FIRST UNION CORPORATION
1998 STOCK INCENTIVE PLAN
1. ESTABLISHMENT AND PURPOSE
First Union Corporation, a North Carolina corporation ("First Union"),
hereby establishes an incentive compensation plan, which shall be known as the
"FIRST UNION CORPORATION 1998 STOCK INCENTIVE PLAN" (the "Plan").
The purposes of the Plan are to (a) help align the long-term financial
interests of Participants with those of stockholders; (b) reinforce a
performance-oriented culture/strategy; (c) incent and reward employees for
increasing First Union's common stock price over time; and (d) motivate, attract
and retain the services of Participants upon whose judgment, interest and
special effort the successful conduct of First Union's operations are dependent.
2. EFFECTIVE DATE AND DURATION OF THE PLAN
The Plan shall become effective on April 21, 1998, subject to its approval
by the stockholders of First Union, and shall remain in effect, subject to the
right of the Board to amend or terminate the Plan at any time pursuant to the
terms hereof, until all Shares subject to it shall have been purchased or
acquired according to the Plan's provisions. In no event may an Award be granted
under the Plan after April 20, 2008. After the date on which the Plan becomes
effective, no further grants will be made under the Prior Plan.
3. DEFINITIONS
(a) "1934 Act" means the Securities Exchange Act of 1934, as
amended, including the rules and regulations promulgated thereunder.
(b) "Award" means, individually or collectively, an Option
(including an ISO or an NQSO), SAR, Stock Award, any other award made
pursuant to the terms of the Plan, or any combination thereof.
(c) "Award Agreement" means an agreement entered into by the
Corporation and each Participant setting forth the terms and provisions
applicable to Awards.
(d) "Beneficial Owner" or "Beneficial Ownership" shall have the
meaning ascribed to such term in Rule 13d-3 of the General Rules and
Regulations under the 1934 Act.
(e) "Board" means the Board of Directors of First Union.
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(f) "Change of Control" means a change in control of First Union of
a nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the 1934 Act; provided,
however, that, without limitation, such a Change of Control shall be
deemed to have occurred if (i) any one person, or more than one person
acting as a group, acquires Beneficial Ownership of Shares that, together
with Shares held by such person or group, possesses more than 50 percent
of the total Fair Market Value or total voting power of the Shares, (ii)
any one person, or more than one person acting as a group, acquires (or
has acquired during the 12-month period ending on the date of the most
recent acquisition by such person or persons) Beneficial Ownership of
Shares possessing 20 percent or more of the total voting power of the
Shares, or (iii) a majority of members of the Board is replaced during any
12- month period by directors whose appointment or election is not
endorsed by a majority of the members of the Board prior to the date of
such appointment or election.
(g) "Code" means the Internal Revenue Code of 1986, as amended (or
any successor thereto), including any rules and regulations promulgated
thereunder.
(h) "Committee" means the Human Resources Committee of the Board or
such other committee as is appointed by the Board to administer the Plan .
(i) "Corporation" means (i) First Union and any entity that is
directly or indirectly controlled by First Union, or (ii) any entity in
which First Union has a significant equity interest, as determined by the
Committee.
(j) "Covered Officer" means, for a calendar year, a Participant who
is one of the group of executive officers of the Corporation designated by
the Committee in writing as "Covered Officers".
(k) "Date of Termination of Employment" means, with respect to an
Employee who is terminating employment with the Corporation, (i) the last
day such Employee performs actual services for the Corporation as an
Employee, (ii) the 91st day of a bona fide leave of absence when such
Employee's right to continue employment with the Corporation is not
guaranteed by law or contract or, if later, on the date that such legal or
contractual guarantee lapses, (iii) the date that such Employee is deemed
to have a Disability, or (iv) the date of such Employee's death, as
applicable.
(l) "Disability", with respect to a Participant, means permanent and
total disability, as defined in Section 22(e)(3) of the Code.
(m) "Early Retirement" means termination of a Participant's
employment upon satisfaction of the requirements for early retirement
under First Union's pension plan.
(n) "Employee" means an employee of the Corporation.
