<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ X ]
Check the appropriate box:
[ X ] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
F.N.B. Corporation
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(Name of Registrant as Specified in Its Charter)
F.N.B. Corporation
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ X ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2)
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14)(3)
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11:1
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4) Proposed maximum aggregate value of transaction:
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(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
[ ] 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 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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4) Date Filed:
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<PAGE> 2
LOGO
March 20, 1996
Dear Shareholder:
It is a pleasure to invite you to attend the Annual Meeting of Shareholders
of F.N.B. Corporation. The meeting will be held at our Data Center, located at
the corner of South Keel Ridge Road and East State Street, Hermitage,
Pennsylvania, on Wednesday, April 24, 1996, at 4:00 p.m.
At the meeting, you will be asked to consider and vote upon the re-election
of six directors, an increase in the authorized shares of common stock, and
proposals for certain stock compensation plans.
Your vote is important regardless of how many shares of stock you own. If
you hold stock in more than one account or name, you will receive a proxy card
for each. Please sign and return each card since they represent a separate
number of votes. Postage paid envelopes are provided for your convenience.
You are cordially invited to attend the Annual Meeting. Regardless of
whether you plan to attend, please date and return the enclosed proxy card(s)
as soon as possible. This will not prevent you from voting at the meeting, but
will assure that your vote is counted if you are unable to attend.
As always, the directors, management and staff thank you for your continued
support and interest in F.N.B. Corporation.
Sincerely,
Peter Mortensen
Chairman and President
LOGO
<PAGE> 3
F.N.B. CORPORATION
----------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
----------------------------------------
Notice is hereby given that the Annual Meeting of the Shareholders of F.N.B.
Corporation (the "Corporation") will be held at the F.N.B. Data and Accounting
Center, located at the corner of South Keel Ridge Road and East State Street,
Hermitage, Pennsylvania, on Wednesday, April 24, 1996, at 4:00 p.m. Eastern
Daylight Time, for the following purposes:
1. To elect six (6) directors of the Corporation;
2. To consider and vote upon each of the following proposals, which have been
unanimously recommended by the Board of Directors:
(a) To approve an amendment to the Corporation's Articles of
Incorporation increasing the number of authorized shares of the
Corporation's common stock, par value $2.00 per share (the "Common Stock"),
to 100,000,000 shares;
(b) To approve the F.N.B. Corporation 1996 Stock Option Plan in the form
attached as EXHIBIT A to the Proxy Statement;
(c) To approve the F.N.B. Corporation Restricted Stock and Incentive
Bonus Plan in the form attached as EXHIBIT B to the Proxy Statement; and
(d) To approve the F.N.B. Corporation Directors' Compensation Plan in the
form attached as EXHIBIT C to the Proxy Statement; and
3. To transact such other business as may properly come before the Annual
Meeting and any adjournments thereof.
As of the date of this Notice, the Board of Directors of the Corporation does
not know of any other business to be transacted at the Annual Meeting.
Only the holders of Common Stock and Series A Preferred Stock of the
Corporation of record on the books of the Corporation at the close of business
on March 8, 1996 are entitled to notice of and to vote at the Annual Meeting
and any adjournments thereof.
Enclosed with this Notice are a Proxy Statement and form of proxy. All
shareholders, whether or not they expect to be present at the meeting, are
requested to date and sign the proxy and to return it in the enclosed
self-addressed envelope. Prompt compliance with this request will be
appreciated. Shareholders who attend the meeting may, if they wish, vote in
person even if they have mailed their proxies.
BY ORDER OF THE BOARD OF DIRECTORS
David B. Mogle, Secretary
March 20, 1996
<PAGE> 4
March 20, 1996
F.N.B. CORPORATION
HERMITAGE SQUARE
HERMITAGE, PENNSYLVANIA 16148-3389
PROXY STATEMENT
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The accompanying proxy is being solicited by F.N.B. Corporation (the
"Corporation") in connection with the Annual Meeting of Shareholders to be held
on April 24, 1996 pursuant to the preceding Notice of Annual Meeting. The
approximate date on which this proxy statement and the accompanying form of
proxy are first being sent to shareholders of the Corporation is March 20,
1996. If the proxy is executed and returned, it may nevertheless be revoked by
written notice to the Secretary of the Corporation at any time prior to the
voting thereof or in open meeting, or by voting in person at the Annual
Meeting. Unless the proxy is revoked or contains other instructions, the
shares represented thereby will be voted at the meeting in favor of the
election as directors of the persons named below and in favor of the proposals
as recommended by the Board of Directors.
The Board of Directors has fixed March 8, 1996 as the record date for
determination of shareholders entitled to notice of and to vote at the Annual
Meeting. As of that date, the Corporation had outstanding 8,608,465 shares of
Common Stock, 24,838 shares of Series A Cumulative Convertible Preferred Stock
("Series A Preferred Stock") and 426,800 shares of Series B Cumulative
Convertible Preferred Stock ("Series B Preferred Stock"). The holders of a
majority of the shares outstanding and entitled to vote, present in person or
represented by proxy, constitute a quorum for the meeting. Holders of Common
Stock are entitled to one vote for each share held and holders of Series A
Preferred Stock are entitled to 4.9 votes for each share held. Holders of
Series B Preferred Stock have no voting rights with respect to their shares of
Series B Preferred Stock.
ELECTION OF DIRECTORS
---------------------
The Bylaws of the Corporation provide that the Board of Directors shall
consist of not fewer than 5 nor more than 25 persons, the exact number to be
determined from time to time by the Board. The number of directors has been
fixed at 22 by the Board of Directors. Proxies will not be voted for a greater
number of persons than the number of nominees set forth below. Directors are
elected by a plurality of the votes actually cast at the meeting. Abstentions
and shares held in "street" name that are not cast at the meeting are not
counted. Neither the holders of Common Stock nor the holders of Series A
Preferred Stock have cumulative voting rights in the election of directors.
The Bylaws of the Corporation also provide for classification of the
directors with respect to the time for which they shall severally hold office.
The Board is divided into four classes with the term of office of the directors
of each class to expire at the fourth annual meeting after their election. At
each succeeding annual meeting of shareholders, successors to the directors of
the class whose term expires are elected. Each director shall hold office for
the term for which he is elected and thereafter until his successor is duly
elected and qualified or until his earlier death, resignation or removal.
Stephen J. Gurgovits, W. Richard Blackwood, William B. Campbell, John R.
Perkins, George A. Seeds and Donna C. Winner, all of whom have expressed their
willingness to serve, have been nominated for election as directors of the
Corporation to hold office for the term described and until their successors
are elected and have qualified. All of the nominees are presently Directors of
the Corporation. In the event one or more of such persons is unable or
unwilling to serve as a director for any reason (and the Corporation knows of
no such reason), the persons named in the enclosed proxy will vote for the
other nominees named and such substituted nominees as may be nominated by the
Board of Directors.
<PAGE> 5
INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS
Information concerning directors and executive officers is set forth below.
The principal occupation of each director and executive officer as of the date
hereof and for the past five years is included in the table. The information
concerning beneficial ownership of Common Stock and Series B Preferred Stock is
based upon information received as of March 1, 1996. No director or executive
officer of the Corporation is the beneficial owner of any shares of Series A
Preferred Stock.
<TABLE>
<CAPTION>
Amount and
Amount and Nature of
Nature of Beneficial
Expiration Beneficial Ownership of
of Term of Ownership of Percent Series B Percent
Name and Director Office as Common Stock of Preferred of
Principal Occupation Age Since Director (a) (b)(c) Class (d) Stock (e) Class (d)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
PETER MORTENSEN 60 1974 1998 65,110(g) 957
Chairman & President of the
Corporation; and Chairman of
First National Bank of
Pennsylvania ("First National
Bank"), a subsidiary (f)
STEPHEN J. GURGOVITS 52 1981 1996 25,978(g)(h) 0
Executive Vice President of the
Corporation since 1995, Senior
Vice President of the Corporation
1988 - 1995; and President &
Chief Executive Officer of First
National Bank
SAMUEL K. SOLLENBERGER 58 1988 1997 13,733(g) 800
Vice President of the
Corporation; and Chairman, Chief
Executive Officer of The
Metropolitan Savings Bank of Ohio
("Metropolitan"), a subsidiary,
since 1996 & President of
Metropolitan 1988-1995
W. RICHARD BLACKWOOD 54 1985 1996 84,570 1.0 8,100 1.9
President of Harry Blackwood Inc.
(insurance and real estate)
WILLIAM B. CAMPBELL 57 1975 1996 64,266(i)(j) 0
Retired Business Executive
CHARLES T. CRICKS 46 1994 1997 34,468(k) 0
President of Greenwood Home Care,
Inc.
HENRY M. EKKER, ESQ. 57 1994 1997 10,025 0
Attorney at Law, Partner of
Ekker, Kuster & McConnell
</TABLE>
2
<PAGE> 6
<TABLE>
<CAPTION>
Amount and
Amount and Nature of
Nature of Beneficial
Expiration Beneficial Ownership of
of Term of Ownership of Percent Series B Percent
Name and Director Office as Common Stock of Preferred of
Principal Occupation Age Since Director (a) (b)(c) Class (d) Stock (e) Class (d)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
THOMAS C. ELLIOTT 72 1991 1998 16,538 0
President & Treasurer, Elliott
Bros. Steel Co. (steel processor)
THOMAS W. HODGE 70 1975 1997 23,113(i) 0
Retired Business Executive
GEORGE E. LOWE, D.D.S. 71 1975 1997 5,554 0
Dentist
PAUL P. LYNCH 44 1991 1997 85,035(l) 1.0 200
Attorney at Law; President &
Chief Executive Officer, Lynch
Brothers Investments, Inc. (real
estate)
JAMES B. MILLER 68 1985 1998 439 0
Retired School Administrator
ROBERT S. MOSS 58 1994 1998 5,646 0
President, Associated Contractors
of Conneaut Lake, Inc. (general
contractors)
JOHN R. PERKINS 68 1985 1996 58,368(m) 0
Retired Vice President of the
Corporation; and Chairman
Emeritus of the Board of
Metropolitan
WILLIAM A. QUINN 67 1974 1998 2,890 0
Retired Vice President of the
Corporation; and Retired
Executive Vice President &
Cashier of First National Bank
GEORGE A. SEEDS 65 1992 1996 4,478 0
President, Findley Welding
Supply, Inc.
WILLIAM J. STRIMBU 35 1995 1999 35,209(n) 0
President, Nick Strimbu, Inc.
(common carrier)
ARCHIE O. WALLACE, ESQ. 61 1992 1999 13,750 0
Attorney at Law, Partner of
Rowley, Wallace, Keck, Karson &
St. John
</TABLE>
3
<PAGE> 7
<TABLE>
<CAPTION>
Amount and
Amount and Nature of
Nature of Beneficial
Expiration Beneficial Ownership of
of Term of Ownership of Percent Series B Percent
Name and Director Office as Common Stock of Preferred of
Principal Occupation Age Since Director (a) (b)(c) Class (d) Stock (e) Class (d)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
JOSEPH M. WALTON 69 1975 1999 17,514 650
Chairman of the Board, CEO &
Treasurer, Jamestown Paint Co.
(manufacturer of paint and
varnish)
JAMES T. WELLER 65 1975 1999 51,876 0
Chairman of the Board & CEO,
Liberty Steel Products, Inc.
(steel processor)
ERIC J. WERNER, ESQ. 33 1995 1999 2,729(o) 0
Chief Administrative Officer,
General Counsel & Secretary,
Werner Co. (manufacturer of
climbing products and aluminum
extrusions)
DONNA C. WINNER 49 1994 1996 221,500 2.6 0
Co-Owner, The Radisson Shenango,
Tara - A Country Inn,
The Winner (clothing store)
JOHN W. ROSE 46 N/A N/A 48,220 24,000 5.6
Executive Vice President of the
Corporation since 1995; President
of McAllen Capital Partners, Inc.
1992-1995; President of
Livingston Financial Group 1988-
1992 (p)
WILLIAM J. RUNDORFF 47 N/A N/A 8,023(g) 0
Executive Vice President of the
Corporation since 1995, Vice
President of the Corporation
1991-1995; and Vice President of
First National Bank since 1991
JOHN D. WATERS 49 N/A N/A 4,034 0
Vice President & CFO of the
Corporation; and Senior Vice
President & CFO of First National
Bank since June 1994; Executive
Vice President & CFO WSFS
Financial Corporation 1988-1993
<FN>
All directors, director nominees and executive officers as a group (25
persons), as the beneficial owners of 894,212 shares of the outstanding Common
Stock, owned 10.3% of the Common Stock of the Corporation as of March 1, 1996
and controlled 10.2% of the outstanding voting power of the Corporation's
issued and outstanding stock.
(a) The term of office for directors expires at the annual meeting to be held
during the year shown.
(b) Includes (1) the following shares which the officer or director has the
right to acquire within sixty days upon exercise of stock options: Mr.
Mortensen, 14,327 shares; Mr. Gurgovits, 12,008 shares; Mr. Sollenberger,
9,691 shares; Mr. Rundorff, 8,023 shares; and Mr. Waters, 367 shares; and
(2) shares which the officer or director has the right to acquire by
conversion of shares of Series B Preferred Stock. Shares of Series B
Preferred Stock are convertible into shares of Common Stock at the ratio
of 1.9479 shares of Common Stock per share of Series B Preferred Stock.
</TABLE>
4
<PAGE> 8
(c) Except as otherwise indicated, each director possesses sole voting power
and sole investment power as to all shares listed opposite his or her
name or shares these powers with his or her spouse or a wholly owned
company. This does not include the following shares held of record by
the director's spouse or children, or held in trust, and as to which
each director disclaims beneficial ownership: Mr. Mortensen, 69 shares;
Mr. Hodge, 2,084 shares; Mr. Walton, 5,111 shares; and Mr. Weller, 9,822
shares.
(d) Unless otherwise indicated, represents less than 1% of the class.
(e) Except as otherwise indicated, each director possesses sole investment
power as to all shares listed opposite his or her name or shares these
powers with his or her spouse or a wholly owned company. This does not
include 650 shares held of record by Mr. Walton's wife and as to which
Mr. Walton disclaims beneficial ownership.
(f) Mr. Mortensen also serves as a director of Southwest Banks, Inc.
(g) Does not include shares awarded as an employer matching contribution as a
part of the Corporation's 401(k) Plan.
(h) Includes 2,128 shares owned by Mr. Gurgovits' wife as a participant in
her employer's profit sharing program; and 40 shares held by Mr.
Gurgovits as trustee for his daughter.
(i) Includes 8,854 shares held in irrevocable trusts by the Trust Department
of First National Bank. A committee which includes Messrs. Campbell and
Hodge holds sole voting power over the shares, while the Trust Department
possesses sole investment power over such shares.
(j) Includes 592 shares owned by Mr. Campbell's wife and 663 shares held in
trust for his daughter, as to which Mr. Campbell shares voting and
investment power.
(k) Includes 2,715 shares held by Mr. Cricks as trustee for his children.
(l) Includes 28,671 shares owned by Mr. Lynch's wife; 786 shares owned by Mr.
Lynch as custodian for his daughters; 651 shares owned by Mr. Lynch's
wife as custodian for his daughters; and 522 shares owned by Mr. Lynch's
mother as custodian for his daughter.
(m) Includes 2,062 shares jointly owned by Mr. Perkins and his daughter; and
11,175 shares held by Mr. Perkins as trustee for certain unrelated
beneficiaries. Mr. Perkins shares voting and investment power with
respect to all such shares.
(n) Excludes 67,217 shares held by Nick Strimbu, Inc. Salaried Employees
Profit Sharing Plan of which Mr. Strimbu is a participant.
(o) Includes 2,625 shares owned by Manufacturers Indemnity and Insurance
Company of America, as to which Mr. Werner shares voting and investment
power.
(p) Mr. Rose also serves as a director of Lafayette American Bank & Trust
Company and as Chairman of the Board of Monarch Bancorporation.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Upon review of Forms 3, 4 and 5 furnished to the Corporation during or with
respect to its most recent fiscal year, the Corporation has determined that no
officer, director or 10 percent shareholder of the Corporation failed to timely
file or failed to file a report during 1995 as required by Section 16(a) of the
Securities Exchange Act of 1934, except that Mr. Blackwood did not file, on a
timely basis, a report for one transaction and Mr. Cricks did not file, on a
timely basis, a report for several transactions.
DIRECTORS' FEES
During 1995, each non-employee director was paid an annual retainer of $4,000
and $1,000 for each quarterly Board meeting attended. Additionally, certain
non-employee directors were compensated for their attendance at various
committee meetings of the Corporation's subsidiaries at rates ranging from $150
to $300 per meeting attended.
In lieu of cash payments, directors may elect to have payment of fees
deferred pursuant to a directors' deferred compensation plan. During 1995,
such deferred fees accumulated interest at an annual rate of 6.82% from January
1 through June 30 and 5.63% from July 1 through December 31. Fees continue to
be deferred until notification to terminate is received, and disbursement of
accumulated fees begins with the calendar year following the year the
participant ceases to be a director. During 1995, Messrs. Blackwood, Lynch,
Perkins,
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<PAGE> 9
Walton and Ms. Winner participated in the directors' deferred compensation
plan. Additionally, Messrs. Mortensen and Gurgovits have elected to
participate in this plan by having an amount equal to the director fees paid
to non-employee directors deferred from their base salaries.
BUSINESS RELATIONSHIPS AND RELATED TRANSACTIONS
Certain directors and executive officers of the Corporation and its
subsidiaries and their associates were customers of, and had loans outstanding
from, the Corporation's subsidiaries in the ordinary course of business during
1995. Such loans were made on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with other customers of the Corporation's subsidiaries and did not
involve more than the normal risk of collectability or present other
unfavorable features.
BOARD AND COMMITTEE MEETINGS
During 1995, the Board of Directors of the Corporation held 4 meetings. All
directors except for Messrs. Moss, Walton, Werner and Ms. Winner attended at
least 75% of the aggregate number of meetings of the Board of Directors and the
respective committees on which they serve.
The Board of Directors has an Audit Committee consisting of Messrs. Hodge,
Lynch, Moss, Quinn and Dr. Lowe. Duties of the Audit Committee include
engaging independent auditors, reviewing with the independent auditors the plan
and results of the auditing engagement, approving services provided by the
independent auditors, reviewing the independence of the independent auditors,
considering the fees charged by the independent auditors and reviewing the
adequacy of internal accounting controls. The Audit Committee met six times
during 1995.
The Board of Directors has a Compensation Committee which includes Messrs.
