Exhibit 10.1
SCHEDULE OF DIRECTORS WHO
HAVE ENTERED INTO DEFERRED
COMPENSATION ARRANGEMENTS
PURSUANT TO A DIRECTOR'S
COMPENSATION AGREEMENT WITH
FARMERS & MERCHANTS TRUST
COMPANY OF CHAMBERSBURG
Monthly Payment Monthly Payment
Under 1-1-82 Under 1-1-83
Director Agreement Agreement
Charles S. Bender II $1,294 $ 315
Jay L. Benedict, Jr. 395 96
John M. Hull, III 557 139
Jeryl C. Miller N/A 1,310
Charles Sioberg 1,078 812
Martha B. Walker 1,366 N/A
Robert G. Zullinger 684 172
FORM OF
DIRECTOR'S COMPENSATION AGREEMENT
1982 VERSION
This Agreement is entered into this first day of
January, 1982, between FARMERS & MERCHANTS TRUST CO. OF
CHAMBERSBURG, P.O. Box T., Chambersburg, Pennsylvania 17201
(Herein referred to as the "Bank") and _________________________
(Herein referred to as the "Director").
WITNESSETH
WHEREAS, the Bank recognizes that the competent and
faithful efforts of Director on behalf of the Bank have
contributed significantly to the success and growth of the Bank;
and
WHEREAS, the Bank values the efforts, abilities and
accomplishments of the Director and recognizes that his services
are vital to its continued growth and profits in the future; and
WHEREAS, the Bank desires to compensate the Director
and retain his services for five years, if elected, to serve on
the Board of Directors. Such compensation is set forth below;
and
WHEREAS, the Director, in consideration of the
foregoing, agrees to continue to serve as a Director, if elected,
NOW, THEREFORE, it is mutually agreed as follows:
1. Compensation. The Bank agrees to pay Director the
total sum of $__________ payable in monthly installments of
$__________ for 120 consecutive months, commencing on the first
day of the month following Director's 65th birthday. Payments to
the Director will terminate when the 120 payments have been made
or at the time of the Director's death, whichever occurs first.
2. Death of Director Before Age 65. In the event
Director should die before reaching age 65, the Bank agrees to
pay to Director's beneficiary designated in writing to the Bank,
the sum of $__________ per month for 120 consecutive months.
Payments will begin on the first day of the month following
Director's death.
3. Death of Director After Age 65. If the Director
dies after age 65 prior to receiving the full 120 monthly
installments, the remaining monthly installments will be paid to
the Director's designated beneficiary(ies). The beneficiary(ies)
shall receive all remaining monthly installments which the
Director would have received until the total sum of $__________
set forth in paragraph "1" is paid. If the Director fails to
designate a beneficiary in writing to the Bank, the balance of
monthly installments remaining at the time of his death shall be
paid to the legal representative of the estate of the Director.
4. Termination of Service as A Director. If the
Director, for any reason other than death, fails to serve five
consecutive years as a Director, he will receive monthly
compensation beginning at age 65 on the basis that the number of
full months served bears to the required number of 60 months
times the compensation stated in paragraph "1." For example, if
the Director serves only 36 months, he will be entitled to 36/60
or 60% of the compensation stated in paragraph "1."
5. Suicide. No payments will be made to the
Director's beneficiary(ies) or to his estate in the event of
death by suicide during the first three years of this Agreement.
6. Status of Agreement. This Agreement does not
constitute a contract of employment between the parties, nor
shall any provision of this Agreement restrict the right of the
Bank's Shareholders to replace the Director or the right of the
Director to terminate his service.
7. Binding Effect. This Agreement shall be binding
upon the parties hereto and upon the successors and assigns of
the Bank, and upon the heirs and legal representatives of the
Director.
8. Interruption of Service. The service of the
Director shall not be deemed to have been terminated or
interrupted due to his absence from active service on account of
illness, disability, during any authorized vacation or during
temporary leaves of absence granted by the Bank for reasons of
professional advancement, education, health or government
service, or during military leave for any period if the Director
is elected to serve on the Board following such interruption.
9. Forfeiture of Compensation by Competition. The
Director agrees that all rights to compensation following age 65
shall be forfeited by him if he engages in competition with the
Bank, without the prior written consent of the Bank, within a
radius of 50 miles of the main office of the Bank for a period of
ten years, coinciding with the number of years that the Director
shall receive such compensation.
10. Assignment of Rights. None of the rights to
compensation under this Agreement are assignable by the Director
or any beneficiary or designee of the Director and any attempt to
anticipate, sell, transfer, assign, pledge, encumber or change
Director's right to receive compensation, shall be void.
11. Status of Director's Rights. The rights granted
to the Director or any designee or beneficiary under this
Agreement shall be solely those of an unsecured creditor of the
Bank.
12. Amendments. This Agreement may be amended only by
a written Agreement signed by the parties.
13. If the Bank shall acquire an insurance policy or
any other asset in connection with the liabilities assumed by it
hereunder, it is expressly understood and agreed that neither
Director nor any beneficiary of Director shall have any right
with respect to, or claim against, such policy or other asset
except as expressly provided by the terms of such policy or in
the title to such other asset. Such policy or asset shall not be
deemed to be held under any trust for the benefit of Director or
his beneficiaries or to be held in any way as collateral security
for the fulfilling of the obligations of the Bank under this
Agreement except as may be expressly provided by the terms of
such policy or other asset. It shall be, and remain, a general,
unpledged, unrestricted asset of the Bank.
14. This Agreement shall be construed under and
governed by the laws of the State of Pennsylvania.
15. Interpretation. Wherever appropriate in this
Agreement, words used in the singular shall include the plural
and the masculine shall include the feminine gender.
16. Period of Economic Hardship. If, in any year,
payments made under this Agreement would, in the sole judgment of
the Board of Directors, create economic hardship for the Bank's
Depositors, the Board of Directors has full authority to postpone
such payments.
