THREE RIVERS BANCORP, INC.
LONG-TERM INCENTIVE PLAN
1. Purpose. The Three Rivers Bancorp, Inc. Long-Term
Incentive Plan ("Program") is intended to secure for Three
Rivers Bancorp, Inc. (the "Company") and its shareholders the
benefits arising from ownership of the Company's common stock,
$0.01 par value per share ("Common Stock"), by those selected
executives and other key employees and directors of the Company
who will be responsible for its future growth. The Program is
designed to help attract and retain superior personnel for
positions of substantial responsibility with the Company, and to
provide key employees with an additional incentive to contribute
to the success of the Company.
2. Elements of the Program. In order to maintain
flexibility in the award of stock benefits, the Program is
comprised of four parts. The first part is the Incentive Stock
Option Plan ("Incentive Plan"). The second part is the
Compensatory Stock Option Plan ("Compensatory Plan"). The third
part is the Stock Appreciation Rights Plan ("S.A.R. Plan"). The
fourth part is the Performance Shares Plan ("Performance Plan").
Copies of the Incentive Plan, Compensatory Plan, S.A.R. Plan,
and Performance Plan are attached hereto as Part I, Part II,
Part III and Part IV, respectively, and are collectively
referred to herein as the "Plans." The grant of an option,
appreciation right or performance share under one of the Plans
shall not be construed to prohibit the grant of an option,
appreciation right or performance share under any of the other
Plans.
3. Applicability of General Provisions. Unless any Plan
specifically indicates to the contrary, all Plans shall be
subject to the General Provisions of the Stock Compensation
Program set forth below.
4. Administration of the Plans. The Plans shall be
administered, construed, governed and amended in accordance with
their respective terms.
GENERAL PROVISIONS OF STOCK COMPENSATION PROGRAM
Article 1. Administration. The Program shall be
administered by the Compensation Committee of the Board of
Directors of the Company. The committee, when acting to
administer the Program, is referred to as the "Program
Administrators." Any action of the Program Administrators shall
be taken by majority vote or the unanimous written consent of
the Program Administrators. The Board of Directors, with the
Program Administrators not voting, shall administer the Program
with respect to the options granted to the Program
Administrators in accordance with the provisions of Plan II. No
Program Administrator or member of the Board of Directors of the
Company or any parent or subsidiary, shall be liable for any
action or determination made in good faith with respect to the
Program or to any option, stock appreciation right, or
performance share granted thereunder.
Article 2. Authority of Program Administrators. Subject
to the other provisions of this Program, and with a view to
effecting its purpose, the Program Administrators shall have
sole authority in their absolute discretion: (a) to construe
and interpret the Program; (b) to define the terms used herein;
(c) to prescribe, amend, and rescind rules and regulations
relating to the Program; (d) to determine the employees to whom
options, appreciation rights and performance shares shall be
granted under the Program; (e) to determine the time or times at
which options, appreciation rights and performance shares shall
be granted under the Program; (f) to determine the number of
shares subject to any option or stock appreciation right under
the Program and the number of shares to be awarded as
performance shares under the Program as well as the option
price, and the duration of each option, appreciation right and
performance share, and any other terms and conditions of
options, appreciation rights and performance shares; (g) to make
any other determinations necessary or advisable for the
administration of the Program and to do everything necessary or
appropriate to administer the Program. All decisions,
determinations, and interpretations made by the Program
Administrators shall be binding and conclusive on all
participants in the Program and on their legal representatives,
heirs and beneficiaries.
Article 3. Maximum Number of Shares Subject to the Program.
The maximum aggregate number of shares of Common Stock available
pursuant to the Plans, subject to adjustment as provided in
Article 6 hereof, shall be equal to 300,000 shares of Common
Stock. If any of the options granted under this Program expire
or terminate for any reason before they have been exercised in
full, the unpurchased shares subject to those expired or
terminated options shall again be available for the purposes of
the Program. If the performance objectives associated with the
grant of any performance share(s) are not achieved within the
specified performance period or if the performance share grant
terminates for any reason before the performance objective date
arrives, the shares of Common Stock associated with such
performance shares shall again be available for the purposes of
the Program.
Article 4. Eligibility and Participation. Only regular
full-time employees of the Company, including officers whether
or not directors of the Company, or of any parent or any
subsidiary, shall be eligible for selection by the Program
Administrators to participate in the Program. Directors who are
not full-time employees of the Company shall only be eligible to
participate in Plan II of the Program.
Article 5. Effective Date and Term of Program. The
Program shall become effective upon its adoption by the Board of
Directors of the Company and subsequent approval of the Program
by a majority of the total votes eligible to be cast at a
meeting of shareholders, which vote shall be taken within 12
months of adoption of the Program by the Company's Board of
Directors; provided, however, that options, appreciation rights,
and performance shares may be granted under this Program prior
to obtaining shareholder approval of the Program, but any such
options or appreciation rights or performance shares shall be
contingent upon such shareholder approval being obtained and may
not be exercised prior to such approval. The Program shall
continue in effect for a term of 10 years unless sooner
terminated under Article 2 of the General Provisions.
