Exhibit 10.13
FRANKLIN FIRST FINANCIAL CORP.
1988 STOCK INCENTIVE PLAN
Adopted May 19, 1988
Amended July 5, 1988
1. Definitions. As used herein, the following terms have the
meanings hereinafter set forth.
(a) "Affiliate" shall mean a corporation which is a parent
corporation or a subsidiary corporation with respect to the Company within the
meaning of section 425(e) or 425(f) of the Code.
(b) "Award" shall mean a transfer of Common Stock subject to
conditions of forfeiture (or the right to purchase Common Stock subject to
conditions of forfeiture) made pursuant to Sections 3 and 10 of the Plan.
(c) "Award Agreement" shall mean the agreement between the
Company and a Grantee with respect to an Award made pursuant to the Plan.
(d) "Board" shall mean the Board of Directors of the Company
or of an Affiliate; "Company's Board" shall mean the Board of Directors of
Franklin First Financial Corp.
(e) "Code" shall mean the Internal Revenue Code of 1986, as
amended, and the same as may be further amended from time to time.
(f) "Committee" shall mean the Company's Board, subject to the
right of the Board of Directors to designate by unanimous vote some other
committee to make recommendations to it for the grant of Options and Awards
and/or to assume other designated responsibilities in the administration of the
Plan. Until another committee is so designated, the Operations Committee of the
Company's Board is designated to make recommendations to the Committee regarding
the granting of Options and Awards.
(g) "Common Stock" shall mean the Company's common stock, par
value $0.01 per share.
(h) "Company" shall mean Franklin First Financial Corp., a
Pennsylvania business corporation.
(i) "Grantee" shall mean a person to whom an Award has been
granted pursuant to the Plan.
(j) "Incentive Stock Option" or "ISO" shall mean an Option
granted pursuant to the Plan, which is intended to constitute an incentive stock
option within the
- 1 -
meaning of section 42 A(b) of the Code.
(k) "Option" shall mean the right to purchase Common Stock
granted pursuant to Sections 3 and 7 of the Plan.
(l) "Option Agreement" shall mean the agreement between the
Company and the Optionee under which the Optionee may purchase Common Stock
pursuant to the Plan.
(m) "Optionee" shall mean a person to whom an Option has been
granted pursuant to the Plan.
(n) "Plan" shall mean the Franklin First Financial Corp. 1988
Stock Incentive Plan, as set forth herein, and the same as may be amended from
time to time.
(o) "Stock Appreciation Right" or "SAR" shall mean the right
granted pursuant to the Plan in connection with an Option to surrender the
Option and receive in exchange therefor an amount equal to the excess of the
fair market value of the Common Stock subject to the Option so surrendered over
the exercise price of the Option.
2. Purpose. The Plan is intended as an additional incentive to key
employees and non-employee members of the Board to enter into or remain in the
employ of the Company or any Affiliate or to serve on the Board and to devote
themselves to the Company's success and to reward past service of such persons
by providing them with an opportunity to acquire or increase a proprietary
interest in the Company through receipt of Awards and/or Options.
3. Administration. The Plan shall be administered by the Committee.
(a) Meetings. The Committee shall hold meetings at such times
and places as it may determine. Acts approved at a meeting by a majority of the
members of the Committee or acts approved in writing by the unanimous consent of
the members of the Committee shall be the valid acts of the Committee.
(b) Grants. The Committee shall from time to time at its
discretion grant Awards and Options pursuant to the terms of the Plan. Subject
to Section 4, the Committee shall have plenary authority to determine the
persons to whom and the times at which Awards or Options shall be granted, the
number of shares of Common Stock to be covered thereby and the price and other
terms and conditions thereof, including in the case of an Option a specification
with respect to whether or not the Option is intended to be an ISO and/or to
include an SAR. In making such determinations the Committee may take into
account the nature of the person's services and responsibilities, the person's
present and potential contribution to the Company's success and such other
factors as it may deem relevant. The interpretation and construction by the
Committee of any provision of the Plan or of any Award or Option granted under
it shall be final, binding
- 2 -
and conclusive.
(c) Exculpation. Each member of the Committee shall be
exculpated from personal liability for services in connection with the Plan to
the same extent that directors of the Company would be exculpated from liability
for their services on the Board pursuant to any applicable provision of law or
the terms of the Company's Articles of Incorporation or By-laws.
