Non-Statutory Stock Option Plan
For the Directors of
The Franklin Holding Corporation
SECTION 1. Purpose; Definitions
The purpose of this Plan is to further the interests of Franklin Holding, its
Stockholders, and its employees, by providing to the ("outside") Directors of
Franklin Holding the opportunity to purchase Franklin Holding Stock. Franklin
Holding believes that such opportunity is an appropriate reward for the
dedication and loyalty of the Directors included herein, and that the adoption
of the Plan is an integral and important feature of the relationship.
"Board" means the Board of Directors of Franklin Holding.
"Disability" means permanent and total disability as determined under procedures
established by the Board for purposes of the Plan.
"Director" means a member of the Board who is eligible in accordance with the
provisions of this Plan.
"Franklin Holding" means The Franklin Holding Corporation, a Delaware
corporation.
"Franklin Holding Stock" means voting common stock, par value $0.01 per share,
of Franklin Holding.
"Plan" means the Non-Statutory Stock Option Plan for the Directors of The
Franklin Holding Corporation.
"Option" means a stock option granted pursuant to the provisions of this Plan.
"Outside" means a director who is not employed by The Franklin Holding
Corporation.
SECTION 2. Eligibility; Administration
Eligibility to Participate. Options to purchase shares of Franklin Holding Stock
shall be made available under this Plan to the Directors of Franklin Holding who
are not also officers or employees of Franklin Holding. Such designation shall
be made by the Board, which shall inform each Director so designated of the fact
of his eligibility to participate.
Administration. The Board shall establish rules and regulations for the
administration of the Plan, and to construe and interpret its provisions. All
determinations of the Board with respect
to the Plan shall be final. All Options granted pursuant to this Plan shall be
approved in accordance with Section 52(o) of the Investment Company Act of 1940.
SECTION 3. Common Stock Subject to Plan
Available Shares. There shall be available for the grant of Stock Options 30,000
shares of Common Stock. The shares subject to any Option which is surrendered,
expires, or otherwise ceases to be exercisable, shall be available for the grant
of further Options. Shares subject to option may consist of authorized but
unissued shares of Franklin Holding or of Treasury shares.
SECTION 4. Stock Options
Stock Options. The number of shares to be subject to an Option granted hereunder
shall be determined in the discretion of the Board. The terms respecting any
Stock Option granted hereunder, except as otherwise determined from time to time
in a uniform and nondiscriminatory manner by the Board, shall be as follows:
A. Option Price. The option price shall be an amount equal to the "Fair
Market Value" of the Stock subject to the Option, determined on the day of
the grant of the Option. For this purpose, Fair Market Value shall be
determined as the closing price of Franklin Holding Stock on the American
Stock Exchange on the applicable day, or if on any day such security is
not so listed, "Fair Market Value" shall be determined as the closing
price of Franklin Holding Stock quoted in the NASDAQ System, in the
domestic over-the-counter market. If at any time such security is not
listed on any securities exchange or quoted in the NASDAQ System or the
over-the-counter market, "Fair Market Value" will be the current net asset
value of the Franklin Holding Stock.
B. Right to Exercise. Any Option granted under this Plan shall be exercisable
in accordance with the following terms and conditions:
1. An Option to purchase shares of Franklin Holding Stock granted
hereunder shall not be exercisable prior to (vesting provision, if
applicable) (except that in the event of the death or Disability of
the person receiving such Option, this condition shall be deemed
automatically waived). No Option granted hereunder shall be
exercisable more than ten years from the date that the Option is
granted.
2. In the event the appointment of a Director then holding Options to
purchase Franklin Holding Stock hereunder is terminated (except if
such termination be by reason of death or permanent and total
disability), said Option shall be exercisable only during the period
of thirty (30) days following said termination of the Director's
appointment. In the event the appointment of a Director then holding
Options to purchase Franklin Holding Stock hereunder is terminated by
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reason of Disability, said Option shall be exercisable only during the
period of twelve (12) months following said termination of the
Director's appointment. If said person then holding Options for the
purchase of Franklin Holding Stock shall die while appointed or within
thirty (30) days following the termination of such appointment, each
said Option shall remain exercisable during the period of twelve (12)
months thereafter by the personal representatives of such deceased
person's estate, or the successors to his estate.
