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Exhibit 10.5
USBANCORP, INC.
1991 STOCK OPTION PLAN
AUGUST 23, 1991
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USBANCORP, INC.
1991 STOCK OPTION PLAN
The purposes of the 1991 Stock Option Plan (the "Plan") are to encourage
eligible employees of USBANCORP, INC. (the "Corporation") and its Subsidiaries,
including Directors and officers of the Corporation who are employees, to
increase their efforts to make the Corporation and each Subsidiary more
successful, to provide an additional inducement for such employees to remain
with the Corporation or a Subsidiary, to reward such employees by providing an
opportunity to acquire the Common Stock, par value $2.50 per share, of the
Corporation (the "Common Stock") on favorable terms and to provide a means
through which the Corporation may attract able persons to enter the employment
of the Corporation or one of its Subsidiaries. For purposes of the Plan, the
term "Subsidiary" means any corporation in an unbroken chain of corporations
beginning with the Corporation if each of the corporations (other than the last
corporation in the unbroken chain) owns stock possessing at least fifty percent
(50%) or more of the total combined voting power of all classes of stock in one
of the other corporations in the chain.
SECTION 1
ADMINISTRATION
The Plan shall be administered by a Committee (the "Committee") appointed
from time to time by the Board of Directors of the Corporation (the "Board") and
consisting of no
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fewer than three members of the Board, none of whom is, or was within one year
prior to becoming a member of the Committee, eligible for selection as a person
to whom stock options may be granted pursuant to the Plan or any other plan of
the Corporation or any of its affiliates (as "affiliates" is defined in
regulations of the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) entitling the
participants therein to acquire stock or stock options of the Corporation or any
of its affiliates. If at any time a member of the Committee would not be
eligible for initial appointment to the Committee, said member shall be deemed
to have resigned from the Committee. The Board may at any time, without cause,
remove any person from the Committee by written notice to such person. Any
member of the Committee may resign by written notice to the Board.
The Committee shall interpret the Plan and prescribe such rules,
regulations and procedures in connection with the operations of the Plan as it
shall deem to be necessary and advisable for the administration of the Plan
consistent with the purposes of the Plan.
The Committee shall keep records of any action taken at its meetings. A
majority of the Committee shall constitute a quorum at any meeting and the acts
of a majority of the members present at any meeting at which a quorum is
present, or acts approved in writing by a majority of the Committee, shall be
the acts of the Committee.
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SECTION 2
ELIGIBILITY
Those salaried employees of the Corporation or any Subsidiary with
executive, managerial, technical or professional responsibility, who may or may
not be an officer or a member of the Board of Directors, shall be eligible to
receive stock options as described herein.
Subject to the provisions of the Plan, the Committee shall have full and
final authority, in its discretion, to grant stock options as described herein
and to determine the employees to whom stock options shall be granted and the
number of shares to be covered by each stock option. In determining the
eligibility of any employee, as well as in determining the number of shares
which may be acquired pursuant to each stock option, the Committee shall
consider the positions and the responsibilities of the employee being
considered, the nature and value to the Corporation or a Subsidiary of his or
her services, his or her present and/or potential contribution to the success of
the Corporation or a Subsidiary and such other factors as the Committee may deem
relevant.
SECTION 3
SHARES AVAILABLE UNDER THE PLAN
The aggregate number of shares of the Common Stock which may be issued or
delivered and as to which stock options may be granted under the Plan is 128,000
shares. All of such shares
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are subject to adjustment and substitution as set forth in Section 6.
If any stock option granted under the Plan is cancelled by mutual consent
or terminates or expires for any reason without having been exercised in full,
the number of shares subject to such stock option shall again be available for
purposes of the Plan.
The shares which may be issued or delivered under the Plan may be either
authorized but unissued shares or treasury shares or partly each, as shall be
determined from time to time by the Board.
