EXHIBIT 4
JAMES MONROE BANCORP, INC.
2003 EQUITY COMPENSATION PLAN
1. PURPOSE OF PLAN.
The purpose of this James Monroe Bancorp, Inc. 2003 Equity Compensation
Plan is to promote the long-term interests of James Monroe Bancorp, Inc. and its
wholly-owned subsidiary, James Monroe Bank, by (i) motivating key personnel and
directors through the grant of equity compensation, (ii) furthering the identity
of interests of Participants with those of the shareholders of the Corporation
through the ownership of the Common Stock of the Corporation and (iii)
permitting the Corporation to attract and retain key personnel and directors
upon whose judgment and efforts the successful conduct of the business of the
Corporation largely depends. Toward this objective, the Committee may grant
stock options, stock appreciation rights, restricted stock awards, phantom stock
and/or performance shares to Key Employees of the Corporation and its
Subsidiaries, and to non-employee directors of the Corporation and its
Subsidiaries, on the terms and subject to the conditions set forth in the Plan.
2. DEFINITIONS.
2.1 "Administrative Policies" shall mean the administrative policies
and procedures, if any, adopted and amended from time to time by the Committee
regarding the administration of the Plan.
2.2 "Award" shall mean any form of stock option, stock appreciation
right, restricted stock award, phantom stock or performance share granted under
the Plan, whether singly, in combination, or in tandem, to a Participant by the
Committee pursuant to such terms, conditions, restrictions and limitations, if
any, as the Committee may establish by the Award Agreement or otherwise.
2.3 "Award Agreement" shall mean a written agreement with respect to an
Award between the Corporation and a Participant establishing the terms,
conditions, restrictions and limitations applicable to an Award. To the extent
an Award Agreement is inconsistent with the terms of the Plan, the Plan shall
govern the rights of the Participant thereunder.
2.4 "Board" shall mean the Board of Directors of the Corporation.
2.5 "Change In Control" shall mean a change in control of the
Corporation of a nature that would be required to be reported (assuming such
event has not been previously reported) in response to Item 6(e) of Schedule 14A
of Regulation l4A promulgated under the Securities Exchange Act of 1934 (or a
successor provision thereto), provided that, without limitation, a Change In
Control shall be deemed to have occurred at such time after the Effective Date
as (i) any "person", within the meaning of Section 14(d) of the Exchange Act,
becomes the beneficial owner, directly or indirectly, of securities of the
Corporation representing 50% or more of the combined voting power of the
Corporation's then outstanding securities, or (ii) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the Board of Directors cease for any reason to constitute at least a majority
thereof unless the election or the nomination for election, by the Corporation's
shareholders, of each new director was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the beginning of the
period.
2.6 "Change In Control Price" shall mean the higher of (i) the mean of
the high and low trading prices for the Corporation's Common Stock on the Stock
Exchange on the date of determination of the Change In Control or (ii) the
highest price per share actually paid for the Common Stock in connection with
the Change In Control of the Corporation.
2.7 "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
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2.8 "Committee" shall mean the entire Board of Directors of the
Corporation, or such other committee designated by the Board, authorized to
administer the Plan under Section 3 hereof. The Committee, in its discretion,
may delegate to a senior executive officer of the Corporation all or part of the
Committee's authority and duties with respect to Awards to individuals who are
not subject to the reporting and other provisions of Section 16 of the Exchange
Act. In the event of any such delegation, references herein to the "Committee"
shall, to the extent of such permitted delegation, be deemed to be references to
such senior executive officer as well. The Committee may revoke or amend the
terms of a delegation at any time, but such action shall not invalidate any
prior actions of any such senior executive officer that were consistent with the
terms of the Plan.
2.9 "Common Stock" shall mean Common Stock, par value $1.00, of the
Corporation.
2.10 "Corporation" shall mean James Monroe Bancorp, Inc.
2.11 "Effective Date" shall mean June 30, 2003.