IN WITNESS HEREOF, the parties have signed this
Agreement the day and year above written.
FARMERS & MERCHANTS TRUST CO. OF
CHAMBERSBURG
(SEAL) By________________________________
____________________, President
_________________________ ____________________________(SEAL)
Witness ____________________, Director
FORM OF
DIRECTOR'S COMPENSATION AGREEMENT
1983 VERSION
This Agreement is entered into this first day of
January, 1983, between FARMERS & MERCHANTS TRUST CO. OF
CHAMBERSBURG, P.O. Box T., Chambersburg, Pennsylvania 17201
(Herein referred to as the "Bank") and _________________________
(Herein referred to as the "Director").
WITNESSETH
WHEREAS, the Bank recognizes that the competent and
faithful efforts of Director on behalf of the Bank have
contributed significantly to the success and growth of the Bank;
and
WHEREAS, the Bank values the efforts, abilities and
accomplishments of the Director and recognizes that his services
are vital to its continued growth and profits in the future; and
WHEREAS, the Bank desires to compensate the Director
and retain his services for five years, if elected, to serve on
the Board of Directors. Such compensation is set forth below;
and
WHEREAS, the Director, in consideration of the
foregoing, agrees to continue to serve as a Director, if elected,
NOW, THEREFORE, it is mutually agreed as follows:
1. Compensation. The Bank agrees to pay Director the
total sum of $__________ payable in monthly installments of
$__________ for 120 consecutive months, commencing on the first
day of the month following Director's 65th birthday. Payments to
the Director will terminate when the 120 payments have been made
or at the time of the Director's death, whichever occurs first.
2. Death of Director Before Age 65. In the event
Director should die before reaching age 65, the Bank agrees to
pay to Director's beneficiary designated in writing to the Bank,
the sum of $__________ per month for 120 consecutive months.
Payments will begin on the first day of the month following
Director's death.
3. Death of Director After Age 65. If the Director
dies after age 65 prior to receiving the full 120 monthly
installments, the remaining monthly installments will be paid to
the Director's designated beneficiary(ies). The beneficiary(ies)
shall receive all remaining monthly installments which the
Director would have received until the total sum of $__________
set forth in paragraph "1" is paid. If the Director fails to
designate a beneficiary in writing to the Bank, the balance of
monthly installments remaining at the time of his death shall be
paid to the legal representative of the estate of the Director.
4. Termination of Service as A Director. If the
Director, for any reason other than death, fails to serve five
consecutive years as a Director, he will receive monthly
compensation beginning at age 65 on the basis that the number of
full months served bears to the required number of 60 months
times the compensation stated in paragraph "1." For example, if
the Director serves only 36 months, he will be entitled to 36/60
or 60% of the compensation stated in paragraph "1."
5. Suicide. No payments will be made to the
Director's beneficiary(ies) or to his estate in the event of
death by suicide during the first three years of this Agreement.
6. Status of Agreement. This Agreement does not
constitute a contract of employment between the parties, nor
shall any provision of this Agreement restrict the right of the
Bank's Shareholders to replace the Director or the right of the
Director to terminate his service.
7. Binding Effect. This Agreement shall be binding
upon the parties hereto and upon the successors and assigns of
the Bank, and upon the heirs and legal representatives of the
Director.
8. Interruption of Service. The service of the
Director shall not be deemed to have been terminated or
interrupted due to his absence from active service on account of
illness, disability, during any authorized vacation or during
temporary leaves of absence granted by the Bank for reasons of
professional advancement, education, health or government
service, or during military leave for any period if the Director
is elected to serve on the Board following such interruption.
9. Forfeiture of Compensation by Competition. The
Director agrees that all rights to compensation following age 65
shall be forfeited by him if he engages in competition with the
Bank, without the prior written consent of the Bank, within a
radius of 50 miles of the main office of the Bank for a period of
ten years, coinciding with the number of years that the Director
shall receive such compensation.
10. Assignment of Rights. None of the rights to
compensation under this Agreement are assignable by the Director
or any beneficiary or designee of the Director and any attempt to
anticipate, sell, transfer, assign, pledge, encumber or change
Director's right to receive compensation, shall be void.
11. Status of Director's Rights. The rights granted
to the Director or any designee or beneficiary under this
Agreement shall be solely those of an unsecured creditor of the
Bank.
12. Amendments. This Agreement may be amended only by
a written Agreement signed by the parties.
13. If the Bank shall acquire an insurance policy or
any other asset in connection with the liabilities assumed by it
hereunder, it is expressly understood and agreed that neither
Director nor any beneficiary of Director shall have any right
with respect to, or claim against, such policy or other asset
except as expressly provided by the terms of such policy or in
the title to such other asset. Such policy or asset shall not be
deemed to be held under any trust for the benefit of Director or
his beneficiaries or to be held in any way as collateral security
for the fulfilling of the obligations of the Bank under this
Agreement except as may be expressly provided by the terms of
such policy or other asset. It shall be, and remain, a general,
unpledged, unrestricted asset of the Bank.
14. This Agreement shall be construed under and
governed by the laws of the State of Pennsylvania.
15. Interpretation. Wherever appropriate in this
Agreement, words used in the singular shall include the plural
and the masculine shall include the feminine gender.
16. Period of Economic Hardship. If, in any year,
payments made under this Agreement would, in the sole judgment of
the Board of Directors, create economic hardship for the Bank's
Depositors, the Board of Directors has full authority to postpone
such payments.
17. All compensation provided by this Agreement is in
addition to that which is provided under the Director's
Compensation Agreement dated January 1, 1982.
IN WITNESS HEREOF, the parties have signed this
Agreement the day and year above written.