SECTION 4
GRANT OF STOCK OPTIONS
The Committee shall have authority, in its discretion, to grant "incentive
stock options" pursuant to Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), to grant "non-statutory stock options" (stock options
which do not qualify under such Section 422 of the Code) or to grant both types
of stock options, provided that the exercise of one type of option shall not
affect the other type.
To the extent that the aggregate fair market value of stock with respect to
which incentive stock options are exercisable for the first time by any
individual during any calendar year (under all plans of the individual's
employer corporation and its parent and subsidiary corporations) exceeds
$100,000, such stock options shall be treated as options which are non-
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statutory stock options. The preceding sentence shall be applied by taking
options into account in the order in which they are granted. Also, for this
purpose, the fair market value of any stock shall be determined as of the date
the option with respect to such stock was granted.
SECTION 5
TERMS AND CONDITIONS OF STOCK OPTIONS
Stock options granted under the Plan shall be subject to the following
terms and conditions:
(A) The purchase price at which each stock option may be exercised (the
"option price") shall be such price as the Committee, in its discretion, shall
determine but shall not be less than one hundred percent (100%) of the fair
market value per share of Common Stock which may be acquired pursuant to the
stock option on the date of grant, except that in the case of an incentive stock
option granted to an employee who, immediately prior to such grant, owns stock
possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of the Corporation or any Subsidiary (a "Ten Percent
Employee"), the option price shall not be less than 110% of such fair market
value on the date of grant. For purposes of this Section 5(A), the fair market
value of the Common Stock shall be determined as provided in Section 5(H) below.
Also, for purposes of this Section 5(A), an individual (i) shall be considered
as owning not only shares of the Common Stock owned individually, but also all
shares that are at the time owned, directly or indirectly, by or for the spouse,
ancestors, lineal descendants and brothers and sisters (whether by the whole or
half blood) of such
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individual and (ii) shall be considered as owning proportionately any shares
owned, directly or indirectly, by or for any corporation, partnership, estate or
trust in which such individual shall be a stockholder, partner or beneficiary.
(B) The option price shall be payable in full in any one or more of the
following ways:
(i) in cash; and/or
(ii) in shares of the Common Stock (which are owned by the optionee
free and clear of all liens and other encumbrances and which are not subject to
the restrictions set forth in Section 7 below) having a fair market value on the
date of exercise of the stock option, determined as provided in Section 5(H),
equal to the option price for the shares being purchased.
If the option price is paid in whole or in part in shares of Common Stock,
any portion of the option price representing a fraction of a share shall be paid
in cash. The date of exercise of a stock option shall be determined under
procedures established by the Committee, and the option price shall be payable
at such time or times as the Committee, in its discretion, shall determine. No
shares shall be issued or delivered upon exercise of a stock option until full
payment of the option price has been made. When full payment of the option price
has been made and subject to the restrictions set forth in Section 7, the
optionee shall be considered for all purposes to be the owner of the shares with
respect to which payment has been made. Payment of the option price with shares
shall not
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increase the number of shares of Common Stock which may be issued or delivered
under the Plan as provided in Section 3.
(C) Subject to Section 8 hereof, stock options may be exercised at the
following rate. On or after the first anniversary of the date on which the
options were granted (the "Grant Date"), one-third of such options may be
exercised (rounded upward to the nearest whole share). On or after the second
anniversary of the Grant Date two-thirds of such options may be exercised
(rounded upward to the nearest whole share) minus the aggregate number of such
options previously exercised. On or after the third anniversary of the Grant
Date, the remainder of the options may b exercised. No incentive stock option
shall be exercisable after the expiration of ten years (five years in the case
of a Ten Percent Employee) from the date of grant. No non-statutory stock option
shall be exercisable after the expiration of ten years and six months from the
date of grant. Subject to this Section 5(C) and Sections 5(F), 5(G) and 5(H)
below, stock options may be exercised at such times, in such amounts and subject
to such restrictions as shall be determined, in its discretion, by the
Committee.