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(o) "Fair Market Value" means the closing sales price of the Shares
on the New York Stock Exchange Composite Tape on the valuation date, or,
if there were no sales on the valuation date, the closing sales price on
the New York Stock Exchange Composite Tape on the first trading day before
such valuation date.
(p) "First Union" is defined in Section 1 herein.
(q) "ISO" means an Option to purchase Shares granted under Section
7(a) herein, which is designated as an ISO and which is intended to meet
the requirements of Section 422 of the Code.
(r) "NQSO" means an Option to purchase Shares granted under Section
7(a) herein, and which is not intended to meet the requirements of Section
422 of the Code.
(s) "Normal Retirement" means termination of a Participant's
employment upon satisfaction of the requirements for normal retirement
under the terms of First Union's pension plan.
(t) "Option" means an ISO or an NQSO.
(u) "Option Price" means the price at which a Share may be purchased
by a Participant pursuant to an Option.
(v) "Participant" means an Employee of the Corporation who has been
granted an Award under the Plan.
(w) "Performance-Based Exception" means the performance-based
exception set forth in Code Section 162(m)(4)(C) from the deductibility
limitations of Code Section 162(m).
(x) "Performance Goals" means performance goals based on any of the
following criteria and established by the Committee prior to April 1 of
each year: earnings or earnings growth; return on equity, assets or
investment; revenues; expenses; stock price; market share; charge-offs; or
reductions in non-performing assets. Such Performance Goals may be
particular to an Employee or the division, department, branch, line of
business, subsidiary or other unit in which the Employee works, or may be
based on the performance of the Corporation generally.
(y) "Performance Stock Awards" means the Stock Awards granted to
Covered Officers upon satisfaction of the conditions set forth in Section
7(c)(ii) of the Plan.
(z) "Period of Restriction" means the period during which the
vesting and/or transfer of Stock Awards is limited in some way, and the
Shares subject to such Stock
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Awards are subject to a substantial risk of forfeiture, as provided in
Section 7(c) herein.
(aa) "Plan" is defined in Section 1 herein.
(bb) "Plan Year" means a twelve-month period beginning with January
1 of each year.
(cc) "Prior Plan" means the First Union 1996 Master Stock
Compensation Plan.
(dd) "RSAs" means a Stock Award granted to a Participant pursuant to
Section 7(c) herein which contains restrictions on vesting and/or
transfer.
(ee) "Retirement" means either Early Retirement or Normal
Retirement.
(ff) "SAR" means an Award, granted alone or in connection with a
related Option, designated as an SAR, pursuant to the terms of Section
7(b) herein.
(gg) "Shares" means the common stock of First Union, par value $3.33
1/3 per share.
(hh) "Stock Award" shall represent an Award made in Shares or
denominated in units equivalent in value to Shares or any other Award
based on or related to Shares, including, but not limited to, RSAs.
4. PLAN ADMINISTRATION
(a) The Committee. The Committee shall be responsible for
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administering the Plan. If considered appropriate by the Board in light of
applicable laws, rules, or regulations, the Committee shall be comprised
of two or more non-employee members of the Board each of whom is a
"Non-Employee Director" within the meaning of Rule 16b-3 under the 1934
Act and an "outside director" within the meaning of Section 162(m) of the
Code. Any action taken with respect to Covered Officers for purpose of
meeting the Performance-Based Exception shall be taken by the Committee
only if all of the members of the Committee are "outside directors" within
the meaning of Code Section 162(m).
