Exhibit 10(a)(vii)
(HEINZ LOGO) [l32433al3243301.gif]
H. J. Heinz Company 1996 Stock Option Plan
(as amended and restated effective August 13, 2008)
1. Definitions
The terms defined in this Section 1 shall, for all purposes of this Plan, have
the meanings herein specified:
(a) “Board of Directors” shall mean not less than a quorum of the whole Board of
Directors of the Company.
(b) “Cause” shall mean an act of dishonesty, moral turpitude or an intentional
or gross negligent act detrimental to the best interests of the Company or a
Subsidiary; provided, that, if an Optionee is a party to a Severance Protection
Agreement with the Company, and such Optionee’s employment with the Company is
terminated in a manner such that the Optionee is entitled to any payments or
benefits (including accrued payments or benefits) under the terms of the
Severance Protection Agreement, then “Cause” for purposes of this Plan shall
have the meaning set forth in such Severance Protection Agreement.
(c) “Change in Control” shall mean the occurrence of any of the events set forth
in clauses (1), (2) and (3) of this subparagraph 1(c).
(1) the date the Company acquires knowledge of the filing under the Exchange Act
of a statement on Schedule 13D, or any amendment thereto, relating to a
transaction or series of transactions in which any person or group deemed a
person under Section 13(d)(3) of the Exchange Act shall have become the
beneficial owner, directly or indirectly (with beneficial ownership determined
as provided in Rule 13d-3, or any successor rule, under the Exchange Act), of
securities of the Company entitling the person or group to 20% or more of all
votes (without consideration of the rights of any class of stock to elect
Directors by a separate class vote) to which all shareholders of the Company
would be entitled in the election of Directors were an election held on such
date; provided, that any shares held by a person or group who filed or who would
have been obligated to file a Schedule 13D or 13G with respect to beneficial
ownership of securities of the Company prior to January 1, 1996, any affiliate
or associate as of January 1, 1996 of any such person, any beneficiary of any
trust or estate included in any such person or group, any member of the family
of any such person, any trust or estate (including the trustees or executors
thereof) established by or for the benefit of any such person, or any charitable
foundation, whether a trust or a corporation (including the trustees and
directors thereof) established by or for the benefit of any such person (in each
case, an “Existing Shareholder”), and any shares held by any employee stock
ownership plan sponsored by the Company, shall be excluded from the shares held
by any person or group for purposes

 

--------------------------------------------------------------------------------

 

of determining whether the foregoing 20% threshold for securities ownership has
been reached by such person or group; and provided further that, notwithstanding
the foregoing, the securities beneficially owned by any Existing Shareholder
shall not be so excluded from the securities beneficially owned by any person or
group if (x) such person or group includes any person who is not an Existing
Shareholder and (y) such person or group has beneficial ownership of securities
of the Company having 20% or more of all votes in the election of directors
(without consideration of the rights of any class of stock to elect Directors by
a separate class vote);
(2) the date on which there is a failure of individuals who were members of the
Board of Directors as of June 12, 1996 to constitute at least a majority of the
Board of Directors, unless the election (or the nomination for election by the
shareholders) of each new director was approved by a vote of at least two-thirds
of the total of such individuals then still in office and such other directors
as may previously have been elected or nominated pursuant to such a two-thirds
vote; or
(3) the date of approval by the shareholders of the Company of an agreement (a
“reorganization agreement”) providing for (i) the merger or consolidation of the
Company with another corporation in which the Company is not the surviving
corporation, or pursuant to which its Common Stock is converted, other than a
merger where the shareholders of the Company immediately prior to the merger or
consolidation beneficially own, immediately after the merger or consolidation,
shares of the corporation issuing cash or securities in the merger or
consolidation entitling such shareholders to 50% or more of all votes (without
consideration of the rights of any class of stock to elect Directors by a
separate class vote) to which all shareholders of such corporation would be
entitled in the election of Directors or where the members of the Board of
Directors of the Company immediately prior to the merger or consolidation
constitute, immediately after the merger or consolidation, a majority of the
Board of Directors of the corporation issuing cash or securities in the merger
or consolidation, or (ii) the sale or other disposition or liquidation of all or
substantially all of the assets of the Company; provided, however that
notwithstanding anything to the contrary in this Plan, no transaction or series
of transactions shall constitute a “Change in Control” as to the holder of any
Stock Option if such transaction or series of transactions required such holder
to be identified in any United States securities law filing as a person or a
member of any group acquiring, holding or disposing of beneficial ownership of
the Company’s securities and effecting a “Change in Control” as defined herein.
(d) “Committee” shall mean the Management Development and Compensation Committee
of the Board of Directors described in Section 4 hereof.
(e) “Common Stock” shall mean the Company’s presently authorized Common Stock,
par value $.25 per share, except as this definition may be modified as provided
in Section 11 hereof.
(f) “Company” shall mean H. J. Heinz Company, a Pennsylvania corporation.

