FC BANC CORP. Appendix A
1997 Stock Option and Incentive Plan
1. Plan Purpose. The purpose of the Plan is to promote the long-term
interests of the Corporation and its shareholders by providing a means for
attracting and retaining directors, officers and employees of the Corporation
and its Affiliates. It is intended that designated Options granted pursuant
to the provisions of this Plan to persons employed by the Corporation or its
Affiliates will qualify as Incentive Stock Options. Options granted to persons
who are not employees will be Non-Qualified Stock Options.
2. Definitions. The following definitions are applicable to the Plan:
"Affiliate" - means any "parent corporation" or "subsidiary
corporation" of the Corporation, as such terms are defined in Section 424(e)
and (f), respectively, of the Code.
"Award" - means the grant of an Incentive Stock Option, a Non-
Qualified Stock Option, a Stock Appreciation Right, Restricted Stock or other
property or securities, or any combination thereof, as provided in the Plan.
"Award Agreement" - means the agreement evidencing the grant of an
Award made under the Plan.
"Bank" - means The Farmers Citizens Bank, and any successor entity.
"Cause" or "cause" - means, in connection with termination or
cessation of service as a director, officer or employee of the Corporation or
an Affiliate, personal dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties or gross negligence.
"Code" - means the Internal Revenue Code of 1986, as amended.
"Committee" - means the Committee referred to in Section 3 hereof.
"Continuous Service" - means the absence of any interruption or
termination of service as a director, officer or employee of the Corporation
or an Affiliate, except that when used with respect to persons granted an
Incentive Option "Continuous Service" means the absence of any interruption or
termination of service as an employee of the Corporation or an Affiliate.
Service shall not be considered interrupted in the case of sick leave,
military leave or any other leave of absence approved by the Corporation or in
the case of transfers between payroll locations of the Corporation or between
the Corporation, its parent, its subsidiaries or its successor.
"Corporation" - means FC Banc Corp., an Ohio corporation.
"Employee" - means any person, including an officer or director, who
is employed by the Corporation or any Affiliate.
"ERISA" - means the Employee Retirement Income Security Act of 1974,
as amended.
"Exercise Price" - means (i) in the case of an Option, the price
per Share at which the Shares subject to such Option may be purchased upon
exercise of such Option and (ii) in the case of a Right, the price per Share
which, upon grant, the Committee determines shall be used to calculate the
aggregate value a Participant shall be entitled to receive pursuant to Sections
9 or 12 hereof upon exercise of such Right.
"Incentive Stock Option" - means an option to purchase Shares granted
by the Committee pursuant to Section 6 hereof which is subject to the
limitations and restrictions of Section 8 hereof and is intended to qualify
under Section 422 of the Code. Unless otherwise set forth in the Award
Agreement, any Option that does not qualify as an Incentive Stock Option for
any reason shall be deemed a Non-Qualified Stock Option.
"Market Value" - means the average of the high and low quoted sales
prices on the date in question (or, if there is no reported sale on such date,
on the last preceding date on which any reported sale occurred) of a Share on
the Composite Tape for the New York Stock Exchange-Listed Stocks, or, if on
such date the Shares are not quoted on the Composite Tape, on the New York Stock
Exchange, or, if the Shares are not listed or admitted to trading on such
Exchange, on the principal United States securities exchange registered under
the Securities Exchange Act of 1934 on which the Shares are listed or admitted
to trading, or, if the Shares are not listed or admitted to trading on any
such exchange, the mean between the closing high bid and low asked quotations
with respect to a Share on such date on the National Association of Securities
Dealers, Inc., Automated Quotations System, or any similar system then in use,
or, if no such quotations are available, the fair market value on such date of
a Share as the Board of Directors shall determine.
"Non-Employee Director" - means a director who (a) is an outside
director, as defined in Section 162(m) of the Code, and (b) is a Non-Employee
Director, as defined in Rule 16b-3(b)(3) of the Securities and Exchange
Commission or any success or rule thereto.
"Non-Qualified Stock Option" - means an option to purchase Shares
granted by the Committee pursuant to Section 6 hereof which does not qualify,
for any reason, as an Incentive Stock Option under Section 422(b) of the Code.
"Option" - means an Incentive Stock Option or a Non-Qualified Stock
Option.
"Participant" - means any director, officer or employee of the
Corporation or any Affiliate who is selected by the Committee to receive an
Award and any director of the Corporation who is granted an Award pursuant to
Section 19 hereof.
