FIRST INTERSTATE
1995 MANAGEMENT INCENTIVE PLAN
EFFECTIVE JANUARY 1, 1995
1. OBJECTIVES. The 1995 Management Incentive Plan is designed to focus
the efforts of certain key employees of First Interstate on the continued
improvement in the performance of First Interstate and to aid in attracting,
motivating and retaining superior executives by providing an incentive and
reward for those key employees who contribute most to the operating progress
and performance of First Interstate.
2. DEFINITIONS. The following definitions shall be applica-
ble to the terms used in the Plan:
(a) "Administrator" means the Chief Executive Officer of
Bancorp.
(b) "Award" means a cash distribution to be made to a Participant
for a Performance Year as determined in accordance with the provisions of the
Plan.
(c) "Award Fund" means the total of the Target Awards for each
Participant as determined and approved in accordance with Section 5 hereof.
(d) "Bancorp" means First Interstate Bancorp, a Delaware
corporation.
(e) "Change in Control" shall have the meaning set forth
in Section 17.
(f) "Committee" means the Compensation Committee of the
Board of Directors of Bancorp.
(g) "First Interstate" means the consolidated group of companies
comprising First Interstate Bancorp.
(h) "Fiscal Year" means the customary fiscal year of
Bancorp.
(i) "Offset Value" shall have the meaning set forth in
Section 18(b) and (c).
(j) "Participant" means a person who, pursuant to Section 4
hereof, is designated as a Participant in the Plan for a Fiscal Year.
(k) "Performance Year" means the Fiscal Year.
(l) "Plan" means this First Interstate 1995
Management Incentive Plan, as set forth herein.
(m) "Policies" shall have the meaning set forth in
Section 18(a).
(n) "PSP" shall have the meaning set forth in Section
7(c).
(o) "Split-Dollar Life Insurance Agreement" shall have the meaning
set forth in Section 18(a).
(p) "Subsidiary" means a bank, corporation, association or similar
organization of which the majority of the outstanding shares of voting stock
is owned directly or indirectly by Bancorp, directly or indirectly.
(q) "Target Award" is determined for each Participant by
multiplying the Participant's base pay rate in effect at the end of the
Performance Year by the Target Award Percentage applicable to the Participant
set forth under Item I of the Target Award Guidelines attached as Table A.
3. ADOPTION AND ADMINISTRATION OF THE PLAN. The Plan shall become
effective as of January 1, 1995 upon adoption by the Committee. Subject to the
provisions of this Plan and in the absence of specific action by the
Committee, this Plan shall be administered by the Administrator. The Plan
shall not be modified except with the consent of the Committee. All decisions
of the Administrator or the Committee shall be final and binding.
4. PARTICIPATION AND TARGET AWARDS.
(a) Determination of Participants and Target Awards. Prior to the
beginning of each Performance Year, or as soon as practicable thereafter, the
Administrator shall prepare a list of proposed Participants in the Plan for
such Performance Year and shall, for each such Participant, establish a
preliminary Target Award Percentage. Each Subsidiary shall be given an
opportunity to make suggestions with respect to both proposed Participants and
their preliminary Target Award Percentages. Any such suggestions shall,
however, not be binding on the Administrator. Additional Participants may be
included during the Performance Year and, as provided in the Plan,
participation for an individual may be terminated. Except as provided in
Section 8(b) and 10, to be considered eligible for an Award, a Participant
must participate in the Plan for at least six months during the Performance
Year.
(b) Notification. Each Participant shall be notified of
his or her participation in the Plan for such Performance Year or
shall be notified of his or her termination, as applicable, by a
letter from the Administrator or his or her designee. A summary of
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this Plan shall be provided to each Participant. A Participant shall have no
right to or interest in an Award unless and until the Participant's Award has
been determined and allocated to the Participant.
5. DETERMINATION OF AWARD FUND.
(a) Performance Review. As soon as practicable after the close of
each Performance Year, a determination of the Corporation's performance and
the performance of each Region participating in this Plan shall be made by the
Administrator. The Administrator's determination shall be subject to approval
by the Committee.
(b) Award Fund. The Committee shall determine the total amount of
the Award Fund authorized for First Interstate for the Performance Year. The
Award Fund shall contain a separate pool of funds for Bancorp and each
participating Subsidiary. The Award Fund amount for Bancorp and each
participating Subsidiary may be determined in any manner the Committee deems
appropriate from time to time. Without limiting the Committee's discretion to
choose other methods to calculate the size of the Award Fund, it is
anticipated that the Award Fund amount for the Participants employed by
Bancorp or a participating Subsidiary will equal the sum of the Target Awards
for each Participant of Bancorp or the participating Subsidiary, as
applicable, multiplied by the following percentage calculated for such a
Participant:
(AxC) + (BxD),
where A is the percentage, if any, of the Participant's Award to be based on
First Interstate's performance, B is the percentage, if any, of the
Participant's Award to be based on a Region's performance, as such percentages
are set forth under Item II of the Target Award Guidelines attached as Table
A, C is a percentage representing the performance of First Interstate
determined by the Administrator, and D is a percentage representing the
performance of the Region determined by the Administrator.
