As filed with the Securities and Exchange Commission on January 12, 2001
Registration No. ___________
_____________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
FIRST VIRGINIA BANKS, INC.
(Exact name of registrant as specified in its charter)
Virginia 54-0497561
(State or other jurisdiction of (IRS Employer Identification
Incorporation of organization) Number)
6400 Arlington Boulevard
Falls Church, Virginia 22042-2336
703/241-4000
(Address of Principal Executive Offices, including zip code )
____________________
1998 Stock Incentive Plan
(Full title of the plan)
CHRISTOPHER M. COLE, ESQ.
First Virginia Banks, Inc.
6400 Arlington Boulevard
Falls Church, Virginia 22042-2336
703-241-4486
(Name, address and telephone number, including area code,
or agent for service)
CALCULATION OF REGISTRATION FEE
Proposed Proposed Maximum
Title of Amount to Maximum Aggregate Amount of
Securities to be Offering Offering Registration
be Registered Registered Price (1) Price (1) Fee (1)
Common Stock, 2,500,000 $45.625 $114,062,500 $28,515.62
Par Value
$1.00 per
share
(1) Pursuant to Rule 457(c) and (h) (1), based on the average ($45.625) of
the high ($46.25) and low ($45.00) prices of the Registrant's Common
Stock on January 9, 2000, as reported on the New York Stock Exchange.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
The following documents filed by First Virginia Banks, Inc. (the "Company"
or "First Virginia") with the Securities and Exchange Commission (the
"Commission") under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), are incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K for the year ended December
31, 1999, as filed with the Commission on March 29, 2000;
(b) The Company's Quarterly Reports on Form 10-Q filed with the Commission
on May 12, 2000, August 7, 2000 and November 9, 2000, respectively;
(c) The description of the Company's Common Stock, par value $1.00 per
share, contained in the Company's Registration Statement on Form 8-A filed
with the Commission on February 23, 1971 with respect to such Common Stock,
including any amendment or report filed for the purposes of updating such
description;
(d) The Company's Registration Statement on Form 8-A dated August 1, 1988,
as amended on August 27, 1997, relating to the Company's Rights Agreement;
and
(e) All other reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act since the end of the fiscal year referred to in (a) above.
All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-
effective amendment which indicates that all securities offered hereby have
been sold or which deregisters all securities remaining unsold, shall be
deemed to be incorporated by reference herein and to be a part hereof from
the date of the filing of such documents.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
The legality of the securities offered hereby has been passed upon by
Christopher M. Cole, Esquire, Vice President and Assistant General Counsel to
the Company. As of January 11, 2001, Mr. Cole owned 4,657 shares of First
Virginia Common Stock.
Item 6. Indemnification of Directors and Officers
Article 10 of the Virginia State Corporation Act ("VSCA") allows, in
general, for indemnification, in certain circumstances, by a Virginia
corporation of any person threatened with or made a party to any action, suit
or proceeding by reason of the fact that he or she is, or was, a director,
officer, employee or agent of such corporation. Indemnification is also
authorized with respect to a criminal action or proceeding where the person
had no reasonable cause to believe that his or her conduct was unlawful.
Article 9 of the VSCA provides limitations on damages payable by officers and
directors, except in cases of willful misconduct or knowing violation of the
criminal law.
Article VI of First Virginia's Articles of Incorporation mandates the
indemnification of directors, advisory directors and officers as a result of
liability incurred by them in proceedings instituted against them by third
parties or by or on behalf of First Virginia itself, relating to the manner
in which they perform their duties unless they have been guilty of willful
misconduct or a knowing violation of criminal law. Subsection (a) of Article
VI provides that First Virginia may contract in advance to provide such
indemnification. Under Article VI, the procedures for determining whether
indemnification must be made will be as provided under the Virginia Stock
Corporation Act ("Corporation Act"). The Corporation Act provides that this
determination must be made (1) by a majority vote of a quorum consisting of
disinterested directors; (2) if such quorum is not available, by a majority
vote of a committee designated by the Board of Directors consisting solely of
two or more disinterested directors; (3) by special legal counsel selected
(i) by the Board or its committee as in (1) or (2) above or, if none such,
(ii) by a majority of the full Board; or (4) by the stockholders, but shares
of or controlled by interested directors may not be voted on the
determination.
Subsection (b) of Article VI requires the advancement of expenses reasonably
incurred by a director, advisory director or officer in a proceeding upon
receipt of an undertaking from him to repay the amounts advanced if it is
ultimately determined that he is not entitled to indemnification. If,
however, a determination has been made that the director, advisory director
or officer is not entitled to be indemnified, expenses need not be advanced.
Subsection (c) of Article VI authorizes First Virginia to provide
indemnification and make advances and reimbursements for expenses to other
persons including directors, advisory directors and officers of its
subsidiaries and employees and agents of First Virginia and its subsidiaries,
to the same extent or a lesser extent than is required to indemnify
directors, advisory directors and officers of First Virginia. First Virginia
may also contract in advance to provide such indemnification.
Subsection (d) of Article VI provides that in any proceeding brought by a
stockholder in the right of First Virginia or brought by or on behalf of
shareholders of First Virginia, no damages may be assessed against a
director, advisory director or officer of First Virginia arising out of a
single transaction, occurrence, or course of conduct. This elimination of
liability is not applicable if the director, advisory director or officer
engages in willful misconduct or a knowing violation of criminal law or of
any federal or state securities law.
First Virginia maintains a Directors and Officers Liability Insurance Policy
issued by Federal Insurance Company (part of the Chubb Group of Insurance
Companies) in the aggregate annual amount of $50 million. This policy
provides coverage up to 100% of its face amount. In general, the policy
insures (i) First Virginia's directors and officers and those of its
affiliates against loss by reason of their wrongful acts, and/or (ii) First
Virginia against claims against the directors and officers by reason of their
wrongful acts for which First Virginia is required to indemnify or pay, all
as such terms are defined in the policies and subject to the terms and
conditions contained therein.
Certain rules of the Federal Deposit Insurance Corporation limit the ability
of certain depository institutions, their subsidiaries and their affiliated
depository institution holding companies to indemnify affiliated parties,
including institution directors. In general, subject to the ability to
purchase directors and officers liability insurance and to advance
professional expenses under certain circumstances, the rules prohibit such
institutions from indemnifying a director for certain costs incurred with
regard to an administrative or enforcement action commenced by any federal
banking agency that results in a final order or settlement pursuant to which
the director is assessed a civil money penalty, removed from office,
prohibited from participating in the affairs of an insured depository
institution or required to cease and desist from or take an affirmative
action described in Section 8(b) of the Federal Deposit Insurance Act (12
U.S.C. ss. 1818(b)).
Item 7. Exemption from Registration Claimed.
Not applicable
Item 8. Exhibits
The following exhibits are filed as a part of this Registration Statement.
Number Description
4 Restated Articles of Incorporation of the Company, as amended,
which are incorporated by reference to Exhibit 3 to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998,
filed with the Commission on August 13, 1998.
4.2 Restated Bylaws of the Company which are incorporated by
reference to Exhibit 3 to the Company's Quarterly Report on Form 10-Q
for the quarter ended March 31, 2000, filed with the Commission on
May 12, 2000.