"Plan" - means the 1997 Stock Option and Incentive Plan of the
Corporation.
"Related" - means (i) in the case of a Right, a Right which is granted
in connection with, and to the extent exercisable, in whole or in part, in
lieu of, an Option or another Right and (ii) in the case of an Option, an
Option which is granted in connection with, and to the extent exercisable, in
whole or in part, in lieu of, a Right or another Option.
"Restricted Stock" - means Shares awarded to a Participant by the
Committee pursuant to Section 10(a) hereof.
"Right" - means a Stock Appreciation Right.
"Shares" - means the shares of Common Stock, par value $2.50 per
share, of the Corporation.
"Stock Appreciation Right" - means a stock appreciation right with
respect to Shares granted by the Committee pursuant to the Plan.
3. Administration. The Plan shall be administered by a Committee
consisting of two or more members, each of whom shall be a Non-Employee
Director. The members of the Committee shall be appointed by the Board of
Directors of the Corporation. Except as limited by the express provisions of
the Plan or by resolutions adopted by the Board of Directors of the Corporation,
the Committee shall have sole and complete authority and discretion to (i)
select Participants and grant Awards; (ii) determine the number of Shares to
be subject to types of Awards generally, as well as to individual Awards granted
under the Plan; (iii) determine the terms and conditions upon which Awards
shall be granted under the Plan; (iv) prescribe the form and terms of
instruments evidencing such grants; and (v) establish from time to time
regulations for the administration of the Plan, interpret the Plan, and make
all determinations deemed necessary or advisable for the administration of the
Plan.
Without in any way limiting the authority of the Committee under the
terms of the Plan, the Committee may provide in any Award Agreement that the
recipient of the Award shall maintain in confidence the amount and terms of
his or her award, except as disclosure thereof may be required under applicable
law. An Award shall be subject to forfeiture at the Committee's discretion
for violation of the confidentiality provisions of an Award Agreement, except
insofar as such Award relates to Options or Rights that have been exercised or
Shares that have become vested by lapse of any applicable restrictions.
A majority of the Committee shall constitute a quorum, and the acts of a
majority of the members present at any meeting at which a quorum is present,
or acts approved in writing by a majority of the Committee without a meeting,
shall be acts of the Committee.
4. Eligibility. The Committee may select from time to time Participants
in the Plan from those directors, officers and employees of the Corporation or
its Affiliates who, in the opinion of the Committee, are responsible for or
contribute to the management, growth and profitability of the Corporation and
its Affiliates. The maximum number of Shares with respect to which an Option
or Options may be granted in any one taxable year of the Corporation is 20,000.
5. Shares Subject to Plan. Subject to adjustment by the operation of
Section 11 hereof, the maximum number of Shares with respect to which Awards
may be made under the Plan is 32,502, plus any Shares surrendered to the
Corporation in payment of the exercise price of Options or Rights issued under
the Plan. The Shares with respect to which Awards may be made under the Plan
may be authorized and unissued shares or issued shares heretofore or hereafter
reacquired and held as treasury shares. Shares that are subject to Related
Rights and Related Options shall be counted only once in determining whether
the maximum number of Shares with respect to which Awards may be granted under
the Plan has been exceeded. An Award shall not be considered to have been made
under the Plan with respect to any Option or Right which terminates and new
Awards may be granted under the Plan with respect to the number of Shares as
to which such termination has occurred.
6. General Terms and Conditions of Options and Rights. The Committee
shall have full and complete authority and discretion, except as expressly
limited by the Plan, to grant Options and/or Rights and to provide the terms
and conditions (which need not be identical among Participants) thereof. In
particular, the Committee shall prescribe the following terms and conditions:
(i) the Exercise Price of any Option or Right, which shall not be less than
the Market Value per Share at the date of grant of such Option or Right, (ii)
the number of Shares subject to, and the expiration date of, any Option or
Right, which expiration date shall not exceed ten years from the date of grant,
(iii) the manner, time and rate (cumulative or otherwise) of exercise of such
Option or Right, and (iv) the restrictions, if any, to be placed upon such
Option or Right or upon Shares which may be issued upon exercise of such Option
or Right. Notwithstanding the foregoing, no individual shall be granted Awards
with respect to more than 50% of the total shares subject to the Plan, and no
director who is not an employee of the Corporation shall be granted Awards
with respect to more than 5% of the total Shares subject to the Plan. All
directors who are neither officers or employees of the Corporation, in the
aggregate, may not be granted Awards with respect to more than 30% of the
total Shares subject to the Plan. No Awards shall vest and become
exercisable earlier than one year from the date the Plan is approved by
shareholders of the Corporation. No Awards shall vest and become exercisable
at a rate in excess of 20% per year beginning from the date of grant.