(b) Committee Authority. The Committee may at any time alter, amend,
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suspend or discontinue the Plan or any or all agreements granted under the
Plan to the extent permitted by law. Except as limited by law, or by the
Articles of Incorporation or By-laws of First Union, and subject to the
provisions herein, the Committee shall have full and exclusive power to
interpret the Plan and to adopt such rules, regulations, and guidelines
for carrying out the Plan as it may deem necessary or proper, all of which
powers shall be executed in the best interests of the Corporation and in
keeping with the provisions and objectives of the Plan. These powers
include, but are not limited to (i)
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selecting Award recipients and the extent of their participation; (ii)
establishing all Award terms and conditions; (iii) adopting procedures and
regulations governing Awards; and (iv) making all other determinations
necessary or advisable for the administration of the Plan. In addition,
except as provided herein, in First Union's Articles of Incorporation or
By-laws, or pursuant to applicable law, the Committee shall have
authority, in its sole discretion, to accelerate the date that any Award
which was not otherwise exercisable or vested shall become exercisable or
vested in whole or in part without any obligation to accelerate such date
with respect to any other Awards granted to any Participant. All
determinations, interpretations or other actions taken or made by the
Committee pursuant to the provisions of the Plan shall be final, binding
and conclusive on all persons interested herein.
The Committee may delegate to one or more officers of the
Corporation the authority to carry out some or all of its
responsibilities, provided that the Committee may not delegate its
authority and powers in any way which would be inconsistent with the
requirements of the Code or the 1934 Act. The Committee may at any time
rescind the authority delegated to any such officers.
In no event shall the Committee have the right to (i) cancel
outstanding Options or SARs for the purpose of replacing or regranting
such Options or SARs with an Option Price that is less than the original
Option Price of the Option or SAR, or otherwise reduce the Option Price,
or (ii) increase the number of shares available for issuance in accordance
with Section 6 of the Plan (except in accordance with Section 6(c))
without shareholder approval.
No member of the Committee shall be liable for any action or
determination with respect to the Plan, and the members shall be entitled
to indemnification and reimbursement in the manner provided in First
Union's Articles of Incorporation. In the performance of its functions
under the Plan, the Committee shall be entitled to rely upon information
and advice furnished by the Corporation's officers, accountants, counsel
and any other party the Committee deems necessary, and no member of the
Committee shall be liable for any action taken or not taken in reliance
upon any such advice.
5. PARTICIPATION
The individuals who shall be eligible to receive Awards under the Plan
shall be officers or other selected key employees of the Corporation as the
Committee shall approve from time to time.
In the event of a change in a Participant's duties and responsibilities,
or a transfer of the Participant to a different position, the Committee may
terminate any Award granted to such Participant or reduce the number of Shares
subject thereto commensurate with the transfer or change in responsibility, as
determined by the Committee in its discretion.
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Notwithstanding any provision of the Plan to the contrary, in order to
foster and promote achievement of the purposes of the Plan or to comply with
provisions of laws in other countries in which the Corporation operates or has
employees, the Committee, in its sole discretion, shall have the power and
authority to (i) determine which Employees (if any) employed outside the United
States are eligible or required to participate in the Plan, (ii) modify the
terms and conditions of any Awards made to such Employees, and (iii) establish
subplans, modified Option exercise and other terms and procedures to the extent
such actions may be necessary or advisable.
6. AVAILABLE SHARES OF COMMON STOCK
(a) Share Limitations. The aggregate amount of Shares that may be
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granted under the Plan shall be as follows:
(i) the aggregate number of Shares as to which Awards may be
granted in any Plan Year shall not exceed 1.5% of the total Shares
outstanding as reported in the Annual Report on Form 10-K of First
Union for the fiscal year ending immediately prior to such Plan
Year;
(ii) there shall be carried forward and be available for
Awards under the Plan in each Plan Year, in addition to the Shares
available for grant under Section 6(a)(i) above, (a) 5,000,000
Shares available for issuance under the Prior Plan; (b) with respect
to any succeeding Plan Year, any unused portion of the limit for a
Plan Year; and (c) any Shares represented by Awards or portions of
Awards made under the Plan which are forfeited, expire, terminate or
are canceled or settled without issuance; provided, however, that if
(a) the Option Price for an Option granted under the Plan is
satisfied by tendering Shares or (b) an SAR is paid by issuing
Shares, only the net number of Shares issued shall be used for
determining the maximum number of Shares available for issuance
under the Plan;
(iii) the aggregate number of Shares (prior to adjustments as
provided in Section 6(c)) that may be represented by Awards granted
to any single individual under the Plan in any calendar year under
Sections 7(a), (b) and (c) of the Plan shall not exceed 500,000; and
(iv) the aggregate number of Shares (prior to adjustments as
provided in Section 6(c))that may be covered by Awards made in the
form of ISOs shall not exceed 100,000,000. Such aggregate number of
Shares may be increased by any Shares represented by ISOs or
portions of ISOs granted under the Plan which are forfeited, expire,
terminate or are cancelled or settled without issuance. If the
Option Price for an ISO granted under the Plan is satisfied by
tendering Shares, only the net number of Shares issued shall be used
for determining the maximum number of Shares in the form of ISOs
available for issuance under the Plan.