Blackwood, Cricks, Weller and Mortensen, who serves ex-officio. During 1995,
the Compensation Committee met five times. Duties of the Compensation
Committee include reviewing the performance of and establishing compensation
for the officers of F.N.B. Corporation and affiliate chief executive officers;
reviewing and approving the compensation of affiliate senior officers as
proposed by affiliate boards of directors; and reviewing compensation and
benefit matters that have corporate-wide significance. The Compensation
Committee also administers the 1990 Stock Option Plan (more fully described
below).
The Board of Directors has a Nominating Committee consisting of Messrs.
Campbell, Elliott, Perkins, Quinn, Seeds and Walton. During 1995, the
Nominating Committee met two times. The Nominating Committee is responsible
for selecting and recommending to the Board of Directors nominees for election
as director. The Nominating Committee will consider nominees recommended by
shareholders of the Corporation. Such recommendations must be made in writing,
include a statement of the nominee's qualifications, and be addressed to the
Nominating Committee at the address of the Corporation. Shareholders may also
nominate persons for election as directors in accordance with the procedures
set forth in the Corporation's Bylaws. Written notification of such
nomination, containing the required information, must be mailed or delivered to
the Secretary of the Corporation not less than 14 days nor more than 50 days
prior to the Annual Meeting.
PROPOSALS TO BE VOTED ON AT ANNUAL MEETING
In addition to the election of directors of the Corporation described above,
the Board of Directors of the Corporation is submitting to the shareholders for
approval at the Annual Meeting four proposals, each of which is set forth below.
The first proposal would amend the Corporation's Articles of Incorporation to
increase the number of authorized shares of Common Stock from 20,000,000 shares
to 100,000,000 shares. As of March 1, 1996, a total of 10,258,217 shares were
issued and outstanding or reserved for issuance upon exercise of outstanding
stock options and conversion of outstanding shares of Preferred Stock and for
issuance under the Dividend Reinvestment Plan, Restricted Stock Bonus Plan and
401(k) Plan. As a result, 9,741,783 shares remained available for issuance. An
increase in the number of authorized shares is necessary at this time to
6
<PAGE> 10
provide additional shares for issuance in any potential acquisitions the
Corporation might make using stock as consideration, and to ensure that shares
are available for issuance to further other corporate purposes such as
declaration of stock dividends.
The other three proposals relate to approval by the shareholders of the
Corporation's 1996 Stock Option Plan, which will further the purposes
(described below) served by the Corporation's existing stock option plan
approved by the shareholders in 1990, under which relatively few options remain
available for granting to employees; approval of the Corporation's Restricted
Stock and Incentive Bonus Plan for key employees and executive officers of the
Corporation and its subsidiaries; and approval of a Directors' Compensation
Plan providing for payment of directors' fees, which were formerly payable
solely in cash, in the form of shares of Common Stock at the election of a
director.
The Board of Directors is recommending that shareholders approve these plans
because they will promote the growth and profitability of the Corporation by:
- Enabling the Corporation to continue to attract and retain the
best available personnel to fill positions involving
substantial responsibilities.
- Providing incentives to officers, directors and key employees
by more closely aligning their economic interests with those
of the Corporation's shareholders through opportunities to
obtain an equity stake in the Corporation.
- Giving the Corporation additional flexibility in designing
appropriate economic incentives to such persons in furtherance
of these goals.
- Enabling the Corporation where appropriate to provide
incentive and other compensation to officers, directors and
key employees in shares of Common Stock rather than by making
payments in cash.
- Enabling the Corporation to attract and retain highly
qualified individuals from the community at large to serve as
directors of the Corporation.
Set forth below is a summary of each of the proposals being submitted
to the shareholders at the Annual Meeting.
PROPOSAL 1
AMENDMENT TO ARTICLES OF INCORPORATION INCREASING THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors has proposed that Article 5 of the
Corporation's Articles of Incorporation be amended to increase the number of
authorized shares of Common Stock from 20,000,000 shares, par value $2.00 per
share, to 100,000,000 shares, par value $2.00 per share. As of March 1, 1996,
a total of 8,607,065 shares of Common Stock were outstanding. In addition, a
total of 1,651,152 shares of Common Stock were reserved for issuance upon the
exercise of outstanding stock options and conversion of outstanding shares of
Preferred Stock and for issuance under the Dividend Reinvestment Plan,
Restricted Stock Bonus Plan and 401(k) Plan. The increase in the number of
authorized shares will enable the Corporation to issue stock in connection with
any potential acquisitions the Corporation might make using stock as
consideration and to further other corporate purposes such as declaring stock
dividends.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 1.
7
<PAGE> 11
PROPOSAL 2
ADOPTION OF F.N.B. CORPORATION 1996 STOCK OPTION PLAN
At the 1996 Annual Meeting, the Board is submitting the F.N.B.
Corporation 1996 Stock Option Plan (the "Option Plan") to the shareholders for
approval. A copy of the Option Plan is attached as EXHIBIT A to this proxy
statement. Set forth below is a description of the material features of and
other information relating to the Option Plan.
GENERAL INFORMATION. The Board adopted the Option Plan on February 2,
1996. The Option Plan permits the Corporation to grant to participants
incentive stock options as defined in Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code"), non-statutory stock options, (that is to say,
stock options not meeting the requirements of Section 422), stock appreciation
rights ("SARs") and limited stock appreciation rights ("LSARs"). The term
"option" as used in this Proxy Statement without further qualification means
any of the foregoing.
The Option Plan is administered by a committee, currently the
Compensation Committee of the Board of Directors of the Corporation (the
"Committee"), which is composed of not less than two members of the Board of
Directors of the Corporation, none of whom have been granted, during the one
year prior to becoming a member of the Committee or during such service,
securities pursuant to the Option Plan or any other plan of the Corporation or
its subsidiaries (except to the extent permitted by subsection (c)(2)(i) of SEC
Rule 16b-3). The members of the Committee are appointed by, and serve at the
pleasure of, the Board of Directors of the Corporation.
SHARES AVAILABLE FOR ISSUANCE. Options to purchase up to a number of
shares equal to 10% of the total issued and outstanding shares of Common Stock
at any time on a fully diluted basis may be granted under the Option Plan. As
of March 1, 1996, the maximum number of shares issuable under the Option Plan
based on this formula would be 954,113 shares. As of March 1, 1996, the market
value of the Common Stock (based on the average of the "bid" and "ask" prices
reported on the Nasdaq System) was $21.00 per share.
PERSONS WHO MAY PARTICIPATE IN THE OPTION PLAN. Those eligible for
participation in the Option Plan are key employees of the Corporation and its
subsidiaries, including directors and officers of the Corporation who are
employees, who share the responsibility for the management, growth or
protection of the business of the Corporation or any subsidiary.
PURCHASE OF SECURITIES PURSUANT TO THE OPTION PLAN; PAYMENT FOR
SECURITIES OFFERED. The purchase price at which an option may be exercised
("exercise price") will be determined by the Committee at the time the option
is granted. In no event, however, will the exercise price be less than the
"fair market value" of the Common Stock, defined in the Option Plan as the
average of the "bid" and "ask" price per share of Common Stock as quoted in a
publication chosen by the Committee on the business day immediately prior to
the date as of which fair market value is to be determined. In addition, the
exercise price of an incentive stock option granted to an optionee who owns
more than 10% of the combined voting power of all classes of the Corporation's
outstanding stock must be at least 110% of the fair market value of the Common
Stock on the date of grant.
An optionee may exercise an option by giving written notice to the
Corporation and by paying the exercise price in cash, or by surrendering other
shares of Common Stock with a market value equal to the exercise price.
All securities to be issued upon exercise of options granted under the
Option Plan will be issued by the Corporation out of its authorized but
unissued stock or out of repurchased shares held by the Corporation, or
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<PAGE> 12
partly each. Such repurchased shares held by the Corporation may have been
purchased by the Corporation on the open market or in private transactions from
time to time.
SARs. The Option Plan provides that SARs may be granted in connection
with either incentive stock options (at the time such stock option is granted)
or non-statutory stock options (at the time such stock option is granted or at
any time thereafter during the option term). SARs are exercisable only to the
extent the related stock option is exercisable and only by the same person or
persons entitled to exercise the related stock option.
Each SAR entitles the holder to surrender the related stock option, or
any portion thereof, in exchange for that number of shares of Common Stock
having an aggregate fair market value equal to the excess of the fair market
value per share of Common Stock on the date of exercise over the option
exercise price per share, multiplied by the number of shares covered by the
stock option or portion thereof being surrendered. However, the Committee, in
its discretion, may determine that the obligation of the Corporation with
respect to a SAR be paid in cash or part in cash and part in shares (subject to
certain limitations in the case of persons subject to Section 16 of the
Exchange Act at the time of exercise).
LSARs. The Option Plan provides for the grant of LSARs in connection
with all or part of an incentive stock option at the time of the grant of such
option, or in connection with a non-statutory option at the time such option is
granted or at any time thereafter during the term of such option.
Each LSAR entitles the holder of the related stock option, upon
exercise of the LSAR, to surrender the stock option and any related SAR, to the
extent unexercised, and receive an amount of cash, in respect of each share of
Common Stock subject to such stock option (or the portion thereof surrendered),
equal to the excess of the fair market value per share of the Common Stock over
the exercise price of such stock option. LSARs shall be exercisable for a
period of 60 days following the occurrence of certain events specified in the
Option Plan relating to a change in control or possible change in control of
the Corporation. No LSAR may be exercised until the holder has completed at
least six months of continuous service with the Corporation or a subsidiary
immediately following the date of grant of the LSAR.
RESALE RESTRICTIONS. A participant who is granted an option under the
Option Plan may not transfer the option other than by will or by the laws of
descent and distribution. No person other than the participant to whom an
option is granted may exercise such option during such participant's lifetime.
BENEFITS GRANTED. The table immediately following Proposal 4 below
contains certain information concerning the options which the Corporation
estimates would have been granted under the Option Plan during 1995 to the
executive officers and groups listed therein had the Option Plan been in
effect.
TERMINATION; AMENDMENT. The Option Plan terminates on February 2,
2006, subject to earlier termination by the Board. The Board has the authority
to amend or terminate the Option Plan, provided that such amendment or
termination does not adversely affect any outstanding option, SAR or LSAR
unless the holder of such option has consented in writing thereto. In
addition, no such amendment of the Option Plan shall, without prior shareholder
approval, (a) increase the number of shares which may be issued or delivered
under the Option Plan, (b) increase the total number of shares which may be
covered by any stock option or options granted to any one optionee, (c) make
any changes in the class of eligible employees or (d) extend the period set
forth in the Option Plan during which options (with or without SARs or LSARs)
may be granted.
EXERCISE OF OPTIONS UPON CERTAIN EVENTS. The Option Plan provides
that in the event a participant's employment with the Corporation is
voluntarily terminated (other than for cause) with the Corporation's consent or
as a result of retirement under a retirement plan of the Corporation, the
participant will have three (3) months to exercise any vested incentive stock
options outstanding. If a participant's employment terminates as a result of
retirement under a retirement plan of the Corporation, however, any
non-statutory stock options, whether or
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<PAGE> 13
not vested at the time of termination, may be exercised at any time until the
expiration date of such options. In the case of termination of employment
arising from disability or (in the case of non-statutory stock options)
voluntary termination of employment with the Corporation's consent, the
participant will have twelve months to exercise any vested options outstanding,
and in the case of the participant's death, the participant's estate or
beneficiary will have twelve months to exercise any vested options then
outstanding, in each case subject to any earlier expiration date of such
options.
In addition, each option granted under the Option Plan shall become
exercisable in full upon certain events relating to a change in control or
possible change in control of the Corporation, whether or not such option is
then exercisable under the stock option agreement relating to such option.
FORFEITURES AND PENALTIES; LIENS. Options issued under the Option
Plan will cease to become exercisable upon the termination of the participant's
employment by the Corporation for any reason other than voluntary termination
with the consent of the Corporation or a subsidiary, retirement under any
retirement plan of the Corporation or a subsidiary, or death. In addition, all
options granted under the Option Plan expire on the tenth anniversary of the
date of the grant (except that any incentive stock option granted to a holder
of more than 10% of the combined voting power of all classes of the
Corporation's outstanding stock expires on the fifth anniversary of the date of
the grant), and no options may be granted after February 2, 2006.
INCOME TAX CONSEQUENCES OF PLAN PARTICIPATION. Set forth below is a
brief description of certain aspects of the Federal income tax consequences of
the grant and exercise of options under the Option Plan and any subsequent
disposition of stock acquired thereby (based upon present provisions of the
Code and the Treasury regulations promulgated thereunder).
NON-STATUTORY STOCK OPTIONS. A participant who is granted a
non-statutory stock option will not realize taxable income at the time
such option is granted or when it vests. In general, a participant
will be subject to tax at ordinary income rates (see "Rate Structure"
below) in the year of exercise on the excess of the fair market value
of the shares underlying the option on the date of exercise over the
option exercise price (the "spread"). Because the spread is
compensation income for federal income tax purposes, income tax
withholding requirements apply upon exercise, and the Corporation will
receive a corresponding deduction. The participant's basis in the
shares so acquired will be equal to the fair market value thereof on
the exercise date (i.e., the option exercise price plus the spread
upon which the participant is taxed). Upon subsequent disposition of
such shares, the participant will realize long-term capital gain or
loss if he has held the shares for more than one year since the option
was exercised; otherwise, such capital gain or loss will be
short-term.
INCENTIVE STOCK OPTIONS. A participant is not taxed at the
time an incentive stock option is granted. The tax consequences upon
exercise and later disposition depend upon the participant's employee
status at certain determination points and on whether the participant
meets certain holding period requirements.
(a) If the participant was an employee of the Corporation
or any of its subsidiaries at all times during the period beginning on
the date on which the option was granted and continuing to the day
which is three months (12 months in the case of disability or death)
before the option is exercised (the "employment rule"), and if the
participant (other than a participant who dies and his or her heirs)
holds the shares of stock acquired upon exercise of the option until
the later of two years after the option grant date or one year after
the exercise date (the "holding period rule"), then, for regular tax
purposes, the participant will not realize income upon exercise or
vesting of the option and the Corporation will not be allowed an
income tax deduction at any time. The difference between the option
exercise price and the amount realized upon disposition of the shares
by the participant will constitute a long-term or short-term capital
gain or loss (depending upon whether the participant sells such stock
on the first anniversary of
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<PAGE> 14
the exercise date or waits for at least one additional day). For
purposes of the alternative minimum tax ("AMT"), the spread (as
defined above) will be recognized as an item of adjustment for the
year of exercise.
(b) If the participant meets the employment rule but
fails to observe the holding period rule, (i) the spread (as of the
option exercise date or any later date as might apply under the rules
discussed above with respect to non-statutory stock options), but not
more than the gain realized, will be treated as ordinary income, (ii)
the balance of gain (if any), or the amount of any loss, will be
treated as capital gain or loss (long-term or short-term depending on
the length of time the stock was held after the option was exercised),
(iii) any item of adjustment for AMT purposes will be eliminated, and
(iv) the Corporation will be entitled to a deduction equal to the
amount of ordinary income upon which the participant is taxed.
(c) If a participant exercises an incentive stock option
but does not meet the employment rule, the option will be treated as a
non-statutory stock option, the federal income tax treatment of which
is described above.
SARS AND LSARS. A participant is not taxed upon the grant of
SARs or LSARs. Upon exercise of such rights, he or she will be taxed
at ordinary income tax rates (subject to withholding) on the amount of
cash received and/or the current fair market value of stock received,
and the Corporation will be entitled to a corresponding deduction.
The participant's basis in any shares acquired through the exercise of
SARs and LSARs will be equal to the amount of ordinary income on which
he or she was taxed, and upon subsequent disposition, any gain or loss
will be a capital gain or loss.
RATE STRUCTURE. Except where the special holding period rules
for incentive stock options apply, a capital gain or loss is long-term
or short-term depending upon whether the stock has been held for more
than one year. For individuals under the present rate structure
provided by the Code, both ordinary income and short-term capital gain
are taxed at a maximum rate of 39.6%, and long-term capital gain is
taxed at a maximum rate of 28%.
INTEREST OF NOMINEES IN OPTION PLAN. One person nominated for
election to the Board of Directors at the 1996 Annual Meeting, Stephen J.
Gurgovits, is presently eligible to receive grants of options under the Option
Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 2.
PROPOSAL 3
ADOPTION OF F.N.B. CORPORATION RESTRICTED STOCK AND
INCENTIVE BONUS PLAN
At the 1996 Annual Meeting, the Board is submitting the F.N.B.
Corporation Restricted Stock and Incentive Bonus Plan (the "Incentive Stock
Plan") to the shareholders for approval. A copy of the Incentive Stock Plan is
attached as EXHIBIT B to this proxy statement. Set forth below is a
description of the material features of and other information relating to the
Incentive Stock Plan.
GENERAL INFORMATION
The provisions of the Incentive Stock Plan relating to grants of
restricted stock (the "Restricted Stock Provisions") were originally adopted by
the Board of Directors of the Corporation on February 18, 1994 as the "F.N.B.
Corporation Restricted Stock Bonus Plan". The Incentive Stock Plan, including
the Restricted Stock Provisions and other provisions relating to incentive
bonus grants (the "Incentive Bonus Provisions"), was adopted
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<PAGE> 15
by the Board on February 2, 1996. The Incentive Stock Plan also
incorporates, as part of the Incentive Bonus Provisions, provisions of
an incentive bonus plan adopted by the Board of Directors on January
31, 1995. The Incentive Stock Plan is administered by the Committee.
GRANTS OF RESTRICTED STOCK
ELIGIBLE PARTICIPANTS. All employees of the Corporation or any of
its subsidiaries on a full-time salaried basis are eligible to participate in
the Restricted Stock Provisions. Employees who are granted shares of Common
Stock under the Restricted Stock Provisions ("Shares") are referred to
individually as a "Restricted Stock Participant" and collectively as
"Restricted Stock Participants." The Committee selects the employees to whom
grants are made under the Restricted Stock Provisions.
GRANTS OF COMMON STOCK. Each grant of Shares under the Restricted
Stock Provisions is evidenced by a Restricted Stock Agreement, which is subject
to the vesting and forfeiture restrictions described below (see "Vesting and
Forfeiture" below) and to such other terms and conditions as the Committee may
deem appropriate in each case.
VESTING AND FORFEITURE. All Shares granted under the Restricted
Stock Provisions will vest and become freely transferable by the Restricted
Stock Participant over a period of not less than one and not more than five
years commencing on the date of grant, as determined by the Committee at the
time of the grant (the "Vesting Period"), and will be subject to forfeiture as
set forth below until vested (the period of time during which any Shares are
subject to a risk of forfeiture is referred to as the "Restricted Period").