Furthermore, at the time of any Award, the Participant shall enter into
an agreement with the Corporation in a form specified by the Committee,
agreeing to the terms and conditions of the Award and such other matters as
the Committee, in its sole discretion, shall determine (the "Option Agreement").
7. Exercise of Options or Rights.
(a) Except as provided herein, an Option or Right granted under the
Plan shall be exercisable during the lifetime of the Participant to whom such
Option or Right was granted only by such Participant and, except as provided
n paragraphs (c) and (d) of this Section 7, no such Option or Right may be
exercised unless at the time such Participant exercises such Option or Right,
such Participant has maintained Continuous Service since the date of grant of
such Option or Right.
(b) To exercise an Option or Right under the Plan, the Participant
to whom such Option or Right was granted shall give written notice to the
Corporation in form satisfactory to the Committee (and, if partial exercises
have been permitted by the Committee, by specifying the number of Shares with
respect to which such Participant elects to exercise such Option or Right)
together with full payment of the Exercise Price, if any and to the extent
required. The date of exercise shall be the date on which such notice is
received by the Corporation. Payment, if any is required, shall be made
either (i) in cash (including check, bank draft or money order) or (ii) by
delivering (A) Shares already owned by the Participant and having a fair
market value equal to the applicable exercise price, such fair market value
to be determined in such appropriate manner as may be provided by the
Committee or as may be required in order to comply with or to conform to
requirements of any applicable laws or regulations, or (B) a combination of
cash and such Shares.
(c) If a Participant to whom an Option or Right was granted shall
cease to maintain Continuous Service for any reason (excluding death or
disability and termination of employment by the Corporation or any Affiliate
for cause), such Participant may, but only within the period of three months
immediately succeeding such cessation of Continuous Service and in no event
after the expiration date of such Option or Right, exercise such Option or
Right to the extent that such Participant was entitled to exercise such Option
or Right at the date of such cessation; provided, however, that such right of
exercise after cessation of Continuous Service shall not be available to a
Participant if the Committee otherwise determines and so provides in the
applicable instrument or instruments evidencing the grant of such Option or
Right. If a Participant to whom an Option or Right was granted shall cease
to maintain Continuous Service by reason of death or disability then, unless
the Committee shall have otherwise provided in the instrument evidencing the
grant of an Option or Stock Appreciation Right, all Options and Rights granted
and not fully exercisable shall become exercisable in full upon the happening
of such event and shall remain so exercisable (i) in the event of death for
the period described in paragraph (d) of this Section 7 and (ii) in the event
of disability for a period of three months following such date. If the
Continuous Service of a Participant to whom an Option or Right was granted by
the Corporation is terminated for cause, all rights under any Option or Right
of such Participant shall expire immediately upon the giving to the
Participant of notice of such termination.
(d) In the event of the death of a Participant while in the
Continuous Service of the Corporation or an Affiliate or within the three month
period referred to in paragraph (c) of this Section 7, the person to whom any
Option or Right held by the Participant at the time of his death is transferred
by will or the laws of descent and distribution, or in the case of an Award
other than an Incentive Stock Option, pursuant to a qualified domestic
relations order, as defined in the Code or Title 1 of ERISA or the rules
thereunder may, but only to the extent such Participant was entitled to
exercise such Option or Right as set forth in paragraph (c) of this Section 7,
exercise such Option or Right at any time within a period of one year succeed-
ing the date of death of such Participant, but in no event later than ten years
from the date of grant of such Option or Right. Following the death of any
Participant to whom an Option was granted under the Plan, irrespective of
whether any Related Right shall have been granted to the Participant or
whether the person entitled to exercise such Related Right desires to do so,
the Committee may, as an alternative means of settlement of such Option, elect
to pay to the person to whom such Option is transferred by will or by the laws
of descent and distribution, or in the case of an Option other than an
Incentive Stock Option, pursuant to a qualified domestic relations order, as
defined in the Code or Title I of ERISA or the rules there under, the amount
by which the Market Value per Share on the date of exercise of such Option
shall exceed the Exercise Price of such Option, multiplied by the number of
Shares with respect to which such Option is properly exercised. Any such
settlement of an Option shall be considered an exercise of such Option for
all purposes of the Plan.
