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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 30, 1996
REGISTRATION NO. 333-01697
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 1
(ON FORM S-8)
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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NATIONAL CITY CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware
(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION)
1900 East Ninth Street
Cleveland, Ohio
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
34-1111088
(I.R.S. EMPLOYER IDENTIFICATION NO.)
44114
(ZIP CODE)
INTEGRA FINANCIAL CORPORATION EMPLOYEE STOCK OPTION PLAN
INTEGRA FINANCIAL CORPORATION MANAGEMENT INCENTIVE PLAN
INTEGRA FINANCIAL CORPORATION NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
EQUIMARK CORPORATION EXECUTIVE OFFICER NON-QUALIFIED STOCK OPTION PLAN
EQUIMARK CORPORATION 1987 NON-QUALIFIED STOCK OPTION PLAN
PENNBANCORP KEY EMPLOYEE STOCK OPTION PLAN
AND
UNION NATIONAL CORPORATION
EMPLOYEE STOCK OPTION PLAN OF 1984
(FULL TITLE OF THE PLANS)
DAVID L. ZOELLER, Esq.
Senior Vice President,
General Counsel and Secretary
National City Corporation
1900 East Ninth Street
Cleveland, Ohio 44114
(NAME AND ADDRESS OF AGENT FOR SERVICE)
(216) 575-2000
(TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
National City Corporation (the "Company") hereby incorporates in this
Prospectus by reference its Annual Report on Form 10-K for the year ended
December 31, 1995, the description of the Company's common stock ("Common
Stock") set forth in the Restated Certificate of Incorporation of the
Registrant, as amended (filed as Exhibit 3.1 to Registration Statement No.
33-49823), and the description of the Company's 8% Cumulative Convertible
Preferred Stock, without par value, set forth in the Certificate of Stock
Designation dated April 18, 1991 (filed as Exhibit 4.4 to its Annual Report on
Form 10-K for the year ended December 31, 1991), each as filed with the
Commission pursuant to the Exchange Act.
All documents filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the securities
offered hereby shall be deemed to be incorporated by reference in this
Prospectus and to be a part hereof from the date of filing of such documents.
Any statement contained in this Prospectus or in a document all or a portion of
which is incorporated or deemed to be incorporated herein by reference shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated herein by reference
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of any such person, a
copy of any or all of the documents incorporated herein by reference (other than
exhibits, unless such exhibits are specifically incorporated by reference in
such documents). Written requests for such copies should be directed to National
City Corporation, National City Center, 1900 East Ninth Street, Cleveland, Ohio
44114-3484 Attention: Janis E. Lyons, Vice President and Director of Investor
Relations. Telephone requests may be directed to 216/575-3329.
Unless otherwise indicated, currency amounts in this Prospectus are stated
in United States dollars ("$" "dollars", "U.S. dollars" or "U.S.$").
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
The legality of the shares of Common Stock has been passed upon for the
Company by Carlton E. Langer, Vice President and Assistant General Counsel of
the Company. Mr. Langer owns currently exercisable options to purchase shares of
Common Stock.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company. Under Section 145 of the Delaware General Corporation Law
(the "DGCL"), directors, officers, employees and other individuals may be
indemnified against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement in connection with specified actions, suits or
proceedings, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the Company -- a "derivative action") if
they acted in good faith and in a manner they reasonably believed to be in, or
not opposed to, the best interests of the Company, and, regarding any criminal
action or proceeding, had no reasonable cause to believe their conduct was
unlawful. A similar standard is applicable in the case of derivative actions,
except that indemnification only extends to expenses (including attorneys' fees)
incurred in connection with the defense or settlement of such actions. The DGCL
requires court approval before there can be any indemnification where the person
seeking indemnification has been found liable to the Company. To the extent that
a person otherwise
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eligible to be indemnified is successful on the merits of any claim or defense
described above, indemnification for expenses (including attorneys' fees)
actually and reasonably incurred is mandated by the DGCL.
Article VI of the Company's Bylaws provides that the Company must
indemnify, to the fullest extent authorized by the DGCL, each person who was or
is made party to, is threatened to be made a party to, or is involved in, any
action, suit or proceeding because he is or was a director, officer or employee
of the Company or of any Company subsidiary (or was serving at the request of
the Company as a director, trustee, officer, employee or agent of another
entity) while serving in such capacity against all expenses, liabilities or loss
incurred by such person in connection therewith. The amount of any
indemnification to which any person shall otherwise be entitled under Article VI
shall be reduced to the extent that such person shall otherwise be entitled to
valid and collectible indemnification provided by a subsidiary of the Company or
any other source.
Article VI also provides that the Company may pay expenses incurred in
defending the proceedings specified above in advance of their final disposition.
The Company may advance expenses to any director, officer or employee only upon
delivery to the Company of an undertaking by the indemnified party stating that
he has reasonably incurred or will reasonably incur actual expenses in defending
an actual civil or criminal suit, action or proceeding in his capacity as such
director, officer or employee, or arising out of his status as such director,
officer or employee, and that he undertakes to repay all amounts so advanced if
it is ultimately determined that the person receiving such payments is not
entitled to be indemnified.
