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FIRST VIRGINIA BANKS, INC.
1998 STOCK INCENTIVE PLAN
Effective April 24, 1998
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ARTICLE I DEFINITIONS
1.01 Acquiring Person 1
1.02 Administrator 1
1.03 Agreement 1
1.04 Associate 1
1.05 Board 1
1.06 Change in Control 1
1.07 Code 1
1.08 Committee 1
1.09 Common Stock 2
1.10 Continuing Director 2
1.11 Control Affiliate 2
1.12 Control Change Date 2
1.13 Corporation 2
1.14 Corresponding SAR 2
1.15 Disability 2
1.16 Efficiency Ratio 2
1.17 Exchange Act 2
1.18 Fair Market Value 2
1.19 Incentive Award 3
1.20 Initial Value 3
1.21 NIACC 3
1.22 Option 3
1.23 Participant 3
1.24 Performance Shares 3
1.25 Person 3
1.26 Plan 3
1.27 Related Entity 4
1.28 Retirement 4
1.29 SAR 4
1.30 Stock Award 4
1.31 Total Shareholder Return 4
ARTICLE II PURPOSES 4
ARTICLE III ADMINISTRATION 5
ARTICLE IV ELIGIBILITY 5
ARTICLE V STOCK SUBJECT TO PLAN 6
5.01 Shares Issued 6
5.02 Aggregate Limit 6
5.03 Reallocation of Shares 6
ARTICLE VI OPTIONS 7
6.01 Award 7
6.02 Option Price 7
6.03 Maximum Option Period 7
6.04 Nontransferability 7
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6.05 Transferable Options 7
6.06 Employee Status 8
6.07 Exercise 8
6.08 Payment 8
6.09 Change in Control 8
6.10 Shareholder Rights 9
6.11 Disposition of Stock 9
ARTICLE VII SARS 9
7.01 Award 9
7.02 Maximum SAR Period 9
7.03 Nontransferability 9
7.04 Transferable SARs 10
7.05 Exercise 10
7.06 Change in Control 10
7.07 Employee Status 11
7.08 Settlement 11
7.09 Shareholder Rights 11
ARTICLE VIII STOCK AWARDS 11
8.01 Award 11
8.02 Vesting 11
8.03 Performance Objectives 11
8.04 Employee Status 12
8.05 Change in Control 12
8.06 Shareholder Rights 12
ARTICLE IX PERFORMANCE SHARE AWARDS 12
9.01 Award 12
9.02 Earning the Award 12
9.03 Payment 13
9.04 Shareholder Rights 13
9.05 Nontransferability 13
9.06 Transferable Performance Shares 13
9.07 Employee Status 13
9.08 Change in Control 14
ARTICLE X INCENTIVE AWARDS 14
10.01 Award 14
10.02 Terms and Conditions 14
10.03 Nontransferability 15
10.04 Employee Status 15
10.05 Change in Control 15
10.06 Shareholder Rights 15
ARTICLE XI ADJUSTMENT UPON CHANGE IN COMMON STOCK 16
ARTICLE XII COMPLIANCE WITH LAW AND
APPROVAL OF REGULATORY BODIES 16
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ARTICLE XIII GENERAL PROVISIONS 17
13.01 Effect on Employment and Service 17
13.02 Unfunded Plan 17
13.03 Rules of Construction 17
13.04 Tax Withholding 17
ARTICLE XIV AMENDMENT 18
ARTICLE XV DURATION OF PLAN 18
ARTICLE XVII EFFECTIVE DATE OF PLAN 18
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ARTICLE I
DEFINITIONS
1.01 Acquiring Person means that (a) a Person, considered alone or
together with all Control Affiliates and Associates of that Person, becomes
directly or indirectly the beneficial owner of securities representing at least
twenty percent of the Corporation's then outstanding securities entitled to
vote generally in the election of the Board, or (b) a person enters into an
agreement that would result in that Person satisfying the conditions in
subsection (a) or that would result in a Related Entity's failure to be a
Related Entity.
1.02 Administrator means the Committee and any delegate of the
Committee that is appointed in accordance with Article III.
1.03 Agreement means a written agreement (including any amendment or
supplement thereto) between the Corporation and a Participant specifying the
terms and conditions of an award of Performance Shares or a Stock Award,
Option, SAR or Incentive Award granted to such Participant.
1.04 Associate, with respect to any Person, is defined in Rule 12b-2
of the General Rules and Regulations under the Exchange Act, as amended as of
January 1, 1990. An Associate does not include the Company or a majority-owned
subsidiary of the Corporation.
1.05 Board means the Board of Directors of the Corporation.
1.06 Change in Control means that (a) the Corporation enters into any
agreement with a Person that involves the transfer of ownership of the
Corporation or of at least fifty percent of the Corporation's total assets on a
consolidated basis, as reported in the Corporation's consolidated financial
statements filed with the Securities and Exchange Commission (including an
agreement for the acquisition of the Corporation by merger, consolidation, or
statutory share exchange - regardless of whether the Corporation is intended to
be the surviving or resulting entity after the merger, consolidation, or
statutory share exchange - or for the sale of substantially all of the
Corporation's assets to that Person), (b) any Person is or becomes an Acquiring
Person, or (c) during any period of two consecutive calendar years, the
Continuing Directors cease for any reason to constitute a majority of the
Board.