(D) No stock option rights shall be transferable by an optionee other than
by will, or if an optionee dies intestate, by the laws of descent and
distribution of the state of domicile of the optionee at the time of death, and
all stock options shall be exercisable during the lifetime of an optionee only
by the optionee.
(E) Unless otherwise determined by the Committee and set forth in the stock
option agreement referred to in Section 5(G) or an amendment thereto:
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(i) If the employment of an optionee who is not a Disabled Optionee
(as defined in Section 5(F) below) is voluntarily terminated with the consent of
the Corporation or Subsidiary, any then outstanding stock option held by such an
optionee shall be exercisable (to the extent exercisable on the date of
termination of employment) by such an optionee at any time prior to the earlier
of the expiration date of such stock option or the date which is three months
after the date of termination of employment;
(ii) If an optionee retires under any retirement plan of the
Corporation or a Subsidiary, any then outstanding stock option held by such an
optionee shall be exercisable in full (whether or not so exercisable on the date
of termination of employment) by such an optionee at any time prior to the
earlier of the expiration date of such stock option or the date which is three
months after the date of termination of employment;
(iii) If the employment of an optionee who is a Disabled Optionee is
terminated, any then outstanding stock option held by such optionee shall be
exercisable in full (whether or not so exercisable on the date of termination of
employment) by the optionee at any time prior to the earlier of the expiration
date of such stock option or the date which is one year after the date of
termination of employment;
(iv) The following transfers of employees will not be treated as a
termination of employment:
(a) A transfer of an employee between Subsidiaries of the
Corporation;
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(b) A transfer of an employee from the Corporation to one of its
Subsidiaries; or
(c) A transfer of an employee to the Corporation from one of its
Subsidiaries.
(v) Following the death of an optionee during employment, any
outstanding stock option held by the optionee at the time of death shall be
exercisable in full (whether or not so exercisable on the date of the death of
the optionee) by the person or persons entitled to do so under the will of the
optionee, or, if the optionee shall fail to make testamentary disposition of the
stock option or shall die intestate, by the legal representative of the
optionee, at any time prior to the expiration date of such stock option or
within one year after the date of death, whichever is the shorter period.
Following the death of an optionee after termination of employment during a
period when a stock option is exercisable provided in clauses (i), (ii) and
(iii) above, any outstanding stock option held by the optionee at the time of
death shall, to the extent the stock option was exercisable by such person or
persons as would have been entitled had the employee died prior to the
termination of employment so long as such exercise occurs prior to the earlier
of the expiration date of such stock option or the date which is one year after
the date of death.
(F) If the employment of an optionee terminates for any reason other than
voluntary termination with the consent of the Corporation or a Subsidiary
disability, retirement under any retirement plan of the Corporation or a
Subsidiary, or death, the rights of such optionee under any then outstanding
stock
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option shall terminate at the time of such termination of employment. In
addition, the Committee may in its discretion immediately terminate any stock
options held by the optionee if an optionee (i) engages in the operation ( or
management of a business, whether as owner, partner, officer, director, employee
or otherwise and whether during or after termination of employment, which is in
competition with the Corporation or any of its Subsidiaries; (ii) uses for his
own benefit or discloses to a third party information pertaining to the
Corporation or any of its Subsidiaries which the Corporation or its Subsidiaries
consider to be confidential; or (iii) interferes with the relationship between
the Corporation or a Subsidiary and its employees, suppliers or customers.
"Disabled Optionee" shall mean an individual who 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 12 months.
Whether termination of employment is a voluntary termination with the
consent of the Corporation or a Subsidiary; whether an optionee is a Disabled
Optionee; whether an optionee has engaged in the operation or management of a
business which is in competition with the Corporation or any of its
Subsidiaries; whether an optionee uses for his own benefit or discloses to a
third party information pertaining to the Corporation or any of its Subsidiaries
which is confidential; and whether an optionee has interfered with the relations
between the Corporation or a Subsidiary and its employees, suppliers or
customers shall be determined in each case by the
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Committee, whose determination shall be final and binding unless such
determination is demonstrably arbitrary and capricious.