Article 6. Adjustments. If the shares of Common Stock of
the Company as a whole are increased, decreased, changed into,
or exchanged for a different number or kind of shares or
securities through merger, consolidation, combination, exchange
of shares, other reorganization, recapitalization,
reclassification, stock dividend, stock split or reverse stock
split, an appropriate and proportionate adjustment shall be made
in the maximum number and kind of shares as to which options,
appreciation rights and performance shares may be granted under
this Program. A corresponding adjustment changing the number or
kind of shares allocated to unexercised options, appreciation
rights, performance shares, or portions thereof, which shall
have been granted prior to any such change, shall likewise be
made. Any such adjustment in outstanding options and
appreciation rights shall be made without change in the
aggregate purchase price applicable to the unexercised portion
of the option or appreciation right, but with a corresponding
adjustment in the price for each share or other unit of any
security covered by the option or appreciation right. In making
any adjustment pursuant to this Article 6, any fractional shares
shall be disregarded.
Article 7. Termination and Amendment of Program. The
Program shall terminate no later than 10 years from the date
such Program is adopted by the Board of Directors, or the date
such Program is approved by the shareholders, whichever is
earlier. No options, appreciation rights, or performance shares
shall be granted under the Program after that date. The Board
of Directors may terminate the Program at any time. Subject to
the limitation contained in Article 8 of the General Provisions,
the Program Administrators may at any time amend or revise the
terms of the Program, including the form and substance of the
option, appreciation right, and performance shares agreements to
be used hereunder; provided that no amendment or revision shall
(a) increase the maximum aggregate number of shares that may be
sold, subjected to appreciation, or distributed pursuant to
options, appreciation rights, or performance shares granted
under this Program, except as permitted under Article 6 of the
General Provisions; (b) change the minimum purchase price for
shares under Section 4 of Plans I and II; (c) increase the
maximum term established under the Plans for any option,
appreciation right, or performance share; or (d) permit the
granting of an option, appreciation right, or performance share
to anyone other than as provided in Article 4 of the General
Provisions.
Article 8. Prior Rights and Obligations. No amendment,
suspension, or termination of the Program shall, without the
consent of the employee who has received an option, appreciation
right, or performance share, alter or impair any of that
employee's rights or obligations under any option, appreciation
right or performance share granted under the Program prior to
such amendment, suspension, or termination.
Article 9. Privileges of Stock Ownership. Notwithstanding
the exercise of any options granted pursuant to the terms of
this Program or the achievement of any performance objective
specified in any performance share granted pursuant to the terms
of this Program, no employee shall have any of the rights or
privileges of a shareholder of the Company in respect of any
shares of stock issuable upon the exercise of his or her option
or achievement of his or her performance goal until certificates
representing the shares have been issued and delivered. No
shares shall be required to be issued and delivered upon
exercise of any option or achievement of any performance goal as
specified in a performance share unless and until all of the
requirements of law and of all regulatory agencies having
jurisdiction over the issuance and delivery of the securities
shall have been fully complied with. No adjustment shall be
made for dividends or any other distributions for which the
record date is prior to the date on which such stock certificate
is issued.
Article 10. Reservation of Shares of Common Stock. The
Company, during the term of this Program, will at all times
reserve and keep available such number of shares of its Common
Stock as shall be sufficient to satisfy the requirements of the
Program. In addition, the Company will from time to time, as is
necessary to accomplish the purposes of this Program, seek to
obtain from any regulatory agency having jurisdiction, any
requisite authority in order to issue and sell shares of Common
Stock hereunder. The inability of the Company to obtain from
any regulatory agency having jurisdiction the authority deemed,
by the Company's counsel, to be necessary to the lawful issuance
and sale of any shares of its stock hereunder shall relieve the
Company of any liability in respect of the non-issuance or sale
of the stock as to which the requisite authority shall not have
been obtained.
Article 11. Tax Withholding. The exercise of any option,
appreciation right, or performance share granted under the
Program is subject to the condition that if at any time the
Company shall determine, in its discretion, that the
satisfaction of withholding tax or other withholding liabilities
under any state or federal law is necessary or desirable as a
condition of, or in any connection with, such exercise or the
delivery or purchase of shares pursuant thereto, then in such
event, the exercise of the option, appreciation right or
performance share shall not be effective unless such withholding
tax or other withholding liabilities shall have been satisfied
in a manner acceptable to the Company.
Article 12. Employment. Nothing in the Program or in any
option, stock appreciation right, or performance share award,
shall confer upon any eligible employee any right to continued
employment by the Company, or by any parent or subsidiary
corporation, or limit in any way the right of the Company or any
parent or subsidiary corporation at any time to terminate or
alter the terms of that employment.
PART I
THREE RIVERS BANCORP, INC.
INCENTIVE STOCK OPTION PLAN
Section 1. Purpose. The purpose of the Three Rivers
Bancorp, Inc. Incentive Stock Option Plan ("Incentive Plan") is
to promote the growth and general prosperity of the Company by
permitting the Company to grant options to purchase shares of
its Common Stock. The Incentive Plan is designed to help
attract and retain superior personnel for positions of
responsibility with the Company and any parent or subsidiary,
and to provide key employees with an additional incentive to
contribute the success of the Company. The Company intends that
options granted pursuant to the provisions of the Incentive Plan
will qualify and will be identified as "incentive stock options"
within the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended ("Code"). This Incentive Plan is Part I of
the Company's Stock Compensation Program ("Program"). Unless
any provision herein indicates to the contrary, this Incentive
Plan shall be subject to the General Provisions of the Program.