In the event of termination of appointment under circumstances other
than as stated above, all Options then held shall terminate, and shall
no longer be exercisable, as of the date of termination of appointment
unless an exception is granted by the Board.
3. Method of Exercise. The Option shall be exercised by written notice
directed to the Board, at Franklin Holding's principal place of
business, accompanied by check in payment of the option price for such
shares. Should the Director wish to exercise the Option in exchange
for shares of previously owned shares of Franklin Holding, the Fair
Market Value of which is greater than the option exercise price, the
Director shall tender the number of shares which, when multiplied by
the Fair Market Value of Franklin Holding's Stock at exercise, would
equal the total option exercise price, to Franklin Holding at the
above address. Should the Director wish to exercise Options and
immediately sell the shares received to fund the option price, the
Option shall be exercised by delivery of an irrevocable letter of
instruction directing Franklin Holding to deliver the Option to a
broker, with whom the optionee has opened an account, within five (5)
business days of exercise of the Option, to Franklin Holding at its
principal place of business. Franklin Holding shall make immediate
delivery of such shares, provided that if any law or regulation
requires Franklin Holding to take any action with respect to the
shares specified in such notice before the issuance thereof, then the
date of delivery of such shares shall be extended for the period
necessary to take such action.
4. Reclassification, Consolidation, or Merger. If and to the extent that
the number of issued shares of the single class of voting common Stock
of Franklin Holding shall be increased or reduced by change in par
value, split up, reclassification, distribution of a dividend payable
in Stock, or the like, the number of shares subject to Option and the
option price per share shall be proportionately adjusted. If Franklin
Holding is reorganized or consolidated or merged with or into another
corporation, the Director shall be entitled to receive Options
covering shares of such reorganized, consolidated, or merged Franklin
Holding in the same proportion, at an equivalent price, and subject to
the same conditions. For purposes of the preceding sentence, the
excess of the aggregate fair market value of the shares subject to the
Option immediately after the
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reorganization, consolidation, or merger over the aggregate Option
price of such shares shall not be more than the excess of the
aggregate fair market value of all shares subject to the Option
immediately before such reorganization, consolidation, or merger over
the aggregate Option price of such shares, and the new Option or
assumption of the old Option shall not give the Director additional
benefits which he did not have under the old Option, or deprive him of
benefits which he had under the old Option.
5. Rights Prior to Exercise of Option. This Option is nontransferable by
the Director, except in the event of his death or pursuant to a
qualified domestic relations order as defined in Section 414(p) of the
Internal Revenue Code of 1986, as amended and during his lifetime is
exercisable only by him. The Director shall have no rights as a
Stockholder with respect to the Option shares until payment of the
Option price and delivery to him of such shares as herein provided.
6. Restrictions on Disposition. Directors are prohibited from disposing
of shares acquired upon the exercise of their Options within six
months of the date of grant of such Options in compliance with the
short swing-profit rules contained in Section 16(b) of the Securities
Exchange Act of 1934.
SECTION 5. Termination; Amendment
Termination or Amendment of Plan. Franklin Holding expressly retains the right
to at any time terminate, suspend, or amend the Plan, in any respect and as
Franklin Holding deems advisable under circumstances then prevailing. Provided,
however, that no amendment hereto shall expand the number of shares of Franklin
Holding Stock subject to the Plan. No amendment, alteration, or discontinuation
shall be made which would impair the rights of any Director under an Option
theretofore granted without the Director's consent except such amendment
necessary to comply with applicable Securities laws.
SECTION 6. Governing Law
Applicable Law. This Plan is adopted by Franklin Holding in the State of New
York and is to be construed and interpreted in accordance with the laws of the
State of New York. The intention of Franklin Holding is that this Plan not
constitute an "incentive stock" plan within the meaning of section 422 of the
Internal Revenue Code of 1986, except to the extent such treatment is permitted
upon a subsequent amendment of the Plan.
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