Unless otherwise determined by the Committee, Shares shall vest in equal
installments during the Vesting Period on each anniversary of the date of grant
until all Shares awarded pursuant to such grant have vested or have been
forfeited. Shares awarded under the Restricted Stock Provisions are enrolled
in the Restricted Stock Participant's name in the Corporation's Voluntary
Dividend Reinvestment and Stock Purchase Plan ("DRP") and must remain in the
DRP throughout the Restricted Period applicable to such Shares.
VOTING AND DIVIDEND RIGHTS. Restricted Stock Participants have full
voting rights with respect to all Shares granted under the Restricted Stock
Provisions, including the Shares which have not yet vested, unless and until
such Shares are forfeited to the Corporation. In addition, Restricted Stock
Participants who are awarded Shares under the Restricted Stock Provisions have
full cash and stock dividend rights with respect to such Shares; however,
dividends must be held and reinvested under the DRP, and are subject to the
same restrictions as the Shares that are the basis for the dividend, during the
applicable Restricted Period.
TERMINATION OF EMPLOYMENT. All restrictions placed upon Shares
granted under the Restricted Stock Provisions shall lapse immediately and such
Shares shall automatically vest upon (i) termination of the Restricted Stock
Participant's employment with the Corporation (or the subsidiary of the
Corporation by which the Restricted Stock Participant is employed) if, and only
if, such termination is by reason of the Restricted Stock Participant's death,
disability covered by a disability plan of the Corporation then in effect or
retirement with the consent of the Corporation or such subsidiary; or (ii) the
occurrence of a Change in Control (as defined in the Incentive Stock Plan) of
the Corporation. In addition, the Committee may allow restrictions on the
Shares to lapse prior to the date specified in a Restricted Stock Participant's
Restricted Stock Agreement if, in the judgment of the Committee, such allowance
is necessary to avoid undue hardship or unfairness to the Restricted Stock
Participant.
Upon the effective date of a termination for any reason not specified
above, all Shares then subject to a risk of forfeiture (together with all
dividends and/or shares of Common Stock purchased under the DRP on account of
such Shares) immediately shall be forfeited and returned to the Corporation by
the administrator of the DRP without consideration or further action being
required of the Corporation.
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<PAGE> 16
TRANSFER RESTRICTIONS. A Restricted Stock Participant who is granted
Shares under the Restricted Stock Provisions may not transfer such Shares until
they are vested (other than by will or by the laws of descent and
distribution).
INCENTIVE BONUS GRANTS
ELIGIBLE PARTICIPANTS. The employees who are eligible to receive
awards under the Incentive Bonus Provisions ("Incentive Awards") are the
executive officers of the Corporation or its subsidiaries of the Corporation
who are members of a select group of management employees and who, in the
opinion of the Committee, are in a position to have a direct and significant
impact on achieving the Corporation's profit and growth objectives. Each year
the Committee designates eligible employees.
TERMS OF AWARDS. The duration of each "award period" under the
Incentive Bonus Provisions is one year corresponding to each of the
Corporation's fiscal years. No later than the end of the first calendar
quarter of each award period, the Committee selects participants ("Incentive
Bonus Participants") and determines the performance achievement targets for
each Incentive Bonus Participant and the amount of Incentive Awards the
Incentive Bonus Participant may earn upon achieving such targets in respect of
each award period based on the Committee's analysis of various factors it deems
appropriate, including similar incentive plans of comparable companies and the
relative contribution to each Incentive Bonus Participant to the overall
performance of the Corporation and its key subsidiaries.
Payout of Incentive Awards for any award period are made within 45
days after the date the Corporation receives the report of its independent
auditors on the Corporation's financial statements for such award period. Such
Incentive Awards may be paid in cash or in Common Stock or partly in each as
the Committee in its discretion determines. If any portion is paid in
authorized but unissued shares, or treasury shares, the Common Stock is valued
at the average of the "bid" and "ask" prices of the Common Stock on the
over-the-counter market on the business day next preceding the date of payment.
The Corporation also may pay all or part of an Incentive Award payable in
Common Stock by purchasing shares in the open market on a date reasonably close
to the date of payment. Payouts of Incentive Awards may also be made pursuant
to deferred compensation arrangements, as the Committee may determine in its
discretion.
The Committee has the right, in its discretion, to modify the amount
of any Incentive Award earned by any Incentive Bonus Participant in respect of
any award period if the Committee in its sole discretion determines that it is
reasonable to do so (i) as a result of extraordinary transactions to which the
Corporation or any of its subsidiaries was subject or material accounting
changes or adjustments applicable to the Corporation in respect of that award
period or (ii) based on such quantitative factors as the Committee deems
appropriate.
RESTRICTIONS ON STOCK GRANTS. Any shares of Common Stock granted to
an Incentive Bonus Participant must be held by the Incentive Bonus Participant
for a minimum of six months prior to any disposition thereof. In addition, the
Committee in its discretion may require that any such shares of Common Stock
not "vest" for a period of up to five years and otherwise be subject to such
restrictions (including restrictions identical to those which may be imposed on
restricted stock grants under the Restricted Stock Provisions), with the terms
and conditions of such restrictions and "vesting", and related forfeiture
provisions, to be determined by the Committee in its discretion, subject to the
provisions described above under "Grants of Restricted Stock -- Termination of
Employment".
With certain exceptions, the payout of an Incentive Award to an
Incentive Bonus Participant is subject to the Incentive Bonus Participant
continuing in the employ of the Corporation or a subsidiary thereof, as the
case may be, through the date the payout is made. In the event an Incentive
Bonus Participant's employment terminates prior to the date the payout is made
for reasons other than voluntary termination of employment or termination of
employment by the Corporation for cause, the Committee will have sole
discretion to determine
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<PAGE> 17
whether and to what extent an Incentive Award will be paid out to the Incentive
Bonus Participant or to his or her beneficiary; provided that if such
termination occurs following a Change of Control and the Incentive Bonus
Participant would otherwise be entitled to payment of an Incentive Award in
respect of the preceding award period, then such Incentive Award shall be paid
to such Incentive Bonus Participant unless the Incentive Bonus Participant's
employment was terminated for cause or the Incentive Bonus Participant
voluntarily terminated his employment other than for good reason, as the terms
"cause" and "good reason" are defined in the Incentive Bonus Provisions.
Any shares of Common Stock granted under the Incentive Bonus
Provisions are enrolled in the Incentive Bonus Participant's name in the DRP.
The Incentive Bonus Participant is entitled to exercise all rights to such
shares, including the right to withdraw such shares from the DRP, in accordance
with the terms of the DRP (subject to any restrictions on such shares that may
be imposed by the Committee in accordance with the Incentive Stock Plan).
SECURITIES TO BE OFFERED
The total number of shares of Common Stock that may be issued pursuant
to the Restricted Stock Provisions in any calendar year may not exceed one
percent (1%) of the highest number of the Corporation's issued and outstanding
Common Stock on a fully diluted basis, and the total number of shares of Common
Stock that may be issued pursuant to the Incentive Bonus Provisions in respect
of any award period may not exceed one percent (1%) of the highest number of
the Corporation's issued and outstanding Common Stock in such award period on a
fully diluted basis, in each case subject to adjustment as provided in the
Incentive Stock Plan in the case of any change in the outstanding shares of
Common Stock of the Corporation. Such shares may be either authorized but
unissued shares or shares repurchased by the Corporation, or partly each.
Shares that are awarded under the Incentive Stock Plan but are later forfeited
shall again become available for grant under the Incentive Stock Plan. As of
March 1, 1996, a total of 8,161 Shares had been issued pursuant to the
Restricted Stock Provisions (all of which were granted pursuant to the
Restricted Stock Bonus Plan prior to the incorporation of the terms of such
plan into the Incentive Stock Plan).
AMENDMENT
The Incentive Stock Plan provides that the Board of Directors of the
Corporation may amend or terminate the Incentive Stock Plan at any time.
However, no alteration, amendment, revocation or termination of the Incentive
Stock Plan that adversely affects the rights of holders of shares of Common
Stock granted under the Incentive Stock Plan will be made without their written
consent.
BENEFITS GRANTED
The table immediately following Proposal 4 below contains certain
information concerning the benefits which the Corporation estimates would have
been granted under the Restricted Stock Provisions of the Incentive Stock Plan
during 1995 to the executive officers and groups listed therein had the
Incentive Stock Plan been in effect.
INTEREST OF NOMINEES IN INCENTIVE STOCK PLAN
One person nominated for election to the Board of Directors at the
1996 Annual Meeting, Mr. Gurgovits, is presently eligible to receive grants
under this Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 3.
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<PAGE> 18
PROPOSAL 4
ADOPTION OF F.N.B. CORPORATION
DIRECTORS' COMPENSATION PLAN
At the 1996 Annual Meeting, the Board is submitting the F.N.B.
Corporation Directors' Compensation Plan (the "Directors' Plan") to the
shareholders for approval. A copy of the Directors' Plan is attached as
EXHIBIT C to this proxy statement. Set forth below is a description of the
material features of and other information relating to the Directors' Plan.
GENERAL INFORMATION. The Directors' Plan was adopted by the Board of
Directors of the Corporation on February 2, 1996 subject to approval by the
shareholders at the Annual Meeting. The purposes of the Directors' Plan
generally are to promote the interests of the Corporation and its shareholders
by attracting and retaining Directors capable of furthering the future success
of the Corporation and by aligning their economic interests more closely with
those of the Corporation's shareholders.
SECURITIES TO BE OFFERED. The total number of shares of Common Stock
that may be issued pursuant to the Directors' Plan in any calendar year may not
exceed one percent (1%) of the highest number of the Corporation's issued and
outstanding Common Stock on a fully diluted basis, subject to adjustment. Such
shares may be either authorized and unissued shares, treasury shares or shares
purchased by the Corporation on the open market.
ELIGIBLE PARTICIPANTS. Each Director of the Corporation or any
subsidiary of the Corporation ("Subsidiary") is eligible to participate in the
Directors' Plan. Currently 57 persons are eligible to participate.
ELECTION TO RECEIVE SHARES. Each Director of the Corporation or any
Subsidiary may at any time elect to receive (a "Share Election") shares of
Common Stock in lieu of cash as his or her compensation for attendance at
meetings of the Board of Directors of the Corporation or a Subsidiary and
Committees of the Board of Directors of the Corporation or a Subsidiary for any
period after the period beginning on the date such election is made and ending
on the date which is six months later (the "Initial Period"). Notwithstanding
any contrary provision of the Plan, any Share Election made by a Director who
is subject to Section 16(b) of the Exchange Act ("Section 16 Person") must be
irrevocable and must be made by such Director at least six (6) months prior to
the effective date of such Share Election. The number of shares of Common
Stock to be granted to each Director who makes such election shall equal the
number of shares of Common Stock that may be purchased (or having a market
value equal to) the amount of cash otherwise payable to such Director by the
Corporation for attendance at such meetings.
PAYMENT OF FEES DURING INITIAL PERIOD. A Director may elect (an
"Initial Period Deferral Election") to delay for six months receipt of all or a
portion of the cash fees payable to the Director during the Initial Period.
Any cash fees as to which an Initial Period Deferral Election has been made
shall be maintained and held in a separate memorandum account and shall accrue
interest at an annual rate equal to the longest term individual retirement
account rate paid from time to time by First National Bank of Pennsylvania.
A Director who has made an Initial Period Deferral Election shall be
deemed to have elected to receive the Initial Period Fees in Shares rather than
in cash. Such election shall become effective on the date six (6) months after
the Corporation's receipt of the notice containing such election.
DEFERRAL OF SHARES OR INITIAL PERIOD FEES. A Director may elect on or
before December 31st of any year to defer receipt of all of his annual fees
payable under the Directors' Plan in Shares for the period beginning on January
1 of the following calendar year and continuing until the Corporation receives
written notice from the Director terminating such deferral (a "Share Deferral
Election"); provided, however, that (i) any Share Deferral
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<PAGE> 19
Election for fees payable in respect of calendar year 1996 must be made on or
before the date which is thirty days after the date on which the Directors'
Plan is approved by the shareholders of the Corporation and (ii) the Director
may make a Share Deferral Election for the calendar year in which he or she is
first elected to the Board of Directors on or before the date thirty days after
the date of his or her initial election to the Board of Directors. Such
deferred fees will be maintained and held for the Director in a separate
memorandum account.
The shares of Common Stock to be received by a Director who has made a
Share Deferral Election with respect to such shares shall be issued to the
Director in annual installments as nearly equal in number as possible over a
ten-year period (or such longer or shorter period as the Committee may
determine) beginning with the first day of the calendar year immediately
following the year in which the Director ceases to be a director. The Director
shall not be deemed to be the legal or beneficial owner of any Shares until
such Shares are distributed by the Corporation to the Director except that all
stock dividends otherwise payable on such Shares shall be credited to the
Director's memorandum account.
If a Director has previously deferred cash fees, the Director may
elect to receive all or a percentage of the cash fees previously deferred in
Shares rather than in cash.
In the event a Director ceases to be a director of the Corporation and
becomes a proprietor, officer, partner, employee, or otherwise becomes
affiliated with any business that is in competition with the Corporation, the
entire balance of his or her deferred fees may, if directed by the Board of
Directors, in its sole discretion, be issued immediately to the Director.
PROVISIONS RELATING TO SHARES ISSUED UNDER DIRECTORS' PLAN. The
shares of Common Stock granted under the Directors' Plan may be treasury shares
or newly-issued shares or may be shares purchased by the Corporation on the
open market and delivered to any Director. In cases where authorized but
unissued or treasury shares of Common Stock are used, the Common Stock shall be
valued at the average of the "bid" and "ask" prices of the Common Stock in the
over-the-counter market on the business day next preceding the date of the
Board or Committee meeting. In cases where the Corporation purchases the
shares of Common Stock, it shall do so as of a date reasonably close to the
date of the Board or Committee meeting.
All shares of Common Stock issued to a Director under the Directors'
Plan shall, at the time of issuance to the Director, be enrolled in the
Director's name in the DRP. The Director shall be entitled to exercise all
rights to such shares, including the right to withdraw such shares from the
DRP, in accordance with the terms of the DRP.
AMENDMENT. The Directors' Plan provides that the Board of Directors
of the Corporation may amend or terminate the Directors' Plan at any time,
provided that, if shareholder approval of such action is necessary in order to
ensure compliance with Rule 16b-3, such action shall be subject to approval by
the holders of the Shares by the vote and in the manner required by Rule 16b-3.
BENEFITS GRANTED. The table immediately following this Proposal 4
contains certain information concerning the benefits which the Corporation
estimates would have been granted under the Directors' Plan to the persons and
groups listed had the Directors' Plan been in effect during 1995.
INTEREST OF NOMINEES IN DIRECTORS' PLAN. Each of the nominees for
election to the Board of Directors at the 1996 Annual Meeting will be eligible
to receive shares of Common Stock under the Directors' Plan upon his or her
election at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 4.
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<PAGE> 20
The following table sets forth the benefits that the Corporation
estimates would have been provided under the foregoing plans during 1995 had
such plans been in effect (in the case of the Option Plan, based on the options
granted in 1995 under the Corporation's 1990 Stock Option Plan, in the case of
the Incentive Stock Plan and Restricted Stock Bonus Plan, based on the actual
amounts earned during 1995, and in the case of the Directors' Plan, based on
the actual directors' fees paid during 1995 assuming that all directors would
have elected to receive such fees in Common Stock). There can be no assurance
that such estimates will accurately reflect future benefits to be granted under
such plans, as the benefits to be granted in the future to the listed groups
and officers cannot be determined. See Summary Compensation Table on page 20
for the titles and positions of the Named Executives.
<TABLE>
<CAPTION>
Option Plan Restricted Stock and Incentive Bonus Plan Directors' Plan
Restricted Stock Incentive Bonus
Provisions Provisions
# of Dollar # of Dollar # of Dollar # of Dollar
Name and Position Options Value(1) Shares(2) Value Shares(2) Value Shares(2) Value
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Peter Mortensen 8,400 63,105 None -- 4,603 99,243 557 12,000
Stephen J. Gurgovits 7,350 55,217 None -- 3,628 78,232 510 11,000
Samuel K. Sollenberger 6,300 47,329 None -- 1,076 23,211 None --
William J. Rundorff 6,300 47,329 None -- 1,625 35,038 None --
John D. Waters 1,837 13,800 None -- 783 16,875 None --
All executive officers as a group 30,187 226,780 None -- 12,905 278,266 1,067 23,000
All non-executive directors as a None -- None -- None -- 22,724 490,000
group
All non-executive employees as a 52,500 394,406 2,551 55,000 6,757 145,700 None --
group
<FN>
(1) Dollar value of options is based on the product of (i) the difference between
the average of the "bid" and "ask" prices per share for the Common Stock on the
Nasdaq System on December 29, 1995 ($21.5625) and the exercise price per share
of the options adjusted for stock dividends and (ii) the number of shares of
Common Stock obtainable upon exercise of the options.
(2) The number of shares is based on the average of the "bid" and "ask" prices per
share for the Common Stock on the Nasdaq System on December 29, 1995
($21.5625), divided into the dollar value of amounts earned.
</TABLE>
COMPENSATION COMMITTEE REPORT
To Our Shareholders:
OVERALL POLICY
The central objective of the Corporation's compensation philosophy is
to provide fair and reasonable compensation to its executive officers and
employees. The Compensation Committee of the Corporation (the "Committee")
believes that successful achievement of this objective attracts and retains
qualified executives, recognizes and rewards individual and collective
contributions and maximizes shareholder value by fostering consistently
improving financial performance.
17
<PAGE> 21
The process for determining fair and reasonable compensation for the
executive officers of the Corporation, as well as the senior officers of its
principal operating subsidiaries, has been carried out by the Board's Committee
for each year covered by the Summary Compensation Table. In that period, at
least a majority of the Committee has been comprised of "outside" directors,
that is, persons not in the employ of the Corporation or any of its
subsidiaries and who are not related by blood or marriage to any executive or
senior officer.
As a matter of long-standing, general practice, the specific amounts
of cash compensation payable to each of the executive and senior officers for
their services in a particular year are fixed at or before the beginning of the
year, upon the Committee's recommendation and the Board's final approval. The
Committee's compensation strategy for 1995 was approved in November of 1994 and
formal deliberation took place in December of 1994 with final Board approval
given in January of 1995.
COMPENSATION COMPONENTS
The Corporation compensates its executive officers in three ways: (1)
base salary, (2) performance-based compensation and (3) long-term incentive
compensation. Each of these components of compensation is discussed in more
detail below.