1.07 Code means the Internal Revenue Code of 1986, and any amendments
thereto.
1.08 Committee means the Management and Benefits Compensation
Benefits Committee of the Board, each member of which shall be a "nonemployee
director" as such term is defined in Rule 16b-3
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promulgated under the Exchange Act. Notwithstanding the foregoing, Committee
may be a "nonemployee director" subcommittee of the Management Compensation and
Benefits Committee if any of its members is not a "nonemployee director."
1.09 Common Stock means the common stock of the Corporation.
1.10 Continuing Director means any member of the Board, while a
member of the Board and (i) who was a member of the Board prior to the adoption
of the Plan or (ii) whose subsequent nomination for election or election to the
Board was recommended or approved by a majority of the Continuing Directors.
1.11 Control Affiliate with respect to any Person, means an affiliate
as defined in Rule 12b-2 of the General Rules and Regulations under the
Exchange Act, as amended as of January 1, 1990.
1.12 Control Change Date means the date on which a Change in Control
occurs. If a Change in Control occurs on account of a series of transactions,
the Control Change Date is the date of the last of such transactions.
1.13 Corporation means First Virginia Banks, Inc.
1.14 Corresponding SAR means an SAR that is granted in relation to a
particular Option and that can be exercised only upon the surrender to the
Corporation, unexercised, of that portion of the Option to which the SAR
relates.
1.15 Disability means, as to an incentive stock option, a disability
within the meaning of Code Section 2(e)(3). Disability means, as to all other
awards, that a Participant is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death, or which has lasted or can be
expected to last for a continuous period of not less than twelve months.
1.16 Efficiency Ratio means the percentage determined by dividing (i)
noninterest expense less nonrecurring expense by (ii) the sum of net interest
income plus noninterest income, all as reported on the Corporation's financial
statements.
1.17 Exchange Act means the Securities Exchange Act of 1934, as
amended and as in effect on the date of this Agreement.
1.18 Fair Market Value means, on any given date, the price per share
of the last sale of Common Stock on the New York Stock Exchange on such date,
or if the Common Stock was not traded on the New York Stock Exchange on such
day, then on the next preceding day that the Common Stock was traded on such
exchange, all as reported in The Wall Street Journal.
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1.19 Incentive Award means an award under Article X which, subject to
such terms and conditions as may be prescribed by the Administrator, entitles
the Participant to receive a cash payment from the Corporation or a Related
Entity.
1.20 Initial Value means, with respect to a Corresponding SAR, the
option price per share of the related Option and, with respect to an SAR
granted independently of an Option, the price per share of Common Stock as
determined by the Administrator on the date of the grant; provided, however,
that the price per share of Common Stock encompassed by the grant of an SAR
shall not be less than the Fair Market Value on the date of grant.
1.21 NIACC means net income after a capital charge.
1.22 Option means a stock option that entitles the holder to purchase
from the Corporation a stated number of shares of Common Stock at the price set
forth in an Agreement.
1.23 Participant means an employee of the Corporation or a Related
Entity, including an employee who is a member of the Board, who satisfies the
requirements of Article IV and is selected by the Administrator to receive an
award of Performance Shares, a Stock Award, an Option, an SAR, an Incentive
Award or a combination thereof.
1.24 Performance Shares means an award, in the amount determined by
the Administrator and specified in an Agreement, stated with reference to a
specified number of shares of Common Stock, that entitles the holder to receive
a payment for each specified share equal to the Fair Market Value of Common
Stock on the date of payment. In the discretion of the Administrator, a
Performance Share award may include the right to receive an additional payment
for the accumulated dividends that would have been paid on each specified share
as if such dividends had been invested in Common Stock on the dividend payment
date, from the date of grant to the date of payment.
1.25 Person means any human being, firm, corporation, partnership, or
other entity. Person also includes any human being, firm, corporation,
partnership, or other entity as defined in sections 13(d) (3) and 14(d)(2) of
the Exchange Act, as amended as of January 1, 1990. For purposes of this Plan,
the term Person does not include the Corporation or any Related Entity, and the
term Person does not include any employee-benefit plan maintained by the
Corporation or by any Related Entity, and any person or entity organized,
appointed, or established by the Corporation or by any subsidiary for or
pursuant to the terms of any such employee-benefit plan, unless the Board
determines that such an employee-benefit plan or such person or entity is a
Person.
1.26 Plan means the First Virginia Banks, Inc. 1998 Stock Incentive
Plan.
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1.27 Related Entity means any entity that directly or indirectly,
through one or more intermediaries, controls, or is controlled by, or is under
common control with, the Corporation.
1.28 Retirement means a Participant's separation from service on or
after his early, normal or delayed retirement date under the First Virginia
Pension Trust Plan.
1.29 SAR means a stock appreciation right that entitles the holder to
receive, with respect to each share of Common Stock encompassed by the exercise
of such SAR, the lesser of (a) the excess, if any, of the Fair Market Value at
the time of exercise over the Initial Value, or (b) the Initial Value.
References to "SARs" include both Corresponding SARs and SARs granted
independently of Options, unless the context requires otherwise.
1.30 Stock Award means Common Stock awarded to a Participant under
Article VIII.