6. ALLOCATION OF AWARD FUND TO PARTICIPANTS. The Award Fund shall be available
for allocation to Participants on a totally discretionary basis in a manner
designed to give the Administrator the flexibility to take into account the
individual performance of each Participant. Based on its evaluation of a
Participant's performance, the Administrator may determine an Award equal to
any percentage of the Participant's Target Award up to the maximum percentage
set forth under Item III of the Target Award Guidelines attached as Table A.
The total Awards determined by the Administrator for Bancorp or a
participating Subsidiary for a Performance Year shall not exceed the amount of
the Award Fund for the particular employer for such Performance Year. In the
event the amount of the Award Fund exceeds the total Awards for a Performance
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Year, such excess shall not be carried forward for purposes of Awards in
future Performance Years. Award payments will be charged against Bancorp or
the Subsidiary for which the Participant is an employee, as appropriate.
7. TIME OF PAYMENT OF AWARDS, DEFERRALS, HARDSHIPS.
(a) Payment Date. Except as provided in (b) below, as soon as practicable
after the allocation of Awards in respect of Participants, any Award, less any
legally required withholding, shall be paid to the Participant or, in the
event of a Participant's death, in accordance with Section 8 hereof.
(b) Deferrals. In the year prior to the year which the Award is earned, a
Participant may elect, on a form specified by Bancorp, to defer the receipt of
any Award to which he or she may be entitled for such Performance Year until
the earlier of (1) termination of employment (the first to occur of
retirement, death, disability, or termination of employment) or (2) January 1
of a specified calendar year. In such event:
(i) The amount the Participant elects, net of any legally required
withholding, shall become the deferred Award;
(ii) Interest on such deferred Award will be the Moody's Investment Grade
Corporate Bond Yield as shown in Moody's Yield Average for the last full month
of each previous calendar year and will be credited quarterly; and
(iii) Such deferred Award, plus accumulated interest, shall be paid upon the
earlier of (1) or (2) above, in the form of a lump sum, equal annual
installments over not more than 10 years, or such other method as may be
selected by the Participant and agreed to by the Administrator.
(c) Deferrals into Performance Units. As an alternative to a deferral payable
in cash, as described in subsection (b), the deferred Award may, if the
Participant elects and the Committee permits, be invested in Performance Units
under Section 7.3 of the First Interstate Bancorp 1991 Performance Stock Plan
(the "PSP") . The amount deferred shall be deemed to be converted into
Performance Units under Section 7.3 of the PSP as of the date the Award would
have been payable if no deferral had occurred, based on the fair market value,
determined in accordance with the terms of the PSP, of the common stock of
Bancorp on that date. The timing and manner of payment of deferrals shall be
governed by a Performance Unit Agreement entered into by the Participant under
the PSP.
(d) Hardship Withdrawal. A Participant may request in writing,
citing the reasons for the request, that the Committee permit the
early payment of all or part of a deferred Award. Within 90 days
after receipt, the Committee shall rule on the request. The
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Committee shall grant the request only if, in its sole discretion, the
Committee makes a specific finding of financial hardship that is an
unanticipated emergency caused by an event beyond the control of the
Participant. The amount payable hereunder shall not exceed the amount
necessary to avoid such hardship.
(e) Acceleration of Deferrals. Anything in this Plan to the contrary
notwithstanding, the Committee may accelerate the payment of all deferred
Awards with respect to Bancorp or any Subsidiary at any time in its sole
discretion. In addition, the Committee reserves the right to pay any deferred
Awards in the form of a lump sum if the amount is less than $10,000.00.
8. DEATH OF A PARTICIPANT.
(a) Beneficiary Designation. A Participant may file a designation of a
beneficiary or beneficiaries on a form to be provided which designation may be
changed or revoked by the Participant's sole action, provided that such change
or revocation is filed in written form.
(b) Death during Performance Year. In case of the death of a Participant
during a Performance Year, Bancorp or the Subsidiary, as appropriate, may pay
a pro rata portion of the Award to which the Participant would have been
entitled for such Performance Year. Such pro rata portion shall be equal to
(1) the ratio which the Participant's completed calendar months of
participation during the Performance Year bears to 12 multiplied by (2) the
amount the Committee determines the Participant would have been entitled to
had he or she lived.