The annual base salary of executive officers is the primary method for
payment of cash compensation to executive officers. For 1995 the factors and
criteria upon which the base salaries of the Corporation's executive officers,
including Peter Mortensen, the Chief Executive Officer of the Corporation, were
determined included (i) the combined value of all cash and non-cash benefits
currently received by the officer, (ii) the officer's compensation history,
(iii) the financial condition of the Corporation and the subsidiary with which
the officer is employed, (iv) the performance of the business units under the
officer's management and (v) the officer's individual performance. The
Committee did not assign a particular weight to any of these factors. Based
upon its review of these factors, the Committee granted no or small base salary
increases to its executive officers for 1995.
In determining base salary and other compensation for executives, the
Committee also reviewed compensation and financial performance survey data,
assembled and published by several recognized independent sources, describing
patterns and amounts paid to other individuals performing the same or similar
jobs as the Corporation's executive officers at financial institutions of
comparable size. Those peer institutions are compared on both a national and a
regional basis. As a general policy, the Committee relies on this information
as a guide in determining fair and reasonable compensation for the
Corporation's executive officers. The overall cash compensation paid in 1994
to the Corporation's executive officers as a group is at or about the 39%
percentile of the comparative group, with Mr. Mortensen compensated at about
the 40% percentile.
Performance-based compensation is awarded to executive officers and
other employees under a Performance Compensation Program (described below under
"Performance Compensation Program") operated by the Corporation's bank and
savings and loan subsidiaries. Awards are based upon the attainment by the
subsidiary with which the officer or employee is employed of various
performance factors at the beginning of the year, including growth,
profitability, asset quality and productivity. Each of these factors is broken
down into various additional components, each of which is accorded different
weights for each of the Corporation's different subsidiaries. Beginning in
1995, Messrs. Mortensen, Gurgovits, Rundorff, Sollenberger and one other
executive officer ceased to be eligible to participate in the Performance
Compensation Program and instead became eligible to participate in the
incentive bonus plan described below.
In 1995, the Corporation adopted an incentive bonus plan (which will
become part of the Restricted Stock and Incentive Bonus Plan being submitted to
the shareholders at the Annual Meeting) pursuant to
18
<PAGE> 22
which certain executive and other senior officers became eligible to receive
incentive bonuses based on performance factors established by the Committee at
the beginning of 1995. Such bonuses were paid in February 1996 following the
Committee's determination that such performance targets were met. The
Committee contemplates that the persons listed in the Summary Compensation
Table will be eligible to participate in the incentive bonus aspect of the
Restricted Stock and Incentive Bonus Plan in respect of each calendar year in
which that Plan is in effect and will not participate in the Performance
Compensation Program in respect of that calendar year.
In 1995, the Committee granted incentive compensation in the form of
stock options to its executive officers and other senior officers under the
Corporation's 1990 Stock Option Plan (see "Stock Options" below). The
Committee has historically granted stock options as a means of providing
long-term incentives to employees, rather than as a reward for past
performance. All stock options granted by the Corporation under the 1990 Plan
"vest" incrementally over a five-year period based on the optionee's continued
employment by the Corporation or one of its principal subsidiaries. The
Committee therefore based its 1995 decisions with regard to the stock options
granted to its executive officers (including Mr. Mortensen, the CEO) primarily
upon the total number of options available for grant and the officer's
position, with adjustments for individual performance where appropriate.
The Committee also granted restricted stock in 1995 to certain
executive and other senior officers under the Corporation's Restricted Stock
Bonus Plan approved in early 1995 by the Board (which will become part of the
Restricted Stock and Incentive Bonus Plan being submitted to the shareholders
at the Annual Meeting). None of the executive officers of the Corporation
included in the Summary Compensation Table received such restricted stock
grants in 1995. The granting of restricted stock reflects the Committee's
desire to increase the portion of executive compensation paid in the form of
stock. Such grants are also a key component of the Committee's long-term
incentive compensation policy because restricted stock granted under such Plan
only "vests" incrementally over a five-year period based on the recipient's
continued employment by the Corporation or one of its principal subsidiaries.
The continued shift in emphasis toward long-term incentive
compensation by utilization of restricted stock and stock options is designed
to more closely relate executive pay to performance and put more executive
compensation "at risk", thus enhancing the officers' focus on maximizing
shareholder value and tying executive compensation to long-term shareholder
value. The Restricted Stock and Incentive Bonus Plan described below,
together with the proposed adoption of the 1996 Stock Option Plan, also
reflect this increased emphasis on long-term incentive compensation
based on restricted stock and option grants.
Respectfully submitted,
James T. Weller, Chairman
George A. Seeds
W. Richard Blackwood
Charles T. Cricks
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Mortensen, Chairman and President of the Corporation, served as an
ex-officio member of the Corporation's Compensation Committee, and did not
participate in any deliberations involving his own compensation.
Mr. Mortensen serves on the board of directors of Liberty Steel
Products, Inc., a closely held corporation which is wholly owned by Mr. Weller
and his family. Mr. Weller, a member of the Corporation's Compensation
Committee, is Chairman and Chief Executive Officer of Liberty Steel Products,
Inc.
19
<PAGE> 23
Executive Remuneration
The following table sets forth information regarding remuneration paid
by the Corporation and its subsidiaries for the years shown to the Chairman and
President of the Corporation and the four other most highly compensated
executive officers of the Corporation whose aggregate annual remuneration
exceeded $100,000 (the "Named Executive Officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Name and Other Restricted Securities LTIP All Other
Principal Salary Bonus Annual Stock Underlying Payouts Compensation
Position Year ($) ($) Compensation(3) Awards ($) Options/ ($) ($)
($) SARs
(#)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Peter Mortensen 1995 347,004 99,243(1) None 8,400 None 35,472(4),(5)
Chairman and President 1994 347,005 12,826(2) 13,981 None 6,615 None 45,196
of the Corporation; 1993 347,005 None None 6,945 None 39,261
Chairman of First
National Bank
Stephen J. Gurgovits 1995 250,008 78,232(1) None 7,350 None 22,256(4),(5)
Executive Vice 1994 250,008 9,101(2) 6,710 None 5,512 None 25,232
President of the 1993 250,000 None None 5,787 None 19,335
Corporation; President
and CEO of First
National Bank
Samuel K. Sollenberger 1995 161,000 23,211(1) None 6,300 None 7,207(4)
Vice President of the 1994 161,000 9,467(2) None 4,410 None 7,325
Corporation; Chairman 1993 161,000 None None 4,630 None 6,562
and CEO of
Metropolitan
William J. Rundorff 1995 147,012 35,038(1) None 6,300 None 9,885(4),(5)
Executive Vice 1994 140,004 5,376(2) None 4,410 None 12,080
President of the 1993 136,500 669(2) None 3,472 None 8,908
Corporation; Vice
President of First
National Bank
John D. Waters 1995 118,008 16,875(1) None 1,837 None 0
Vice President and CFO 1994 62,181 2,413(2) 28,974 None 0 None 0
of the Corporation;
Senior Vice President
and CFO of First
National Bank
</TABLE>
20
<PAGE> 24
(1) Amount earned by the officer under the Corporation's Incentive Bonus Plan.
(2) Amount earned by the officer under the Corporation's Performance
Compensation Program.
(3) The aggregate amount of payments made to each officer for perquisites or
other personal benefits did not exceed 10% of salary and bonus except that in
1994, Messrs. Mortensen and Gurgovits received $13,981 and $6,710, respectively,
as a reimbursement due to increases in the Federal income tax rates. Also in
1994, Mr. Waters received a relocation allowance of $28,974.
(4) Includes the following amounts paid or accrued by the Corporation under the
following programs to Messrs. Mortensen, Gurgovits, Sollenberger and Rundorff,
respectively: 401(k) Plan (employer matching contributions), $4,500, $4,500,
$4,324 and $4,481; Basic Retirement Plan (employer matching contributions
relating to 401(k) Plan), $12,592, $6,485, $882, and $1,377; Supplemental
Disability, $8,357, $4,647, $2,001, and $0.
(5) Includes the following amounts which represent the present value of imputed
interest on the Corporation's portion of split dollar life insurance premiums
paid during 1995: Mr. Mortensen, $10,023; Mr. Gurgovits, $6,625; and Mr.
Rundorff, $4,027. These premiums will be returned to the Corporation upon the
earlier of either the death of the covered employee or termination of the
policy.
DEFERRED COMPENSATION
In addition to the Basic Retirement Plan (more fully described below),
the Board of Directors of First National Bank has established a Deferred
Compensation Plan (the "Compensation Plan") for Messrs. Mortensen and Gurgovits
which commenced January 1, 1986. The Compensation Plan provides for payments
of annual benefits of $62,000 for Mr. Mortensen and $25,000 for Mr. Gurgovits
for a period of ten years commencing upon the occurrence of: (a) retirement
from First National Bank; (b) complete and total disability; or (c) the death
of the participant in the event such death occurs prior to retirement.
PERFORMANCE COMPENSATION PROGRAM
The Corporation's banking subsidiaries have established a Performance
Compensation Program ("Program") in which all employees are eligible to
participate. The amount of the award available for distribution is based upon
that subsidiary's performance with regard to Performance Factors. In 1995, the
Performance Factors focused on loan and deposit growth, profitability, asset
quality and productivity. The Program also establishes a range of payout
percentages which reflect that subsidiary's success in achieving these
Performance Factors. This payout percentage is uniformly applied to the gross
salaries of each eligible employee. In 1995, Messrs. Mortensen, Gurgovits,
Rundorff and Sollenberger did not participate in the Program.
STOCK OPTIONS
The Corporation's 1990 Stock Option Plan (the "1990 Plan") authorizes
the grant to key employees of the Corporation and its subsidiaries of incentive
stock options, intended to qualify under Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"), non-statutory stock options (not
intended to qualify under Section 422 of the Code), stock appreciation rights
("SARs") and limited stock appreciation rights ("LSARs"). The purposes of the
1990 Plan are to promote growth and profitability of the Corporation by
enabling it to attract and retain the best available personnel for positions of
substantial responsibility, and to provide key employees with an opportunity
for investment in the Corporation's Common Stock and to give them an additional
incentive to increase their efforts on behalf of the Corporation and its
subsidiaries.
The 1990 Plan is administered by the Committee, which has the
authority to determine and designate the key employees to whom options are to
be granted, the number of shares to be optioned, the option exercise price, the
type of option, the option period, the restrictions, if any, on the shares, if
any, issuable upon the exercise of the option, the terms for payment of the
option price and the terms and
21
<PAGE> 25
conditions of each option. The Committee may include SARs and LSARs in
connection with an incentive stock option or a non-statutory stock option,
either at the time of grant or, in the case of a non-statutory stock option, at
any time thereafter during the term of the stock option.
Consideration for the options to be granted under the Plan is provided
by the optionee's past, present and expected future contributions to the
management of the Corporation. No monetary consideration is provided by the
optionees with respect to the grant of the options.
An aggregate of 428,830 shares of Common Stock has been reserved for
issuance upon exercise of stock options granted under the Plan. Options which
have been granted under the Plan will expire no later than ten years from the
date of grant. Shares not purchased pursuant to options which expire or are
terminated unexercised shall again be available for purposes of the Plan. To
the extent that SARs or LSARs are exercised, the stock option in connection
with which such SARs or LSARs were granted shall be deemed to have been
exercised and the shares of Common Stock which otherwise would have been issued
upon the exercise of such stock option shall not be the subject of any further
grant of options under the Plan.
Under the Plan, the exercise price for incentive stock options or
non-statutory stock options to purchase unrestricted shares is to be determined
by the Committee, but may not be less than the fair market value of the Common
Stock on the day before the option is granted. The exercise price for
non-statutory stock options to purchase restricted shares shall be fixed by the
Committee, but may not be less than the fair value of the Common Stock on the
date of grant, as determined by the Committee.
During 1995, stock options covering a total of 82,687 shares of Common
Stock were granted to 21 employees under the Plan. As of December 31, 1995, no
options granted under the Plan had been exercised by the executive officers of
the Corporation. The following tables show certain information relating to
stock options granted during the last fiscal year and aggregated stock options
for the named executive officers and all unexercised options held by such
officers as of December 31, 1995.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation
Individual Grants(1) for Option Term(3)
(a) (b) (c) (d) (e) (f) (g)
Securities % of Total
Underlying Options/SARs Exercise
Options/SARs Granted to or Base
Granted2 Employees in Price Expiration
Name (#) Fiscal Year ($/Sh) Date 5% ($) 10% ($)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Mr. Mortensen 8,400 10.7 14.05 01/20/05 192,242 306,113
Mr. Gurgovits 7,350 9.3 14.05 01/20/05 168,211 267,849
Mr. Sollenberger 6,300 8.0 14.05 01/20/05 144,181 229,585
Mr. Rundorff 6,300 8.0 14.05 01/20/05 144,181 229,585
Mr. Waters 1,837 2.3 14.05 01/20/05 42,041 66,944
</TABLE>
22
<PAGE> 26
(1) Adjusted for 5% stock dividend.
(2) Options were granted on January 20, 1995 and are 20% vested on each of the
first through fifth anniversaries of the grant date.
(3) In order for the gains reported in columns (f) and (g) to be realized over
the ten-year term of the option, the stock price at the end of the period would
be $22.89 and $36.44 respectively, reflecting increases in the overall market
price of each share of Common Stock of the Corporation by approximately 63% and
159%, respectively.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money Options
Options at 12/31/95 at 12/31/95($) 1
Shares
Acquired Value
on Realized
Name Exercise ($) Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Mr. Mortensen 0 0 8,476 20,776 98,980 189,251
Mr. Gurgovits 0 0 7,063 17,662 82,475 60,263
Mr. Sollenberger 0 0 5,651 14,550 65,984 131,293
Mr. Rundorff 0 0 4,458 13,369 51,192 116,848
Mr. Waters 0 0 0 1,837 0 13,456
</TABLE>
(1) Represents the difference between the aggregate market value at December 31,
1995 of the shares subject to the options and the aggregate option price of
those shares.
23
<PAGE> 27
RETIREMENT BENEFITS
The following table illustrates the annual benefits payable in 1996
under the life annuity option of the First National pension plan and the Basic
Retirement Plan (more fully described below) upon normal retirement at age 62.
ESTIMATED ANNUAL PENSION PAYMENTS
<TABLE>
<CAPTION>
Average Annual Earnings Years of Service
for 5 Years Preceding
Retirement 10 15 20 25 or More
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$125,000 $ 43,309 $ 53,109 $ 62,909 $ 72,709
$150,000 $ 54,434 $ 66,359 $ 78,284 $ 90,209
$175,000 $ 71,934 $ 83,859 $ 95,784 $107,709
$200,000 $ 89,434 $101,359 $113,284 $125,209
$225,000 $106,934 $118,859 $130,784 $142,709
$250,000 $124,434 $136,359 $148,284 $160,209
$275,000 $141,934 $153,859 $165,784 $177,709
$300,000 $159,434 $171,359 $183,284 $195,209
$325,000 $176,934 $188,859 $200,784 $212,709
$350,000 $194,434 $206,359 $218,284 $230,209
$375,000 $211,934 $223,859 $235,784 $247,709
$400,000 $229,434 $241,359 $253,284 $265,209
$500,000 $299,434 $311,359 $323,284 $335,209
</TABLE>
The retirement benefit for each employee covered by the pension plan
is a monthly benefit in the form of a Five Year Certain and Life annuity, equal
to 1.2% of Final Average Earnings plus .5% of Final Average Earnings in excess
of the employee's Covered Compensation (as defined by Section 401(1)(5)(E) of
the Internal Revenue Code) times Years of Service, not to exceed twenty-five
(25) years. The Final Average Earnings figure is calculated using the highest
sixty (60) consecutive months of earnings of the last 120 months of service as
an employee. The benefits listed above are not subject to deduction for Social
Security.
Compensation included for computation of benefits is base salary as
indicated in column (c) of the Summary Compensation Table. As of December 31,
1995, credited years of service under the plan were as follows: Mr. Mortensen,
37 years; Mr. Gurgovits, 34 years; Mr. Rundorff, five years and Mr. Waters, one
year.
24
<PAGE> 28
The following table illustrates the annual benefits payable in 1996
under the life annuity option of the Metropolitan pension plan and the Basic
Retirement Plan (more fully described below) upon normal retirement at age 65.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL PENSION PAYMENTS
Highest Average Total Years of Service
Compensation for Any 5
Consecutive Years of 10
Years Preceding Retirement
10 15 20 25 30 or More
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$100,000 $25,397 $ 32,850 $ 40,303 $ 47,756 $ 55,209
$125,000 $34,531 $ 44,076 $ 53,620 $ 63,164 $ 72,709
$150,000 $43,665 $ 55,301 $ 66,937 $ 78,573 $ 90,209
$175,000 $61,165 $ 72,801 $ 84,437 $ 96,073 $107,709
$200,000 $78,665 $ 90,301 $101,937 $113,573 $125,209
$225,000 $96,165 $107,801 $119,437 $131,073 $142,709
</TABLE>
The retirement benefit for each employee covered by the plan is a
monthly benefit for life equal to 28% of Average Monthly Compensation up to the
employee's Covered Compensation (as defined by Section 401(l)(5)(E) of the
Internal Revenue Code) and 47% of said compensation in excess of the employee's
Covered Compensation. The Average Monthly Compensation is calculated by
determining the highest Average Total Compensation of any five consecutive
years during the last ten years of employment. The monthly benefit of any
employee with less than 30 years of service with Metropolitan is reduced by
1/30th for each year of service less than 30. The amount of the contribution,
payment or accrual with respect to a specified person is not and cannot be
separately or individually calculated by the actuaries for the plan. The
benefits listed above are not subject to deduction for Social Security.
Compensation included for computation of benefits is total cash
compensation as indicated in columns (c) and (d) of the Summary Compensation
Table, including bonuses. As of December 31, 1995, Mr. Sollenberger was
credited with seven years of service under the plan.
BASIC RETIREMENT PLAN
The Basic Retirement Plan (the "BRP") is an unfunded plan providing
supplemental retirement benefits to those officers of the Corporation and its
subsidiaries who are designated by the Board of Directors of the Corporation
(the "Board"). The basic benefits under the BRP, payable when a participant
retires at or after the normal retirement date under his employer's defined
benefit or defined contribution plan ("Primary Qualified Plan"), is a monthly
benefit equal to either 50%, 60% or 70% (as determined by the Board) of the
participant's highest average monthly cash compensation during any five
consecutive calendar years within the last ten calendar years of employment.
This amount is reduced by the monthly benefit to which the participant would be
entitled under Social Security at normal retirement under the Primary Qualified
Plan in which he participates and (to the extent the benefit relates to
employer contributions other than matching contributions) under other benefit
plans designated by the Board. The benefit also includes credits equal to
matching stock contributions which certain participants were prevented from
receiving pursuant to the Corporation's 401(k) Plan due to limits imposed by
the Internal Revenue Code.