1.31 Total Shareholder Return means, with respect to any period, the
sum of (i) the excess, if any, of the Fair Market Value on the first day of the
period over the Fair Market Value on the last day of the period and (ii) the
value of any dividends on Common Stock payable with respect to such period.
ARTICLE II
PURPOSES
The Plan is intended to promote a closer identification of the
interests of employees with those of the Corporation and its shareholders,
thereby further stimulating their efforts to enhance the soundness,
profitability, growth and shareholder value of the Corporation. The Plan also
is intended to assist the Corporation and Related Entities in recruiting and
retaining individuals with ability and initiative by enabling such persons to
participate in the future success of the Corporation and the Related Entities
and to associate their interests with those of the Corporation and its
shareholders. The Plan is intended to permit the grant of both Options
qualifying under Section 422 of the Code ("incentive stock options") and
Options not so qualifying, and the grant of SARs, Stock Awards, Performance
Shares and Incentive Awards. No Option that is intended to be an incentive
stock option shall be invalid for failure to qualify as an incentive stock
option. The proceeds received by the Corporation from the sale of Common Stock
pursuant to this Plan shall be used for general corporate purposes.
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ARTICLE III
ADMINISTRATION
The Plan shall be administered by the Administrator. The
Administrator shall have authority to grant Stock Awards, Performance Shares,
Incentive Awards, Options and SARs upon such terms (not inconsistent with the
provisions of this Plan), as the Administrator may consider appropriate. Such
terms may include conditions (in addition to those contained in this Plan), on
the exercisability of all or any part of an Option or SAR or on the
transferability or forfeitability of a Stock Award, an award of Performance
Shares or an Incentive Award, including by way of example and not of
limitation, conditions on which Participants may defer receipt of benefits
under the Plan, requirements that the Participant complete a specified period
of employment with the Corporation or a Related Entity, requirements that the
Corporation achieve a specified level of financial performance or that the
Corporation achieve a specified level of financial return. Notwithstanding any
such conditions, the Administrator may, in its discretion, accelerate the time
at which any Option or SAR may be exercised, or the time at which a Stock Award
may become transferable or nonforfeitable or the time at which an Incentive
Award or an award of Performance Shares may be settled.
The Administrator also shall have complete authority to interpret all
provisions of this Plan; to prescribe the form of Agreements; to adopt, amend,
and rescind rules and regulations pertaining to the administration of the Plan;
and to make all other determinations necessary or advisable for the
administration of this Plan. The express grant in the Plan of any specific
power to the Administrator shall not be construed as limiting any power or
authority of the Administrator. Any decision made, or action taken, by the
Administrator or in connection with the administration of this Plan shall be
final and conclusive. Neither the Administrator nor any member of the
Committee shall be liable for any act done in good faith with respect to this
Plan or any Agreement, Option, SAR, Stock Award or Incentive Award or award of
Performance Shares. All expenses of administering this Plan shall be borne by
the Corporation, a Related Entity or a combination thereof.
ARTICLE IV
ELIGIBILITY
Any employee of the Corporation or a Related Entity (including a
corporation that becomes a Related Entity after the adoption of this Plan), is
eligible to participate in this Plan if the Administrator, in its sole
discretion, determines that such person has contributed significantly or can be
expected to contribute
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significantly to the profits or growth of the Corporation or a Related Entity.
Directors of the Corporation who are employees of the Corporation or a Related
Entity may be selected to participate in this Plan.
ARTICLE V
STOCK SUBJECT TO PLAN
5.01 Shares Issued. Upon the award of shares of Common Stock
pursuant to a Stock Award or in settlement of an award of Performance Shares,
the Corporation may issue shares of Common Stock from its authorized but
unissued Common Stock. Upon the exercise of any Option or SAR the Corporation
may deliver to the Participant (or the Participant's broker if the Participant
so directs), shares of Common Stock from its authorized but unissued Common
Stock.
5.02 Aggregate Limit. The maximum aggregate number of shares of
Common Stock that may be issued under this Plan, pursuant to the exercise of
SARs and Options and the grant of Stock Awards and the settlement of
Performance Shares awarded on and after April 24, 1998, is 2,500,000 shares.
The maximum aggregate number of shares that may be issued under this Plan as
Stock Awards and in settlement of Performance Shares awarded on and after April
24, 1998, is 800,000 shares. The maximum aggregate number of shares that may
be issued under this Plan and the maximum number of shares that may be issued
as Stock Awards and in settlement of Performance Shares shall be subject to
adjustment as provided in Article XI.
5.03 Reallocation of Shares. If an Option is terminated, in whole or
in part, for any reason other than its exercise or the exercise of a
Corresponding SAR that is settled with Common Stock, the number of shares of
Common Stock allocated to the Option or portion thereof may be reallocated to
other Options, SARs, Performance Shares and Stock Awards to be granted under
this Plan. If an SAR is terminated, in whole or in part, for any reason other
than its exercise that is settled with Common Stock or the exercise of a
related Option, the number of shares of Common Stock allocated to the SAR or
portion thereof may be reallocated to other Options, SARs, Performance Shares
and Stock Awards to be granted under this Plan. If an award of Performance
Shares is terminated, in whole or in part, for any reason other than its
settlement with Common Stock, the number of shares of Common Stock allocated to
the Performance Shares or portion thereof may be reallocated to other options,
SARs, Performance Shares and Stock Awards to be granted under this Plan. If a
Stock Award is forfeited, in whole or in part, for any reason, the number of
shares of Common Stock allocated to the Stock Award or portion thereof may be
reallocated to other Options, SARs, Performance Shares and Stock Awards to be
granted under this Plan.
