UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 19, 2013
CSS Industries, Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 1-2661 | 13-1920657 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employee Identification No.) |
| 1845 Walnut Street, Philadelphia, PA | 19103 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (215) 569-9900
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
On March 19, 2013, the Human Resources Committee (“HR Committee”) of our Board of Directors (“Board”) adjusted the annual base salaries of certain of our named executive officers effective beginning April 1, 2013. The adjusted salaries are shown in the table below:
| Executive Officer Name and Title |
Annual Base Salary |
|||
| Christopher J. Munyan, President and Chief Executive Officer |
$ | 590,073 | ||
| Vincent A. Paccapaniccia, Vice President – Finance, and Chief Financial Officer |
$ | 354,781 | ||
| William G. Kiesling, Vice President – Legal and Human Resources |
$ | 346,489 | ||
| Laurie Gilner, President of C.R. Gibson, LLC |
$ | 338,130 | ||
On March 19, 2013, we and Mr. Munyan, our President and Chief Executive Officer, entered into an amendment to the employment agreement dated May 12, 2006 between us and Mr. Munyan. The amendment changes the automatic renewal provision of the agreement such that each renewal period is reduced from three years to two years. As amended, the current expiration date of June 30, 2015 remains in place, and, on any annual basis commencing in 2014, the agreement will automatically renew for a two-year term unless either party gives the other notice of non-renewal at least ninety (90) days prior to July 1. Additionally, the amendment provides that Mr. Munyan will receive severance pay for 24 months at his then-current base salary if his employment is terminated other than for cause. Prior to the Amendment, severance pay would have been provided for 18 to 36 months, depending on the length of time between the termination date and the then-current expiration date of the agreement. The Amendment also adds a clause providing that the severance pay provisions remain applicable after the expiration of the agreement, provided that the expiration arises from our determination to send a notice of non-renewal to Mr. Munyan. A copy of the foregoing amendment is filed herewith as Exhibit 10.1.
On March 19, 2013, we and Mr. Paccapaniccia, our Chief Financial Officer, entered into an amendment to the employment agreement dated March 25, 2010 between us and Mr. Paccapaniccia. The amendment extends the expiration date of such agreement from March 31, 2013 to March 31, 2015. The amendment also provides that Mr. Paccapaniccia will receive severance pay for 12 months at his then-current base salary if his employment is terminated other than for cause during the period from March 31, 2013 to March 30, 2015. A copy of the foregoing amendment is filed herewith as Exhibit 10.2.
2
Additionally, on March 19, 2013 the HR Committee approved an amendment to the Company’s Management Incentive Program (“MIP”). As amended, the MIP provides that, unless the HR Committee determines otherwise at the time that it establishes the performance objectives for a particular performance period, no participant in the MIP will be entitled to receive a payment under the MIP, and that no award under the MIP will be deemed earned, with respect to a particular performance period unless such participant remains continuously employed by the Company or a subsidiary of the Company through the last day of the performance period for which the award relates. Such amendment applies to performance periods beginning on or after April 1, 2013. Prior to such amendment, a participant was required to remain employed by the Company or a subsidiary of the Company through the date of actual payment on account of an award under the MIP in order to be eligible to receive such payment. A copy of the MIP, as amended on March 19, 2013, is filed herewith as Exhibit 10.3.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Changes in Fiscal Year.
On March 19, 2013, our Board amended our bylaws to change the age limitation applicable to service on our Board from 75 years of age to 76 years of age for directors other than the director serving as Chairman. The amendment changed the second sentence of Section 4.03 of our bylaws to read as follows:
No director, other than a director serving as chairman of the board of directors, shall be qualified to stand for re-election or otherwise continue to serve as a member of the board of directors past the date of the Annual Meeting of Stockholders of the corporation occurring in the calendar year in which such director reaches or has reached his or her seventy-sixth birthday.
