EXHIBIT 10.3
LONG-TERM INCENTIVE PLAN OF 1990.
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