Section 2. Option Terms and Conditions. The terms and
conditions of options granted under the Incentive Plan may
differ from one another as the Program Administrators shall, in
their discretion, determine, as long as all options granted
under the Incentive Plan satisfy the requirements of the
Incentive Plan. The written agreement evidencing options
granted under the Incentive Plan shall be substantially in the
form attached hereto as Exhibit "A," with such changes thereto
as the Program Administers shall make in accordance with the
authority granted to them hereunder.
Section 3. Duration of Options. Each option and all
rights thereunder granted pursuant to the terms of the Incentive
Plan shall expire on the date determined by the Program
Administrators, but in no event shall any option granted under
the Incentive Plan expire later than 10 years from the date on
which the option is granted, except that any employee who owns
more than 10% of the combined voting power of all classes of
stock of the Company, or of any parent or subsidiary, must
exercise any options within five years from the date of grant.
In addition, each option shall be subject to early termination
as provided in the Incentive Plan.
Section 4. Purchase Price. The purchase price for shares
acquired pursuant to the exercise, in whole or in part, of any
option shall not be less than the fair market value of the
shares at the time of the grant of the option; except that for
any employee who owns more than 10% of the combined voting power
of all classes of stock of the Company, or of any parent or
subsidiary, the purchase price shall not be less than 110% of
fair market value. Fair market value shall be determined by the
Program Administrators on the basis of such factors as they deem
appropriate; provided, however, that fair market value shall be
determined without regard to any restriction other than a
restriction which, by its terms, will never lapse, and further
provided, however, that if at the time the determination of fair
market value is made, those shares are subject to trading on a
national securities exchange or in a consolidated reporting
system in which last sales are reported, the fair market value
of those shares shall not be less than the average of the high
and low sales prices reported for the Common Stock on the date
on which the option is granted, or on the most recent trading
day preceding such date if no sales were reported for such date.
For purposes of this Section 4, the term "national securities
exchange" shall include the National Association of Securities
Dealers Automated Quotation System and the over-the-counter
market.
Section 5. Maximum Amount of Options in Any Calendar Year.
The aggregate fair market value (determined as of the time the
option is granted) of the Common Stock with respect to which
incentive stock options are first exercisable by any Optionee
during any calendar year under the terms of this Plan and all
such plans of the Company and any parent or subsidiary
corporation, shall not exceed $100,000. Any option in excess of
the foregoing limitations shall be granted pursuant to the
Company's Compensatory Stock Option Plan (Plan II), and shall be
clearly and specifically designated as not being an incentive
stock option.
Section 6. Exercise of Options. Each option shall be
exercisable in one or more installments during its term, and the
right to exercise may be cumulative as determined by the Program
Administrators. No option may be exercised for a fraction of a
share of Common Stock. The purchase price of any shares
purchased shall be paid in full, in cash or by certified or
cashier's check payable to the order of the Company or by shares
of Common Stock, if permitted by the Program Administrators, or
by a combination of cash, check, or shares of Common Stock, at
the time of exercise of the option; provided that the form(s) of
payment allowed the employee shall be established when the
option is granted. If any portion of the purchase price is paid
in shares of Common Stock, those shares shall be tendered at
their then fair market value as determined by the Program
Administrators in accordance with Section 4 of this Incentive
Plan. Notwithstanding the foregoing, Common Stock acquired
pursuant to the exercise of an incentive stock option may not be
tendered as payment unless the holding period requirements of
Code Section 422(a)(1) have been satisfied, and Common Stock not
acquired pursuant to the exercise of an incentive stock option
may not be tendered as payment unless it has been held,
beneficially and of record, for at least one year.
Section 7. Acceleration of Right of Exercise of
Installments. Notwithstanding the first sentence of Section 6
of this Incentive Plan, in the event the Company or its
shareholders enter into an agreement to dispose of all or
substantially all of the assets or stock of the Company by means
of a sale, merger or other reorganization, liquidation, or
otherwise, any option granted pursuant to the terms of the
Incentive Plan shall become immediately exercisable with respect
to the full number of shares subject to that option during the
period commencing as of the date of the agreement to dispose of
all or substantially all of the assets or stock of the Company
and ending when the disposition of assets or stock contemplated
by that agreement is consummated or the option is otherwise
terminated in accordance with its provisions or the provisions
of this Incentive Plan, whichever occurs first; provided,
however, that no option shall be immediately exercisable under
this Section 7 on account of any agreement to dispose of all or
substantially all of the assets or stock of the Company by means
of a sale, merger or other reorganization, liquidation, or
otherwise where the shareholders of the Company immediately
before the consummation of the transaction will own at least 50%
of the total combined voting power of all classes of stock
entitled to vote of the surviving entity, whether the Company or
some other entity, immediately after the consummation of the
transaction. In the event the transaction contemplated by the
agreement referred to in this Section 7 is not consummated, but
rather is terminated, cancelled, or expires, the options granted
pursuant to the Incentive Plan shall thereafter be treated as if
such agreement had never been entered into.