2.12 "Key Employee" shall mean an employee of the Corporation or a
Subsidiary who holds a position of responsibility in a managerial,
administrative or professional capacity, or a consultant to the Corporation, in
either case whose performance, as determined by the Committee in the exercise of
its sole and absolute discretion, can have a significant effect on the growth,
profitability and success of the Corporation.
2.13 "Participant" shall mean any individual to whom an Award has been
granted by the Committee under this Plan.
2.14 "Plan" shall mean this James Monroe Bancorp, Inc. 2003 Equity
Compensation Plan, as amended from time to time.
2.15 "Share" shall mean one share of Common Stock of the Corporation.
2.16 "Stock Exchange" shall mean the Nasdaq SmallCap Market or National
Market System or the principal stock exchange upon which the Common Stock is
traded or, if the Common Stock is no longer traded on such a market or a stock
exchange, then such other market price reporting system on which the Common
Stock is traded or quoted designated by the Committee after it determines that
such other system is both reliable and reasonably accessible.
2.17 "Subsidiary" shall mean a corporation or other business entity in
which the Corporation directly or indirectly owns fifty percent (50%) or more of
the voting equity.
3. ADMINISTRATION OF THE PLAN.
(a) Composition of the Committee. The Plan shall be administered by the
entire Board of Directors of the Corporation which shall serve as the Committee
("Committee").
(b) Powers of the Committee. The Committee shall have all the powers
vested in it by the terms of the Plan, such powers to include authority, in its
sole and absolute discretion, to grant Awards under the Plan, prescribe Award
Agreements evidencing such Awards and establish programs for granting Awards.
The Committee shall have full power and authority to take all other
actions necessary to carry out the purpose and intent of the Plan, including,
but not limited to, the authority to (i) determine the eligible persons to whom,
and the time or times at which Awards shall be granted; (ii) determine the types
of Awards to be granted; (iii) determine the number of shares to be covered by
or used for reference purposes for each Award; (iv) impose such terms,
limitations, restrictions and conditions upon any such Awards as the Committee
shall deem appropriate; (v) modify, amend, extend or renew outstanding Awards,
or accept the surrender of outstanding Awards and substitute new Awards
(provided, however, that, except as provided in Section 17 of the Plan, any
modification that would materially adversely affect any outstanding Awards shall
not be made without the consent of the holder);
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(vi) accelerate or otherwise change the time in which an Award may be exercised
or becomes payable and to waive or accelerate the lapse, in whole or in part, of
any restriction or condition with respect to such Award, including, but not
limited to, any restriction or condition with respect to the vesting or
exercisability of an Award following termination of any grantee's employment or
other relationship with the Company; and (vii) establish objectives and
conditions, if any, for earning Awards and determining whether Awards will be
paid after the end of a performance period.
The Committee shall have full power and authority, in its sole and
absolute discretion, to administer and interpret the Plan and to adopt and
interpret such rules, regulations, agreements, guidelines and instruments for
the administration of the Plan and for the conduct of its business as the
Committee deems necessary or advisable.
(c) Award Agreement. Each Award shall be evidenced by an Award
Agreement containing such provisions as may be approved by the Committee. Each
such Award Agreement shall constitute a binding contract between the Corporation
and the Participant, and every Participant, upon acceptance of such Award
Agreement, shall be bound by the terms and restrictions of the Plan and of such
Award Agreement. The terms of each such Award Agreement shall be in accordance
with the Plan, but each Award Agreement may include such additional provisions
and restrictions determined by the Committee, in its discretion, provided that
such additional provisions and restrictions are not inconsistent with the terms
of the Plan. In particular, the Committee shall set forth in each Award
Agreement (i) the number of Shares subject to, and the expiration date of, the
Award, (ii) the manner, time and rate (cumulative or otherwise) of exercise or
vesting of such Award and (iv) the restrictions, if any, to be placed upon such
Award, or upon Shares which may be issued upon exercise of such Award.