8. Incentive Stock Options. Incentive Stock Options may be granted only
to Participants who are Employees. Any provision of the Plan to the contrary
notwithstanding, (i) no Incentive Stock Option shall be granted more than ten
years from the date the Plan is adopted by the Board of Directors of the
Corporation and no Incentive Stock Option shall be exercisable more than ten
years from the date such Incentive Stock Option is granted, (ii) the Exercise
Price of any Incentive Stock Option shall not be less than the Market Value
per Share on the date such Incentive Stock Option is granted, (iii) any Incen-
tive Stock Option shall not be transferable by the Participant to whom such
Incentive Stock Option is granted other than by will or the laws of descent and
distribution, and shall be exercisable during such Participant's lifetime only
by such Participant, (iv) no Incentive Stock Option shall be granted to any
individual who, at the time such Incentive Stock Option is granted, owns stock
possessing more than ten percent of the total combined voting power of all
classes of stock of the Corporation or any Affiliate unless the Exercise
Price of such Incentive Stock Option is at least 110 percent of the Market
Value per Share at the date of grant and such Incentive Stock Option is not
exercisable after the expiration of five years from the date such Incentive
Stock Option is granted, and (v) the aggregate Market Value (determined as of
the time any Incentive Stock Option is granted) of the Shares with respect to
which Incentive Stock Options are exercisable for the first time by a
Participant in any calendar year shall not exceed $100,000.
9. Stock Appreciation Rights. A Stock Appreciation Right shall, upon
its exercise, entitle the Participant to whom such Stock Appreciation Right
was granted to receive a number of Shares or cash or combination thereof, as
the Committee in its discretion shall determine, the aggregate value of which
(i.e., the sum of the amount of cash and/or Market Value of such Shares on date
of exercise) shall equal (as nearly as possible, it being understood that the
Corporation shall not issue any fractional shares) the amount by which the
Market Value per Share on the date of such exercise shall exceed the Exercise
Price of such Stock Appreciation Right, multiplied by the number of Shares
with respect of which such Stock Appreciation Right shall have been exercised.
A Stock Appreciation Right may be Related to an Option or may be granted
independently of any Option as the Committee shall from time to time in each
case determine. At the time of grant of an Option the Committee shall
determine whether and to what extent a Related Stock Appreciation Right shall
be granted with respect thereto; provided, however, and notwithstanding any
other provision of the Plan, that if the Related Option is an Incentive Stock
Option, the Related Stock Appreciation Right shall satisfy all the restrictions
and limitations of Section 8 hereof as if such Related Stock Appreciation Right
were an Incentive Stock Option and as if other rights which are Related to
Incentive Stock Options were Incentive Stock Options. In the case of a Related
Option, such Related Option shall cease to be exercisable to the extent of
the Shares with respect to which the Related Stock Appreciation Right was
exercised. Upon the exercise or termination of a Related Option, any Related
Stock Appreciation Right shall terminate to the extent of the Shares with
respect to which the Related Option was exercised or terminated.
10. Restricted Stock and Performance Awards.
(a) Restricted Stock. The Committee is hereby authorized to grant Awards
of Restricted Stock to Participants with the following terms and conditions and
with such additional terms and conditions not inconsistent with the provisions
of the Plan as the Committee shall determine:
(i) Restrictions. Shares of Restricted Stock shall be subject to such
restrictions as the Committee may impose (including, without
limitation, any limitation on the right to vote a Share of Restricted
Stock or the right to receive any dividend or other right or property
with respect thereto), which restrictions may lapse separately or
in combination at such time or times, in such installments or other-
wise as the Committee may deem appropriate.
(ii) Stock Certificates. Any Restricted Stock granted under the Plan
shall be evidenced by issuance of a stock certificate or certificates,
which certificate or certificates shall be held by the Corporation.
Such certificate or certificates shall be registered in the name of
the Participant and shall bear an appropriate legend referring to the
restrictions applicable to such Restricted Stock.
(iii) Forfeiture; Delivery of Shares. Except as otherwise determined by
the Committee, upon Termination of Service during the applicable
restriction period, all Shares of Restricted Stock at such time
subject to restriction shall be forfeited to the Corporation;
provided, however, that the Committee may waive in whole or in part
any or all remaining restrictions with respect to Shares of Restricted
Stock. Shares representing Restricted Stock that is no longer subject
to restrictions shall be delivered to the holder thereof promptly
after the applicable restrictions lapse or are waived.