(G) All stock options shall be confirmed by a stock option agreement, or an
amendment thereto, which shall be executed by the Chief Executive Officer, the
President (if other than the Chief Executive Officer) or any Executive Vice
President on behalf of the Corporation and by the employee to whom such stock
options are granted.
(H) Fair market value of the Common Stock, so long as the Common Stock
trades in the over-the-counter market or on a stock exchange, shall be computed
by taking a weighted average of the mean between the highest and lowest selling
prices per share of the Common Stock as quoted in such reliable publication as
the Committee, in its discretion, may choose to rely upon, on the nearest date
before and the nearest date after the date as of which fair market value is to
be determined on which there are sales.
If at any time the Common Stock does not trade in the over-the-counter
market or on a stock exchange, the fair market value of the Common Stock shall
be determined by an independent and experienced appraiser which is selected by
the Committee. Fair market value shall be determined without regard to any
restriction applicable to the Common Stock other than a restriction which, by
its terms, will never lapse.
(I) The obligation of the Corporation to issue or deliver shares of the
Common Stock under the Plan shall be subject to (i) the effectiveness of a
registration statement under the Securities Act of 1933, as amended, with
respect to such shares,
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if deemed necessary or appropriate by counsel for the Corporation, (ii) the
condition that the shares shall have been listed (or authorized for listing upon
official notice of issuance) upon each stock exchange on which such shares may
then be listed and (iii) all other applicable laws, regulations, rules and
orders which may then be in effect; provided, however, that if the Company Stock
shall be delisted from all national stock exchanges and/or deregistered in
accordance with the provisions of the Securities Exchange Act of 1934, as
amended, the Corporation shall have the obligation to issue and deliver shares
of Common Stock under the Plan upon the exercise of any then outstanding stock
option.
Subject to the foregoing provisions of this Section 5 and the other
provisions of the Plan, any stock option granted under the plan shall be subject
to such other terms and conditions as the Committee shall deem advisable.
SECTION 6
ADJUSTMENT AND SUBSTITUTION OF SHARES
If a dividend or other distribution shall be declared upon the Common Stock
payable in shares of Common Stock, the number of shares of Common Stock then
subject to any outstanding stock option and the number of shares which may be
issued or delivered under the Plan but are not then subject to an outstanding
stock option shall be adjusted by adding thereto the number of shares which
would have been distributable thereon if such shares had bee outstanding on the
date fixed for determining the stockholders entitled to receive such stock
dividend or distribution.
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If the outstanding shares of Common Stock shall be changed into or
exchangeable for a different number or kind of shares of stock or other
securities of the Corporation or another corporation, whether through
reorganization, reclassification, recapitalization, stock split-up, combination
of shares, merger or consolidation, then there shall be substituted for each
share of Common Stock subject to any then outstanding stock option and for each
share of Common Stock which may be issued or delivered under the Plan but is not
then subject to an outstanding stock option, the number and kind of shares of
stock or other securities into which each outstanding share of Common Stock
shall be so changed or for which each such share shall be exchangeable.
In the case of any adjustment or substitution as provided for in this
Section 6, the aggregate option price for all shares subject to each then
outstanding stock option prior to such adjustment or substitution shall be the
aggregate option price for all shares of stock or other securities (including
any fraction) to which such shares shall have been adjusted or which shall have
been substituted for such shares. Any new option price per share shall be
carried to at least three decimal places with the last decimal place rounded
upwards to the nearest whole number.
No adjustment or substitution provided for in this Section 6 shall require
the Corporation to issue or sell a fraction of a share or other security.
Accordingly, all fractional shares or other securities which result from any
such adjustment or substitution shall be eliminated and not carried forward to
any subsequent adjustment or substitution.
