<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Riggs National Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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<PAGE> 2
[The following notice of annual meeting and accompanying proxy statement will
be disseminated to holders of Riggs National Corporation Common Stock on or
about March 18, 1998.]
<PAGE> 3
LOGO
RIGGS NATIONAL CORPORATION
1503 PENNSYLVANIA AVENUE, N.W.
WASHINGTON, D.C. 20005
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 15, 1998
Notice is hereby given that the Annual Meeting of Shareholders (the
"Meeting") of Riggs National Corporation (the "Corporation") will be held on
Wednesday, April 15, 1998, at 9:30 a.m., local time, at the JW Marriott Hotel,
1331 Pennsylvania Avenue, N.W., Washington, D.C. 20004, for the following
purposes:
1. To elect a board of directors for the ensuing year;
2. To consider and act upon a proposal to amend the Corporation's 1993,
1994, and 1996 Stock Option Plans that would replace the "Joint
Compensation Committee" of the Board of Directors of the Corporation
(the "Board") with the "Compensation Committee" as each of the
respective plans' administrator and amend each of the plans to
conform with recent amendments to Rule 16b-3 of the Securities
Exchange Act of 1934;
3. To consider and act upon a proposal to amend the Corporation's 1996
Stock Option Plan that would expand the definition of "Key Employees"
eligible for grants under the plan, increase the number of shares of
the Corporation's Common Stock available for stock option awards from
two million to four million shares, and ratify the waiver by the
Board of the Shareholders' preemptive rights to any stock issuances
by the Corporation;
4. To consider and act upon a proposal to approve the 1997 Non-Employee
Directors Stock Option Plan that would authorize the grant of an
aggregate maximum of 350,000 shares of the Corporation's Common Stock
to eligible Board members and ratify the waiver by the Board of the
Shareholders' preemptive rights to any stock issuance by the
Corporation;
5. To consider and act upon a proposal to amend the language regarding
the waiver by the Board of the Shareholders' preemptive rights in the
Corporation's Certificate of Incorporation that requires "at least
ten Directors voting" and replace it with "at least a majority of
Directors voting," which will conform the Certificate of
Incorporation to a change in the number of directors;
6. To consider a shareholder proposal requiring the Board take the
necessary steps to have the accountants elected each year by all the
shareholders; and
7. To consider and act upon any other matters that may properly be
brought before the Meeting or any adjournment or postponement
thereof.
Shareholders of record at the close of business on February 27, 1998, will
be entitled to vote at the Meeting or any adjournment or postponement thereof.
Whether or not you contemplate attending the Meeting, please execute the
enclosed proxy and return it in the enclosed postage-paid return envelope. You
may revoke your proxy at any time prior to its exercise by written notice to the
Assistant Corporate Secretary of the Corporation, by executing and delivering a
proxy bearing a later date, or by attending the Meeting and voting in person.
You are cordially invited to attend the Meeting in person.
By Order of the Board of Directors,
T.C. Coughlin Signature
TIMOTHY C. COUGHLIN
President
March 18, 1998
<PAGE> 4
LOGO
RIGGS NATIONAL CORPORATION
1503 PENNSYLVANIA AVENUE, N.W.
WASHINGTON, D.C. 20005
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS TO BE
HELD ON APRIL 15, 1998
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board") of Riggs National Corporation, a
Delaware corporation (the "Corporation"), to be used at the Annual Meeting of
Shareholders of the Corporation (the "Meeting") to be held on Wednesday, April
15, 1998, at 9:30 a.m. local time at the JW Marriott Hotel, 1331 Pennsylvania
Avenue, N.W., Washington, D.C. 20004, or at any adjournment or postponement
thereof. The Corporation owns all of the outstanding stock of Riggs Bank
National Association ("Riggs Bank N.A.").
Shareholders of record at the close of business on February 27, 1998 (the
"Record Date"), will be entitled to notice of, and to vote at, the Meeting. On
the Record Date, the Corporation had 30,575,788 shares of Common Stock, par
value $2.50 per share ("Common Stock"), outstanding and entitled to vote at the
Meeting. Each share of Common Stock is entitled to one vote. Under the
applicable provisions of the Corporation's By-Laws and the Delaware General
Corporation Law (the "Delaware GCL"), the presence, in person or by proxy, of
the holders of a majority of the shares of Common Stock is necessary to
constitute a quorum of the shareholders in order to elect directors or take
action on a proposal submitted to shareholders at a meeting of shareholders. For
these purposes, Common Stock that is present or represented by proxy at the
Meeting will be counted for quorum purposes regardless of whether the holder of
the Common Stock or proxy fails to vote to elect directors or to vote on a
proposal or whether a broker with discretionary voting authority with respect to
such election or proposal fails to so vote.
Once a quorum is established, under the applicable provisions of the
Delaware GCL and the Corporation's By-Laws, in order for a director to be
elected, the director must receive a plurality of the votes of the holders of
the shares of Common Stock present in person or represented by proxy at the
Meeting. For voting purposes, therefore, abstentions and "broker non-votes" will
have no effect on the outcome of such election. With regard to the proposals to
be presented to shareholders at the Meeting, such proposals must be approved by
the affirmative vote of the holders of a majority of Common Stock present in
person or represented by proxy at the Meeting and, for voting purposes,
abstentions will be counted as "no" votes and "broker non-votes" will not be
counted.
This Proxy Statement and the accompanying proxy are dated and are first
being sent to shareholders on or about March 18, 1998. Shares of Common Stock
represented by proxies that are properly executed and received in time for the
Meeting will be voted in accordance with the shareholders' specifications. In
the absence of specific instructions, executed proxies received in response to
this solicitation will be voted for the election of the persons listed herein as
directors, for the Corporation proposals described herein and against the
shareholder proposal described herein. Should any other matters properly come
before the Meeting, the persons named as proxies will, unless otherwise
specified in the proxy, vote upon such matters according to their discretion. A
proxy may be revoked at any time prior to its exercise by written notice to the
Assistant Corporate Secretary of the Corporation, by executing and delivering a
proxy bearing a later date, or by attending the Meeting and voting in person.
1
<PAGE> 5
The voting list will be available for inspection by shareholders of the
Corporation at least ten days prior to the Meeting at the office of the
Corporation located at 1503 Pennsylvania Avenue, N.W., Washington, D.C. 20005.
The Annual Report to Shareholders, including financial statements for the
year ended December 31, 1997, is enclosed with this Proxy Statement.
ELECTION OF DIRECTORS
At the Meeting, nine (9) directors (which will constitute the entire Board
after the Meeting) are to be elected to hold office until the next Annual
Meeting of Shareholders and until their respective successors have been elected
and qualified. The shares of Common Stock represented by properly executed
proxies will be voted for the nominees named below unless otherwise specified on
the proxy. It is not contemplated that any of the nominees will become
unavailable to serve, but if that should occur before the Meeting, proxies that
do not withhold authority to vote for directors may be voted for another nominee
or nominees selected by the Board unless the Board votes to reduce the size of
the Board to the actual number of nominees. In no event may the proxies be voted
for a greater number of persons than the number of nominees named.
NOMINEES FOR DIRECTOR
The following table sets forth (i) the name and age of each nominee, (ii)
the year during which each nominee first became a director of the Corporation,
(iii) the principal occupation and business experience of the nominee during the
past five years, including all positions and offices with the Corporation, (iv)
other directorships of companies and organizations held by the nominee and (v)
the number of shares of Common Stock beneficially owned by each nominee as of
January 31, 1998. All nominees are currently directors of the Corporation. The
table has been prepared from information obtained from the nominees.
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED
JANUARY 31, 1998,
NAME, AGE AND YEAR PRINCIPAL OCCUPATION, BUSINESS EXPERIENCE AND PERCENTAGE OF
BECAME A DIRECTOR IN LAST FIVE YEARS, OTHER DIRECTORSHIPS CLASS(1)
- ------------------ ----------------------------------------- ------------------
<S> <C> <C>
JOE L. ALLBRITTON Chairman of the Board and Chief Executive Officer 12,291,126(2)
Age 73 of the Corporation; Chairman of the Board and Chief 36.8%
1981 Executive Officer, Riggs Bank N.A. (a subsidiary of
the Corporation); Chairman, Riggs & Co. (a division
of Riggs Bank N.A.); Chairman of the Board, Riggs
Bank Europe Limited (an indirect subsidiary of the
Corporation); Chairman of the Board, Riggs Asia
Limited (an indirect subsidiary of the
Corporation); Chairman of the Board and owner,
Perpetual Corporation, which owns Allbritton
Communications Company (owner of television
stations) and Allnewsco, Inc. (news programming
service); Chairman of the Board and owner,
Westfield News Advertiser, Inc. (owner of a
television station and newspapers); Chairman of the
Board and owner, University Bancshares, Inc. (a
Texas bank holding company) (1975-1997); Trustee,
National Geographic Society.
</TABLE>
2
<PAGE> 6
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED
JANUARY 31, 1998,
NAME, AGE AND YEAR PRINCIPAL OCCUPATION, BUSINESS EXPERIENCE AND PERCENTAGE OF
BECAME A DIRECTOR IN LAST FIVE YEARS, OTHER DIRECTORSHIPS CLASS(1)
- ------------------ ----------------------------------------- ------------------
<S> <C> <C>
ROBERT L. Director, Riggs Bank Europe Limited (an indirect 1,011,526(3)
ALLBRITTON subsidiary of the Corporation); Director, Executive 3.0%
Age 28 Vice President and Chief Operating Officer,
1994 Allbritton Communications Company (owner of
television stations); Director, Perpetual
Corporation (owner of Allbritton Communications
Company and Allnewsco, Inc.); Director, Allnewsco,
Inc. (news programming service); Director,
University Bancshares, Inc. (a Texas bank holding
company) (1992-1997); Trustee and Vice President,
The Allbritton Foundation; Director and President,
Harrisburg Television, Inc. (owner of a television
station); Director and Vice President, Allbritton
Group, Inc. (a television broadcasting holding
company); Director and President, Allfinco, Inc. (a
subsidiary of Allbritton Communications Company);
Director, Allbritton News Bureau, Inc. (news
production equipment); Director and Vice President,
TV Alabama, Inc. (owner of television stations);
Director and Vice President, Allbritton
Jacksonville, Inc. (owner of television stations).
TIMOTHY C. President of the Corporation; Director, Riggs 102,521(4)
COUGHLIN Investment Management Corporation (an indirect
Age 55 subsidiary of the Corporation); Director, Riggs
1988 Asia Limited (an indirect subsidiary of the
Corporation); Vice Chairman of the Board, Riggs
Bank N.A. (1996); Chairman, British American
Business Association; Treasurer, The Bankers
Roundtable; Trustee, Federal City Council; Trustee,
Greater Washington Research Center ; Member, D.C.
Tax Revision Commission; Chairman, Boys and Girls
Clubs of Greater Washington; Chairman, The Paul
Berry Academic Scholarship Foundation, Inc.;
Trustee, Corcoran Gallery of Art.
JOHN M. FAHEY, JR. President and Chief Executive Officer (effective 1,000
Age 46 March 1, 1998), National Geographic Society;
1997 Executive Vice President and Chief Operating
Officer, National Geographic Society (1997-1998);
President and Chief Executive Officer, National
Geographic Ventures (1996-1997); Chairman,
President and Chief Executive Officer, Time Life,
Inc. (a subsidiary of Time Warner, Inc.)
(1989-1995).
</TABLE>
3
<PAGE> 7
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED
JANUARY 31, 1998,
NAME, AGE AND YEAR PRINCIPAL OCCUPATION, BUSINESS EXPERIENCE AND PERCENTAGE OF
BECAME A DIRECTOR IN LAST FIVE YEARS, OTHER DIRECTORSHIPS CLASS(1)
- ------------------ ----------------------------------------- ------------------
<S> <C> <C>
LAWRENCE I. HEBERT Director, Riggs Investment Management Corporation 11,000(6)
Age 51 (an indirect subsidiary of the Corporation);
1988 Director, Riggs Bank Europe Limited (an indirect
subsidiary of the Corporation); President and
Director, Perpetual Corporation (owner of
Allbritton Communications Company and Allnewsco,
Inc.); Vice Chairman, President and Director,
Allbritton Communications Company (owner of
television stations); Director, Allnewsco, Inc.
(news programming service); President, Westfield
News Advertiser, Inc. (owner of a television
station and newspapers); Vice President, University
Bankshares, Inc. (a Texas bank holding company)
(1975-1997); Trustee, The Allbritton Foundation;
Director, Allied Capital Corporation (an investment
company).
STEVEN B. PFEIFFER Director, Riggs Bank Europe Limited (an indirect 8,849
Age 51 subsidiary of the Corporation); Partner and Head of
1989 the International Department, Fulbright & Jaworski
L.L.P. (law firm); Chairman Emeritus of the Board
of Trustees, Wesleyan University (Connecticut).(5)
ROBERT L. SLOAN Vice Chairman of the Board of the Corporation; 11,536(7)
Age 51 Chief Executive Officer, Sibley Memorial Hospital,
1993 Washington, D.C.; Former Chairman, District of
Columbia Hospital Association; Former Chairman,
Potomac Home Health Care Agency; Trustee and former
Chairman, Community of Hope, Inc.; President,
Tri-State Hospital Association.
JACK VALENTI Chairman and Chief Executive Officer, Motion 7,317(8)
Age 76 Picture Association of America, Inc.; Director,
1986 American Film Institute.
EDDIE N. WILLIAMS President and Chief Executive Officer, Joint Center 3,280(9)
Age 65 for Political and Economic Studies; Director,
1993 Harrah's Entertainment Corporation; Director,
Harrah's Jazz Finance Corporation; Director, Blue
Cross/Blue Shield of the National Capital Area;
Director, Care First, Inc.
</TABLE>
- ---------------
(1) Beneficial ownership, as determined in accordance with Rule 13d-3 under the
Securities Exchange Act of 1934, includes sole or shared power to vote or
direct the voting of, or to dispose or direct the disposition of, shares as
well as the right to acquire beneficial ownership within 60 days of January
31, 1998, through the exercise of an option or otherwise. Unless otherwise
indicated, the listed persons have sole voting power and sole investment
power with respect to the shares of Common Stock set forth in the table and
own less than 1% of the shares outstanding.
(2) Included in this total are exercisable options to purchase 2,354,000 shares
of the Corporation's Common Stock held by Joe L. Allbritton as of January
31, 1998. For a more complete description of Joe L. Allbritton's beneficial
ownership of the Corporation's Common Stock, please see "Beneficial
Ownership of Corporation Stock," Note 2, page 6.
(3) Under the federal securities laws, Robert L. Allbritton may be deemed to
share voting and investment power with regard to 1,011,126 shares owned by
charitable foundations of which Robert L. Allbritton, his father Joe L.
Allbritton and his mother Barbara B. Allbritton are the trustees (the
"Foundations").
(4) Included in this total are exercisable options to purchase 92,500 shares of
the Corporation's Common Stock held by Mr. Coughlin as of January 31, 1998.
(5) Mr. Pfeiffer is a partner in the law firm of Fulbright & Jaworski L.L.P.
This law firm performed legal services for the Corporation during 1997 and
is expected to perform legal services for the Corporation in 1998.
4
<PAGE> 8
(6) Mr. Hebert is a voting trustee of The Allbritton Foundation, which owns
611,126 shares of the Corporation's Common Stock.
(7) Included in this total are 4,222 shares of Phantom Stock (see "Director
Compensation," below).
(8) Included in this total are 4,511 shares of Phantom Stock (see "Director
Compensation," below).
(9) Included in this total are 280 shares of Phantom Stock (see "Director
Compensation," below).
BOARD AND COMMITTEE MEETINGS
The Board has an Executive Committee, an Audit Committee and a Compensation
Committee. It does not have a standing Nominating Committee. Directors of the
Corporation are nominated by the full Board.
The Executive Committee exercises the power of the Board between meetings
of the Board and such other powers as the Board may delegate. The Executive
Committee did not meet during 1997. The committee members during 1997 were
directors Joe L. Allbritton, Barbara B. Allbritton, Frederick L. Bollerer,
Timothy C. Coughlin, Ronald E. Cuneo, James E. Fitzgerald, Heather S. Foley,
Lawrence I. Hebert, Timothy A. Lex and Robert L. Sloan. Following the reduction
in the number of directors in May 1997, the Executive Committee consisted of Joe
L. Allbritton, Timothy C. Coughlin, Lawrence I. Hebert and Robert L. Sloan.
The Audit Committee reviews the audit and examination reports of the
internal auditors, independent public accountants and federal bank examiners as
they relate to the Corporation and its subsidiaries. The Audit Committee held
four meetings in 1997. The committee members during 1997 were directors Calvin
Cafritz, Michela A. English, John M. Fahey, Jr., James E. Fitzgerald, David J.
Gladstone, Steven B. Pfeiffer and Robert L. Sloan. Following the reduction in
the number of directors in May 1997, the Audit Committee consisted of John M.
Fahey, Jr., Steven B. Pfeiffer and Robert L. Sloan.
The Compensation Committee assists the Board in fulfilling its
responsibilities related to compensation and benefits. The Compensation
Committee met three times in 1997. The committee members during 1997 were
directors Charles A. Camalier, III, Ronald E. Cuneo, Michela A. English, James
E. Fitzgerald, Michael J. Jackson, Robert L. Sloan, Jack Valenti and Eddie N.
Williams. Following the reduction in the number of directors in May 1997, the
Compensation Committee consisted of Robert L. Sloan, Jack Valenti and Eddie N.
Williams. For a discussion of fiscal year 1997 compensation programs, see "1997
Compensation," found under "Compensation Committee Report to Shareholders,"
pages 12-13.
The Board held seven meetings in 1997, and the various Committees of the
Board, including those listed above, met a total of 17 times. Of the directors
serving during 1997, director Jack Valenti attended fewer than 75% of the
aggregate of the total number of meetings of the Board and of the committees on
which he served during 1997.
SECTION 16(A) COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 and rules promulgated
under it require that certain officers, directors and beneficial owners of the
Corporation's equity securities ("insiders") file various reports with the
Securities and Exchange Commission ("SEC"). Based solely on its review of the
copies of such forms received by it, or written representations from certain
reporting persons that all required forms were filed, the Corporation believes
that all of the Corporation's insiders have timely filed the reports under
Section 16(a) required to be filed for 1997.
DIRECTOR COMPENSATION
Directors of the Corporation who are not officers currently receive a
retainer fee of $24,000 per year. Directors receive an additional retainer fee
of $3,000 for membership on committees, and the Chairmen of the committees
receive an additional retainer fee of $5,000 per year, except for the Chairman
of the Audit Committee, who receives an additional retainer fee of $25,000 per
year. Officers of the Corporation who are directors do not receive compensation
in addition to their compensation as officers for attending Board or committee
meetings of the Corporation. In April 1994, a Deferred Compensation Plan was
adopted to allow
5
<PAGE> 9
non-employee directors of the Corporation to defer receipt of all or a portion
of director's fees to a specified date or termination of service as a director.
Under the plan, directors may elect to defer all fees and to have such deferred
amounts treated as having been invested in cash, shares of the Corporation's
Common Stock (the deferred stock is known as "Phantom Stock"), and/or a
combination of cash and shares. Deferred fees treated as invested in cash are
credited with interest at the rate paid by Riggs Bank N.A. on certificates of
deposit with a one-year maturity. Dividends on Phantom Stock are reinvested in
additional shares of Phantom Stock. Shares of Phantom Stock acquired under the
plan are priced at the closing market price of such shares on the date on which
fee payment is deferred.
On July 9, 1997, a 1997 Non-Employee Directors Stock Option Plan (the "1997
Plan") was adopted, subject to shareholder approval. Under the 1997 Plan, the
Board may grant options to purchase common stock of the Corporation to
non-employee directors of the Corporation and the non-employee directors of its
subsidiaries. The amount, timing and terms of such grants will be based on such
considerations as the Board may consider appropriate, subject to the provisions
of the 1997 Plan. The maximum number of shares that may be issued under the 1997
Plan is 350,000 shares of common stock. On July 9, 1997, a total of 307,500
shares of Common Stock of the Corporation were granted to a total of 17
non-employee directors, subject to shareholder approval of the 1997 Plan.
BENEFICIAL OWNERSHIP OF CORPORATION STOCK
The following table sets forth information, as of January 31, 1998,
concerning (a) each person known by the Corporation to own beneficially more
than 5% of the Common Stock, (b) each of the executive officers named in the
Summary Compensation Table and (c) executive officers and directors (including
nominees) of the Corporation and executive officers of Riggs Bank N.A. as a
group:
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT OF
BENEFICIAL OWNERS OF COMMON STOCK OWNERSHIP(1) CLASS
--------------------------------- ------------ ----------
<S> <C> <C>
Joe L. Allbritton.................................. 12,291,126(2) 36.8%
Riggs National Corporation
1503 Pennsylvania Avenue, N.W.
Washington, D.C. 20005
Barbara B. Allbritton.............................. 2,342,858(3) 7.0%
Riggs National Corporation
1503 Pennsylvania Avenue, N.W.
Washington, D.C. 20005
Timothy C. Coughlin................................ 102,521(4)
Timothy A. Lex..................................... 42,167(5)
John L. Davis...................................... 52,167(6)
Joseph W. Barr..................................... 31,833(7)
Frederick L. Bollerer.............................. 400
All executive officers and directors (including
nominees) of the Corporation as a group (19
persons)......................................... 12,676,986(8) 38.0%
</TABLE>
- ---------------
(1) Beneficial ownership, as determined in accordance with Rule 13d-3 under the
Securities and Exchange Act of 1934, includes sole or shared power to vote,
or direct the disposition of, shares as well as the right to acquire
beneficial ownership within 60 days of January 31, 1998, through the
exercise of an option or otherwise. Except where noted, the listed persons
have sole voting power and sole investment power with respect to the shares
of Common Stock set forth in the table and own less than 1% of the shares
outstanding.
