FIRST INTERSTATE
1995 REGIONAL EXECUTIVE INCENTIVE PLAN
EFFECTIVE JANUARY 1, 1995
1. OBJECTIVES. The 1994 Regional Executive Incentive Plan is designed to
focus the efforts of certain executive employees of selected Subsidiaries on
the continued improvement in the performance of such Subsidiaries, and to aid
in attracting, motivating and retaining superior executives by providing an
incentive and reward for those executive employees who contribute most to the
operating progress and performance of the Corporation's Subsidiaries.
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) "Management Incentive Plan" means the First
Interstate Bancorp 1995 Management Incentive Plan.
(j) "Offset Value" shall have the meaning set forth in
Section 18 (b) and (c) .
(k) "Participant" means an eligible executive who, pursuant to
Section 4 hereof, automatically becomes a Participant in the Plan for a Fiscal
Year.
(l) "Performance Year" means the Fiscal Year.
(m) "Plan" means this First Interstate Bancorp 1995 Regional
Executive Incentive Plan, as set forth herein.
(n) "Policies" shall have the meaning set forth in
Section 18(a) .
(o) "PSP" shall have the meaning set forth in Section
7(c).
(p) "Region" means any of the California, Northwest, Southwest or
Texas regions consisting of First Interstate banks and as defined by First
Interstate Bancorp.
(q) "Split-Dollar Life Insurance Agreement" shall have the meaning
set forth in Section 18(a).
(r) "Subsidiary" means a bank, corporation, association or similar
organization of which the majority of the outstanding shares of voting stock
is owned by Bancorp, directly or indirectly.
(s) "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. The Chief
Executive Officer of each Region shall be Participants in the Plan. As
provided in the Plan, participation for an individual may be terminated.
Except as provided in Sections 8(b) and 10, to be considered eligible for an
Award, a Participant must be participating in the Plan or the Management
Incentive Plan for at least six months during the Performance Year.
(b) Notification. Each Participant shall be notified of
his or her eligibility for participation in the Plan for such
2
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 copy
of 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 certified by the Committee.
5. DETERMINATION OF AWARD.
(a) Performance Review. As soon as practicable after
the close of each Performance Year, a determination of each
Region's performance shall be made by the Administrator. The
Administrator's determination shall be subject to the approval by
the Committee.
(b) Award Fund. The Committee shall determine the total amount of
the Award Fund authorized under this Plan for the Performance Year. The Award
Fund amount for a Region 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 will equal the sum
of the Target Awards for each Participant multiplied by a percentage
representing the performance of the Region determined by the Administrator.
The maximum Award Fund amount may not exceed 1.5 times the sum of Target
Awards.
(c) Limitations. The Committee shall have the right to reduce an
Award to an actual award percentage of no less than 0%. Award payments will be
charged against Bancorp or the Subsidiary for which the Participant is an
employee, as appropriate.
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 150%. In the event the
amount of the Award Fund exceeds the total Awards for a Performance Year, such
excess shall not be carried forward for purposes of Awards in future
Performance Years. Award payments will be charged against 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 determination of Awards and approval by the Committee,
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.
3
(b) Deferrals. In the year prior to the year in which an 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 or, in the case of any payment to the Administrator, by
the Committee.
(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 or the 1995 Performance Stock Plan (each, a "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 said plan, 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 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 hereunder at any time in its sole
discretion. In addition, the Committee reserves the right to pay
4
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 so that they are
no longer eligible to participate in this Plan, such Participant's Award,
consistent with Subsection 4(a), shall normally be calculated as the sum of
the following:
(a) the Award the Participant would have received, 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
based on service after the transfer determined on a Performance Year basis and
then multiplied by the ratio which his
5
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 a
Subsidiary is terminated prior to the approval of an Award by 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 Participants in connection with its periodic amendment
of relative weights of the goals set forth by the Committee.
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 Bancorp or a
Subsidiary.
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 Bancorp or a Subsidiary and does not constitute any contract or agreement
of employment or interfere in any way with the right of Bancorp or a
Subsidiary 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 Bancorp or a Subsidiary as necessary to
satisfy such requirements.
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
6
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 takes place.
(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 loot 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 Bancorp representing 20% or more of the combined voting power of
Bancorp's then outstanding securities; (ii) individuals who were members of
the Board of Directors of Bancorp immediately prior to a meeting of the
stockholders of 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 Bancorp approve the dissolution or
liquidation of Bancorp; (iv) the stockholders of 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 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
Bancorp approve the sale of substantially all of 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. Bancorp
shall be totally and 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
INSURANCE 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 ownership of these
7
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 the plans set forth in
Table B. The "Offset Value" shall be applied to offset the benefits payable
under this Plan and such plans in the order set forth in Table B:
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
8
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, 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 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.
9
(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 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, First Interstate Bancorp hereby adopts this
1995 Regional Executive Incentive Plan as of January 1, 1995.
FIRST INTERSTATE BANCORP
By _________________________________
10