- 2 -

--------------------------------------------------------------------------------

 

(g) “Employee” or “Employees” shall mean key persons (including directors and
officers) employed by the Company, or a Subsidiary thereof, on a full-time basis
and who are compensated for such employment by a regular salary.
(h) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
(i) “Fair Market Value” shall, except as provided in Section 8 hereof, mean the
closing sale price of the Common Stock on the New York Stock Exchange—Composite
Tape on the date a Stock Option is granted or Limited Stock Appreciation Rights
are exercised (or, for purposes of determining the value of shares of Common
Stock used in payment of the Option Price as provided in Section 9(C)(4), the
date of exercise) or, if there are no sales on such dates, at the opening price
on the following day on which there are sales.
(j) “Good Reason” shall mean the occurrence after a Change in Control of any of
the events or conditions described in the following subsections (l) through (5):
(1) a change in the Optionee’s title, position, duties or responsibilities
(including reporting responsibilities) which represents an adverse change from
the Optionee’s title, position, duties or responsibilities as in effect at any
time within 90 days preceding the date of the Change in Control or at any time
thereafter; or any removal of the Optionee from or failure to reappoint or
reelect him or her to any one of such offices or positions, except in connection
with a disability termination (as described in Section 9(D)(2) of the Plan) or a
termination of the Optionee’s employment for Cause, as a result of the
Optionee’s death or by the Optionee other than for Good Reason;
(2) a reduction in the Optionee’s base salary or any failure to pay the Optionee
any compensation or benefits to which the Optionee is entitled within five days
after the date due;
(3) the Optionee being required by the Company to perform the Optionee’s regular
duties at any place outside a 30-mile radius from the place where the Optionee’s
regular duties were performed immediately before the Change in Control, except
for reasonably required travel on the Company’s business which is not materially
greater than such travel requirements in effect immediately before the Change in
Control;
(4) the failure by the Company to provide the Optionee with compensation and
benefits, in the aggregate, at least equal (in opportunities) to those provided
for under the compensation and employee benefit plans, programs, and practices
in which the Optionee was participating at any time within 90 days preceding the
date of a Change in Control or at any time thereafter; or
(5) for any Optionee who is a party to a Severance Protection Agreement with the
Company, any additional event or condition that constitutes “Good Reason” under
such Severance Protection Agreement.
Any event or condition described in subsections 1 through 5, above, which occurs
before a Change in Control but which the Participant reasonably demonstrates
(a) was at the request of a third party who has indicated an intention or taken
steps reasonably calculated to effect a Change in Control and who effectuates a
Change in Control or (b) otherwise arose in connection with, or in anticipation
of, a Change in Control which actually occurs, shall constitute Good Reason for
purposes of this Plan notwithstanding that it occurred before the Change in
Control.

- 3 -

--------------------------------------------------------------------------------

 

(k) “Incentive Option” shall mean a Stock Option which is an “incentive stock
option” as defined in Section 422 of the Internal Revenue Code of 1986, as
amended (“Code”).
(l) “Limited Stock Appreciation Rights” shall mean the right to receive cash
with respect to shares of Common Stock subject to a Stock Option in lieu of
exercising such Stock Option as described in Section 8 hereof.
(m) “Non-Statutory Option” shall mean a Stock Option which does not qualify as
an Incentive Option as defined above.
(n) “Option” shall mean a Stock Option or Limited Stock Appreciation Right
granted by the Company pursuant to the Plan.
(o) “Optionee” shall mean a person who accepts an Option granted under the Plan.
(p) “Option Price” shall mean the price to be paid for the shares of Common
Stock being purchased pursuant to a Stock Option Agreement.
(q) “Option Period” shall mean the period from the date of grant of an Option to
the date after which such Option may no longer be exercised. Nothing in this
Plan shall be construed to extend the termination date of the Option Period
beyond the date set forth in the Stock Option Agreement. No Option shall be
exercisable after the expiration of ten years from the date the Option is
granted.
(r) “Plan” shall mean the H. J. Heinz Company 1996 Stock Option Plan.
(s) “Stock Option” shall mean an Incentive Option or a Non-Statutory Option
granted by the Company pursuant to the Plan to purchase shares of Common Stock.
(t) “Stock Option Agreement” shall mean the written agreement between the
Company and Optionee confirming the Option and setting forth the terms and
conditions upon which it may be exercised.
(u) “Subsidiary” shall mean any corporation in which the Company owns, directly
or indirectly through Subsidiaries, at least 50% of the total combined voting
power of all classes of stock.
(v) “Successor” shall have the meaning set forth in Section 9(D)(4) hereof.
2. Purposes
The purposes of the Plan are to promote the growth and profitability of the
Company by enabling it to attract and retain the best available personnel for
positions of substantial responsibility, to provide key Employees with an
opportunity for investment in the Company’s Common Stock and to give them an
additional incentive to increase their efforts on behalf of the Company and its
Subsidiaries.