(2) Joe L. Allbritton has sole voting and investment power with regard to
8,926,000 of these shares. Pursuant to the federal securities laws, included
among these 8,926,000 shares are 675,511 shares owned by Allwin, Inc., which
is wholly owned by him. Also included, pursuant to federal securities laws,
are 1,011,126 shares owned by the Foundations as to which Mr. Allbritton, as
a trustee, shares voting and investment power as described in Note 3, page
4. In addition, 1,330,000 shares are beneficially owned by Barbara B.
6
<PAGE> 10
Allbritton as to which Joe L. Allbritton shares voting and investment
power as described in Note 3, below. He disclaims beneficial ownership of
an additional 1,732 shares owned by Barbara B. Allbritton.
This amount includes 2,354,000 exercisable options of the Corporation's
Common Stock held by Joe L. Allbritton as of January 31, 1998.
The shares of Common Stock owned directly by Joe L. Allbritton are pledged
to secure a loan with a commercial bank. Should an event of default set
forth in the related loan agreement (which contains standard default
provisions) occur, the lending bank may be able to sell or transfer the
shares depending on the circumstances. In the absence of such an event of
default, he retains the right to receive the dividends and the power to vote
the shares. For a more complete description of the loan, including default
provisions, see the Schedule 13d and amendments thereto filed by Joe L.
Allbritton with the SEC.
(3) Barbara B. Allbritton has sole voting and investment power with regard to
1,732 of these shares and shares voting and investment power with Joe L.
Allbritton as to 1,330,000 shares, with respect to which she has granted to
him an irrevocable proxy to vote such shares and has agreed not to sell such
shares free of the proxy except in limited market transactions. Also
included, pursuant to the federal securities laws, are 1,011,126 shares
owned by the Foundations as to which Mrs. Allbritton, as a trustee, shares
voting and investment power as described in Note 3, page 4. Mrs. Allbritton
disclaims beneficial ownership of 8,926,000 shares beneficially owned by Joe
L. Allbritton as described in Note 2, page 6.
(4) See Note 4, page 4.
(5) This amount includes exercisable options to purchase 41,167 shares of the
Corporation's Common Stock held by Mr. Lex as of January 31, 1998.
(6) This amount includes exercisable options to purchase 50,667 shares of the
Corporation's Common Stock held by Mr. Davis as of January 31, 1998.
(7) This amount includes exercisable options to purchase 30,333 shares of the
Corporation's Common Stock held by Mr. Barr as of January 31, 1998.
(8) Of the 12,676,986 shares which are beneficially held by the executive
officers and directors (including nominees) of the Corporation, 2,662,167
are options which have vested and are exercisable and 9,014 are shares of
Phantom Stock.
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<PAGE> 11
COMPENSATION OF EXECUTIVE OFFICERS
The annual and other compensation paid by the Corporation and Riggs Bank
N.A. for 1997, 1996 and 1995 to the Chief Executive Officer and each of the four
most highly compensated executive officers of the Corporation (and one executive
officer who departed during 1997), including certain officers of Riggs Bank
N.A., and the capacities in which they are currently serving, are set forth
below:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------------------- ------------
(a) (b) (c) (d) (e) (f) (g)
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS COMPENSATION
- --------------------------- ---- -------- -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Joe L. Allbritton......... 1997 $380,000 $ --(1) $ 436 500,000 $225,050(1)
Chairman of the Board 1996 380,000 -- 713 1,224,000 183,031
and Chief Executive 1995 380,000 570,000 553 300,000 129,400
Officer of the
Corporation; Chairman of
the Board and Chief
Executive Officer of
Riggs Bank N.A.
Timothy C. Coughlin....... 1997 300,000 141,000(2) 1,769 25,000 6,155(2)
President of the 1996 300,000 120,000 -- 25,000 6,314
Corporation 1995 300,000 150,000 -- 15,000 1,580
Timothy A. Lex............ 1997 200,000 94,000(3) 3,694 25,000 5,983(3)
Executive Vice President 1996 197,115 80,000 -- 35,000 5,483
and Chief Operating 1995 164,200 31,316 129,426(3) 10,000 76,228
Officer of Riggs Bank
N.A.
John L. Davis............. 1997 185,000 87,000(4) -- 10,000 6,690(4)
Chief Financial Officer 1996 179,615 64,750 -- 20,000 6,573
of the Corporation; 1995 164,231 38,466 -- 25,000 1,305
Executive Vice President
and Chief Financial
Officer of Riggs Bank
N.A.
Joseph W. Barr............ 1997 175,000 54,000(5) -- 10,000 5,985(5)
Executive Vice 1996 165,000 47,025 -- 10,000 2,008
President...............
of Riggs Bank N.A. 1995 152,885 27,392 -- 20,000 1,831
Frederick L. Bollerer..... 1997 245,769 0 -- 0 7,515(6)
Former President 1996 300,000 90,000 5,432 10,000 7,330
of Riggs Bank N.A. 1995 300,000 300,000 -- 30,000 2,623
</TABLE>
- ---------------
(1) Mr. Allbritton requested that the Board not include him in the 1996 and 1997
Bonus Plans. See "1997 Compensation. The Chairman and Chief Executive
Officer of Riggs National Corporation," found under "Compensation Committee
Report to Shareholders," page 12, for additional comments.
Of the $225,050 of "All Other Compensation" reported for Mr. Allbritton in
column (g) for 1997, $55,370 represents the economic benefit attributable to
group term life insurance coverage and the Split Dollar Life Insurance Plan
applicable to certain key employees of the Corporation and its subsidiaries,
and $169,680 is attributable to director's fees for services rendered as
Chairman of the Board of Riggs Bank Europe Limited. Mr. Allbritton received
director's fees of $117,263 and $71,145 in 1996 and 1995, respectively, for
services rendered as the Chairman of the Board of Riggs Bank Europe Limited.
(2) Timothy C. Coughlin was awarded a bonus amount of 47% of base salary based
on his contribution to the Corporation's exceeding its performance goal in
1997. For a discussion of the payment of incentives based on the
Corporation's 1997 performance, see "1997 Compensation. Other Executive
Officers," found under "Compensation Committee Report to Shareholders," page
12.
8
<PAGE> 12
Of the $6,155 of "All Other Compensation" reported in column (g) for 1997,
$1,355 represents the economic benefit attributable to the Split Dollar Life
Insurance Plan and $4,800 is attributable to matching contributions to the
Riggs Bank N.A. Employees' Savings Plan account of Mr. Coughlin.
(3) Timothy A. Lex was awarded a bonus amount of 47% of base salary based on his
contribution to the Corporation's exceeding its performance goal in 1997.
For a discussion of the payment of incentives based on the Corporation's
1997 performance, see "1997 Compensation. Other Executive Officers," found
under "Compensation Committee Report to Shareholders," page 12.
Of the $5,983 of "All Other Compensation" reported for Mr. Lex in column (g)
for 1997, $1,183 represents the economic benefit attributable to group term
life insurance coverage and the Split Dollar Life Insurance Plan, and $4,800
is attributable to matching contributions to the Riggs Bank N.A. Employees'
Savings Plan account of Mr. Lex.
Of the $129,426 of "Other Annual Compensation" reported for Timothy A. Lex
in column (e) for 1995, $129,378 (99.96%) represents overseas cost-of-living
adjustments, tax gross-ups and other payments to Mr. Lex to provide him with
equivalent compensation and living expenses while posted with Riggs Bank
N.A.'s London operation.
(4) John L. Davis was awarded a bonus amount of 47% of base salary based on his
contribution to the Corporation's exceeding its performance goal in 1997.
For a discussion of the payment of incentives based on the Corporation's
1997 performance, see "1997 Compensation. Other Executive Officers," found
under "Compensation Committee Report to Shareholders," page 12.
Of the $6,690 of "All Other Compensation" reported for John L. Davis in
column (g) for 1997, $1,890 represents the economic benefit attributable to
group term life insurance coverage and the Split Dollar Life Insurance Plan,
and $4,800 is attributable to matching contributions to the Riggs Bank N.A.
Employees' Savings Plan account of Mr. Davis.
(5) Joseph W. Barr was awarded a bonus amount of 31% of base salary based on his
contribution to the Corporation's exceeding its performance goal in 1997.
For a discussion of the payment of incentives based on 1997 performance, see
"1997 Compensation. Other Executive Officers," found under "Compensation
Committee Report to Shareholders," page 12.
Of the $5,985 of "All Other Compensation" reported for Mr. Barr in column
(g) for 1997, $1,995 represents the economic benefit attributable to group
term life insurance coverage and the Split Dollar Life Insurance Plan, and
$3,990 is attributable to matching contributions to the Riggs Bank N.A.
Employees' Savings Plan account of Mr. Barr.
(6) Of the $7,515 of "All Other Compensation" reported for Mr. Bollerer in
column (g) for 1997, $2,715 represents the economic benefit attributable to
group term life insurance coverage and the Split Dollar Life Insurance Plan,
and $4,800 is attributable to matching contributions to the Riggs Bank N.A.
Employees' Savings Plan account of Mr. Bollerer.
9
<PAGE> 13
STOCK OPTION GRANTS IN 1997
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e) (f)
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO GRANT DATE
OPTIONS EMPLOYEES EXERCISE EXPIRATION PRESENT
NAME GRANTED IN 1997 PRICE DATE VALUE($)(1)
---- ---------- ---------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Joe L. Allbritton(2)...................... 500,000 46.4% $20.50 7/9/07 $4,482,500
Timothy C. Coughlin(3).................... 25,000 2.3 19.75 4/9/07 215,475
Timothy A. Lex(3)......................... 25,000 2.3 19.75 4/9/07 215,475
John L. Davis(3).......................... 10,000 0.9 19.75 4/9/07 86,190
Joseph W. Barr(3)......................... 10,000 0.9 19.75 4/9/07 86,190
Frederick L. Bollerer(3).................. -- -- -- -- --
</TABLE>
- ---------------
(1) The grant date present value estimate reflected in the above table has been
developed solely for purposes of comparative disclosure in accordance with
the rules and regulations of the SEC, and does not necessarily reflect the
Corporation's view of the appropriate value or methodology for the purposes
of financial reporting. This hypothetical value, determined by the
Black-Scholes model, is based on the following assumptions:
- Exercise price is equal to the closing market price on the day of
grant;
- The annual dividend rate is 1.0126% for options maturing April 9, 2007,
and 0.9756% for options maturing July 9, 2007;
- Price volatility is based on weekly data for the preceding one-year
period;
- The risk-free rate is 5.80% for options maturing April 9, 2007, and
5.74% for options maturing July 9, 2007, for the expected term of the
options with a yield of comparable maturing Treasury securities; and
- There is a 14% discount for forfeiture of unexercised shares.
These assumptions are based upon historical experience and are not a
forecast of future stock price performance or volatility or of future
dividend policy.
There is no assurance that the value received by an executive will be at or
near the value estimated by the Black-Scholes model. The actual value of
options will depend on the market value of the Corporation's Common Stock on
the dates upon which the options are exercised. No realization of value from
the options is possible without an increase in the price of the
Corporation's Common Stock, which would benefit all shareholders.
(2) On July 9, 1997 (the "July Grant Date"), certain non-employee directors
recommended, and the Board approved, a stock option grant to the Chairman
and Chief Executive Officer. Mr. Allbritton was awarded the option to
purchase 500,000 shares of the Corporation's Common Stock. Pursuant to the
Corporation's 1996 Stock Option Plan, as approved by shareholders, the
option was granted at a price equal to the closing price of such stock on
the July Grant Date. The option vests and becomes exercisable as follows:
(1) upon achievement of specific and aggressive stock performance criteria
or (2) upon a "change of control" of the Corporation, as defined in the
Corporation's 1996 Stock Option Plan.
(3) On April 9, 1997 (the "April Grant Date"), the Compensation Committee
recommended, and the Board approved, stock option grants to senior executive
officers. Messrs. Coughlin, Lex, Davis and Barr were awarded options to
purchase 25,000, 25,000, 10,000 and 10,000 shares, respectively, of the
Corporation's Common Stock. Pursuant to the Corporation's 1994 Stock Option
Plan, as approved by shareholders, the options were granted at a price equal
to the closing price of such stock on the April Grant Date. These options
vest and become exercisable as follows: (1) one-third equally over three
years on the respective grant date anniversaries or (2) upon a "change of
control" of the Corporation, as defined in the Corporation's 1994 Stock
Option Plan.
10
<PAGE> 14
STOCK OPTION EXERCISES IN 1997/FY-END OPTION VALUES
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
NUMBER OF SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT FY-END OPTIONS, FY-END
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
---- ----------- --------- -------------------- ------------------------
<S> <C> <C> <C> <C>
Joe L. Allbritton.......... -- -- 2,104,000 / 350,000 $29,977,600 / $3,218,250
Timothy C. Coughlin........ -- -- 57,500 / 32,500 960,313 / 289,688
Timothy A. Lex............. -- -- 41,167 / 38,833 655,693 / 390,557
John L. Davis.............. -- -- 50,667 / 24,333 847,006 / 301,119
Joseph W. Barr............. -- -- 30,333 / 19,667 507,869 / 228,381
Frederick L. Bollerer...... 135,000 1,644,375 0 / 0 0 / 0
</TABLE>
RETIREMENT BENEFITS
Senior officers of the Corporation and its subsidiaries are eligible to
receive pension benefits under the Riggs Bank N.A. Amended Pension Plan.
Effective December 31, 1995, the benefit formula for determining the pension
benefit payable under the plan is 1% times the officer's average compensation
for each year of service up to a maximum of 30 years. However, if a greater
benefit would result under plan provisions in effect prior to December 31, 1995,
based on average compensation and years of service prior to December 31, 1995,
an officer's pension benefit payable under the plan is protected at that level.
Average compensation is limited by the Riggs Bank N.A. Amended Pension Plan
to base salary. In accordance with applicable tax code provisions, base salary
has been limited since 1989. Base salary was limited to $160,000 for 1997.
Applying the formula, the estimated annual pension benefit for each of the
highest paid executive officers, assuming each retired as of his normal age (or
his current age if later), is as follows: Mr. Allbritton $96,227; Mr. Coughlin
$50,529; Mr. Lex $46,950; Mr. Davis $20,436; and Mr. Barr $31,245. Mr. Bollerer
is not eligible for a pension benefit based on his departure effective October
15, 1997.
The Corporation also has a Supplemental Executive Retirement Plan, which
provides supplemental retirement income to certain key employees of the
Corporation and its subsidiaries at the level of senior vice president and
above. The Compensation Committee determines the terms and conditions under
which the employee participates and becomes vested in the benefits of the plan,
including accelerating the vesting of benefits to any participant. Under
parameters adopted by the Compensation Committee, the level of benefits is based
on the participant's functional responsibility. Upon the latter of a
participant's termination of employment with vested benefits or attainment of
age 62, the participant will begin receiving the vested portion of the
supplemental retirement benefit, payable for the life of the participant, but
for no more than 15 years. In the case of the death of a participant while
employed, the participant's beneficiary will receive the supplemental benefit
for 15 years. Based on the parameters set by the Compensation Committee, the
annual benefit payable to each of Messrs. Allbritton and Coughlin would be
$40,000. The annual benefit payable to Messrs. Lex, Davis, and Barr would be
$25,000, $15,000 and $15,000 respectively. The annual benefit payable to Mr.
Bollerer is $40,000.
TRANSACTIONS WITH MANAGEMENT
INDEBTEDNESS OF DIRECTORS, NOMINEES FOR DIRECTORS, EXECUTIVE OFFICERS AND
RELATED PERSONS
The Corporation's banking subsidiaries have had, and are expected to have
in the future, banking transactions in the ordinary course of their business
with directors of Riggs Bank N.A. and Riggs Bank Europe Limited and their
associates (primarily the businesses with which they are associated), and
directors and executive officers of the Corporation and their associates, on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons. In the
11
<PAGE> 15
opinion of management, these transactions did not, at the time they were entered
into, involve more than the normal risk of collectability or present other
unfavorable features.
OTHER
During 1997 and 1996, the Corporation purchased equipment and software from
Wang Federal, Inc. Ronald E. Cuneo (a member of the Board during 1996 and part
of 1997) was President of Wang Federal, Inc. at the time of purchase. Total
expenditures equaled $1.0 million in 1996 and $1.3 million in 1997.
COMPENSATION COMMITTEE REPORT TO SHAREHOLDERS
GENERAL
The Compensation Committee of the Corporation is responsible for:
- reviewing the overall salary administration program for the
Corporation and Riggs Bank N.A. and its subsidiaries (the "Riggs
Group");
- reviewing and making recommendations to the Board concerning annual
salary and bonus programs for the Riggs Group;
- reviewing and making recommendations to the Board concerning
compensation and benefits of executive officers of the Riggs Group;
and
- reviewing the Riggs Group's benefit plans, considering any new
benefits that significantly modify the existing plans and recommending
to the Board any changes requiring Board approval.
In 1997, the Compensation Committee approved a compensation framework for
executive officers in which executives' pay was directly linked to the financial
success of the bank. Specifically, the 1997 compensation framework consisted of:
(1) paying competitive market rates of base pay; (2) rewarding financial
performance of the Corporation through an annual bonus plan based on aggressive
goals for return on average assets ("ROA"), net income, and fee income and (3)
granting competitive stock options to key employees of the Corporation as an
incentive to further the long-term growth and success of the Corporation.
1997 COMPENSATION
THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF RIGGS NATIONAL
CORPORATION. Joe L. Allbritton continued to serve as Chairman of the Board and
Chief Executive Officer of the Corporation throughout 1997, during which the
Corporation substantially improved its financial position. Under the Chairman's
leadership, the Corporation earned $50.9 million in net income and exceeded its
ROA and fee income goals.
In 1997, Mr. Allbritton continued to voluntarily maintain his base salary
at the same level he has received since 1992. Per his request of the Board, Mr.
Allbritton was not included in the Corporation's 1997 Bonus Plan and, therefore,
was not paid a bonus.
In July 1997, Mr. Allbritton was granted the option to purchase 500,000
shares of the Corporation's Common Stock at a price of $20.50 per share upon the
recommendation of certain non-employee directors of the Corporation. The option
vests and becomes exercisable upon the Corporation's achievement of specific and
aggressive stock performance criteria or upon a "change of control" of the
Corporation as defined in the Corporation's 1996 Stock Option Plan. This option
was granted to Mr. Allbritton in recognition of his personal role in the
Corporation's outstanding financial success and the Board's high regard for him
and his contributions to the Corporation.
OTHER EXECUTIVE OFFICERS. The Compensation Committee established a
performance-based bonus plan for executive officers in 1997 under which bonuses
were paid to eligible officers based on both the Corporation's achievement of
specified targets for 1997 ROA, net income, fee income and the executive's
performance. The Corporation used a systematic evaluation approach to appraise
all officer performance, including that of the senior officers.
12
<PAGE> 16
Additionally, stock option grants were made in 1997 based on corporate and
individual performance in 1997. See "Stock Option Grants in 1997," page 10, for
a description of the stock options granted to executive officers.
1998 COMPENSATION
The Board has approved a performance-based incentive plan for executive
officers in 1998.
TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Internal Revenue Code Section 162(m) does not permit the Corporation to
deduct certain non-performance-based compensation in excess of $1 million per
taxable year paid to the Chief Executive Officer or the four most highly
compensated employees named in the Proxy Statement.
For 1997, all compensation earned by the Corporation's five highest paid
officers was completely deductible. When applicable, the Compensation Committee
will review the adoption of a policy regarding Section 162(m).
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of the below-named three directors,
none of whom are present or former officers or employees of the Corporation or
any of its subsidiaries. No executive officer of the Corporation serves as an
officer, director, or member of a compensation committee of any entity whose
executive officer served on the Compensation Committee or as a director of the
Corporation. During fiscal year 1997, Compensation Committee member Robert L.
Sloan, or his associates, had an outstanding loan with a lending subsidiary of
the Corporation on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons. In the opinion of management, this transaction did not, at the
time it was entered into, involve more than the normal risk of collectability or
present other unfavorable features.
Respectfully Submitted,
Riggs National Corporation
Compensation Committee
Jack Valenti, Chairman
Robert L. Sloan
Eddie N. Williams
13
<PAGE> 17
STOCK PERFORMANCE CHART
The following graph shows the performance of the Corporation's Common Stock
over the past five fiscal years as compared to the NASDAQ Market Value Index and
the Middle Atlantic Banks Index.