4.3 Amended and Restated Rights Agreement dated as of July 29,
1988, as amended as of August 27, 1997, between the Company and
Registrar and Transfer Company, Rights Agent, which is incorporated by
reference to Exhibit 1 filed under Form 8-A/A, filed with the
Commission on September 29, 1997.
5 Opinion of Christopher M. Cole, Vice President and Assistant
General Counsel to the Company.
23.1 Consent of Christopher M. Cole, Vice President and Assistant
General Counsel to the Company, which is contained in his opinion filed
as Exhibit 5.
23.2 Consent of KPMG LLP.
23.3 Consent of Ernst & Young LLP
24 Power of Attorney of Directors and Officers of the Company.
99 First Virginia Banks, Inc. 1998 Stock Incentive Plan.
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933 (the "Securities Act");
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represents a fundamental change
in the information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement;
(iii)to include any material information with respect to
the plan of distribution not previously disclosed in the
Registration Statement or any material change to such information
in the Registration Statement;
provided, however, that paragraphs (a) (1) (i) and (a) (1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
with or furnished to the Commission by the Company pursuant to Section
13 or Section 15(d) of the Exchange Act that are incorporated by
reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Company's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act
that is incorporated by reference in the Registration Statement shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of
the Company pursuant to the foregoing provisions, or otherwise, the
Company has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Company of expenses incurred or paid by a director, officer or
controlling person of the Company in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered,
the Company will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is
against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
SIGNATURES
THE REGISTRANT
Pursuant to the requirements of the Securities Act of 1933, First Virginia
Banks, Inc. certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized in the County of Fairfax, State of Virginia, on
this 12th day of January, 2001.
FIRST VIRGINIA BANKS, INC.
/s/ Barry J. Fitzpatrick
Barry J. Fitzpatrick, Chairman of the Board,
President and Principal Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on January 12, 2001.
/s/ Barry J. Fitzpatrick /s/ Richard F. Bowman
Name: Barry J. Fitzpatrick Name: Richard F. Bowman
Title: Chairman of the Board, President Title: Principal Financial
and Principal Executive Officer Officer and Principal Accounting
Officer
/s/ Edward L. Breeden, III* /s/ Paul H. Geithner, Jr.*
Name: Edward L. Breeden, III Name: Paul H. Geithner, Jr.
Title: Director Title: Director
/s/ L. H. Ginn, III /s/ Gilbert R. Giordano*
Name: L. H. Ginn, III Name: Gilbert R. Giordano
Title: Director Title: Director
/s/ Edward M. Holland*
Name: Edward M. Holland Name: Lawrence T. Jennings
Title: Director Title: Director
/s/ Eric C. Kendrick* /s/ W. Lee Phillips, Jr.*
Name: Eric C. Kendrick Name: W. Lee Phillips, Jr.
Title: Director Title: Director
/s/ Lynda S. Vickers-Smith*
Name: Robert M. Rosenthal Name: Lynda S. Vickers-Smith
Title: Director Title: Director
/s/ Robert H. Zalokar* /s/ Albert F. Zettlemoyer*
Name: Robert H. Zalokar Name: Albert F. Zettlemoyer
Title: Director Title: Director
* /s/ Christopher M. Cole
Name: Christopher M. Cole
Title: Attorney-in-Fact
EXHIBIT INDEX
to
Registration Statement on Form S-8 of
First Virginia Banks, Inc.
Exhibit Description
4 Restated Articles of Incorporation of the Company, as amended,
which are incorporated by reference to Exhibit 3 to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998,
filed with the Commission on August 13, 1998.
4.2 Restated Bylaws of the Company which are incorporated by
reference to Exhibit 3 to the Company's Quarterly Report on Form 10-Q
for the quarter ended March 31, 2000, filed with the Commission on
May 12, 2000.
4.3 Amended and Restated Rights Agreement dated as of July 29,
1988, as amended as of August 27, 1997 between the Company and
Registrar and Transfer Company, Rights Agent, which is incorporated by
reference to Exhibit 1 filed under Form 8-A/A, filed with the
Commission on September 29, 1997.
5 Opinion of Christopher M. Cole, Vice President and Assistant
General Counsel to the Company.
23.1 Consent of Christopher M. Cole, Vice President and Assistant
General Counsel to the Company, which is contained in his opinion filed
as Exhibit 5.
23.2 Consent of KPMG LLP.
23.3 Consent of Ernst & Young LLP
24 Power of Attorney of Directors and Officers of the Company.
99 First Virginia Banks, Inc. 1998 Stock Incentive Plan.
EXHIBIT 5
[FVBI Letterhead]
January 12, 2001
First Virginia Banks, Inc.
6400 Arlington Boulevard
Falls Church, Virginia 22042-2336
Re: Registration Statement on Form S-8 Relating to 1998 Stock
Incentive Plan
Ladies and Gentlemen:
I am familiar with the proceedings taken by First Virginia Banks, Inc. (the
"Company") in connection with the preparation and filing with the Securities
and Exchange Commission (the "Commission") of a Registration Statement on
Form S-8 under the Securities Act of 1933, as amended, of an aggregate of
2,500,000 shares of its common stock, $1.00 par value per share (the
"Shares"), which are proposed to be offered and sold pursuant to the 1998
Stock Incentive Plan (the "Plan").
As counsel for the Company, the Plan and the Registration Statement have
been reviewed under my direction, and I have examined and am familiar with
the records relating to the organization of the Company, including its
articles of incorporation, bylaws and all amendments thereto, and the records
of all proceedings taken by the Board of Directors of the Company pertinent
to the rendering of this opinion.
Based on the foregoing, and having regard for such legal considerations as I
have deemed relevant, I am of the opinion that the Shares have been duly
authorized and, when issued and paid for in accordance with the terms of the
Plan, the Shares will be validly issued, fully paid and nonassessable.
I hereby consent to the filing of this opinion with the Commission as
Exhibit 5 to the Registration Statement. In giving this consent, I do not
admit that I am within the category of persons whose consent is required by
Section 7 of the Securities Act, or other rules and regulations of the
Commission thereunder.
Very truly yours,
/s/ Christopher M. Cole
Christopher M. Cole
Vice President and
Assistant General Counsel
CMC:nel
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
First Virginia Banks, Inc.
We consent to the use of our report dated January 18, 2000, relating to the
consolidated balance sheet of First Virginia Banks, Inc. as of December 31,
1999 and the related consolidated statements of income, shareholders' equity
and cash flows for the year then ended, which report is included in the
annual report to shareholders, in the December 31, 1999 annual report on Form
10-K of First Virginia Banks, Inc., which annual report is incorporated by
reference in this Registration Statement on Form S-8 of First Virginia Banks,
Inc.