Item 9.01 Financial Statements and Exhibits.
| (d) | Exhibits |
The following Exhibits are filed herewith:
| Exhibit No. |
Description | |
| 3.1 | Amendment to Bylaws adopted March 19, 2013. | |
| 10.1 | Amendment dated March 19, 2013 to Employment Agreement between CSS Industries, Inc. and Christopher J. Munyan. | |
| 10.2 | Amendment dated March 19, 2013 to Employment Agreement between CSS Industries, Inc. and Vincent A. Paccapaniccia. | |
| 10.3 | CSS Industries, Inc. Management Incentive Program (as amended and restated effective as of March 19, 2013). | |
3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CSS Industries, Inc. (Registrant) | ||
| By: |
/s/ William G. Kiesling | |
| William G. Kiesling | ||
| Vice President – Legal and Human | ||
| Resources and General Counsel | ||
Date: March 25, 2013
4
EXHIBIT INDEX
| Exhibit | Description | |
| 3.1 | Amendment to Bylaws adopted March 19, 2013. | |
| 10.1 | Amendment dated March 19, 2013 to Employment Agreement between CSS Industries, Inc. and Christopher J. Munyan. | |
| 10.2 | Amendment dated March 19, 2013 to Employment Agreement between CSS Industries, Inc. and Vincent A. Paccapaniccia. | |
| 10.3 | CSS Industries, Inc. Management Incentive Program (as amended and restated effective as of March 19, 2013). | |
Exhibit 3.1
Amendment adopted March 19, 2013
to
Bylaws of CSS Industries, Inc.
RESOLVED, that the second sentence of Section 4.03 of the Bylaws of the Company be, and it is hereby, amended to read in its entirety as follows: “No director, other than a director serving as chairman of the board of directors, shall be qualified to stand for re-election or otherwise continue to serve as a member of the board of directors past the date of the Annual Meeting of Stockholders of the corporation occurring in the calendar year in which such director reaches or has reached his or her seventy-sixth birthday.”
Exhibit 10.1
AMENDMENT TO EMPLOYMENT AGREEMENT
This AMENDMENT TO EMPLOYMENT AGREEMENT (the “Amendment”), dated as of March 19, 2013, amends that certain employment agreement, dated May 12, 2006, as amended as of September 5, 2008 and as of December 26, 2008 (collectively, the “Employment Agreement”), between CSS Industries, Inc., a Delaware corporation (“CSS”), and Christopher J. Munyan (“Executive”).
WHEREAS, CSS and the Executive previously entered into the Employment Agreement, which, among other things, provides for the employment of the Executive by CSS in the position of President and Chief Executive Officer;
WHEREAS, the parties desire to amend the Employment Agreement to modify the term of the Executive’s employment with CSS and to modify certain severance benefits that the Executive is eligible to receive in the event that his employment with CSS is terminated by CSS without cause;
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which is acknowledged, the parties hereto, intending to be legally bound, agree as follows:
1. Amendment and Restatement of Section 1. The parties acknowledge and agree that Section 1 of the Employment Agreement shall be deleted in its entirety and replaced with the following:
1. Contract Term - The term of your employment will extend until June 30, 2015, unless terminated earlier by you or by CSS at any time as provided herein. Commencing with the calendar year 2014, the term of the Executive’s employment with CSS shall renew each year for a two (2) year term unless either the Executive or CSS gives notice of non-renewal at least ninety (90) days prior to July 1 of such year.
2. Amendment and Restatement of Section 4. The parties acknowledge and agree that Section 4 of the Employment Agreement shall be deleted in its entirety and replaced with the following:
4. Employment Status; Severance Pay - Your employment status with CSS will be that of an employee at-will, and thus this employment status is subject to termination by either you or CSS at any time. However, in the event that CSS terminates your employment without cause either (i) during the term hereof, including any renewal term, or (ii) after the expiration of this letter agreement, but only if this letter agreement has expired because CSS provides you with notice of non-renewal as provided in Section 1 hereof, and subject to your compliance with the terms and conditions of this letter agreement, CSS will pay you an amount equal to twenty-four (24) months of your then-current annual base salary (less applicable tax withholdings and payroll deductions), such amount reduced by and to the extent of any earnings and other compensation received by you or accrued for your benefit for your services (whether as an employee or as an independent contractor) during the period commencing on the day following the one year anniversary of your termination. In addition to the foregoing, in the event that CSS terminates your employment without cause as provided in the immediately preceding sentence, and subject to your compliance with the terms and conditions of this letter agreement, CSS will make the services of an “outplacement” firm available to you to assist you in finding new employment; provided, however, that CSS’ expenditures to make such services available to you shall not exceed the aggregate amount of $6,500. For purposes of this letter agreement, termination “without cause” means termination other than termination resulting from or related to your breach of any of your obligations under this letter agreement, your failure to comply with any lawful directive of CSS’ Chairman of the Board of Directors or the Board of Directors of CSS, your failure to comply with CSS’ Code of Ethics, your conviction of a felony or of any moral turpitude crime, or your willful or intentional engagement in conduct injurious to CSS or any of its affiliates.