<TABLE>
<CAPTION>
Riggs Middle NASDAQ
Measurement Period National Atlantic National
(Fiscal Year Covered) Corporation Banks(1) Market
<S> <C> <C> <C>
1992 100.00 100.00 100.00
1993 85.19 116.30 114.80
1994 82.72 113.06 112.21
1995 128.40 180.94 158.70
1996 172.30 259.66 195.19
1997 271.08 369.03 239.53
</TABLE>
- ---------------
(1) A list of the banks included in the Middle Atlantic Banks Index is available
to shareholders, at no charge, by writing to Mary B. LeMont, Assistant
Corporate Secretary, Riggs National Corporation, 800 17th Street, N.W., 7th
Floor, Washington, D.C. 20006.
14
<PAGE> 18
CORPORATION PROPOSALS
AMENDMENTS TO THE 1993, 1994 AND 1996 STOCK OPTION PLANS
On January 21, 1998, the Board approved and adopted amendments to the
Corporation's 1993, 1994 and 1996 Stock Option Plans (collectively, the
"Plans"), subject to shareholder approval. The modifications address certain
administrative provisions contained in all three Plans.
Each of the Plans as proposed to be amended generally has the same terms
and conditions with respect to its operation and administration. Key employees
of the Corporation and/or of a subsidiary of the Corporation, including
directors who are officers, are eligible to receive option grants. The
Corporation estimates the number of key employees eligible to participate is
180. The options granted under the Plans are either incentive options (within
the meaning of Section 422 of the Internal Revenue Code) or nonqualified
options. The exercise price per share for the shares subject to options will be
not less than the fair market value of the Common Stock on the date of grant.
However, the exercise price per share for shares subject to an incentive stock
option granted to an individual, who on the date of grant owns more than 10% of
the total combined voting power of all classes of stock of the Corporation (or a
subsidiary corporation), will be not less than 110% of the fair market value of
the Common Stock on the date of grant. The maximum term of options under the
Plans is 10 years. Vested options generally may be exercised no later than three
months after the optionee terminates employment provided that if the termination
of employment is due to death or disability, the options become fully vested and
may be exercised until the earlier of the expiration date of the option or one
year after termination of employment. The Board may amend or terminate the Plan
with respect to future grants of options provided that shareholder approval is
required for any amendment that increases the aggregate number of shares
available, changes the class of eligible persons or extends the term of any of
the Plans.
An optionee will not be taxed when an option is granted under the Plans.
When an optionee exercises a nonqualified option, the optionee generally will
have compensation income equal to the amount by which the then fair market value
of the stock exceeds the option exercise price. The Corporation generally will
receive a deduction equal to the amount of compensation income recognized by the
optionee. An optionee holding an incentive stock option who complies with the
applicable holding periods before disposing of the stock acquired upon exercise
of the incentive option will qualify for favorable tax treatment, and in such
case the Corporation will not receive a tax deduction. If the optionee holding
an incentive stock option fails to comply with the applicable holding periods
provided by the Internal Revenue Code to obtain favorable tax treatment, the
rules applicable to nonqualified stock options generally will apply to both the
optionee and the Corporation.
As originally approved and adopted, the Plans each provided that a "Joint
Compensation Committee" would be responsible for plan administration. Consistent
with the reorganization of the Board of the Corporation and Riggs Bank N.A.
during 1997, it is necessary to amend each of the Plans to replace the "Joint
Compensation Committee" with the "Compensation Committee" of the Board as the
Plans' administrator and as the committee that will make recommendations to the
non-employee members of the Board with respect to the grant of options under the
Plans.
In accordance with provisions of Rule 16b-3 of the Securities Exchange Act
of 1934, each of the Plans as originally approved and adopted contained
requirements that persons administering the Plans qualify as "Disinterested
Persons" and that stockholders of the Corporation approve amendments which
materially increase the benefits accruing to "Insiders," materially modify the
requirements as to eligibility of Insiders to participate in the Plans, or
remove administration of the Plans from a committee of Disinterested Persons.
Due to amendments to Rule 16b-3, it is no longer appropriate to include these
requirements in each of the Plans. The Plans, as amended, remove these
requirements.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE AMENDMENTS TO THE
PLANS.
***
15
<PAGE> 19
AMENDMENTS TO THE 1996 STOCK OPTION PLAN AND RATIFICATION OF THE WAIVER OF
ASSOCIATED PREEMPTIVE RIGHTS
On May 15, 1996, the shareholders of the Corporation approved the 1996
Stock Option Plan (the "1996 Plan"). On January 21, 1998, the Board approved and
adopted amendments to the 1996 Plan, subject to shareholder approval. The
modifications address issues related to which employees are eligible to
participate in the 1996 Plan and the aggregate number of shares of Common Stock
that may be issued pursuant to the 1996 Plan.
As amended, the 1996 Plan will expand the definition of key employees
eligible for grants under the Plan so that any employee who has substantial
responsibility in the direction and management of the Corporation or a
subsidiary can receive grants, rather than just senior officers. This amendment
will provide an additional tool to retain critical employees and is consistent
with the definition of key employees included in the 1993 and 1994 Plans.
The 1996 Plan initially authorized the reservation of two million shares of
Common Stock of the Corporation for issuance pursuant to stock option awards.
The amendment proposes to increase the number of shares of the Corporation's
Common Stock available for stock option awards from two million to four million
shares, but continues to limit grants to any one key employee during a calendar
year to two million shares. Furthermore, the Board unanimously waived preemptive
rights of the Corporation's shareholders with regard to such shares. The waiver
of preemptive rights requires the approval by at least ten directors pursuant to
Article Ninth of the Certificate of Incorporation. (The Corporation also is
proposing to amend Article Ninth of the Certificate of Incorporation, and such
amendment is more fully described below.) However, since the membership of the
Board was less than ten at the time of the approval and remains less than ten
currently, the shareholders are asked to ratify the waiver of the associated
preemptive rights as adopted by the Board.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE AMENDMENTS TO THE
1996 PLAN AND THE RATIFICATION OF THE WAIVER OF THE ASSOCIATED PREEMPTIVE
RIGHTS.
***
APPROVAL OF 1997 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN AND RATIFICATION OF
THE WAIVER OF ASSOCIATED PREEMPTIVE RIGHTS
On July 9, 1997, the Board adopted, subject to shareholder approval, the
1997 Non- Employee Directors Stock Option Plan (the "1997 Directors Plan"). The
1997 Directors Plan will terminate if not approved by the shareholders of the
Corporation, or upon the earlier of one of the following: (a) the adoption of a
resolution of the Board terminating the Plan; (b) the date shares are no longer
available for issuance under the Plan; or (c) July 9, 2007. The purpose of the
1997 Directors Plan is to increase the proprietary interest of non-employee
directors of the Corporation and its subsidiaries by granting such directors
options to purchase Common Stock of the Corporation. The grants are intended to
more closely align the interests of the non-employee directors of the
Corporation and its subsidiaries with those of the shareholders.
The 1997 Directors Plan authorized the grant of an aggregate maximum of
350,000 shares of the Corporation's Common Stock to eligible members of the
Board. The Board is responsible for administration of the 1997 Directors Plan. A
director is eligible to receive an option under the 1997 Directors Plan if the
director is not otherwise an employee of the Corporation or any subsidiary. The
amount, timing and terms of such grants will be based on such considerations as
the Board may consider appropriate, subject to the provisions of the 1997
Directors Plan. When an option becomes exercisable, the optionee may purchase
shares of the Corporation's Common Stock by the payment of the exercise price
for the number of shares being purchased. The exercise price per share of Common
Stock may be not less than the greater of the fair market value of a share of
Common Stock on the date of grant or the par value of the Common Stock. Vested
options generally may be exercised no later than three months after the optionee
ceases to be a director of the Corporation or a subsidiary, provided that if the
director terminates service due to death or disability, the director's options
become fully vested and may be exercised until the earlier of the expiration of
the options or one year after the termination of the director's service. In the
event of changes in the Common Stock by reason of capital
16
<PAGE> 20
adjustments, such as stock splits and recapitalizations, appropriate adjustments
will be made in the price of shares and the number of shares subject to options.
The Board retains the right to amend or terminate the 1997 Directors Plan. An
amendment or termination of the 1997 Directors Plan may not adversely affect a
director's rights with respect to an outstanding option without such director's
consent.
On July 9, 1997, vested options at an exercise price of $20.50 per share
for a total of 307,500 shares of Common Stock of the Corporation were granted to
a total of 17 non-employee directors of the Corporation and its subsidiaries,
subject to shareholder approval of the 1997 Directors Plan. The option exercise
price for the issued options was the closing price of the Common Stock on the
date of grant. A total of 23 non-employee directors of the Corporation and its
subsidiaries are currently eligible to participate in the 1997 Directors Plan.
The closing price of the Corporation's Common Stock as reported on the Nasdaq
National Market System on March [ ], 1998, was $[ ] per share.
The Corporation generally will receive a tax deduction for compensation
expense when a director exercises a stock option granted under the 1997
Directors Plan. A director will not be taxed when a stock option is granted
under the 1997 Directors Plan. When a director exercises an option, the director
generally will have compensation income equal to the amount by which the fair
market value of the stock exceeds the option price on the date of the option
exercise.
On July 9, 1997, the Board also unanimously waived preemptive rights of the
Corporation's shareholders with regard to such shares available under the 1997
Directors Plan. The waiver of preemptive rights requires the approval by at
least ten directors pursuant to Article Ninth of the Certificate of
Incorporation. However, since the membership of the Board was less than ten at
the time of the approval and remains less than ten currently, the shareholders
are asked to ratify the waiver of the associated preemptive rights as adopted by
the Board.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE APPROVAL OF THE
1997 DIRECTORS PLAN AND THE RATIFICATION OF THE WAIVER OF THE ASSOCIATED
PREEMPTIVE RIGHTS.
***
AMENDMENT TO ARTICLE NINTH OF THE CERTIFICATE OF INCORPORATION
Article Ninth of the Corporation's Certificate of Incorporation, as
amended, provides that shareholders of the Corporation shall have preemptive
rights to purchase any stock or right to purchase stock issued by the
Corporation. Article Ninth provides, however, that such preemptive rights shall
not exist if, at the time the issuance of securities or rights is approved, the
Board votes unanimously to eliminate such rights with a minimum of ten directors
voting. At the time that Article Ninth was amended to add the ten director
minimum, the number of Directors of the Corporation was twenty-five. As a
result, the ten director minimum had the effect of requiring at least two-fifths
of the directors to vote on the issue. At an April 9, 1997, meeting of the
Board, the number of Directors of the Corporation was reduced to eight and the
number was increased to its present nine at a subsequent meeting of the Board.
In order to be consistent with the amendment to the Certificate of Incorporation
and to further protect the interests of the shareholders, the Certificate of
Incorporation must be amended. In its meeting on January 21, 1998, the Board
passed a resolution recommending that the Certificate of Incorporation be
amended to require that the elimination of preemptive rights shall continue to
require a unanimous vote of the Board with at least a majority of the directors
voting. This amendment to Article Ninth must be approved by the shareholders of
the Corporation. The Certificate of Incorporation shall be amended by striking
the language requiring "at least ten Directors voting" and replacing it with "at
least a majority of Directors voting."
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE AMENDMENT TO
ARTICLE NINTH OF THE CERTIFICATE OF INCORPORATION.
***
17
<PAGE> 21
SHAREHOLDER PROPOSAL
GENERAL
Mrs. Evelyn Y. Davis, Watergate Office Building, 2600 Virginia Avenue,
N.W., Suite 215, Washington, D.C. 20032, who is the owner of 500 shares of
Common Stock, has advised the Corporation that she intends to present the
following proposal for shareholder action at the Meeting:
RESOLVED: "That the stockholders of Riggs National recommend that the Board
take the necessary steps to have the accountants elected EACH year by all
the stockholders."
REASONS: "The majority of New York Stock Exchange listed companies elect
accountants each year."
"The accountants should be made 'accountable' to all shareholders, not just
the Board."
"We like the firm of Arthur Andersen, but they should be willing to stand
for election EACH year, as they do at MANY other companies."
"If you AGREE, please mark your proxy FOR this resolution."
BOARD OF DIRECTORS' RECOMMENDATION
The Board recommends a vote AGAINST this proposal. The Board, through its
Audit Committee, is charged with the responsibility of monitoring the
Corporation's outside accountants, Arthur Andersen, and assessing their
performance. Some members of the Audit Committee and the Board are officers or
directors of other corporations which employ major accounting firms and,
therefore, are familiar with the relative merits of each firm and are well
qualified to make judgments in this area. The Corporation believes that
procedures currently in place adequately ensure the quality and independence of
the Corporation's outside accountants. Corporation officers and the Audit
Committee continually monitor and evaluate Arthur Andersen's performance.
Throughout the year, Corporation employees work with Arthur Andersen and report
the results of Arthur Andersen's effectiveness to senior management. Therefore,
the Board believes that it is in the best position to select the Corporation's
outside accountants.
SHAREHOLDER PROPOSALS FOR THE 1999 ANNUAL MEETING
The Board anticipates that the next Annual Meeting of Shareholders will be
held on or about April 14, 1999. A shareholder who intends to present a proposal
at the 1999 Annual Meeting must submit the written text of the proposal to the
Corporation no later than November 1, 1998, in order for the proposal to be
considered for inclusion in the Corporation's proxy statement and form of proxy
for that meeting.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP are the independent public accountants for the
Corporation and have served as the independent public accountants for the
Corporation since 1981. A representative of Arthur Andersen LLP is expected to
be present at the Meeting and will have the opportunity to make a statement, if
he or she desires to do so, and to respond to appropriate questions.
OTHER MATTERS
This proxy is solicited on behalf of the Board. The cost of solicitation of
proxies will be borne by the Corporation. The Corporation may solicit proxies
personally or by telephone, in addition to the solicitations by mail. All such
further solicitations will be made by directors, officers or regular employees
of the Corporation
18
<PAGE> 22
or of Riggs Bank N.A., who will not be additionally compensated therefor, or by
the Corporation's transfer agent (The Bank of New York), whose costs will be
borne by the Corporation. Arrangements will be made by the Corporation for the
forwarding, at the Corporation's expense, of solicitation materials by brokers,
nominees, fiduciaries and other custodians to their principals.
The Board is not aware of any other matters that may come before the
Meeting. If any other business properly comes before the Meeting, the persons
designated as proxies will vote upon such matters according to their discretion.
ANNUAL REPORT ON FORM 10-K
A copy of the Annual Report on Form 10-K, as filed with the SEC, is
available without charge upon written request to Jay F. Ferrin, Investor
Relations, at corporate headquarters.
By Order of the Board of Directors,
/s/ T.C. COUGHLIN
TIMOTHY C. COUGHLIN
President
19
<PAGE> 23
[RIGGS LOGO]
RIGGS NATIONAL CORPORATION
PROXY FOR 1998 ANNUAL MEETING OF SHAREHOLDERS
The undersigned hereby appoints Edward. J. Miller, Jr., H. Gregory Platts
and Stuart Philip Ross as Proxies, severally and each with full power of
substitution, to vote all the shares of Common Stock of Riggs National
Corporation standing in the name of the undersigned on its books on February
27, 1998, at the Annual Meeting of Shareholders to be held at the JW Marriott
Hotel, 1331 Pennsylvania Avenue, N.W., Washington, D.C. 20004, on April 15,
1998, at 9:30 a.m., or at any adjournment thereof, with all the powers the
undersigned would possess if personally present as follows:
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND IF
PROPERLY EXECUTED AND TIMELY DELIVERED, WILL BE VOTED AS DIRECTED HEREIN. IF
NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED "FOR" ITEMS 1-5, "AGAINST" ITEM
6, AND IN ACCORDANCE WITH THE RECOMMENDATION OF THE BOARD OF DIRECTORS SHOULD
ANY OTHER BUSINESS BE PROPERLY PRESENTED AT THE MEETING.
(CONTINUED, AND TO BE EXECUTED AND DATED ON THE OTHER SIDE.)
RIGGS NATIONAL CORPORATION
P.O. BOX 11185
NEW YORK, N.Y. 10203-0185
<PAGE> 24
RIGGS NATIONAL CORPORATION
1503 PENNSYLVANIA AVENUE, N.W.
WASHINGTON, D.C. 20005
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 15, 1998
Notice is hereby given that the Annual Meeting of Shareholders (the
"Meeting") of Riggs National Corporation (the "Corporation") will be held on
Wednesday, April 15, 1998, at 9:30 a.m., local time, at the JW Marriott Hotel,
1331 Pennsylvania Avenue, N.W., Washington, D.C. 20004, for the following
purposes:
1. To elect a board of directors for the ensuing year;
2. To amend the Corporation's 1993, 1994, and 1996 Stock Option Plans
replacing the "Joint Compensation Committee" of the Board of
Directors (the "Board") with the "Compensation Committee" as each
of the respective plans' administrator and amending each of the
plans to conform with recent amendments to Rule 16b-3;
3. To amend the Corporation's 1996 Stock Option Plan expanding the
definition of "Key Employees" eligible for grants under the plan,
increasing the number of shares of stock available for stock option
awards from two million to four million shares, and ratifying the
waiver by the Board of the Shareholders' preemptive rights to any
stock issuances by the Corporation;
4. To approve the 1997 Non-Employee Directors Stock Option Plan
authorizing the grant of an aggregate maximum of 350,000 shares of
stock to eligible Board members and ratifying the waiver by the Board
of Shareholders' preemptive rights to any stock issuances by the
Corporation;
5. To amend the language regarding the waiver by the Board of the
Shareholders' preemptive rights in the Corporation's Certificate of
Incorporation that requires "at least ten Directors voting" and
replacing it with "at least a majority of Directors voting" which
will conform the Certificate to a change in the number of directors;
6. To consider a shareholder proposal requiring the Board take the
necessary steps to have the accountants elected each year by all the
shareholders; and
7. To consider and act upon any other matters that may properly be
brought before the Meeting or any adjournment or postponement
thereof.
Shareholders of record at the close of business on February 27,
1998, will be entitled to vote at the Meeting or any adjournment or
postponement thereof. Whether or not you contemplate attending the Meeting,
please execute the PROXY CARD below and return it in the enclosed postage-paid
return envelope. You may revoke your proxy at any time prior to its exercise by
written notice to the Assistant Corporate Secretary of the Corporation, by
executing and delivering a proxy bearing a later date, or by attending the
Meeting and voting in person.
You are cordially invited to attend the Meeting in person.
By Order of the Board of Directors,
/s/ TIMOTHY C. COUGHLIN
President
March 18, 1998
DETACH PROXY CARD HERE
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
_________
/_______ /
(1) ELECTION OF DIRECTORS: FOR all nominees /X/ WITHHOLD AUTHORITY to vote /X/ *EXCEPTIONS /X/
listed below for all nominees listed below
</TABLE>
Nominees: Joe L. Allbritton, Robert L. Allbritton, Timothy C. Coughlin, John
M. Fahey, Jr., Lawrence I. Hebert, Steven B. Pfeiffer, Robert L.
Sloan, Jack Valenti, Eddie N. Williams
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
THE "EXCEPTIONS" BOX AND WRITE THAT NOMINEE'S NAME ON THE FOLLOWING LINE.)
*EXCEPTIONS
------------------------------------------------------------------
FOR A DESCRIPTION OF ITEMS 2 THROUGH 6, PLEASE SEE THE NOTICE OF ANNUAL
MEETING ABOVE.
(2) FOR /X/ AGAINST /X/ ABSTAIN /X/
(3) FOR /X/ AGAINST /X/ ABSTAIN /X/
(4) FOR /X/ AGAINST /X/ ABSTAIN /X/
(5) FOR /X/ AGAINST /X/ ABSTAIN /X/
(6) FOR /X/ AGAINST /X/ ABSTAIN /X/
(7) To consider and act upon any matters that may properly be brought before the
Meeting or any adjournment or postponement thereof.
Change of Address and/ /X/
or Comments Mark Here
(When signing as attorney, executor,
administrator, trustee or guardian,
please give full title, if more than
one trustee, all should sign.
Dated: _____________________, 1998
----------------------------------
Signature of Shareholder
----------------------------------
Signature of Shareholder
VOTES MUST BE INDICATED /X/
(X) IN BLACK OR BLUE INK.
PLEASE DATE, SIGN AND RETURN PROMPTLY IN THE ACCOMPANYING ENVELOPE.
<PAGE> 25
[The following information will not be disseminated to holders of Riggs
National Corporation's Common Stock with the foregoing proxy statement.]
<PAGE> 26
RIGGS NATIONAL CORPORATION
1993 STOCK OPTION PLAN
AS AMENDED(1)
1. PURPOSE OF THE PLAN.
This 1993 Stock Option Plan (the "Plan") of Riggs National Corporation
(the "Corporation") for key employees of the Corporation and its subsidiaries is
to advance the best interest of the Corporation by providing such employees who
have a substantial responsibility for its management and growth with an
additional incentive to continue to contribute to the growth and success of the
Corporation by increasing their proprietary interest in the success of the
Corporation.
2. DEFINITIONS.
(a) "Board" means the Board of Directors of the Corporation.
(b) "Common Stock" means the common shares, $2.50 par value per share,
of the Corporation.
(c) "Compensation Committee" means the compensation committee of the
Board, but excluding any member who is not a Non-Employee Director.