/s/ KPMG LLP
Richmond, Virginia
January 12, 2001
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
on Form S-8 pertaining to the 1998 Stock Incentive Plan of First Virginia
Banks, Inc. of our report dated January 19, 1999, with respect to the
consolidated balance sheet of First Virginia Banks, Inc. as of December 31,
1998 and the related consolidated statements of income, shareholders' equity
and cash flows for each of the two years in the period ended December 31,
1998 included in its Annual Report (Form 10-K) for the year ended December
31, 1999, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
McLean, Virginia
January 10, 2001
EXHIBIT 24
POWER OF ATTORNEY
Each of the undersigned, being a director and/or officer of First Virginia
Banks, Inc. (the "Company"), hereby nominates, constitutes and appoints
Thomas P. Jennings and Christopher M. Cole, or any one of them severally, to
be his or her true and lawful attorney-in-fact and to sign in his or her name
and on his or her behalf in any and all capacities stated below, and to file
with the Securities and Exchange Commission (the "Commission"), a
Registration Statement on Form S-8 (the "Registration Statement") relating to
the offer and sale of the Company's common stock, $1.00 par value per share,
pursuant to the terms of the First Virginia Banks, Inc. 1998 Stock Incentive
Plan and to file any and all amendments, including post-effective amendments,
to the Registration Statement, making such changes in the Registration
Statement as such attorney-in-fact deems appropriate, and generally to do all
such things on his or her behalf in any and all capacities stated below to
enable the Company to comply with the provisions of the Securities Act of
1933, as amended, and all requirements of the Commission.
This Power of Attorney has been signed by the following persons in the
capacities indicated on December 20, 2000.
/s/ Barry J. Fitzpatrick /s/ Richard F. Bowman
Name: Barry J. Fitzpatrick Name: Richard F. Bowman
Title: Chairman of the Board, Title: Principal Financial
President and Principal Officer and Principal
Executive Officer Accounting Officer
/s/Edward L. Breeden, III /s/ Paul H. Geithner, Jr.
Name: Edward L. Breeden, III Name: Paul H. Geithner, Jr.
Title: Director Title: Director
/s/ L. H. Ginn, III /s/ Gilbert R. Giordano
Name: L. H. Ginn, III Name: Gilbert R. Giordano
Title: Director Title: Director
/s/ Edward M. Holland
Name: Edward M. Holland Name: Lawrence T. Jennings
Title: Director Title: Director
/s/ Eric C. Kendrick /s/ W. Lee Phillips, Jr.
Name: Eric C. Kendrick Name: W. Lee Phillips, Jr.
Title: Director Title: Director
/s/ Lynda S. Vickers-Smith
Name: Robert M. Rosenthal Name: Lynda S. Vickers-Smith
Title: Director Title: Director
/s/ Robert H. Zalokar /s/ Albert F. Zettlemoyer
Name: Robert H. Zalokar Name: Albert F. Zettlemoyer
Title: Director Title: Director
EXHIBIT 99
FIRST VIRGINIA BANKS, INC.
1998 STOCK INCENTIVE PLAN
Effective April 24, 1998
ARTICLE I DEFINITIONS
1.01 Acquiring Person 1
1.02 Administrator 1
1.03 Agreement 1
1.04 Associate 1
1.05 Board 1
1.06 Change in Control 1
1.07 Code 1
1.08 Committee 1
1.09 Common Stock 2
1.10 Continuing Director 2
1.11 Control Affiliate 2
1.12 Control Change Date 2
1.13 Corporation 2
1.14 Corresponding SAR 2
1.15 Disability 2
1.16 Efficiency Ratio 2
1.17 Exchange Act 2
1.18 Fair Market Value 2
1.19 Incentive Award 3
1.20 Initial Value 3
1.21 NIACC 3
1.22 Option 3
1.23 Participant 3
1.24 Performance Shares 3
1.25 Person 3
1.26 Plan 3
1.27 Related Entity 4
1.28 Retirement 4
1.29 SAR 4
1.30 Stock Award 4
1.31 Total Shareholder Return 4
ARTICLE II PURPOSES 4
ARTICLE III ADMINISTRATION 5
ARTICLE IV ELIGIBILITY 5
ARTICLE V STOCK SUBJECT TO PLAN 6
5.01 Shares Issued 6
5.02 Aggregate Limit 6
5.03 Reallocation of Shares 6
ARTICLE VI OPTIONS 7
6.01 Award 7
6.02 Option Price 7
6.03 Maximum Option Period 7
6.04 Nontransferability 7
6.05 Transferable Options 7
6.06 Employee Status 8
6.07 Exercise 8
6.08 Payment 8
6.09 Change in Control 8
6.10 Shareholder Rights 9
6.11 Disposition of Stock 9
ARTICLE VII SARS 9
7.01 Award 9
7.02 Maximum SAR Period 9
7.03 Nontransferability 9
7.04 Transferable SARs 10
7.05 Exercise 10
7.06 Change in Control 10
7.07 Employee Status 11
7.08 Settlement 11
7.09 Shareholder Rights 11
ARTICLE VIII STOCK AWARDS 11
8.01 Award 11
8.02 Vesting 11
8.03 Performance Objectives 11
8.04 Employee Status 12
8.05 Change in Control 12
8.06 Shareholder Rights 12
ARTICLE IX PERFORMANCE SHARE AWARDS 12
9.01 Award 12
9.02 Earning the Award 12
9.03 Payment 13
9.04 Shareholder Rights 13
9.05 Nontransferability 13
9.06 Transferable Performance Shares 13
9.07 Employee Status 13
9.08 Change in Control 14
ARTICLE X INCENTIVE AWARDS 14
10.01 Award 14
10.02 Terms and Conditions 14
10.03 Nontransferability 15
10.04 Employee Status 15
10.05 Change in Control 15
10.06 Shareholder Rights 15
ARTICLE XI ADJUSTMENT UPON CHANGE IN COMMON STOCK 16
ARTICLE XII COMPLIANCE WITH LAW AND
APPROVAL OF REGULATORY BODIES 16
ARTICLE XIII GENERAL PROVISIONS 17
13.01 Effect on Employment and Service 17
13.02 Unfunded Plan 17
13.03 Rules of Construction 17
13.04 Tax Withholding 17
ARTICLE XIV AMENDMENT 18
ARTICLE XV DURATION OF PLAN 18
ARTICLE XVII EFFECTIVE DATE OF PLAN 18
ARTICLE I
DEFINITIONS
1.01 Acquiring Person means that (a) a Person, considered alone or together
with all Control Affiliates and Associates of that Person, becomes directly or
indirectly the beneficial owner of securities representing at least twenty
percent of the Corporation's then outstanding securities entitled to vote
generally in the election of the Board, or (b) a person enters into an agreement
that would result in that Person satisfying the conditions in subsection (a) or
that would result in a Related Entity's failure to be a Related Entity.
1.02 Administrator means the Committee and any delegate of the Committee
that is appointed in accordance with Article III.
1.03 Agreement means a written agreement (including any amendment or
supplement thereto) between the Corporation and a Participant specifying the
terms and conditions of an award of Performance Shares or a Stock Award, Option,
SAR or Incentive Award granted to such Participant.
1.04 Associate, with respect to any Person, is defined in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act, as amended as of January
1, 1990. An Associate does not include the Company or a majority-owned
subsidiary of the Corporation.
1.05 Board means the Board of Directors of the Corporation.
1.06 Change in Control means that (a) the Corporation enters into any
agreement with a Person that involves the transfer of ownership of the
Corporation or of at least fifty percent of the Corporation's total assets on
a consolidated basis, as reported in the Corporation's consolidated financial
statements filed with the Securities and Exchange Commission (including an
agreement for the acquisition of the Corporation by merger, consolidation, or
statutory share exchange - regardless of whether the Corporation is intended to
be the surviving or resulting entity after the merger, consolidation, or
statutory share exchange - or for the sale of substantially all of the
Corporation's assets to that Person), (b) any Person is or becomes an Acquiring
Person, or (c) during any period of two consecutive calendar years, the
Continuing Directors cease for any reason to constitute a majority of the Board.