Notwithstanding the first sentence of Section 6 of this
Incentive Plan, in the event of a change in control of the
Company or threatened change in control of the Company as
determined by a vote of not less than a majority of the Board of
Directors of the Company, all options granted prior to such
change in control or threatened change of control shall become
immediately exercisable. The term "control" for purposes of
this Section shall refer to the acquisition of 24.99% or more of
the voting securities of the Company by any person or by persons
acting as a group within the meaning of Section 13(d) of the
Securities Exchange Act of 1934, as amended; provided, however,
that for purposes of the Incentive Plan, no change in control or
threatened change in control shall be deemed to have occurred if
prior to the acquisition of, or offer to acquire, 24.99% or more
of the voting securities of the Company, the full Board of
Directors of the Company shall have adopted, by not less than
two-thirds vote, a resolution specifically approving such
acquisition or offer. The term "person" for purposes of this
Section refers to an individual or a corporation, partnership,
trust, association, joint venture, pool, syndicate, sole
proprietorship, unincorporated organization or any other form of
entity not specifically listed herein.
Section 8. Written Notice Required. Any option granted
pursuant to the terms of the Incentive Plan shall be exercised
when written notice of that exercise has been given to the
Company at its principal office by the person entitled to
exercise the option and full payment for the shares with respect
to which the option is exercised has been received by the
Company.
Section 9. Additional Exercise Provisions. An employee
granted and holding more than one option granted pursuant to the
terms of the Incentive Plan at any relevant time may, in
accordance with the provisions of the Incentive Plan, elect to
exercise such options in any order.
In addition, at the request of the employee and to the
extent permitted by applicable law, the Company may, in its sole
discretion, selectively approve arrangements with a brokerage
firm under which such brokerage firm, on behalf of the employee,
shall pay to the Company the exercise price of the options being
exercised, and the Company, pursuant an irrevocable notice from
the employee, shall promptly deliver the shares being purchased
to such brokerage firm.
Section 10. Compliance With Securities Laws. Shares of
Common Stock shall not be issued with respect to any option
granted under the Incentive Plan unless the exercise of that
option and the issuance and delivery of those shares pursuant to
that exercise shall comply with all relevant provisions of state
and federal law including, without limitation, the Securities
Act of 1933, as amended, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon
which the shares may then be listed, and shall be further
subject to the approval of counsel for the Company with respect
to such compliance. The Program Administrators may also require
an employee to whom an option has been granted under the
Incentive Plan ("Optionee") to furnish evidence satisfactory to
the Company, including a written and signed representation
letter and consent to be bound by any transfer restriction
imposed by law, legend, condition, or otherwise, that the shares
are being purchased only for investment and without any present
intention to sell or distribute the shares in violation of any
state or federal law, rule, or regulation. Further, each
Optionee shall consent to the imposition of a legend on the
shares of Common Stock subject to his or her option restricting
their transferability as required by law or by this Section 10.
Section 11. Employment of Optionee. Nothing in the Plan
or in any option granted hereunder shall confer upon any
Optionee any right to continued employment by the Company, or
any parent or subsidiary corporation, or limit in any way the
right of the Company or any parent or subsidiary corporation at
any time to terminate or alter the terms of that employment.
Section 12. Option Rights Upon Termination of Employment.
If an Optionee ceases to be employed by the Company, or any
parent or subsidiary corporation (or a corporation or a parent
or subsidiary of such corporation issuing or assuming a stock
option in a transaction to which section 424(a) of the Code
applies), for any reason other than death or disability, his or
her option shall immediately terminate; provided, however, that
the Program Administrators may, at the time an option is
granted, in their discretion, allow such option to be exercised
(to the extent exercisable on the date of termination of
employment) at any time within three months after the date of
termination of employment, unless either the option or the
Incentive Plan otherwise provides for earlier termination.
Section 13. Option Rights Upon Disability. If an Optionee
becomes permanently and totally disabled within the meaning of
Section 22(e)(3) of the Code while employed by the Company, or
any parent or subsidiary corporation (or a corporation or a
parent or subsidiary of such corporation issuing or assuming a
stock option in a transaction to which section 424(a) of the
Code applies), the option may be exercised, to the extent
exercisable on the date of termination of employment, at any
time within one year after the date of termination of employment
due to disability, unless either the option or the Incentive
Plan otherwise provides for earlier termination.
Section 14. Option Rights Upon Death of Optionee. Except
as otherwise limited by the Program Administrators at the time
of the grant of an option, if an Optionee dies while employed by
the Company, or any parent or subsidiary corporation (or a
corporation or a parent or subsidiary of such corporation
issuing or assuming a stock option in a transaction to which
section 424(a) of the Code applies), or within three months
after ceasing to be an employee thereof, his or her option shall
expire one year after the date of death unless by its term it
expires sooner. During this one year or shorter period, the
option may be exercised, to the extent that it remains
unexercised on the date of death, by the person or persons to
whom the Optionee's rights under the option shall pass by will
or by the laws of descent and distribution, but only to the
extent that the Optionee is entitled to exercise the option at
the date of death.
Section 15. Options Not Transferable. Options granted
pursuant to the terms of the Incentive Plan may not be sold,
pledged, assigned, or transferred in any manner otherwise than
by will or the laws of descent or distribution and may be
exercised during the lifetime of an Optionee only by that
Optionee.
Section 16. Adjustments to Number and Purchase Price of
Optioned Shares. All options granted pursuant to the terms of
this Incentive Plan shall be adjusted in the manner prescribed
by Article 6 of the General Provisions of this Program.