(d) Indemnification. Each member of the Board or of the
Committee shall be entitled without further act on his part to indemnity from
the Company to the fullest extent provided by applicable law and the Company's
Articles of Incorporation or By-laws in connection with or arising out of any
action, suit or proceeding with respect to the administration of the Plan or the
granting of Awards or Options under it in which he may be involved by reason of
his being or having been a member of the Board or the Committee, whether or not
he continues to be such member of the Board or the Committee at the time of the
action, suit or proceeding.
4. Eligibility.
(a) Key Employees. All key employees of the Company or an
Affiliate (including members of the Board who are key employees) shall be
eligible to receive Awards or Options hereunder. The Committee, in its sole
discretion, shall determine whether an individual qualifies as a key employee.
(b) Current Outside Directors. On the date this Plan becomes
effective under subsection 6(a), each person then serving on the Board who is
not an employee of the Company or an Affiliate shall be granted an Option to
purchase 5,000 shares of Common Stock at an exercise price equal to the initial
offering price of the Common Stock. Except as provided in this subsection, no
non-employee director of the Company or an Affiliate on the date this Plan
becomes effective shall be eligible to be granted Options or Awards under this
Plan.
(c) Future Outside Directors. Each person who begins his
initial service on the Board after the date this Plan becomes effective shall be
eligible to receive Options but not Awards hereunder; however, any Option shall
not be an ISO unless such person is also an employee of the Company or an
Affiliate. The Committee shall specify at the time of grant of an Option whether
such Option includes a SAR.
5. Shares. The aggregate maximum number of shares of the Common Stock
for which Awards or Options may be issued under the Plan is 517,500 shares,
adjusted as provided in Section 11. Shares shall be issued from authorized and
unissued Common Stock or Common Stock held in or hereafter acquired for the
treasury of the Company. If any outstanding Option granted under the Plan
expires, lapses or is terminated for any reason or if any shares which are
subject to an Award are forfeited for any reason, the Shares allocable thereto
may again be the subject of an Award or Option granted pursuant
- 3 -
to the Plan.
6. Effective Date and Term of the Plan.
(a) Effective Date. The Plan shall be effective as of the date
of the commencement of the Company's initial underwritten public offering of its
Common Stock. If the Plan is not approved within one year after such effective
date by a majority of the outstanding voting stock of the Company voting either
in person or by proxy, at a duly called meeting of the shareholders, then no
Option granted pursuant to the Plan shall be an ISO and all ISOs previously
granted under the Plan shall remain outstanding but shall not be treated as
ISOs.
(b) Term. This Plan shall terminate on May 18, 1998, and no
Option or Award shall be granted hereunder after May 18, 1998.
7. Terms and Conditions of Options. Options granted pursuant to the
Plan shall be evidenced by written Option Agreements in such form as the
Committee shall from time to time approve, which Option Agreements shall comply
with and be subject to the following terms and conditions and such other terms
and conditions which the Committee shall from time to time require which are not
inconsistent with the terms of the Plan.
(a) Number of Shares. Each Option Agreement shall state the
number of shares to which it pertains.
(b) Exercise Price. Each Option Agreement shall state the
exercise price at which shares covered by the Option may be purchased. In the
case of an ISO, the exercise price shall be at least 100% of the fair market
value of the Common Stock on the date the ISO is granted and, in the case of an
Option that is not an ISO, the exercise price shall be at least 85% of the fair
market value of the Common Stock on the date such Option is granted, as fair
market value determined by the Committee; provided, however, if an ISO is
granted to an Optionee who then owns, directly or by attribution under section
425(d) of the Code, shares possessing more than ten percent of the total
combined voting power of all classes of stock of the Company or an Affiliate,
then the exercise price shall be at least 110% of the fair market value of the
shares on the date the Option is granted. If the Common Stock is traded in a
public market, then the fair market value per share shall be the mean between
the closing "bid" and "asked" prices thereof or the mean between the highest and
lowest quoted selling prices thereof, as applicable, as the Committee
determines, on the day the Option is granted as reported in customary financial
reporting services.