- 4 -

--------------------------------------------------------------------------------

 

3. Effective Date and Termination
The effective date of the Plan is June 12, 1996. The Plan was approved by the
shareholders of the Company on September 10, 1996. No Stock Options or Limited
Stock Appreciation Rights may be granted under the Plan after June 11, 2006.
4. Administration
The Plan shall be administered by a Management Development and Compensation
Committee of not less than three directors of the Company (“Committee”)
appointed by the Board of Directors. No person shall be eligible or continue to
serve as a member of such Committee unless such person is an “outside director”
within the meaning of Code Section 162(m) (“Section 162(m)”). No person shall be
eligible for the grant of an Option under this Plan while serving as a member of
such Committee. Members of the Committee shall serve at the pleasure of the
Board of Directors. Vacancies occurring in the membership of the Committee shall
be filled by appointment by the Board of Directors. No member of the Committee,
while serving as such, shall be eligible to receive any Option hereunder,
although membership on the Committee shall not affect or impair any such
member’s rights under any Option granted to him at a time when he was not a
member of the Committee.
The Committee shall keep minutes of its meetings. A majority of the Committee
shall constitute a quorum thereof and the acts of a majority of the members
present at any meeting of the Committee at which a quorum is present, or acts
approved in writing by a majority of the entire Committee, shall be the acts of
the Committee.
5. Eligibility
Subject to the provisions of the Plan, the Committee shall determine and
designate from time to time those key Employees of the Company or its
Subsidiaries to whom Options are to be granted and the number of shares of
Common Stock covered by such grants. In determining the eligibility of an
Employee to receive an Option, as well as in determining the number of shares
covered by such Option, the Committee shall consider the position and
responsibilities of the Employee being considered, the nature and value to the
Company or a Subsidiary of his services and accomplishments, his present and
potential contribution to the success of the Company or its Subsidiaries, and
such other factors as the Committee may deem relevant.
No Option may be granted to an individual who, immediately after such grant,
“owns” (as defined in Code Sections 422 and 424) stock possessing more than 10%
of the total combined voting power or value of all classes of stock of the
corporation then employing such individual or of a parent or subsidiary
corporation of such employer corporation.
More than one Option may be granted to an individual. The maximum number of
shares, however, which may be granted under this Plan to any individual as
Options shall not exceed 10% of the maximum number of shares available under the
Plan, subject to adjustment in accordance with Section 11 hereof.

- 5 -

--------------------------------------------------------------------------------

 