PART II
THREE RIVERS BANCORP, INC.
COMPENSATORY STOCK OPTION PLAN
Section 1. Purpose. The purpose of the Three Rivers
Bancorp, Inc. Compensatory Stock Option Plan ("Compensatory
Plan") is to permit the Company to grant options to purchase
shares of its Common Stock to selected executive officers, full-
time, key employees and to directors of the Company. The
Compensatory Plan is designed to help attract and retain
superior personnel for positions of substantial responsibility
with the Company and any parent or subsidiary, and to provide
key employees with an additional incentive to contribute to the
success of the Company. Any option granted pursuant to this
Compensatory Plan shall be clearly and specifically designated
as not being an incentive stock option, as defined in
Section 422(b) of the Internal Revenue Code of 1986, as amended
("Code"). This Compensatory Plan is Part II of the Company's
Stock Compensation Program ("Program"). Unless any provision
herein indicates to the contrary, this Compensatory Plan shall
be subject to the General Provisions of the Program.
Section 2. Option Terms and Conditions. The terms and
conditions of options granted under this Compensatory Plan may
differ from one another as the Program Administrators shall, in
their discretion, determine as long as all options granted under
the Compensatory Plan satisfy the requirements of the
Compensatory Plan. The written agreement evidencing options
granted under the Compensatory Plan shall be substantially in
the form attached hereto as Exhibit "B," with such changes
thereto as the Program Administers shall make in accordance with
the authority granted to them hereunder.
Section 3. Duration of Options. Each option and all
rights thereunder granted pursuant to the terms of this
Compensatory Plan shall expire on the date determined by the
Program Administrators, but in no event shall any option granted
under the Compensatory Plan expire later than 10 years and one
month from the date on which the option is granted. In
addition, each option shall be subject to early termination as
provided in the Compensatory Plan.
Section 4. Purchase Price. The purchase price for shares
acquired pursuant to the exercise, in whole or in part, of any
option shall be equal to the fair market value of the shares at
the time of the grant of the option, as determined by the
Program Administrators at the time of grant on the basis of such
factors as they deem appropriate; provided, however, that fair
market value shall be determined without regard to any
restriction other than a restriction which, by its terms, shall
never lapse. If at the time of the determination, the shares of
the Company are admitted to trading on a national securities
exchange for which sales prices are regularly reported, the fair
market value of those shares shall not be less than the mean of
the high and low asked or closing sales prices reported for the
Common Stock on that exchange on the day or most recent trading
day preceding the date on which the option is granted. For
purposes of this Section 4, the term "national securities
exchange" shall include the National Association of Securities
Dealers Automated Quotation System and the over-the-counter
market.
Section 5. Exercise of Options. Each option shall be
exercisable in one or more installments during its term and the
right to exercise may be cumulative as determined by the Program
Administrators (or the Board of Directors with respect to the
Program Administrators). No options may be exercised for a
fraction of a share of Common Stock. The purchase price of any
shares purchased shall be paid in full in cash or by certified
or cashier's check payable to the order of the Company or by
shares of Common Stock, if permitted by the Program
Administrators (or the Board of Directors with respect to the
Program Administrators), or by a combination of cash, check or
shares of Common Stock, at the time of exercise of the option.
If any portion of the purchase price is paid in shares of Common
Stock, those shares shall be tendered at their then fair market
value as determined by the Program Administrators (or the Board
of Directors with respect to the Program Administrators) in
accordance with Section 4 of this Compensatory Plan.
Notwithstanding the foregoing, Common Stock acquired pursuant to
the exercise of an incentive stock option may not be tendered as
payment of options granted and exercised under the Compensatory
Plan unless the holding period requirements of Code
Section 422(a)(1) have been satisfied, and Common Stock not
acquired pursuant to the exercise of an incentive stock option
may not be tendered as payment unless it has been held,
beneficially and of record, for at least one year.
In addition, at the request of the employee and to the
extent permitted by applicable law, the Company may, in its sole
discretion, selectively approve arrangements with a brokerage
firm under which such brokerage firm, on behalf of the employee,
shall pay to the Company the exercise price of the options being
exercised, and the Company, pursuant an irrevocable notice from
the employee, shall promptly deliver the shares being purchased
to such brokerage firm.
Section 6. Acceleration of Right of Exercise of
Installments. Notwithstanding the first sentence of Section 5
of this Compensatory Plan, if the Company or its shareholders
enter into an agreement to dispose of all or substantially all
of the assets or stock of the Company by means of a sale, merger
or other reorganization, liquidation, or otherwise, any option
granted pursuant to the terms of this Compensatory Plan shall
become immediately exercisable with respect to the full number
of shares subject to that option during the period commencing as
of the date of the agreement to dispose of all or substantially
all of the assets or stock of the Company and ending when the
disposition of assets or stock contemplated by that agreement is
consummated, or the option is otherwise terminated in accordance
with its provisions or the provisions of this Compensatory Plan,
whichever occurs first; provided, however, that no option shall
be immediately exercisable under this Section 6 on account of
any agreement to dispose of all or substantially all of the
assets or stock of the Company by means of a sale, merger or
other reorganization, liquidation, or otherwise where the
shareholders of the Company immediately before the consummation
of the transaction will own at least 50% of the total combined
voting power of all classes of stock entitled to vote of the
surviving entity whether the Company or some other entity,
immediately after the consummation of the transaction. In the
event the transaction contemplated by the agreement referred to
in this Section 6 is not consummated, but rather is terminated,
cancelled or expires, the options granted pursuant to this
Compensatory Plan shall thereafter be treated as if such
agreement had never been entered into.