25
<PAGE> 29
The BRP contains provisions for reducing the basic benefit described
above if the participant retires before his normal retirement age but on or
after the early retirement date permitted by the Primary Qualified Plan. The
participant's rights to benefits under the BRP vest pursuant to a schedule set
forth in the BRP which takes into account years of participation in the BRP and
years of credited service under the participant's Primary Qualified Plan. A
participant automatically becomes 100% vested if he is employed with the
Corporation or a subsidiary on his normal retirement date, if a "change in
control" (as defined in the BRP) occurs, or in the event of his death or total
and permanent disability. Benefits are forfeited in the event a participant's
employment is terminated for cause or if the participant retires before the
early retirement date provided in his Primary Qualified Plan.
The tables shown above under "Retirement Benefits" include benefits
payable under the BRP in illustrating the annual benefits payable to the named
executive officers who participate in the pension plans described above.
EMPLOYMENT AGREEMENTS
The Corporation has entered into Employment Agreements (collectively,
the "Agreements") with Messrs. Mortensen, Gurgovits, Sollenberger, Rundorff and
Waters. Each of the Agreements provide that on December 31 of each year, the
term of employment of each executive officer will be automatically extended to
December 31 of the third calendar year thereafter (unless the Corporation or
the respective executive officer fixes the expiration date of the term of
employment in accordance with provisions contained in the Agreements) and that
the officer will continue to be employed throughout that term at not less than
his current base salary.
The term shall not be extended to a date beyond December 31 of the
year during which the executive officer reaches age 62, except for Mr.
Mortensen which is age 65. The term of employment of Mr. Sollenberger shall be
extended only if, prior to the renewal date, the Board of Directors of the
Corporation has made a determination to extend the term of his employment for
such period. All of the Agreements may be terminated voluntarily by the
executive officers and upon such event, all obligations of the Corporation
shall cease as of the date of termination. The Corporation will be obligated,
should it terminate any of the Agreements other than for cause, to pay the
executive officer affected for the balance of the term of his Employment
Agreement then in effect.
Provision is made in the Agreements for termination of their
respective obligations to serve the Corporation and for the payment to them of
a bonus equal to approximately three times their annual compensation for
Messrs. Mortensen and Gurgovits, and two times for Messrs. Rundorff and
Waters, in the event of a sale or other change of control transaction affecting
the Corporation.
26
<PAGE> 30
STOCK PERFORMANCE GRAPHS
The following five-year performance graph compares the cumulative
total shareholder return (assuming reinvestment of dividends) on the
Corporation's Common Stock ([ ]) to the Nasdaq Composite Index (+) and the
Nasdaq Bank Index (x). This stock performance graph assumes $100 was invested
on December 31, 1990, and the cumulative return is measured as of each
subsequent fiscal year end.
<TABLE>
<CAPTION>
12/31/90 12/31/91 12/31/92 12/31/93 12/30/94 12/29/95
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Nasdaq CRSP Bank 100.00 164.09 239.98 272.39 271.41 404.35
FNBCorp-PA 100.00 102.87 123.75 177.50 189.78 278.88
Nasdaq Total Return 100.00 160.56 186.86 214.51 209.68 296.30
</TABLE>
The following ten-year performance graph compares the price
appreciation of the Corporation's Common Stock ([ ]) with the price
appreciation on stocks included in the Nasdaq Composite Index (X).
<TABLE>
<CAPTION>
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FNB Corporation 100.00 152.4 194.8 176.5 173.5 135.9 136.2 160 225.2 236.5 341
Nasdaq Composite 100.00 107.3 101.7 117.4 140 115 180.4 208.3 239 231.4 324.8
</TABLE>
27
<PAGE> 31
SECURITY OWNERSHIP OF CERTAIN SHAREHOLDERS
Under the terms of the Merger Agreement between Reeves Bank ("Reeves")
and the Corporation, certain shareholders of Reeves received Series A Preferred
Stock and Common Stock in exchange for their shares of Reeves stock. The
following table sets forth certain information concerning persons known to the
Corporation to be the beneficial owner of 5% or more of the outstanding Series
A Preferred Stock as of March 1, 1996. The Corporation is not aware of any
other person who is the beneficial owner of 5% or more of any other class of
the Corporation's stock.
<TABLE>
<CAPTION>
Shares Percent of Outstanding
Name and Address Beneficially Series A
Owned Preferred Stock
Beneficially Owned
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Cede & Co. 4,126 16.6
Box 20
Bowling Green Station
New York, NY 10004
Hilton G. Klein & Joan H. Klein
122 Hilton Drive 2,160 8.7
New Brighton, PA 15006
I.B.E.W. Local #712 Pension Trust Fund
217 Sassafras Lane 2,000 8.1
P.O. Box 248
Beaver, PA 15009
Hanna Jane Boggs
7531 Spring Lake Road, Apt. C2 1,809 7.3
Bethesda, MD 20817
Richard Charles Boggs
6211 33rd St. NW 1,809 7.3
Washington, DC 20015
</TABLE>
VOTING SHARES HELD IN FIDUCIARY CAPACITY
The Corporation's affiliate, First National Bank, and said affiliate's
nominee were as of March 1, 1996 the beneficial owner of 374,973 shares of the
Corporation's Common Stock, or 4.4% of the outstanding shares of Common Stock.
These shares are held by First National Bank with full voting and/or
dispositive power in various fiduciary capacities. First National Bank has or
shares voting power as to 292,352 of these shares, or 3.4% of the total shares
of Common Stock outstanding, and 3.3% of the total voting power of the
Corporation's outstanding Stock. First National Bank will vote the shares over
which it has authority as of the record date for the election of the six
candidates for director and in favor of the other proposals to be presented at
the Annual Meeting described herein.
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AUDITORS
The Corporation engaged Ernst & Young LLP ("Ernst & Young") Certified
Public Accountants, as auditors for the year ended December 31, 1995. Ernst &
Young has served as auditors since 1993. Representatives of Ernst & Young are
expected to be present at the Annual Meeting, and will have the opportunity to
make a statement and respond to appropriate questions.
ANNUAL REPORT ON FORM 10-K
UPON WRITTEN REQUEST TO THE UNDERSIGNED SECRETARY OF THE CORPORATION
(AT THE ADDRESS SPECIFIED ON PAGE 1) BY ANY SHAREHOLDER WHOSE PROXY IS
SOLICITED HEREBY, THE CORPORATION WILL FURNISH TO SUCH SHAREHOLDER WITHOUT
CHARGE A COPY OF ITS 1995 ANNUAL REPORT ON FORM 10-K TO THE SECURITIES AND
EXCHANGE COMMISSION, TOGETHER WITH FINANCIAL STATEMENTS AND SCHEDULES THERETO.
ADDITIONAL INFORMATION
The Corporation knows of no other matters which will be presented to
shareholders for action at the Annual Meeting. However, if other matters are
presented which are proper subjects for action by shareholders, it is the
intention of those named in the accompanying proxy to vote such proxy in
accordance with their judgment upon such matters.
Solicitation of proxies will be made by employees of the Corporation,
and the cost will be borne by the Corporation. Proxies will be solicited by
mail and, in limited instances, by telephone, telegraph and personal interview.
The Corporation will also request brokerage houses and other custodians,
nominees and fiduciaries to forward soliciting material to the beneficial
owners of the stock held of record by such persons and will reimburse such
persons for their costs incurred in forwarding such materials.
SHAREHOLDER PROPOSALS
Proposals of security holders intended to be presented at the next
Annual Meeting must be received by the Corporation no later than November 20,
1996 for inclusion in the Corporation's proxy statement and form of proxy
relating to such meeting.
BY ORDER OF THE BOARD OF DIRECTORS
David B. Mogle, Secretary
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EXHIBIT A
F.N.B. CORPORATION
1996 STOCK OPTION PLAN
The purposes of the 1996 Stock Option Plan (the "Plan") are to
encourage eligible employees of F.N.B. Corporation (the "Corporation") and its
Subsidiaries, including directors and officers of the Corporation who are
employees, to increase their efforts to make the Corporation and each
Subsidiary more successful, to provide an additional inducement for such
employees to remain with the Corporation or a Subsidiary, to reward such
employees by providing an opportunity to acquire the Common Stock, par value
$2.00 per share, of the Corporation (the "Common Stock") on favorable terms and
to provide a means through which the Corporation may attract able persons to
enter the employment of the Corporation or one of its Subsidiaries. For
purposes of the Plan, the term "Subsidiary" means any corporation in an
unbroken chain of corporations beginning with the Corporation if each of the
corporations (other than the last corporation in the unbroken chain) owns stock
possessing more than fifty percent (50%) of the total combined voting power of
all classes of stock in one of the other corporations in the chain.
SECTION 1
Administration
The Plan shall be administered by a Committee (the
"Committee") appointed by the Board of Directors of the Corporation (the
"Board") and consisting of not less than two members of the Board, none of whom
has received during the one year period prior to service on the Committee, or
during such service, securities of the Corporation pursuant to the Plan or any
other plan of the Corporation or any of its affiliates (as "affiliates" is
defined in regulations of the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) (except as
permitted by subsection (c)(2)(i)(A)-(D) of Rule 16b-3 promulgated by the
Commission under the Exchange Act or any successor rule).
The Committee shall interpret the Plan and prescribe such
rules, regulations and procedures in connection with the operation of the Plan
as it shall deem to be necessary and advisable for the administration of the
Plan consistent with the purposes of the Plan.
The Committee shall keep records of action taken at its
meetings. A majority of the Committee shall constitute a quorum at any meeting
and the acts of a majority of the members present at any meeting at which a
quorum is present, or acts approved in writing by a majority of the Committee,
shall be the acts of the Committee.
SECTION 2
Eligibility
Those employees of the Corporation or any Subsidiary who share
the responsibility for the management, growth or protection of the business of
the Corporation or any Subsidiary shall be eligible to receive stock options
(with or without stock appreciation rights) as described herein.
Subject to the provisions of the Plan, the Committee shall
have full and final authority, in its discretion, to grant stock options (with
or without stock appreciation rights) as described herein and to determine the
employees to whom stock options (with or without stock appreciation rights)
shall be granted
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and the number of shares to be covered by each stock option. In determining
the eligibility of any employee, as well as in determining the number of shares
covered by each stock option, the Committee shall consider the position and the
responsibilities of the employee being considered, the nature and value to the
Corporation or a Subsidiary of his or her services, his or her present and/or
potential contribution to the success of the Corporation or a Subsidiary and
such other factors as the Committee may deem relevant.
SECTION 3
Shares Available under the Plan
The aggregate number of shares of the Common Stock which may
be issued or delivered and as to which stock options may be granted under the
Plan is such number of shares as is equal to 10% of the total issued and
outstanding shares of Common Stock at any time on a fully-diluted basis. All
such shares are subject to adjustment and substitution as set forth in Section
6.
If any stock option granted under the Plan is canceled by
mutual consent or terminates or expires for any reason without having been
exercised in full, the number of shares subject to such stock option shall
again be available for purposes of the Plan, except that to the extent that
stock appreciation rights granted in conjunction with a stock option under the
Plan are exercised and the related stock option surrendered, the number of
shares available for purposes of the Plan shall be reduced by the number of
shares, if any, of Common Stock issued or delivered upon exercise of such stock
appreciation rights.
The shares which may be issued or delivered under the Plan may
be either authorized but unissued shares or repurchased shares or partly each.
SECTION 4
Grant of Stock Options,
Stock Appreciation Rights, and
Limited Stock Appreciation Rights
The Committee shall have authority, in its discretion, to
grant "incentive stock options" pursuant to Section 422 of the Internal Revenue
Code of 1986 (the "Code"), to grant "non-statutory stock options" (stock
options which do not qualify under Section 422 of the Code) or to grant both
types of stock options (but not in tandem). The Committee also shall have the
authority, in its discretion, to grant stock appreciation rights in conjunction
with incentive stock options or non-statutory stock options with the effect
provided in Section 5(D). Stock appreciation rights granted in conjunction
with an incentive stock option may only be granted at the time such incentive
stock option is granted. Stock appreciation rights granted in conjunction with
a non-statutory stock option may be granted either at the time such stock
option is granted or at any time thereafter during the term of such stock
option. The Committee shall also have the authority, in its discretion, to
grant limited stock appreciation rights in accordance with the provisions of,
and subject to the terms and conditions set forth in, Section 8.
No employee shall be granted a stock option or stock options
under the Plan (disregarding cancelled, terminated or expired stock options)
for an aggregate number of shares in excess of ten percent (10%) of the total
number of shares which may be issued or delivered under the Plan. For the
purposes of this limitation, any adjustment or substitution made pursuant to
Section 6 with respect to shares which have not been issued or delivered under
the Plan upon the exercise of stock options shall also be made with respect to
shares already issued or delivered under the Plan upon the exercise of stock
options and with respect to shares which would have been issued or delivered
under the Plan but for the exercise of stock appreciation rights in lieu of the
exercise of stock options prior to such adjustment or substitution.
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SECTION 5
Terms and Conditions of Stock Options and
Stock Appreciation Rights
Stock options and stock appreciation rights granted under the
Plan shall be subject to the following terms and conditions:
(A) The purchase price at which each stock option may be
exercised (the "option price") shall be such price as the Committee, in its
discretion, shall determine but shall not be less than one hundred percent
(100%) of the fair market value per share of Common Stock covered by the
stock option on the date of grant, except that in the case of an incentive
stock option granted to an employee who, immediately prior to such grant,
owns stock possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Corporation or any Subsidiary
(a "Ten Percent Employee"), the option price shall not be less than 110% of
such fair market value on the date of grant. For purposes of this Section
5(A), the fair market value of the Common Stock shall be determined as
provided in Section 5(H). Also, for purposes of this Section 5(A), an
individual (i) shall be considered as owning not only shares of the Common
Stock owned individually, but also all shares that are at the time owned,
directly or indirectly, by or for the spouse, ancestors, lineal descendants
and brothers and sisters (whether by the whole or half blood) of such
individual and (ii) shall be considered as owning proportionately any
shares owned, directly or indirectly, by or for any corporation,
partnership, estate or trust in which such individual shall be a
stockholder, partner or beneficiary.
(B) The option price shall be payable in full in any one or
more of the following ways:
(i) in cash; and/or
(ii) in shares of Common Stock (which are owned by
the optionee free and clear of all liens and other encumbrances
and which are not subject to the restrictions set forth in
Section 7) having a fair market value on the date of exercise
of the stock option, determined as provided in Section 5(H),
equal to the option price for the shares being purchased.
If the option price is paid in whole or in part in shares of
Common Stock, any portion of the option price representing a fraction of a
share shall be paid in cash. The date of exercise of a stock option shall
be determined under procedures established by the Committee, and the option
price shall be payable at such time or times as the Committee, in its
discretion, shall determine. No shares shall be issued or delivered upon
exercise of a stock option until full payment of the option price has been
made. When full payment of the option price has been made and subject to
the restrictions set forth in Section 7, the optionee shall be considered
for all purposes to be the owner of the shares with respect to which
payment has been made. Payment of the option price with shares shall not
increase the number of shares of Common Stock which may be issued or
delivered under the Plan as provided in Section 3.
(C) Subject to Section 9 hereof, no stock option shall be
exercisable during the first six months of its term, except that this
limitation on exercise shall not apply (i) if the optionee dies during such
six-month period or (ii) if the optionee becomes disabled within the
meaning of Section 422(c)(6) of the Code (a "Disabled Optionee"), or if his
or her employment is voluntarily terminated with the consent of the
Corporation or a Subsidiary during such six-month period. No incentive
stock option shall be exercisable after the expiration of ten years (five
years in the case of a Ten
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Percent Employee) from the date of grant. No non-statutory stock option
shall be exercisable after the expiration of ten years and six months from
the date of grant. Subject to this Section 5(C) and Sections 5(F), 5(G)
and 5(H), stock options may be exercised at such times, in such amounts and
subject to such restrictions as shall be determined, in its discretion, by
the Committee.
(D) Stock appreciation rights shall be exercisable to the
extent that the related stock option is exercisable and only by the same
person or persons who are entitled to exercise the related stock option.
Stock appreciation rights shall entitle the optionee to surrender the
related stock option, or any portion thereof, and to receive from the
Corporation in exchange therefor that number of shares of Common Stock
having an aggregate fair market value equal to the excess of the fair
market value of one share of Common Stock on such date of exercise over the
option price per share, multiplied by the number of shares covered by the
stock option, or portion thereof, which is surrendered. Cash shall be paid
in lieu of any fractional shares. The Committee shall have the authority,
in its discretion, to determine that the obligation of the Corporation
shall be paid in cash or part in cash and part in shares, except that the
Corporation shall not pay to any person who is subject to the provisions of
Section 16 of the Exchange Act at the time of exercise of stock
appreciation rights any portion of the obligation of the Corporation in
cash (except cash in lieu of a fractional share) unless such stock
appreciation rights are exercised during the period beginning on the third
and ending on the twelfth business day following the date of release for
publication of the quarterly or annual summary statements of sales and
earnings of the Corporation. The date of exercise of stock appreciation
rights shall be determined under procedures established by the Committee,
and payment under this Section 5(D) shall be made by the Corporation as
soon as practicable after the date of exercise. To the extent that a stock
option as to which stock appreciation rights have been granted in
conjunction therewith is exercised, the stock appreciation rights shall be
canceled. For the purposes of this Section 5(D), the fair market value of
Common Stock shall be determined as provided in Section 5(H).
(E) No stock option or stock appreciation rights shall be
transferable by an optionee other than by will, or if an optionee dies
intestate, by the laws of descent and distribution of the state of domicile
of the optionee at the time of death, and all stock options and stock
appreciation rights shall be exercisable during the lifetime of an optionee
only by the optionee.