(c) Medium of Payment. An Optionee shall pay for shares (i) in
cash, (ii) by certified check payable to the order of the Company, or (iii) by
such other mode of payment as the Committee may approve. Furthermore, the
Committee may provide in an Option Agreement that payment may be made all or in
part in shares of the Common
- 4 -
Stock held by the Optionee. If payment is made in whole or in part in shares of
the Common Stock, then the Optionee shall deliver to the Company certificates
registered in the name of such Optionee representing shares of Common Stock
owned by such Optionee, free of all liens, claims and encumbrances of every
kind, accompanied by stock powers duly endorsed in blank by the Optionee. For
purposes of determining the amount of payment, shares of Common Stock tendered
as payment by the Optionee shall be valued at fair market value (as determined
by the Committee under subsection 6(b)) on the date of exercise (as determined
under Section 9). Notwithstanding the foregoing, the Committee, in its sole
discretion, may refuse to accept shares of Common Stock in payment of the
exercise price. In that event, any certificates representing shares of Common
Stock which were delivered to the Company shall be returned to the Optionee with
notice of the refusal of the Committee to accept such shares in payment of the
exercise price. The Committee may impose from time to time such limitations and
prohibitions on the use of shares of the Common Stock to exercise an Option as
it deems appropriate.
(d) Termination of Options. No Option shall be exercisable
after the first to occur of the following:
(i) Expiration of the term specified in the Option
Agreement, which shall not exceed (A) ten years from the date of grant, or (B)
five years from the date of grant with respect to an ISO if the Optionee on the
date of grant owns, directly or by attribution under section 425(d) of the Code,
shares possessing more than ten percent of the total combined voting power of
all classes of stock of the Company or of an Affiliate;
(ii) Termination of the Optionee's employment or
service with the Company and its Affiliates, subject to such additional periods
not to exceed one year as the Committee shall determine, which periods may vary
with the reason for termination including, without limitation, the Optionee's
death, disability or retirement;
(iii) The date set by the Committee to be an
accelerated expiration date in the event of dissolution or liquidation of the
Company or consummation of any acquisition or business combination transaction
in which the Company is not the surviving or acquiring entity or in which the
Company becomes an 80% or more owned subsidiary of another person or company, in
which case the Committee may take whatever other action with respect to the
Option, including acceleration of any exercise provisions, it deems necessary or
desirable; or
(iv) A finding by the Committee, after full
consideration of the facts presented on behalf of both the Company and the
Optionee, that the Optionee has breached his employment or service contract with
the Company or an Affiliate, or has been engaged in any sort of disloyalty to
the Company or an Affiliate, including, without limitation, fraud, embezzlement,
theft, commission of a felony or proven dishonesty in the course of his
employment or service or has disclosed trade secrets or confidential
- 5 -
information of the Company or an Affiliate. In such event, in addition to
immediate termination of the Option, the Optionee, upon a determination by the
Committee, shall automatically forfeit all shares for which the Company has not
yet delivered the share certificates upon refund by the Company of the exercise
price.
(e) Transfers. No Option granted under the Plan may be
transferred, except by will or by the laws of descent and distribution. During
the lifetime of the person to whom an Option is granted, such Option may be
exercised only by him or his legal representative in the event of his
incompetence.
(f) Other Provisions. The Option Agreements shall contain such
other provisions including, without limitation, additional restrictions upon the
exercise of the Option or additional limitations upon the term of the Option, as
the Committee shall deem advisable.
(g) Amendment. The Committee shall have the right to amend
Option Agreements issued to an Optionee subject to his consent, except that the
consent of the Optionee shall not be required for any amendment made under
subsection 7(d)(iii).
8. Stock Appreciation Rights (SARs).
(a) In General. Subject to the terms and conditions of the
Plan, the Committee may, in its sole and absolute discretion, grant to an
Optionee in connection with an Option rights to surrender to the Company, in
whole or in part, an Option, and to receive in exchange therefor payment by the
Company of an amount equal to the excess of the fair market value of the shares
of Common Stock subject to such Option, or portion thereof, so surrendered
(determined in the manner described in subsection 7(b) as of the date the SARs
are exercised) over the exercise price to acquire such shares. Such payment may
be made, as determined by the Committee in accordance with subsection 8(c) below
and set forth in the Option Agreement, either in shares of Common Stock or in
cash or in any combination thereof.
(b) Grant. Each SAR shall relate to a specific Option granted
under the Plan and shall be granted to the Optionee concurrently with the grant
of such Option by inclusion of appropriate provisions in the Option Agreement
pertaining thereto. The number of SARs granted to an Optionee shall not exceed
the number of shares of Common Stock which such Optionee is entitled to purchase
pursuant to the related Option. The number of SARs held by an Optionee shall be
reduced by (i) the number of SARs exercised under the provisions of the Option
Agreement pertaining to the related Option, and (ii) the number of shares of
Common Stock purchased pursuant to the exercise of the related Option.