(d) "Corporation" means the Riggs National Corporation.
(e) "Date of Grant" means the date on which an Option is approved by the
Non-Employee Directors Committee.
(f) "Director" means a member of the Corporation's Board of Directors.
(g) "Disability" as to an Option holder has the same meaning as the term
is used in the long-term disability insurance plan contributed to by
the Corporation or its Subsidiary on behalf of the Option holder or
if the Option holder is not covered by any such plan, disability
shall have the meaning provided for in Section 22(e)(3) of the
Internal Revenue Code of 1986, as amended, or any successor statute
thereto (the "Code").
(h) "Fair Market Value" shall mean, with respect to a share of Common
Stock, (i) if the Common Stock is traded on the National Market
System or a national securities exchange, the closing price of the
Common Stock on the day immediately preceding determination date or
if there are no sales on such date, then on the next preceding date
on which there were sales of Common Stock, all as published in the
NASDAQ National Market Issues report in the Eastern Edition of The
Wall Street Journal, (ii) if the Common Stock is not traded on the
National Market System or listed on a national securities exchange,
the mean between the bid and asked prices last reported by the
National Association of Securities Dealers, Inc. for the
over-the-counter market on the day immediately preceding the
determination date or, if no bid and asked prices are reported on
such date, then on the next preceding date on which there were such
quotations, or (iii) if the Common Stock, is not traded on the
National Market System or listed on a national securities exchange
and quotations for the Common Stock are not reported by the National
Association of Securities Dealers, Inc., the Fair Market Value
determined by the Compensation Committee on the basis of available
prices for the Common Stock or in such manner as the Compensation
Committee shall agree. Notwithstanding the preceding, the Fair
Market Value on a given determination date of Common Stock subject
to
- ------------------
(1) As amended by resolution of the Board of Directors and approved by the
shareholders on ____________. 1998.
- 1 -
<PAGE> 27
Incentive Stock Options or Common Stock valued in connection with
the exercise of Incentive Stock Options shall be an amount which is
equal to the Compensation Committee's good faith determination of
the Common Stock's value on the given determination date and the
Compensation Committee shall for all purposes of this Plan have the
authority to determine Fair Market Value using methods other than
those described in this Section, if the Compensation Committee
determines that such alternative methods more properly reflect the
Fair Market Value of the Common Stock. Furthermore, in all cases,
Fair Market Value shall not be less than the Par Value of the Common
Stock.
(i) "Incentive Stock Option" means an Option qualifying for special tax
treatment under Section 422 of the Code.
(j) "Insider" means any person subject to the provisions of section 16
of the Act, including an "officer" of the Corporation within the
meaning of section 16 of the Act, a "director" within the meaning of
section 3(a)(7) of the Act, and a "beneficial owner" of more than
ten percent (10%) of any class of the equity securities of the
Corporation within the meaning of section 16 of the Act.
(k) "Key Employee" means any employee (including employees who are also
officers or directors, but not including directors who are not also
employees) of the Corporation or any Subsidiary Corporation who have
substantial responsibility in the direction and management of the
Corporation or a Subsidiary Corporation as determined by the
Compensation Committee.
(l) "Non-Employee Director" means a Director who: (i) is not currently
an officer or otherwise employed by the Corporation, or by a Parent
or Subsidiary Corporation of the Corporation; (ii) does not receive
compensation directly or indirectly from the Corporation, its Parent
Corporation or its Subsidiary Corporation for services rendered as a
consultant or in any capacity other than as a director, except for
an amount for which disclosure would not be required pursuant to
Item 404(a) of regulation S-K [$60,000]; (iii) does not possess an
interest in any other transaction for which disclosure would be
required pursuant to Item 404(a) of Regulation S-K [$60,000]; (iv)
is not engaged in a business relationship for which disclosure would
be required pursuant to Item 404(a) of regulation S-K; and (v)
qualifies as an "outside director" within the meaning of Section
162(m)(4) of the Code, and applicable regulations thereunder or who
is deemed to be an outside director under the applicable regulations
and authority.
(m) "Non-Employee Directors Committee" means a committee composed of all
Non-Employee Directors.
(n) "Nonqualified Stock Option" means an Option that is not an Incentive
Stock Option.
(o) "Option" means an Incentive Stock Option or a Nonqualified Stock
Option granted under this Plan.
(p) "Parent Corporation" has the same meaning used in Section 424(e) of
the Code.
(q) "Plan" means the Riggs National Corporation 1993 Stock Option Plan
as set forth herein, which may be amended from time to time.
(r) "Subsidiary Corporation" has the same meaning used in Section 424(f)
of the Code.
3. SHARES OF COMMON STOCK SUBJECT TO THE PLAN.
Subject to the provisions of Section 8 of the Plan, the aggregate number
of authorized but unissued shares of Common Stock or shares of previously issued
Common Stock that have been reacquired by the Corporation that may be issued
pursuant to Options granted under the Plan will not exceed one million two
hundred fifty thousand
- 2 -
<PAGE> 28
(1,250,000) shares. Shares that by reason of expiration of an Option or
otherwise are no longer subject to purchase pursuant to an Option granted under
the Plan may again be available for issuance pursuant to Options under the Plan.
4. ADMINISTRATION OF THE PLAN.
The Plan shall be administered by the Compensation Committee. The
Compensation Committee has the authority to recommend to the Non-Employee
Directors Committee the Key Employees to be granted Options, the times when
Options will be granted, the number of shares subject to each Option, the
exercise price of each Option, the vesting schedule (if any) of each Option, the
conditions precedent (if any) to acceleration of the vesting schedule of each
Option, the method of payment for shares acquired upon the exercise of Options,
the expiration date of each Option, the Fair Market Value of Common Stock
subject to Options, and any other terms and conditions of the Options it deems
appropriate. The Non-Employee Directors Committee shall have the authority to
approve, reject or modify recommended grants of Options by the Compensation
Committee. A majority of the Non-Employee Directors Committee shall constitute a
quorum. All actions by the Non-Employee Directors Committee shall require a
majority of the members of such committee present at such meeting. Any action by
the Non-Employee Directors Committee may be taken by a unanimous written consent
of all members of the committee, and action so taken shall be fully effective as
if it had been taken by a vote of the members at a meeting duly called and held.
No Option shall be granted unless and until such grant is approved by the
Non-Employee Directors Committee.
All questions of interpretation of the Plan or of any Options will be
determined solely by the Compensation Committee and any such determination will
be final and binding upon all persons having an interest in the Plan.
5. ELIGIBILITY.
Key Employees of the Corporation and any Subsidiary Corporation will be
eligible to participate in the Plan, as approved by the Compensation Committee.
6. TERMS AND CONDITIONS OF STOCK OPTIONS.
Each Option granted under this Plan will be evidenced by an Option
agreement between the Corporation and the recipient which sets forth the
exercise price of the Option, the vesting schedule (if any) of the Option, the
expiration date of the Option, and any other terms or conditions approved by the
Non-Employee Directors Committee subject to the following terms and conditions:
(a) OPTION PRICE.
(i) NONQUALIFIED STOCK OPTIONS. The exercise price per share for
the shares subject to a Nonqualified Stock Option will be no
less than one hundred percent (100%) of the Fair Market Value
of the Common Stock on the Date of Grant.
(ii) INCENTIVE STOCK OPTIONS. The exercise price per share for the
shares subject to an Incentive Stock Option will be no less
than one hundred percent (100%) of the Fair Market Value of
the Common Stock on the Date of Grant. However, the exercise
price per share for shares subject to an Incentive Stock
Option granted to an individual who on the Date of Grant owns
more than ten percent (10%) of the total combined voting power
of all classes of stock of the Corporation (or of a Parent
Corporation or a Subsidiary Corporation) will not be less than
one hundred and ten percent (110%) of the Fair Market Value of
the Common Stock on the Date of Grant.
(b) TERM OF OPTIONS. Notwithstanding any other provisions of the Plan or
any Option agreement, no Option will be exercisable after the
expiration of ten (10) years from the Date of Grant. Furthermore,
- 3 -
<PAGE> 29
no Incentive Stock Option granted to an individual who on the Date
of Grant owns more than ten percent (10%) of the total combined
voting power of all classes of stock of the Corporation (or of a
Parent Corporation or a Subsidiary Corporation) will be exercisable
after the expiration of five (5) years from the Date of Grant.
(c) MAXIMUM VALUE OF OPTIONS WHICH ARE INCENTIVE STOCK OPTIONS. To the
extent that the aggregate Fair Market Value of the Common Stock with
respect to which Incentive Stock Options granted to any person are
exercisable for the first time during any calendar year (under all
stock option plans of the Corporation, a Parent Corporation and any
Subsidiary Corporation) exceeds $100,000, the options are not
Incentive Stock Options. For purposes of this paragraph, the Fair
Market Value of the Common Stock will be determined as of the time
the Incentive Stock Option with respect to the Common Stock is
granted. This paragraph will be applied by taking Incentive Stock
Options into account in the order in which they are granted.
(d) VESTING OF OPTIONS AND TERMINATION OF EMPLOYMENT. An Option will be
exercisable only to the extent that it is vested on the date of
exercise. Vesting of an Option will cease on the date that an Option
holder is no longer an employee of the Corporation or a Parent
Corporation or Subsidiary Corporation (the "date of termination"),
and the Option will be exercisable only to the extent the Option is
vested on the date of termination. However, if the Option holder is
no longer an employee because of death or Disability, any Option
that is not one hundred percent (100%) vested will automatically
become one hundred percent (100%) vested on the date of termination.
If the Option holder's termination is for any reason other than
death, the right to exercise the Option (to the extent that it is
vested) will expire ninety (90) days after the date of termination.
If the Option holder's termination is for reason of death, the right
to exercise the Option will expire one (1) year after the date of
the holder's death, and until expiration, the holder's heirs,
legatees or legal representative may exercise the Option.
(e) EXERCISE.
(i) CASH PAYMENT. An Option may be exercised as to all or any
number of whole shares of the Common Stock with respect to
which the Option is vested. Options may be exercised only by
the Option holder's written notice to the secretary of the
Corporation (the "exercise notice") and only if the exercise
notice is accompanied by payment in cash of the full exercise
price for the shares with respect to which the Option is
exercised, except as otherwise provided herein.
(ii) NONCASH PAYMENT. Unless otherwise provided at the time of
grant, payment of the exercise price may be made in the form
of (1) Common Stock of the Corporation that has been held for
at least six (6) months prior to the date of exercise or (2) a
combination of cash and such Common Stock that has been held
for at least six (6) months prior to the date of exercise. The
value of any Common Stock used to pay the exercise price or
any portion thereof will be the Fair Market Value of Common
Stock on the date of exercise.
Wherever in this Plan or any agreement a Key Employee is
permitted to pay the exercise price of an Option relating to
the exercise of an Option by delivering Common Stock, the Key
Employee may, subject to procedures satisfactory to the
Compensation Committee, satisfy such delivery requirement by
presenting proof of beneficial ownership of such Common Stock,
in which case the Corporation shall treat the Option as
exercised without further payment and shall withhold such
number of Common Stock from the Common Stock acquired by the
exercise of the Option.
(iii) BROKER-DEALER PAYMENT. Unless otherwise provided at the time
of grant, payment of the unpaid exercise price by a
broker-dealer or by the Option holder with cash advanced by
the broker-dealer, if the exercise notice is accompanied by
the Option holder's written
- 4 -
<PAGE> 30
irrevocable instructions to deliver the Common Stock acquired
upon exercise of the Option to the broker-dealer.
(f) NONTRANSFERABILITY. No Option granted under the Plan, contingent or
otherwise, will be transferable, assignable or subject to any
encumbrance, pledge, or charge of any nature, except by will or the
laws of descent and distribution. During the lifetime of an Option
holder, an Option will be exercisable only by the Option holder or
by the Option holder's legal representative. The executor or
administrator of the estate of the Option holder may transfer any
rights with respect to such Option to the person or persons or
entity (including a trust) entitled thereto under the will of the
holder of such Option or under the laws of intestacy.
(g) STOCK LEGEND. The Corporation may require that certificates
evidencing shares of Common Stock purchased upon the exercise of
Incentive Stock Options issued under the Plan be endorsed with a
legend in substantially the following form:
The shares evidenced by this certificate may not be sold or
transferred prior to ______________, 19____, in the absence of
a written statement from Riggs National Corporation (the
"Corporation") to the effect that the Corporation is aware of
the fact of such sale or transfer.
The blank contained in such legend shall be filled in with the date
that is the later of: (i) one year and one day after the date of
exercise of such Incentive Stock Option or (ii) two years and one
day after the date of grant of such Incentive Stock Option. Upon
delivery to the Corporation, at its principal executive office, of a
written statement to the effect that such shares have been sold or
transferred prior to such date, the Corporation does hereby agree to
promptly deliver to the transfer agent for such shares a written
statement to the effect that the Corporation is aware of the fact of
such sale or transfer. The Corporation may also require the
inclusion of any additional legend which may be necessary or
appropriate.
(h) CHANGE OF CONTROL. In the event of a Change of Control (as
hereinafter defined), all then-outstanding Options will become one
hundred percent (100%) vested and exercisable as of the Change of
Control. However, if in the opinion of counsel to the Corporation
the immediate exercisability of such Options, when taken into
consideration with all other "parachute payments" as defined in
Section 280G of the Code, would result in an "excess parachute
payment" as defined in such section, such Option shall not become
immediately exercisable, except and to the extent the Compensation
Committee in its discretion shall otherwise determine.
For purposes of the Plan, "Change of Control" means (1) the sale of
substantially all of the Corporation's assets; (2) the acquisition,
whether directly, indirectly, beneficially (within the meaning of
Rule 13d-3 of the Act), or of record, of securities of the
Corporation representing twenty-five percent (25%) or more in the
aggregate voting power of the Corporation's then-outstanding Common
Stock by any "person" (within the meaning of Sections 13(d) and
14(d) of the Act), including any corporation or group of associated
persons acting in concert, other than (i) the Corporation or its
subsidiaries and/or (ii) any employee pension benefit plan (within
the meaning of Section 3(2) of the Employee Retirement Income
Security Act of 1974) of the Corporation or its subsidiaries,
including a trust established pursuant to any such plan; (3) the
Corporation is merged or consolidated with or into another
corporation in any transaction or series of transactions, in which
either (A) the persons who were the beneficial owners of the
Corporation's voting securities immediately prior to such
transaction do not beneficially own immediately after such
transaction at least fifty percent (50%) of the total outstanding
voting power of the surviving corporation or (B) any "person"
(within the meaning of Sections 13(d) and 14(d) of the Act),
including any corporation or group of associated persons acting in
concert is or becomes the direct, indirect or beneficial owner
(within the meaning of Rule 13d-3 of the Act) of twenty-five percent
(25%) or more of the aggregate voting power of resulting entity,
provided that
- 5 -
<PAGE> 31
such person was not a twenty-five percent (25%) or more owner of the
Corporation prior to the transaction or transactions; or (4) the
Corporation is liquidated or dissolved or adopts a plan of
liquidation or dissolution. Notwithstanding the foregoing, a Change
of Control will not result from: (A) a transfer of the Corporation's
voting securities by a person who is the beneficial owner, directly
or indirectly, of twenty-five percent (25%) or more of the voting
securities of the Corporation (a "25 Percent Owner") to (i) a member
of such 25 Percent Owner's immediate family (within the meaning of
Rule 16a-1(e) of the Act) either during such 25 Percent Owner's
lifetime or by will or the laws of descent and distribution; (ii)
any trust as to which the 25 Percent Owner or a member (or members)
of his immediate family (within the meaning of Rule 16a-1(e) of the
Act) is the beneficiary; (iii) any trust as to which the 25 Percent
Owner is the settlor with sole power to revoke; (iv) any entity over
which such 25 Percent Owner has the power, directly or indirectly,
to direct or cause the direction of the management and policies of
the entity, whether through the ownership of voting securities, by
contract or otherwise; or (v) any charitable trust, foundation or
corporation under Section 501(c)(3) of the Code that is funded by
the 25 Percent Owner or (B) the acquisition of voting securities of
the Corporation or the resulting entity in the event of a merger or
consolidation, by either (i) a person who was a 25 Percent Owner on
the effective date of the Plan or (ii) a person, trust or other
entity described in the foregoing clauses (A)(i)-(v) of this
subsection.
7. TERMINATION AND AMENDMENT OF THE PLAN AND OPTIONS.
The Board may terminate the Plan at any time except with respect to any
outstanding Options. The Board may amend the Plan in any manner with respect to
future grants of Options and may amend outstanding Options in any manner
consistent with the Plan subject to the following limitations:
(a) Except as provided in Section 8 of the Plan, no amendment will be
effective without the approval of the shareholders of the
Corporation if that amendment (i) materially increases the number of
securities that may be issued under the Plan, (ii) changes the class
of eligible employees, officers or directors, or (iii) extends the
term of the Plan or the period during which any outstanding
Incentive Stock Option may be exercised.
(b) No amendment will be effective if the amendment changes the manner
of determining the exercise price of Incentive Stock Options, makes
individuals who are not employees of the Corporation or of any
Parent or Subsidiary Corporation eligible to be granted Incentive
Stock Options, changes the nontransferability of the Options, or
alters or impairs any rights or obligations of any outstanding
Option without the written consent of the Option holder.
8. CHANGE IN CAPITAL STRUCTURE.
(a) The existence of outstanding Options shall not affect in any way the
right or power of the Corporation or its stockholders to make or
authorize any or all adjustments, recapitalizations, reorganizations
or other changes in the Corporations' capital structure or its
business, or any merger or consolidation of the Corporation, or any
issue of bonds, debentures, preferred or prior preference stock
ahead of or affecting the Common Stock or the rights thereof, or the
dissolution or liquidation of the Corporation, or any sale or
transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or
otherwise.
(b) If the Corporation shall effect a subdivision or consolidation of
shares or other capital readjustment, the payment of a stock
dividend, or other increase or reduction of the number of shares of
the Common Stock outstanding, without receiving compensation
therefore in money, services or property, then (i) the number,
class, and per share price of shares of Common Stock subject to
outstanding Options hereunder shall be appropriately adjusted in
such a manner as to entitle an optionee to receive upon exercise of
an Option, for the same aggregate cash
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<PAGE> 32
consideration, the same total number and class of shares as he would
have received had the optionee exercised his or her Option in full
immediately prior to the event requiring the adjustment; and (ii)
the number and class of shares then reserved for issuance under the
Plan shall be adjusted by substituting for the total number and
class of shares of Common Stock then reserved that number and class
of shares of Common Stock that would have been received by the owner
of an equal number of outstanding shares of each class of Common
Stock as the result of the event requiring the adjustment.
(c) After a merger of one or more corporations into the Corporation or
after a consolidation of the Corporation and one or more
corporations in which the Corporation shall be the surviving
corporation, each holder of an outstanding Option shall, at no
additional cost, be entitled upon exercise of such Option to receive
(subject to any required action by stockholders) in lieu of the
number and class of shares as to which such Option shall then be so
exercisable, the number and class of shares of stock or other
securities to which such holder would have been entitled pursuant to
the terms of the agreement of merger or consolidation if,
immediately prior to such merger or consolidation, such holder had
been the holder of record of the number and class of shares of
Common Stock equal to the number and class of shares as to which
such Option shall be so exercised.
(d) If the Corporation is merged into or consolidated with another
corporation under circumstances where the Corporation is not the
surviving corporation, or if the Corporation is liquidated, or sells
or otherwise disposes of substantially all of its assets to another
corporation while unexercised Options remain outstanding under the
Plan, unless provisions are made in connection with such transaction
for the continuance of the Plan and/or the assumption or
substitution of such Options with new options covering the stock of
the successor corporation, or parent or subsidiary thereof, with
appropriate adjustments as to the number and kind of shares and
prices, then all outstanding Options shall be canceled as of the
effective date of any such merger, consolidation or sale provided
that (i) notice of such cancellation shall be given to each holder
of an Option and (ii) each holder of an Option shall have the right
to exercise such Option in full (without regard to any vesting or
other limitations on exercise imposed on such Option) during the
30-day period preceding the effective date of such merger,
consolidation, liquidation, or sale (the "corporate event").
Notwithstanding the preceding provisions if no provisions are made
for the continuance, assumption or substitution of Options and if
exercise of any then-outstanding Options during the 30-day period
preceding the effective date of such corporate event would not be in
conformity with all applicable federal securities laws, the Option
holder will be paid in cash an amount equal to the difference
between the Fair Market Value of the shares of Common Stock subject
to the Option as of the corporate event and the exercise price of
the Option, or if in the opinion of counsel to the Corporation the
immediate exercisability of such Options (or cash payment), when
taken into consideration with all other "parachute payments" as
defined in Section 280G of the Code, would result in an "excess
parachute payment" as defined in such section, such Option shall not
become immediately exercisable and shall be canceled as of the
effective date of the corporate event, except and to the extent the
Compensation Committee in its discretion shall otherwise determine.
(e) Except as hereinbefore expressly provided, the issue by the
Corporation of shares of stock of any class, or securities
convertible into shares of stock of any class, for cash or property,
or for labor or services either upon direct sale or upon the
exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Corporation convertible
into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the
number, class or price of shares of Common Stock then subject to
outstanding Options.