(c) Death after Performance Year. In case of the death of a Participant after
the end of a Performance Year, but before the delivery of an Award to which he
or she may be entitled, such Award shall be delivered to the Participant's
designated beneficiary.
(d) Failure to Designate Beneficiary. If a Participant dies having failed to
designate any beneficiary, or if no beneficiary survives the Participant or
survives to the date of any payment in question, the amount otherwise payable
to such beneficiary shall be paid to the Participant's surviving spouse, if
any, and otherwise to the Participant's heirs at law, as determined under the
law governing succession to personal property for the state in which the
Participant resided on the day the Participant died.
9. TRANSFER OF A PARTICIPANT. In the event a Participant for any Performance
Year is transferred during such Performance Year from Bancorp or a Subsidiary
to another Subsidiary or Bancorp, such Participant's Award, consistent with
Subsection 4(a), shall normally be calculated as the sum of the following:
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(a) the Award the Participant would have received under the Plan, had he or
she not been transferred, multiplied by the ratio which his or her completed
months of participation during such Performance Year prior to the transfer
bears to 12, plus
(b) the Award, if any, the Participant is entitled to receive under the Plan
based on service after the transfer determined on a Performance Year basis and
then multiplied by the ratio which his or her completed months of
participation during such Performance Year subsequent to such transfer bears
to 12.
10. RETIREMENT OR DISABILITY OF PARTICIPANT. In case a Participant becomes
totally and permanently disabled during a Performance Year, or retires from
active employment after attaining age 55 during a Performance Year, the
Committee may but need not grant the Participant an Award. Generally, if an
Award is granted, it will be based on a pro rata portion of the Award.
11. TERMINATION OF EMPLOYMENT. If the employment of a Participant with First
Interstate is terminated prior to the approval of the Committee as specified
in Section 5(a) for reasons other than those specified in Sections 8, 9 or 10
hereof, the right to and the amount of an Award shall be forfeited.
12. TERMINATION AND MODIFICATION. No Award shall be granted under the Plan
after any date as of which the Plan shall have been terminated. The Board of
Directors of Bancorp or the Committee may at any time modify, terminate or
from time to time suspend and, if suspended, may reinstate the provisions of
this Plan, including Table A. The Committee may consider but shall not be
bound by suggestions of participating Subsidiaries in connection with its
periodic amendment of relative weights set forth under Item II of Table A.
13. EFFECT OF OTHER PLANS. Eligibility in or the receipt of any Award under
the Plan shall not be affected by or affect any other compensation or benefit
plans in effect for First Interstate; provided, however that the receipt of an
Award under the Corporate Executive Incentive Plan in a Performance year shall
preclude participation in any Award under this Plan for such year.
14. NO EMPLOYMENT RIGHTS. Nothing contained in nor any action under the Plan
will confer upon any individual any right to continue in the employment of
First Interstate and does not constitute any contract or agreement of
employment or interfere in any way with the right of First Interstate to
terminate any individual's employment.
15. WITHHOLDING TAX. As required by law, federal, state or local
taxes that are subject to the withholding of tax at the source
shall be withheld by First Interstate as necessary to satisfy such
requirements.
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16. EFFECTIVE DATE. This Plan shall be effective as of January 1,
1995. The Plan, including Table A, shall remain in effect as
amended from time to time.
17. PROVISIONS APPLICABLE IN THE EVENT OF A CHANGE IN CONTROL.
(a) In the event of a "Change in Control" (as defined below) , notwithstanding
any provisions to the contrary in this Plan, the operation of this Plan shall
be modified as set forth below in this Section 17. These modifications shall
only apply with respect to Target Awards for the Performance Year in which a
Change in Control occurs.
(b) Notwithstanding any provision to the contrary in this Plan, within ten
(10) days after the Change in Control of Bancorp each Participant shall be
paid 100% of his or her Target Award for the year in which the Change in
Control occurs, based on the base pay rate then in effect.