1
The foregoing payment obligation, and the foregoing obligation to make “outplacement” services available to you, is contingent upon (x) receipt by CSS of a valid and fully effective release (in form and substance reasonably satisfactory to CSS) of all claims of any nature which you might have at such time against CSS, its affiliates and their respective officers, directors and agents, excepting therefrom only any payments due to you from CSS pursuant to this paragraph, and (y) your resignation from all positions of any nature which you may then hold with CSS and its affiliates. If you are eligible to receive the foregoing payment, such amount will be paid to you in equal installments, with such installments being paid on the then-applicable paydays for CSS executives over the designated period, commencing within sixty (60) days following your termination date, unless delay is required as described in Section 10(b) herein.
In addition, if you are eligible to receive severance pay under the terms of this letter agreement, and if you elect health care continuation coverage under the Consolidated Omnibus Reconciliation Act (“COBRA”) following termination of your employment, CSS will pay for a portion of the monthly COBRA premium, on the same basis as CSS pays for a portion of such coverage for active employees, until the earlier of the date upon which (a) severance payments are no longer paid to you hereunder, (b) you no longer qualify to receive COBRA benefits, or (c) you elect to discontinue health care continuation coverage under COBRA. If you elect to continue health care continuation coverage under COBRA, normal employee premium deductions will be made from your severance pay.
Further, if you are eligible to receive severance pay under the terms of this letter agreement, you covenant and agree that commencing with the one year anniversary of the date of your termination you will promptly advise CSS in writing on a bi-weekly basis of any earnings and other compensation received by you or accrued for your benefit for your services (whether as an employee or as an independent contractor) during the period commencing on the day following the one year anniversary of your termination.
2
3. Miscellaneous. Except as expressly modified hereby, the Employment Agreement remains in full force and effect. Upon the execution and delivery hereof, the Employment Agreement shall thereupon be deemed to be amended as hereinabove set forth, and this Amendment and the Employment Agreement shall henceforth be read, taken and construed as one and the same instrument. This Amendment may be executed in counterparts, each of which shall be considered an original instrument, but all of which shall be considered one and the same agreement, and shall become binding when one or more counterparts have been signed by each of the parties hereto and delivered to the other party.
IN WITNESS WHEREOF, this Amendment has been executed by CSS and by the Executive as of the date first above written.
| CSS INDUSTRIES, INC. (“CSS”) | ||
| By: |
/s/ Jack Farber | |
| Jack Farber | ||
| Chairman of the Board of Directors | ||
| /s/ Christopher J. Munyan | ||
| Christopher J. Munyan (“Executive”) | ||
3
Exhibit 10.2
CSS Industries, Inc.
1845 Walnut Street
Suite 800
Philadelphia, PA 19103-4755
(215) 569-9900
FAX (215) 569-9979
Executive Office
March 19, 2013
Personal and Confidential
Mr. Vincent A. Paccapaniccia
1721 Meetinghouse Lane
Yardley, PA 19067
Dear Vince:
The purpose of this letter agreement is to amend certain provisions of your offer letter, dated March 25, 2010 (the “Offer Letter”). As we discussed, we have agreed as follows:
| 1. | Effective immediately, Section 1 of the Offer Letter shall be amended in its entirety to read as follows: |
1. Contract Term – The term of your employment will be five (5) years, commencing March 31, 2010 and ending March 31, 2015, unless terminated earlier by you or by CSS at any time as provided herein. Thereafter, your employment status with CSS will continue to be that of an employee at-will, subject to termination by either you or CSS at any time.
2. Effective immediately, the following paragraph shall be added as a new second paragraph to Section 4 of the Offer Letter:
In the event that CSS terminates your employment without cause at any time on or after March 31, 2013 but prior to March 31, 2015, and subject to your compliance with the terms and conditions of this letter agreement, CSS will pay you an amount equal to one year of your then-current annual base salary (less applicable tax withholdings and payroll deductions).
In all other respects, the Offer Letter shall remain in full force and effect according to its terms and conditions.
Mr. Vincent A. Paccapaniccia
March 19, 2013
Page 2
Please confirm your understanding of the foregoing provisions by executing the enclosed counterpart of this letter and returning the executed counterpart to me.
| Sincerely yours, |
| /s/ Christopher J. Munyan |
| Christopher J. Munyan |
| President and Chief Executive Officer |
| CSS Industries, Inc. |
The aforementioned is confirmed as of this 19th day of March, 2013:
| /s/ Vincent A. Paccapaniccia |
| Vincent A. Paccapaniccia |
| cc: | William G. Kiesling |
Exhibit 10.3
CSS INDUSTRIES, INC.