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ARTICLE VI
OPTIONS
6.01 Award. In accordance with the provisions of Article IV, the
Administrator will designate each individual to whom an Option is to be granted
and will specify the number of shares of Common Stock covered by each such
award; provided, however, that no individual may be granted Options in any
calendar year covering more than 100,000 shares of Common Stock.
6.02 Option Price. The price per share for Common Stock purchased on
the exercise of an Option shall be determined by the Administrator on the date
of grant, but shall not be less than the Fair Market Value on the date the
Option is granted.
6.03 Maximum Option Period. The maximum period in which an Option
may be exercised shall be ten years from the date such Option was granted. The
terms of any Option may provide that it is exercisable for a period less than
such maximum period.
6.04 Nontransferability. Except as provided in Section 6.05, each
Option granted under this Plan shall be nontransferable except by will or by
the laws of descent and distribution. In the event of any transfer of an
Option (by the Participant or his transferee), the Option and any Corresponding
SAR that relates to such Option must be transferred to the same person or
persons or entity or entities. Except as provided in Section 6.05, during the
lifetime of the Participant to whom the Option is granted, the Option may be
exercised only by the Participant. No right or interest of a Participant in
any Option shall be liable for, or subject to, any lien, obligation, or
liability of such Participant.
6.05 Transferable Options. Section 6.04 to the contrary
notwithstanding, if the Agreement provides, an Option that is not an incentive
stock option may be transferred by a Participant to the Participant's children,
grandchildren, spouse, one or more trusts for the benefit of such family
members or a partnership in which such family members are the only partners, on
such terms and conditions as may be permitted under Securities Exchange
Commission Rule 16b-3 as in effect from time to time. The holder of an Option
transferred pursuant to this section shall be bound by the same terms and
conditions that governed the Option during the period that it was held by the
Participant; provided, however, that such transferee may not transfer the
Option except by will or the laws of descent and distribution. In the event of
any transfer of an Option (by the Participant or his transferee), the Option
and any Corresponding SAR that relates to such Option may be transferred to the
same person or persons or entity or entities.
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6.06 Employee Status. For purposes of determining the applicability
of Section 422 of the Code (relating to incentive stock options), or in the
event that the terms of any Option provide that it may be exercised only during
employment or within a specified period of time after termination of
employment, the Administrator may decide to what extent leaves of absence for
governmental or military service, illness, temporary disability, or other
reasons shall not be deemed interruptions of continuous employment.
6.07 Exercise. Subject to the provisions of this Plan and the
applicable Agreement, an Option may be exercised in whole at any time, or in
part from time to time at such times, beyond one year after it is granted and
in compliance with such requirements as the Administrator shall determine;
provided, however, that incentive stock options (granted under the Plan and all
plans of the Corporation and its Related Entities) may not be first exercisable
in a calendar year for stock having a Fair Market Value (determined as of the
date an Option is granted) exceeding the limit prescribed by Code section
422(d); and further provided, however, that an Option that is exercisable on
the date of termination of employment must be exercised, if at all, prior to
the earlier of: (1) the close of the period of: (a) three months less one day
next succeeding the date of termination of employment for reasons other than
Disability or death, or (b) one year next succeeding the date of termination of
employment on account of Disability or death, and (2) the close of the option
period. An Option granted under this Plan may be exercised with respect to any
number of whole shares less than the full number for which the Option could be
exercised. A partial exercise of an Option shall not affect the right to
exercise the Option from time to time in accordance with this Plan and the
applicable Agreement with respect to the remaining shares subject to the
Option. The exercise of an Option shall result in the termination of any
Corresponding SAR to the extent of the number of shares with respect to which
the Option is exercised.
6.08 Payment. Unless otherwise provided by the Agreement, payment of
the Option price shall be made in cash or a cash equivalent acceptable to the
Administrator. Subject to rules established by the Administrator, payment of
all or part of the Option price may be made with shares of Common Stock which
have been owned by the Participant for at least six months and which have not
been used for another exercise during the prior six months. If Common Stock is
used to pay all or part of the Option price, the sum of the cash and cash
equivalent and the Fair Market Value (determined as of the day preceding the
date of exercise) of such shares must not be less than the Option price of the
shares for which the Option is being exercised.
6.09 Change in Control. Section 6.07 to the contrary
notwithstanding, each outstanding Option shall be fully exercisable (in whole
or in part at the discretion of the holder) on and after
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a Control Change Date and during the period (i) beginning on the first day
after a tender offer or exchange offer for shares of Common Stock (other than
an offer made by the Corporation), provided that shares are acquired pursuant
to such offer, and (ii) ending on the thirtieth day following the expiration of
such offer.
6.10 Shareholder Rights. No Participant shall have any rights as a
shareholder with respect to shares subject to his Option until the date of
exercise of such Option.