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(b) Shares not applied to limitations. The following will not be
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applied to the share limitations of Section 6(a) above: (i) dividends or
dividend equivalents paid in cash in connection with outstanding Awards,
(ii) stock denominated Awards which by their terms may be settled only in
cash, and (iii) Shares and any Awards that are granted through the
assumption of, or in substitution for, outstanding Awards previously
granted to Employees as the result of a merger, consolidation, or
acquisition of the employing company as the result of which it is merged
with the Corporation or becomes a subsidiary of the Corporation.
(c) Adjustments. In the event of any stock dividend, stock split,
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combination or exchange of equity securities, merger, consolidation,
recapitalization, divestiture or other distribution (other than ordinary
cash dividends) of assets to stockholders, or any other change affecting
Shares or Share price, such proportionate adjustments, if any, as the
Committee in its discretion may deem appropriate to reflect such change
shall be made with respect to the limitations on the numbers of Shares
that may be issued and represented by Awards under the Plan; provided,
however, that any fractional shares resulting from any such adjustment
shall be eliminated. Upon the occurrence of any such event, the Committee
may also (or in lieu of any of the foregoing adjustments) make such other
adjustments as it shall consider appropriate to preserve the benefits or
potential benefits intended to be made available to Participants. Options
granted pursuant to the Plan and described as ISOs shall not be adjusted
in a manner that causes the Options to fail to continue to qualify as
ISOs.
The Shares subject to the provisions of the Plan shall be shares of
authorized but unissued Shares.
7. AWARDS UNDER THE PLAN
The types of Awards set forth in this Article 7 may be granted under the
Plan, singly, in combination or in tandem as the Committee may determine.
(a) Options.
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(i) Grant. An Option shall represent a right to purchase a specified
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number of Shares at a stated Option Price during a specified time, not to
exceed ten years from the date of grant, as determined by the Committee.
The Option Price per Share for each ISO shall not be less than 100% of the
Fair Market Value on the date of grant. An Option may be in the form of an
ISO which is consistent with the applicable terms, conditions, and
limitations established by the Code and the Committee. Each Option grant
shall be evidenced by an Award Agreement that shall specify the Option
Price, the duration of the Option, the number of Shares to which the
Option pertains, and such other provisions as the Committee shall
determine. The Award Agreement also shall specify whether the Option is
intended to be an ISO or an NQSO. Options granted under this Section 7(a)
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shall be exercisable at such times and be subject to such restrictions and
conditions as the Committee shall in each instance approve and which shall
be set forth in the applicable Award Agreement, which need not be the same
for each grant or for each Participant. Upon satisfaction of the
applicable conditions to exercisability specified in the terms and
conditions of the Award as set forth in the Award Agreement, the
Participant shall be entitled to exercise the Option in whole or in part
and to receive, upon satisfaction or payment of the Option Price in the
manner contemplated in this Section 7(a), the number of Shares in respect
of which the Option shall have been exercised.
(ii) Exercise. Options shall be exercised by the delivery of a
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written notice of exercise to the Corporation, setting forth the number of
Shares with respect to which the Option is to be exercised, accompanied by
full payment for the Shares. The Shares covered by an Option may be
purchased by methods designated by the Committee, in its discretion,
including, but not limited to (A) a cash payment; (B) tendering Shares
owned by the Participant, valued at the Fair Market Value at the date of
exercise; or (C) any combination of the above. As soon as practicable
after receipt of a written notification of exercise and full payment, the
Corporation shall deliver to the Participant, Share certificates in an
appropriate amount based upon the number of Shares purchased under the
Option.