(c) A "Change in Control" of Bancorp means and shall be deemed to have
occurred if and when any one of the following five events occurs: (i) within
the meaning of Section 13(d) of the Securities Exchange Act of 1934, any
person or group becomes a beneficial owner, directly or indirectly, of
securities of First Interstate Bancorp representing 20% or more of the
combined voting power of First Interstate Bancorp's then outstanding
securities; (ii) individuals who were members of the Board of Directors of
First Interstate Bancorp immediately prior to a meeting of the stockholders of
First Interstate Bancorp involving a contest for the election of Directors
shall not constitute a majority of the Board of Directors following such
election; (iii) the stockholders of First Interstate Bancorp approve the
dissolution or liquidation of First Interstate Bancorp; (iv) the stockholders
of First Interstate Bancorp approve an agreement to merge or consolidate, or
otherwise organize, with or into one or more entities which are not
subsidiaries, as a result of which less than 50% of the outstanding voting
securities of the surviving or resulting entity are, or are to be, owned by
former stockholders of First Interstate Bancorp (excluding from the term
"former stockholders" a stockholder who is, or as a result of the transaction
in question becomes, an "affiliate," as that term is used in the Securities
Exchange Act of 1934 and the Rules promulgated thereunder, of any party to
such merger, consolidation or reorganization); or (v) the stockholders of
First Interstate Bancorp approve the sale of substantially all of First
Interstate Bancorp's business and/or assets to a person or entity which is not
a Subsidiary.
(d) Any Participant shall be entitled to refuse all or any portion of any
Target Award under this Plan if he or she determines that receipt of such
payment may result in adverse tax consequences to him or her. First Interstate
Bancorp shall be totally and
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permanently relieved of any obligation to pay any Award which a
Participant explicitly so refuses in writing.
18. PROVISIONS APPLICABLE TO OFFSETS FOR SPLIT-DOLLAR LIFE INSUR-
ANCE AGREEMENTS.
(a) Notwithstanding anything contained herein to the contrary, any benefits
payable under this Plan shall be offset by the value of benefits received by
the Participant under certain life insurance policies as set forth in this
Section. Participants in this Plan may own life insurance policies (the
"Policies") purchased on their behalf by Bancorp ("the Company"). The
ownership of these Policies by each Participant is, however, subject to
certain conditions (set forth in a "Split-Dollar Life Insurance Agreement"
between each Participant and Bancorp) and, if the Participant fails to meet
the conditions set forth in the Split-Dollar Life Insurance Agreement, the
Participant may lose certain rights under the Policy.
(b) In the event that a Participant satisfies the conditions specified in
Section 4 or 5 of the Split-Dollar Life Insurance Agreement, so that the
Participant or his or her beneficiary becomes entitled to benefits under one
of those sections, the value of those benefits shall constitute an offset to
any benefits otherwise payable under this Plan. As the case may be, this
offset (the "Offset Value") shall be equal to the value of benefits payable
under the Split-Dollar Life Insurance Agreement and shall be determined as of
the date that the Participant satisfies the conditions specified in Section 4
or 5 of the Split-Dollar Life Insurance Agreement, that is, the cash value of
the Policy or, in the case of the Participant's death, the death benefit
payable to the beneficiary under the Policy reduced by one times the
Participant's annual base salary (maximum $500,000) at the time of death. The
Offset Value shall then be compared to the Participant's deferred award
(including interest accumulated on such award) under this Plan, and such
amounts shall be reduced, but not to less than zero, by the Offset Value.
(c) If the Policy in subsection (a) is not on the life of the Participant and
the insured dies prior to distribution of benefits under this Plan, then the
value of the benefits received by the Participant under the Policy will offset
the Participant's deferred award (including interest accumulated on such
award) under this Plan. This offset ("Offset Value") shall be equal to the
amount of death benefit payable to the Participant and shall be determined as
of the date of death of the insured. This Offset Value shall then be compared
to the Participant's deferred award (including interest accumulated on such
award) under this Plan, and such amounts shall be reduced, but not to be less
than zero, by the Offset Value.
(d) Notwithstanding anything contained herein to the contrary, if, in addition
to the benefits otherwise payable under this Plan, the Participant or his or
her beneficiary is entitled to benefits under
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(i) the First Interstate Bancorp Annual Incentive Compensation Plans, (ii) the
First Interstate Bancorp Profit Improvement Plans, (iii) the First Interstate
Bancorp Management Incentive Plans, (iv) the Supplemental Employee Savings
Plan of First Interstate Bancorp, (v) the First Interstate Bancorp Excess
Benefit Retirement Plan, (vi) the First Interstate Bancorp Supplemental
Executive Retirement Plan; (vii) the First Interstate Supplemental Retirement
Program or (viii) the First Interstate Executive Incentive Plans, the "Offset
Value" shall be applied to offset the benefits payable under this Plan and
such plans in the following order:
1. The First Interstate Bancorp Excess Benefit Retirement
Plan;
2. The First Interstate Bancorp Supplemental Executive
Retirement Plan;
3. The Supplemental Employee Savings Plan of First Inter-
state Bancorp;
4. The First Interstate Bancorp Management Incentive
Plans;
5. The First Interstate Bancorp Annual Incentive Compen-
sation Plans;
6. The First Interstate Bancorp Profit Improvement Plans.
7. The First Interstate Bancorp Corporate Executive Incen-
tive Plan.