6.11 Disposition of Stock. A Participant shall notify the Company of
any sale or other disposition of Common Stock acquired pursuant to an Option
that was an incentive stock option if such sale or disposition occurs (i)
within two years of the grant of an Option or (ii) within one year of the
issuance of the Common Stock to the Participant. Such notice shall be in
writing and directed to the Secretary of the Company.
ARTICLE VII
SARS
7.01 Award. In accordance with the provisions of Article IV, the
Administrator will designate each individual to whom SARs are to be granted and
will specify the number of shares covered by each such award; provided,
however, that no individual may be granted SARs in any calendar year covering
more than 100,000 shares. For purposes of the preceding sentence, an Option
and Corresponding SAR shall be treated as a single award. In addition, no
Participant may be granted Corresponding SARs (under all incentive stock option
plans of the Corporation and its Affiliates) that are related to incentive
stock options which are first exercisable in any calendar year for stock having
an aggregate Fair Market Value (determined as of the date the related Option is
granted) that exceeds the limit prescribed by Code section 422(d).
7.02 Maximum SAR Period. The maximum period in which an SAR may be
exercised shall be ten years from the date such SAR was granted. The terms of
any SAR may provide that it has a term that is less than such maximum period.
7.03 Nontransferability. Except as provided in Section 7.04, each
SAR granted under this Plan shall be nontransferable except by will or by the
laws of descent and distribution. In the event of any such transfer, a
Corresponding SAR and the related Option must be transferred to the same person
or persons or entity or entities. Except as provided in Section 7.04, during
the lifetime of the Participant to whom the SAR is granted, the SAR may be
exercised only by the Participant. No right or interest of a Participant in
any SAR shall be liable for, or subject to, any lien, obligation, or liability
of such Participant.
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7.04 Transferable SARs. Section 7.03 to the contrary
notwithstanding, if the Agreement provides, an SAR, other than a Corresponding
SAR that is related to an incentive stock option, may be transferred by a
Participant to the Participant's children, grandchildren, spouse, one or more
trusts for the benefit of such family members or a partnership in which such
family members are the only partners, on such terms and conditions as may be
permitted under Securities Exchange Commission Rule 16b-3 as in effect from
time to time. The holder of an SAR transferred pursuant to this section shall
be bound by the same terms and conditions that governed the SAR during the
period that it was held by the Participant; provided, however, that such
transferee may not transfer the SAR except by will or the laws of descent and
distribution. In the event of any transfer of a Corresponding SAR and the
related Option must be transferred to the same person or person or entity or
entities.
7.05 Exercise. Subject to the provisions of this Plan and the
applicable Agreement, an SAR may be exercised in whole at any time, or in part
from time to time at such times, beyond one year after it is granted and in
compliance with such requirements as the Administrator shall determine;
provided, however, that a Corresponding SAR that is related to an incentive
stock option may be exercised only to the extent that the related Option is
exercisable and only when the Fair Market Value exceeds the option price of the
related Option; and further provided, however, that an SAR that is exercisable
on the date of termination of employment must be exercised, if at all, prior to
the earlier of: (1) the close of the period of: (a) three months less one day
next succeeding the date of termination of employment for reasons other than
Disability or death, or (b) one year next succeeding the date of termination of
employment on account of Disability or death, and (2) the close of the SAR
period. An SAR granted under this Plan may be exercised with respect to any
number of whole shares less than the full number for which the SAR could be
exercised. A partial exercise of an SAR shall not affect the right to exercise
the SAR from time to time in accordance with this Plan and the applicable
Agreement with respect to the remaining shares subject to the SAR. The
exercise of a Corresponding SAR shall result in the termination of the related
Option to the extent of the number of shares with respect to which the SAR is
exercised.
7.06 Change in Control. Section 7.05 to the contrary
notwithstanding, each outstanding SAR shall be fully exercisable (in whole or
in part at the discretion of the holder) on and after a Control Change Date and
during the period (i) beginning on the first day after any tender offer or
exchange offer for shares of Common Stock (other than one made by the
Corporation), provided that shares are acquired pursuant to such offer, and
(ii) ending on the thirtieth day following the expiration of such offer.
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7.07 Employee Status. If the terms of any SAR provide that it may be
exercised only during employment or within a specified period of time after
termination of employment, the Administrator may decide to what extent leaves
of absence for governmental or military service, illness, temporary disability
or other reasons shall not be deemed interruptions of continuous employment.
7.08 Settlement. At the Administrator's discretion, the amount
payable as a result of the exercise of an SAR may be settled in cash, Common
Stock, or a combination of cash and Common Stock. No fractional share will be
deliverable upon the exercise of an SAR but a cash payment will be made in lieu
thereof.
7.09 Shareholder Rights. No Participant shall, as a result of
receiving an SAR, have any rights as a shareholder of the Corporation until the
date that the SAR is exercised and then only to the extent that the SAR is
settled by the issuance of Common Stock.
ARTICLE VIII
STOCK AWARDS
8.01 Award. In accordance with the provisions of Article IV, the
Administrator will designate each individual to whom a Stock Award is to be
made and will specify the number of shares of Common Stock covered by each such
award; provided, however, that no Participant may receive Stock Awards in any
calendar year for more than 30,000 shares of Common Stock.