(iii) Termination. If the employment of a Participant with the
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Corporation shall terminate by reason of death, Disability or Retirement,
any then outstanding Options granted to such Participant shall become
immediately exercisable on the Date of Termination of Employment. Unless
the Committee determines otherwise, any such outstanding Options will be
forfeited on the expiration date of such Options or within three years
after the Date of Termination of Employment, whichever period is shorter.
Unless the Committee determines otherwise, if the employment of a
Participant with the Corporation shall terminate for any reason other than
death, Disability or Retirement, (i) any then outstanding but
unexercisable Options granted to such Participant will be forfeited on the
Date of Termination of Employment, and (ii) any then outstanding and
exercisable Options granted to such Participant will be forfeited on the
expiration date of such Options or three months after the Date of
Termination of Employment, whichever period is shorter.
(iv) ISOs. In the case of any outstanding Options granted to a
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Participant that are ISOs, the tax treatment prescribed under Section 422
of the Code shall not be available if such Options are not exercised (A)
within three months after the Date of Termination of Employment unless
such termination is due to death or Disability, or (B) within one year
after the Date of Termination of Employment due to Disability. If a
Participant's employment is terminated due to death, the tax treatment
prescribed under Section 422 of the Code shall be available if the
Participant was either an Employee on the date of death or an Employee
within the three month period prior to the date of death.
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(b) SARs.
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(i) Grant. An SAR shall represent a right to receive a payment in
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cash, Shares, or a combination thereof, equal to the excess of the Fair
Market Value of a specified number of Shares on the date the SAR is
exercised over an amount which shall be no less than the Fair Market Value
on the date the SAR was granted (or the Option Price for SARs granted in
tandem with an Option) as set forth in the applicable Award Agreement.
Each SAR grant shall be evidenced by an Award Agreement that shall specify
the SAR exercise price, the duration of the SAR, the number of Shares to
which the SAR pertains, whether the SAR is granted in tandem with the
grant of an Option or is freestanding, and such other provisions as the
Committee shall determine. SARs granted under this Section 7(b) shall be
exercisable at such times and be subject to such restrictions and
conditions as the Committee shall in each instance approve and which shall
be set forth in the applicable Award Agreement, which need not be the same
for each grant of for each Participant.
(ii) Exercise. SARs shall be exercised by the delivery of a written
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notice of exercise to the Corporation, setting forth the number of Shares
with respect to which the SAR is to be exercised. The date of exercise of
the SAR shall be the date on which the Corporation shall have received
notice from the Participant of the exercise of such SAR. SARs granted in
tandem with the grant of an Option may be exercised for all or part of the
Shares subject to the related Option upon the surrender of the right to
exercise the equivalent portion of the related Option. SARs granted in
tandem with the grant of an Option may be exercised only with respect to
the Shares for which its related Option is then exercisable. With respect
to SARs granted in tandem with an ISO, (A) such SAR will expire no later
than the expiration of the underlying ISO, (B) the value of the payout
with respect to such SAR may be for no more than one hundred percent of
the difference between the Option Price of the underlying ISO and the Fair
Market Value of the Shares subject to the underlying ISO at the time such
SAR is exercised, and (C) such SAR may be exercised only when the Fair
Market Value of the Shares subject to the underlying ISO exceeds the
Option Price of the ISO. SARs granted independently from the grant of an
Option may be exercised upon the terms and conditions contained in the
applicable Award Agreement. Notwithstanding any other provision of the
Plan, the Committee may impose such conditions on exercise of an SAR
(including, without limitation, the right of the Committee to limit the
time of exercise to specified periods) as may be required to satisfy the
requirements of Section 16 (or any successor law) of the 1934 Act. In the
event the SAR shall be payable in Shares, a certificate for the Shares
acquired upon exercise of an SAR shall be issued in the name of the
Participant as soon as practicable following receipt of notice of
exercise. No fractional Shares will be issuable upon exercise of the SAR
and, unless provided in the applicable Award Agreement, the Participant
will receive cash in lieu of fractional Shares.