(f) Adjustment under the preceding provisions of this section will be
made by the Compensation Committee, whose determination as to what
adjustments will be made and the extent thereof will be final,
binding, and conclusive. No fractional interest will be issued under
the Plan on account
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<PAGE> 33
of any such adjustment. No adjustment will be made in a manner that
causes an Incentive Stock Option to fail to continue to qualify as
an Incentive Stock Option under the Code.
9. HOLDING PERIOD.
Notwithstanding anything to the contrary in the Plan, Common Stock
acquired through exercise of an Option that was outstanding on November 13,
1996, or any other Option granted to an Insider but which was not granted by the
Non-Employee Directors Committee or the Board or which was not approved by the
shareholders may not be disposed of by the Insider during the six-month period
beginning on the Date of Grant.
10. GENERAL PROVISIONS.
(a) The Corporation shall not be required to sell or issue any shares
under any Option if the issuance of such shares shall constitute a
violation by the Option holder or the Corporation of any provision
of any law, statute, or regulation of any stock exchange upon which
the Common Stock may be listed or any governmental authority whether
it be Federal or State. Unless a registration statement is in effect
under the Securities Act of 1933, as amended (the "Act") with
respect to the shares of Common Stock covered by an Option, the
Corporation shall not be required to issue shares upon exercise of
any Option (i) unless the Compensation Committee has received
evidence satisfactory to it to the effect that the holder of such
Option is acquiring such shares for investment and not with a view
to the distribution thereof or (ii) unless an opinion of counsel to
the Corporation has been received by the Corporation, in a form and
substance which is deemed acceptable by the Compensation Committee,
to the effect that a registration statement is not required. Any
determination in this connection by the Compensation Committee shall
be final, binding and conclusive. In the event the shares issuable
on exercise of an Option are not registered under the Act, the
Corporation may imprint the following legend or any other legend
which counsel for the Corporation considers necessary or advisable
to comply with the Act:
"The shares of stock represented by this certificate have not
been registered under the Securities Act of 1933 or under the
securities laws of any State and may not be sold or
transferred except pursuant to an effective registration
statement or upon receipt by the Corporation of any opinion of
counsel, in form and substance satisfactory to the
Corporation, that registration is not required for such sale
or transfer."
The Corporation may, but shall in no event be obligated to, register
any securities covered hereby pursuant to the Act and, in the event
any shares are so registered, the Corporation may remove any legend
on certificates representing such shares. The Corporation shall not
be obligated to take any affirmative action in order to cause the
exercise of an Option or the issuance of shares pursuant thereto to
comply with any law or regulation of any governmental authority.
(b) No Option holder and no beneficiary or other person claiming under
or through an Option holder will have any right, title or interest
in or to any shares of Common Stock allocated or reserved under the
Plan or subject to any Option except as to such shares of Common
Stock, if any, that have been issued or transferred to such Option
holder or beneficiary.
(c) The Plan and all determinations made and actions taken pursuant
thereto will be governed by the laws of the State of Delaware and
construed in accordance therewith.
(d) The Plan is intended to comply in all respects with Rule 16b-3
promulgated under the Act (the "exemption"). If the Plan is found
not to qualify for the exemption, any disqualifying Plan provision
will be deemed replaced by a provision that most nearly accomplishes
the intent of the Board at the time the Plan was adopted and that
results in the Plan's qualification for the exemption. If the
Board's intent cannot be accomplished through a substitute provision
that
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<PAGE> 34
results in the Plan's qualification for the exemption, the Plan will
continue in full force and effect in the form adopted by the Board
notwithstanding the Plan's failure to qualify for the exemption.
(e) Options may be granted under this Plan from time to time in
substitution for stock options held by employees of other
corporations who become employees of the Corporation or a Subsidiary
Corporation as a result of a merger or consolidation of the
employing corporation with the Corporation or a Subsidiary
Corporation or the acquisition by the Corporation or a Subsidiary
Corporation of the assets of the employing corporation, or the
acquisition by the Corporation or a Subsidiary Corporation of at
least 50% of the issued and outstanding stock of the employing
corporation as the result of which it becomes a Subsidiary
Corporation of the Corporation. The terms and conditions of the
substitute options so granted may vary from the terms and conditions
set forth in this Plan to such extent as the Compensation Committee
at the time of grant may deem appropriate to conform, in whole or in
part, to the provisions of the stock options in substitution for
which they are granted, but with respect to stock options which are
Incentive Stock Options, no such variation shall be such as to
affect the status of any such substitute option as an "incentive
stock option" under Section 422 of the Code.
11. TAXES.
(a) WITHHOLDING.
(i) CASH PAYMENT. The Corporation may make such provisions as it
deems appropriate to withhold any taxes the Corporation
determines it is required to withhold in connection with any
Option or require the Option holder to pay the amount of the
withholding taxes in cash to the Corporation as a condition
precedent to the issuance of shares pursuant to the exercise
of an Option.
(ii) BROKER-DEALER PAYMENT. If the exercise price of an Option is
paid by a broker-dealer, as provided herein, payment of
withholding taxes in connection with the exercise of the
Option, up to an amount calculated by assuming the maximum
federal, state, and local marginal tax rates, may be made by
the broker-dealer.
(b) TAX QUALIFICATION. Incentive Stock Options granted under the Plan
are intended to qualify as Incentive Stock Options within the
meaning of Section 422 of the Code, and the terms of the Plan and
Options granted hereunder shall be so construed. Notwithstanding the
foregoing, nothing in the Plan shall be interpreted as a
representation, guarantee or other undertaking on the part of the
Corporation that any Options are, or will be, determined to qualify
as incentive stock options within the meaning of the Code.
12. INDEMNIFICATION OF BOARD AND COMMITTEES
The members of the Board of Directors, the Compensation Committee and the
Non-Employee Directors Committee will be indemnified by the Corporation against
the reasonable expenses, including attorneys' fees, actually and necessarily
incurred in connection with the defense of any action, suit or proceeding, or in
connection with any appeal therein, to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection with the
Plan or Option agreements, and against all amounts paid by them in settlement
thereof (provided such settlement is approved by legal counsel selected by the
Corporation) or paid by them in satisfaction of a judgment in any such action,
suit or proceeding, except in relation to matters as to which it is adjudged in
such action, suit or proceeding that the member is liable for negligence or
misconduct in the performance of the member's duties; provided that within sixty
(60) days after institution of any such action, suit or proceeding a member will
in writing offer the Corporation the opportunity, at its own expense, to defend
the same. The foregoing right of indemnification shall inure to the benefit of
the heirs, executors or administrators of each such member of the Board of
Directors, the Compensation Committee and the Non-Employee Directors Committee
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<PAGE> 35
and shall be in addition to any and all other rights of indemnification to which
such members may be entitled to as a matter of law, contract, or otherwise.
13. LIMITATION OF RIGHTS
Neither the adoption and maintenance of the Plan nor the grant of Options
will:
(a) limit the right of the Corporation, Parent Corporation or Subsidiary
Corporation to discharge or discipline any employee, or otherwise
terminate or modify the terms of any employment agreement, or
(b) confer upon any Option holder any contract or other right or
interest other than as specifically provided in the Plan and the
Option agreement.
14. EFFECTIVE DATE OF THE PLAN, DURATION OF THE PLAN.
(a) The Plan became effective as of March 10, 1993, upon adoption by the
Board, subject to approval by the holders of a majority of the
shares of Common Stock which are represented in person or by proxy
and entitled to vote on the subject at the 1993 annual meeting of
the shareholders of the Corporation.
(b) Unless previously terminated, the Plan will terminate ten (10) years
after the earlier of (i) the date the Plan is adopted by the Board,
or (ii) the date the Plan is approved by the shareholders, except
that Options that are granted under the Plan before its termination
will continue to be administered under the terms of the Plan until
the Options terminate or are exercised.
Amended by the Board of Directors on January 21, 1998
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<PAGE> 36
RIGGS NATIONAL CORPORATION
1994 STOCK OPTION PLAN
AS AMENDED(1)
1. PURPOSE OF THE PLAN.
This 1994 Stock Option Plan (the "Plan") of Riggs National Corporation
(the "Corporation") for key employees of the Corporation and its subsidiaries is
designed to advance the best interest of the Corporation by providing such
employees who have a substantial responsibility for its management and growth
with an additional incentive to continue to contribute to the growth and success
of the Corporation by increasing their proprietary interest in the success of
the Corporation.
2. DEFINITIONS.
(a) "Board" means the Board of Directors of the Corporation.
(b) "Common Stock" means the common shares, $2.50 par value per share,
of the Corporation.
(c) "Compensation Committee" means the compensation committee of the
Board, but excluding any member who is not a Non-Employee Director.
(d) "Corporation" means the Riggs National Corporation.
(e) "Date of Grant" means the date on which an Option is approved by the
Non-Employee Directors Committee.
(f) "Director" means a member of the Corporation's Board of Directors.
(g) "Disability" as to an Option holder has the same meaning as the term
is used in the long-term disability insurance plan contributed to by
the Corporation or its Subsidiary Corporation on behalf of the
Option holder, or if the Option holder is not covered by any such
plan, disability shall have the meaning provided for in Section
22(e)(3) of the Internal Revenue Code of 1986, as amended, or any
successor statute thereto (the "Code").
(h) "Fair Market Value" shall mean, with respect to a share of Common
Stock, (i) if the Common Stock is traded on the National Market
System or a national securities exchange, the closing price of the
Common Stock on the determination date, or, if there are no sales on
such date, then on the next preceding date on which there were sales
of Common Stock, all as published in the NASDAQ National Market
Issues report in the Eastern Edition of The Wall Street Journal,
(ii) if the Common Stock is not traded on the National Market System
or listed on a national securities exchange, the closing price last
reported by the National Association of Securities Dealers, Inc. for
the over-the-counter market on the determination date, or, if no
sales are reported on such date, then on the next preceding date on
which there were such quotations, or (iii) if the Common Stock, is
not traded on the National Market System or listed on a national
securities exchange and quotations for the Common Stock are not
reported by the National Association of Securities Dealers, Inc.,
the Fair Market Value determined by the Compensation Committee on
the basis of
- -----------------------
(1) As amended by resolution of the Board of Directors and approved by the
shareholders on ___________, 1998.
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<PAGE> 37
available prices for the Common Stock or in such manner as the
Compensation Committee shall agree. Notwithstanding the preceding,
the Fair Market Value on a given determination date of Common Stock
subject to Incentive Stock Options or Common Stock valued in
connection with the exercise of Incentive Stock Options shall be an
amount that is equal to the Compensation Committee's good faith
determination of the Common Stock's value on the given determination
date, and the Compensation Committee shall for all purposes of this
Plan have the authority to determine Fair Market Value using methods
other than those described in this Section if the Compensation
Committee determines that such alternative methods more properly
reflect the Fair Market Value of the Common Stock. Furthermore, in
all cases, Fair Market Value shall not be less than the Par Value of
the Common Stock.
(i) "Incentive Stock Option" means an Option qualifying for special tax
treatment under Section 422 of the Code.
(j) "Insider" means any person subject to the provisions of section 16
of the Act, including an "officer" of the Corporation within the
meaning of section 16 of the Act, a "director" within the meaning of
section 3(a)(7) of the Act, and a "beneficial owner" of more than
ten percent (10%) of any class of the equity securities of the
Corporation within the meaning of section 16 of the Act.
(k) "Key Employee" means any employee (including employees who are also
officers or directors, but not including directors who are not also
employees) of the Corporation or any Subsidiary Corporation who has
substantial responsibility in the direction and management of the
Corporation or a Subsidiary Corporation as determined by the
Compensation Committee.
(l) "Non-Employee Director" means a Director who: (i) is not currently
an officer or otherwise employed by the Corporation, or by a Parent
or Subsidiary Corporation of the Corporation; (ii) does not receive
compensation directly or indirectly from the Corporation, its Parent
Corporation or its Subsidiary Corporation for services rendered as a
consultant or in any capacity other than as a director, except for
an amount for which disclosure would not be required pursuant to
Item 404(a) of regulation S-K [$60,000]; (iii) does not possess an
interest in any other transaction for which disclosure would be
required pursuant to Item 404(a) of Regulation S-K [$60,000]; (iv)
is not engaged in a business relationship for which disclosure would
be required pursuant to Item 404(a) of regulation S-K; and (v)
qualifies as an "outside director" within the meaning of Section
162(m)(4) of the Code, and applicable regulations thereunder or who
is deemed to be an outside director under the applicable regulations
and authority.
(m) "Non-Employee Directors Committee" means a committee composed of all
Non-Employee Directors.
(n) "Nonqualified Stock Option" means an Option that is not an Incentive
Stock Option.
(o) "Option" means an Incentive Stock Option or a Nonqualified Stock
Option granted under this Plan.
(p) "Parent Corporation" has the same meaning used in Section 424(e) of
the Code.
(q) "Plan" means the Riggs National Corporation 1994 Stock Option Plan
as set forth herein, which may be amended from time to time.
(r) "Subsidiary Corporation" has the same meaning used in Section 424(f)
of the Code.
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<PAGE> 38
3. SHARES OF COMMON STOCK SUBJECT TO THE PLAN.
Subject to the provisions of Section 8 of the Plan, the aggregate number
of authorized but unissued shares of Common Stock or shares of previously issued
Common Stock that have been reacquired by the Corporation that may be issued
pursuant to Options granted under the Plan will not exceed one million two
hundred fifty thousand (1,250,000) shares. Shares that by reason of expiration
of an Option or otherwise are no longer subject to purchase pursuant to an
Option granted under the Plan may again be available for issuance pursuant to
Options under the Plan.
4. ADMINISTRATION OF THE PLAN.
The Plan shall be administered by the Compensation Committee. The
Compensation Committee has the authority to recommend to the Non-Employee
Directors Committee the Key Employees to be granted Options, the times when
Options will be granted, the number of shares subject to each Option, the
exercise price of each Option, the vesting schedule (if any) of each Option, the
conditions precedent (if any) to acceleration of the vesting schedule of each
Option, the method of payment for shares acquired upon the exercise of Options,
the expiration date of each Option, the Fair Market Value of Common Stock
subject to Options, and any other terms and conditions of the Options it deems
appropriate. The Non-Employee Directors Committee shall have the authority to
approve, reject or modify recommended grants of Options by the Compensation
Committee. A majority of the Non-Employee Directors Committee shall constitute a
quorum. All actions by the Non-Employee Directors Committee shall require a
majority of the members of such committee present at such meeting. Any action by
the Non-Employee Directors Committee may be taken by a unanimous written consent
of all members of the committee, and action so taken shall be fully effective as
if it had been taken by a vote of the members at a meeting duly called and held.
No Option shall be granted unless and until such grant is approved by the
Non-Employee Directors Committee.
All questions of interpretation of the Plan or of any Options will be
determined solely by the Compensation Committee, and any such determination will
be final and binding upon all persons having an interest in the Plan.
5. ELIGIBILITY.
Key Employees of the Corporation and any Subsidiary Corporation will be
eligible to participate in the Plan, as approved by the Compensation Committee.
No Key Employee shall be eligible to be granted Stock Options under the
Plan representing more than 100,000 shares of Common Stock per year, regardless
of whether the Stock Options are Incentive Stock Options, Nonqualified Stock
Options or a combination thereof.
6. TERMS AND CONDITIONS OF STOCK OPTIONS.
Each Option granted under this Plan will be evidenced by an Option
agreement between the Corporation and the recipient that sets forth the exercise
price of the Option, the vesting schedule (if any) of the Option, the expiration
date of the Option, and any other terms or conditions approved by the
Non-Employee Directors Committee subject to the following terms and conditions:
(a) OPTION PRICE.
(i) NONQUALIFIED STOCK OPTIONS. The exercise price per share for
the shares subject to a Nonqualified Stock Option will be no
less than one hundred percent (100%) of the Fair Market Value
of the Common Stock on the Date of Grant.
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<PAGE> 39
(ii) INCENTIVE STOCK OPTIONS. The exercise price per share for the
shares subject to an Incentive Stock Option will be no less
than one hundred percent (100%) of the Fair Market Value of
the Common Stock on the Date of Grant. However, the exercise
price per share for shares subject to an Incentive Stock
Option granted to an individual who on the Date of Grant owns
more than ten percent (10%) of the total combined voting power
of all classes of stock of the Corporation (or of a Parent
Corporation or a Subsidiary Corporation) will not be less than
one hundred and ten percent (110%) of the Fair Market Value of
the Common Stock on the Date of Grant.
(b) TERM OF OPTIONS. Notwithstanding any other provisions of the Plan or
any Option agreement, no Option will be exercisable after the
expiration of ten (10) years from the Date of Grant. Furthermore, no
Incentive Stock Option granted to an individual who on the Date of
Grant owns more than ten percent (10%) of the total combined voting
power of all classes of stock of the Corporation (or of a Parent
Corporation or a Subsidiary Corporation) will be exercisable after
the expiration of five (5) years from the Date of Grant.
(c) MAXIMUM VALUE OF OPTIONS WHICH ARE INCENTIVE STOCK OPTIONS. To the
extent that the aggregate Fair Market Value of the Common Stock with
respect to which Incentive Stock Options granted to any person are
exercisable for the first time during any calendar year (under all
stock option plans of the Corporation, a Parent Corporation and any
Subsidiary Corporation) exceeds $100,000, the options are not
Incentive Stock Options. For purposes of this paragraph, the Fair
Market Value of the Common Stock will be determined as of the time
the Incentive Stock Option with respect to the Common Stock is
granted. This paragraph will be applied by taking Incentive Stock
Options into account in the order in which they are granted.
(d) VESTING OF OPTIONS AND TERMINATION OF EMPLOYMENT. An Option will be
exercisable only to the extent that it is vested on the date of
exercise. Vesting of an Option will cease on the date that an Option
holder is no longer an employee of the Corporation or a Parent
Corporation or Subsidiary Corporation (the "date of termination"),
and the Option will be exercisable only to the extent the Option is
vested on the date of termination. However, if the Option holder is
no longer an employee because of death or Disability, any Option
that is not one hundred percent (100%) vested will automatically
become one hundred percent (100%) vested on the date of termination.
If the Option holder's termination is for reason of death, the right
to exercise the Option will expire one (1) year after the date of
the holder's death, and until expiration, the holder's heirs,
legatees or legal representative may exercise the Option. If the
Option holder's termination is for any reason other than death, the
right to exercise the Option (to the extent that it is vested) will
expire ninety (90) days after the date of termination unless the
Option would then expire during the Pooling Period and the Common
Stock received upon the exercise of the Option would be subject to
the Pooling Period transfer restrictions and, in that case, the
right to exercise the Option will expire ten (10) calendar days
after the end of the Pooling Period. "Pooling Period" means the
period in which property is subject to restrictions on transfer in
compliance with the "Pooling-of-Interests Accounting" rules set
forth in the Securities and Exchange Commission Accounting Series
Releases 130 and 135. If termination is for a reason other than the
holder's death and the Option holder dies after his or her
termination but before the right to exercise the Option has expired,
the right to exercise the Option shall expire one (1) year after the
date of the holder's termination of employment, and until
expiration, the holder's heirs, legatees or legal representative may
exercise the Option.
(e) EXERCISE.
(i) CASH PAYMENT. An Option may be exercised as to all or any
number of whole shares of the Common Stock with respect to
which the Option is vested. Options may be exercised
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<PAGE> 40
only by the Option holder's written notice to the Secretary of
the Corporation (the "exercise notice") and only if the
exercise notice is accompanied by payment in cash of the full
exercise price for the shares with respect to which the Option
is exercised, except as otherwise provided herein.
(ii) NONCASH PAYMENT. Unless otherwise provided at the time of
grant, payment of the exercise price may be made in the form
of (1) Common Stock of the Corporation that has been held for
at least six (6) months prior to the date of exercise or (2) a
combination of cash and such Common Stock that has been held
for at least six (6) months prior to the date of exercise. The
value of any Common Stock used to pay the exercise price or
any portion thereof will be the Fair Market Value of Common
Stock on the date of exercise.
Wherever in this Plan or any agreement a Key Employee is
permitted to pay the exercise price of an Option relating to
the exercise of an Option by delivering Common Stock, the Key
Employee may, subject to procedures satisfactory to the
Compensation Committee, satisfy such delivery requirement by
presenting proof of beneficial ownership of such Common Stock,
in which case the Corporation shall treat the Option as
exercised without further payment and shall withhold such
number of Common Stock from the Common Stock acquired by the
exercise of the Option.
(iii) BROKER-DEALER PAYMENT. Unless otherwise provided at the time
of grant, payment of the unpaid exercise price by a
broker-dealer or by the Option holder with cash advanced by
the broker-dealer, if the exercise notice is accompanied by
the Option holder's written irrevocable instructions to
deliver the Common Stock acquired upon exercise of the Option
to the broker-dealer.
(f) NONTRANSFERABILITY. No Option granted under the Plan, contingent or
otherwise, will be transferable, assignable or subject to any
encumbrance, pledge, or charge of any nature, except by will or the
laws of descent and distribution. During the lifetime of an Option
holder, an Option will be exercisable only by the Option holder or
by the Option holder's legal representative. The executor or
administrator of the estate of the Option holder may transfer any
rights with respect to such Option to the person or persons or
entity (including a trust) entitled thereto under the will of the
holder of such Option or under the laws of intestacy.