8.02 Vesting. The Administrator, on the date of the award, may
prescribe that a Participant's rights in a Stock Award shall be forfeitable or
otherwise restricted for a period of time or subject to such conditions as may
be set forth in the Agreement.
8.03 Performance Objectives. In accordance with Section 8.02, the
Administrator may prescribe that Stock Awards will become vested or
transferable or both based on objectives stated with respect to the
Corporation's, a Related Entity's or an operating unit's return on equity,
earnings per share, total earnings, earnings growth, return on assets, Fair
Market Value, NIACC, Efficiency Ratio, Total Shareholder Return or such other
measures as may be selected by the Administrator. If the Administrator, on the
date of award, prescribes that a Stock Award shall become nonforfeitable and
transferable only upon the attainment of performance objectives, the shares
subject to such Stock Award shall become nonforfeitable and transferable only
to the extent that the Administrator certifies that such objectives have been
achieved.
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8.04 Employee Status. In the event that the terms of any Stock Award
provide that shares may become transferable and nonforfeitable thereunder only
after completion of a specified period of employment, the Administrator may
decide in each case to what extent leaves of absence for governmental or
military service, illness, temporary disability, or other reasons shall not be
deemed interruptions of continuous employment.
8.05 Change in Control. Sections 8.02, 8.03 and 8.04 to the contrary
notwithstanding, on and after a Control Change Date or the first day following
a tender offer or exchange offer for shares of Common Stock (other than one
made by the Corporation), provided that shares are acquired pursuant to such
offer, each outstanding Stock Award shall be transferable and nonforfeitable as
of the Control Change Date or the first day following such offer.
8.06 Shareholder Rights. Prior to their forfeiture (in accordance
with the applicable Agreement and while the shares of Common Stock granted
pursuant to the Stock Award may be forfeited or are nontransferable), a
Participant will have all rights of a shareholder with respect to a Stock
Award, including the right to receive dividends and vote the shares; provided,
however, that during such period (i) a Participant may not sell, transfer,
pledge, exchange, hypothecate, or otherwise dispose of shares of Common Stock
granted pursuant to a Stock Award, (ii) the Corporation shall retain custody of
any certificates evidencing shares of Common Stock granted pursuant to a Stock
Award, and (iii) the Participant will deliver to the Corporation a stock power,
endorsed in blank, with respect to each Stock Award. The limitations set forth
in the preceding sentence shall not apply after the shares of Common Stock
granted under the Stock Award are transferable and are no longer forfeitable.
ARTICLE IX
PERFORMANCE SHARE AWARDS
9.01 Award. In accordance with the provisions of Article IV, the
Administrator will designate each individual to whom an award of Performance
Shares is to be made and will specify the number of shares of Common Stock
covered by each such award; provided, however, that the maximum number of
shares of Common Stock that may be earned by a Participant under all
Performance Share awards (whether settled in Common Stock, cash or a
combination of Common Stock and cash) granted in a calendar year shall be the
product of (i) 35,000 shares and (ii) the number of years (twelve consecutive
months) during which one or more performance criteria is measured.
9.02 Earning the Award. The Administrator, on the date of the grant
of an award, shall prescribe that the Performance Shares, or portion thereof,
will be earned, and the Participant will be
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entitled to receive payment pursuant to the award of Performance Shares, only
upon the satisfaction of performance objectives and such other criteria as may
be prescribed by the Administrator during a performance measurement period of
at least one year. The performance objectives may be stated with respect to
the Corporation's, a Related Entity's or an operating unit's return on equity,
earnings per share, total earnings, earnings growth, return on assets, Fair
Market Value, NIACC, Efficiency Ratio, Total Shareholder Return or such other
measures as may be selected by the Administrator. No payments will be made
with respect to Performance Shares unless, and then only to the extent that,
the Administrator certifies that such objectives have been achieved.
9.03 Payment. In the discretion of the Administrator, the amount
payable when an award of Performance Shares is earned may be settled in cash,
by the issuance of Common Stock or a combination of cash and Common Stock. A
fractional share shall not be deliverable when an award of Performance Shares
is earned, but a cash payment will be made in lieu thereof.
9.04 Shareholder Rights. No Participant shall, as a result of
receiving an award of Performance Shares, have any rights as a shareholder
until and to the extent that the award of Performance Shares is earned and
settled by the issuance of Common Stock. After an award of Performance Shares
is earned, if settled completely or partially in Common Stock, a Participant
will have all the rights of a shareholder with respect to such Common Stock.
9.05 Nontransferability. Except as provided in Section 9.06,
Performance Shares granted under this Plan shall be nontransferable except by
will or by the laws of descent and distribution. No right or interest of a
Participant in any Performance Shares shall be liable for, or subject to, any
lien, obligation, or liability of such Participant.
9.06 Transferable Performance Shares. Section 9.05 to the contrary
notwithstanding, if the Agreement provides, an award of Performance Shares may
be transferred by a Participant to the Participant's children, grandchildren,
spouse, one or more trusts for the benefit of such family members or a
partnership in which such family members are the only partners, on such terms
and conditions as may be permitted under Securities Exchange Commission Rule
16b-3 as in effect from time to time. The holder of Performance Shares
transferred pursuant to this section shall be bound by the same terms and
conditions that governed the Performance Shares during the period that they
were held by the Participant; provided, however that such transferee may not
transfer Performance Shares except by will or the laws of descent and
distribution.