FARMERS & MERCHANTS TRUST CO. OF
CHAMBERSBURG
(SEAL) By________________________________
____________________, President
_________________________ ____________________________(SEAL)
Witness ____________________, Director
Exhibit 10.2
FARMERS AND MERCHANTS TRUST COMPANY OF CHAMBERSBURG
DIRECTOR'S DEFERRED COMPENSATION PLAN
WHEREAS, FARMERS AND MERCHANTS TRUST COMPANY OF CHAMBERSBURG
does intend by the following instrument to establish a Deferred
Compensation Plan for the exclusive benefit of its Directors; and
WHEREAS, the purpose of the Plan is to provide said
individuals with the opportunity to defer the payment of certain
fees due them;
NOW, THEREFORE, to carry the above intentions into effect,
Farmers and Merchants Trust Company of Chambersburg does enter
into this Plan this 1st day of July, 1986.
This Plan shall be known as the:
FARMERS AND MERCHANTS TRUST COMPANY OF CHAMBERSBURG
DIRECTORS' DEFERRED COMPENSATION PLAN
ARTICLE I
PURPOSE
The Bank recognizes that the members of its Board of
Directors possess an intimate knowledge of the Bank, the
community and general business strategies. It further recognizes
that the participation of its Directors is essential to the
Bank's continued growth and success. Accordingly, in order to
retain and attract knowledgeable Directors, the Bank now adopts a
plan allowing its Directors to defer their Director fees until
their severance from the Board, as follows:
ARTICLE II
2.1 "BANK" means Farmers and Merchants Trust Company of
Chambersburg and any successor thereto.
2.2 "BENEFICIARY" means the person or persons designated by
a Participant pursuant to Section 5.4.
2.3 "DEFERRAL ELECTION FORM" shall mean a written agreement
between a Participant and the Bank, whereby a
Participant agrees to defer all or a portion of his
Director Fees to be earned in the future, and the Bank
agrees to make benefit payments in accordance with the
provisions of the Plan.
2.4 "DEFERRED BENEFIT ACCOUNT" means the accounts
maintained on the books of the Bank pursuant to
Article IV. A separate Deferred Benefit Account shall
be maintained for each Participant. A Participant's
Deferred Benefit Account shall be utilized solely as a
device for the measurement and determination of the
amounts to be paid to the Participants pursuant to the
Plan and shall be subject to Article VI hereof. A
Participant's Deferred Benefit Account shall not
constitute or be treated as a trust fund of any kind.
2.5 "DETERMINATION DATE" means December 31 of each Plan
Year and, for each Participant, the date of death or
date of Severance as applicable.
2.6 "DIRECTOR" means each individual who serves on the
Bank's Board of Directors and, except for the Chairman
of the Board of the Bank, is not otherwise employed by
the Bank.
2.7 "DIRECTOR FEES" means the compensation to a Director,
as a Director, including but not limited to meeting or
retainer fees.
2.8 "EFFECTIVE DATE" means July 1, 1986.
2.9 "PARTICIPANT" means each active Director who has
deferred all or a portion of his Director Fees in
accordance with Article III and any former Director who
remains entitled to a benefit pursuant to Article V.
2.10 "PLAN" means the Farmers and Merchants Trust Company of
Chambersburg Directors' Deferred Compensation Plan as
described in this instrument, and as amended from time
to time.
2.11 "PLAN INTEREST YIELD" means the average for the Plan
Year or part thereof preceding the Determination Date
of the interest rate available on One Year U. S.
Treasury Bills.
2.12 "PLAN YEAR" initially means the period beginning on
July 1, 1986, and ending December 31, 1986.
Thereafter, Plan Year means the 12 consecutive month
period beginning on January 1 and ending on
December 31.
2.13 "SEVERANCE" means voluntary or involuntary termination
of Board membership for any reasons other than death,
specifically excepting however a Termination For Cause.
2.14 "TERMINATION FOR CAUSE" means termination from the
Bank's Board of Directors as a result of willful
misconduct or gross negligence in the performance by
the Director of his duties as a Director.
ARTICLE III
3.1 Each Director who elects to defer all or a specified
portion of Directors Fees pursuant to the terms
provided herein shall execute a Deferral Election Form
prior to the Plan Year for which the deferral shall
first occur.
3.2 Each Director appointed to the Board during the course
of a Plan Year may file a Deferral Election Form with
respect to Director Fees to be earned in the future
including those earned throughout the balance of such
Plan Year.
3.3 An election to defer Director Fees pursuant to the Plan
is irrevocable and shall continue until the earlier of
a Participant's death, Severance or Termination For
Cause. Notwithstanding, a Participant may change the
deferred portion of his Director Fees or suspend
deferrals effective for any subsequent Plan Year by
executing a new Deferral Election Form prior to the
first day of the Plan Year such change is to be
effective.
ARTICLE IV
DEFERRED BENEFIT ACCOUNT
4.1 For recordkeeping purposes only, the Bank shall
maintain separate Deferred Benefit Accounts for each
Participant. The existence of these accounts shall not
require any segregation of assets.
4.2 The amount of Director Fees that a Participant elects
to defer shall be credited to the Participant's
Deferred Benefit Account throughout each Plan Year at
such time as the Participant would otherwise be
entitled to the Director Fees which are the source of
the deferral.
4.3 On each Determination Date, the Bank shall credit each
Deferred Benefit Account, an additional amount equal to
the Plan Interest Yield.
ARTICLE V
BENEFITS
5.1 Within sixty (60) days of a Participant's Termination
For Cause, the Bank shall pay to the Participant a lump
sum cash distribution, in lieu of any other benefit
provided hereunder, equal to the Participant's
accumulated deferrals, without interest.
5.2 Within sixty (60) days of a Participant's Severance or
death, the Bank shall pay to the Participant, or in the
event of a Participant's death to the Participant's
Beneficiary, a deferred benefit. The amount of the
deferred benefit shall be equal to Participant's
Deferred Benefit Account, determined pursuant to
Article IV.