The Chairman of the Board of Directors, the Chief Executive Officer of
the Corporation and such other officers as shall be designated by the Committee
are hereby authorized to execute Agreements on behalf of the Corporation and to
cause them to be delivered to the recipients of Awards.
(d) Non-Uniform Determinations. The Committee's determinations under
the Plan (including, without limitation, determinations of the persons to
receive Awards, the form, amount and timing of such Awards, the terms and
provisions of such Awards and the Award Agreements evidencing such Awards) need
not be uniform and may be made by the Committee selectively among persons who
receive, or are eligible to receive, Awards under the Plan, whether or not such
persons are similarly situated.
(e) Limited Liability. To the maximum extent permitted by law, no
member of the Committee shall be liable for any action taken or decision made in
good faith relating to the Plan or any Award thereunder.
(f) Effect of the Committee's Decisions. All decisions, determinations
and interpretations of the Committee shall be final and conclusive on all
persons affected thereby.
(g) Indemnification. In addition to such other rights of
indemnification as they may have, the members of the Committee shall be
indemnified by the Corporation in connection with any claim, action, suit or
proceeding relating to any action taken or failure to act under or in connection
with the Plan or any Award granted thereunder to the full extent provided for
under the Corporation's Articles of Incorporation or Bylaws with respect to the
indemnification of Directors.
4. ELIGIBILITY.
Any Key Employee or director of the Corporation or Subsidiary is
eligible to become a Participant in the Plan.
5. SHARES AVAILABLE FOR THE PLAN.
(a) Shares Reserved. Shares of Common Stock available for issuance
under the Plan may be authorized and unissued shares or treasury shares. Subject
to the adjustments provided for in Section 17 hereof, the maximum number of
shares of Common Stock available for grant of Awards under the Plan during shall
be Two Hundred Thousand (200,000);
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(b) Shares Granted. For purposes of calculating the number of Shares of
Common Stock deemed to be granted hereunder, each Award, whether denominated in
stock options, stock appreciation rights, restricted stock, performance shares
or phantom stock, shall be deemed to be a grant of a number of shares of Common
Stock equal to the number of shares represented by the stock options, shares of
restricted stock, performance shares, shares of phantom stock or stock
appreciation rights set forth in the Award, provided, however:
(i) in the case of any Award as to which the exercise of one
right nullifies the exercisability of another (including, by way of
illustration, the grant of a stock option with Tandem SARs (as hereinafter
defined)), the number of Shares deemed to have been granted shall be the maximum
number of Shares (and/or cash equivalents) that could have been acquired upon
the maximum exercise or settlement of the Award; and
(ii) in the case of performance share awards providing for
payments in excess of 100% of the number of shares set forth in the Award
Agreement, the number of shares granted shall be deemed to be the maximum number
of shares (and/or the cash equivalent thereof) issuable under the Award at the
highest level of performance.
(c) Release of Shares. Any shares for which an Award is granted
hereunder that are released from such Award for any reason shall become
available for other Awards to be granted under the Plan. Notwithstanding the
foregoing, for purposes of calculating the number of shares available for
re-grant in any year, the portion of any Award that has been settled by the
payment of cash or the issuance of shares of Common Stock, or a combination
thereof, shall not be available for re-grant under the Plan, irrespective of the
value of the settlement or the method of its payment. The settlement of an Award
shall not be deemed to be the grant of an Award hereunder.
6. TERM.
The Plan shall become effective as of June 30, 2003 subject to approval
of the Plan by the Corporation's shareholders at the 2003 annual meeting. No
Awards shall be exercisable or payable before approval of the Plan has been
obtained from the Corporation's shareholders. Any Award made under the Plan
prior to the date of approval by the shareholders shall be void if shareholder
approval is not obtained.