Notwithstanding the first sentence of Section 5 of this
Compensatory Plan, in the event of a change in control of the
Company, or threatened change in control of the Company as
determined by a vote of not less than a majority of the Board of
Directors of the Company, all options granted prior to such
change in control or threatened change in control shall become
immediately exercisable. The term "control" for purposes of
this Section shall refer to the acquisition of 24.99% or more of
the voting securities of the Company by any person or by persons
acting as a group within the meaning of Section 13(d) of the
Securities Exchange Act of 1934, as amended; provided, however,
that for purposes of this Compensatory Plan, no change in
control or threatened change in control shall be deemed to have
occurred if prior to the acquisition of, or offer to acquire,
24.99% or more of the voting securities of the Company, the full
Board of Directors of the Company shall have adopted, by not
less than two-thirds vote, a resolution specifically approving
such acquisition or offer. The term "person" for purposes of
this Section refers to an individual or a corporation,
partnership, trust, association, joint venture, pool, syndicate,
sole proprietorship, unincorporated organization or any other
form of entity not specifically listed herein.
Section 7. Written Notice Required. Any option granted
pursuant to the terms of this Compensatory Plan shall be
exercised when written notice of that exercise has been given to
the Company at its principal office by the person entitled to
exercise the option and full payment for the shares with respect
to which the option is exercised has been received by the
Company.
Section 8. Compliance With Securities Laws. Shares shall
not be issued with respect to any option granted under the
Compensatory Plan unless the exercise of that option and the
issuance and delivery of the shares pursuant thereto shall
comply with all relevant provisions of state and federal law,
including, without limitation, the Securities Act of 1933, as
amended, the rules and regulations promulgated thereunder and
the requirements of any stock exchange upon which the shares may
then be listed, and shall be further subject to the approval of
counsel for the Company with respect to such compliance. The
Program Administrators may also require an employee to whom an
option has been granted ("Optionee") to furnish evidence
satisfactory to the Company, including a written and signed
representation letter and consent to be bound by any transfer
restrictions imposed by law, legend, condition, or otherwise,
that the shares are being purchased only for investment purposes
and without any present intention to sell or distribute the
shares in violation of any state or federal law, rule, or
regulation. Further, each Optionee shall consent to the
imposition of a legend on the shares of Common Stock subject to
his or her option restricting their transferability as required
by law or by this Section 8.
Section 9. Employment of Optionee. Each Optionee, if
requested by the Program Administrators, must agree in writing
as a condition of the granting of his or her option, to remain
in the employment of the Company or any parent or subsidiary (or
a corporation or a parent or subsidiary of such corporation
issuing or assuming a stock option in a transaction to which
Code Section 424(a) applies), following the date of the granting
of that option for a period specified by the Program
Administrators, which period shall in no event exceed three
years. Nothing in this Compensatory Plan or in any option
granted hereunder shall confer upon any Optionee any right to
continued employment by the Company or any parent or subsidiary,
or limit in any way the right of the Company or any parent or
subsidiary at any time to terminate or alter the terms of that
employment.
Section 10. Option Rights Upon Termination of Employment.
If any Optionee under this Compensatory Plan ceases to be
employed by the Company or any parent or subsidiary (or a
corporation or a parent or subsidiary of such corporation
issuing or assuming a stock option in a transaction to which
Code Section 424(a) applies), for any reason other than
disability or death, his or her option shall immediately
terminate; provided, however, that the Program Administrators
(or the Board of Directors with respect to the Program
Administrators) may, in their discretion, allow the option to be
exercised, to the extent exercisable on the date of termination
of employment, at any time within two years after the date of
termination of employment, unless either the option or this
Compensatory Plan otherwise provides for earlier termination.
Section 11. Option Rights Upon Disability. If an Optionee
becomes permanently and totally disabled within the meaning of
Code Section 22(e)(3) while employed by the Company, or any
parent or subsidiary corporation (or a corporation or a parent
or subsidiary of such corporation issuing or assuming a stock
option in a transaction to which Code Section 424(a) applies),
the Program Administrators (or the Board of Directors with
respect to the Program Administrators), in their discretion, may
allow the option to be exercised, to the extent exercisable on
the date of termination of employment, at any time within one
year after the date of termination of employment due to
disability, unless either the option or the Incentive Plan
otherwise provides for earlier termination.
Section 12. Option Rights Upon Death of Optionee. Except
as otherwise limited by the Program Administrators (or the Board
of Directors with respect to the Program Administrators) at the
time of the grant of an option, if an Optionee dies while
employed by the Company, or any parent or subsidiary, (or a
corporation or a parent or subsidiary of such corporation
issuing or assuming a stock option in a transaction to which
Code Section 424(a) applies), his or her option shall expire one
year after the date of death unless by its terms it expires
sooner. During this one year or shorter period, the option may
be exercised, to the extent that it remains unexercised on the
date of death, by the person or persons to whom the Optionee's
rights under the option shall pass by will or by the laws of
descent and distribution, but only to the extent that the
Optionee is entitled to exercise the option at the date of
death.