5.3 The Participant's deferred benefit shall be payable as
a lump sum, unless, prior to the calendar year of
Severance or death, the Participant elects to have his
deferred benefit payable over an optional payment
period of five years. If the Participant shall elect
against a lump-sum distribution, the Bank shall
annuitize his deferred benefit, utilizing the average
of the Plan Interest Yield during the three calendar
years immediately preceding the Participant's Severance
or death, and pay such annuitized benefit to the
Participant, or if applicable, his Beneficiary, in
equal annual installments.
5.4 The Participant may designate a Beneficiary by filing a
written notice of such designation with the Bank in
such form as the Bank requires and may include
contingent beneficiaries. The Participant may from
time to time change the designated Beneficiary or
Beneficiaries without the consent of such Beneficiary
by filing a new designation in writing with the Bank.
(If a Participant maintains his primary residence in a
state which has community property laws, the spouse of
a married Participant shall join in any designation of
a Beneficiary or Beneficiaries other than the spouse.)
If no designation shall be in effect at the time when
any benefits payable under this Plan shall become due,
the Beneficiary shall be the spouse of the Participant,
or if no spouse is then living, the representatives of
the Participant's estate.
5.5 To the extent required by the law in effect at the time
payments are made, the Bank shall withhold any taxes
required by the federal or any state or local
government from payments made hereunder.
ARTICLE VI
UNFUNDED PLAN
6.1 Benefits are payable as they become due irrespective of
any actual investments the Bank may make to meet its
obligations. The Bank is under no obligation to
purchase or maintain any asset, and any reference to
investments is solely for the purpose of computing the
value of benefits. Neither this Plan nor any action
taken pursuant to the provisions of this Plan shall
create or be considered to create a trust of any kind,
or a fiduciary relationship between the Bank and the
Participant, or any other person. To the extent a
Participant or any other person acquires a right to
receive payments from the Bank under this Plan, such
right shall be no greater than the right of any
unsecured creditor of Bank.
ARTICLE VII
ASSIGNMENT
7.1 No Participant, Beneficiary or heir shall have any
right to commute, sell, transfer, assign or otherwise
convey the right to receive any payment under the terms
of this Plan. Any such attempted assignment shall be
considered null and void.
ARTICLE VIII
AMENDMENT AND TERMINATION
8.1 The Plan may be amended in whole or in part by the Bank
at any time. Notice of any such amendment shall be
given in writing to each Participant and each
Beneficiary of a deceased Participant.
8.2 Subject to Section 8.3, no amendment hereto shall
permit amounts accumulated pursuant to the Plan prior
to the amendment to be paid to a Participant or
Beneficiary prior to the time he would otherwise be
entitled thereto.
8.3 The Bank reserves the sole right to terminate the Plan
(and/or the Deferral Election Form pertaining to any
Participant) at any time prior to the commencement of
payment of benefits, but only in the event that the
Bank, in its sole discretion, shall determine that the
economics of the Plan have been adversely and
materially affected by a change in tax laws, other
government action or other event beyond the control of
the Participants and the Bank. In the event of any
such termination, each affected Participant shall be
entitled to a deferred benefit equal to the amount of
his Deferred Benefit Account determined under Article
IV, using the Plan Interest Yield as of the date of
termination of the Plan (and/or his Deferral Election
Form).
ARTICLE IX
MISCELLANEOUS
9.1 The benefits provided for the Participants under this
Plan are in addition to benefits provided by any other
plan or program of the Bank and, except as otherwise
expressly provided for herein, the benefits of this
Plan shall supplement and shall not supersede any plan
or agreement between the Bank and any Participant or
any provisions contained herein.
9.2 The Plan shall be governed and construed under the laws
of the Commonwealth of Pennsylvania as in effect at the
time of its adoption.
9.3 The courts of the Commonwealth of Pennsylvania shall
have exclusive jurisdiction in any or all actions
arising under this Plan.
9.4 The terms of this Plan shall be binding upon and inure
to the benefit of the parties hereto, their respective
heirs, executors, administrators and successors.
9.5 The interest of any Participant or any Beneficiary
receiving payments hereunder shall not be subject to
anticipation, nor to voluntary or involuntary
alienation until distribution is actually made.
9.6 All headings preceding the text of the several Articles
hereof are inserted solely for reference and shall not
constitute a part of this Plan, nor affect its meaning,
construction or effect.
9.7 Where the context admits, words in the masculine gender
shall include the feminine and neuter genders.