(F) Unless otherwise determined by the Committee and set
forth in the stock option agreement referred to in Section 5(G) or an
amendment thereto:
(i) If the employment of an optionee who is not a
Disabled Optionee is voluntarily terminated with the written
consent of the Corporation or a Subsidiary or an optionee
retires under any retirement plan of the Corporation or a
Subsidiary, any then outstanding incentive stock option held by
such an optionee shall be exercisable (to the extent
exercisable on the date of termination of employment) by such
an optionee at any time prior to the expiration date of such
incentive stock option or within three months after the date of
termination of employment, whichever is the shorter period;
(ii) If the employment of an optionee who is not a
Disabled Optionee is voluntarily terminated with the written
consent of the Corporation or a Subsidiary, any then
outstanding non-statutory stock option held by such an optionee
shall be exercisable (to the extent exercisable on the date of
termination of employment) by such an optionee at any time
prior to the expiration date of such non-statutory stock option
or within one year after the date of termination of employment,
whichever is the shorter period;
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(iii) If an optionee retires under any retirement
plan of the Corporation or a Subsidiary, any then outstanding
non-statutory stock option held by such an optionee shall be
exercisable (whether or not exercisable on the date of
termination of employment) by such an optionee at any time
prior to the expiration date of such non-statutory stock
option;
(iv) If the employment of an optionee who is a
Disabled Optionee is voluntarily terminated with the written consent of the
Corporation or a Subsidiary, any then outstanding stock option held by such
optionee shall be exercisable in full (whether or not so exercisable on the
date of termination of employment) by the optionee at any time prior to the
expiration date of such stock option or within one year after the date of
termination of employment, whichever is the shorter period; and
(v) Following the death of an optionee during
employment, any outstanding stock option held by the optionee
at the time of death shall be exercisable in full (whether or
not so exercisable on the date of the death of the optionee) by
such optionee's estate or by the person or persons entitled to
do so under the will of the optionee, or, if the optionee shall
fail to make testamentary disposition of the stock option or
shall die intestate, by the legal representative of the
optionee, at any time prior to the expiration date of such
stock option or within one year after the date of death,
whichever is the shorter period. Following the death of an
optionee after termination of employment but during a period
when a stock option is exercisable as provided in clauses (i),
(ii), (iii) and (iv) above, any outstanding stock option held
by the optionee at the time of death shall be exercisable by
such optionee's estate or by such person or persons entitled to
do so under the Will of the optionee or by such legal
representative to the extent the stock option was exercisable
by the optionee at the time of death at any time prior to the
expiration date of such stock option or within one year after
the date of death, whichever is the shorter period.
(vi) If the employment of an optionee terminates
for any reason other than voluntary termination with the
consent of the Corporation or a Subsidiary, retirement under
any retirement plan of the Corporation or a Subsidiary,
voluntary termination while a Disabled Optionee with the
consent of the Corporation or death, the rights of such
optionee under any then outstanding stock option shall
terminate at the time of such termination of employment. In
addition, if an optionee engages in the operation or management
of a business, whether as owner, partner, officer, director,
employee or otherwise and whether during or after termination
of employment, which is in competition with the Corporation or
any of its Subsidiaries, the Committee may in its discretion
immediately terminate all stock options held by the optionee.
Whether termination of employment is a voluntary termination with the
written consent of the Corporation or a Subsidiary, whether an optionee is
a Disabled Optionee and whether an optionee has engaged in the operation or
management of a business which is in competition with the Corporation or
any of its Subsidiaries shall be determined in each case by the Committee
and any such determination by the Committee shall be final and binding.
(G) All stock options and stock appreciation rights shall
be confirmed by a stock option agreement, or an amendment thereto, which
shall be executed by the Chief Executive Officer, the President (if other
than the Chief Executive officer) or any Vice President on behalf of the
Corporation and by the employee to whom such stock options and stock
appreciation rights are granted.
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(H) Fair market value of the Common Stock,
(i) so long as the Common Stock trades in the
over-the-counter market, shall be as set forth in such reliable
publication as the Committee, in its discretion, may choose to
rely upon, by taking the average of the "bid" and "ask" prices
per share of the Common Stock as quoted in such reliable
publication on the trading date immediately preceding the date
as of which fair market value is to be determined, or
(ii) in the event the Common Stock ceases to trade
in the over-the-counter market and is traded on another
exchange, shall be as set forth in such reliable publication as
the Committee, in its discretion, may choose to rely upon, by
taking the average of the highest and lowest price per share of
the Common Stock as quoted in such reliable publication on the
nearest date before the date as of which fair market value is
to be determined or by such other reasonable method or formula
as may be determined by the Committee in its discretion.
(I) The obligation of the Corporation to issue or deliver
shares of Common Stock under the Plan shall be subject to (i) the
effectiveness of a registration statement under the Securities Act of 1933,
as amended, with respect to such shares, if deemed necessary or appropriate
by counsel for the Corporation, (ii) the condition that the shares shall
have been listed (or authorized for listing upon official notice of
issuance) upon each stock exchange on which such shares may then be listed
and (iii) all other applicable laws, regulations, rules and orders which
may then be in effect.
Subject to the foregoing provisions of this Section 5 and the
other provisions of the Plan, any stock option or stock appreciation rights
granted under the Plan shall be subject to such other terms and conditions as
the Committee shall deem advisable.
SECTION 6
Adjustment and Substitution of Shares
If a dividend or other distribution shall be declared upon the
Common Stock payable in shares of Common Stock, the number of shares of Common
Stock then subject to any outstanding stock option and the number of shares
which may be issued or delivered under the Plan but are not then subject to an
outstanding stock option shall be adjusted by adding thereto the number of
shares which would have been distributable thereon if such shares had been
outstanding on the date fixed for determining the stockholders entitled to
receive such stock dividend or distribution.
If the outstanding shares of Common Stock shall be changed
into or exchangeable for a different number or kind of shares of stock or other
securities of the Corporation or another corporation, whether through
reorganization, reclassification, recapitalization, stock split-up, combination
of shares, merger or consolidation, then there shall be substituted for each
share of Common Stock subject to any then outstanding stock option and for each
share of Common Stock which may be issued or delivered under the Plan but is
not then subject to an outstanding stock option, the number and kind of shares
of stock or other securities into which each outstanding share of Common Stock
shall be so changed or for which each such share shall be exchangeable.
In the case of any adjustment or substitution as provided for
in this Section 6, the aggregate option price for all shares subject to each
then outstanding stock option prior to such adjustment or substitution shall be
the aggregate option price for all shares of stock or other securities
(including any fraction) to which such shares shall have been adjusted or which
shall have been substituted for such shares.
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Any new option price per share shall be carried to at least three decimal
places with the last decimal place rounded upwards to the nearest whole number.
No adjustment or substitution provided for in this Section 6
shall require the Corporation to issue or sell a fraction of a share or other
security. Accordingly, all fractional shares or other securities which result
from any such adjustment or substitution shall be eliminated and not carried
forward to any subsequent adjustment or substitution.
If any such adjustment or substitution provided for in this
Section 6 requires the approval of stockholders in order to enable the
Corporation to grant incentive stock options, then no such adjustment or
substitution shall be made without prior stockholder approval. Notwithstanding
the foregoing, in the case of incentive stock options, if the effect of any
such adjustment or substitution would be to cause the stock option to fail to
continue to qualify as an incentive stock option or to cause a modification,
extension or renewal of such stock option within the meaning of Section 424 of
the Code, the Committee may elect that such adjustment or substitution not be
made but rather shall use reasonable efforts to effect such other adjustment of
each then outstanding stock option as the Committee in its sole discretion
shall deem equitable and which will not result in any disqualification,
modification, extension or renewal (within the meaning of Section 424 of the
Code) of such incentive stock option.
SECTION 7
Restrictions on Transfer of
Certain Shares
Shares of Common Stock acquired under exercise of an (a)
option pursuant to Section 5(B)(ii) by a person then subject to the provisions
of Section 16 of the Exchange Act shall not be sold or otherwise transferred
prior to (i) the expiration of six months after the date of acquisition of
shares upon exercise of such option or (ii) the death of the optionee,
whichever may first occur or (b) incentive stock option shall not be sold or
otherwise transferred until after the expiration of any holding period required
by Section 422 of the Code, as may be amended from time to time. The
Corporation is authorized to (i) retain the certificate(s) representing such
shares or place such certificates in the custody of its transfer agent, (ii)
place a restrictive legend on such shares, and/or (iii) issue a stop transfer
order to the transfer agent with respect to such shares in order to enforce the
transfer restrictions of this Section.
SECTION 8
Limited Stock Appreciation Rights
Limited stock appreciation rights may be granted in connection
with all or part of (i) an incentive stock option granted under the Plan at the
time of the grant of such stock option or (ii) a non-statutory option, at the
time such option is granted or at any time thereafter during the term of the
such option.
Limited stock appreciation rights shall entitle the holder of
an option in connection with which such limited stock appreciation rights are
granted, upon exercise of the limited stock appreciation rights, to surrender
the stock option, or any applicable portion thereof, and any related stock
appreciation rights, to the extent unexercised, and to receive an amount of
cash determined pursuant to this Section 8. Such option, and any related stock
appreciation rights, shall, to the extent so surrendered, thereupon cease to be
exercisable.
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Limited stock appreciation rights shall be subject to the
following terms and conditions and to such other terms and conditions not
inconsistent with the Plan as shall from time to time be approved by the
Committee.
(A) Limited stock appreciation rights shall be
exercisable, subject to Section 8(B), during any one or more of the
following periods:
(i) for a period of 60 days beginning on the date
on which shares of Common Stock are first purchased pursuant to
a tender offer or exchange offer (other than such an offer by
the Corporation), whether or not such offer is approved or
opposed by the Corporation and regardless of the number of
shares of Common Stock purchased pursuant to such offer;
(ii) for a period of 60 days beginning on the date
the Corporation acquires knowledge that any person or group
deemed a person under Section 13(d)(3) of the Exchange Act
(other than any director of the Corporation on November 1,
1989, any Affiliate or Associate of any such director (with
such terms having the respective meanings set forth in Rule
12b-2 under the Exchange Act as in effect on November 1, 1989),
any member of the family of any such director, any trust
(including the trustees thereof) established by or for the
benefit of any such persons, or any charitable foundation,
whether a trust or a corporation (including the trustees and
directors thereof) established by or for the benefit of any
such persons), in a transaction or series of transactions shall
become the beneficial owner, directly or indirectly (with
beneficial ownership determined as provided in Rule 13d-3, or
any successor rule, under the Exchange Act), of securities of
the Corporation entitling the person or group to 10% or more of
all votes (without consideration of the rights of any class of
stock to elect directors by a separate class vote) to which all
shareholders of the Corporation would be entitled if the
election of Directors were an election held on such date;
(iii) for a period of 60 days beginning on the date
of filing under the Exchange Act of a Statement on Schedule
13D, or any amendment thereto, by any person or group deemed a
person under Section 13(d)(3) of the Exchange Act, disclosing
an intention or possible intention to acquire or change control
of the Corporation;
(iv) for a period of 60 days beginning on the date,
during any period of two consecutive years, when individuals
who at the beginning of such period constitute the Board of
Directors of the Corporation cease for any reason to constitute
at least a majority thereof, unless the election, or the
nomination for election by the shareholders of the Corporation,
of each new Director was approved by a vote of at least
two-thirds of the Directors then still in office who were
Directors at the beginning of such period; and
(v) for a period of 60 days beginning on the date
of approval by the shareholders of the Corporation of an
agreement (a "reorganization agreement") providing for (a) the
merger or consolidation of the Corporation with another
corporation where the shareholders of the Corporation,
immediately prior to the merger or consolidation, do not or
will not beneficially own, immediately after the merger or
consolidation, shares of the corporation issuing cash or
securities in the merger or consolidation entitling such
shareholders to 50% or more of all votes (without consideration
of the rights of any class of stock to elect directors by a
separate class vote) to which all shareholders of such
corporation would be entitled in the election of Directors or
where the members of the Board of Directors of the Corporation,
immediately prior to the merger or consolidation, do
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not or will not, immediately after the merger or consolidation, constitute
a majority of the Board of Directors of the corporation issuing cash or
securities in the merger or consolidation or (b) the sale or other
disposition of all or substantially all the assets of the Corporation.
(B) Subject to Section 9 hereof, limited stock
appreciation rights shall in no event be exercisable unless and until the
holder of the limited stock appreciation rights shall have completed at
least six months of continuous service with the Corporation or a
Subsidiary, or both, immediately following the date upon which the limited
stock appreciation rights shall have been granted.
(C) Upon exercise of limited stock appreciation rights,
the holder thereof shall be entitled to receive an amount of cash in
respect of each share of Common Stock subject to the related option equal
to the excess of the fair market value of such share over the option price
of such related option, and for this purpose fair market value shall mean
the highest last sale price of the Common Stock on the over-the-counter
market during the period beginning on the 90th day prior to the date on
which the limited stock appreciation rights are exercised and ending on
such date, except that (a) in the event of a tender offer or exchange offer
for Common Stock, fair market value shall mean the greater of such last
sale price or the highest price paid for Common Stock pursuant to any
tender offer or exchange offer in effect at any time beginning on the 90th
day prior to the date on which the limited stock appreciation rights are
exercised and ending on such date, (b) in the event of the acquisition by
any person or group of beneficial ownership of securities of the
Corporation entitling the person or group to 10% or more of all votes to
which all shareholders of the Corporation would be entitled in the election
of Directors or in the event of the filing of a Statement on Schedule 13D,
or any amendment thereto, disclosing an intention or possible intention by
any person or group to acquire control of the Corporation, fair market
value shall mean the greater of such last sale price or the highest price
per share paid for Common Stock shown on the Statement on Schedule 13D, or
any amendment thereto, filed by the person or group becoming a 10%
beneficial owner or disclosing an intention or possible intention to
acquire control of the Corporation and (c) in the event of approval by
shareholders of the Corporation of a reorganization agreement, fair market
value shall mean the greater of such last sale price or the fixed or
formula price specified in the reorganization agreement if such price is
determinable as of the date of exercise of the limited stock appreciation
rights. Any securities or property which are part or all of the
consideration paid for Common Stock in a tender offer or exchange offer or
under an approved reorganization agreement shall be valued at the higher of
(a) the valuation placed on such securities or property by the person
making the tender offer or exchange offer or by the corporation other than
the Corporation issuing securities or property in the merger or
consolidation or to whom the Corporation is selling or otherwise disposing
of all or substantially all the assets of the Corporation and (b) the
valuation placed on such securities or property by the Committee.
(D) To the extent that limited stock appreciation rights
shall be exercised, the option in connection with which such limited stock
appreciation rights shall have been granted shall be deemed to have been
exercised and any related stock appreciation rights shall be canceled. To
the extent that the option in connection with which limited stock
appreciation rights shall have been granted or any related stock
appreciation rights shall be exercised, the limited stock appreciation
rights granted in connection with such option shall be canceled.
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SECTION 9
Acceleration of the Exercise Date of
Stock Options and Related Stock Appreciation Rights
Notwithstanding any other provision of this Plan, all stock
options and stock appreciation rights shall become exercisable upon the
occurrence of any of the events specified in Section 8(A) whether or not such
options are then exercisable under the provisions of the applicable agreements
relating thereto, except that if stock appreciation rights have been granted
along with limited stock appreciation rights to the same option holder with
respect to the same option, in no event may the stock appreciation rights be
exercised for cash during any of the 60-day periods provided for in Section 8.
SECTION 10
Effect of the Plan on the Rights
of Employees and Employer
Neither the adoption of the Plan nor any action of the Board
or the Committee pursuant to the Plan shall be deemed to give any employee any
right to be granted a stock option (with or without stock appreciation rights)
under the Plan and nothing in the Plan, in any stock option or stock
appreciation rights granted under the Plan or in any stock option agreement
shall confer any right to any employee to continue in the employment of the
Corporation or any Subsidiary or interfere in any way with the rights of the
Corporation or any Subsidiary to terminate the employment of any employee at
any time.
SECTION 11
Amendment
The right to alter and amend the Plan at any time and from
time to time and the right to revoke or terminate the Plan are hereby
specifically reserved to the Board; provided always that no such revocation or
termination shall terminate any outstanding stock option or stock appreciation
rights theretofore granted under the Plan; and provided further that no such
alteration or amendment of the Plan shall, without prior stockholder approval
(a) increase the total number of shares which may be issued or delivered under
the Plan, (b) increase the total number of shares which may be covered by any
stock option or stock options granted to any one optionee, (c) make any changes
in the class of eligible employees or (d) extend the period set forth in the
Plan during which stock options (with or without stock appreciation rights) may
be granted. No alteration, amendment, revocation or termination of the Plan
shall, without the written consent of the holder of a stock option or stock
appreciation rights theretofore granted under the Plan, adversely affect the
rights of such holder with respect to such stock option or stock appreciation
rights.
SECTION 12
Effective Date and Duration of Plan
The effective date and date of adoption of the Plan shall be
February 2, 1996 (the "Effective Date"), the date of adoption of the Plan by
the Board, provided that such adoption of the Plan by the Board is approved by
the affirmative vote of the holders of at least a majority of the outstanding
shares of Common Stock at a meeting of such holders duly called, convened and
held within one year of the Effective Date. No stock option or stock
appreciation rights granted under the Plan prior to such shareholder approval
may be exercised until after such approval. No stock option or stock
appreciation rights may be granted under the Plan subsequent to February 2,
2006.
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EXHIBIT B
F.N.B. CORPORATION
RESTRICTED STOCK AND INCENTIVE BONUS PLAN
ARTICLE I
ESTABLISHMENT AND PLAN OBJECTIVES
1.1 ESTABLISHMENT OF PLAN; EFFECTIVE DATE. F.N.B. Corporation
(the "Corporation") hereby establishes an incentive plan for key employees, as
described herein, which shall be known as the F.N.B. Corporation Restricted
Stock and Incentive Bonus Plan (hereinafter referred to as the "Plan"). The
Plan is effective as of January 1, 1996.
1.2 PLAN OBJECTIVES. The Plan is intended to further the
attainment of the Corporation's long-term profit and growth objectives by (i)
offering an incentive to key employees and key executives of the Corporation
and its subsidiaries who influence the long-term profitability of the
Corporation, (ii) to provide key employees and executives with an additional
inducement to remain in the service of the Corporation and with an increased
incentive to work for its long-range success, (iii) to encourage stock
ownership by such key employees and executives by providing them with an
ownership interest in the Corporation and (iv) to facilitate the recruiting of
executive personnel in the future.
ARTICLE II
DEFINITIONS
2.1 DEFINITIONS. As used herein, the following terms shall have
the following meanings:
(a) "Board" shall mean the Board of Directors of the Corporation.
(b) "Change of Control" shall have the meaning set forth in the
F.N.B. Corporation Basic Retirement Plan.
(c) "Committee" shall mean the Compensation Committee of the Board
of Directors of the Corporation.
(d) "Corporation" shall mean F.N.B. Corporation, its successors
and assigns.
(e) "DRP" shall mean the Corporation's Voluntary Dividend
Reinvestment and Stock Purchase Plan, as amended from time to time.
(f) "Eligible Employee" shall have the meaning set forth in
Section 5.1 below.
(g) "Incentive Award Period" shall have the meaning set forth in
Section 5.2 below.
(h) "Incentive Bonus Participant" shall mean an Eligible Employee
designated by the Committee as eligible to receive an award under the incentive
bonus provisions of Article V of the Plan in respect of any Incentive Award
Period.
(i) "Participant" shall mean an Incentive Bonus Participant or a
Restricted Stock Participant.