The aggregate Fair Market Value (determined as of the time the Stock Option is
granted) of the Common Stock with respect to which Incentive Options granted
after 1986 are exercisable for the first time during any calendar year by an
Employee under all plans of the Company and its Subsidiaries shall not exceed
the greater of $100,000 or such sum as may from time to time be permitted under
Code Section 422.
6. Number of Shares Available
Subject to adjustment as provided in Section 11 hereof, the aggregate number of
shares of Common Stock that may be granted as Options is 15,000,000. The Common
Stock to be offered under the Plan may be either authorized and unissued shares
or issued shares reacquired by the Company and presently or hereafter held as
treasury shares. The Board of Directors has reserved for the purposes of the
Plan a total of 15,000,000 of the authorized but unissued shares of Common
Stock, subject to adjustment in accordance with Section 11 hereof. If any shares
as to which an Option granted under the Plan shall remain unexercised at the
expiration thereof or shall be terminated unexercised, such shares may be
available for further grants under the Plan. To the extent that a Limited Stock
Appreciation Right granted in conjunction with a Stock Option is exercised, such
Stock Option shall be deemed to have been exercised and the shares of Common
Stock which otherwise would have been issued upon the exercise of such Stock
Option shall not be subject to the grant of any further Options.
7. Types of Stock Options
The Committee shall have full and complete authority, in its discretion, subject
to the provisions of the Plan, to grant Stock Options containing such terms and
conditions as shall be requisite, in the judgment of the Committee, to
constitute both Incentive Options and Non-Statutory Options. Non-Statutory
Options shall be identified as such in the Stock Option Agreement. The Committee
may include Limited Stock Appreciation Rights (as provided by Section 8 hereof)
in connection with a Stock Option, either at the time of grant or, in the case
of a Non-Statutory Option, at a later date.
8. Limited Stock Appreciation Rights and Acceleration of the Exercise Date of
Stock Options following Change in Control
(A) Limited Stock Appreciation Rights may be granted in connection with all or
part of a Stock Option granted under this Plan, either at the time of grant of
such Stock Option or, in the case of a Non-Statutory Option, at any time
thereafter during the term of the Stock Option.
(B) Limited Stock Appreciation Rights shall entitle the holder of a Stock Option
in connection with which such Limited Stock Appreciation Rights are granted,
upon exercise of the Limited Stock Appreciation Rights, to surrender the Stock
Option, or any applicable portion thereof, to the extent unexercised, and to
receive an amount of cash determined pursuant to subparagraph (3) of paragraph
(C) of this Section 8. Such Stock Option, shall, to the extent so surrendered,
thereupon cease to be exercisable.

- 6 -

--------------------------------------------------------------------------------

 

(C) Limited Stock Appreciation Rights shall be subject to the following terms
and conditions and to such other terms and conditions not inconsistent with the
Plan as shall from time to time be approved by the Committee.
(1) Limited Stock Appreciation Rights shall in no event be exercisable unless
and until the holder of the Limited Stock Appreciation Rights shall have
completed at least six months of continuous service with the Company or a
Subsidiary, or both, immediately following the date upon which the Limited Stock
Appreciation Rights shall have been granted and shall be exercisable only at
such time or times and to the extent that the related Stock Option is
exercisable.
(2) Upon exercise of Limited Stock Appreciation Rights, the holder thereof shall
be entitled to receive an amount of cash in respect of each share of Common
Stock subject to the related Stock Option equal to the excess of the fair market
value of such share over the Option Price of such related Stock Option, and for
this purpose fair market value shall mean the highest last sale price of the
Common Stock on the New York Stock Exchange during the period beginning on the
90th day prior to the date on which the Limited Stock Appreciation Rights are
exercised and ending on such date, except that (a) in the event of the
acquisition by any person or group of beneficial ownership of securities of the
Company entitling the person or group to 20% or more of all votes to which all
shareholders of the Company would be entitled in the election of Directors
(without consideration of the rights of any class of stock to elect Directors by
a separate class vote), fair market value shall mean the greater of such last
sale price or the highest price per share paid for Common Stock shown on the
Statement on Schedule 13D, or any amendment thereto, filed by the person or
group becoming a 20% beneficial owner and (b) in the event of approval by
shareholders of the Company of a reorganization agreement, fair market value
shall mean the greater of such last sale price or the fixed or formula price
specified in the reorganization agreement if such price is determinable as of
the date of exercise of the Limited Stock Appreciation Rights. Any securities or
property which are part or all of the consideration paid for Common Stock in a
tender offer or exchange offer or under an approved reorganization agreement
shall be valued at the higher of (a) the valuation placed on such securities or
property by the person making the tender offer or exchange offer or by the
corporation other than the Company issuing securities or property in the merger
or consolidation or to whom the Company is selling or otherwise disposing of all
or substantially all the assets of the Company and (b) the valuation placed on
such securities or property by the Committee.
(D) With respect to any Option granted on or prior to May 16, 2005, all Options
shall become exercisable upon the occurrence of a Change in Control whether or
not such Options are then exercisable under the provisions of the applicable
agreements relating thereto. With respect to any Option granted on or after
May 17, 2005, unless otherwise provided in any Stock Option Agreement, each
Option shall become immediately vested and exercisable as to 100% of the shares
of Common Stock subject to the Option upon (i) the occurrence of a Change in
Control if such Option is not assumed, substituted or replaced by a Surviving
Corporation or other successor to the business of the Company with an award of
equivalent value, or (ii) if clause (i) does not apply, the termination of an
Optionee’s employment with or services for the Company within 24 months