(c) Payment. The Committee shall have sole discretion to
determine whether, and shall set forth in the Option Agreement pertaining to the
related Option the circumstances under which, payment in respect of SARs granted
to any Optionee shall be
- 6 -
made in shares of Common Stock, or in cash, or in a combination thereof. If
payment is made in Common Stock, the number of shares of Common Stock which
shall be issued pursuant to the exercise of SARs shall be determined by dividing
(i) the total number of SARs being exercised, multiplied by the amount by which
the fair market value (as determined under subsection 7(b)) of a share of Common
Stock on the exercise date exceeds the exercise price for shares covered by the
related Option, by (ii) the fair market value of a share of Common Stock on the
exercise date of the SARs. No fractional share of Common Stock shall be issued
on exercise of an SAR; cash shall be paid by the Company to the individual
exercising an SAR in lieu of any such fractional share. If payment on exercise
of an SAR is to be made in cash, the individual exercising the SAR shall receive
in respect of each share to which exercise relates an amount of money equal to
the difference between the fair market value of a share of Common Stock on the
exercise date and the exercise price for shares covered by the related Option.
(d) Limitations. SARs shall be exercisable at such times and
under such terms and conditions as the Committee, in its sole and absolute
discretion, shall determine and set forth in the Option Agreements pertaining to
the related Options; provided, however, that an SAR may be exercised only at
such times and by such individuals as the related Option under the Plan and the
Option Agreement may be exercised.
9. Exercise. No Option or SAR associated therewith shall be deemed to
have been exercised prior to the receipt by the Company of written notice of
such exercise and, in the case of an Option exercise, of payment in full of the
exercise price for the shares to be purchased. The date on which the Company
receives such notice, together with payment of the exercise price and all
information or acknowledgements required herein, shall be the exercise date of
the Option or SAR. Each such notice shall specify the number of shares to which
the exercise pertains and, in the case of an Option, shall (unless the shares
are covered by a then current registration statement or a Notification under
Regulation A under the Securities Act of 1933, as amended (the "Act")), contain
the Optionee's acknowledgment in form and substance satisfactory to the Company
that (a) such shares are being purchased for investment and not for distribution
or resale (other than a distribution or resale which, in the opinion of counsel
satisfactory to the Company, may be made without violating the registration
provisions of the Act), (b) the Optionee has been advised and understands that
(i) the shares have not been registered under the Act and are "restricted
securities" within the meaning of Rule 144 under the Act and are subject to
restrictions on transfer and (ii) the Company is under no obligation to register
the shares under the Act or to take any action which would make available to the
Optionee any exemption from such registration, (c) such shares may not be
transferred without compliance with all applicable federal and state securities
laws, and (d) an appropriate legend referring to the foregoing restrictions on
transfer may be endorsed on the certificates. Notwithstanding the above, should
the Company be advised by counsel that issuance of shares should be delayed
pending (A) registration under federal or state securities laws or (B) the
receipt of an opinion that an appropriate exemption therefrom is
- 7 -
available, the Company may defer exercise of any Option granted hereunder until
either such event in (A) or (B) has occurred.
10. Terms and Conditions of Awards. Awards granted pursuant to the Plan
shall be evidenced by written Award Agreements in such form as the Committee
shall from time to time approve, which Award Agreements shall comply with and be
subject to the following terms and conditions and such other terms and
conditions which the Committee shall from time to time require which are not
inconsistent with the terms of the Plan.
(a) Number of Shares. Each Award Agreement shall state the
number of shares of Common Stock to which it pertains.
(b) Purchase Price. Each Award Agreement shall specify the
purchase price, if any, which applies to the Award. If the Board specifies a
purchase price, the Grantee shall be required to make payment on or before the
date specified in the Award Agreement, which date shall not be more than 30 days
from the date the Award is made. Grantee shall pay for shares (i) in cash, (ii)
by certified check payable to the order of the Company, or (iii) by such other
mode of payment as the Committee may approve.
(c) Transfer. In the case of an Award which provides for a
transfer of shares without any payment by the Grantee, the transfer shall take
place on the date specified in the Award Agreement. In the case of an Award
which provides for a payment, the transfer shall take place on the date payment
is delivered to the Company. Stock certificates evidencing shares transferred
pursuant to an Award shall be issued in the sole name of the Grantee.