1.07 Code means the Internal Revenue Code of 1986, and any amendments
thereto.
1.08 Committee means the Management and Benefits Compensation Benefits
Committee of the Board, each member of which shall be a "nonemployee director"
as such term is defined in Rule 16b-3
promulgated under the Exchange Act. Notwithstanding the foregoing, Committee
may be a "nonemployee director" subcommittee of the Management Compensation and
Benefits Committee if any of its members is not a "nonemployee director."
1.09 Common Stock means the common stock of the Corporation.
1.10 Continuing Director means any member of the Board, while a member of
the Board and (i) who was a member of the Board prior to the adoption of the
Plan or (ii) whose subsequent nomination for election or election to the Board
was recommended or approved by a majority of the Continuing Directors.
1.11 Control Affiliate with respect to any Person, means an affiliate as
defined in Rule 12b-2 of the General Rules and Regulations under the Exchange
Act, as amended as of January 1, 1990.
1.12 Control Change Date means the date on which a Change in Control
occurs. If a Change in Control occurs on account of a series of transactions,
the Control Change Date is the date of the last of such transactions.
1.13 Corporation means First Virginia Banks, Inc.
1.14 Corresponding SAR means an SAR that is granted in relation to a
particular Option and that can be exercised only upon the surrender to the
Corporation, unexercised, of that portion of the Option to which the SAR
relates.
1.15 Disability means, as to an incentive stock option, a disability within
the meaning of Code Section 2(e)(3). Disability means, as to all other awards,
that a Participant is unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment which can be
expected to result in death, or which has lasted or can be expected to last for
a continuous period of not less than twelve months.
1.16 Efficiency Ratio means the percentage determined by dividing (i)
noninterest expense less nonrecurring expense by (ii) the sum of net interest
income plus noninterest income, all as reported on the Corporation's financial
statements.
1.17 Exchange Act means the Securities Exchange Act of 1934, as amended and
as in effect on the date of this Agreement.
1.18 Fair Market Value means, on any given date, the price per share of the
last sale of Common Stock on the New York Stock Exchange on such date, or if the
Common Stock was not traded on the New York Stock Exchange on such day, then on
the next preceding day that the Common Stock was traded on such exchange, all
as reported in The Wall Street Journal.
1.19 Incentive Award means an award under Article X which, subject to such
terms and conditions as may be prescribed by the Administrator, entitles the
Participant to receive a cash payment from the Corporation or a Related Entity.
1.20 Initial Value means, with respect to a Corresponding SAR, the option
price per share of the related Option and, with respect to an SAR granted
independently of an Option, the price per share of Common Stock as determined
by the Administrator on the date of the grant; provided, however, that the price
per share of Common Stock encompassed by the grant of an SAR shall not be less
than the Fair Market Value on the date of grant.
1.21 NIACC means net income after a capital charge.
1.22 Option means a stock option that entitles the holder to purchase from
the Corporation a stated number of shares of Common Stock at the price set forth
in an Agreement.
1.23 Participant means an employee of the Corporation or a Related Entity,
including an employee who is a member of the Board, who satisfies the
requirements of Article IV and is selected by the Administrator to receive an
award of Performance Shares, a Stock Award, an Option, an SAR, an Incentive
Award or a combination thereof.
1.24 Performance Shares means an award, in the amount determined by the
Administrator and specified in an Agreement, stated with reference to a
specified number of shares of Common Stock, that entitles the holder to receive
a payment for each specified share equal to the Fair Market Value of Common
Stock on the date of payment. In the discretion of the Administrator, a
Performance Share award may include the right to receive an additional payment
for the accumulated dividends that would have been paid on each specified share
as if such dividends had been invested in Common Stock on the dividend payment
date, from the date of grant to the date of payment.
1.25 Person means any human being, firm, corporation, partnership, or other
entity. Person also includes any human being, firm, corporation, partnership,
or other entity as defined in sections 13(d) (3) and 14(d)(2) of the Exchange
Act, as amended as of January 1, 1990. For purposes of this Plan, the term
Person does not include the Corporation or any Related Entity, and the term
Person does not include any employee-benefit plan maintained by the Corporation
or by any Related Entity, and any person or entity organized, appointed, or
established by the Corporation or by any subsidiary for or pursuant to the terms
of any such employee-benefit plan, unless the Board determines that such an
employee-benefit plan or such person or entity is a Person.
1.26 Plan means the First Virginia Banks, Inc. 1998 Stock Incentive Plan.
1.27 Related Entity means any entity that directly or indirectly, through
one or more intermediaries, controls, or is controlled by, or is under common
control with, the Corporation.
1.28 Retirement means a Participant's separation from service on or after
his early, normal or delayed retirement date under the First Virginia Pension
Trust Plan.
1.29 SAR means a stock appreciation right that entitles the holder to
receive, with respect to each share of Common Stock encompassed by the exercise
of such SAR, the lesser of (a) the excess, if any, of the Fair Market Value at
the time of exercise over the Initial Value, or (b) the Initial Value.
References to "SARs" include both Corresponding SARs and SARs granted
independently of Options, unless the context requires otherwise.
1.30 Stock Award means Common Stock awarded to a Participant under Article
VIII.
1.31 Total Shareholder Return means, with respect to any period, the sum of
(i) the excess, if any, of the Fair Market Value on the first day of the period
over the Fair Market Value on the last day of the period and (ii) the value of
any dividends on Common Stock payable with respect to such period.
ARTICLE II
PURPOSES
The Plan is intended to promote a closer identification of the interests of
employees with those of the Corporation and its shareholders, thereby further
stimulating their efforts to enhance the soundness, profitability, growth and
shareholder value of the Corporation. The Plan also is intended to assist the
Corporation and Related Entities in recruiting and retaining individuals with
ability and initiative by enabling such persons to participate in the future
success of the Corporation and the Related Entities and to associate their
interests with those of the Corporation and its shareholders. The Plan is
intended to permit the grant of both Options qualifying under Section 422 of the
Code ("incentive stock options") and Options not so qualifying, and the grant
of SARs, Stock Awards, Performance Shares and Incentive Awards. No Option that
is intended to be an incentive stock option shall be invalid for failure to
qualify as an incentive stock option. The proceeds received by the Corporation
from the sale of Common Stock pursuant to this Plan shall be used for general
corporate purposes.
ARTICLE III
ADMINISTRATION
The Plan shall be administered by the Administrator. The Administrator
shall have authority to grant Stock Awards, Performance Shares, Incentive
Awards, Options and SARs upon such terms (not inconsistent with the provisions
of this Plan), as the Administrator may consider appropriate. Such terms may
include conditions (in addition to those contained in this Plan), on the
exercisability of all or any part of an Option or SAR or on the transferability
or forfeitability of a Stock Award, an award of Performance Shares or an
Incentive Award, including by way of example and not of limitation, conditions
on which Participants may defer receipt of benefits under the Plan, requirements
that the Participant complete a specified period of employment with the
Corporation or a Related Entity, requirements that the Corporation achieve a
specified level of financial performance or that the Corporation achieve a
specified level of financial return. Notwithstanding any such conditions, the
Administrator may, in its discretion, accelerate the time at which any Option
or SAR may be exercised, or the time at which a Stock Award may become
transferable or nonforfeitable or the time at which an Incentive Award or an
award of Performance Shares may be settled.