7. PARTICIPATION.
The Committee shall select, from time to time, Participants from
directors and those Key Employees who, in the opinion of the Committee, can
advance the Plan's purposes, and the Committee shall determine the type or types
of Awards to be made to the Participant. The terms, conditions and restrictions
of each Award shall be set forth in an Award Agreement.
8. STOCK OPTIONS.
(a) Grants. Awards may be granted in the form of stock options. Stock
options may be incentive stock options within the meaning of section 422 of the
Code or non-statutory stock options (i.e., stock options which are not incentive
stock options), or a combination of both, or any particular type of tax
advantage option authorized by the Code from time to time.
(b) Terms and Conditions of Options. An option shall be exercisable in
whole or in such installments and at such times as may be determined by the
Committee; provided, however, that no stock option shall be exercisable more
than ten (10) years after the date of grant thereof. The option exercise price
shall be established by the Committee, but such price shall not be less than the
per share fair market value of the Common Stock, as determined by the Committee,
on the date of the stock option's grant subject to adjustment as provided in
Section 17.
(c) Restrictions Relating to Incentive Stock Options. Stock options
issued in the form of incentive stock options shall, in addition to being
subject to all applicable terms, conditions, restrictions and/or limitations
established by the Committee, comply with section 422 of the Code. Incentive
Stock Options shall be granted
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(i) only to employees of the Corporation and its subsidiaries within the meaning
of section 424 of the Code and (ii) within ten (10) years after the date of
adoption of this Plan. The aggregate fair market value (determined as of the
date the option is granted) of Shares with respect to which incentive stock
options are exercisable for the first time by an individual during any calendar
year (under this Plan or any other plan of the Corporation or any Subsidiary
which provides for the granting of incentive stock options) may not exceed
$100,000 or such other number as may be applicable under the Code from time to
time. Any Incentive Stock Option that is granted to any employee who is, at the
time the option is granted, deemed for purposes of section 422 of the Code, or
any successor provision, to own Shares of the Corporation possessing more than
ten percent of the total combined voting power of all classes of shares of the
Corporation or of a parent or subsidiary of the Corporation, shall have an
option exercise price that is at least one hundred ten percent (110%) of the
fair market value of the Shares at the date of grant and shall not be
exercisable after the expiration of five years from the date it is granted.
(d) Additional Terms and Conditions. The Committee may, by way of the
Award Agreement or otherwise, establish such other terms, conditions,
restrictions and/or limitations, if any, on any stock option Award, provided
they are not inconsistent with the Plan.
(e) Payment. Upon exercise, a Participant may pay the option exercise
price of a stock option in cash or Shares of Common Stock, stock appreciation
rights or a combination of the foregoing, or such other consideration as the
Committee may deem appropriate. The Committee shall establish appropriate
methods for accepting Common Stock and may impose such conditions as it deems
appropriate on the use of such Common Stock to exercise a stock option.
9. STOCK APPRECIATION RIGHTS.
(a) Grants. Awards may be granted in the form of Stock Appreciation
Rights ("SARs"). SARs shall entitle the recipient to receive a payment equal to
the appreciation in market value of a stated number of Shares of Common Stock
from the price stated in the Award Agreement to the market value of the Common
Stock on the date of exercise or surrender. An SAR may be granted in tandem with
all or a portion of a related stock option under the Plan ("Tandem SARs"), or
may be granted separately ("Freestanding SARs"). A Tandem SAR may be granted
either at the time of the grant of the related stock option or at any time
thereafter during the term of the stock option. An SAR may be exercised no
sooner than six months after it is granted. In the case of SARs granted in
tandem with stock options granted prior to the grant of such SARs, the
appreciation in value shall be appreciation from the option exercise price of
such related stock option to the market value of the Common Stock on the date of
exercise.
(b) Terms and Conditions of Tandem SARs. Subject to limitations
contained in the preceding paragraph, a Tandem SAR shall be exercisable to the
extent, and only to the extent, that the related stock option is exercisable.