9.07 Employee Status. In the event that the terms of any Performance
Share award provide that no payment will be made unless the Participant
completes a stated period of employment, the
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Administrator may decide to what extent leaves of absence for government or
military service, illness, temporary disability, or other reasons shall not be
deemed interruptions of continuous employment.
9.08 Change In Control. Section 9.02 to the contrary
notwithstanding, a pro rata amount of each outstanding Performance Share award
shall be earned and settled in whole shares of Common Stock as of a Control
Change Date that occurs at least three months after the first day of the
measurement period or on the first day after a tender offer or exchange offer
for shares of Common Stock (other than one made by the Company), provided that
such day is at least three months after the first day of the measurement period
and provided further that shares are acquired pursuant to such offer. Such
Common Stock shall be nonforfeitable and transferable. The number of shares of
Common Stock issuable under this Section 9.02 shall be determined by
multiplying the target amount of shares (as prescribed by the applicable
Agreement), by a fraction. The numerator shall be the number of days in the
period beginning on the date of the first day of the measurement period and
ending on the Control Change Date or the first day after the tender or exchange
offer described in this Section 9.03. The denominator is the number of days in
the period, or the longest of such periods, during which performance is
measured under the Performance Share award.
ARTICLE X
INCENTIVE AWARDS
10.01 Award. the Administrator shall designate Participants to whom
Incentive Awards are made. All Incentive Awards shall be finally determined
exclusively by the Administrator under the procedures established by the
Administrator; provided, however, that no Participant may receive an Incentive
Award payment in any calendar year that exceeds the lesser of (i) $1,000,000
and (ii) 150% of the Participant's annual base salary (prior to any salary
reduction or deferral elections) as of the date of grant of the Incentive
Award.
10.02 Terms and Conditions. The Administrator, at the time an
Incentive Award is made, shall specify the terms and conditions which govern
the award. Such terms and conditions shall prescribe that the Incentive Award
shall be earned only upon, and to the extent that, performance objectives are
satisfied. The performance objectives may be stated with respect to the
Corporation's, a Related Entity's or an operating unit's return on equity,
earnings per share, total earnings, earnings growth, return on assets, Fair
Market Value, NIACC, Efficiency Ratio, Total Shareholder Return or such other
measures as may be selected by the Administrator. Such terms and conditions
also may include other limitations on the
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payment of Incentive Awards including, by way of example and not of limitation,
requirements that the Participant complete a specified period of employment
with the Corporation or a Related Entity. The Administrator, at the time an
Incentive Award is made, shall also specify when amounts shall be payable under
the Incentive Award and whether amounts shall be payable in the event of the
Participant's death, Disability, or Retirement. No payments will be made with
respect to an Incentive Award unless, and then only to the extent that, the
Administrator certifies that the performance objectives have been achieved.
10.03 Nontransferability. Incentive Awards granted under this Plan
shall be nontransferable except by will or by the laws of descent and
distribution and then only to the extent that the Administrator specified, at
the time the Incentive Award was made, that amounts may be payable in the event
of the Participant's death. No right or interest of a Participant in an
Incentive Award shall be liable for, or subject to, any lien, obligation, or
liability of such Participant.
10.04 Employee Status. If the terms of an Incentive Award provide
that a payment will be made thereunder only if the Participant completes a
stated period of employment, the Administrator may decide to what extent leaves
of absence for governmental or military service, illness, temporary disability
or other reasons shall not be deemed interruptions of continuous employment.
10.05 Change in Control. Section 10.02 to the contrary
notwithstanding, a pro rata amount of each Incentive Award shall be earned as
of a Control Change Date that occurs at least three months after the first day
of the measurement period or on the first day after a tender offer or exchange
offer for shares of Common Stock (other than one made by the Company), provided
that such day is at least three months after the first day of the measurement
period and provided further that shares are acquired pursuant to such offer.
The amount payable under this Section 10.05 shall be determined by multiplying
the target amount (as prescribed by the applicable Agreement), by a fraction.
The numerator shall be the number of days in the period beginning on the first
day of the measurement period and ending on the Control Change Date or the
first day after the tender or exchange offer described in this Section 10.05.
The denominator shall be the number of days in the period, or the longest of
such periods, during which performance is measured under the Incentive Award.
10.06 Shareholder Rights. No Participant shall, as a result of
receiving an Incentive Award, have any rights as a shareholder of the
Corporation or any Affiliate on account of such award.
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ARTICLE XI
ADJUSTMENT UPON CHANGE IN COMMON STOCK
The maximum number of shares as to which Options, SARs, Performance
Shares and Stock Awards may be granted under this Plan, the terms of
outstanding Stock Awards, Options, Performance Shares, Incentive Awards, and
SARs, and the per individual limitations on the number of shares for which
Options, SARs, Performance Shares, and Stock Awards may be granted shall be
adjusted as the Committee shall determine to be equitably required in the event
that the Corporation (i) effects one or more stock dividends, stock split-ups,
subdivisions or consolidations of shares, recapitalizations, mergers with the
Corporation being the survivor, or other changes in the Corporation's capital
stock or (ii) engages in a transaction to which Section 424 of the Code
applies. Any determination made under this Article XI by the Committee shall
be final and conclusive.