(iii) Termination. If the employment of a Participant with the
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Corporation shall
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terminate by reason of death, Disability or Normal Retirement, any then
outstanding SARs granted to such Participant shall become immediately
exercisable on the Date of Termination of Employment. Unless the Committee
determines otherwise, any such outstanding SARs will be forfeited on the
expiration date of such SARs or within three years after the Date of
Termination of Employment, whichever period is shorter. Unless the
Committee determines otherwise, if the employment of a Participant with
the Corporation shall terminate for any reason other than death,
Disability or Normal Retirement, (i) any then outstanding but
unexercisable SARs granted to such Participant will be forfeited on the
Date of Termination of Employment, and (ii) any then outstanding and
exercisable SARs granted to such Participant will be forfeited on the
expiration date of such SARs or three months after the Date of Termination
of Employment, whichever period is shorter.
(c) Stock Awards.
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(i) Grant. All or any part of any Stock Award may be subject to
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conditions and restrictions established by the Committee, and set forth in
the applicable Award Agreement, which may include, but are not limited to,
continuous service with the Corporation, a requirement that Participants
pay a stipulated purchase price for each Stock Award, the achievement of
specific Performance Goals, and/or applicable securities laws
restrictions. During the applicable Period of Restriction, Participants
holding RSAs may exercise full voting rights with respect to such Shares.
During the applicable Period of Restriction, Participants holding RSAs
shall be entitled to receive all dividends and other distributions paid
with respect to such Shares while they are so restricted. If any such
dividends or distributions are paid in Shares, such Shares shall be
subject to the same restrictions on transferability as the RSAs with
respect to which they are paid.
(ii) Performance Stock Awards. Performance Stock Awards will be
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granted to Covered Officers under the following conditions:
(A) Prior to April 1 of each year, the Committee shall
determine the Covered Officers and the Performance Goals for such
year that will need to be attained in order to permit Performance
Stock Awards to be granted to the Covered Officers in the following
year; and
(B) the value of Performance Stock Awards granted to a Covered
Officer (calculated by multiplying the Fair Market Value on the date
of grant times the number of Shares of the Stock Award) shall equal
300% of the Covered Officer's base salary for the calendar year
preceding the date of grant; provided, that such value may not
exceed $4,500,000; and provided, further, that the Committee may, in
its discretion, reduce the number of Shares to be granted in the
Performance Stock Award.
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Notwithstanding the foregoing, any Shares of restricted stock issued to
Covered Officers in 1998 pursuant to the satisfaction of the performance goal
set forth in the Prior Plan shall be issued under the Plan in accordance with
the terms, conditions and limitations set forth in the Prior Plan.
(iii) Termination. Unless the Committee determines otherwise, if the
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employment of a Participant with the Corporation shall terminate because
of Normal Retirement, Disability or death, any remaining Period of
Restriction applicable to Stock Awards granted to such Participant shall
automatically terminate and, except as otherwise provided in this Section
7(c), such Stock Awards shall be free of restrictions and freely
transferable. Unless the Committee determines otherwise, if the employment
of a Participant with the Corporation shall terminate for any reason other
than death, Disability or Normal Retirement, then any Stock Awards subject
to restrictions on the date of such termination shall automatically be
forfeited on the Date of Termination of Employment and returned to the
Corporation; provided, however, if such employment terminates due to Early
Retirement or any involuntary termination by the Corporation, the
Committee may, in its sole discretion, waive the automatic forfeiture of
any or all such Stock Awards and/or may add such new restrictions to such
Stock Awards as it deems appropriate.
8. DIVIDENDS AND DIVIDEND EQUIVALENTS
The Committee may provide that Awards under Section 7(c) of the Plan earn
dividends or dividend equivalents. Such dividends or dividend equivalents may be
paid currently or may be credited to a Participant's account. Any crediting of
dividends or dividend equivalents may be subject to such restrictions and
conditions as the Committee may establish, including reinvestment in additional
Shares or Share equivalents.