FARMERS AND MERCHANTS TRUST COMPANY
OF CHAMBERSBURG
Date: ________, 199_ By:________________________________
Exhibit 10.3
FRANKLIN FINANCIAL SERVICES CORPORATION
LONG-TERM INCENTIVE PLAN OF 1990
TABLE OF CONTENTS
Page
SECTION 1
PURPOSE OF THE PLAN.......................................... 1
SECTION 2
EFFECTIVE DATE OF PLAN....................................... 1
SECTION 3
DEFINITIONS.................................................. 1
SECTION 4
SCOPE OF THE PLAN............................................ 3
4.1 Form of Awards..................................... 3
4.2 Shares Reserved.................................... 4
SECTION 5
ADMINISTRATION............................................... 4
5.1 Committee Members.................................. 4
5.2 Committee Actions.................................. 4
5.3 Committee Authority................................ 5
SECTION 6
STOCK ADJUSTMENTS............................................ 5
SECTION 7
ELIGIBILITY.................................................. 6
SECTION 8
GRANT OF AWARDS.............................................. 6
8.1 Authority to Grant Awards.......................... 6
8.2 Documentation of Grant............................. 6
SECTION 9
TERMS AND CONDITIONS......................................... 7
9.1 Stock Options...................................... 7
9.2 Incentive Stock Options............................ 8
9.3 Stock Appreciation Rights.......................... 10
9.4 Performance Shares and Performance Units........... 11
9.5 Restricted Stock................................... 12
SECTION 10
PLAN TERMINATION, AMENDMENT OR CHANGE OF CONTROL............. 13
10.1 Plan Termination or Amendment...................... 13
10.2 Change of Control.................................. 14
SECTION 11
MISCELLANEOUS................................................ 15
11.1 Withholding........................................ 15
11.2 Legal and Other Requirements....................... 16
11.3 Rights as a Shareholder............................ 16
11.4 Notices............................................ 16
11.5 No Right to Employment............................. 17
11.6 Indemnification.................................... 17
11.7 Governing Law...................................... 17
11.8 Parties in Interest................................ 17
11.9 Nontransferability................................. 17
11.10 Construction/Heading.............................. 18
SECTION 1
PURPOSE OF THE PLAN
The, purpose of the Long-Term Incentive Plan of 1990 (the "Plan")
is to provide incentive compensation opportunities for selected
officers and key employees of Franklin Financial Services
Corporation (the "Holding Company"). In providing these
opportunities, the Holding Company seeks to generate in the
participants a proprietary and vested interest in the performance
of the Holding Company and an increasing incentive to contribute
to the Holding Company's future success and prosperity, thereby
benefiting all shareholders. Providing incentive compensation
opportunities to key employees will aid the Holding Company in
attracting, retaining, and encouraging the kind of management it
requires to realize its long term financial objectives.
SECTION 2
EFFECTIVE DATE OF PLAN
This Plan shall become effective January 1, 1990, subject to the
approval of the shareholders of the Holding Company at the Annual
Meeting on April 24, 1990.
SECTION 3
DEFINITIONS
3.1 "Award" or "Awards" means a stock option, an incentive
stock option, a stock appreciation right, a performance
unit, performance share or a restricted stock award.
3.2 "Board" means the Board of Directors of the Holding
Company.
3.3 "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
3.4 "Committee" means the Committee designated by the Board to
administer the Plan.
3.5 "Common Stock" means the Common Stock of the Holding
Company.
3.6 "Corporation" means the Holding Company and its
subsidiaries.
3.7 "Disability" means such rules, regulations and
determinations as the Committee deems appropriate under the
Plan in respect of any disability of any Participant.
Without limiting the generality of the foregoing, the
Committee shall be entitled to determine (i) whether or not
any such disability shall constitute a termination of
employment within the meaning of the Plan and (ii) the
impact, if any of any disability on Awards under the Plan
theretofore made to any Participant.
3.8 "Employee" means any employee of the Corporation.
3.9 "Fair Market Value" means the average of the most recent
dealer "bid" and "asked" price of the Common Stock in the
over-the-counter market.
3.10 "Option" means an incentive stock option or a nonqualified
stock option granted to a Participant subject to the terms
and conditions as described in the Plan.
3.11 "Participant" means an Employee who is selected by the
Committee to receive an Award under the Plan.
3.12 "Performance Cycle" or "Cycle" means the period of months
or years selected by the Committee during which the
performance is measured for the purpose of determining the
extent to which an award of Performance Shares or
Performance Units has been earned.
3.13 "Performance Goals" means the objectives established by the
Committee for a Performance Cycle, for the purpose of
determining the extent to which Performance Shares or
Performance Units which have been contingently awarded for
such Cycle are earned.
3.14 "Performance Share" means a share of Common Stock
contingently awarded to a Participant subject to the terms
and conditions as described in the Plan.
3.15 "Performance Unit" means a fixed or variable dollar
denominated unit contingently awarded to a Participant
subject to the terms and conditions as described in the
Plan.
3.16 "Restricted Period" means the period of months or years
selected by the Committee during which a grant of
Restricted Stock may be forfeited to the Holding Company.
3.17 "Restricted Stock" means shares of Common Stock
contingently granted to a Participant subject to the terms
and conditions as described in the Plan.
3.18 "Subsidiary" means a company that is wholly or partially
owned by the Holding Company that, with the approval of the
Board, may participate in this Plan.
SECTION 4
SCOPE OF THE PLAN
4.1 Form of Awards. Awards means any type of option, share or
right that may be granted pursuant to the terms of this
Plan. Awards may be granted in the form of Options, Stock
Appreciation Rights ("SARs"), Restricted Stock, Performance
Units and Performance Shares.
4.2 Shares Reserved. The maximum number of shares to be issued
pursuant to all Awards made under the Plan shall be 100,000
shares of presently authorized but unissued or reacquired
Common Stock. This limitation shall be subject to
adjustment as provided in Section 6 of the Plan. Shares
pursuant to Awards which, by reason of the expiration,
cancellation or other termination of Awards prior to
issuance, are not issued, and Restricted Shares that are
forfeited after their issuance, shall again be available
for future Awards.
SECTION 5
ADMINISTRATION
5.1 Committee Members. The Plan shall be administered by the
Committee, which shall be composed of at least three
members of the Board and may include a representative of
each Subsidiary, none of whom shall have been eligible to
participate in the Plan for a period of at least one year
prior to his election to serve on the Committee. No member
of the Committee shall be eligible to participate in the
Plan while serving on the Committee, nor shall any member
of the Committee be eligible to participate in the Plan for
at least one year after his membership on the Committee
ends.
5.2 Committee Actions. The Committee shall hold meetings at
such times and places as it may determine. Such acts, as
are reduced to or approved in writing by each of the
members of the Committee in a meeting at which a majority
of members are present, shall be the valid acts of the
Committee.
5.3 Committee Authority. The Committee shall have the
authority to construe and interpret the provisions of the
Plan. When appropriate, it may also adopt, prescribe,
amend and rescind rules and regulations relating to the
Plan. The Committee shall determine the Employees to whom
Awards will be made under the Plan. It shall also
determine the time and frequency at which Awards will be
made and the number of shares to be optioned or awarded.