MANAGEMENT INCENTIVE PROGRAM
(As amended and restated, effective as of March 19, 2013)
SECTION 1. PURPOSE; DEFINITIONS. The purpose of the CSS Industries, Inc. Management Incentive Program (the “Program”) is to enable CSS Industries, Inc. (the “Company”) and its subsidiaries to motivate and reward favorable performance by the Company’s executive officers and other key employees of the Company and its subsidiaries by providing such individuals with the opportunity to receive cash bonus payments based upon the achievement of pre-established and objective performance goals for each fiscal year. The Program, which became effective on April 17, 2007 and was subsequently amended on June 3, 2008, is being amended and restated effective for Performance Periods beginning on or after April 1, 2013. Performance Periods beginning prior to April 1, 2013 are governed by the terms of the Program as in effect prior to the date of this amendment and restatement.
For purposes of the Program, the following terms will have the meanings defined below, unless the context clearly requires a different meaning:
(a) “Award” means a cash bonus under the Program.
(b) “Board” means the Board of Directors of the Company, as constituted from time to time.
(c) “Code” means the Internal Revenue Code of 1986, as amended, and any successor thereto.
(d) “Committee” means the Human Resources Committee of the Board or such other committee appointed by the Board for purposes of the Program, provided that the Human Resources Committee or such other committee shall consist of members of the Board who are not employees of the Company or any subsidiary or affiliate thereof and, with respect to matters relating to Awards intended to constitute “qualified performance-based compensation” under Section 162(m) of the Code, who qualify as “outside directors” under Section 162(m) of the Code.
(e) “Fiscal Year” means the period beginning on April 1 and ending on March 31.
(f) “Participant” means the executive officers of the Company and any other key employee of the Company or any Subsidiary selected by the Committee to participate in the Program.
(g) “Performance Period” means each Fiscal Year or another period as designated by the Committee, so long as such period does not exceed one year.
(h) “Subsidiary” means a subsidiary of the Company.
SECTION 2. ADMINISTRATION OF PROGRAM. The Committee shall administer and interpret the Program, provided, that, the Program will not be interpreted in a manner that causes an Award intended to constitute “qualified performance-based compensation” under Section 162(m) of the Code to fail to so qualify. The Committee shall have the power, from time to time, to: (i) select Participants; (ii) determine the terms and conditions of each Award, including without limitation the amount of cash, if any, to be paid to each Participant; (iii) establish the performance objectives for any Performance Period in accordance with Section 3 hereof and certify whether such performance objectives have been obtained; (iv) establish and amend rules and regulations relating to the Program, and to make all other determinations necessary and advisable for the administration of the Program; (v) adopt subplans to the Program, and (vi) correct any defect, supply any omission or reconcile any inconsistency in the Program or any Award.
1
Nothing in the Program shall be deemed to limit the ability of the Committee to grant Awards to Participants under the Program which are not intended to qualify as “qualified performance-based compensation” under Section 162(m) of the Code and which are not exempt from the limitations thereof; provided, however, that in no event may an Award be granted in substitution or replacement of an Award intended to qualify as “qualified performance-based compensation” under Section 162(m) of the Code.
All decisions made by the Committee pursuant to the Program shall be made in the Committee’s sole and absolute discretion and shall be final and binding on the Participants and the Company and its Subsidiaries. No member or former member of the Board or the Committee shall be liable for any act, omission, interpretation, construction or determination made in connection with the Program other than as a result of such individual’s willful misconduct.
SECTION 3. AWARDS.
(a) Eligibility. The Committee shall designate the Participants who shall be eligible to participate in the Program for a Performance Period.