(g) STOCK LEGEND. The Corporation may require that certificates
evidencing shares of Common Stock purchased upon the exercise of
Incentive Stock Options issued under the Plan be endorsed with a
legend in substantially the following form:
The shares evidenced by this certificate may not be sold or
transferred prior to ______________, 19____, in the absence of
a written statement from Riggs National Corporation (the
"Corporation") to the effect that the Corporation is aware of
the fact of such sale or transfer.
The blank contained in such legend shall be filled in with the date
that is the later of: (i) one year and one day after the date of
exercise of such Incentive Stock Option or (ii) two years and one
day after the date of grant of such Incentive Stock Option. Upon
delivery to the Corporation, at its principal executive office, of a
written statement to the effect that such shares have been sold or
transferred prior to such date, the Corporation does hereby agree to
promptly deliver to the transfer agent for such shares a written
statement to the effect that the Corporation is aware of the fact of
such sale or transfer. The Corporation may also require the
inclusion of any additional legend which may be necessary or
appropriate.
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<PAGE> 41
(h) CHANGE OF CONTROL. In the event of a Change of Control (as
hereinafter defined), all then-outstanding Options will become one
hundred percent (100%) vested and exercisable as of the Change of
Control. However, if in the opinion of counsel to the Corporation
the immediate exercisability of such Options, when taken into
consideration with all other "parachute payments" as defined in
Section 280G of the Code, would result in an "excess parachute
payment" as defined in such section, such Option shall not become
immediately exercisable, except and to the extent the Compensation
Committee in its discretion shall otherwise determine.
For purposes of the Plan, "Change of Control" means (1) the sale of
substantially all of the Corporation's assets; (2) the acquisition,
whether directly, indirectly, beneficially (within the meaning of
Rule 13d-3 of the Act), or of record, of securities of the
Corporation representing twenty-five percent (25%) or more in the
aggregate voting power of the Corporation's then-outstanding Common
Stock by any "person" (within the meaning of Sections 13(d) and
14(d) of the Act), including any corporation or group of associated
persons acting in concert, other than (i) the Corporation or its
subsidiaries and/or (ii) any employee pension benefit plan (within
the meaning of Section 3(2) of the Employee Retirement Income
Security Act of 1974) of the Corporation or its subsidiaries,
including a trust established pursuant to any such plan; (3) the
Corporation is merged or consolidated with or into another
corporation in any transaction or series of transactions, in which
either (A) the persons who were the beneficial owners of the
Corporation's voting securities immediately prior to such
transaction do not beneficially own immediately after such
transaction at least fifty percent (50%) of the total outstanding
voting power of the surviving corporation or (B) any "person"
(within the meaning of Sections 13(d) and 14(d) of the Act),
including any corporation or group of associated persons acting in
concert is or becomes the direct, indirect or beneficial owner
(within the meaning of Rule 13d-3 of the Act) of twenty-five percent
(25%) or more of the aggregate voting power of resulting entity,
provided that such person was not a twenty-five percent (25%) or
more owner of the Corporation prior to the transaction or
transactions; or (4) the Corporation is liquidated or dissolved or
adopts a plan of liquidation or dissolution. Notwithstanding the
foregoing, a Change of Control will not result from: (A) a transfer
of the Corporation's voting securities by a person who is the
beneficial owner, directly or indirectly, of twenty-five percent
(25%) or more of the voting securities of the Corporation (a "25
Percent Owner") to (i) a member of such 25 Percent Owner's immediate
family (within the meaning of Rule 16a-1(e) of the Act) either
during such 25 Percent Owner's lifetime or by will or the laws of
descent and distribution; (ii) any trust as to which the 25 Percent
Owner or a member (or members) of his immediate family (within the
meaning of Rule 16a-1(e) of the Act) is the beneficiary; (iii) any
trust as to which the 25 Percent Owner is the settlor with sole
power to revoke; (iv) any entity over which such 25 Percent Owner
has the power, directly or indirectly, to direct or cause the
direction of the management and policies of the entity, whether
through the ownership of voting securities, by contract or
otherwise; or (v) any charitable trust, foundation or corporation
under Section 501(c)(3) of the Code that is funded by the 25 Percent
Owner or (B) the acquisition of voting securities of the Corporation
or the resulting entity in the event of a merger or consolidation,
by either (i) a person who was a 25 Percent Owner on the effective
date of the Plan or (ii) a person, trust or other entity described
in the foregoing clauses (A)(i)-(v) of this subsection.
7. TERMINATION AND AMENDMENT OF THE PLAN AND OPTIONS.
The Board may terminate the Plan at any time except with respect to any
outstanding Options. The Board may amend the Plan in any manner with respect to
future grants of Options and the Non-Employee Directors Committee may amend
outstanding Options in any manner consistent with the Plan subject to the
following limitations:
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<PAGE> 42
(a) Except as provided in Section 8 of the Plan, no amendment will be
effective without the approval of the shareholders of the
Corporation if that amendment (i) materially increases the number of
securities that may be issued under the Plan, (ii) changes the class
of eligible employees, officers or directors, or (iii) extends the
term of the Plan or the period during which any outstanding
Incentive Stock Option may be exercised.
(b) No amendment will be effective if the amendment changes the manner
of determining the exercise price of Incentive Stock Options, makes
individuals who are not employees of the Corporation or of any
Parent or Subsidiary Corporation eligible to be granted Incentive
Stock Options, changes the nontransferability of the Options, or
alters or impairs any rights or obligations of any outstanding
Option without the written consent of the Option holder.
8. CHANGE IN CAPITAL STRUCTURE.
(a) The existence of outstanding Options shall not affect in any way the
right or power of the Corporation or its stockholders to make or
authorize any or all adjustments, recapitalizations, reorganizations
or other changes in the Corporation's capital structure or its
business, or any merger or consolidation of the Corporation, or any
issue of bonds, debentures, preferred or prior preference stock
ahead of or affecting the Common Stock or the rights thereof, or the
dissolution or liquidation of the Corporation, or any sale or
transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or
otherwise.
(b) If the Corporation shall effect a subdivision or consolidation of
shares or other capital readjustment, the payment of a stock
dividend, or other increase or reduction of the number of shares of
the Common Stock outstanding, without receiving compensation
therefore in money, services or property, then (i) the number,
class, and per share price of shares of Common Stock subject to
outstanding Options hereunder shall be appropriately adjusted in
such a manner as to entitle an optionee to receive upon exercise of
an Option, for the same aggregate cash consideration, the same total
number and class of shares as he would have received had the
optionee exercised his or her Option in full immediately prior to
the event requiring the adjustment; and (ii) the number and class of
shares then reserved for issuance under the Plan shall be adjusted
by substituting for the total number and class of shares of Common
Stock then reserved that number and class of shares of Common Stock
that would have been received by the owner of an equal number of
outstanding shares of each class of Common Stock as the result of
the event requiring the adjustment.
(c) After a merger of one or more corporations into the Corporation or
after a consolidation of the Corporation and one or more
corporations in which the Corporation shall be the surviving
corporation, each holder of an outstanding Option shall, at no
additional cost, be entitled upon exercise of such Option to receive
(subject to any required action by stockholders) in lieu of the
number and class of shares as to which such Option shall then be so
exercisable, the number and class of shares of stock or other
securities to which such holder would have been entitled pursuant to
the terms of the agreement of merger or consolidation if,
immediately prior to such merger or consolidation, such holder had
been the holder of record of the number and class of shares of
Common Stock equal to the number and class of shares as to which
such Option shall be so exercised.
(d) If the Corporation is merged into or consolidated with another
corporation under circumstances where the Corporation is not the
surviving corporation, or if the Corporation is liquidated, or sells
or otherwise disposes of substantially all of its assets to another
corporation while unexercised Options remain outstanding under the
Plan, unless provisions are made in connection with such
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<PAGE> 43
transaction for the continuance of the Plan and/or the assumption or
substitution of such Options with new options covering the stock of
the successor corporation, or parent or subsidiary thereof, with
appropriate adjustments as to the number and kind of shares and
prices, then all outstanding Options shall be canceled as of the
effective date of any such merger, consolidation or sale provided
that (i) notice of such cancellation shall be given to each holder
of an Option and (ii) each holder of an Option shall have the right
to exercise such Option in full (without regard to any vesting or
other limitations on exercise imposed on such Option) during the
30-day period preceding the effective date of such merger,
consolidation, liquidation, or sale (the "corporate event").
Notwithstanding the preceding provisions, if no provisions are made
for the continuance, assumption or substitution of Options and if
exercise of any then-outstanding Options during the 30-day period
preceding the effective date of such corporate event would not be in
conformity with all applicable federal securities laws, or if in the
opinion of counsel to the Corporation the immediate exercisability
of such Options, when taken into consideration with all other
"parachute payments" as defined in Section 280G of the Code, would
result in an "excess parachute payment" as defined in such section,
such Option shall not become immediately exercisable and shall be
canceled as of the effective date of the corporate event, except and
to the extent the Compensation Committee in its discretion shall
otherwise determine.
(e) Except as hereinbefore expressly provided, the issue by the
Corporation of shares of stock of any class, or securities
convertible into shares of stock of any class, for cash or property,
or for labor or services either upon direct sale or upon the
exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Corporation convertible
into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the
number, class or price of shares of Common Stock then subject to
outstanding Options.
(f) Adjustment under the preceding provisions of this section will be
made by the Compensation Committee, whose determination as to what
adjustments will be made and the extent thereof will be final,
binding, and conclusive. No fractional interest will be issued under
the Plan on account of any such adjustment. No adjustment will be
made in a manner that causes an Incentive Stock Option to fail to
continue to qualify as an Incentive Stock Option under the Code.
9. HOLDING PERIOD.
Notwithstanding anything to the contrary in the Plan, Common Stock
acquired through exercise of an Option that was outstanding on November 13,
1996, or any other Option granted to an Insider but which was not granted by the
Non-Employee Directors Committee or the Board or which was not approved by the
shareholders may not be disposed of by the Insider during the six-month period
beginning on the Date of Grant.
10. GENERAL PROVISIONS.
(a) The Corporation shall not be required to sell or issue any shares
under any Option if the issuance of such shares shall constitute a
violation by the Option holder or the Corporation of any provision
of any law, statute, or regulation of any stock exchange upon which
the Common Stock may be listed or any governmental authority whether
it be Federal or State. Unless a registration statement is in effect
under the Securities Act of 1933, as amended (the "Act") with
respect to the shares of Common Stock covered by an Option, the
Corporation shall not be required to issue shares upon exercise of
any Option (i) unless the Compensation Committee has received
evidence satisfactory to it to the effect that the holder of such
Option is acquiring such shares for investment and not with a view
to the distribution thereof or (ii) unless an opinion of counsel to
the Corporation has been received by the Corporation, in a form and
substance that is deemed
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<PAGE> 44
acceptable by the Compensation Committee, to the effect that a
registration statement is not required. Any determination in this
connection by the Compensation Committee shall be final, binding and
conclusive. In the event the shares issuable on exercise of an
Option are not registered under the Act, the Corporation may imprint
the following legend or any other legend that counsel for the
Corporation considers necessary or advisable to comply with the Act:
"The shares of stock represented by this certificate have not
been registered under the Securities Act of 1933 or under the
securities laws of any State and may not be sold or
transferred except pursuant to an effective registration
statement or upon receipt by the Corporation of any opinion of
counsel, in form and substance satisfactory to the
Corporation, that registration is not required for such sale
or transfer."
The Corporation may, but shall in no event be obligated to, register
any securities covered hereby pursuant to the Act and, in the event
any shares are so registered, the Corporation may remove any legend
on certificates representing such shares. The Corporation shall not
be obligated to take any affirmative action in order to cause the
exercise of an Option or the issuance of shares pursuant thereto to
comply with any law or regulation of any governmental authority.
(b) No Option holder and no beneficiary or other person claiming under
or through an Option holder will have any right, title or interest
in or to any shares of Common Stock allocated or reserved under the
Plan or subject to any Option except as to such shares of Common
Stock, if any, that have been issued or transferred to such Option
holder or beneficiary.
(c) The Plan and all determinations made and actions taken pursuant
thereto will be governed by the laws of the State of Delaware and
construed in accordance therewith.
(d) The Plan is intended to comply in all respects with Rule 16b-3
promulgated under the Act (the "exemption"). If the Plan is found
not to qualify for the exemption, any disqualifying Plan provision
will be deemed replaced by a provision that most nearly accomplishes
the intent of the Board at the time the Plan was adopted and that
results in the Plan's qualification for the exemption. If the
Board's intent cannot be accomplished through a substitute provision
that results in the Plan's qualification for the exemption, the Plan
will continue in full force and effect in the form adopted by the
Board notwithstanding the Plan's failure to qualify for the
exemption.
(e) Options may be granted under this Plan from time to time in
substitution for stock options held by employees of other
corporations who become employees of the Corporation or a Subsidiary
Corporation as a result of a merger or consolidation of the
employing corporation with the Corporation or a Subsidiary
Corporation or the acquisition by the Corporation or a Subsidiary
Corporation of the assets of the employing corporation, or the
acquisition by the Corporation or a Subsidiary Corporation of at
least 50% of the issued and outstanding stock of the employing
corporation as the result of which it becomes a Subsidiary
Corporation of the Corporation. The terms and conditions of the
substitute options so granted may vary from the terms and conditions
set forth in this Plan to such extent as the Compensation Committee
at the time of grant may deem appropriate to conform, in whole or in
part, to the provisions of the stock options in substitution for
which they are granted, but with respect to stock options which are
Incentive Stock Options, no such variation shall be such as to
affect the status of any such substitute option as an "incentive
stock option" under Section 422 of the Code.
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<PAGE> 45
11. TAXES.
(a) WITHHOLDING.
(i) CASH PAYMENT. The Corporation may make such provisions as it
deems appropriate to withhold any taxes the Corporation
determines it is required to withhold in connection with any
Option or require the Option holder to pay the amount of the
withholding taxes in cash to the Corporation as a condition
precedent to the issuance of shares pursuant to the exercise
of an Option.
(ii) BROKER-DEALER PAYMENT. If the exercise price of an Option is
paid by a broker-dealer, as provided herein, payment of
withholding taxes in connection with the exercise of the
Option, up to an amount calculated by assuming the maximum
federal, state, and local marginal tax rates, may be made by
the broker-dealer.
(b) TAX QUALIFICATION. Incentive Stock Options granted under the Plan
are intended to qualify as Incentive Stock Options within the
meaning of Section 422 of the Code, and the terms of the Plan and
Options granted hereunder shall be so construed. Notwithstanding the
foregoing, nothing in the Plan shall be interpreted as a
representation, guarantee or other undertaking on the part of the
Corporation that any Options are, or will be, determined to qualify
as incentive stock options within the meaning of the Code.
12. INDEMNIFICATION OF BOARD AND COMMITTEES
The members of the Board of Directors and the Compensation Committee and
the Non-Employee Directors Committee will be indemnified by the Corporation
against the reasonable expenses, including attorneys' fees, actually and
necessarily incurred in connection with the defense of any action, suit or
proceeding, or in connection with any appeal therein, to which they or any of
them may be a party by reason of any action taken or failure to act under or in
connection with the Plan or Option agreements, and against all amounts paid by
them in settlement thereof (provided such settlement is approved by legal
counsel selected by the Corporation) or paid by them in satisfaction of a
judgment in any such action, suit or proceeding, except in relation to matters
as to which it is adjudged in such action, suit or proceeding that the member is
liable for negligence or misconduct in the performance of the member's duties;
provided that within sixty (60) days after institution of any such action, suit
or proceeding a member will in writing offer the Corporation the opportunity, at
its own expense, to defend the same. The foregoing right of indemnification
shall inure to the benefit of the heirs, executors or administrators of each
such member of the Board of Directors, the Compensation Committee and the
Non-Employee Directors Committee and shall be in addition to any and all other
rights of indemnification to which such members may be entitled to as a matter
of law, contract, or otherwise.
13. LIMITATION OF RIGHTS
Neither the adoption and maintenance of the Plan nor the grant of Options
will:
(a) limit the right of the Corporation, Parent Corporation or Subsidiary
Corporation to discharge or discipline any employee, or otherwise
terminate or modify the terms of any employment agreement, or
(b) confer upon any Option holder any contract or other right or
interest other than as specifically provided in the Plan and the
Option agreement.
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<PAGE> 46
14. EFFECTIVE DATE OF THE PLAN, DURATION OF THE PLAN.
(a) The Plan is effective as of February 9, 1994 upon adoption by the
Board, subject to approval by the holders of a majority of the
shares of Common Stock which are represented in person or by proxy
and entitled to vote on the subject at the 1994 annual meeting of
the shareholders of the Corporation.
(b) Unless previously terminated, the Plan will terminate ten (10) years
after the earlier of (i) the date the Plan is adopted by the Board,
or (ii) the date the Plan is approved by the shareholders, except
that Options that are granted under the Plan before its termination
will continue to be administered under the terms of the Plan until
the Options terminate or are exercised.
Amended by the Board of Directors on January 21, 1998
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<PAGE> 47
RIGGS NATIONAL CORPORATION
1996 STOCK OPTION PLAN
AS AMENDED(1)
1. PURPOSE OF THE PLAN.
This 1996 Stock Option Plan (the "Plan") of Riggs National Corporation
(the "Corporation") for key employees of the Corporation and its subsidiaries
is designed to advance the best interest of the Corporation by providing such
employees who have a substantial responsibility for its management and growth
with an additional incentive to continue to contribute to the growth and
success of the Corporation by increasing their proprietary interest in the
success of the Corporation.
2. DEFINITIONS.
(a) "Board" means the Board of Directors of the Corporation.
(b) "Common Stock" means the common shares, $2.50 par value per share,
of the Corporation.
(c) "Compensation Committee" means the compensation committee of the
Board, but excluding any member who is not a Non-Employee Director.
(d) "Corporation" means the Riggs National Corporation.
(e) "Date of Grant" means the date on which an Option is approved by the
Non-Employee Directors Committee.
(f) "Director" means a member of the Corporation's Board of Directors.
(g) "Disability" as to an Option holder has the same meaning as the term
is used in the long-term disability insurance plan contributed to by
the Corporation or its Subsidiary Corporation on behalf of the
Option holder, or if the Option holder is not covered by any such
plan, disability shall have the meaning provided for in Section
22(e)(3) of the Internal Revenue Code of 1986, as amended, or any
successor statute thereto (the "Code").
(h) "Fair Market Value" shall mean, with respect to a share of Common
Stock, (i) if the Common Stock is traded on the National Market
System or a national securities exchange, the closing price of the
Common Stock on the determination date, or, if there are no sales on
such date, then on the next preceding date on which there were sales
of Common Stock, all as published in the NASDAQ National Market
Issues report in the Eastern Edition of The Wall Street Journal,
(ii) if the Common Stock is not traded on the National Market System
or listed on a national securities exchange, the closing price last
reported by the National Association of Securities Dealers, Inc. for
the over-the-counter market on the determination date, or, if no
sales are reported on such date, then on the next preceding date on
which there were such quotations, or (iii) if the Common Stock, is
not traded on the National Market System or listed on a national
securities exchange and quotations for the
- --------------------------
(1) As amended by resolution of the Board of Directors and approved by the
shareholders on ____________, 1998.
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<PAGE> 48
Common Stock are not reported by the National Association of
Securities Dealers, Inc., the Fair Market Value determined by the
Compensation Committee on the basis of available prices for the
Common Stock or in such manner as the Compensation Committee shall
agree. Notwithstanding the preceding, the Fair Market Value on a
given determination date of Common Stock subject to Incentive Stock
Options or Common Stock valued in connection with the exercise of
Incentive Stock Options shall be an amount that is equal to the
Compensation Committee's good-faith determination of the Common
Stock's value on the given determination date, and the Compensation
Committee shall for all purposes of this Plan have the authority to
determine Fair Market Value using methods other than those described
in this Section if the Compensation Committee determines that such
alternative methods more properly reflect the Fair Market Value of
the Common Stock. Furthermore, in all cases, Fair Market Value shall
not be less than the Par Value of the Common Stock.
(i) "Incentive Stock Option" means an Option qualifying for special tax
treatment under Section 422 of the Code.
(j) "Insider" means any person subject to the provisions of Section 16
of the Act, including an "officer" of the Corporation within the
meaning of Section 16 of the Act, a "director" within the meaning of
section 3(a)(7) of the Act, and a "beneficial owner" of more than
ten percent (10%) of any class of the equity securities of the
Corporation within the meaning of Section 16 of the Act.
(k) "Key Employee" means any employee (including employees who are also
officers or directors, but not including directors who are not also
employees) of the Corporation or any Subsidiary Corporation who has
substantial responsibility in the direction and management of the
Corporation or a Subsidiary Corporation, as determined by the
Compensation Committee.