Section 13. Transferability. Except as provided below,
options granted pursuant to the terms of this Compensatory Plan
may not be sold, pledged, assigned, or transferred in any manner
otherwise than by will or the laws of descent or distribution
and may be exercised during the lifetime of an Optionee only by
that Optionee. However, if the Program Administrators so
determine at the time the option is granted, the option may be
transferable to members of the Optionee's "immediate family" (as
hereinafter defined), to a partnership whose members are only
the Optionee and/or members of the Optionee's immediate family,
or to a trust for the benefit of only the Optionee and/or
members of the Optionee's immediate family. For purposes of
this Section 13, an Optionee's "immediate family" includes only
his or her spouse, parents or other ancestors, and children and
other direct descendants of the Optionee or of his or her spouse
(including such ancestors and descendants by adoption).
Section 14. Adjustments to Number and Purchase Price of
Optioned Shares. All options granted pursuant to the terms of
this Compensatory Plan shall be adjusted in a manner prescribed
by Article 6 of the General Provisions of the Program.
PART III
THREE RIVERS BANCORP, INC.
STOCK APPRECIATION RIGHTS PLAN
Section 1. Purpose. The purpose of the Three Rivers
Bancorp, Inc. Stock Appreciation Rights Plan ("S.A.R. Plan") is
to permit the Company to grant stock appreciation rights for its
Common Stock to its full-time, key employees. The S.A.R. Plan
is designed to help attract and retain superior personnel for
positions of substantial responsibility with the Company and any
parent or subsidiary and to provide key employees with an
additional incentive to contribute to the success of the
Company. This S.A.R. Plan is Part III of the Company's Stock
Compensation Program ("Program").
Section 2. Terms and Conditions. The Program
Administrators may, but shall not be obligated to, authorize, on
such terms and conditions as they deem appropriate in each case,
the Company to accept the surrender by the recipient of a stock
option granted under Plan I or Plan II of the right to exercise
that option, or portion thereof, in consideration for the
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 surrendered, over the option price of
such shares. Such payment, at the discretion of the Program
Administrators, may be made in shares of Common Stock valued at
the then fair market value thereof, determined as provided in
Section 4 of Plan I, or in cash or partly in cash and partly in
shares of Common Stock; provided that with respect to rights
granted in tandem with incentive stock options, the Program
Administrators shall establish the form(s) of payment allowed
the Optionee at the date of grant. The Program Administrators
shall not be authorized to make payment to any optionee in
shares of the Company's Common Stock unless Section 83 of the
Internal Revenue Code of 1986, as amended ("Code") would apply
to the Common Stock transferred to the Optionee.
Notwithstanding the foregoing, the Company may not permit the
exercise and cancellation of a stock appreciation right issued
pursuant to this S.A.R. Plan until the Company has been subject
to the reporting requirements of Section 13 of the Securities
Exchange Act of 1934, as amended ("Exchange Act") for a period
of at least one year prior to the exercise and cancellation of
any such stock appreciation right.
Section 3. Time Limitations. Any election by an Optionee
to exercise the stock appreciation rights provided in this
S.A.R. Plan shall be made during the period beginning on the
third business day following the release for publication of
quarterly or annual financial information required to be
prepared and disseminated by the Company pursuant to the
requirements of the Exchange Act and ending on the twelfth
business day following such date. The required release of
information shall be deemed to have been satisfied when the
specified financial data appears on or in a wire service,
financial news service or newspaper of general circulation or is
otherwise first made publicly available.
Section 4. Exercise of Stock Appreciation Rights; Effect
on Stock Options and Vice-Versa. Upon the exercise of a stock
appreciation right, the number of shares available under the
stock option to which it relates shall decrease by a number
equal to the number of shares for which the right was exercised.
Upon the exercise of a stock option, any related stock
appreciation right shall terminate as to any number of shares
subject to the right that exceeds the total number of shares for
which the stock option remains unexercised.
Section 5. Time of Grant. With respect to options granted
under Plan I, stock appreciation rights must be granted
concurrently with the stock options to which they relate; with
respect to options granted under Plan II, stock appreciation
rights may be granted concurrently or at any time thereafter
prior to the exercise or expiration of such options.
Section 6. Non-Transferable. The holder of a stock
appreciation right may not transfer or assign the right
otherwise than by will or in accordance with the laws of descent
and distribution. Furthermore, in the event of the termination
of his or her service with the Company as a director, officer
and/or employee, the right may be exercised only within the
period, if any, which the option to which it relates may be
exercised.
Section 7. Tandem Incentive Stock Option - Stock
Appreciation Right. Whenever an incentive stock option, granted
pursuant to Plan I and a stock appreciation right authorized
hereunder are granted together and the exercise of one affects
the right to exercise the other, the following requirements
shall apply:
1) The stock appreciation right will expire no later than
the expiration of the underlying incentive stock option;
2) The stock appreciation right may be for no more than
the difference between the exercise price of the underlying
option and the market price of the stock subject to the
underlying option at the time the stock appreciation right is
exercised;
3) The stock appreciation right is transferable only when
the underlying incentive stock option is transferable, and under
the same conditions;
4) The stock appreciation right may be exercised only when
the underlying incentive stock option is eligible to be
exercised; and
5) The stock appreciation right may be exercised only when
the market price of the stock subject to the option exceeds the
exercise price of the stock subject to the option.