Upon exercise of a Tandem SAR as to some or all of the Shares covered by an
Award, the related stock option shall be canceled automatically to the extent of
the number of SARs exercised, and such Shares shall not thereafter be eligible
for grant under Section 5 hereof.
(c) Terms and Conditions of Freestanding SARs. Freestanding SARs shall
be exercisable in whole or in such installments and at such times as may be
determined by the Committee. The base price of a Freestanding SAR shall also be
determined by the Committee; provided, however, that such price shall not be
less than the fair market value of the Common Stock, as determined by the
Committee, on the date of the award of the Freestanding SAR.
(d) Deemed Exercise. The Committee may provide that an SAR shall be
deemed to be exercised at the close of business on the scheduled expiration date
of such SAR, if at such time the SAR by its terms is otherwise exercisable and,
if so exercised, would result in a payment to the participant.
(e) Additional Terms and Conditions. The Committee may, consistent with
the Plan, by way of the Award Agreement or otherwise, determine such other
terms, conditions, restrictions and/or limitations, if any, on any SAR Award,
including, but not limited to, determining the manner in which payment of the
appreciation in value shall be made.
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10. RESTRICTED STOCK AWARDS.
(a) Grants. Awards may be granted in the form of Restricted Stock
Awards. Restricted Stock Awards shall be awarded in such numbers and at such
times as the Committee shall determine.
(b) Award Restrictions. Restricted Stock Awards shall be subject to
such terms, conditions, restrictions, or limitations as the Committee deems
appropriate including, by way of illustration but not by way of limitation,
restrictions on transferability, requirements of continued employment or
individual performance or the financial performance of the Corporation. The
Committee may modify, or accelerate the termination of, the restrictions
applicable to a Restricted Stock Award under such circumstances as it deems
appropriate.
(c) Rights as Shareholders. During the period in which any restricted
shares of Common Stock are subject to the restrictions imposed under the
preceding paragraph, the Committee may, in its discretion, grant to the
Participant to whom such restricted shares have been awarded all or any of the
rights of a shareholder with respect to such shares, including, by way of
illustration but not by way of limitation, the right to vote such shares and to
receive dividends.
(d) Evidence of Award. Any Restricted Stock Award granted under the
Plan may be evidenced in such manner as the Committee deems appropriate,
including, without limitation, book-entry registration or issuance of a stock
certificate or certificates.
11. PHANTOM STOCK.
(a) Grants. Awards may be granted in the form of Phantom Stock Awards.
Phantom Stock Awards shall entitle the Participant to receive the market value
or the appreciation in value of an equivalent number of shares of Common Stock
on a settlement date determined by the Committee.
(b) Additional Terms and Conditions. The Committee may, consistent with
the Plan, by way of Award Agreement or otherwise, determine such other terms,
conditions, restrictions or limitations, if any, on any Award of Phantom Stock.
12. PERFORMANCE SHARES.
(a) Grants. Awards may be granted in the form of Performance Shares.
"Performance Shares" shall mean interests the entitlement to which is based upon
the attainment of predetermined Performance Targets as hereinafter defined
during a Performance Period as hereinafter defined. At the end of the
Performance Period, Performance Shares shall be converted into Common Stock (or
Common Stock and cash, as determined by the Award Agreement) and distributed to
Participants based upon such entitlement.
(b) Performance Criteria. The Committee may grant an Award of
Performance Shares to Participants as of the first day of each Performance
Period. As used herein, the term "Performance Period" shall mean the period
during which a Performance Target is measured and the term "Performance Target"
shall mean the predetermined goals established by the Committee. A Performance
Target will be established at the beginning of each Performance Period. If at
the end of the Performance Period, the Performance Target is fully met, the
Performance Shares will be converted 100% into shares of Common Stock (or the
cash equivalent thereof, as determined by the Award Agreement) and issued to the
Participant. Award payments in excess of 100% shall be permitted based upon an
attainment in excess of 100% of the Performance Target. If the Performance
Target has not been fully met, Performance Shares will be converted and
delivered only to the extent, if any, provided at the time of the grant of such
Award for conversion based upon partial attainment of the Performance Target and
the balance of the Performance Shares will be forfeited to the Corporation and
available for reissuance pursuant to Section 5 hereof. Award payments made in
cash rather than the issuance of Common Stock shall not, by reason of such
payment in cash, result in additional shares being available for reissuance
pursuant to Section 5 hereof.
