration Upon a Change in Control. In the event of a Change in
Control all Incentive Stock Options held by a Participant as of the date of the
Change in Control shall immediately become exercisable.
(j) Delivery of Shares. Upon the exercise of an Incentive Stock Option,
payment shall be made in the form of shares of Common Stock.
(k) Disqualifying Dispositions. Each Award Agreement with respect to an
Incentive Stock Option shall require the Participant to notify the Committee of
any disposition of shares of Common Stock issued pursuant to the exercise of
such Option under the circumstances described in Section 421(b) of the Code
(relating to certain disqualifying dispositions), within 10 days of such
disposition.
8. STOCK AWARDS.
The Committee may make grants of Stock Awards, which shall consist of
the grant of some number of shares of Common Stock, to a Participant upon such
terms and conditions as it may determine to the extent such terms and conditions
are consistent with the following provisions:
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(a) Grants of the Stock Awards. Stock Awards may only be made in whole
shares of Common Stock. Stock Awards may only be granted from shares reserved
under the Plan and available for award at the time the Stock Award is made to
the Participant.
(b) Terms of the Stock Awards. The Committee shall determine the dates
on which Stock Awards granted to a Participant shall vest and any terms or
conditions which must be satisfied prior to the vesting of any Stock Award or
portion thereof. Any such terms or conditions shall be determined by the
Committee as of the Date of Xxxxx. To the extent that Stock Awards shall vest
based upon performance goals which must be satisfied prior to the vesting of any
installment or portion of a Stock Award, such performance goals shall be
determined by the Committee either on an individual level, for all Participants,
for all Stock Awards made for a given period of time, or as otherwise determined
by the Committee. No Stock Award or portion thereof that is subject to the
satisfaction of any condition shall be considered to be earned or vested until
the Committee certifies in writing that the conditions to which the earning or
vesting of such Stock Award is subject have been achieved.
(c) Termination of Employment or Service (General). Unless otherwise
determined by the Committee, upon the termination of a Participant's employment
or service for any reason other than Retirement, disability or death, or
Termination for Cause, any Stock Awards in which the Participant has not become
vested as of the date of such termination shall be forfeited and any rights the
Participant had to such Stock Awards shall become null and void.
(d) Termination of Employment or Service (Retirement). Unless otherwise
determined by the Committee, in the event of a Participant's Retirement, any
Stock Awards in which the Participant has not become vested as of the date of
Retirement shall be forfeited and any rights the Participant had to such
unvested Stock Awards shall become null and void.
(e) Termination of Employment or Service (Disability or Death). Unless
otherwise determined by the Committee, in the event of a termination of the
Participant's service due to disability or death, all unvested Stock Awards held
by such Participant shall immediately vest as of the date of such termination.
(f) Termination of Employment or Service (Termination for Cause).
Unless otherwise determined by the Committee, or in the event of the
Participant's Termination for Cause, all Stock Awards in which the Participant
had not become vested as of the effective date of such Termination for Cause
shall be forfeited and any rights such Participant had to such unvested Stock
Awards shall become null and void.
(g) Acceleration Upon a Change in Control. In the event of a Change in
Control, all unvested Stock Awards held by a Participant shall immediately vest.
(h) Issuance of Certificates. Except in the case where a valid Section
83(b) election is made by a Participant in accordance with Section 14 of the
Plan or as otherwise determined by the Committee, reasonably promptly after the
applicable date that a Stock Award shall be earned and non-forfeitable, the
Corporation shall cause to be issued a stock certificate, registered in the name
of the Participant to whom such Stock Award was granted, evidencing the
applicable shares of Common Stock represented by such Stock Award. In the event
that any such shares are issued in advance that such Stock Awards are earned,
any such stock certificate issued shall bear the following legend:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the restrictions, terms and
conditions (including forfeiture provisions and restrictions against
transfer) contained in the TF Financial Corporation 2005 Stock-Based
Incentive Plan, and Award Agreement entered into between the registered
owner of such shares and TF
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Financial Corporation or its Affiliates. A copy of the Plan and Award
Agreement is on file in the office of the Corporate Secretary of TF
Financial Corporation, 0 Xxxxx Xxxxx, Xxxxxxx, XX 00000.
Such legend shall not be removed until the Participant becomes vested in such
shares pursuant to the terms of the Plan and Award Agreement. Each certificate
issued pursuant to this Section 8(i), in connection with a Stock Award, shall be
held by the Corporation or its Affiliates, unless the Committee determines
otherwise.