Notwithstanding the foregoing, as a precondition to a transfer, the Company may
require an acknowledgement by the Grantee as required under Section 9.
(d) Forfeiture Conditions. The Committee shall specify in an
Award Agreement the conditions under which the Grantee of that Award shall be
required to convey to the Company the shares covered by the Award. Upon the
occurrence of any such specified condition, the Grantee shall forthwith
surrender and deliver to the Company the certificates evidencing such shares as
well as completely executed instruments of conveyance. The Committee, in its
discretion, may provide that certificates for shares transferred pursuant to an
Award be held in escrow by the Company or an appropriate officer of the Company
until such time as each and every forfeiture condition has lapsed and that the
Grantee be required, as a condition of the transfer, to deliver to such escrow
agent stock powers covering the transferred shares duly endorsed by the Grantee.
Stock certificates evidencing shares subject to forfeiture shall bear a legend
to the effect that the Common Stock evidenced thereby is subject to repurchase
or conveyance to the Company in accordance with an Award made under the Plan and
that the shares may not be sold or otherwise transferred.
(e) Lapse of Conditions. Upon termination or lapse of each and
every
- 8 -
forfeiture condition, the Company shall cause certificates without the legend
referring to the Company's repurchase right (but with any other legends that may
be appropriate) evidencing the shares covered by the Award to be issued to the
Grantee upon the Grantee's surrender of the legended certificates held by him to
the Company.
(f) Rights as Shareholder. Upon payment of the purchase price,
if any, for shares covered by an Award and compliance with the acknowledgement
requirement of subsection 10(c), the Grantee shall have all of the rights of a
shareholder with respect to the shares of Common Stock covered thereby,
including the right to vote the shares and receive all dividends and other
distributions paid or made with respect thereto.
11. Adjustments on Changes in Capitalization. The aggregate number of
shares and class of shares as to which Awards or Options may be granted
hereunder, the number of shares covered by each outstanding Option and the
exercise price thereof, and the number of shares subject to forfeiture with
respect to each Award shall be appropriately adjusted in the event of a stock
dividend, stock split, recapitalization or other change in the number or class
of issued and outstanding equity securities of the Company resulting from a
subdivision or consolidation of the Common Stock and/or other outstanding equity
security or a recapitalization or other capital adjustment (not including the
issuance of Common Stock on the conversion of other securities of the Company
which are convertible into Common Stock) affecting the Common Stock which is
effected without receipt of consideration by the Company. In the event of any
adjustment relating to shares covered by an Award and still subject to
forfeiture, the foregoing provisions and the provisions of subsection 10(d)
shall apply to the certificates issued in connection with the adjustment. The
Committee shall have authority to determine the adjustments to be made under
this Section and any such determination by the Committee shall be final, binding
and conclusive; provided, however, that no adjustment shall be made which will
cause an ISO to lose its status as such without the consent of the Optionee.
12. Amendment of the Plan. The Company's Board may amend the Plan from
time to time in such manner as it may deem advisable. Nevertheless, the
Company's Board may not, without obtaining approval by vote of a majority of the
outstanding voting stock of the Company, within twelve months before or after
such action, change the class of individuals eligible to receive an ISO, extend
the expiration date of the Plan or increase the maximum number of shares as to
which Awards or Options may be granted, except as provided in Section 11 hereof.
No amendment to the Plan shall adversely affect any outstanding Option or Award,
however, without the consent of its holder.
13. Continued Employment. The grant of an Award or Option pursuant to
the Plan shall not be construed to imply or to constitute evidence of any
agreement, express or implied, on the part of the Company or any Affiliate to
retain an Optionee or Grantee in the employ of the Company or an Affiliate or as
a member of the Board or in any other capacity.
- 9 -
14. Withholding of Taxes. Whenever the Company proposes or is required
to deliver or transfer shares or cash in connection with the exercise of an
Option, SAR or Award, the company shall have the right to (a) require the
intended transferee to remit or otherwise make available to the Company an
amount sufficient to satisfy any federal, state and/or local withholding tax
requirements prior to the delivery or transfer of any certificate or
certificates for such shares or (b) take whatever action it deems necessary to
protect its interests with respect to tax liabilities, including, without
limitation, withholding a portion of any shares or cash otherwise deliverable
pursuant to the Plan. The Company's obligation to make any delivery or transfer
of shares under the Plan shall be conditioned on the Optionee's or Grantee's
compliance with any withholding requirement to the satisfaction of the Company.
- 10 -