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(c) Additional Terms and Conditions. The Committee may, consistent with
the terms of this Plan, by way of the Award Agreement or otherwise, determine
the manner of payment of Awards of Performance Shares and other terms,
conditions, restrictions or limitations, if any, on any Award of Performance
Shares.
13. PAYMENT OF AWARDS.
Except as otherwise provided herein, Award Agreements may provide that,
at the discretion of the Committee, payment of Awards may be made in cash,
Common Stock, a combination of cash and Common Stock, or any other form of
property as the Committee shall determine. Further, the terms of Award
Agreements may provide for payment of Awards in the form of a lump sum or
installments, as determined by the Committee.
14. DIVIDENDS AND DIVIDEND EQUIVALENTS.
If an Award is granted in the form of a Restricted Stock Award, Phantom
Stock Award or a Freestanding SAR, the Committee may choose, at the time of the
grant of the Award, to include as part of such Award an entitlement to receive
dividends or dividend equivalents, subject to such terms, conditions,
restrictions or limitations, if any, as the Committee may establish. Dividends
and dividend equivalents shall be paid in such form and manner and at such time
as the Committee shall determine. All dividends or dividend equivalents which
are not paid currently may, at the Committee's discretion, accrue interest or be
reinvested into additional Shares of Common Stock.
15. TERMINATION OF EMPLOYMENT.
The Committee may adopt Administrative Policies determining the
entitlement of Participants who cease to be employed by either the Corporation
or Subsidiary whether because of death, disability, resignation, termination or
retirement pursuant to an established retirement plan or policy of the
Corporation or of its applicable Subsidiary. Such matters may also be dealt with
under the terms of Award Agreements.
Notwithstanding the provision of any stock option granted hereunder
which provides for its exercise over a stated vesting period as indicated in the
Award Agreement, such stock option shall become immediately exercisable and
fully vested upon the Participant's death or Permanent and Total Disability.
Any stock option granted hereunder shall be exercisable by a
Participant:
(i) in the event of death, within two (2) years from the date
of death (but not later than the date on which the option would otherwise
expire) by the personal representatives of his estate or person or persons to
whom his rights under such option shall have passed by will or by laws of
descent and distribution;
(ii) in the event of permanent and total disability (as such
term is defined in Section 22(e)(3) of the Code), within one (1) year from the
date of such permanent and total disability, but not later than the date on
which the option would otherwise expire.
16. ASSIGNMENT AND TRANSFER.
The rights and interests of a Participant under the Plan may not be
assigned, encumbered or transferred except (a) in the event of the death of a
Participant, by will or the laws of descent and distribution, and (b) as may be
explicitly set forth in an Award Agreement.
17. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
In the event of any change in the outstanding Shares of Common Stock by
reason of any reorganization, recapitalization, stock split, stock dividend,
combination or exchange of shares, merger, consolidation or any change in the
corporate structure or shares of the Corporation, the maximum aggregate number
and class of shares as to which Awards may be granted under the Plan and the
shares issuable pursuant to then outstanding Awards (and the
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exercise price of any outstanding stock options) shall be appropriately adjusted
by the Committee, whose determination shall be final.