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(j) "Plan" shall mean the F.N.B. Corporation Restricted Stock and
Incentive Bonus Plan in its entirety, including any amendments, rules and
regulations adopted pursuant hereto.
(k) "Restricted Period" shall have the meaning set forth in
Section 4.3 below.
(l) "Restricted Stock Participant" shall mean an employee who has
been granted Stock under the provisions of Article IV of the Plan (relating to
grants of restricted stock).
(m) "Stock" shall mean the Corporation's common stock, par value
$2.00 per share.
(n) "Vesting Period" shall have the meaning set forth in Section
4.3 below.
Other terms shall have the respective meanings given them in succeeding
sections of the Plan.
ARTICLE III
ADMINISTRATION OF THE PLAN
3.1 ADMINISTRATION. The Committee shall be responsible for the
administration of the Plan. The Committee, by majority thereof, is authorized
to interpret the Plan, to prescribe, amend, and rescind rules and regulations
relating to the Plan, provide for conditions and assurances deemed necessary or
advisable to protect the interests of the Corporation, including without
limitation all rules and regulations necessary or advisable to enable shares of
Stock granted under the Plan to be held and administered under the DRP, and to
make all other determinations necessary or advisable for the administration of
the Plan, but only to the extent not contrary to the express provisions of the
Plan. Determinations, interpretations, or other actions made or taken by the
Committee pursuant to the provisions of the Plan shall be final, binding and
conclusive for all purposes and upon all persons whomsoever.
Within the provisions of the Plan, the Committee shall have the sole,
final and conclusive authority to determine:
(a) The employees to whom awards shall be made under Article IV
and/or Article V below;
(b) The amount of any award of cash or Stock to be made to each
such employee; and
(c) The terms and conditions of each restricted stock agreement
("Restricted Stock Agreement") between the Corporation and any employee who has
received an award of restricted Stock under Article IV or Article V below.
In making such determinations, the Committee shall consider the position and
responsibilities of the eligible employees, the value of their services to the
Corporation and its subsidiaries, and such other factors as the Committee deems
pertinent. The Committee's determinations under the Plan need not be uniform
and may be made by it selectively among persons who are eligible to receive
awards under the Plan.
3.2 EMPLOYMENT OF AGENTS. In administering the Plan, the
Committee may employ accountants and counsel (who may be the independent
auditors and outside counsel for the Corporation) and other persons to assist
or render advice to it, all at the expense of the Corporation.
3.3 ELIGIBILITY TO SERVE ON COMMITTEE. None of the members of the
Committee shall be a person who shall have been granted during the one year
prior to becoming a member of the Committee, or shall be granted during service
on the Committee, Stock or other securities pursuant to the Plan or any other
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plan of the Corporation or any of its subsidiaries except to the extent
permitted by subsection (c)(2)(i) of Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended, or any successor thereto.
ARTICLE IV
GRANTS OF RESTRICTED STOCK
4.1 ELIGIBILITY. Any person employed by the Corporation or any of
its subsidiaries on a full time, salaried basis shall be eligible to become a
Restricted Stock Participant and shall be eligible to receive grants of
restricted Stock pursuant to this Article IV.
4.2 GRANTS OF COMMON STOCK. Each restricted stock grant under
this Article IV shall be evidenced by a Restricted Stock Agreement, which shall
be subject to the following terms and conditions and to such other terms and
conditions as the Committee may deem appropriate in each case:
(a) Unless applicable law provides otherwise, the employee
receiving a restricted stock grant shall be responsible for compliance with all
securities, tax or other legal requirements with respect to such employee's
receipt, holding or disposition of the shares.
(b) The vesting and forfeiture restrictions contained in Section
4.3 below.
(c) The shares of Stock granted under this Article IV shall be
enrolled in the Restricted Stock Participant's name in the DRP. Such shares
shall remain in the DRP throughout the Restricted Period. On the date on which
the transfer restrictions on any shares of Stock lapse, the Corporation shall
notify the DRP Administrator as to the name of the Restricted Stock Participant
and the number of shares of Stock as to which the restrictions have lapsed.
The Restricted Stock Participant shall be entitled to exercise all rights to
the unrestricted shares of Stock, including the right to withdraw such shares
from the DRP, in accordance with the terms of the DRP.
4.3 VESTING AND FORFEITURE RESTRICTIONS. All shares of Stock
granted under this Article IV shall vest and become freely transferable by the
Restricted Stock Participant over a period of not less than one and not more
than five years commencing on the date of grant, as determined by the Committee
at the time of the grant (the "Vesting Period"), and shall be subject to
forfeiture as set forth below until vested (the period of time during which any
shares of Stock are subject to a risk of forfeiture is referred to as the
"Restricted Period"). Unless otherwise determined by the Committee, shares of
Stock shall vest in equal installments during the Vesting Period on each
anniversary of the date of grant until all shares awarded pursuant to such
grant have vested or have been forfeited.
The Committee, in its sole discretion, may impose such other
restrictions on Stock granted pursuant to this Article IV as it may deem
advisable, including, without limitation, restrictions under applicable federal
laws, under the requirements of any stock exchange upon which such shares or
shares of the same class are then listed, and under any blue sky or other
securities laws applicable to such shares. The Committee may condition the
grant of any stock, or the termination of the restrictions, upon receipt of an
appropriate investment representation from the Restricted Stock Participant.
The Corporation may, in its discretion, postpone the granting of any stock
until completion of registration or other qualification of the shares under any
state or federal law, rule, or regulation or the receipt of any consent or
approval of any governmental body, or any other agreement or consent as the
Committee may consider appropriate. The Corporation may further require any
Restricted Stock Participant or other person receiving shares of Stock under
this Article IV to make such representations and furnish such information as it
may consider appropriate in compliance with applicable law.
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4.4 VOTING AND DIVIDEND RIGHTS. Restricted Stock Participants
shall have full voting rights on the shares of Stock granted under this Article
IV, including the shares which have not yet vested, unless and until such
shares are forfeited to the Corporation.
Restricted Stock Participants awarded shares of Stock under this
Article IV shall have full cash and stock dividend rights with respect to such
shares of Stock subject to the other provisions of this Section 4.4. All such
dividends or other distributions shall be credited to the Restricted Stock
Participant's account in the DRP and, in the case of cash dividends, used to
purchase shares of Stock pursuant to the DRP. All shares credited to the
Restricted Stock Participant as a result of such cash or stock dividends shall
be subject to the same restrictions on transferability and the same risk of
forfeiture as the shares of Restricted Stock that are the basis for the
dividend.
4.5 TERMINATION OF EMPLOYMENT.
(a) All restrictions placed upon shares of Stock granted hereunder
or under a Restricted Stock Agreement shall lapse immediately and such shares
shall automatically vest upon (i) termination of the Restricted Stock
Participant's employment with the Corporation (or the subsidiary of the
Corporation by which the Restricted Stock Participant is employed) if, and only
if, such termination is by reason of the Restricted Stock Participant's death,
disability covered by a disability plan of the Corporation then in effect or
retirement with the consent of the Corporation or (ii) the occurrence of a
Change in Control of the Corporation. In addition, the Committee may allow
restrictions on the Stock to lapse prior to the date specified in a Restricted
Stock Agreement if, in the judgment of the Committee, such allowance is
necessary to avoid undue hardship or unfairness to the Restricted Stock
Participant.
(b) Upon the effective date of a termination for any reason not
specified in Section 4.5(a) above, all shares (together with all dividends
and/or shares of Stock purchased under the DRP on account of such shares) then
subject to a risk of forfeiture under Section 4.3 above immediately shall be
forfeited and returned to the Corporation by the plan administrator under the
DRP without consideration or further action being required of the Corporation.
For purposes of this Section 4.5 and Section 4.3, the effective date of a
Restricted Stock Participant's termination shall be the date upon which such
Restricted Stock Participant ceases to perform services as an employee of the
Corporation or any of its subsidiaries, without regard to accrued vacation,
severance or other benefits or the characterization thereof on the payroll
records of the Corporation or any of its subsidiaries.
4.6 ASSIGNMENT OR TRANSFER. No shares of Stock granted under this
Article IV or any rights or interests therein shall be assignable or
transferable during the Restricted Period by a Restricted Stock Participant
except by will or the laws of descent and distribution. Each Restricted Stock
Participant who is granted Stock pursuant to this Article IV may, from time to
time, name any beneficiary or beneficiaries to whom any benefit under this
Article IV is to be paid in case of his or her death before he or she receives
any or all of such benefit. Each designation will revoke all prior
designations by the same Restricted Stock Participant, shall be in a form
prescribed by the Committee and will be effective only when filed by the
Restricted Stock Participant in writing with the Committee during his or her
lifetime. In the absence of any such designation, benefits remaining unpaid at
the Restricted Stock Participant's death shall be paid to his or her estate,
subject to the terms of this Article IV and the Plan.
ARTICLE V
GRANTS OF INCENTIVE BONUSES
5.1 ELIGIBILITY. Any Eligible Employee shall be eligible to be an
Incentive Bonus Participant and receive incentive bonus awards pursuant to this
Article V. As used in this Article V, the term "Eligible Employee" shall mean
any executive officer of the Corporation or of a subsidiary of the Corporation
who is
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a member of a select group of management employees and who, in the opinion of
the Committee, is in a position to have a direct and significant impact on
achieving the Corporation's profit and growth objectives.
5.2 AWARD PERIODS. The duration of each "Incentive Award Period"
shall be one year corresponding to the Corporation's fiscal year.
5.3 PARTICIPATION AND PERFORMANCE ACHIEVEMENT TARGETS. No later
than the end of the first calendar quarter of each Incentive Award Period, the
Committee in its discretion shall select Eligible Employees to be Incentive
Bonus Participants and shall determine the performance achievement targets for
each Incentive Bonus Participant and the amount of awards the Incentive Bonus
Participant may earn upon achieving such targets in respect of each Incentive
Award Period based on the Committee's analysis of various factors it deems
appropriate, including similar incentive plans of comparable companies and the
relative contribution of each Incentive Bonus Participant to the overall
performance of the Corporation and its subsidiaries.
5.4 PAYMENTS OF ANNUAL BONUSES.
(a) Payout of annual bonuses under this Article V shall be made
within 45 days after the receipt by the Corporation of the report of its
independent auditors on the Company's financial statements in respect of the
Incentive Award Period in respect of which the Incentive Award has been earned,
as the Committee in its discretion shall determine.
(b) Payout of annual bonuses under this Article V shall be made in
cash or in Stock or partly in each as the Committee in its discretion shall
determine. If any portion is paid in authorized but unissued shares, or
treasury shares, of Stock, the Stock shall be valued at the average of the last
quoted "bid" and "ask" prices of the Stock on the over-the-counter market on
the business day next preceding the date of payment (or, in the event the
Common Stock ceases to trade in the over-the-counter market and is traded on
another exchange or on the Nasdaq National Market, by such other reasonable
method or formula as may be determined by the Committee in its discretion).
Payout of all or part of an annual bonus under this Article V to any Incentive
Bonus Participant may also be made in Stock by the purchase thereof by the
Corporation in the open market on a date reasonably close to the date of
payment. Payouts of awards under this Article V may also be made pursuant to
deferred compensation arrangements, as the Committee may determine in its
discretion.
(c) The Corporation shall not be liable for interest upon any
award made under this Article V. Prior to the time shares of Stock are
delivered to an Incentive Bonus Participant by the Corporation pursuant to a
payout of an annual bonus under this Article V, the Incentive Bonus Participant
shall not be entitled to have any shares registered or recorded in his or her
name, nor shall such Incentive Bonus Participant have the rights of a
shareholder of the Corporation in respect of such shares.
(d) The Committee shall have the right, in its discretion, to
modify the amount of any award earned by any Incentive Bonus Participant under
this Article V in respect of any Incentive Award Period if the Committee in its
sole discretion determines that it is reasonable to do so (i) as a result of
extraordinary transactions to which the Corporation or any of its subsidiaries
was subject or material accounting changes or adjustments applicable to the
Corporation in respect of that Incentive Award Period or (ii) on the basis of
such other quantitative factors as the Committee deems appropriate.
(e) Any shares of Stock of the Corporation issued to an Incentive
Bonus Participant under this Article V shall, at the time of issuance to such
Incentive Bonus Participant, be enrolled in the Incentive Bonus Participant's
name in the DRP. The Incentive Bonus Participant shall be entitled to exercise
all rights
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to such shares, including the right to withdraw such shares from the DRP, in
accordance with the terms of the DRP (except as otherwise provided in the
Plan).
5.5 LIMITATIONS AND REDUCTIONS OF PAYMENTS.
(a) Any shares of Stock of the Corporation awarded to an Incentive
Bonus Participant under this Article V must be held by the Incentive Bonus
Participant for a minimum of six months prior to any disposition thereof. In
addition, the Committee in its discretion may require that any such shares of
Stock be restricted and not "vest" for a period of up to five years and be
subject to such other restrictions as are identical to those provided in
Article IV with respect to grants of Restricted Stock to Restricted Stock
Participants (including the requirement that the Incentive Bonus Participant
enter into a Restricted Stock Agreement with the Corporation), with the terms
and conditions of such restrictions and "vesting", and related forfeiture
provisions, to be determined by the Committee in its discretion, provided, that
the provisions of Section 4.5 above shall apply to any restricted Stock awarded
under this Article V, including without limitation those providing that any
restrictions on such shares of Stock shall lapse immediately and all such
shares shall automatically vest upon the occurrence of a Change of Control of
the Corporation.
(b) The Committee in its sole discretion may impose such other
restrictions on any shares of Stock paid pursuant to this Article V as it may
deem advisable including, without limitation, restrictions under applicable
federal laws, under the requirements of any stock exchange upon which such
share or shares of the same class are then listed, and under any blue sky or
other securities laws applicable to such shares. The Committee may condition
the payment of any Stock under this Article V, or the delivery of share
certificates evidencing such Stock, upon receipt of an appropriate investment
representation from the Incentive Bonus Participant. The Corporation, in its
discretion, may postpone the issuance and delivery of shares of Stock pursuant
to this Article V until completion of registration or other qualification of
the shares under any state or federal law, rule, or regulation as the
Corporation may consider appropriate. The Corporation may further require any
Incentive Bonus Participant or other person receiving Stock under this Article
V to make such representations and furnish such information as it my consider
appropriate in connection with the issuance of the shares of Stock in
compliance with applicable law.
(c) Each payout of an annual bonus under this Article V that is to
be made in cash shall be from the general funds of the Corporation. No special
or separate fund shall be established or other segregation of assets made to
assure payout of any annual bonuses. No Incentive Bonus Participant or other
person shall have under any circumstances any interest whatever in any
particular property or assets of the Corporation as a result of the operation
of this Article V.
5.6 TERMINATION OF EMPLOYMENT.
(a) Except as herein otherwise provided, the payout of an annual
bonus under this Article V to an Incentive Bonus Participant is subject to the
Incentive Bonus Participant continuing in the employ of the Corporation or a
subsidiary thereof, as the case may be, through the date the payout is made as
set forth in Section 5.4(a). In the event an Incentive Bonus Participant's
employment terminates prior to the date the payout is made as set forth in
Section 5.4(a) for reasons other than voluntary termination of employment or
termination of employment by the Corporation for cause, the Committee shall
have sole discretion to determine whether and to what extent an annual bonus
under this Article V will be paid out to the Incentive Bonus Participant or to
his or her beneficiary; provided, however, that if such termination occurs
following a Change of Control and the Incentive Bonus Participant would
otherwise be entitled to payment of an annual bonus under this Article V in
respect of the preceding Award Period, then such annual bonus shall be paid to
such Incentive Bonus Participant unless the Incentive Bonus Participant's
employment was terminated for cause (as defined in paragraph (b) below) or the
Incentive Bonus Participant voluntarily terminated his employment other than
for good reason (as defined in paragraph (c) below).
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(b) As used herein "cause" shall mean the willful and continued
failure by the Incentive Bonus Participant substantially to perform his duties
with the Corporation or any subsidiary or the willful engaging by the Incentive
Bonus Participant in misconduct which is demonstrably and materially injurious
to the Corporation or any of its subsidiaries.
(c) As used herein, the term "good reason" shall mean any of (i)
the assignment to the Incentive Bonus Participant by the Corporation or any
subsidiary of duties, or to a position, constituting a material diminution in
the Incentive Bonus Participant's position or duties compared with his position
or duties with the Corporation or any subsidiary immediately prior to a Change
of Control of the Corporation, or any removal of the Incentive Bonus
Participant from or any failure to reelect the employee to any such position,
except in connection with the termination of his employment by reason of his
death, disability or retirement, for cause, or by the employee other than for
good reason, (ii) a reduction by the Corporation or any subsidiary in the
Incentive Bonus Participant's base salary as in effect on the date of the
Change of Control, (iii) any material diminution in the benefits provided to
the employee by the Corporation following a Change of Control or (iv) the
Incentive Bonus Participant's relocation by the Corporation or any subsidiary
to any place other than the location at which the Incentive Bonus Participant
performed the Incentive Bonus Participant's duties prior to a Change of Control
of the Corporation.
ARTICLE VI
CAPITAL ADJUSTMENTS
If there should occur any change in the outstanding shares of common
stock of the Corporation by reason of a stock dividend, stock split,
recapitalization, merger, consolidation, combination, or exchange of shares or
other similar corporate change, the aggregate number of shares of Stock
issuable under the Plan shall be appropriately adjusted by the Committee, whose
determination shall be conclusive, to prevent dilution or enlargement of the
Participant's potential Stock interests in relation to other holders of the
Stock. In such event, the Committee may also make such appropriate adjustment
in the number and type of shares subject to Stock grants then outstanding under
the Plan.
ARTICLE VII
MISCELLANEOUS PROVISIONS
7.1 NUMBER OF SHARES.
(a) The total number of shares of Stock of the Corporation that
may be granted to all Restricted Stock Participants under Article IV in respect
of any calendar year may not exceed one percent (1%) of the highest number of
the Corporation's issued and outstanding Stock in such calendar year calculated
on a fully diluted basis, subject to adjustment as provided in Section 6 above.
(b) The total number of shares of Stock of the Corporation that
may be granted to all Incentive Bonus Participants under Article V in respect
of any Incentive Award Period may not exceed one percent (1%) of the highest
number of the Corporation's issued and outstanding Stock in such Award Period
calculated on a fully diluted basis, subject to adjustment as provided in
Section 6 above.
(c) The shares of Stock awarded under the Plan shall be either
authorized but unissued shares or shares that have been reacquired by the
Corporation. Shares that are awarded but forfeited under the Plan shall again
be available for grant under the Plan.
7.2 FUTURE EMPLOYMENT. The selection of an eligible employee as a
Participant shall not constitute a contract of employment between the
Participant and the Corporation or otherwise entitle the Participant to remain
in the employ of the Corporation or any of its subsidiaries.