- 7 -

--------------------------------------------------------------------------------

 

following a Change in Control if such termination is (a) by the Company for
reasons other than Cause or (b) by the Optionee for Good Reason, but, in either
case of clause (i) or (ii), only to the extent the Option has not otherwise been
terminated and canceled or become exercisable as of such date.
(E) To the extent that Limited Stock Appreciation Rights shall be exercised, the
Stock Option in connection with which such Limited Stock Appreciation Rights
shall have been granted shall be deemed to have been exercised. To the extent
that the Stock Option in connection with which Limited Stock Appreciation Rights
shall have been granted shall be exercised, the Limited Stock Appreciation
Rights granted in connection with such Option shall be cancelled.
9. Terms of Options
The grant of each Option shall be confirmed by a Stock Option Agreement (in the
form prescribed by the Committee) which shall be executed at Pittsburgh,
Pennsylvania, by the Company and the Optionee as promptly as practicable after
such grant. The Stock Option Agreement shall expressly state or incorporate by
reference the provisions of this Plan.
(A) Option Price
Subject to adjustment as provided in Section 11 hereof, the Committee at the
time a Stock Option is granted shall determine the Option Price which shall be
not less than 100% of the Fair Market Value of the Company’s Common Stock on the
date of grant.
(B) Option Periods
The term of each Option granted under this Plan shall be for such period as the
Committee shall determine, but not more than ten years from the date of grant
thereof, subject to earlier termination as hereinafter provided in paragraph
(D) of this Section 9.
(C) Exercise of Options
Each Option granted under this Plan may be exercised to the extent exercisable,
in whole or in part at any time during the Option Period, for such number of
shares as shall be prescribed by the provisions of the Stock Option Agreement
evidencing such Option, provided that:
(1) An Option may be exercised (a) during the continuance of the Optionee’s
employment by the Company or a Subsidiary in accordance with the provisions of
paragraph (E) of this Section 9, or (b) after termination of the Optionee’s
employment by the Company or a Subsidiary in accordance with the provisions of
paragraph (D) of this Section 9.
(2) Limited Stock Appreciation Rights may not be exercised prior to six months
immediately following the date upon which such Limited Stock Appreciation Rights
are granted.

- 8 -

--------------------------------------------------------------------------------

 

(3) An Option may be exercised by the Optionee or a Successor only by written
notice (in the form prescribed by the Committee) to the Company specifying the
number of shares to be purchased.
(4) The aggregate Option Price of the shares as to which a Stock Option may be
exercised shall be, in the discretion of the Committee and consistent with the
provisions of Section 17:
(a) paid in U.S. funds by any one or any combination of the following: cash,
(including check, draft or wire transfer made payable to the order of the
Company), or delivery of Common Stock certificates endorsed in blank or
accompanied by executed stock powers with signatures guaranteed by a national
bank or trust company or a member of a national securities exchange evidencing
shares of Common Stock, whose value shall be deemed to be the Fair Market Value
on the date of exercise of such Common Stock; or
(b) paid on a deferred basis, and upon such terms and conditions, including
provision for securing the payment of the same, as the Committee, in its
discretion, shall provide; or
(c) deemed to be paid in full provided the notice of the exercise of a Stock
Option is accompanied by a copy of irrevocable instructions to a broker to
promptly deliver to the Company the amount of sale or loan proceeds sufficient
to cover the Option Price; or
(d) paid by a “net exercise” arrangement pursuant to which the Company will
reduce the number of shares of Common Stock issued upon exercise by the largest
whole number of shares with a Fair Market Value that does not exceed the
aggregate exercise price; provided, however, that the Company shall accept a
cash or other payment from the Optionee to the extent of any remaining balance
of the aggregate exercise price not satisfied by such reduction in the number of
whole shares to be issued; and further provided that shares of Common Stock will
no longer be subject to an Option and such Option will no longer be exercisable
thereafter to the extent of (i) the shares used to pay the exercise price
pursuant to a “net exercise,” (ii) the shares delivered to the Optionee as a
result of such exercise, and (iii) any shares withheld to satisfy tax
withholding obligations as a result of such exercise.
Payment of the Option Price with certificates evidencing shares of Common Stock
as provided above shall not increase the number of shares available for the
grant of Options under the Plan.
As soon as practicable after receipt by the Company of notice of exercise and of
payment in full of the Option Price of the shares with respect to which a Stock
Option has been exercised, a certificate or certificates representing such
shares shall be registered in the name or names of the Optionee or his Successor
and shall be delivered to the Optionee or his Successor at Pittsburgh,