(l) "Non-Employee Director" means a Director who: (i) is not currently
an officer or otherwise employed by the Corporation, or by a Parent
or Subsidiary Corporation of the Corporation; (ii) does not receive
compensation directly or indirectly from the Corporation, its Parent
Corporation or its Subsidiary Corporation for services rendered as a
consultant or in any capacity other than as a director, except for
an amount for which disclosure would not be required pursuant to
Item 404(a) of regulation S-K [$60,000]; (iii) does not possess an
interest in any other transaction for which disclosure would be
required pursuant to Item 404(a) of Regulation S-K [$60,000]; (iv)
is not engaged in a business relationship for which disclosure would
be required pursuant to Item 404(a) of regulation S-K; and (v)
qualifies as an "outside director" within the meaning of Section
162(m)(4) of the Code, and applicable regulations thereunder or who
is deemed to be an outside director under the applicable regulations
and authority.
(m) "Non-Employee Directors Committee" means a committee composed of all
Non-Employee Directors.
(n) "Nonqualified Stock Option" means an Option that is not an Incentive
Stock Option.
(o) "Option" means an Incentive Stock Option or a Nonqualified Stock
Option granted under this Plan.
(p) "Parent Corporation" has the same meaning used in Section 424(e) of
the Code.
(q) "Plan" means the Riggs National Corporation 1996 Stock Option Plan
as set forth herein, which may be amended from time to time.
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<PAGE> 49
(r) "Subsidiary Corporation" has the same meaning used in Section 424(f)
of the Code.
3. SHARES OF COMMON STOCK SUBJECT TO THE PLAN.
Subject to the provisions of Section 8 of the Plan, the aggregate
number of authorized but unissued shares of Common Stock that may be issued
pursuant to Options granted under the Plan will not exceed four million
(4,000,000) shares. The shares of Common Stock issued may be shares of
authorized but unissued Common Stock or shares of previously issued Common
Stock that have been reacquired by the Corporation. The maximum number of
shares of Common Stock with respect to which options may be issued to any one
Key Employee during a calendar year shall be two million (2,000,000). Shares
that by reason of expiration of an Option or otherwise are no longer subject
to purchase pursuant to an Option granted under the Plan may again be
available for issuance pursuant to Options under the Plan.
4. ADMINISTRATION OF THE PLAN.
The Plan shall be administered by the Compensation Committee. The
Compensation Committee has the authority to recommend to the Non-Employee
Directors Committee the Key Employees to be granted Options, the times when
Options will be granted, the number of shares subject to each Option, the
exercise price of each Option, the vesting schedule (if any) of each Option,
the conditions precedent (if any) to acceleration of the vesting schedule of
each Option, the method of payment for shares acquired upon the exercise of
Options, the expiration date of each Option, the Fair Market Value of Common
Stock subject to Options, and any other terms and conditions of the Options
it deems appropriate. The Non-Employee Directors Committee shall have the
authority to approve, reject or modify recommended grants of Options by the
Compensation Committee. A majority of the Non-Employee Directors Committee
shall constitute a quorum. All actions by the Non-Employee Directors
Committee shall require a majority of the members of such committee present
at such meeting. Any action by the Non-Employee Directors Committee may be
taken by a unanimous written consent of all members of the committee, and
action so taken shall be fully effective as if it had been taken by a vote of
the members at a meeting duly called and held. No Option shall be granted
unless and until such grant is approved by the Non-Employee Directors
Committee.
All questions of interpretation of the Plan or of any Option will be
determined solely by the Compensation Committee, and any such determination
will be final and binding upon all persons having an interest in the Plan.
5. ELIGIBILITY.
Key Employees of the Corporation and any Subsidiary Corporation will be
eligible to participate in the Plan, as approved by the Compensation
Committee.
6. TERMS AND CONDITIONS OF STOCK OPTIONS.
Each Option granted under this Plan will be evidenced by an Option
agreement between the Corporation and the recipient that states whether it is
intended to be an Incentive Stock Option of a Nonqualified Stock Option and
that it is to be subject to the applicable rules in the Plan and in the Code
which apply to that form of option and that sets forth the exercise price of
the Option, the vesting schedule (if any) of the Option, the expiration date
of the Option, and any other terms or conditions approved by the Non-Employee
Directors Committee subject to the following terms and conditions:
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<PAGE> 50
(a) OPTION PRICE.
(i) NONQUALIFIED STOCK OPTIONS. The exercise price per share for
the shares subject to a Nonqualified Stock Option will be no
less than one hundred percent (100%) of the Fair Market Value
of the Common Stock on the Date of Grant.
(ii) INCENTIVE STOCK OPTIONS. The exercise price per share for the
shares subject to an Incentive Stock Option will be no less
than one hundred percent (100%) of the Fair Market Value of
the Common Stock on the Date of Grant. However, the exercise
price per share for shares subject to an Incentive Stock
Option granted to an individual who on the Date of Grant owns
more than ten percent (10%) of the total combined voting power
of all classes of stock of the Corporation (or of a Parent
Corporation or a Subsidiary Corporation) will not be less than
one hundred and ten percent (110%) of the Fair Market Value of
the Common Stock on the Date of Grant.
(b) TERM OF OPTIONS. Notwithstanding any other provisions of the Plan or
any Option agreement, no Option will be exercisable after the
expiration of ten (10) years from the Date of Grant. Furthermore, no
Incentive Stock Option granted to an individual who on the Date of
Grant owns more than ten percent (10%) of the total combined voting
power of all classes of stock of the Corporation (or of a Parent
Corporation or a Subsidiary Corporation) will be exercisable after
the expiration of five (5) years from the Date of Grant.
(c) MAXIMUM VALUE OF OPTIONS WHICH ARE INCENTIVE STOCK OPTIONS. To the
extent that the aggregate Fair Market Value of the Common Stock with
respect to which Incentive Stock Options granted to any person are
exercisable for the first time during any calendar year (under all
stock option plans of the Corporation, a Parent Corporation and any
Subsidiary Corporation) exceeds $100,000, the options are not
Incentive Stock Options. For purposes of this paragraph, the Fair
Market Value of the Common Stock will be determined as of the time
the Incentive Stock Option with respect to the Common Stock is
granted. This paragraph will be applied by taking Incentive Stock
Options into account in the order in which they are granted.
(d) VESTING OF OPTIONS AND TERMINATION OF EMPLOYMENT. An Option will be
exercisable only to the extent that it is vested on the date of
exercise. Vesting of an Option will cease on the date that an Option
holder is no longer an employee of the Corporation or a Parent
Corporation or Subsidiary Corporation (the "date of termination"),
and the Option will be exercisable only to the extent the Option is
vested on the date of termination. However, if the Option holder is
no longer an employee because of death or Disability, any Option
that is not one hundred percent (100%) vested will automatically
become one hundred percent (100%) vested on the date of termination.
If the Option holder's termination is for reason of death, the right
to exercise the Option will expire one (1) year after the date of
the holder's death, and until expiration, the holder's heirs,
legatees or legal representative may exercise the Option. If the
Option holder's termination is for any reason other than death, the
right to exercise the Option (to the extent that it is vested) will
expire three (3) months after the date of termination. If
termination is for a reason other than the holder's death and the
Option holder dies after his or her termination but before the right
to exercise the Option has expired, the right to exercise the Option
shall expire one (1) year after the date of the holder's termination
of employment, and until expiration, the holder's heirs, legatees or
legal representative may exercise the Option.
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<PAGE> 51
(e) EXERCISE.
(i) CASH PAYMENT. An Option may be exercised as to all or any
number of whole shares of the Common Stock with respect to
which the Option is vested. Options may be exercised only by
the Option holder's written notice to the Secretary of the
Corporation (the "exercise notice") and only if the exercise
notice is accompanied by payment in cash of the full exercise
price for the shares with respect to which the Option is
exercised, except as otherwise provided herein.
(ii) NONCASH PAYMENT. Unless otherwise provided at the time of
grant, payment of the exercise price may be made in the form
of (1) Common Stock of the Corporation that has been held for
at least six (6) months prior to the date of exercise or (2) a
combination of cash and such Common Stock that has been held
for at least six (6) months prior to the date of exercise. The
value of any Common Stock used to pay the exercise price or
any portion thereof will be the Fair Market Value of Common
Stock on the date of exercise.
Wherever in this Plan or any agreement a Key Employee is
permitted to pay the exercise price of an Option relating
to the exercise of an Option by delivering Common Stock,
the Key Employee may, subject to procedures satisfactory to
the Compensation Committee, satisfy such delivery
requirement by presenting proof of beneficial ownership of
such Common Stock, in which case the Corporation shall
treat the Option as exercised without further payment and
shall withhold such number of Common Stock from the Common
Stock acquired by the exercise of the Option.
(iii) BROKER-DEALER PAYMENT. Unless otherwise provided at the time
of grant, payment of the unpaid exercise price by a
broker-dealer or by the Option holder with cash advanced by
the broker-dealer, if the exercise notice is accompanied by
the Option holder's written irrevocable instructions to
deliver the Common Stock acquired upon exercise of the Option
to the broker-dealer.
(f) NONTRANSFERABILITY. No Incentive Stock Option granted under the
Plan, contingent or otherwise, and no Nonqualified Stock Option
granted under this Plan, unless the Non-Employee directors Committee
directs otherwise, will be transferable, assignable or subject to
any encumbrance, pledge, or charge of any nature, except by will or
the laws of descent and distribution. During the lifetime of an
Option holder, an Option will be exercisable only by the Option
holder. The executor or administrator of the estate of the Option
holder may transfer any rights with respect to such Option to the
person or persons or entity (including a trust) entitled thereto
under the will of the holder of such Option or under the laws of
intestacy.
(g) STOCK LEGEND. The Corporation may require that certificates
evidencing shares of Common Stock purchased upon the exercise of
Incentive Stock Options issued under the Plan be endorsed with a
legend in substantially the following form:
The shares evidenced by this certificate may not be sold or
transferred prior to _________, 19___, in the absence of a
written statement from Riggs National Corporation (the
"Corporation") to the effect that the Corporation is aware of
the fact of such sale or transfer.
The blank contained in such legend shall be filled in with the date
that is the later of: (i) one year and one day after the date of
exercise of such Incentive Stock Option or (ii) two years and one
day after
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the date of grant of such Incentive Stock Option. Upon delivery to
the Corporation, at its principal executive office, of a written
statement to the effect that such shares have been sold or
transferred prior to such date, the Corporation does hereby agree
to promptly deliver to the transfer agent for such shares a written
statement to the effect that the Corporation is aware of the fact of
such sale or transfer. The Corporation may also require the
inclusion of any additional legend that may be necessary or
appropriate.
(h) CHANGE OF CONTROL. In the event of a Change of Control (as
hereinafter defined), all then-outstanding Options will become one
hundred percent (100%) vested and exercisable as of the Change of
Control. However, if in the opinion of counsel to the Corporation
the immediate exercisability of such Options, when taken into
consideration with all other "parachute payments" as defined in
Section 280G of the Code, would result in an "excess parachute
payment" as defined in such section, such Option shall not become
immediately exercisable, except and to the extent the Compensation
Committee in its discretion shall otherwise determine.
For purposes of the Plan, "Change of Control" means (1) the sale
of substantially all of the Corporation's assets; (2) the
acquisition, whether directly, indirectly, beneficially (within
the meaning of Rule 13d-3 of the Act), or of record, of
securities of the Corporation representing twenty-five percent
(25%) or more in the aggregate voting power of the Corporation's
then-outstanding Common Stock by any "person" (within the meaning
of Sections 13(d) and 14(d) of the Act), including any
corporation or group of associated persons acting in concert,
other than (i) the Corporation or its subsidiaries and/or (ii)
any employee pension benefit plan (within the meaning of Section
3(2) of the Employee Retirement Income Security Act of 1974) of
the Corporation or its subsidiaries, including a trust
established pursuant to any such plan; (3) the Corporation is
merged or consolidated with or into another corporation in any
transaction or series of transactions, in which either (A) the
persons who were the beneficial owners of the Corporation's
voting securities immediately prior to such transaction do not
beneficially own immediately after such transaction at least
fifty percent (50%) of the total outstanding voting power of the
surviving corporation or (B) any "person" (within the meaning of
Sections 13(d) and 14(d) of the Act), including any corporation
or group of associated persons acting in concert is or becomes
the direct, indirect or beneficial owner (within the meaning of
Rule 13d-3 of the Act) of twenty-five percent (25%) or more of
the aggregate voting power of resulting entity, provided that
such person was not a twenty-five percent (25%) or more owner of
the Corporation prior to the transaction or transactions; or (4)
the Corporation is liquidated or dissolved or adopts a plan of
liquidation or dissolution. Notwithstanding the foregoing, a
Change of Control will not result from: (A) a transfer of the
Corporation's voting securities by a person who is the beneficial
owner, directly or indirectly, of twenty-five percent (25%) or
more of the voting securities of the Corporation (a "25 Percent
Owner") to (i) a member of such 25 Percent Owner's immediate
family (within the meaning of Rule 16a-1(e) of the Act) either
during such 25 Percent Owner's lifetime or by will or the laws of
descent and distribution; (ii) any trust as to which the 25
Percent Owner or a member (or members) of his immediate family
(within the meaning of Rule 16a-1(e) of the Act) is the
beneficiary; (iii) any trust as to which the 25 Percent Owner is
the settlor with sole power to revoke; (iv) any entity over which
such 25 Percent Owner has the power, directly or indirectly, to
direct or cause the direction of the management and policies of
the entity, whether through the ownership of voting securities,
by contract or otherwise; or (v) any charitable trust, foundation
or corporation under Section 501(c)(3) of the Code that is funded
by the 25 Percent Owner or (B) the acquisition of voting
securities of the Corporation or the resulting entity in the
event of a merger or consolidation, by either (i) a person who
was a 25 Percent Owner on the effective date of the Plan or (ii)
a person, trust or other entity described in the foregoing
clauses (A)(i)-(v) of this subsection.
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7. TERMINATION AND AMENDMENT OF THE PLAN AND OPTIONS.
The Board may terminate the Plan at any time except with respect to any
outstanding Options. The Board may amend the Plan in any manner with respect
to future grants of Options and the Non-Employee Directors Committee may
amend outstanding Options in any manner consistent with the Plan subject to
the following limitations:
(a) Except as provided in Section 8 of the Plan, no amendment will be
effective without the approval of the shareholders of the
Corporation if that amendment (i) changes in the aggregate number of
shares which may be issued under this Plan, (ii) changes the class
of eligible employees, officers or directors, or (iii) extends the
term of the Plan or the period during which any outstanding
Incentive Stock Option may be exercised.
(b) No amendment will be effective if the amendment changes the manner
of determining the exercise price of Incentive Stock Options, makes
individuals who are not employees of the Corporation or of any
Parent or Subsidiary Corporation eligible to be granted Incentive
Stock Options, changes the nontransferability of the Options, or
alters or impairs any rights or obligations of any outstanding
Option without the written consent of the Option holder.
8. CHANGE IN CAPITAL STRUCTURE.
(a) The existence of outstanding Options shall not affect in any way the
right or power of the Corporation or its stockholders to make or
authorize any or all adjustments, recapitalization, reorganizations
or other changes in the Corporation's capital structure or its
business, or any merger or consolidation of the Corporation, or any
issue of bonds, debentures, preferred or prior preference stock
ahead of or affecting the Common Stock or the rights thereof, or the
dissolution or liquidation of the Corporation, or any sale or
transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or
otherwise.
(b) If the Corporation shall effect a subdivision or consolidation of
shares or capital readjustment, the payment of a stock dividend, or
other increase or reduction of the number of shares of the Common
Stock outstanding, without receiving compensation therefore in
money, services or property, then (i) the number, class, and
per-share price of shares of Common Stock subject to outstanding
Options hereunder shall be appropriately adjusted in such a manner
as to entitle an optionee to receive upon exercise of an Option, for
the same aggregate cash consideration, the same total number and
class of shares as he would have received had the optionee exercised
his or her Option in full immediately prior to the event requiring
the adjustment; and (ii) the number and class of shares then
reserved for issuance under the Plan shall be adjusted by
substituting for the total number and class of shares of Common
Stock then reserved that number and class of shares of Common Stock
that would have been received by the owner of an equal number of
outstanding shares of each class of Common Stock as the result of
the event requiring the adjustment.
(c) After a merger of one or more corporations into the Corporation or
after a consolidation of the Corporation and one or more
corporations in which the Corporation shall be the surviving
corporation, each holder of an outstanding Option shall, at no
additional cost, be entitled upon exercise of such Option to receive
(subject to any required action by stockholders) in lieu of the
number and class of shares as to which such Option shall then be so
exercisable, the number of and class of shares of stock or other
securities to which such holder would have been entitled pursuant to
the terms of the agreement of merger or consolidation if,
immediately prior to such merger or consolidation, such holder had
been the holder of record of the number and class of
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<PAGE> 54
shares of Common Stock equal to the number and class of shares as to
which such Option shall be so exercised.
(d) If the Corporation is merged into or consolidated with another
corporation under circumstances where the Corporation is not the
surviving corporation, or if the Corporation is liquidated, or sells
or otherwise disposes of substantially all its assets to another
corporation while unexercised Options remain outstanding under the
Plan, unless provisions are made in connection with such transaction
for the continuance of the Plan and/or the assumption or
substitution of such Options with new options covering the stock of
the successor corporation, or parent or subsidiary thereof, with
appropriate adjustments as to the number and kind of shares and
prices, then all outstanding Options shall be canceled as of the
effective date of any such merger, consolidation or sale provided
that (i) notice of such cancellation shall be given to each holder
of an Option and (ii) each holder of an Option shall have the right
to exercise such Option in full (without regard to any vesting or
other limitations on exercise imposed on such Option) during the
30-day period preceding the effective date of such merger,
consolidation, liquidation, or sale (the "corporate event").
Notwithstanding the preceding provisions, if no provisions are made
for the continuance, assumption or substitution of Options and if
exercise of any then-outstanding Options during the 30-day period
preceding the effective date of such corporate event would not be in
conformity with all applicable federal securities laws, or if in the
opinion of counsel to the Corporation the immediate exercisability
of such Options, when taken into consideration with all other
"parachute payments" as defined in Section 280G of the Code, would
result in an "excess parachute payment" as defined in such section,
such Option shall not become immediately exercisable and shall be
canceled as of the effective date of the corporate event, except and
to the extent the Compensation Committee in its discretion shall
otherwise determine.
(e) Except as hereinbefore expressly provided, the issue by the
Corporation of shares of stock of any class, or securities
convertible into shares of stock by any class, for cash or property,
or for labor or services either upon direct sale or upon the
exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Corporation convertible
into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the
number, class or price of shares of Common Stock then subject to
outstanding Options.
(f) Adjustment under the preceding provisions of this section will be
made by the Compensation Committee, whose determination as to what
adjustment will be made and the extent thereof will be final,
binding, and conclusive. No fractional interest will be issued under
the Plan on account of any such adjustment. No adjustment will be
made in a manner that causes an Incentive Stock Option to fail to
continue to qualify as an Incentive Stock Option under the Code.
9. HOLDING PERIOD.
Notwithstanding anything to the contrary in the Plan, Common Stock
acquired through exercise of an Incentive Stock Option that was outstanding
on November 13, 1996, or any other Option granted to an Insider but which was
not granted by the Non-Employee Directors Committee or the Board or which was
not approved by the shareholders may not be disposed of by an Insider during
the six-month period beginning on the Date of Grant.
10. GENERAL PROVISIONS.
(a) The Corporation shall not be required to sell or issue any shares
under any Option if the issuance of such shares constitute a
violation by the Option holder or the Corporation of any provision
of
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<PAGE> 55
any law, statute, or regulation of any stock exchange upon which the
Common Stock may be listed or any governmental authority whether it
be Federal or State. Unless a registration statement is in effect
under the Securities Act of 1933, as amended (the "Act") with
respect to the shares of Common Stock covered by an Option, the
Corporation shall not be required to issue shares upon exercise of
any Option (i) unless the Compensation Committee has received
evidence satisfactory to it to the effect that the holder of such
Option is acquiring such shares for investment and not with a view
to the distribution thereof or (ii) unless an opinion of counsel to
the Corporation has been received by the Corporation, in a form and
substance that is deemed acceptable by the Compensation Committee,
to the effect that a registration statement is not required. Any
determination in this connection by the Compensation Committee shall
be final, binding and conclusive. In the event the shares issuable
on exercise of an Option are not registered under the Act, the
Corporation may imprint the following legend or any other legend
that counsel for the Corporation considers necessary or advisable to
comply with the Act:
"The shares of stock represented by this certificate have not been
registered under the Securities Act of 1933 or under the securities
laws of any State and may not be sold or transferred except pursuant
to an effective registration statement or upon receipt by the
Corporation of any opinion of counsel, in form and substance
satisfactory to the Corporation, that registration is not required
for such sale or transfer."
The Corporation may, but shall in no event be obligated to, register
any securities covered hereby pursuant to the Act and, in the event
any shares are so registered, the Corporation may remove any legend
on certificates representing such shares. The Corporation shall not
be obligated to take any affirmative action in order to cause the
exercise of an Option or the issuance of shares pursuant thereto to
comply with any law or regulation of any governmental authority.
(b) No Option holder and no beneficiary or other person claiming under
or through an Option holder will have any right, title or interest
in or to any shares of Common Stock allocated or reserved under the
Plan or subject to any Option except as to such shares of Common
Stock, if any, that have been issued or transferred to such Option
holder or beneficiary.