Section 8. Tandem Stock Option - Limited Stock
Appreciation Right. The Program Administrators may provide that
any tandem stock appreciation right granted pursuant to
Section 8 hereof be a limited stock appreciation right, in which
event:
1) The limited stock appreciation right shall be
exercisable during the period beginning on the first day
following the expiration of an Offer (as defined below) and
ending on the thirtieth day following such date (but in no event
less than six months after the date of grant of the right);
2) Neither the option tandem to the limited stock
appreciation right nor any other stock appreciation right tandem
to such option may be exercised at any time that the limited
stock appreciation right may be exercised, provided that this
requirement shall not apply in the case of an incentive stock
option tandem to a limited stock appreciation right if and to
the extent that the Program Administrators determine that such
requirement is not consistent with applicable statutory
provisions regarding incentive stock options and the regulations
issued thereunder;
3) Upon exercise of the limited stock appreciation right,
the fair market value of the shares to which the right relates
for purposes of Section 4 of Plan I shall be determined as the
highest price per share paid in any Offer that is in effect at
any time during the period beginning on the sixtieth day prior
to the date on which the limited stock appreciation right is
exercised and ending on such exercise date; provided, however,
with respect to a limited stock appreciation right tandem to an
incentive stock option, the Program Administrators shall
determine fair market value of such shares in a different manner
if and to the extent that the Program Administrators deem
necessary or desirable to conform with applicable statutory
provisions regarding incentive stock options and the regulations
issued thereunder.
The term "Offer" shall mean any tender offer or exchange
offer for shares of the Company, provided that the person making
the offer acquires shares of the Company's capital stock
pursuant to such offer.
Section 9. Exercise Restriction Effects. For the purposes
of Section 9 of Plan I, a tandem incentive stock option - stock
appreciation right will be considered exercised in full when
either the underlying incentive stock option or the stock
appreciation right is fully exercised.
Section 10. Request for Reports. A copy of the Company's
annual report to shareholders shall be delivered to each
Optionee. Upon written request, the Company shall furnish to
each Optionee a copy of its most recent Form 10-K Annual Report
and each Form 10-Q Quarterly Report and Form 8-K Current Report
filed with the Securities and Exchange Commission since the end
of the Company's prior fiscal year.
PART IV
THREE RIVERS BANCORP, INC.
PERFORMANCE SHARE PLAN
Section 1. Purpose. The purpose of the Three Rivers
Bancorp, Inc. Performance Share Plan ("Performance Plan") is to
promote the growth and general prosperity of the Company by
permitting the Company to grant performance shares to help
attract and retain superior personnel for positions of
substantial responsibility with the Company and any parent or
subsidiary, and to provide key employees with an additional
incentive to contribute to the success of the Company. This
Performance Plan is Part IV of the Company's Stock Compensation
Program ("Program").
Section 2. Terms and Conditions. The Program
Administrators may grant performance shares to any employee
eligible under Article 4 of the General Provisions. Each
performance share grant confers upon the recipient thereof the
right to receive a specified number of shares of Common Stock of
the Company contingent upon the achievement of specified
performance objectives within a specified period. The Program
Administrators shall specify the performance objective and the
period of duration of the performance share grant at the time
that such performance share is granted. Any performance shares
granted under this Plan shall constitute an unfunded promise to
make future payments to the affected employee upon the
completion of specified conditions. The grant of an opportunity
to receive performance shares shall not entitle the affected
employee to any rights to specific fund(s) or assets of the
Company, or any parent or subsidiary.
Section 3. Cash in Lieu of Stock. In lieu of some or all
of the shares earned by achievement of the specified performance
objectives within the specified period, the Program
Administrators may distribute cash in an amount equal to the
fair market value of the Common Stock at the time that the
employee achieves the performance objective within the specified
period. Such fair market value shall be determined by Section 4
of Plans I and II, on the business day next preceding the date
of payment.
Section 4. Performance Objective Period. The duration of
the period within which to achieve the performance objectives is
to be determined by the Program Administrators. The period may
not be less than one year nor more than five years from the date
the performance share is granted.
Section 5. Non-Transferable. A participating employee may
not transfer or assign a performance share.
Section 6. Performance Share Rights Upon Death or
Termination of Employment. If a participating employee dies or
terminates service with the Company or any parent or subsidiary
(or a corporation or a parent or subsidiary of such corporation
issuing or assuming a stock option in a transaction to which
Section 424(a) of the Internal Revenue Code of 1986, as amended
("Code") applies), prior to the expiration of the performance
objective period, any performance shares granted to him during
that period are terminated.
Section 7. Tax Consequences. No federal income tax
consequences are incurred by the Company or the participating
employee at the time a performance share is granted. However,
if the specified performance objectives are met, the employee
will realize ordinary income at the end of the award period
equal to the amount of cash or the fair market value of the
stock received by him or her. The Company will ordinarily be
entitled to a deduction for federal income tax purposes at the
same time and in the same amount. The Program Administrators
shall be authorized to make payment in shares of Common Stock
only if Code Section 83 would apply to the transfer of Common
Stock to the employee.