The Administrator also shall have complete authority to interpret all
provisions of this Plan; to prescribe the form of Agreements; to adopt, amend,
and rescind rules and regulations pertaining to the administration of the Plan;
and to make all other determinations necessary or advisable for the
administration of this Plan. The express grant in the Plan of any specific
power to the Administrator shall not be construed as limiting any power or
authority of the Administrator. Any decision made, or action taken, by the
Administrator or in connection with the administration of this Plan shall be
final and conclusive. Neither the Administrator nor any member of the Committee
shall be liable for any act done in good faith with respect to this Plan or any
Agreement, Option, SAR, Stock Award or Incentive Award or award of Performance
Shares. All expenses of administering this Plan shall be borne by the
Corporation, a Related Entity or a combination thereof.
ARTICLE IV
ELIGIBILITY
Any employee of the Corporation or a Related Entity (including a corporation
that becomes a Related Entity after the adoption of this Plan), is eligible to
participate in this Plan if the Administrator, in its sole discretion,
determines that such person has contributed significantly or can be expected to
contribute significantly to the profits or growth of the Corporation or a
Related Entity. Directors of the Corporation who are employees of the
Corporation or a Related Entity may be selected to participate in this Plan.
ARTICLE V
STOCK SUBJECT TO PLAN
5.01 Shares Issued. Upon the award of shares of Common Stock pursuant to a
Stock Award or in settlement of an award of Performance Shares, the Corporation
may issue shares of Common Stock from its authorized but unissued Common Stock.
Upon the exercise of any Option or SAR the Corporation may deliver to the
Participant (or the Participant's broker if the Participant so directs), shares
of Common Stock from its authorized but unissued Common Stock.
5.02 Aggregate Limit. The maximum aggregate number of shares of Common
Stock that may be issued under this Plan, pursuant to the exercise of SARs and
Options and the grant of Stock Awards and the settlement of Performance Shares
awarded on and after April 24, 1998, is 2,500,000 shares. The maximum aggregate
number of shares that may be issued under this Plan as Stock Awards and in
settlement of Performance Shares awarded on and after April 24, 1998, is
800,000 shares. The maximum aggregate number of shares that may be issued under
this Plan and the maximum number of shares that may be issued as Stock Awards
and in settlement of Performance Shares shall be subject to adjustment as
provided in Article XI.
5.03 Reallocation of Shares. If an Option is terminated, in whole or in
part, for any reason other than its exercise or the exercise of a Corresponding
SAR that is settled with Common Stock, the number of shares of Common Stock
allocated to the Option or portion thereof may be reallocated to other Options,
SARs, Performance Shares and Stock Awards to be granted under this Plan. If an
SAR is terminated, in whole or in part, for any reason other than its exercise
that is settled with Common Stock or the exercise of a related Option, the
number of shares of Common Stock allocated to the SAR or portion thereof may be
reallocated to other Options, SARs, Performance Shares and Stock Awards to be
granted under this Plan. If an award of Performance Shares is terminated, in
whole or in part, for any reason other than its settlement with Common Stock,
the number of shares of Common Stock allocated to the Performance Shares or
portion thereof may be reallocated to other options, SARs, Performance Shares
and Stock Awards to be granted under this Plan. If a Stock Award is forfeited,
in whole or in part, for any reason, the number of shares of Common Stock
allocated to the Stock Award or portion thereof may be reallocated to other
Options, SARs, Performance Shares and Stock Awards to be granted under this
Plan.
ARTICLE VI
OPTIONS
6.01 Award. In accordance with the provisions of Article IV, the
Administrator will designate each individual to whom an Option is to be granted
and will specify the number of shares of Common Stock covered by each such
award; provided, however, that no individual may be granted Options in any
calendar year covering more than 100,000 shares of Common Stock.
6.02 Option Price. The price per share for Common Stock purchased on the
exercise of an Option shall be determined by the Administrator on the date of
grant, but shall not be less than the Fair Market Value on the date the Option
is granted.
6.03 Maximum Option Period. The maximum period in which an Option may be
exercised shall be ten years from the date such Option was granted. The terms
of any Option may provide that it is exercisable for a period less than such
maximum period.
6.04 Nontransferability. Except as provided in Section 6.05, each Option
granted under this Plan shall be nontransferable except by will or by the laws
of descent and distribution. In the event of any transfer of an Option (by the
Participant or his transferee), the Option and any Corresponding SAR that
relates to such Option must be transferred to the same person or persons or
entity or entities. Except as provided in Section 6.05, during the lifetime of
the Participant to whom the Option is granted, the Option may be exercised only
by the Participant. No right or interest of a Participant in any Option shall
be liable for, or subject to, any lien, obligation, or liability of such
Participant.
6.05 Transferable Options. Section 6.04 to the contrary notwithstanding,
if the Agreement provides, an Option that is not an incentive stock option may
be transferred by a Participant to the Participant's children, grandchildren,
spouse, one or more trusts for the benefit of such family members or a
partnership in which such family members are the only partners, on such terms
and conditions as may be permitted under Securities Exchange Commission Rule
16b-3 as in effect from time to time. The holder of an Option transferred
pursuant to this section shall be bound by the same terms and conditions that
governed the Option during the period that it was held by the Participant;
provided, however, that such transferee may not transfer the Option except by
will or the laws of descent and distribution. In the event of any transfer of
an Option (by the Participant or his transferee), the Option and any
Corresponding SAR that relates to such Option may be transferred to the same
person or persons or entity or entities.
6.06 Employee Status. For purposes of determining the applicability of
Section 422 of the Code (relating to incentive stock options), or in the event
that the terms of any Option provide that it may be exercised only during
employment or within a specified period of time after termination of employment,
the Administrator may decide to what extent leaves of absence for governmental
or military service, illness, temporary disability, or other reasons shall not
be deemed interruptions of continuous employment.
6.07 Exercise. Subject to the provisions of this Plan and the applicable
Agreement, an Option may be exercised in whole at any time, or in part from time
to time at such times, beyond one year after it is granted and in compliance
with such requirements as the Administrator shall determine; provided, however,
that incentive stock options (granted under the Plan and all plans of the
Corporation and its Related Entities) may not be first exercisable in a calendar
year for stock having a Fair Market Value (determined as of the date an Option
is granted) exceeding the limit prescribed by Code section 422(d); and further
provided, however, that an Option that is exercisable on the date of termination
of employment must be exercised, if at all, prior to the earlier of: (1) the
close of the period of: (a) three months less one day next succeeding the date
of termination of employment for reasons other than Disability or death, or (b)
one year next succeeding the date of termination of employment on account of
Disability or death, and (2) the close of the option period. An Option granted
under this Plan may be exercised with respect to any number of whole shares less
than the full number for which the Option could be exercised. A partial
exercise of an Option shall not affect the right to exercise the Option from
time to time in accordance with this Plan and the applicable Agreement with
respect to the remaining shares subject to the Option. The exercise of an
Option shall result in the termination of any Corresponding SAR to the extent
of the number of shares with respect to which the Option is exercised.