The issuance by the Corporation of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash or property,
or for labor or services, either upon direct sale or upon the exercise of
rights or warrants to subscribe therefor, or upon conversion of shares or
obligations of the Corporation convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof shall be made
with respect to, the maximum number of shares as to which Options, SARs,
Performance Shares and Stock Awards may be granted, the per individual
limitations on the number of shares for which Options, SARs, Performance Shares
and Stock Awards may be granted or the terms of outstanding Stock Awards,
Options, Performance Shares, Incentive Awards or SARs.
The Committee may make Stock Awards and may grant Options, SARs,
Performance Shares, and Incentive Awards in substitution for performance
shares, phantom shares, stock awards, stock options, stock appreciation rights,
or similar awards held by an individual who becomes an employee of the
Corporation or a Related Entity in connection with a transaction described in
the first paragraph of this Article XI. Notwithstanding any provision of the
Plan (other than the limitation of Section 5.02), the terms of such substituted
Stock Awards or Option, SAR, Performance Shares or Incentive Award grants shall
be as the Committee, in its discretion, determines is appropriate.
ARTICLE XII
COMPLIANCE WITH LAW AND
APPROVAL OF REGULATORY BODIES
No Option or SAR shall be exercisable, no Common Stock shall be
issued, no certificates for shares of Common Stock shall be
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delivered, and no payment shall be made under this Plan except in compliance
with all applicable federal and state laws and regulations (including, without
limitation, withholding tax requirements), any listing agreement to which the
Corporation is a party, and the rules of all domestic stock exchanges on which
the Corporation's shares may be listed. The Corporation shall have the right
to rely on an opinion of its counsel as to such compliance. Any share
certificate issued to evidence Common Stock when a Stock Award is granted, a
Performance Share is settled, or for which an Option or SAR is exercised may
bear such legends and statements as the Administrator may deem advisable to
assure compliance with federal and state laws and regulations. No Option or
SAR shall be exercisable, no Stock Award or Performance Share shall be granted,
no Common Stock shall be issued, no certificate for shares shall be delivered,
and no payment shall be made under this Plan until the Corporation has obtained
such consent or approval as the Administrator may deem advisable from
regulatory bodies having jurisdiction over such matters.
ARTICLE XIII
GENERAL PROVISIONS
13.01 Effect on Employment and Service. Neither the adoption of this
Plan, its operation, nor any documents describing or referring to this Plan (or
any part thereof), shall confer upon any individual any right to continue in
the employ or service of the Corporation or a Related Entity or in any way
affect any right and power of the Corporation or a Related Entity to terminate
the employment or service of any individual at any time with or without
assigning a reason therefor.
13.02 Unfunded Plan. The Plan, insofar as it provides for grants,
shall be unfunded, and the Corporation shall not be required to segregate any
assets that may at any time be represented by grants under this Plan. Any
liability of the Corporation to any person with respect to any grant under this
Plan shall be based solely upon any contractual obligations that may be created
pursuant to this Plan. No such obligation of the Corporation shall be deemed
to be secured by any pledge of, or other encumbrance on, any property of the
Corporation.
13.03 Rules of Construction. Headings are given to the articles and
sections of this Plan solely as a convenience to facilitate reference. The
reference to any statute, regulation, or other provision of law shall be
construed to refer to any amendment to or successor of such provision of law.
13.04 Tax Withholding. Each Participant shall be responsible for
satisfying any income and employment tax withholding obligation attributable to
participation in this Plan. If approved in advance
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by the Administrator after a written request from a Participant, a Participant
may surrender shares of Common Stock or receive fewer shares of Common Stock
than otherwise would be issuable in satisfaction of all or part of that
obligation.
ARTICLE XIV
AMENDMENT
The Board may amend or terminate this Plan from time to time;
provided, however, that no amendment may become effective until shareholder
approval is obtained if (i) the amendment increases the aggregate number of
shares of Common Stock that may be issued under the Plan (other than an
adjustment pursuant to Article XI) or (ii) the amendment changes the class of
individuals eligible to become Participants. No amendment shall, without a
Participant's consent, adversely affect any rights of such Participant under
any Stock Award, Performance Share award, Option, SAR or Incentive Award
outstanding at the time such amendment is made.
ARTICLE XV
DURATION OF PLAN
No Stock Award, Performance Share award, Option, SAR or Incentive
Award may be granted under this Plan after April 24, 2008. Stock Awards,
Performance Share awards, Options, SARs and Incentive Awards granted before
that date shall remain valid in accordance with their terms.
ARTICLE XVII
EFFECTIVE DATE OF PLAN
Options, SARs, Performance Shares and Incentive Awards may be granted
under this Plan upon its adoption by the Board, provided that no Option, SAR,
Performance Shares or Incentive Award granted on or after April 24, 1998 shall
be effective or exercisable unless this Plan is approved by a majority of the
votes cast by the Company's shareholders, voting either in person or by proxy,
at a duly held shareholders' meeting at which a quorum is present. Stock
Awards may be granted under this Plan on or after April 24, 1998, upon the
later of its adoption by the Board or its approval by shareholders in
accordance with the preceding sentence.
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