(b) Performance Awards. The Committee is hereby authorized to grant
performance Awards to Participants subject to the terms of the Plan and any
applicable Award Agreement. A performance Award granted under the Plan (i)
may be denominated or payable in cash, Shares (including, without limitation,
Restricted Stock), other securities, other Awards or other property and (ii)
shall confer on the holder thereof the right to receive payments, in whole or
in part, upon the achievement of such performance goals during such performance
periods as the Committee shall establish. Subject to the terms of the Plan and
any applicable Award Agreement, the performance goals to be achieved during any
performance period, the length of any performance period, the amount of any
performance Award granted and the amount of any payment or transfer to be made
pursuant to any performance Award shall be determined by the Committee.
11. Adjustments Upon Changes in Capitalization. In the event of any
change in the outstanding Shares subsequent to the effective date of the Plan
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
number, class and exercise price of shares with respect to which Awards have
been granted under the Plan shall be appropriately adjusted by the Committee,
whose determination shall be conclusive.
12. Effect of Merger and Change in Control.
(a) Merger. In the event of any merger, consolidation or combination
of the Corporation (other than a merger, consolidation or combination in which
the Corporation is the continuing entity and which does not result in the
outstanding Shares being converted into or exchanged for different securities,
cash or other property, or any combination thereof) pursuant to a plan or
agreement the terms of which are binding upon all shareholders of the Corpora-
tion (except to the extent that dissenting shareholders may be entitled, under
statutory provisions or provisions contained in the articles of incorporation,
to receive the appraised or fair value of their holdings), any Participant to
whom an Option or Right has been granted shall have the right (subject to the
provisions of the Plan and any limitation or vesting period applicable to such
Option or Right), thereafter and during the term of each such Option or Right,
to receive upon exercise of any such Option or Right an amount equal to the
excess of the fair market value on the date of such exercise of the securities,
cash or other property, or combination thereof, receivable upon such merger,
consolidation or combination in respect of a Share over the Exercise Price of
such Right or Option, multiplied by the number of Shares with respect to which
such Option or Right shall have been exercised. Such amount may be payable
fully in cash, fully in one or more of the kind or kinds of property payable
in such merger, consolidation or combination, or partly in cash and partly in
one or more of such kind or kinds of property, all in the discretion of the
Committee.
(b) Change in Control. Each of the events specified in the following
clauses (i) through (iii) of this Section 12(b) shall be deemed a "change in
control": (i) any third person, including a "group," as defined in Section 13
(d)(3) of the Securities Exchange Act of 1934, shall become the beneficial
owner of shares of the Corporation with respect to which 25% or more of the
total number of votes for the election of the Board of Directors of the Corpor-
ation may be cast, (ii) as a result of, or in connection with, any cash tender
offer, merger or other business combination, sale of assets or contested
election, or combination of the foregoing, the persons who were directors of
the Corporation shall cease to constitute a majority of the Board of Directors
of the Corporation, or (iii) the shareholders of the Corporation shall approve
an agreement providing either for a transaction in which the Corporation will
cease to be an independent, publicly owned corporation or for a sale or other
disposition of all or substantially all the assets of the Corporation. Upon a
change in control, unless the Committee shall have otherwise provided in the
Award Agreement, any restricted period with respect to Restricted Stock awarded
to such Participant shall lapse and all Shares awarded as Restricted Stock
shall become fully vested in the Participant to whom such Shares were awarded.
If a tender offer or exchange offer for Shares (other than such an offer by
the Corporation) is commenced, or if the event specified in clause (iii) above
shall occur, unless the Committee shall have otherwise provided in the Award
Agreement, all Options and Stock Appreciation Rights granted and not fully
exercisable shall become exercisable in full upon the happening of such event;
provided, however, that no Option or Stock Appreciation Right that has
previously been exercised or otherwise terminated shall become exercisable.
13. Assignments and Transfers. No Award nor any right or interest of a
Participant under the Plan in any instrument evidencing any Award under the
Plan may be assigned, encumbered or transferred except, in the event of the
death of a Participant, by will or the laws of descent and distribution or in
the case of Awards other than Incentive Stock Options pursuant to a qualified
domestic relations order, as defined in the Code or Title I of ERISA or the
rules thereunder.
14. Employee Rights Under the Plan. No director, officer or employee
shall have a right to be selected as a Participant nor, having been so
selected, to be selected again as a Participant and no director, officer,
employee or other person shall have any claim or right to be granted an Award
under the Plan or under any other incentive or similar plan of the Corporation
or any Affiliate. Neither the Plan nor any action taken thereunder shall be
construed as giving any employee any right to be retained in the employ of the
Corporation or any Affiliate.