Decisions of the Committee shall be final, conclusive and
binding upon all parties.
SECTION 6
STOCK ADJUSTMENTS
In the event of any change in the number of issued and
outstanding shares of Common Stock of the Holding Company which
results from a stock split, reverse stock split, the payment of a
stock dividend or any other change in the capital structure of
the Holding Company, the Committee shall proportionately adjust
the maximum number of shares reserved under Section 4.2 and shall
appropriately adjust the number of shares subject to each
outstanding Award, and the price per share thereof (but not the
total Award price), so that upon exercise or realization of such
Award, the Participant shall receive the same number of shares he
would have received had he been holder of all shares subject to
his outstanding Award immediately before the effective date of
such change in the number of issued shares of Common Stock of the
Holding Company. Such adjustment shall not result in the
issuance of fractional shares. Any adjustment under this Section
shall be made by the Committee, subject to approval by the Board.
No adjustment shall be made that would cause an incentive stock
option to fail to continue to qualify as an incentive stock
option within the meaning of Section 422(A) of the Code. The
grant of an Award pursuant to the Plan shall not affect in any
way the right of the Holding Company to make adjustments,
reclassifications, reorganizations, or changes in its capital or
business structure or to merge, consolidate, dissolve, liquidate,
sell, or transfer all or any part of its business or assets.
SECTION 7
ELIGIBILITY
Employees of the Corporation, as may be designated by the
Committee, who are performing or who have been engaged to perform
services of special importance to the management, operation, or
development of the Corporation shall be eligible to receive
Awards under the Plan. Nonemployee members of the Board shall
not be eligible for Awards under the Plan.
SECTION 8
GRANT OF AWARDS
8.1 Authority to Grant Awards. Subject to the provisions of
this Plan, the Committee shall have sole and complete
authority to determine, among those Employees who are
eligible according to Section 7, to whom Awards shall be
granted, the number of Awards and the conditions and
limitations, if any, in addition to those set forth below,
applicable to the Award. The Committee shall have the
authority to grant Awards of one type or of several types
and in such combinations as the Committee shall determine.
In the case of incentive stock options, the terms and
conditions of such grants shall be subject to and comply
with such limitations as may be prescribed by Section 422A
of the Code.
8.2 Documentation of Grant. Each Award granted under this Plan
shall be evidenced by an Award Agreement executed by the
Corporation and the Participant. Said agreement shall set
forth the type of Award, the terms and conditions of such
Award, and the manner in which it may be exercised, subject
to the provisions of this Plan.
SECTION 9
TERMS AND CONDITIONS
9.1 Stock Options.
A. Price. The Committee shall establish the option price
at the time each stock option is granted, which price
shall not be less than 50% of the Fair Market Value of
the shares on the day the option is granted. The
option price shall be subject to adjustment in
accordance with the provisions of Section 6.
B. Terms. The Committee may determine that any stock
option shall become exercisable in installments and may
determine that the right to exercise such stock option
as to such installments shall expire on different dates
or on the same date.
C. Termination of Employment. In the event a Participant
ceases to be an Employee for reasons including
Disability or death, stock options may be exercised for
a period of up to twelve (12) months beyond the date
the Participant ceases to be an Employee; provided,
however, that there will be no extension of such
exercise period beyond the date a Participant ceases to
be an Employee if the Participant's employment has been
terminated for cause. For purposes of this
Section 9.1C termination for "cause" means
Participant's employment was terminated because of
Participant's personal dishonesty, willful misconduct,
breach of fiduciary duty involving personal profit,
willful failure to perform stated duties, willful
violation of any law, rule or regulation.
D. Exercise of Options. The option price of each share as
to which an option is exercised shall be paid in full
at the time of such exercise. Such payment shall be
made in cash, by tender of shares of Common Stock owned
by the Participant for at least six (6) months, or by a
combination of cash and such shares of Common Stock.
In addition the Committee may provide the Participant
with assistance in financing the option price and
applicable taxes on such terms and conditions as it
determines appropriate.
9.2 Incentive Stock Options.
A. Price. The Committee shall establish the option price
at the time each incentive stock option is granted,
which price shall not be less than 100% of the Fair
Market Value of the shares on the day the option was
granted. However, if an Employee, at the time the
option is granted, owns stock possessing more than 10%
of the total combined voting power of all classes of
stock of the Corporation, the option price shall not be
less than 110% of the Fair Market Value of the shares
on the day the option was granted. The option price
shall be subject to adjustment in accordance with the
provisions of Section 6.
B. Terms. The Committee may determine that any incentive
stock option shall become exercisable in installments
and may determine that the right to exercise such
incentive stock option as to such installments shall
expire on different dates or on the same date.
Incentive stock options may not be exercisable later
than ten years after their date of grant. Incentive
stock options shall not be granted later than ten years
after the earlier of: (i) the date this Plan is
adopted, or (ii) the date this Plan is approved by the
shareholders of the Holding Company.
C. Termination of Employment. In the event a Participant
ceases to be an Employee for reasons other than
Disability or death, no incentive stock options may be
exercised after three (3) months beyond the date the
Participant ceases to be an Employee; provided,
however, that there will be no extension of such
exercise period beyond the date a Participant ceases to
be an Employee if the Participant's employment has been
terminated for cause. For purposes of this
Section 9.2C termination for "cause" means
Participant's employment was terminated because of
Participant's personal dishonesty, willful misconduct,
breach of fiduciary duty involving personal profit,
willful failure to perform stated duties, or willful
violation of any law, rule or regulation. In the event
a Participant ceases to be an Employee for reasons of
Disability or death, incentive stock options may be
exercised for a period of up to twelve (12) months
beyond the date of Disability or death.