6.08 Payment. Unless otherwise provided by the Agreement, payment of the
Option price shall be made in cash or a cash equivalent acceptable to the
Administrator. Subject to rules established by the Administrator, payment of
all or part of the Option price may be made with shares of Common Stock which
have been owned by the Participant for at least six months and which have not
been used for another exercise during the prior six months. If Common Stock is
used to pay all or part of the Option price, the sum of the cash and cash
equivalent and the Fair Market Value (determined as of the day preceding the
date of exercise) of such shares must not be less than the Option price of the
shares for which the Option is being exercised.
6.09 Change in Control. Section 6.07 to the contrary notwithstanding, each
outstanding Option shall be fully exercisable (in whole or in part at the
discretion of the holder) on and after a Control Change Date and during the
period (i) beginning on the first day after a tender offer or exchange offer for
shares of Common Stock (other than an offer made by the Corporation), provided
that shares are acquired pursuant to such offer, and (ii) ending on the
thirtieth day following the expiration of such offer.
6.10 Shareholder Rights. No Participant shall have any rights as a
shareholder with respect to shares subject to his Option until the date of
exercise of such Option.
6.11 Disposition of Stock. A Participant shall notify the Company of any
sale or other disposition of Common Stock acquired pursuant to an Option that
was an incentive stock option if such sale or disposition occurs (i) within two
years of the grant of an Option or (ii) within one year of the issuance of the
Common Stock to the Participant. Such notice shall be in writing and directed
to the Secretary of the Company.
ARTICLE VII
SARS
7.01 Award. In accordance with the provisions of Article IV, the
Administrator will designate each individual to whom SARs are to be granted and
will specify the number of shares covered by each such award; provided, however,
that no individual may be granted SARs in any calendar year covering more than
100,000 shares. For purposes of the preceding sentence, an Option and
Corresponding SAR shall be treated as a single award. In addition, no
Participant may be granted Corresponding SARs (under all incentive stock option
plans of the Corporation and its Affiliates) that are related to incentive stock
options which are first exercisable in any calendar year for stock having an
aggregate Fair Market Value (determined as of the date the related Option is
granted) that exceeds the limit prescribed by Code section 422(d).
7.02 Maximum SAR Period. The maximum period in which an SAR may be
exercised shall be ten years from the date such SAR was granted. The terms of
any SAR may provide that it has a term that is less than such maximum period.
7.03 Nontransferability. Except as provided in Section 7.04, each SAR
granted under this Plan shall be nontransferable except by will or by the laws
of descent and distribution. In the event of any such transfer, a Corresponding
SAR and the related Option must be transferred to the same person or persons or
entity or entities. Except as provided in Section 7.04, during the lifetime of
the Participant to whom the SAR is granted, the SAR may be exercised only by the
Participant. No right or interest of a Participant in any SAR shall be liable
for, or subject to, any lien, obligation, or liability of such Participant.
7.04 Transferable SARs. Section 7.03 to the contrary notwithstanding, if
the Agreement provides, an SAR, other than a Corresponding SAR that is related
to an incentive stock option, may be transferred by a Participant to the
Participant's children, grandchildren, spouse, one or more trusts for the
benefit of such family members or a partnership in which such family members are
the only partners, on such terms and conditions as may be permitted under
Securities Exchange Commission Rule 16b-3 as in effect from time to time. The
holder of an SAR transferred pursuant to this section shall be bound by the same
terms and conditions that governed the SAR during the period that it was held
by the Participant; provided, however, that such transferee may not transfer the
SAR except by will or the laws of descent and distribution. In the event of any
transfer of a Corresponding SAR and the related Option must be transferred to
the same person or person or entity or entities.
7.05 Exercise. Subject to the provisions of this Plan and the applicable
Agreement, an SAR may be exercised in whole at any time, or in part from time
to time at such times, beyond one year after it is granted and in compliance
with such requirements as the Administrator shall determine; provided, however,
that a Corresponding SAR that is related to an incentive stock option may be
exercised only to the extent that the related Option is exercisable and only
when the Fair Market Value exceeds the option price of the related Option; and
further provided, however, that an SAR that is exercisable on the date of
termination of employment must be exercised, if at all, prior to the earlier of:
(1) the close of the period of: (a) three months less one day next succeeding
the date of termination of employment for reasons other than Disability or
death, or (b) one year next succeeding the date of termination of employment on
account of Disability or death, and (2) the close of the SAR period. An SAR
granted under this Plan may be exercised with respect to any number of whole
shares less than the full number for which the SAR could be exercised. A
partial exercise of an SAR shall not affect the right to exercise the SAR from
time to time in accordance with this Plan and the applicable Agreement with
respect to the remaining shares subject to the SAR. The exercise of a
Corresponding SAR shall result in the termination of the related Option to the
extent of the number of shares with respect to which the SAR is exercised.
7.06 Change in Control. Section 7.05 to the contrary notwithstanding, each
outstanding SAR shall be fully exercisable (in whole or in part at the
discretion of the holder) on and after a Control Change Date and during the
period (i) beginning on the first day after any tender offer or exchange offer
for shares of Common Stock (other than one made by the Corporation), provided
that shares are acquired pursuant to such offer, and (ii) ending on the
thirtieth day following the expiration of such offer.
7.07 Employee Status. If the terms of any SAR provide that it may be
exercised only during employment or within a specified period of time after
termination of employment, the Administrator may decide to what extent leaves
of absence for governmental or military service, illness, temporary disability
or other reasons shall not be deemed interruptions of continuous employment.
7.08 Settlement. At the Administrator's discretion, the amount payable as
a result of the exercise of an SAR may be settled in cash, Common Stock, or a
combination of cash and Common Stock. No fractional share will be deliverable
upon the exercise of an SAR but a cash payment will be made in lieu thereof.
7.09 Shareholder Rights. No Participant shall, as a result of receiving an
SAR, have any rights as a shareholder of the Corporation until the date that the
SAR is exercised and then only to the extent that the SAR is settled by the
issuance of Common Stock.
ARTICLE VIII
STOCK AWARDS
8.01 Award. In accordance with the provisions of Article IV, the
Administrator will designate each individual to whom a Stock Award is to be made
and will specify the number of shares of Common Stock covered by each such
award; provided, however, that no Participant may receive Stock Awards in any
calendar year for more than 30,000 shares of Common Stock.
8.02 Vesting. The Administrator, on the date of the award, may prescribe
that a Participant's rights in a Stock Award shall be forfeitable or otherwise
restricted for a period of time or subject to such conditions as may be set
forth in the Agreement.
8.03 Performance Objectives. In accordance with Section 8.02, the
Administrator may prescribe that Stock Awards will become vested or transferable
or both based on objectives stated with respect to the Corporation's, a Related
Entity's or an operating unit's return on equity, earnings per share, total
earnings, earnings growth, return on assets, Fair Market Value, NIACC,
Efficiency Ratio, Total Shareholder Return or such other measures as may be
selected by the Administrator. If the Administrator, on the date of award,
prescribes that a Stock Award shall become nonforfeitable and transferable only
upon the attainment of performance objectives, the shares subject to such Stock
Award shall become nonforfeitable and transferable only to the extent that the
Administrator certifies that such objectives have been achieved.
8.04 Employee Status. In the event that the terms of any Stock Award
provide that shares may become transferable and nonforfeitable thereunder only
after completion of a specified period of employment, the Administrator may
decide in each case to what extent leaves of absence for governmental or
military service, illness, temporary disability, or other reasons shall not be
deemed interruptions of continuous employment.