(c) The Plan and all determinations made and actions taken pursuant
thereto will be governed by the laws of the State of Delaware and
construed in accordance therewith.
(d) The Plan is intended to comply in all respects with Rule 16b-3
promulgated under the Act (the "exemption"). If the Plan is found
not to qualify for the exemption, any disqualifying Plan provision
will be deemed replaced by a provision that most nearly accomplishes
the intent of the Board at the time the Plan was adopted and that
results in the Plan's qualification for the exemption. If the
Board's intent cannot be accomplished through a substitute provision
that results in the Plan's qualification for the exemption, the Plan
will continue in full force and effect in the form adopted by the
Board notwithstanding the Plan's failure to qualify for the
exemption.
(e) Options may be granted under this Plan from time to time in
substitution for stock options held by employees of other
corporations who become employees of the Corporation or a Subsidiary
Corporation as a result of a corporate merger, consolidation,
acquisition of property or stock, separation, reorganization or
liquidation of the employing corporation. The terms and conditions
of the substitute options so granted may vary from the terms and
conditions set forth in this Plan to such extent as the Compensation
Committee at the time of grant may deem appropriate to conform, in
whole or in part, to the provisions of the stock options in
substitution for which they are granted, but with respect to stock
options that are Incentive Stock Options, no such variation
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<PAGE> 56
shall be such as to affect the status of any such substitute option
as an "incentive stock option" under Section 422 of the Code.
11. TAXES.
(a) WITHHOLDING.
(i) CASH PAYMENT. The Corporation may make such provisions as it
deems appropriate to withhold any taxes the Corporation
determines it is required to withhold in connection with any
Option or require the Option holder to pay the amount of the
withholding taxes in cash to the Corporation as a condition
precedent to the issuance of shares pursuant to the exercise
of an Option.
(ii) BROKER-DEALER PAYMENT. If the exercise price of an Option is
paid by a broker-dealer, as provided herein, payment of
withholding taxes in connection with the exercise of the
Option, up to an amount calculated by assuming the maximum
federal, state, and local marginal tax rates, may be made by
the broker-dealer.
(b) TAX QUALIFICATION. Incentive Stock Options granted under the Plan
are intended to qualify as Incentive Stock Options within the
meaning of Section 422 of the Code, and the terms of the Plan and
Options granted hereunder shall be so construed. Notwithstanding the
foregoing, nothing in the Plan shall be interpreted as a
representation, guarantee or other undertaking on the part of the
Corporation that any Options are, or will be, determined to qualify
as incentive stock options within the meaning of the Code.
12. INDEMNIFICATION OF BOARD AND COMMITTEES.
The members of the Board of Directors, the Compensation Committee and
the Non-Employee Directors Committee will be indemnified by the Corporation
against the reasonable expenses, including attorneys' fees, actually and
necessarily incurred in connection with the defense of any action, suit or
proceeding, or in connection with any appeal therein, to which they or any of
them may be a party by reason of any action taken or failure to act under or
in connection with the Plan or Option agreements, and against all amounts
paid by them in settlement thereof (provided such settlement is approved by
legal counsel selected by the Corporation) or paid by them in satisfaction of
a judgment in any such action, suit or proceeding, except in relation to
matters as to which it is adjudged in such action, suit or proceeding, except
in relation to matters as to which it is adjudged in such action, suit or
proceeding that the member is liable for negligence or misconduct in the
performance of the member's duties; provided that within sixty (60) days
after institution of any such action, suit or proceeding a member will in
writing offer the Corporation the opportunity, at its own expense, to defend
the same. The foregoing right of indemnification shall inure to the benefit
of the heirs, executors or administrators of each such member of the Board of
Directors, the Compensation Committee and the Non-Employee Directors
Committee and shall be in addition to any and all other rights of
indemnification to which such members may be entitled as a matter of law,
contract, or otherwise.
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13. LIMITATION OF RIGHTS.
Neither the adoption and maintenance of the Plan nor the grant of
Options will:
(a) limit the right of the Corporation, Parent Corporation or Subsidiary
Corporation to discharge or discipline any employee, or otherwise
terminate or modify the terms of any employment agreement, or
(b) confer upon any Option holder any contract or other right or
interest other than as specifically provided in the Plan and the
Option agreement.
14. EFFECTIVE DATE OF THE PLAN, DURATION OF THE PLAN.
(a) The Plan became effective as of March 26, 1996, upon adoption by the
Board, subject to approval by the holders of a majority of the
shares of Common Stock which are represented in person or by proxy
and entitled to vote on the subject at the 1996 annual meeting of
the shareholders of the Corporation.
(b) Unless previously terminated, the Plan will terminate ten (10) years
after the earlier of (i) the date the Plan is adopted by the Board,
or (ii) the date the Plan is approved by the shareholders, except
that Options that are granted under the Plan before its termination
will continue to be administered under the terms of the Plan until
the Options terminate or are exercised.
Amended by the Board of Directors on January 21, 1998
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RIGGS NATIONAL CORPORATION
1997 NON-EMPLOYEE DIRECTORS
STOCK OPTION PLAN
ARTICLE I
PURPOSES
The purpose of the Riggs National Corporation 1997 Non-Employee Directors
Stock Option Plan is increase the proprietary interest of non-employee directors
of Riggs National Corporation (the "Corporation") and its subsidiaries by
granting such directors options to purchase common stock of the Corporation.
ARTICLE II
DEFINITIONS
2.1 Agreement means a written agreement (including any amendment or supplement
thereto) between the Corporation and an Eligible Director specifying the
terms and conditions of an Option granted to such Eligible Director.
2.2 Board means the Board of Directors of the Corporation.
2.3 Common Stock means the common stock, $2.50 par value, of the Corporation.
2.4 Corporation means Riggs National Corporation.
2.5 Director means a member of the Board of Directors of the Corporation or a
Subsidiary.
2.6 Disability means a complete and permanent inability by reason of illness
or accident to perform the duties of a Director, as determined by the
Board based on medical evidence acceptable to it.
2.7 Eligible Director means a member of the Board of Directors of the
Corporation or a Subsidiary who is not an employee of the Corporation or a
Subsidiary.
2.8 Fair Market Value means, with respect to a share of Common Stock, if the
Common Stock is traded on the National Market System or a national
securities exchange, the closing price of the Common Stock on the
determination date, or if there were no sales on such date, then on the
next preceding date on which there were sales, or in any other case, the
current fair market value of the Common Stock, shall be determined by the
Board using any reasonable method in good faith.
2.9 Option means a stock option that entitles the holder to purchase from the
Corporation a stated number of shares of Common Stock as specified in the
Agreement at the price set forth in the Agreement.
<PAGE> 59
2.10 Participant means an Eligible Director who is selected by the Board to
receive an Option.
2.11 Plan means the Riggs National Corporation 1997 Non-Employee Directors
Stock Option Plan .
2.12 Subsidiary means any subsidiary of the Corporation.
2.13 Termination of Service means with respect to a Director, the date such
person ceases to serve as a Director.
ARTICLE III
ADMINISTRATION
The Plan shall be administered by the Board. The Board shall have
authority to grant Options to Eligible Directors upon such terms (not
inconsistent with the provisions of this Plan) as the Board may consider
appropriate. Such terms may include conditions (in addition to those
contained in this Plan) on the exercisability of all or any part of an
Option. Notwithstanding any such conditions, the Board may, in its
discretion, accelerate the time at which any Option may be exercised. In
addition, the Board shall have complete authority to interpret all provisions
of this Plan; to prescribe the form of Agreements; to adopt, amend, and
rescind rules and regulations pertaining to the administration of the Plan;
and to make all other determinations necessary or advisable for the
administration of this Plan. The express grant in the Plan of any specific
power to the Board shall not be construed as limiting any power or authority
of the Board. Any decision made, or action taken, by the Board or in
connection with the administration of this Plan shall be final and conclusive
on all persons having an interest in the Plan. No member of the Board shall
be liable for any act done in good faith with respect to this Plan or any
Agreement or Option. The Board may delegate its authority with respect to
administration of the Plan as it deems appropriate, provided that such
delegation does not cause grants of options to fail to be exempt transactions
under Rule 16B-3 promulgated under the Securities Exchange Act of 1934. All
expenses of administering this Plan shall be borne by the Corporation.
ARTICLE IV
ELIGIBILITY
The Board may grant options under the Plan to Eligible Directors.
ARTICLE V
STOCK SUBJECT TO PLAN
5.1 Shares Issued. Upon the exercise of a stock Option the Corporation may
issue shares of authorized but unissued Common Stock or shares of
previously issued Common Stock that has been reacquired by the
Corporation.
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5.2 Aggregate Limit. The maximum aggregate number of shares of Common Stock
that may be issued under this Plan pursuant to the exercise of Options is
three hundred fifty thousand (350,000) shares of Common Stock. The maximum
aggregate number of shares that may be issued under this Plan is subject
to adjustment as provided in Article VII.
5.3 Reallocation of Shares. If an Option is terminated or expires, in whole or
in part, for any reason other than its exercise, the number of shares of
Common Stock allocated to the Option or portion thereof may again be
available for issuance pursuant to Options under the Plan.
ARTICLE VI
OPTIONS
6.1 Award. In accordance with the provisions of Article IV, the Board will
designate each Eligible Director to whom an Option is to be granted and
will specify the vesting provisions and number of shares of Common Stock
covered by such Option.
6.2 Option Price. The exercise price per share for Common Stock subject to an
Option shall be determined by the Board on the date of grant; provided,
however, that the exercise price per share for Common Stock shall not be
less than the greater of the Fair Market Value on the date the Option is
granted or the par value of the Common Stock.
6.3 Maximum Option Period. Unless provided otherwise by the Board, the maximum
period during which an Option may be exercised shall be ten (10) years
from the date of grant.
6.4 Vesting and Termination of Service. Unless provided otherwise by the
Board, an Option shall be subject to the following provisions:
(a) An Option will be exercisable only to the extent that it is vested
on the date of exercise. Vesting of an Option will cease on the date
that a Participant incurs a Termination of Service, and the Option
will be exercisable only to the extent the Option is vested on the
date of Termination of Service. However, if the Participant's
Termination of Service results from death or Disability, any Option
that is not one hundred percent (100%) vested will automatically
become one hundred percent (100%) vested on the date of Termination
of Service.
(b) If the Participant's Termination of Service results from death or
Disability, the right to exercise the Option will expire on the
earlier of (i) one (1) year after the date of the holder's death or
termination by reason of Disability, or (ii) the expiration date
under the terms of the Agreement. Until the expiration date, in the
case of the Option holder's death, the holder's heirs, legatees or
legal representative may exercise the Option.
(c) If the Participant's Termination of Service is for any reason other
than death or Disability, the right to exercise the Option (to the
extent that it is vested) will expire on the earlier of (i) three
(3) months after the date of the holder's Termination of Service, or
(ii) the date the Option expires under the terms of the Agreement.
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(d) If Termination of Service is for a reason other than the
Participant's death, and the Participant dies after Termination of
Service but before the right to exercise the Option has expired, the
right to exercise the Option shall expire on the earlier of (i) one
(1) year after the date of the Participant's Termination of Service,
or (ii) the date the Option expires under the terms of the
Agreement, and, until expiration, the Participant's heirs, legatees
or legal representative may exercise the Option.
6.5 Nontransferability. Except as provided in Section 6.6, each Option granted
under this Plan shall be nontransferable except by will or by the laws of
descent and distribution. Except to the extent an Option is transferred in
accordance with Section 6.6, during the lifetime of the Participant to
whom the Option is granted, the Option may be exercised only by the
Participant. No right or interest of a Participant in any Option shall be
liable for, or subject to, any lien, obligation, or liability of such
Participant.
6.6 Transferable Options. Section 6.5 to the contrary notwithstanding, if the
Board so provides, an Option may be transferred by a Participant to the
Participant's children, grandchildren, spouse, one or more trusts for the
benefit of such family members or a partnership in which such family
members are the only partners; provided, however, that Participant may not
receive any consideration for the transfer. The holder of an Option
transferred pursuant to this section shall be bound by the same terms and
conditions that governed the Option during the period that it was held by
the Participant.
6.7 Exercise. The Option holder must provide written notice to the Secretary
of the Corporation of the exercise of Options and the number of Options
exercised. Subject to the provisions of this Plan and the applicable
Agreement, an Option may be exercised to the extent vested in whole at any
time or in part from time to time at such times and in compliance with
such requirements as the Board shall determine. An Option granted under
this Plan may be exercised with respect to any number of whole shares less
than the full number for which the Option could be exercised. A partial
exercise of an Option shall not affect the right to exercise the Option
from time to time in accordance with this Plan and the applicable
Agreement with respect to the remaining shares subject to the Option. An
Option may not be exercised with respect to fractional shares of Common
Stock.
6.8 Payment. The option exercise price shall be paid in full at the time of
exercise (i) in cash, (ii) with Common Stock owned by the Participant,
(iii) by delivery to the Corporation of (x) irrevocable instructions to
deliver directly to a broker the stock certificates representing the
shares of Common Stock for which the Option is being exercised, and (y)
irrevocable instructions to such broker to sell such shares of Common
Stock and promptly deliver to the Corporation the portion of the proceeds
equal to the option exercise price, or (iv) any combination thereof. For
purposes of making payment in shares of Common Stock, such shares shall be
valued at their Fair Market Value on the date of exercise of the Option
and shall have been held by the Participant for at least six (6) months.
6.9 Shareholder Rights. No Participant shall have any rights as a shareholder
with respect to shares subject to his Option until the date of exercise of
such Option.
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ARTICLE VII
CHANGE IN CAPITAL STRUCTURE
(a) The existence of outstanding Options shall not affect in any way
the right or power of the Corporation or its stockholders to make
or authorize any or all adjustments, recapitalization,
reorganizations or other changes in the Corporation's capital
structure or its business, or any merger or consolidation of the
Corporation, or any issuance of bonds, debentures, preferred or
prior preference stock ahead of or affecting the Common Stock or
the rights thereof, or the dissolution or liquidation of the
Corporation, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.
(b) If the Corporation shall effect a subdivision or consolidation of
shares or other capital readjustment, the payment of a stock
dividend, or other increase or reduction of the number of shares
of the Common Stock outstanding, without receiving compensation
therefore in money, services or property, then (i) the number,
class, and per share price of shares of Common Stock subject to
outstanding Options hereunder shall be appropriately adjusted in
such a manner as to entitle an Option holder to receive upon
exercise of an Option, for the same aggregate cash consideration,
the same total number and class of shares as he would have
received had the Option holder exercised his or her Option in
full immediately prior to the event requiring the adjustment; and
(ii) the number and class of shares then reserved for issuance
under the Plan shall be adjusted by substituting for the total
number and class of shares of Common Stock then reserved that
number and class of shares of Common Stock that would have been
received by the owner of an equal number of outstanding shares of
Common Stock as the result of the event requiring the adjustment.
(c) After a merger of one or more corporations into the Corporation
or after a consolidation of the Corporation and one or more
corporations in which the Corporation shall be the surviving
corporation, each holder of an Option shall, at no additional
cost, be entitled upon exercise of such Option to receive
(subject to any required action by stockholders) in lieu of the
number and class of shares as to which such Option shall then be
so exercisable, the number and class of shares of stock or other
securities to which such Option holder would have been entitled
pursuant to the terms of the agreement of merger or consolidation
if, immediately prior to such merger or consolidation, such
Option holder had been the holder of record of the number and
class of shares of Common Stock equal to the number and class of
shares as to which such Option shall be so exercised.
(d) If the Corporation is merged into or consolidated with another
corporation under circumstances where the Corporation is not the
surviving corporation, or if the
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Corporation is liquidated, or sells or otherwise disposes of
substantially all of its assets to another corporation while
unexercised Options remain outstanding under the Plan, unless
provisions are made in connection with such transaction for the
continuance of the Plan and/or the assumption or substitution of
such Options with new options, stock appreciation rights covering
the stock of the successor corporation, or parent or subsidiary
thereof, with appropriate adjustments as to the number and kind of
shares and prices, then all outstanding Options shall be canceled as
of the effective date of any such merger, consolidation or sale
provided that (i) notice of such cancellation shall be given to each
holder of an Option and (ii) each holder of an Option shall have the
right to exercise such Option in full (without regard to any vesting
or other limitations on exercise imposed on such Option) during the
30-day period preceding the effective date of such merger,
consolidation, liquidation, or sale (the "corporate event").
Notwithstanding the preceding provisions, if no provisions are made
for the continuance, assumption or substitution of Options and if
exercise of any then-outstanding Options during the 30-day period
preceding the effective date of such corporate event would not be in
conformity with all applicable federal securities laws, or if in the
opinion of counsel to the Corporation the immediate exercisability
of such Options, when taken into consideration with all other
"parachute payments" as defined in Section 280G of the Code, would
result in an "excess parachute payment" as defined in such section,
such Option shall not become immediately exercisable and shall be
canceled as of the effective date of the corporate event, except and
to the extent the Board in its discretion shall otherwise determine.
(e) Except as previously expressly provided, neither the issuance by
the Corporation of shares of stock of any class, or securities
convertible into shares of stock of any class, for cash or
property, or for labor or services either upon direct sale or
upon the exercise of rights or warrants to subscribe therefor, or
upon conversion of shares or obligations of the Corporation
convertible into such shares or other securities, nor the
increase or decrease of the number of authorized shares of stock,
nor the addition or deletion of classes of stock, shall affect,
and no adjustment by reason thereof shall be made with respect
to, the number, class or price of shares of Common Stock then
subject to outstanding Options.
(f) Adjustment under the preceding provisions of this section will be
made by the Board, whose determination as to what adjustments
will be made and the extent thereof will be final, binding, and
conclusive. No fractional interest will be issued under the Plan
on account of any such adjustment.
ARTICLE VIII
COMPLIANCE WITH LAW
The Corporation shall not be required to sell or issue any shares under
any Option if the issuance of such shares constitute a violation by the
Option holder or the Corporation of any
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provision of any law, statute, or regulation of any stock exchange upon which
the Common Stock may be listed or any governmental authority whether it be
Federal or State. Unless a registration statement is in effect under the
Securities Act of 1933, as amended (the "Act") with respect to the shares of
Common Stock covered by an Option, the Corporation shall not be required to
issue shares upon exercise of any Option (i) unless the Board has received
evidence satisfactory to it to the effect that the holder of such Option is
acquiring such shares for investment and not with a view to the distribution
thereof or (ii) unless an opinion of counsel to the Corporation has been
received by the Corporation, in a form and substance that is deemed acceptable
by the Board, to the effect that a registration statement is not required. Any
determination in this connection by the Board shall be final, binding and
conclusive. In the event the shares issuable on exercise of an Option are not
registered under the Act, the Corporation may imprint the following legend or
any other legend that counsel for the Corporation considers necessary or
advisable to comply with the Act:
"The shares of stock represented by this certificate
have not been registered under the Securities Act of
1933 or under the securities laws of any State and
may not be sold or transferred except pursuant to an
effective registration statement or upon receipt by
the Corporation of any option of counsel, in form and
substance satisfactory to the Corporation, that
registration is not required for such sale or
transfer."
The Corporation may, but shall in no event be obligated to, register
any securities covered hereby pursuant to the Act and, in the event any
shares are so registered, the Corporation may remove any legend on
certificates representing such shares. The Corporation shall not be
obligated to take any affirmative action in order to cause the exercise of an
Option or the issuance of shares pursuant thereto to comply with any law or
regulation of any governmental authority.
ARTICLE IX
GENERAL PROVISIONS
9.1 Effect on Service. Neither the adoption of this Plan, its operation, nor
any documents describing or referring to this Plan (or any part thereof)
shall confer upon any individual any right to continue in the service of
the Corporation or a Subsidiary or in any way affect any right and power
of the Corporation or a Subsidiary to terminate the service of any
individual at any time with or without assigning a reason therefor.
9.2 Unfunded Plan. The Plan, insofar as it provides for grants, shall be
unfunded, and the Corporation shall not be required to segregate any
assets that may at any time be represented by grants under this Plan. Any
liability of the Corporation to any person with respect to any grant under
this Plan shall be based solely upon any contractual obligations that may
be created pursuant to this Plan. No such obligation of the Corporation
shall be
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deemed to be secured by any pledge of, or other encumbrance on, any
property of the Corporation.
9.3 Rules of Construction. Headings are given to the articles and sections of
this Plan solely as a convenience to facilitate reference. The reference
to any statute, regulation, or other provision of law shall be construed
to refer to any amendment to or successor of such provision of law.
9.4 Choice of Law. The Plan and all Agreements entered into under the Plan
shall be interpreted under the law of the state of Delaware.
ARTICLE X
AMENDMENT
The Board may amend or terminate this Plan from time to time; provided,
however, that no amendment shall, without a Participant's consent, adversely
affect any rights of such Participant under any Option outstanding at the
time such amendment is made.
ARTICLE XI
EFFECTIVE DATE OF PLAN, DURATION OF PLAN
(a) The Plan became effective as of July 9, 1997 upon adoption by the
Board, subject to approval by the holders of a majority of the shares of
Common Stock.
(b) Unless previously terminated, the Plan will terminate on July 8, 2007,
except that Options that are granted under the Plan prior to its termination
will continue to be administered under the terms of the Plan until the
Options terminate or are exercised.
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