- 9 -

--------------------------------------------------------------------------------

 

Pennsylvania. If any part of the Option Price is paid on a deferred basis, the
shares for which payment has been deferred shall be registered in the name of
the Optionee or his Successor but the certificate or certificates representing
such shares shall not be delivered to the Optionee or his Successor until the
Option Price for such shares has been paid in full.
(D) Termination of Employment
The effect of termination of an Optionee’s employment with the Company or a
Subsidiary shall be as follows:
(1) Involuntary Termination. If the employment of an Optionee is terminated
involuntarily without Cause by the Company or a Subsidiary, any outstanding
Options held by such Optionee may be exercised at any time prior to the
expiration date of such Options or within three months after the date of such
involuntary termination, whichever is the shorter period; provided, however,
that such Options were exercisable on the date of such termination under the
provisions of the Plan and the applicable agreements relating thereto, or the
Committee specifically waives the restrictions relating to exercisability, if
any, contained in the Plan and such agreements.
(2) Disability Termination. If (i) an Optionee is a party to a Severance
Protection Agreement with the Company, and such Participant’s employment with
the Company is terminated in a manner such that the Participant is entitled to
payments or benefits under the Severance Protection Agreement due to a
termination due to “Disability” within the meaning of such Severance Protection
Agreement or (ii) in all other cases, the employment of an Optionee is
terminated by the Company or a Subsidiary because, in the opinion of the
Committee, the Optionee has become physically incapacitated, any outstanding
Options held by such Optionee may be exercised at any time prior to the
expiration date of such Options; whether or not such Options were exercisable on
the date of such termination under the provisions of the applicable agreements
relating thereto. For the purposes of this Plan the question whether the
termination of employment shall be considered a disability termination caused by
physical incapacity shall be determined in each case by the Committee and such
determination by the Committee shall be final.
(3) Retirement. If an Optionee’s employment terminates as the result of
retirement of the Optionee under any retirement plan of the Company or a
Subsidiary, he may exercise any outstanding Option at any time prior to the
expiration date of the Option; provided, however, that such Options were
exercisable on the date of such termination under the provisions of the
applicable agreements relating thereto, or the Committee specifically waives the
restrictions relating to exercisability, if any, contained in such agreements.
(4) Death. (a) If an Optionee shall die, the Optionee’s Options may be exercised
by the person or persons entitled to do so under a beneficiary designation in
accordance with paragraph (E) of this Section 9 or, if none, under the
Optionee’s will or, if the Optionee shall have failed to designate a beneficiary
or make testamentary disposition of such Options or shall have died intestate,
by the Optionee’s legal representative or representatives (such person, persons,
representative, or representatives are referred to herein as the “Successor” of
an Optionee).

- 10 -

--------------------------------------------------------------------------------

 

(b) If an Optionee shall die while the Optionee is an Employee, the Successor
may exercise the Optionee’s Options at any time prior to the expiration date of
such Options; whether or not such Options were exercisable on the date of the
Optionee’s death under the provisions of the applicable agreements relating
thereto.
(c) If the Optionee shall die within three months after the involuntary
termination without Cause of the Optionee’s employment, the Optionee’s Options
may be exercised by the Successor at any time prior to the expiration date of
such Options or within one year of the date of the Optionee’s death, whichever
is the shorter period, provided, however, that such Options were exercisable on
the date of the Optionee’s termination of employment under the provisions of the
applicable agreements relating thereto or the Committee specifically waives the
restrictions relating to exercisability, if any, contained in such agreements.
(5) Other Termination. If the employment of an Optionee shall terminate for any
reason other than as set forth in subparagraphs (1), (2), (3), or (4) above, his
rights under any then outstanding Options shall terminate at the time of such
termination of employment; provided, however, the Committee may, in its sole
discretion, to the extent consistent with the provisions of Section 17, take
such action as it considers appropriate to waive such automatic termination
and/or the restrictions, if any, contained in the applicable agreements relating
thereto.
(6) Extension of Option Exercise Periods. Notwithstanding the Option termination
provisions set forth above, at the request of an Optionee or his Successor, but
in the Committee’s sole discretion, the Committee may at any time prior to the
termination of an Option, extend the period during which the Option may be
exercised following the termination of an Optionee’s employment for any period
up to the remaining Option Period for the Option.
(E) Non-Transferability
Unless otherwise designated by the Committee to the contrary, each Option
granted under the Plan shall by its terms be non-transferable by the Optionee
(except by will or the laws of descent and distribution), and each Option shall
be exercisable during the Optionee’s lifetime only by the Optionee, his or her
guardian or legal representative or by such other means as the Committee may
approve from time to time that is not inconsistent with or contrary to the
provisions of either Section 16(b) of the Exchange Act or Rule 16b-3, as either
may be amended from time to time, or any law, rule, regulation or other
provision that may hereafter replace such Rule. An Optionee may also designate a
beneficiary to exercise his or her Options after the Optionee’s death. To the
extent consistent with the provisions of Section 17, the Committee may amend
outstanding Options to provide for transfer, without payment of consideration,
to immediate family members of the Optionee or to trusts or partnerships for
such family members. Any Limited Stock Appreciation Right issued in conjunction
with an Incentive Option is transferable only when such Option is transferable
and under the same conditions.