18. WITHHOLDING TAXES.
The Corporation or the applicable Subsidiary shall be entitled to
deduct from any payment under the Plan, regardless of the form of such payment,
the amount of all applicable income and employment tax required by law to be
withheld with respect to such payment or may require the Participant to pay to
it such tax prior to and as a condition of the making of such payment. The
Committee may allow a Participant to pay the amount of taxes required by law to
be withheld from an Award by withholding from any payment of Common Stock due as
a result of such Award, or by permitting the Participant to deliver to the
Corporation shares of Common Stock having a fair market value, as determined by
the Committee, equal to the amount of such required withholding taxes.
19. REGULATORY APPROVALS AND LISTINGS.
Notwithstanding anything contained in this Plan to the contrary, the
Corporation shall have a no obligation to issue or deliver certificates of
Common Stock evidencing Restricted Stock Awards or any other Award payable in
Common Stock prior to (a) the obtaining of any approval from any governmental
agency which the Corporation shall, in its sole discretion, determine to be
necessary or advisable, (b) the admission of such shares to listing on the Stock
Exchange and (c) the completion of any registration or other qualification of
said shares under any state or federal law or ruling of any governmental body
that the Corporation shall, in its sole discretion, determine to be necessary or
advisable.
20. NO RIGHT TO CONTINUED EMPLOYMENT OR GRANTS.
Participation in the Plan shall not give any Key Employee any right to
remain in the employ of the Corporation or any Subsidiary or any director the
right to remain as a director of the Corporation or any Subsidiary. The
Corporation or, in the case of employment with a Subsidiary, the Subsidiary,
reserves the right to terminate the employment of any Key Employee at any time.
The adoption of this Plan shall not be deemed to give any Key Employee or any
other individual any right to be selected as a Participant, to be granted any
Awards hereunder or if granted an Award in any year, to receive Awards in any
subsequent year.
21. AMENDMENT.
The Corporation reserves the right to amend, modify or terminate this
Plan at any time by action of its Board of Directors, or, by action of the Board
of Directors with the consent of a Participant, to amend, modify or terminate
any outstanding Award or Award Agreement, except that the Corporation may not,
without shareholder approval, adopt any amendment which would (a) materially
increase the benefits accruing to Participants under the Plan, (b) materially
increase the number of shares of Common Stock which may be issued under the Plan
(except as specified in Section 17), or (c) materially modify the requirements
as to eligibility for participation in the Plan. Moreover, no action may be
taken by the Corporation (without the consent of the Participant) that will
impair the validity of any Award then outstanding or that will prevent any
incentive stock options issued or to be issued under this Plan from being
"incentive stock options" as defined under section 422 of the Code or any
successor provision.
22. CHANGE IN CONTROL.
(a) Stock Options. In the event of a Change In Control options not
otherwise exercisable at the time of a Change In Control shall become fully
exercisable immediately prior to such Change In Control and, in the discretion
of the Committee, (i) the options shall be assumed, or an equivalent option
substituted, by any successor corporation to the Corporation, or (ii) the
Corporation shall make provisions for the Participant to exercise the options
for a minimum of forty-five (45) days prior to the Change In Control as to all
Shares subject to the options.
(b) Stock Appreciation Rights. In the event of a Change In Control,
Tandem SARs not otherwise exercisable upon a Change In Control shall become
exercisable to the extent that the related Stock Option is
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exercisable. Freestanding SARs not otherwise exercisable upon a Change In
Control shall also become fully exercisable upon such Change In Control.
(i) The Corporation shall make payment to Participants with
respect to SARs in cash in an amount equal to the appreciation in the value of
the SAR from the base price specified in the Award Agreement to the Change In
Control Price;
(ii) Such cash payments to Participants shall be due and
payable, and shall be paid by the Corporation, immediately upon the occurrence
of such Change In Control; and
(iii) After the payment provided for in (ii) above,
Participants shall have no further rights under SARs outstanding at the time of
such Change In Control.