(b) Performance Criteria. The Committee shall establish the performance objective or objectives in writing that must be satisfied in order for a Participant to receive an Award for that Performance Period, which shall be established before the beginning of the Performance Period or during a period ending no later than the earlier of (i) 90 days after the beginning of the Performance Period or (ii) the date on which 25% of the Performance Period has been completed, or such other date as may be required or permitted under applicable regulations under Section 162(m) of the Code. In addition, at that time the Committee will also specify in writing the Performance Period during which the performance will be measured, the portion of Awards that will be payable upon the full, partial or over-achievement of specified performance objectives for that Performance Period, and any other conditions that the Committee deems appropriate and consistent with the Program and Section 162(m) of the Code, with respect to any Award that is intended to constitute “qualified performance-based compensation” under Section 162(m) of the Code. Except with respect to an Award that is not intended to constitute “qualified performance-based compensation” under Section 162(m) of the Code, such performance objectives shall be objectively determinable and based upon one or more of the following criteria, as determined by the Committee for the applicable Performance Period (subject to adjustment in accordance with Section 3(b) below): the price of the Company’s stock, earnings per share, income before taxes and extraordinary items, net income, operating income, revenues, earnings before income tax, EBITDA (earnings before interest, taxes, depreciation and amortization), operational cash flow, after-tax or pre-tax profits, return on capital employed or return on invested capital, after-tax or pre-tax return on stockholders’ equity, limiting the level in, or increase in all or a portion of, the Company’s assets and/or liabilities, stockholder return, return on equity, growth in assets, unit volume, sales or market share, or strategic business criteria consisting of one or more objectives based on meeting specified revenue goals, market penetration goals, geographic business expansion goals, cost targets or goals relating to acquisitions or divestitures.
Performance goals may be established on a Company-wide basis or with respect to one or more Subsidiaries, products of any subsidiary, division or other operational unit of the Company or its Subsidiaries, as determined by the Committee; and in either absolute terms or relative to the performance of one or more comparable companies or an index covering multiple companies. For Awards intended to constitute “qualified performance-based compensation” under Section 162(m) of the Code, the performance goals shall satisfy the requirements of “qualified performance-based compensation,” including the requirement that the achievement of the goals be substantially uncertain at the time they were established and that the goals be established in such a way that a third party with knowledge of the relevant facts could determine whether and to what extent the performance goals have been met. The performance objectives for a particular Performance Period need not be the same for all Participants.
2
(c) Adjustments to Performance Criteria. The Committee may provide, at the time the performance goals are established in accordance with Section 3(a) or at any time with respect to any Award that is not intended to constitute “qualified performance-based compensation” under Section 162(m) of the Code, that adjustments will be made to the applicable performance goals to take into account, in any objective manner specified by the Committee, the impact of one or more of the following: (i) gain or loss from all or certain claims and/or litigation and insurance recoveries, (ii) the impairment of tangible or intangible assets, (iii) stock-based compensation expense, (iv) extraordinary, unusual or infrequently occurring events reported in the Company’s public filings, (v) restructuring activities reported in the Company’s public filings, (vi) investments, dispositions or acquisitions, (vii) gain or loss from the disposal of certain assets, (viii) gain or loss from the early extinguishment, redemption, or repurchase of debt, or (ix) changes in accounting principles that become effective during the Performance Period.
Any adjustment described in this Section 3(c) may relate to the Company, any Subsidiary or to any subsidiary, division or other operational unit of the Company or its Subsidiaries, as determined by the Committee at the time the performance goals are established or at any time with respect to any Award that is not intended to constitute “qualified performance-based compensation” under Section 162(m) of the Code. Any adjustment shall be determined in accordance with generally accepted accounting principles and standards, unless such other objective method of measurement is designated by the Committee at the time performance goals are established. Notwithstanding the foregoing, adjustments will be made as necessary to any performance criteria related to the Company’s stock to reflect changes in corporate capitalization, including a recapitalization, stock split or combination, stock dividend, spin-off, merger, reorganization or other similar event or transaction affecting the Company’s stock.
(d) Maximum Award Amount Payable. The maximum amount payable hereunder to a Participant in any twelve month Performance Period will not exceed $2,000,000.
(e) Payment Conditioned on Continued Employment. Unless the Committee specifies another date at the time the performance objectives for a Performance Period are established, no Participant will be entitled to any payment hereunder, and no Award hereunder will be deemed to be earned, with respect to any particular Performance Period unless such Participant has remained continuously employed by the Company or its Subsidiaries through the last day of the Performance Period for which the Award relates.
(f) Negative Discretion. Notwithstanding anything else contained herein to the contrary, the Committee shall have the right, in its absolute discretion, (i) to reduce or eliminate the amount otherwise payable to any Participant hereunder based on individual performance or any other factors that the Committee, in its sole discretion, shall deem appropriate and (ii) to establish rules or procedures that have the effect of limiting the amount payable to each Participant to an amount that is less than the maximum amount otherwise authorized hereunder. In no event shall the Committee have the discretion to increase the amount of compensation that is payable upon achievement of the designated performance goals for Awards that are intended to constitute “qualified performance-based compensation” under Section 162(m) of the Code.