- 11 -

--------------------------------------------------------------------------------

 

(F) Other Terms
Options granted pursuant to the Plan shall contain such other terms, provisions,
and conditions (which need not be identical) not inconsistent herewith as shall
be determined by the Committee.
10. Listing and Registration of Shares
If at any time the Board of Directors shall determine, in its discretion, that
the listing, registration or qualification of any of the shares subject to
Options under the Plan upon any securities exchange or under any state or
federal law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of or in connection with the purchase or
issue of shares thereunder, no outstanding Options, the exercise of which would
result in the purchase or issuance of shares, may be exercised in whole or in
part unless such listing, registration, qualification, consent or approval shall
have been effected or obtained free of any conditions not acceptable to the
Board of Directors. The Board of Directors may require any person exercising an
Option to make such representations and furnish such information as it may
consider appropriate in connection with the issuance or delivery of the shares
in compliance with applicable law and shall have the authority to cause the
Company at its expense to take any action related to the Plan which may be
required in connection with such listing, registration, qualification, consent
or approval.
11. Adjustments
To the extent consistent with the provisions of Section 17, in the event that a
dividend shall be declared upon the Common Stock payable in shares (other than
treasury shares) of Common Stock, the number of shares of Common Stock then
subject to any Option outstanding under the Plan and the number of shares
reserved for the grant of Options pursuant to the Plan but not yet subject to an
Option shall be adjusted by adding to each such share the number of shares which
would be distributable in respect thereof if such shares had been outstanding on
the date fixed for determining the shareholders of the Company entitled to
receive such stock dividend. To the extent consistent with the provisions of
Section 17, in the event that the outstanding shares of Common Stock shall be
changed into or exchanged for a different number or kind of shares of stock or
other securities of the Company or of another corporation, whether through
reorganization, recapitalization, stock split-up, combination of shares, merger,
or consolidation, then there shall be substituted for each share of Common Stock
subject to any such Option and for each share of Common Stock reserved for the
grant of Options pursuant to the Plan but not yet subject to an Option, the
number and kind of shares of stock or other securities into which each
outstanding share of Common Stock shall have been so changed or for which each
such share shall have been exchanged. In the event there shall be any change,
other than as specified above in this Section 11, in the number or kind of
outstanding shares of Common Stock or of any stock or other securities into
which such Common Stock shall have been changed or for which it shall have been
exchanged, then if the Board of Directors, in its sole discretion and consistent
with the provisions of Section 17, shall determine that such change equitably
requires an adjustment in the number or kind of shares theretofore reserved for
the grant of

- 12 -

--------------------------------------------------------------------------------

 