(i) Non-Transferability. Except to the extent permitted by the Code,
the rules promulgated under Section 16(b) of the Exchange Act or any successor
statutes or rules:
The recipient of a Stock Award shall not sell, transfer, assign,
pledge, or otherwise encumber shares subject to the Stock Award until
full vesting of such shares has occurred. For purposes of this section,
the separation of beneficial ownership and legal title through the use
of any "swap" transaction is deemed to be a prohibited encumbrance.
Unless determined otherwise by the Committee and except in the event of
the Participant's death or pursuant to a domestic relations order, a
Stock Award is not transferable and may be earned in his lifetime only
by the Participant to whom it is granted. Upon the death of a
Participant, a Stock Award is transferable by will or the laws of
descent and distribution. The designation of a beneficiary shall not
constitute a transfer.
If a recipient of a Stock Award is subject to the provisions of Section
16 of the Exchange Act, shares of Common Stock subject to such Stock
Award may not, without the written consent of the Committee (which
consent may be given in the Award Agreement), be sold or otherwise
disposed of within six (6) months following the date of grant of the
Stock Award.
(j) Dividend Rights on Stock Awards. The holder of a Stock Award,
whether or not earned, shall also be entitled to receive an amount equal to any
cash dividends declared and paid with respect to shares of Common Stock
represented by such Stock Award between the date the relevant Stock Award was
granted to such Participant and the date the shares of Stock Awards are
distributed. Such cash dividend amounts applicable to Stock Awards shall
constitute compensation that shall be paid by the Trust or the Company to the
Participant within 30 days of the respective dividend payment date.
(k) Voting of Stock Awards. After a Stock Award has been granted but
for which the shares covered by such Stock Award have not yet been vested,
earned and distributed to the Participant pursuant to the Plan, the Trustee
shall vote such shares of Common Stock held by any such Trust.
(l) Delivery of Shares. Payment due to a Participant upon the
redemption of a Stock Award shall be made in the form of shares of Common Stock.
9. METHOD OF EXERCISE OF OPTIONS.
Subject to any applicable Award Agreement, any Option may be
exercised by the Participant in whole or in part at such time or times, and the
Participant may make payment of the Exercise Price in such form or forms
permitted by the Committee, including, without limitation, payment by delivery
of cash or Common Stock having a Fair Market Value on the day immediately
preceding the exercise date equal to the total Exercise Price, or by any
combination of cash and shares of Common Stock, including exercise by means of a
cashless exercise arrangement with a qualifying broker-dealer in accordance with
procedures approved by the
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Corporation. Payment of the Exercise Price in full or partial payment in the
form of Common Stock shall be made utilizing Common Stock that has been owned by
the party exercising such Option for not less than six months prior to the date
of exercise of such Option. No shares of Common Stock shall be issued until full
payment of the Exercise Price has been received by the Corporation.
10. RIGHTS OF PARTICIPANTS.
No Participant shall have any rights as a shareholder with respect to
any shares of Common Stock covered by an Option until the date of issuance of a
stock certificate for such Common Stock. Nothing contained herein or in any
Award Agreement confers on any person any right to continue in the employ or
service of the Corporation or an Affiliate or interferes in any way with the
right of the Corporation or an Affiliate to terminate a Participant's employment
or services.
11. DESIGNATION OF BENEFICIARY.
A Participant may, with the consent of the Committee, designate a
person or persons to receive, in the event of death, any Award to which the
Participant would then be entitled. Such designation will be made upon forms
supplied by and delivered to the Corporation and may be revoked in writing. If a
Participant fails effectively to designate a beneficiary, then the Participant's
estate will be deemed to be the beneficiary.
12. DILUTION AND OTHER ADJUSTMENTS.
In the event of any change in the outstanding shares of Common Stock by
reason of any stock dividend or split, re-capitalization, merger, consolidation,
spin-off, reorganization, combination or exchange of shares, or other similar
corporate change, or other increase or decrease in such shares without receipt
or payment of consideration by the Corporation, or in the event an extraordinary
capital distribution is made, the Committee may make such adjustments to
previously granted Awards to prevent dilution, diminution, or enlargement of the
rights of the Participant, including any or all of the following:
(a) adjustments in the aggregate number or kind of shares of Common
Stock or other securities that may underlie future Awards under the Plan;
(b) adjustments in the aggregate number or kind of shares of Common
Stock or other securities underlying Awards already made under the Plan;
(c) adjustments in the Exercise Price of outstanding Incentive and/or
Non- Statutory Stock Options.
No such adjustments may, however, materially change the value of benefits
available to a Participant under a previously granted Award. All Awards under
this Plan shall be binding upon any successors or assigns of the Corporation.