D. Exercise of Options. An incentive stock option shall
not be exercisable for six (6) months after the date it
is granted. The option price of each share as to which
an incentive stock option is exercised shall be paid in
full at the time of such exercise. Such payment shall
be made in cash, by tender of shares of Common Stock
owned by the Participant for at least six (6) months,
or by a combination of cash and such shares of Common
Stock. In addition, the Committee may provide the
Participant with assistance in financing the option
price and applicable taxes on such terms and conditions
as it determines appropriate.
9.3 Stock Appreciation Rights.
A. Grant and Exercisability. Stock appreciation rights
may be granted in tandem with an Option, in addition to
an Option, or may be freestanding and unrelated to an
Option. Stock appreciation rights granted in tandem or
in addition to an Option may be granted either at the
same time as the Option or at a later time. No stock
appreciation right shall be exercisable earlier than
six months after its grant, except in the event of the
Participant's death or Disability.
B. Value and Payment. A stock appreciation right shall
entitle the Participant to receive from the Corporation
an amount equal to the positive difference between the
Fair Market Value of a share of Common Stock on the
exercise of the stock appreciation right and the grant
price, or some lesser amount as the Committee may
determine either at the time of grant or at any time
prior to exercise. The Committee shall determine
whether the stock appreciation right shall be settled
in cash, shares of Common Stock or a combination of
cash and shares of Common Stock.
C. Termination of Employment. A Participant must be an
Employee in order to exercise a stock appreciation
right; provided, however, that in the event of a
Participant's death or Disability, the Committee, in
its discretion and after taking into consideration the
performance of such Participant and the performance of
the Corporation, may extend the period during which
such Participant or his successor may exercise some or
all of his stock appreciation rights, but said
extension shall not be for more than twelve (12) months
from the date of termination.
9.4 Performance Shares and Performance Units.
A. Grant. The Committee shall determine the number of
Performance Shares and/or Performance Units to be
granted, if any, and the number of such shares and
units for each Performance Cycle, and shall determine
the duration of each Performance Cycle and the value of
each Performance Unit. There may be more than one
Performance Cycle in existence at any one time, and the
duration of Performance Cycles may differ from each
other.
B. Performance Goals. The Committee shall establish
Performance Goals for each Cycle on the basis of such
criteria and to accomplish such objectives as the
Committee may from time to time select. During any
Cycle, the Committee may adjust the Performance Goals
for such Cycle as it deems equitable in recognition of
unusual or non-recurring events affecting the
Corporation or changes in applicable tax laws or
accounting principles.
C. Earned Awards. At the end of each Performance Cycle,
the Committee shall determine the number of Performance
Shares and Performance Units which have been earned by
Participants on the basis of performance in relation to
the established Performance Goals.
D. Certificates and Payment. Certificates issued in
respect of Performance Shares shall be registered in
the name of the Participant and deposited by him,
together with a stock power endorsed in blank, with the
Corporation. At the expiration of the Performance
Cycle, the Corporation shall deliver certificates
representing earned Performance Shares to the
Participant or his legal representative. Payment for
Performance Units shall be in (i) cash; (ii) shares of
Common Stock; (iii) shares of Restricted Stock; or
(iv) in nonqualified stock options with an option price
of $1 per share and with a aggregate discount from Fair
Market Value not in excess of the value of the earned
Performance Units for which payment is being made, in
such proportions as the Committee shall determine.
Participants may be offered the opportunity to defer
receipt of payment for earned Performance Shares and
Performance Units under terms established by the
Committee.
E. Termination of Employment. A Participant must be an
Employee at the end of a Performance Cycle in order to
be entitled to payment of Performance Shares and/or
Performance Units in respect of such Cycle; provided,
however, that in the event of a Participant's death or
Disability before the end of such Cycle, the Committee,
in its discretion and after taking into consideration
the performance of such Participant and the performance
of the Corporation during the Cycle, may authorize
payment to such Participant or his successor with
respect to some or all of the Performance Shares and/or
Performance Units deemed earned for that Cycle.
9.5 Restricted Stock.
A. Grant. At the time of making a grant of Restricted
Stock, the Committee shall determine the number of
shares of Restricted Stock to be granted to each
Participant, the duration of the Restricted Period
during which, and the conditions under which, all or
part of the Restricted Stock may be forfeited to the
Corporation, and any terms and conditions of the Award
in addition to those contained in Section 9.5C and
9.5D, including, but not limited to, the establishment
of criteria which would permit the restrictions to
lapse on an accelerated basis.
B. Certificates and Payment. Certificates issued in
respect of shares of Restricted Stock shall be
registered in the name of the Participant and deposited
by him, together with a stock power endorsed in blank,
with the Corporation. At the expiration of the
Restricted Period, the Corporation shall deliver to the
Participant or his legal representative such
certificates representing shares which have not been
forfeited. Participants may be offered the opportunity
to defer receipt of payment for Restricted Stock under
terms established by the Committee.
C. Termination of Employment. In the event a Participant
ceases to be an Employee during the Restricted Period
for reasons other than death or Disability, all shares
of Restricted Stock shall be forfeited to the
Corporation.
D. Death or Disability. In the event of a Participant's
death or Disability during the Restricted Period, the
restrictions imposed hereunder shall lapse with respect
to such number of shares of Restricted Stock.
SECTION 10
PLAN TERMINATION, AMENDMENT OR CHANGE OF CONTROL
10.1 Plan Termination or Amendment. To the extent permitted by
law, the Board may amend, suspend, or terminate the Plan at
any time; provided, however, that no amendment may be
adopted that permits an Award to be granted to any member
of the Committee, and further provided that, with respect
to incentive stock options, except as specified in
Section 6, no amendment may be adopted that will increase
the number of shares reserved for Awards under the Plan,
change the option price, or change the provisions required
for compliance with Section 422A of the Code and
regulations issued thereunder. The Board shall not amend
the Plan so as to increase the maximum number of shares
that may be issued under the Plan, except as specified in
Section 6, materially increase the benefits accruing to
Participants or materially modify the requirements for
eligibility to participate in the Plan, without the
approval of the shareholders of the Holding Company. The
amendment or termination of this Plan shall not, without
the consent of the Participant, alter or impair any rights
or obligations under any Award previously granted
hereunder.