(c) Restricted Stock Awards. In the event of a Change In Control, all
restrictions previously established with respect to Restricted Stock Awards will
conclusively be deemed to have been satisfied. Participants shall be entitled to
have issued to them the Shares of Common Stock described in the applicable Award
Agreements, free and clear of any restriction or restrictive legend, except that
if, upon the advice of counsel to the Corporation, Shares of Common Stock cannot
lawfully be issued without restriction, then the Corporation shall make payment
to Participants in cash in an amount equal to the Change In Control Price of the
Common Stock that otherwise would have been issued:
(i) Such cash payments to Participants shall be due and
payable, and shall be paid by the Corporation, immediately upon the occurrence
of such Change In Control; and
(ii) After the payment provided for in (i) above, Participants
shall have no further rights under Restricted Stock Awards outstanding at the
time of such Change In Control of the Corporation.
(d) Phantom Stock. In the event of a Change In Control:
(i) All restrictions and conditions, if any, previously
established with respect to Phantom Stock Awards will conclusively be deemed to
have been satisfied and fulfilled, and the Corporation shall make payment to
Participants in cash in an amount necessary to satisfy the Participants' rights
under Phantom Stock Awards in accordance with the amounts otherwise payable by
the Corporation pursuant to the Award Agreement;
(ii) Such cash payments shall be made to Participants by the
Corporation immediately prior to the occurrence of such Change In Control; and
(iii) After the payment provided for in (ii) above, the
Participants shall have no further rights under Phantom Stock Awards outstanding
at the time of such change of control of the Corporation.
(e) Performance Shares. In the event of a Change In Control:
(i) All previously established Performance Targets will be
conclusively deemed to have been met. Participants shall be entitled to a
pro-rata proportion of the shares of Common Stock which would have been issued
to them upon conversion of any outstanding Performance Shares at the end of the
Performance Period (based upon the applicable Performance Targets, which are
conclusively deemed to have been met by reason of the Change In Control),
payable in the manner specified in subsection (ii) hereof. The pro-rata
proportion of the shares of Common Stock to be issued shall be equal to a
fraction, the numerator of which is the duration of the Performance Period prior
to such Change In Control and the denominator of which is the original length of
the Performance Period;
(ii) In lieu of issuing shares of Common Stock upon such
conversion of Performance Shares, the Corporation shall make payment to
Participants in cash in an amount equal to the Change In Control Price of the
shares of Common Stock that would have been issued under paragraph (i) above;
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(iii) Such cash payments to Participants shall be due and
payable, and shall be paid by the Corporation, immediately upon the occurrence
of such Change In Control; and
(iv) After the payment provided for in (ii) above, the
Participants shall have no further rights under awards of Performance Shares
outstanding at the time of such Change In Control of the Corporation.
(f) Miscellaneous. Upon a Change In Control, no action shall be taken
which would adversely affect the rights of any Participant or the operation of
the Plan with respect to any Award to which the Participant may have become
entitled hereunder on or prior to the date of the Change In Control or to which
he may become entitled as a result of such Change In Control.
23. NO RIGHT, TITLE OR INTEREST IN CORPORATION ASSETS.
No Participant shall have any rights as a shareholder as a result of
participation in the Plan until the date of issuance of a stock certificate in
his name except, in the case of Restricted Stock Awards, to the extent such
rights are granted to the Participant under Section 10(c) hereof. To the extent
any person acquires a right to receive payments from the Corporation under this
Plan, such rights shall be no greater than the rights of an unsecured creditor
of the Corporation.
24. PAYMENT BY SUBSIDIARIES.
Settlement of Awards to employees of Subsidiaries shall be made by and
at the expense of such Subsidiary. Except as prohibited by law, if any portion
of an Award is to be settled in shares of Common Stock, the Corporation shall
sell and transfer to the Subsidiary, and the Subsidiary shall purchase, the
number of shares necessary to settle such portion of the Award.
25. GOVERNING LAW.
The Plan shall be governed by and. construed in accordance with the
laws of the Commonwealth of Virginia, except as preempted by applicable Federal
law.
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