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If any such adjustment or substitution provided for in this Section 6
requires the approval of stockholders in order to enable the Corporation to
grant incentive stock options, then no such adjustment or substitution shall be
made without prior stockholder approval. Notwithstanding the foregoing, in the
case of incentive stock options, if the effect of any such adjustment or
substitution would be to cause the stock option to fail to continue to qualify
as an incentive stock option or to cause a modification, extension or renewal of
such stock option within the meaning of Section 424 of the Code, the Committee
may elect that such adjustment or substitution not be made but rather shall use
reasonable efforts to effect such other adjustment of each then outstanding
stock option as the Committee in its sole discretion shall deem equitable and
which will not result in any disqualification, modification, extension or
renewal (within the meaning of Section 424 of the Code) of such incentive stock
option.
SECTION 7
RESTRICTIONS ON TRANSFER OF CERTAIN SHARES
Shares of Common Stock acquired under exercise of an option pursuant to
Section 5(B)(ii) by a person then subject to the provision of Section 16 of the
Exchange Act shall not be sold or otherwise transferred prior to the expiration
of six months after the date of the grant of the option. The Corporation is
authorized to (i) retain the certificate(s) representing such shares or place
such certificates in the custody of its transfer agent, (ii) place a restrictive
legend on such shares, and/or (iii) issue a stop transfer order to the transfer
agent with
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respect to such shares in order to enforce the transfer restrictions of this
Section.
SECTION 8
ACCELERATION OF THE EXERCISE DATE OF STOCK OPTIONS
Notwithstanding any other provision of this Plan, all stock options shall
become exercisable upon the occurrence of any of the events listed below whether
or not such options are then exercisable under the provisions of the applicable
agreements relating thereto:
(A) Stock option rights shall be exercisable during any one or more of the
following periods:
(i) for a period of 60 days beginning on the date on which shares of
Common Stock are first purchased pursuant to a tender offer or exchange offer
(other than such an offer by the Corporation or a Subsidiary), whether or not
such offer is approved or opposed by the Corporation or a Subsidiary and
regardless of the number of shares of Common Stock purchased pursuant to such
offer;
(ii) for a period of 60 days beginning on the date the Corporation
acquires knowledge that any person or group deemed a person under Section
13(d)(3) of the Exchange Act (other than any director of the Corporation on
August 23, 1991, any Affiliate or Associate of any such director (with such
terms having the respective meanings set forth in Rule 12b-2 under the Exchange
Act as in effect on August 23, 1991), any member of the family of any such
director, any trust (including the trustees
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thereof) established by or for the benefit of any such person or any charitable
foundation, whether a trust or a corporation (including the trustees and
directors thereof) established by any of such persons), in a transaction or
series of transactions shall become the beneficial owner, directly or indirectly
(with beneficial ownership determined as provided in Rule 13d-3, or any
successor rule, under the Exchange Act), of securities of the Corporation
entitling the person or group to 20% or more of all votes (without consideration
of the rights of any class of stock to elect directors by a separate class vote)
to which all shareholders of the Corporation would be entitled if the election
of Directors were an election held on such date;
(iii) for a period of 60 days beginning on the date of filing under
the Exchange Act of a Statement on Schedule 13D, or any amendment thereto, by
any person or group deemed a person under Section 13(d)(3) of the Exchange Act,
disclosing an intention or possible intention to acquire or change control of
the Corporation;
(iv) for a period of 60 days beginning on the date, during any period
of two consecutive years, when individuals who at the beginning of such period
constitute the Board of Directors of the Corporation cease for any reason to
constitute at least a majority thereof, unless the election, or the nomination
for election by the shareholders of the Corporation, of each new Director 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; and
(v) for a period of 60 days beginning on the date of approval by the
shareholders of the Corporation of an agreement
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(a "reorganization agreement") providing for (a) the merger or consolidation of
the Corporation with another corporation where the shareholders of the
Corporation, immediately prior to the merger or consolidation, will not
beneficially own, immediately after the merger or consolidation, shares of the
corporation issuing cash or securities in the merger or consolidation entitling
such shareholders to 40% or more of all votes (without consideration of the
rights of any class of stock to elect directors by a separate class vote) to
which all shareholders of such corporation would be entitled in the election of
Directors or where the members of the Board of Directors of the Corporation,
immediately prior to the merger or consolidation, do not, immediately after the
merger or consolidation, constitute a majority of the Board of Directors of the
corporation issuing cash or securities in the merger or consolidation or (b) the
sale or other disposition of all or substantially all the assets of the
Corporation.