13. TAXES.
(a) Whenever under this Plan, cash or shares of Common Stock are to be
delivered upon exercise or payment of an Award or any other event with respect
to rights and benefits hereunder, the Committee shall be entitled to require as
a condition of delivery (i) that the Participant remit an amount sufficient to
satisfy all federal, state, and local withholding tax requirements related
thereto, (ii) that the withholding of such sums come from compensation otherwise
due to the Participant or from any shares of Common Stock due to the Participant
under this Plan or (iii) any combination of the foregoing; provided, however,
that no amount shall
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be withheld from any cash payment or shares of Common Stock relating to an Award
which was transferred by the Participant in accordance with this Plan.
(b) If any disqualifying disposition described in Section 7(k) is made
with respect to shares of Common Stock acquired under an Incentive Stock Option
granted pursuant to this Plan, or any transfer described in Section 6(c) is
made, or any election described in Section 14 is made, then the person making
such disqualifying disposition, transfer, or election shall remit to the
Corporation or its Affiliates an amount sufficient to satisfy all federal,
state, and local withholding taxes thereby incurred; provided that, in lieu of
or in addition to the foregoing, the Corporation or its Affiliates shall have
the right to withhold such sums from compensation otherwise due to the
Participant, or, except in the case of any transfer pursuant to Section 6(c),
from any shares of Common Stock due to the Participant under this Plan.
(c) The Trustee may deduct from any distribution of shares of Common
Stock awarded to an Outside Director under this Plan, sufficient amounts of
shares of Common Stock to cover any applicable tax obligations incurred as a
result of vesting of the Stock Award.
14. NOTIFICATION UNDER SECTION 83(b).
A Participant may, in connection with the receipt of an Award, or
thereafter, make the election permitted under Section 83(b) of the Code,
provided that such Participant shall notify the Committee of such election
within 10 days of filing notice of the election with the Internal Revenue
Service, in addition to any filings and notifications required pursuant to
regulations issued under the authority of Section 83(b) of the Code.
15. AMENDMENT OF THE PLAN AND AWARDS.
(a) Except as provided in paragraph (c) of this Section 15, the Board
of Directors may at any time, and from time to time, modify or amend the Plan in
any respect, prospectively or retroactively; provided however, that provisions
governing grants of Incentive Stock Options shall be submitted for shareholder
approval to the extent required by such law, regulation or otherwise. Failure to
ratify or approve amendments or modifications by shareholders shall be effective
only as to the specific amendment or modification requiring such ratification.
Other provisions of this Plan will remain in full force and effect. No such
termination, modification or amendment may adversely affect the rights of a
Participant under an outstanding Award without the written permission of such
Participant.
(b) Except as provided in paragraph (c) of this Section 15, the
Committee may amend any Award Agreement, prospectively or retroactively;
provided, however, that no such amendment shall adversely affect the rights of
any Participant under an outstanding Award without the written consent of such
Participant.
(c) In no event shall the Board of Directors amend the Plan or shall
the Committee amend an Award Agreement in any manner that has the effect of:
(i) Allowing any Option to be granted with an exercise price below
the Fair Market Value of the Common Stock on the Date of Grant.
(ii) Allowing the exercise price of any Option previously granted
under the Plan to be reduced subsequent to the Date of Award.
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16. EFFECTIVE DATE OF PLAN.
The Board of Directors approved and adopted the Plan with an Effective
Date being the date of approval of the Plan by a vote of a majority of the
stockholders of the Corporation present in person or by proxy and entitled to
vote at a meeting of such stockholders. All amendments to the Plan are effective
upon approval by the Board of Directors, subject to shareholder approval when
specifically required under the Plan or applicable federal or state statutes,
rules or regulations. The failure to obtain shareholder approval for such
purposes will not affect the validity or other provisions of the Plan and any
Awards made under the Plan.
17. TERMINATION OF THE PLAN.
The right to grant Awards under the Plan will terminate upon the
earlier of: (i) ten (10) years after the Effective Date; (ii) the issuance of a
number of shares of Common Stock pursuant to the exercise of Options and the
distribution of Stock Awards is equivalent to the maximum number of shares
reserved under the Plan as set forth in Section 4 hereof. The Board of Directors
has the right to suspend or terminate the Plan at any time, provided that no
such action will, without the consent of a Participant, adversely affect a
Participant's vested rights under a previously granted Award.
18. NO EMPLOYMENT RIGHTS.
No Employee or other person shall have a right to be selected as a
Participant under the Plan. Neither the Plan nor any action taken by the
Committee in administration of the Plan shall be construed as giving any person
any rights of employment or retention as an Employee or in any other capacity
with the Corporation or any Affiliate.
19. APPLICABLE LAW.
The Plan will be administered in accordance with the laws of the
Commonwealth of Pennsylvania to the extent not pre-empted by applicable federal
law.
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