8.05 Change in Control. Sections 8.02, 8.03 and 8.04 to the contrary
notwithstanding, on and after a Control Change Date or the first day following
a tender offer or exchange offer for shares of Common Stock (other than one made
by the Corporation), provided that shares are acquired pursuant to such offer,
each outstanding Stock Award shall be transferable and nonforfeitable as of the
Control Change Date or the first day following such offer.
8.06 Shareholder Rights. Prior to their forfeiture (in accordance with the
applicable Agreement and while the shares of Common Stock granted pursuant to
the Stock Award may be forfeited or are nontransferable), a Participant will
have all rights of a shareholder with respect to a Stock Award, including the
right to receive dividends and vote the shares; provided, however, that during
such period (i) a Participant may not sell, transfer, pledge, exchange,
hypothecate, or otherwise dispose of shares of Common Stock granted pursuant to
a Stock Award, (ii) the Corporation shall retain custody of any certificates
evidencing shares of Common Stock granted pursuant to a Stock Award, and (iii)
the Participant will deliver to the Corporation a stock power, endorsed in
blank, with respect to each Stock Award. The limitations set forth in the
preceding sentence shall not apply after the shares of Common Stock granted
under the Stock Award are transferable and are no longer forfeitable.
ARTICLE IX
PERFORMANCE SHARE AWARDS
9.01 Award. In accordance with the provisions of Article IV, the
Administrator will designate each individual to whom an award of Performance
Shares is to be made and will specify the number of shares of Common Stock
covered by each such award; provided, however, that the maximum number of shares
of Common Stock that may be earned by a Participant under all Performance Share
awards (whether settled in Common Stock, cash or a combination of Common Stock
and cash) granted in a calendar year shall be the product of (i) 35,000 shares
and (ii) the number of years (twelve consecutive months) during which one or
more performance criteria is measured.
9.02 Earning the Award. The Administrator, on the date of the grant of an
award, shall prescribe that the Performance Shares, or portion thereof, will be
earned, and the Participant will be entitled to receive payment pursuant to the
award of Performance Shares, only upon the satisfaction of performance
objectives and such other criteria as may be prescribed by the Administrator
during a performance measurement period of at least one year. The performance
objectives may be stated with respect to the Corporation's, a Related Entity's
or an operating unit's return on equity, earnings per share, total earnings,
earnings growth, return on assets, Fair Market Value, NIACC, Efficiency Ratio,
Total Shareholder Return or such other measures as may be selected by the
Administrator. No payments will be made with respect to Performance Shares
unless, and then only to the extent that, the Administrator certifies that such
objectives have been achieved.
9.03 Payment. In the discretion of the Administrator, the amount payable
when an award of Performance Shares is earned may be settled in cash, by the
issuance of Common Stock or a combination of cash and Common Stock. A
fractional share shall not be deliverable when an award of Performance Shares
is earned, but a cash payment will be made in lieu thereof.
9.04 Shareholder Rights. No Participant shall, as a result of receiving an
award of Performance Shares, have any rights as a shareholder until and to the
extent that the award of Performance Shares is earned and settled by the
issuance of Common Stock. After an award of Performance Shares is earned, if
settled completely or partially in Common Stock, a Participant will have all the
rights of a shareholder with respect to such Common Stock.
9.05 Nontransferability. Except as provided in Section 9.06, Performance
Shares granted under this Plan shall be nontransferable except by will or by the
laws of descent and distribution. No right or interest of a Participant in any
Performance Shares shall be liable for, or subject to, any lien, obligation, or
liability of such Participant.
9.06 Transferable Performance Shares. Section 9.05 to the contrary
notwithstanding, if the Agreement provides, an award of Performance Shares may
be transferred by a Participant to the Participant's children, grandchildren,
spouse, one or more trusts for the benefit of such family members or a
partnership in which such family members are the only partners, on such terms
and conditions as may be permitted under Securities Exchange Commission Rule
16b-3 as in effect from time to time. The holder of Performance Shares
transferred pursuant to this section shall be bound by the same terms and
conditions that governed the Performance Shares during the period that they were
held by the Participant; provided, however that such transferee may not transfer
Performance Shares except by will or the laws of descent and distribution.
9.07 Employee Status. In the event that the terms of any Performance Share
award provide that no payment will be made unless the Participant completes a
stated period of employment, the Administrator may decide to what extent leaves
of absence for government or military service, illness, temporary disability,
or other reasons shall not be deemed interruptions of continuous employment.
9.08 Change In Control. Section 9.02 to the contrary notwithstanding, a
pro rata amount of each outstanding Performance Share award shall be earned and
settled in whole shares of Common Stock as of a Control Change Date that occurs
at least three months after the first day of the measurement period or on the
first day after a tender offer or exchange offer for shares of Common Stock
(other than one made by the Company), provided that such day is at least three
months after the first day of the measurement period and provided further that
shares are acquired pursuant to such offer. Such Common Stock shall be
nonforfeitable and transferable. The number of shares of Common Stock issuable
under this Section 9.02 shall be determined by multiplying the target amount of
shares (as prescribed by the applicable Agreement), by a fraction. The
numerator shall be the number of days in the period beginning on the date of the
first day of the measurement period and ending on the Control Change Date or the
first day after the tender or exchange offer described in this Section 9.03.
The denominator is the number of days in the period, or the longest of such
periods, during which performance is measured under the Performance Share award.
ARTICLE X
INCENTIVE AWARDS
10.01 Award. the Administrator shall designate Participants to whom
Incentive Awards are made. All Incentive Awards shall be finally determined
exclusively by the Administrator under the procedures established by the
Administrator; provided, however, that no Participant may receive an Incentive
Award payment in any calendar year that exceeds the lesser of (i) $1,000,000
and (ii) 150% of the Participant's annual base salary (prior to any salary
reduction or deferral elections) as of the date of grant of the Incentive Award.
10.02 Terms and Conditions. The Administrator, at the time an Incentive
Award is made, shall specify the terms and conditions which govern the award.
Such terms and conditions shall prescribe that the Incentive Award shall be
earned only upon, and to the extent that, performance objectives are satisfied.
The performance objectives may be stated with respect to the Corporation's, a
Related Entity's or an operating unit's return on equity, earnings per share,
total earnings, earnings growth, return on assets, Fair Market Value, NIACC,
Efficiency Ratio, Total Shareholder Return or such other measures as may be
selected by the Administrator. Such terms and conditions also may include other
limitations on the payment of Incentive Awards including, by way of example and
not of limitation, requirements that the Participant complete a specified period
of employment with the Corporation or a Related Entity. The Administrator, at
the time an Incentive Award is made, shall also specify when amounts shall be
payable under the Incentive Award and whether amounts shall be payable in the
event of the Participant's death, Disability, or Retirement. No payments will
be made with respect to an Incentive Award unless, and then only to the extent
that, the Administrator certifies that the performance objectives have been
achieved.
10.03 Nontransferability. Incentive Awards granted under this Plan shall
be nontransferable except by will or by the laws of descent and distribution and
then only to the extent that the Administrator specified, at the time the
Incentive Award was made, that amounts may be payable in the event of the
Participant's death. No right or interest of a Participant in an Incentive
Award shall be liable for, or subject to, any lien, obligation, or liability of
such Participant.