8. The First Interstate Bancorp Regional Executive Incen-
tive Plan.
9. The First Interstate Bancorp Supplemental Retirement
Program.
19.DISPUTE RESOLUTION.
(a) If a Participant who has applied for retirement under the Retirement Plan
for Employees of First Interstate Bancorp and Its Affiliates, or, in the case
of the Participant's death, his or her beneficiary, disagrees with the
Compensation Committee of the Board of Directors of First Interstate Bancorp
(the "Administrator") regarding the interpretation of this Plan, and if the
Participant or his or her beneficiary has exhausted the claims review and
appeal procedure under Section 503 of the Employee Retirement Income Security
Act of 1974 with respect to his or her claim for benefits under this Plan,
then the Participant or his or her beneficiary may, if he or she desires,
submit any claim for benefits under this Plan or dispute regarding the
interpretation of
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this Plan to arbitration; provided that, the request for arbitration must be
brought within the time limit for bringing a judicial proceeding with respect
to such claim for benefits, or if less, within one year after the
Administrator's final denial of such claim for benefits. This right to select
arbitration shall be solely that of Participant or his or her beneficiary and
Participant or his or her beneficiary may decide whether or not to arbitrate
in his or her discretion. The "right to select arbitration" is not mandatory
on Participant or his or her beneficiary and Participant or his or her
beneficiary may choose in lieu thereof to bring an action in an appropriate
civil court. Once an arbitration is commenced, however, it may not be
discontinued without the mutual consent of both parties to the arbitration.
During the lifetime of the Participant only he or she can use the arbitration
procedure set forth in this section.
(b) Any claim for arbitration may be filed in writing with an arbitrator of
Participant's or beneficiary's choice who is selected by the method described
in the next four sentences. The first step of the selection shall consist of
Participant or his or her beneficiary submitting a list of five potential
arbitrators to the Administrator. Each of the five arbitrators must be either
(1) a member of the National Academy of Arbitrators located in the State of
California or (2) a retired California Superior Court or Appellate Court
judge. Within one week after receipt of the list, the Administrator shall
select one of the five arbitrators as the arbitrator for the dispute in
question. If the Administrator fails to select an arbitrator in a timely
manner, Participant or his or her beneficiary shall then designate one of the
five arbitrators as the arbitrator for the dispute in question.
(c) The arbitration hearing shall be held within seven days (or as soon
thereafter as possible) after the picking of the arbitrator. No continuance of
said hearing shall be allowed without the mutual consent of Participant or his
or her beneficiary and the Administrator. Absence from or nonparticipation at
the hearing by either party shall not prevent the issuance of an award.
Hearing procedures which will expedite the hearing may be ordered at the
arbitrator's discretion, and the arbitrator may close the hearing in his or
her sole discretion when he or she decides he or she has heard sufficient
evidence to satisfy issuance of an award.
(d) The arbitrator's award shall be rendered as expeditiously as possible and
in no event later than one week after the close of the hearing. In the event
the arbitrator finds that Bancorp has violated the terms of this Plan, he or
she shall order Bancorp immediately to take the necessary steps to remedy such
violation. The award of the arbitrator shall be final and binding upon the
parties. The award may be enforced in any appropriate court as soon as
possible after its rendition. If an action is brought to confirm the award,
both Bancorp and Participant agree that no
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appeal shall be taken by either party from any decision rendered in such
action.
(e) Solely for purposes of determining the allocation of the costs described
in this Section 19(e), the Administrator will be considered the prevailing
party in a dispute if the arbitrator determines (1) that Bancorp has not
violated the terms of this Plan, and (2) the claim by Participant or his or
her beneficiary was not made in good faith. otherwise, Participant or his or
her beneficiary will be considered the prevailing party. In the event that
Bancorp is the prevailing party, the fee of the arbitrator and all necessary
expenses of the hearing (excluding any attorneys, fees incurred by Bancorp)
including stenographic reporter, if employed, shall be paid by the other
party. In the event that Participant or his or her beneficiary is the
prevailing party, the fee of the arbitrator and all necessary expenses of the
hearing (including all attorneys' fees incurred by Participant or his or her
beneficiary in pursuing his or her claim) , including the fees of a
stenographic reporter if employed, shall be paid by Bancorp.
IN WITNESS WHEREOF, Bancorp hereby adopts this Restatement as of January 1,
1995.
FIRST INTERSTATE BANCORP
By ____________________________
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