SECTION 4. PAYMENT. To the extent that the Committee determines at the time of grant to qualify an Award as performance-based compensation under Section 162(m) of the Code, no Award shall be payable except upon written certification by the Committee following the Performance Period that the performance goals have been satisfied to a particular extent and that any other material terms and conditions precedent to payment of an Award have been satisfied. If the performance goals have not been satisfied for such Performance Period such Awards shall be forfeited. If the Committee does not determine at the time of grant to qualify an Award as performance-based compensation under Section 162(m) of the Code, no Award shall be payable except upon determination by the Committee that the performance objective or objectives have been satisfied to a particular extent and that any other material terms and conditions precedent to payment of an Award have been satisfied. Payment hereunder will be made as soon as practicable after the Committee certification or determination referenced above is completed. The Committee shall seek to complete the certification or determination referenced above so that any payment hereunder for a particular Performance Period will be made no later than 2 1/2 months following the end of the Fiscal Year containing the last day of the Performance Period to which the Award relates.
3
SECTION 5. GENERAL PROVISIONS.
(a) Amendment and Termination. The Program shall continue until the Board or the Committee amends, suspends, discontinues or terminates the Program, which may occur at any time, in the sole discretion of the Board or the Committee; provided, however, with respect to Awards intended as “qualified performance-based compensation,” the Program must be reapproved by the Company’s stockholders no later than the first stockholders meeting that occurs in the fifth year following the year in which the stockholders approved the Program, if required by Section 162(m) of the Code or the regulations thereunder, and no such action shall be effective without approval by the stockholders of the Company to the extent necessary to continue to qualify the amounts payable hereunder to Participants as “qualified performance-based compensation” under Section 162(m) of the Code.
(b) Unsecured Creditor Status. A Participant entitled to payment hereunder shall rely solely upon the unsecured promise of the Company and its Subsidiaries and nothing herein contained shall be construed to give to or vest in a Participant or any other person now or at any time in the future, any right, title, interest, or claim in or to any specific asset, fund, reserve, account, insurance or annuity policy or contract, or other property of any kind whatever owned by the Company or its Subsidiaries, or in which the Company or its Subsidiaries may have any right, title, or interest, nor or at any time in the future.
(c) Non-Assignment of Awards. The Participant shall not be permitted to sell, transfer, pledge or assign any amount payable pursuant to the Program or an Award, provided that the right to payment of an Award earned hereunder may pass by will or the laws of descent and distribution.
(d) Separability. If any term or condition of the Program shall be invalid or unenforceable to any extent or in any application, then the remainder of the Program, with the exception of such invalid or unenforceable provision, shall not be affected thereby, and shall continue in effect and application to its fullest extent.
(e) Continued Employment. Neither the adoption of the Program nor the execution of any document in connection with the Program will: (i) confer upon any employee of the Company or a Subsidiary any right to continued employment with the Company or such Subsidiary, or (ii) interfere in any way with the right of the Company or such Subsidiary to terminate the employment of any of its employees at any time.
(f) Incapacity. If a Participant is unable to care for his or her affairs because of illness or accident, the Committee, in its sole discretion, may determine to pay any amount due such Participant under the Program to his or her legal representatives, administrators, or assigns or any other person claiming under or through such Participant, and any such payment shall be a complete discharge of the Company’s and its Subsidiaries’ obligations hereunder.
(g) Withholding. The Company and its Subsidiaries, as the case may be, shall withhold the amount of any federal, state, local or other tax, charge or assessment attributable to the payment of any Award as it may deem necessary or appropriate, in its sole discretion.
4
(h) Compliance with Section 409A of the Code. The Program is intended to comply with the short-term deferral rule set forth in the regulations under Section 409A of the Code, in order to avoid application of Section 409A to the Program. If, and to the extent that, any payment under this Program is deemed to be deferred compensation subject to the requirements of Section 409A of the Code, this Program shall be administered so that such payments are made in accordance with the requirements of Section 409A of the Code.
(i) Governing Law. The Program and all Awards granted hereunder will be governed by and construed in accordance with the laws and judicial decisions of the Commonwealth of Pennsylvania, without regard to the application of the principles of conflicts of laws.
5