SECTION 9
EFFECT OF THE PLAN ON THE RIGHTS OF EMPLOYEES AND EMPLOYER
Neither the adoption of the Plan nor any action of the Board or the
Committee pursuant to the Plan shall be deemed to give any employee any right to
be granted a stock option under the Plan and nothing in the Plan, in any stock
option granted under the Plan or in any stock option agreement shall confer any
right upon any employee to continue in the employment of the Corporation or any
Subsidiary or diminish in any way the right of the Corporation or any Subsidiary
to terminate the employment of any employee at any time. The granting of a stock
option
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shall impose no obligation upon the Optionee to exercise such option.
SECTION 10
AMENDMENT
The right to alter and amend the Plan at any time and from time to time and
the right to revoke or terminate the Plan are hereby specifically reserved to
the Board; provided always that no such revocation or termination shall
terminate any outstanding stock option theretofore granted under the Plan; and
provided further that no such alteration or amendment of the Plan shall, without
prior stockholder approval, (a) increase the total number of shares which may be
issued under the Plan, (b) increase the total number of shares issuable pursuant
to any stock option granted to any one optionee, (c) make any changes in the
class of eligible employees or (d) extend the period set forth in the Plan
during which stock options may be granted. No alteration, amendment, revocation
or termination of the Plan shall, without the written consent of the holder of a
stock option theretofore granted under the Plan, adversely affect the rights of
such holder with respect to such stock option.
SECTION 11
EFFECTIVE DATE AND DURATION OF PLAN
The effective date and date of adoption of the Plan shall be August 23,
1991 (the "Effective Date"), the date of adoption of the Plan by the Board,
provided that such adoption of the Plan by the Board is approved by the
affirmative vote of the
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holders of at least a majority of the outstanding shares of Common Stock at a
meeting of such holders duly called, convened and held within one year of the
Effective Date. Notwithstanding any provision of the Plan to the contrary, no
stock option granted under the Plan prior to such shareholder approval may be
exercised until after such approval. No stock option may be granted under the
Plan subsequent to the date which is ten (10) years following the effective date
of the Plan.
SECTION 12
APPLICATION OF FUNDS
The proceeds received by the Corporation for the sale of the Common Stock
pursuant to exercise of stock options shall be used for general corporate
purpose
SECTION 13
RESERVATION OF THE STOCK
The Corporation shall be under no obligation to purchase or reserve Common
Stock to satisfy the exercise of stock options. The grant of stock options to
employees hereunder shall not be construed to constitute the establishment of a
trust of the Common Stock issuable pursuant to such stock options, and no
particular Common Stock shall be identified as optioned and reserved for
employees hereunder. The Corporation shall be deemed to have complied with the
terms of the Plan if, at the time of issuance and delivery pursuant to the
exercise of a stock option, it has a sufficient number of shares of the Common
Stock authorized and unissued or in its treasury which may then
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be appropriate and issued for purposes of the Plan, irrespective of the date
when such Common Stock was authorized.
SECTION 14
GOVERNING LAW
The Plan and all determinations and actions taken pursuant thereto shall be
governed by the laws of the Commonwealth of Pennsylvania and construed in
accordance therewith.
This Plan has been prepared, negotiated and delivered in, and shall be
construed and enforced in accordance with, the laws of the Commonwealth of
Pennsylvania.
USBANCORP, INC.
By: CLIFFORD A. BARTON
Title: Chairman, President & CEO
ATTEST:
TERRY K. DUNKLE
Secretary
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