Options pursuant to the Plan but not yet subject to an Option and of the shares
then subject to an Option or Options, such adjustment shall be made by the Board
of Directors and shall be effective and binding for all purposes of the Plan and
of each Option outstanding thereunder. In the case of any such substitution or
adjustment as provided for in this Section 11, the Option Price for each share
of stock or other security which shall have been substituted for each share of
Common Stock covered by an outstanding Option shall be adjusted appropriately to
reflect such substitution or adjustment. No adjustment or substitution provided
for in this Section 11 shall require the Company to sell a fractional share of
Common Stock, and the total substitution or adjustment with respect to each
outstanding Option shall be limited accordingly.
Upon any adjustment made pursuant to this Section 11 the Company will, upon
request, deliver to the Optionee or to his Successors a certificate of its
Secretary setting forth the Option Price thereafter in effect and the number and
kind of shares or other securities thereafter purchasable on the exercise of
such Option.
12. Withholding Taxes
The Company unilaterally or by arrangement with the Optionee shall make
appropriate provision for satisfaction of withholding taxes in the case of any
grant, award, exercise, or other transaction which gives rise to a withholding
requirement. An Optionee or other person receiving shares issued upon exercise
of a Non-Statutory Option shall be required to pay the Company or any Subsidiary
in cash the amount of any taxes which the Company or Subsidiary is required to
withhold.
Notwithstanding the preceding sentence and subject to such rules as the
Committee may adopt, Optionees who are subject to Section 16(b) of the Exchange
Act, and, if determined by the Committee, other Optionees, may satisfy the
obligation, in whole or in part, by election on or before the date that the
amount of tax required to be withheld is determined, to have the number of
shares received upon exercise of the Non-Statutory Option reduced by a number of
shares having a fair market value equal to the amount of the required
withholding to be so satisfied or to surrender to the Company previously held
shares of Common Stock having an equivalent fair market value.
13. Interpretation, Amendments and Termination
All actions taken by the Board of Directors pursuant to this Section 13 shall be
taken only in accordance with the recommendation of the Committee, and shall be
consistent with the provisions of Section 17. The Board of Directors may make
such rules and regulations and establish such procedures for the administration
of the Plan as it deems appropriate. In the event of any dispute or disagreement
as to the interpretation of this Plan or of any rule, regulation or procedure,
or as to any question, right or obligation arising from or related to the Plan,
the decision of the Board of Directors shall be final and binding upon all
persons. The Board of Directors may amend this Plan as it shall deem advisable,
except that the Board of Directors may not, without further approval of the
shareholders of the Company, (a) increase the total number of shares of Common
Stock which may be granted under the Plan, (b) change the manner of determining
the Option Price set forth in Section 9(A) hereof, (c) permit any

- 13 -

--------------------------------------------------------------------------------

 

Option to be exercised more than ten years after the date it was granted or
increase the number of shares that may be received by any one individual
pursuant to Section 5 hereof, (d) amend any provision of this Section 13 or
(e) withdraw the administration of the Plan from a committee of directors
meeting the requirements of Section 4 hereof. The Board of Directors may, in its
discretion, terminate this Plan at any time. Termination of the Plan shall not
affect the rights of Optionees or their Successors under any Options outstanding
and not exercised in full on the date of termination.
Subject to the foregoing and the requirements of Section 162(m), the Board of
Directors may without further action on the part of the shareholders of the
Company or the consent of participants, amend the Plan, (a) to permit or
facilitate qualification of Options thereafter granted under the Plan as
Incentive Options, and (b) to preserve the employer deduction under
Section 162(m).
14. Foreign Jurisdictions
The Committee may, from time to time, adopt, amend, and terminate under the
Plan, such arrangements, not inconsistent with the intent of the Plan, as it may
deem necessary or desirable to make available tax or other benefits of laws of
any foreign jurisdiction, to key employees of the Company or its subsidiaries
who are subject to such laws and who receive grants under the Plan.
Notwithstanding the foregoing, any action taken pursuant to this Section 14 must
be consistent with the provisions of Section 17.
15. Compliance with Section 162(m)
With respect to employees subject to Section 162(m), transactions under the Plan
are intended to avoid loss of the deduction referred to in paragraph (1) of
Section 162(m). Anything in the Plan or elsewhere to the contrary
notwithstanding, to the extent any provision of the Plan or action by the
Committee fails to so comply or avoid the loss of such deduction, it shall be
deemed null and void, to the extent permitted by law and deemed advisable by the
Committee concerned with matters relating to employees subject to
Section 162(m).
16. Notices
All notices under the Plan shall be in writing, and if to the Company, shall be
delivered to the Secretary of the Company or mailed to its principal office,
Post Office Box 57, Pittsburgh, Pennsylvania 15230, addressed to the attention
of the Secretary; and if to the Optionee, shall be delivered personally or
mailed to the Optionee at the address appearing in the payroll records of the
Company or a Subsidiary. Such addresses may be changed at any time by written
notice to the other party.
17. Code Section 409A
It is intended that the Options granted pursuant to this Plan shall not
constitute “deferrals of compensation” within the meaning of Code Section 409A
and, as a result, shall not be subject to the requirements of Section 409A. The
Plan is to be interpreted in a manner consistent with this intention.

- 14 -

--------------------------------------------------------------------------------

 

Notwithstanding any other provision in this Plan, a new Option may not be issued
if such Option would be subject to Code Section 409A, and an existing Option may
not be modified in a manner that would cause such Option to become subject to
Code Section 409A.

- 15 -