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7.3 AMENDMENT AND TERMINATION. The Board of Directors of the
Corporation reserves the right to amend or supplement the Plan or terminate the
Plan at any time; provided, however, that the Board shall not modify any
provision in any manner adversely affecting any grant or award previously made
under the Plan without the consent of the Participant.
7.4 WITHHOLDING. The Corporation shall have the right to deduct
from all payments under the Plan any federal, state, or local taxes required by
law to be withheld with respect to such payments. The Participant or other
person receiving payment of shares of Stock under the Plan may be required to
pay to the Corporation the amount of any such taxes that the Corporation is
required to withhold with respect to such Stock.
7.5 FEDERAL INCOME TAX ELECTIONS. The Participant or other person
receiving a payment of Stock hereunder shall report to the Corporation in
writing the time and manner in which such Participant or other person elects to
recognize income from or by virtue of such award for federal income tax
purposes, promptly after the making of such election.
7.6 INDEMNIFICATION. Each person who is or shall have been a
member of the Committee or the Board shall be indemnified and held harmless by
the Corporation from any loss, cost, liability, or expense that may be imposed
upon or reasonably incurred by him or her in connection with any claim, action,
suit, or proceeding to which he or she may be a party by reason of any action
taken or failure to act under the Plan. The foregoing right of indemnification
shall not be exclusive of any other rights of indemnification to which such
persons may be entitled under the Corporation's Articles of Incorporation or
Bylaws, as a matter of law, by contract, or otherwise, or any power that the
Corporation may have to indemnify them or hold them harmless.
7.7 GOVERNING LAW. The Plan, and all other documents delivered
hereunder, shall be construed in accordance with and governed by the laws of
the Commonwealth of Pennsylvania, to the extent that such laws are not
preempted by the laws of the United States of America.
7.8 EXPENSES. The expenses of administering the Plan shall be
borne by the Corporation.
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EXHIBIT C
F.N.B. CORPORATION
DIRECTORS' COMPENSATION PLAN
1. PURPOSE
The purpose of the F.N.B. Corporation Directors' Compensation Plan
(the "Plan") is to promote the interests of F.N.B. Corporation (the "Company")
and its shareholders by attracting and retaining Directors capable of
furthering the future success of the Company and by aligning their economic
interests more closely with those of the Company's shareholders.
2. DEFINITIONS
"Board of Directors" means the Board of Directors of the Company or
any of the Company's subsidiaries.
"Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations thereunder. References to any provision of the Code or
rule or regulation thereunder shall be deemed to include any amended or
successor provision, rule or regulation.
"Committee" means the Compensation Committee of the Board of Directors
of the Company.
"Director" means a member of the Board of Directors or a former member
to whom fees are paid for attendance at Board or Committee meetings.
"DRP" means the Company's Voluntary Dividend Reinvestment and Stock
Purchase Plan, as amended from time to time.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
"Initial Period" means, as to any Director who is a Section 16 Person
and who has made a Share Election, the period beginning on the date such Share
Election is made and ending on the date six months following such date.
"Prior Agreement" shall have the meaning set forth in Section 6(c)
hereof.
"Rule 16b-3" means Rule 16b-3 under the Exchange Act and any successor
rule.
"Section 16 Person" means any person who is subject to the provisions
of Section 16 of the Exchange Act and the rules of the Securities and Exchange
Commission thereunder as amended from time to time.
"Share" means a share of common stock of the Company, par value $2.00
per share, and such other securities as may be substituted for a Share or such
other securities pursuant to the adjustment provisions of Section 10.
"Share Deferral Election" shall have the meaning set forth in Section
6(a) hereof.
"Share Election" shall have the meaning set forth in Section 4 hereof.
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3. EFFECTIVE DATE AND TERM OF THE PLAN
The Plan shall become effective from the date approved by the Board of
Directors of the Company subject to approval of the Plan by the shareholders of
the Company within twelve months following such approval of the Plan by the
Board of Directors. The term of the Plan shall expire on December 31, 2010.
4. ELECTION TO RECEIVE SHARES AFTER INITIAL PERIOD
Each Director of the Company or any subsidiary of the Company may at
any time elect (a "Share Election") to receive Shares in lieu of cash as his or
her sole compensation for attendance at meetings of the Board of Directors and
Committees of the Board of Directors for any period after the Initial Period.
Notwithstanding any contrary provision of the Plan, any Share Election (or any
election made under Section 6(c) below) by a Director who is a Section 16
Person shall be irrevocable and shall be made by such Director at least six (6)
months prior to the effective date of such Share Election (or Section 6(c)
election). Any Share Election shall be made by a Director by executing and
delivering to the Company a Share Election Notice in the form of Exhibit A
hereto. The number of Shares to be granted to each Director who makes such
election shall equal the number of Shares that may be purchased for (or having
a market value equal to) the amount of cash otherwise payable to such Director
by the Company for attendance at such meetings.
5. PAYMENT OF FEES DURING INITIAL PERIOD
All compensation payable to each Director who is a Section 16 Person
for attendance at meetings of the Board of Directors and Committees of the
Board of Directors of the Company and its subsidiaries during the Initial
Period applicable to such Director ("Initial Period Fees") shall be payable in
cash; provided, however, that any Director who is a Section 16 Person may elect
pursuant to the following provisions to delay receipt of Initial Period Fees
for six months after the Director first makes a Share Election pursuant to
Section 4 above and to receive such Initial Period Fees in Shares rather than
cash.
(a) A Director who is a Section 16 Person and who has made a
Share Election may elect to delay for six months his or her receipt of
all or a portion of the Initial Period Fees payable to the Director for
the Initial Period preceding the effective date of such Share Election
by executing and delivering to the Company, at the time the Share
Election is made, a Notice of Share Election For Initial Period Fees in
the form of Exhibit B hereto. Any Initial Period Fees which are the
subject of such an election shall be maintained and held in a separate
memorandum account and shall accumulate interest at a rate per annum
equal to the longest term individual retirement account rate paid from
time to time by First National Bank of Pennsylvania until the effective
date of the election described in paragraph (b) below.
(b) A Director who has executed and delivered a Notice of
Share Election For Initial Period Fees pursuant to paragraph (a) above
shall be deemed to have irrevocably elected to receive such Initial
Period Fees in Shares rather than in cash. Such election to receive
Initial Period Fees in Shares rather than cash shall become effective
on the date six (6) months after the Company's receipt of the
Director's Notice of Share Election For Initial Period Fees. Such
Director shall be issued on the effective date of such election, in
lieu of the cash amount credited to his or her memorandum account
pursuant to paragraph (a) above, a number of Shares as shall be
determined in accordance with Section 7(a) below (subject to any Share
Deferral Election made by such Director pursuant to Section 6 below).
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6. DEFERRAL OF RECEIPT OF SHARES OR INITIAL PERIOD FEES
Payment of Shares granted under the Plan pursuant to Section 4 or
Section 5 above may be deferred by election of a Director in accordance with
the provisions of this Section 6.
(a) The Director may elect, by executing and delivering to the
Company a Notice of Election to Defer Annual Fees in the form of Exhibit C
hereto, on or before December 31st of any year to defer receipt of all (but not
less than all) of his or her annual fees payable under the Plan in Shares
pursuant to Section 4 or Section 5 above for the period beginning on January 1
of the following calendar year and continuing until the Company receives
written notice from the Director terminating such deferral (a "Share Deferral
Election"); provided, however, that (i) any Share Deferral Election for fees
payable pursuant to Section 4 or Section 5 above in respect of calendar year
1996 must be made on or before the date thirty days after the date on which the
Plan is approved by the shareholders of the Company and (ii) the Director may
make a Share Deferral Election for the calendar year in which he or she is
first elected to the Board of Directors at any time on or before the date
thirty days after the date on which he or she is first elected to the Board of
Directors. Such deferred fees will be maintained and held in a separate
memorandum account. Such fees will be received in Shares as provided below.
(b) The Shares to be received by a Director who has made a Share
Deferral Election with respect to such Shares shall be issued to the Director
in annual installments as nearly equal in number as possible over a ten-year
period (or such longer or shorter period as the Committee may determine)
beginning with the first day of the first calendar year immediately following
the year in which the Director ceases to be a director. The Director shall not
be deemed to be the legal or beneficial owner of any Shares until such Shares
are distributed by the Company to the Director except that all cash and stock
dividends otherwise payable on such Shares shall be credited to the Director's
memorandum account.
(c) If the Director has previously deferred cash fees pursuant to
an Agreement to Defer Annual Fees with the Company (a "Prior Agreement"), the
Director also may elect to receive all or a percentage of the cash fees which
were deferred by the Director under such Prior Agreement prior to the effective
date of his or her initial Share Deferral Election under this Section 6 and
which are currently held in a memorandum account for the Director, together
with accumulated interest thereon, in Shares rather than in cash. Such
election may be made by checking the appropriate box on the Election form
attached hereto as Exhibit C at the time the Director first makes a Share
Deferral Election under this Section 6, which election shall be irrevocable (if
the Director is a Section 16 Person) and shall become effective on the date on
which such Director's initial Share Election becomes effective. The number of
Shares as to which such election is made will be equal to the amount of cash
fees (and accumulated interest) as to which such election is made divided by
the average of the "bid" and "ask" prices of the Common Stock on the
over-the-counter market on the date on which such Election becomes effective
(or, if such day is not a trading day, on the first trading day immediately
following such date). If such election is made by the Director, interest on
such deferred fees under such Director's Prior Agreement shall cease to
accumulate from and after the effective date of the Director's election, and
the Shares to which the Director will be entitled will be deferred and
distributed in accordance with paragraph (b) above, except that if such
election becomes effective during the period during which such deferred fees
are payable in accordance with the Director's Prior Agreement, the Director
shall receive such Shares over the remainder of such original deferral period.
(d) In the event the Director ceases to be a director of the
Company and becomes a proprietor, officer, partner, employee, or otherwise
becomes affiliated with any business that is in competition with the Company,
the entire balance of his or her deferred fees may, if directed by the Board of
Directors, in its sole discretion, be issued immediately to the Director.
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(e) Upon the death of the Director prior to the expiration of the
period during which the deferred amounts are payable, the balance of the shares
issuable to the Director shall be issuable to his or her estate or other
beneficiary designated by the Director in writing to the Company in full on the
first day of the calendar year following the year in which he dies.
(f) Except as otherwise provided in Section 5 with respect to
Initial Period Fees and in any Prior Agreement to which a Director is a party
with respect to cash fees previously deferred by such Director, no Director
shall be entitled after the effective date of the Plan to defer receipt of
compensation for attendance of meetings of the Board of Directors or any
Committee of the Board of Directors unless and to the extent such Director has
made a Share Election as to such fees.
7. OTHER PROVISIONS RELATING TO SHARES
(a) The Shares issued under the Plan may be treasury shares or
newly-issued shares or may be shares purchased by the Company on the open
market for a purchase price equal to the amount of the compensation which the
Director has elected to receive in Shares (or, in the case of Shares issuable
in respect of Initial Period Fees pursuant to Section 5 and Shares the receipt
of which has been deferred pursuant to Section 6, the amount credited to the
Director in his or her memorandum account at the time such Shares are
purchased) and delivered to any Director. In cases where authorized but
unissued or treasury Shares are used, the Common Stock shall be valued at the
average of the "bid" and "ask" prices of the Common Stock in the
over-the-counter market on the business day next preceding the date of the
Board or Committee meeting or such other date on which such Shares shall become
issuable to the Director under the Plan (or, if the Common Stock ceases to
trade in the over-the-counter market and is traded on another exchange or on
the Nasdaq National Market, by such other reasonable method or formula as may
be determined by the Committee in its discretion). In cases where the Company
purchases the Shares, it shall do so as of a date reasonably close to the date
of the Board or Committee meeting.
(b) None of the Shares issued under the Plan shall be subject to
forfeiture upon the termination of a Director's service prior to completion of
his or her term.
(c) The obligation of the Company to deliver Shares to any
Director who has elected to receive Shares pursuant to the Plan shall be
subject to all applicable laws, rules and regulations, and to such approvals by
governmental agencies as may be deemed necessary or appropriate by the Company,
including, among others, such steps as counsel for the Company shall deem
necessary or appropriate to comply with requirements of relevant securities
laws. Such obligation shall also be subject to the condition that any Shares
reserved for issuance under the Plan shall have been duly listed on any
national securities exchange or automated quotation system (including Nasdaq)
which then constitutes the principal trading market for the Shares.
(d) The Company, in its sole discretion, may register any Shares
to be issued pursuant to the Plan under the Securities Act of 1933, as amended.
In the event the Company elects not to register such Shares, each Director
agrees to execute and deliver to the Company a certificate containing such
representations as to his or her investment intent and other matters as the
Company may reasonably require.
8. ENROLLMENT IN DRP
All Shares issued to each Director pursuant to the Plan shall, within
five business days following the date of issuance to the Director (but in any
event before the next record date for payment of dividends on the Common
Stock), be enrolled in the Director's name in the DRP. The Director shall be
entitled to exercise all rights to such Shares, including the right to withdraw
such Shares from the DRP, in accordance with the terms of the DRP.
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9. MAXIMUM SHARES
The maximum number of Shares that may be issued under the Plan during
any calendar year may not exceed one percent (1%) of the highest number of the
Corporation's issued and outstanding common stock calculated on a fully diluted
basis, subject to adjustment as set forth in Section 10 below.
10. ADJUSTMENTS
The number and kind of Shares which may be issued under the Plan shall
be automatically adjusted to prevent dilution or enlargement of the rights of
Directors in the event of any changes in the number or kind of outstanding
Shares resulting from a merger, recapitalization, stock exchange, stock split,
stock dividend, other extraordinary dividend or distribution, corporate
division or other change in the Company's corporate or capital structure.
11. AMENDMENT, SUSPENSION AND DISCONTINUANCE
The Board of Directors may at any time amend, suspend or discontinue
the Plan, provided that, if shareholder approval of such action is necessary in
order to ensure compliance with Rule 16b-3, such action shall be subject to
approval by the holders of the Shares by the vote and in the manner required by
Rule 16b-3.
12. COMPLIANCE WITH RULE 16b-3
The Company intends that the Plan and all transactions hereunder meet
all of the requirements of Rule 16b-3 in order that the receipt of Shares by
any Director hereunder be exempt from the provisions of Section 16(b) of the
Exchange Act, and that any Director who elects to receive Shares under the Plan
shall not, as a result thereof, lose his or her status as a "disinterested
person" as defined in Rule 16b-3. Accordingly, if any provision of the Plan
does not meet a requirement of Rule 16b-3 as then applicable to any such
transaction, or would cause a Director who receives any Shares hereunder not to
be a "disinterested person," such provision shall be construed or deemed
amended to the extent necessary to meet such requirement and to preserve such
status.
13. GOVERNING LAW
The Plan shall be applied and construed in accordance with and
governed by the law of the Commonwealth of Pennsylvania and applicable Federal
law.
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SHARE ELECTION NOTICE
The undersigned director ("Director") of F.N.B. Corporation (the
"Corporation") and/or a subsidiary of the Corporation hereby elects, pursuant
to the F.N.B. Corporation Directors' Compensation Plan (the "Plan"), to receive
his or her compensation for attendance at meetings of the Board of Directors
and Committees of the Board of Directors of the Corporation and its
subsidiaries in shares of the Corporation's Common Stock rather than in cash.
I acknowledge and agree that if I am a Section 16 Person (as defined
in the Plan), my Share Election shall not become effective until the date six
(6) months following the date this Notice has been executed and delivered to
the Corporation and my Share Election shall remain effective until the date six
(6) months after I have executed and delivered to the Corporation a notice
terminating my Share Election. I further acknowledge that the provisions of
the Plan shall govern my Share Election and all shares to be granted to me
pursuant thereto.
Executed as of the date and year set forth below.
_________________________________
Signature of Director
_________________________________
Name of Director
Date: __________________________
EXHIBIT A
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NOTICE OF SHARE ELECTION FOR INITIAL PERIOD FEES
The undersigned director ("Director") of F.N.B. Corporation (the
"Corporation") and/or a subsidiary of the Corporation hereby elects, pursuant
to the F.N.B. Corporation Directors' Compensation Plan (the "Plan"), to delay,
for a period of six months after the date hereof, his or her receipt of the
cash fees payable to the Director for attendance at meetings of the Board of
Directors of the Corporation or its subsidiaries or committees thereof during
the six months prior to the effective date of the Share Election Notice which
the undersigned has executed and delivered along with this Notice ("Initial
Period Fees"). The undersigned acknowledges and agrees that this election
shall constitute an irrevocable election to receive such Initial Period Fees in
shares of the Corporation's common stock rather than in cash as set forth in
the Plan, which election shall become effective on the date six months
following the date the Corporation receives this Notice.
I acknowledge and agree that the provisions of the Plan shall govern my
election to delay receipt of the fees which are subject to this Notice and to
receive such fees in shares of Common Stock, the terms under which such fees
will be held and my receipt of such shares of Common Stock.
Executed as of the date and year set forth below.
_________________________________
Signature of Director
_________________________________
Name of Director
Date: ___________________________
EXHIBIT B
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NOTICE OF ELECTION TO DEFER ANNUAL FEES
The undersigned director ("Director") of F.N.B. Corporation (the
"Corporation") and/or a subsidiary of the Corporation hereby elects, pursuant
to the F.N.B. Corporation Directors' Compensation Plan (the "Plan"), to defer
receipt of all shares of the Corporation's Common Stock which may be issuable
to the undersigned pursuant to the Plan for the calendar year beginning on the
January 1 first following the date of this Notice (or, if this election is made
within 30 calendar days after the date the Plan is approved by the shareholders
of the Corporation or within 30 calendar days after the date on which the
undersigned is first elected or appointed to the Board of Directors of the
Corporation and/or a subsidiary of the Corporation, for the current calendar
year) and each subsequent calendar year until the Corporation receives a notice
from the undersigned revoking this Election to Defer Annual Fees.
(Check if applicable:)
______ I hereby elect to receive _____% of the cash fees
previously deferred by me under my Agreement with Director
to Defer Annual Fees and held by the Corporation, together
with accumulated interest thereon, in Shares rather than in
cash as provided in and pursuant to the terms of Section 6
of the Plan.
I acknowledge and agree that the provisions of the Plan shall govern my
receipt of the shares of Common Stock which are subject to this Notice and all
such Shares.
Executed as of the date and year set forth below.
_________________________________
Signature of Director
_________________________________
Name of Director
Date: _________________________
EXHIBIT C
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________________________________________________________________________________
F.N.B. Corporation * Hermitage Square * Hermitage, Pennsylvania 16148-3389
* (412) 981-6000