9. PAYMENTS AND PAYMENT DEFERRALS
Payment of Awards may be in the form of cash, Shares, other Awards, or
combinations thereof as the Committee shall determine, and with such
restrictions as it may impose. The Committee also may require or permit
Participants to elect to defer the receipt or issuance of Shares from Options or
Stock Awards or the settlement of Awards in cash under such rules and procedures
as it may establish under the Plan. It also may provide that deferred
settlements of Awards include the payment or crediting of earnings on deferred
amounts. In addition, the Committee may stipulate in an Award Agreement, either
at the time of grant or by subsequent amendment, that a payment or portion of a
payment of an Award be delayed in the event that Section 162(m) of the Code (or
any successor or similar provision of the Code affecting tax deductibility)
would disallow a tax deduction by the Corporation for all or a portion of such
payment. The period of any such delay in payment shall be until the payment, or
portion thereof, is tax deductible, or such earlier date as the Committee shall
determine.
10. TRANSFERABILITY
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(a) ISOs. No ISO granted under the Plan may be sold, transferred,
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pledged, assigned or otherwise alienated or hypothecated, other than by
will or by the laws of descent and distribution. Further, all ISOs granted
to a Participant under the Plan shall be exercisable during his or her
lifetime only by such Participant. The foregoing shall also apply to all
SARs granted in tandem with an ISO.
(b) NQSOs and SARs. Except as otherwise provided in a Participant's
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Award Agreement, no NQSO or SAR granted under the Plan may be sold,
transferred, pledged, assigned or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution. Further,
except as otherwise provided in a Participant's Award Agreement, all NQSOs
and SARs granted to a Participant under the Plan shall be exercisable
during his or her lifetime only by such Participant.
(c) Stock Awards. Stock Awards granted under the Plan may not be
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sold, transferred, pledged, assigned or otherwise alienated or
hypothecated until the end of the applicable Period of Restriction
established by the Committee and specified in the applicable Award
Agreement, or upon earlier satisfaction of any other conditions, as
specified by the Committee in its sole discretion and set forth in the
applicable Award Agreement. All rights with respect to a Stock Award
granted to a Participant under the Plan shall be available during his or
her lifetime only to such Participant.
11. CHANGE OF CONTROL
In the event of (i) any merger, consolidation, or acquisition where the
stockholders of First Union on the effective date of such merger, consolidation,
or acquisition do not own at least 50% of the outstanding shares of voting stock
of the surviving corporation, or (ii) any Change of Control, each Award granted
under the Plan shall immediately be exercisable and/or fully vested and
nonforfeitable, as the case may be.
12. AWARD AGREEMENTS
Each Award under the Plan shall be evidenced by an Award Agreement setting
forth its terms, conditions, and limitations for each Award, the provisions
applicable in the event the Participant's employment terminates, and the
Corporation's authority unilaterally or bilaterally to amend, modify, suspend,
cancel, or rescind any Award. The Committee need not require the execution of
any such agreement by the recipient, in which case acceptance of the Award by
the respective Participant shall constitute agreement by the Participant to the
terms and conditions of the Awards.
13. TAX WITHHOLDING
The Corporation shall have the right to deduct from any settlement of an
Award made under the Plan, including the delivery of Shares, or require the
payment of, a sufficient amount to
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cover withholding of any federal, state or local or other governmental taxes or
charges required by law or such greater amount of withholding as the Committee
shall determine from time to time and as permitted or required by applicable
rules and regulations, or to take such other action as may be necessary to
satisfy any such withholding obligations. If the Committee permits or requires
Shares to be used to satisfy required tax withholding, such Shares shall be
valued at the Fair Market Value as of the tax recognition date for such Award or
such other date as may be required by applicable law, rule or regulation. The
Corporation shall have the right to effect income, social security and medicare
tax withholding and reporting as may be required under applicable law upon the
disposition by an Employee of Common Stock acquired upon the exercise of an
option qualifying as an incentive stock option under Section 422 of the Code at
the time of exercise. The Corporation shall collect any required withholding
from "other earnings" of the employee. In the absence of "other earnings"
sufficient to satisfy such withholding, the employee shall remit such amounts
required to satisfy such withholding obligations to the Corporation within 10
business days of any such notice and request for payment.