10.04 Employee Status. If the terms of an Incentive Award provide that a
payment will be made thereunder only if the Participant completes a stated
period of employment, the Administrator may decide to what extent leaves of
absence for governmental or military service, illness, temporary disability or
other reasons shall not be deemed interruptions of continuous employment.
10.05 Change in Control. Section 10.02 to the contrary notwithstanding, a
pro rata amount of each Incentive Award shall be earned as of a Control Change
Date that occurs at least three months after the first day of the measurement
period or on the first day after a tender offer or exchange offer for shares of
Common Stock (other than one made by the Company), provided that such day is at
least three months after the first day of the measurement period and provided
further that shares are acquired pursuant to such offer. The amount payable
under this Section 10.05 shall be determined by multiplying the target amount
(as prescribed by the applicable Agreement), by a fraction. The numerator shall
be the number of days in the period beginning on the first day of the
measurement period and ending on the Control Change Date or the first day after
the tender or exchange offer described in this Section 10.05. The denominator
shall be the number of days in the period, or the longest of such periods,
during which performance is measured under the Incentive Award.
10.06 Shareholder Rights. No Participant shall, as a result of receiving
an Incentive Award, have any rights as a shareholder of the Corporation or any
Affiliate on account of such award.
ARTICLE XI
ADJUSTMENT UPON CHANGE IN COMMON STOCK
The maximum number of shares as to which Options, SARs, Performance Shares
and Stock Awards may be granted under this Plan, the terms of outstanding Stock
Awards, Options, Performance Shares, Incentive Awards, and SARs, and the per
individual limitations on the number of shares for which Options, SARs,
Performance Shares, and Stock Awards may be granted shall be adjusted as the
Committee shall determine to be equitably required in the event that the
Corporation (i) effects one or more stock dividends, stock split-ups,
subdivisions or consolidations of shares, recapitalizations, mergers with the
Corporation being the survivor, or other changes in the Corporation's capital
stock or (ii) engages in a transaction to which Section 424 of the Code applies.
Any determination made under this Article XI by the Committee shall be final and
conclusive.
The issuance by the Corporation of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash or property,
or for labor or services, either upon direct sale or upon the exercise of rights
or warrants to subscribe therefor, or upon conversion of shares or obligations
of the Corporation convertible into such shares or other securities, shall not
affect, and no adjustment by reason thereof shall be made with respect to, the
maximum number of shares as to which Options, SARs, Performance Shares and Stock
Awards may be granted, the per individual limitations on the number of shares
for which Options, SARs, Performance Shares and Stock Awards may be granted or
the terms of outstanding Stock Awards, Options, Performance Shares, Incentive
Awards or SARs.
The Committee may make Stock Awards and may grant Options, SARs, Performance
Shares, and Incentive Awards in substitution for performance shares, phantom
shares, stock awards, stock options, stock appreciation rights, or similar
awards held by an individual who becomes an employee of the Corporation or a
Related Entity in connection with a transaction described in the first paragraph
of this Article XI. Notwithstanding any provision of the Plan (other than the
limitation of Section 5.02), the terms of such substituted Stock Awards or
Option, SAR, Performance Shares or Incentive Award grants shall be as the
Committee, in its discretion, determines is appropriate.
ARTICLE XII
COMPLIANCE WITH LAW AND
APPROVAL OF REGULATORY BODIES
No Option or SAR shall be exercisable, no Common Stock shall be issued, no
certificates for shares of Common Stock shall be
delivered, and no payment shall be made under this Plan except in compliance
with all applicable federal and state laws and regulations (including, without
limitation, withholding tax requirements), any listing agreement to which the
Corporation is a party, and the rules of all domestic stock exchanges on which
the Corporation's shares may be listed. The Corporation shall have the right
to rely on an opinion of its counsel as to such compliance. Any share
certificate issued to evidence Common Stock when a Stock Award is granted, a
Performance Share is settled, or for which an Option or SAR is exercised may
bear such legends and statements as the Administrator may deem advisable to
assure compliance with federal and state laws and regulations. No Option or SAR
shall be exercisable, no Stock Award or Performance Share shall be granted, no
Common Stock shall be issued, no certificate for shares shall be delivered, and
no payment shall be made under this Plan until the Corporation has obtained such
consent or approval as the Administrator may deem advisable from regulatory
bodies having jurisdiction over such matters.
ARTICLE XIII
GENERAL PROVISIONS
13.01 Effect on Employment and Service. Neither the adoption of this Plan,
its operation, nor any documents describing or referring to this Plan (or any
part thereof), shall confer upon any individual any right to continue in the
employ or service of the Corporation or a Related Entity or in any way affect
any right and power of the Corporation or a Related Entity to terminate the
employment or service of any individual at any time with or without assigning
a reason therefor.
13.02 Unfunded Plan. The Plan, insofar as it provides for grants, shall be
unfunded, and the Corporation shall not be required to segregate any assets that
may at any time be represented by grants under this Plan. Any liability of the
Corporation to any person with respect to any grant under this Plan shall be
based solely upon any contractual obligations that may be created pursuant to
this Plan. No such obligation of the Corporation shall be deemed to be secured
by any pledge of, or other encumbrance on, any property of the Corporation.
13.03 Rules of Construction. Headings are given to the articles and
sections of this Plan solely as a convenience to facilitate reference. The
reference to any statute, regulation, or other provision of law shall be
construed to refer to any amendment to or successor of such provision of law.
13.04 Tax Withholding. Each Participant shall be responsible for
satisfying any income and employment tax withholding obligation attributable to
participation in this Plan. If approved in advance by the Administrator after
a written request from a Participant, a Participant may surrender shares of
Common Stock or receive fewer shares of Common Stock than otherwise would be
issuable in satisfaction of all or part of that obligation.
ARTICLE XIV
AMENDMENT
The Board may amend or terminate this Plan from time to time; provided,
however, that no amendment may become effective until shareholder approval is
obtained if (i) the amendment increases the aggregate number of shares of Common
Stock that may be issued under the Plan (other than an adjustment pursuant to
Article XI) or (ii) the amendment changes the class of individuals eligible to
become Participants. No amendment shall, without a Participant's consent,
adversely affect any rights of such Participant under any Stock Award,
Performance Share award, Option, SAR or Incentive Award outstanding at the time
such amendment is made.
ARTICLE XV
DURATION OF PLAN
No Stock Award, Performance Share award, Option, SAR or Incentive Award may
be granted under this Plan after April 24, 2008. Stock Awards, Performance
Share awards, Options, SARs and Incentive Awards granted before that date shall
remain valid in accordance with their terms.
ARTICLE XVII
EFFECTIVE DATE OF PLAN
Options, SARs, Performance Shares and Incentive Awards may be granted under
this Plan upon its adoption by the Board, provided that no Option, SAR,
Performance Shares or Incentive Award granted on or after April 24, 1998 shall
be effective or exercisable unless this Plan is approved by a majority of the
votes cast by the Company's shareholders, voting either in person or by proxy,
at a duly held shareholders' meeting at which a quorum is present. Stock Awards
may be granted under this Plan on or after April 24, 1998, upon the later of its
adoption by the Board or its approval by shareholders in accordance with the
preceding sentence.