15. Delivery and Registration of Stock. The Corporation's obligation to
deliver Shares with respect to an Award shall, if the Committee so requests,
be conditioned upon the receipt of a representation as to the investment
intention of the Participant to whom such Shares are to be delivered, in such
form as the Committee shall determine to be necessary or advisable to comply
with the provisions of the Securities Act of 1933 or any other Federal, state
or local securities legislation or regulation. It may be provided that any
representation requirement shall become inoperative upon a registration of
the Shares or other action eliminating the necessity of such representation
under the Securities Act of 1933 or other applicable securities law. The
Corporation shall not be required to deliver any Shares under the Plan prior
to (i) the admission of such shares to listing on any stock exchange on which
Shares may then be listed, and (ii) the completion of such registration or
other qualification of such Shares under any state or Federal law, rule or
regulation, as the Committee shall determine to be necessary or advisable.
16. Withholding Tax. Upon the termination of the restricted period with
respect to any shares of Restricted Stock (or at any such earlier time, if any,
that an election is made by the Participant under Section 83(b) of the Code,
or any successor provision thereto, to include the value of such shares in
taxable income), the Corporation shall have the right to require the Participant
or other person receiving such shares to pay the Corporation the amount of any
taxes which the Corporation is required to withhold with respect to such shares,
or, in lieu thereof, to retain or sell without notice, a sufficient number of
shares held by it to cover the amount required to be withheld. The Corporation
shall have the right to deduct from all dividends paid with respect to shares
of Restricted Stock the amount of any taxes which the Corporation is required
to withhold with respect to such dividend payments.
The Corporation shall have the right to deduct from all amounts paid in
cash with respect to the exercise of a Right under the Plan any taxes required
by law to be withheld with respect to such cash payments. Where a Participant
or other person is entitled to receive Shares pursuant to the exercise of an
Option or Right pursuant to the Plan, the Corporation shall have the right to
require the Participant or such other person to pay the Corporation the amount
of any taxes which the Corporation is required to withhold with respect to
such Shares, or, in lieu thereof, to retain, or sell without notice, a number
of such Shares sufficient to cover the amount required to be withheld.
All withholding decisions pursuant to this Section 16 shall be at the sole
discretion of the Committee or the Corporation.
17. Amendment or Termination. The Board of Directors of the Corporation
may amend, suspend or terminate the Plan or any portion thereof at any time,
but (except as provided in Section 11 hereof) no amendment shall be made with-
out approval of the shareholders of the Corporation which shall (i) increase
the aggregate number of Shares with respect to which Awards may be made under
the Plan (except pursuant to Section 11), (ii) materially increase the benefits
accruing to Participants, (iii) materially change the requirements as to
eligibility for participation in the Plan or (iv) change the class of persons
eligible to participate in the Plan; provided, that no such amendment,
suspension or termination shall impair the rights of any Participant, without
his consent, in any Award made pursuant to the Plan.
18. Effective Date and Term of Plan. The Plan shall become effective
upon its adoption by shareholders of the Corporation. It shall continue in
effect for a term of ten years unless sooner terminated under Section 17 hereof.
19. Initial Grant. Following adoption of this Plan by the shareholders
of the Corporation at the Corporation's 1997 Annual Meeting of Shareholder of
the Corporation, each member of the Board of Directors of the Corporation who
is not an Employee shall be granted a ten-year, Non-Qualified Stock Option to
purchase 900 shares at an Exercise Price per share equal to the Market Value
per share of the Shares on the date of grant. Any director who is elected or
appointed hereafter, but during the term of the Plan, who is not then an
Employee shall be granted a ten-year, Non-Qualified Stock Option to purchase
900 shares at an Exercise Price per share equal to the Market Value per share
of the Shares on the date of grant, the number of Shares being subject to
possible adjustment as provided in Section 11 in the event of intervening
changes in capitalization; provided, however, that no director shall receive
more than one Award pursuant to this Section 19.
Each Option issued under this Section 19 shall be evidenced by a Non-
Qualified Stock Option Agreement in a form approved by the Board of Directors
and shall be subject in all respects to the terms and conditions of this Plan,
which are controlling. All Options granted pursuant to this section shall
vest and become exercisable in five equal annual installments, with the first
installment vesting and becoming exercisable on the first anniversary of the
date of grant, subject to the Director maintaining Continuous Service with
the Corporation or its Affiliates since the date of grant.