10.2 Change of Control.
A. Authority. In order to maintain the Participants'
rights in the event of a "Change of Control" of the
Holding Company, the Board, in its sole discretion,
may, notwithstanding anything to the contrary contained
in the Plan, either at the time an Award is made or at
any time prior to or simultaneously with a "Change of
Control" (i) provide for the acceleration of any time
periods relating to the exercise or realization of such
Awards so that such Awards may be exercised or realized
in full on or before a date fixed by the Board;
(ii) provide for the purchase of such Awards by the
Holding Company, upon the Participant's request, for an
amount of cash equal to the amount which could have
been attained upon the exercise or realization of such
rights had such Awards been currently exercisable or
payable; (iii) make such adjustment to the Awards then
outstanding as the Board deems appropriate to reflect
such change; or (iv) cause the Awards then outstanding
to be assumed or new rights of equivalent value
substituted thereof, by the successor corporation in
such change. The Board may, in its sole discretion,
include such further provisions and limitations in any
agreement entered into with respect to an Award as it
may deem equitable and in the best interest of the
Corporation.
B. Definition. "Change of Control" means the occurrence
of (i) a person (including a group as defined in
Section 13(d)(3) of the Securities Exchange Act of
1934) becoming, directly or indirectly, the beneficial
owner (as defined under the Securities Exchange Act of
1934) of 25% or more of the shares of the Holding
Company, or (ii) during any period of two consecutive
years, individuals who at the beginning of such period
constituted the Board, ceasing for any reason to
constitute at least a majority of the Board unless the
election of each director of the Board, who was not a
director of the Board at the beginning of such period,
was approved by a vote of at least two-thirds of the
directors then still in office who were directors at
the beginning of such period, or (iii) the Holding
Company ceasing to be a publicly owned corporation.
SECTION 11
MISCELLANEOUS
11.1 Withholding. The Corporation shall have the right to
deduct from all amounts paid in cash (whether under this
Plan or otherwise) any taxes required by law to be withheld
therefrom. In the case of payments of Awards in the form
of Common Stock, the Committee in its discretion may
require the Participant to pay the Corporation the amount
of any taxes required to be withheld with respect to such
Common Stock, or in lieu thereof, the Corporation shall
have the right to retain (or the Participant may be offered
the opportunity to elect to tender) the number of shares of
Common Stock whose Fair Market Value equals the amount
required to be withheld.
11.2 Legal and Other Requirements. The obligation of the
Corporation to sell and deliver Common Stock under the Plan
shall be subject to all applicable laws, regulations, rules
and approvals, including but not limited to, the
effectiveness of a registration statement under the
Securities Act of 1933 if deemed necessary or appropriate
by the Corporation. Certificates for shares of Common
Stock issued hereunder may be legended as the Board shall
deem appropriate.
11.3 Rights as a Shareholder. No Participant shall have any
right as a shareholder with respect to any Award granted to
him unless and until certificates for shares of Common
Stock are issued to him, except in the event an Award is
made in the form of Restricted Stock, the Participant shall
have all rights of a shareholder subject to Section 9.5,
including but not limited to, the right to receive all
dividends paid on such shares and the right to vote such
shares.
11.4 Notices. Every direction, revocation or notice authorized
or required by the Plan shall be deemed delivered to the
Corporation (i) on the date it is personally delivered to
the Secretary of the Corporation at its principal executive
offices or (ii) three business days after it is sent by
registered or certified mail, postage prepaid, addressed to
the Secretary at such offices. Notice shall be deemed
delivered to a Participant (i) on the date it is personally
delivered to him or (ii) three business days after it is
sent by registered or certified mail, postage prepaid,
addressed to him at the last address shown for him on the
records of the Corporation.
11.5 No Right to Employment. No person shall have any claim or
right to be granted an Award, and the grant of an Award
shall not be construed as giving a Participant the right to
be retained in the employ of the Corporation. Further, the
Corporation expressly reserves the right at any time to
dismiss a Participant, free from any liability, or any
claim under the Plan, except as provided herein or in any
agreement entered into with respect to an Award.
11.6 Indemnification. The Corporation shall indemnify each
member of the Committee and each other officer or employee
of the Corporation to whom any duty or power relating to
the Plan may be allocated or delegated, to the fullest
extent permitted under the laws of the Commonwealth of
Pennsylvania and the Bylaws of the Corporation.
11.7 Governing Law. All questions pertaining to construction,
validity and effect of the provisions of this Plan and the
rights of all persons hereunder shall be governed by the
laws of the Commonwealth of Pennsylvania.
11.8 Parties in Interest. The provisions of this Plan and the
terms and conditions of any Award shall be binding upon and
inure to the benefit of all successors of each Participant.
11.9 Nontransferability. Awards may not be sold, assigned,
transferred, pledged or otherwise encumbered, except by
will or the laws of descent and distribution. During the
lifetime of a Participant, an Award shall be exercisable
only by the Participant or by his guardian or legal
representative. Upon the death of a Participant, an Award
shall be exercisable, to the extent permitted, by the
Participant's estate or by a person who acquired the right
to exercise such Award by bequest or inheritance or by
reason of the death of the Participant.
11.10 Construction/Heading. All words herein shall be construed
to be of such number and gender as the context requires.
All headings preceding the text of the several paragraphs
hereof are inserted solely for reference and shall not
constitute a part of this Plan, or affect its meaning,
construction or effect.
FRANKLIN FINANCIAL SERVICES
CORPORATION
DATE:____________________ BY:________________________________
Officer
ATTEST:
BY:________________________________
Secretary