14. OTHER BENEFIT AND COMPENSATION PROGRAMS
Unless otherwise specifically determined by the Committee, settlements of
Awards received by Participants under the Plan shall not be deemed a part of a
Participant's regular, recurring compensation for purposes of calculating
payments or benefits from the Corporation's benefit plans or severance program.
Further, the Corporation may adopt other compensation programs, plans or
arrangements as it deems appropriate or necessary. The Committee may permit a
Participant to defer such Participant's receipt of the payment of cash or the
delivery of Shares that would otherwise be due to such Participant by virtue of
the exercise of an Option or SAR, or the satisfaction of conditions, lapse or
waiver of restrictions with respect to Stock Awards. If any such deferral
election is required or permitted, the Committee shall, in its sole discretion,
establish rules and procedures for such payment deferrals.
15. UNFUNDED PLAN
Unless otherwise determined by the Committee, the Plan shall be unfunded
and shall not create (or be construed to create) a trust or a separate fund or
funds. The Plan shall not establish any fiduciary relationship between the
Corporation and any participant or other person. To the extent any person holds
any rights by virtue of an Award granted under the Plan, such rights shall
constitute general unsecured liabilities of the Corporation and shall not confer
upon any participant any right, title, or interest in any assets of the
Corporation.
16. REGULATORY APPROVALS
The implementation of the Plan, the granting of any Award under the Plan,
and the issuance of Shares upon the exercise or settlement or any Award shall by
subject to the Corporation's procurement of all approvals and permits required
by regulatory authorities having jurisdiction over the Plan, the Awards granted
under it, or the Shares issued pursuant to it.
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17. RIGHTS AS A STOCKHOLDER
A Participant shall have no rights as a stockholder with respect to Shares
covered by an Award until the date the Participant or his nominee is the holder
of record. No adjustment will be made for dividends or other rights for which
the record date is prior to such date, except as provided in Section 6(c).
18. FUTURE RIGHTS
No person shall have any claim or right to be granted an Award, and the
grant of an Award shall not be construed as giving a Participant the right to be
retained in the employ of the Corporation or to participate in any other
compensation or benefit plan, program or arrangement of the Corporation. In
addition, the Corporation expressly reserves the right at any time to dismiss a
Participant free from any liability or any claim under the Plan, except as
provided herein or in any agreement entered into hereunder.
19. GOVERNING LAW
The Plan and all agreements entered into under the Plan shall be construed
in accordance with and governed by the laws of the State of North Carolina.
20. SUCCESSORS AND ASSIGNS
The Plan and any applicable Award Agreement entered into under the Plan
shall be binding on all successors and assigns of a Participant, including,
without limitation, the estate of such Participant and the executor,
administrator or trustee of such estate, or any receiver or trustee in
bankruptcy or representative of the Participant's creditors.
21. INDEMNIFICATION
Each person who is or shall have been a member of the Committee or of the
Board shall be indemnified and held harmless by the Corporation against and from
any loss, cost, liability, or expense that may be imposed upon or reasonably
incurred by him in connection with or resulting from any claim, action, suit, or
proceeding to which he may be a party or in which he may be involved by reason
of any action taken or failure to act under the Plan and against and from any
and all amounts paid by him in settlement thereof, with the Corporation's
approval, or paid by him in satisfaction of any judgment in any such action,
suit, or proceeding against him, provided he shall give the Corporation an
opportunity, at its own expense, to handle and defend the same before he
undertakes to handle and defend it on his own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification to
which such persons may be entitled under First Union's Articles of Incorporation
or Bylaws, as a matter of law, or otherwise, or any power that the Corporation
may have to indemnify them or hold them harmless.
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22. APPLICATION OF FUNDS
The proceeds received by the Corporation from the issuance of Shares
pursuant to the exercise of Options will be used for general corporate purposes.
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