Finally, Article VI provides that the Company may maintain insurance, at
its expense, to protect itself and any of its directors, officers, employees or
agents against any expense, liability or loss, regardless of whether the Company
has the power or obligation to indemnify that person against such expense,
liability or loss under the provisions of Article VI.
The right to indemnification is not exclusive of any other right which any
person may have or acquire under any statute, provision of the Company's
Certificate or Bylaws, or otherwise. Additionally, no amendment to the Company's
Certificate can increase the liability of any director or officer for any act or
omission by him prior to such amendment.
ITEM 8. EXHIBITS
The following Exhibits are filed as part of this Registration Statement:
4.1 Restated Certificate of Incorporation of the Company, as amended
(filed as Exhibit 3.1 to Registration Statement No. 33-49823 and
incorporated herein by reference).
4.2 National City Corporation First Restatement of By-Laws adopted April
27, 1987 (As Amended through October 24, 1994) (filed as exhibit 3.3
to Registrant's Form S-4 Registration Statement No. 33-56539 dated
November 18, 1994 and incorporated herein by reference).
4.3 Form of the Integra Financial Corporation Employee Stock Option Plan
4.4 Form of the Integra Financial Corporation Management Incentive Plan
4.5 Form of Integra Financial Corporation Non-Employee Directors Stock
Option Plan
4.6 Form of the Equimark Corporation 1987 Non-qualified Stock Option Plan
4.7 Form of the Equimark Corporation Executive Officer Non-Qualified
Stock Option Plan
4.8 Form of the Pennbancorp Key Employee Stock Option Plan
4.9 Form of the Union National Corporation Employee Stock Option Plan of
1984
5.1 Opinion of Carlton E. Langer, Vice President and Assistant General
Counsel of the Company as to the legality of the Common Stock being
registered
23.1 Consent of Ernst & Young LLP
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23.2 Consent of Carlton E. Langer, Esq. (included in Exhibit 5.1)
24.1 Power of Attorney (Filed as Exhibit 24.1 to the Company's
Registration Statement No. 333-01697 and incorporated herein by
reference).
ITEM 9. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
Provided, however, that paragraphs 1(i) and 1(ii) do not apply if the
Registration Statement is on Form S-3, Form S-8 or Form F-3 and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein; and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof;
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 15 above, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
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SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-8 AND HAS DULY CAUSED THIS POST-EFFECTIVE
AMENDMENT NO. 1 (ON FORM S-8) TO FORM S-4 REGISTRATION STATEMENT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THERETO DULY AUTHORIZED, IN THE CITY OF
CLEVELAND, STATE OF OHIO, ON THE 30TH DAY OF APRIL 1996.
NATIONAL CITY CORPORATION
By /s/ THOMAS A. RICHLOVSKY
Thomas A. Richlovsky
Senior Vice President and
Treasurer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
POST-EFFECTIVE AMENDMENT NO. 1 (ON FORM S-8) TO FORM S-4 REGISTRATION STATEMENT
HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATE
INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
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<S> <C> <C>
/s/ DAVID A. DABERKO Chairman and Chief Executive
David A. Daberko Officer, Director
/s/ WILLIAM R. ROBERTSON President, Director
William R. Robertson
/s/ SANDRA H. AUSTIN Director
Sandra H. Austin
/s/ JAMES M. BIGGAR Director
James M. Biggar
/s/ CHARLES H. BOWMAN Director
Charles H. Bowman
/s/ EDWARD B. BRANDON Director
Edward B. Brandon
/s/ JOHN G. BREEN Director
John G. Breen
/s/ DUANE E. COLLINS Director
Duane E. Collins
____________________ Director
Richard E. Disbrow
/s/ DANIEL E. EVANS Director
Daniel E. Evans
/s/ OTTO N. FRENZEL III Director
Otto N. Frenzel III
</TABLE>
April 30, 1996
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<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
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<S> <C> <C>
/s/ BERNADINE P. HEALY, M.D. Director
Bernadine P. Healy, M.D.
/s/ JOSEPH H. LEMIEUX Director
Joseph H. Lemieux
/s/ W. BRUCE LUNSFORD Director
W. Bruce Lunsford
/s/ A. STEVENS MILES Director
A. Stevens Miles
/s/ STEPHEN A. STITLE Director
Stephen A. Stitle
/s/ MORRY WEISS Director
Morry Weiss
</TABLE>
*Carlton E. Langer, Vice President and Assistant General Counsel, the
undersigned attorney-in-fact, by signing his name below, does hereby sign this
Post-Effective Amendment No. 1 (on Form S-8) to Form S-4 Registration Statement
on behalf of each of the above-indicated officers and directors of National City
Corporation (constituting a majority of the directors) pursuant to a power of
attorney executed by such persons and previously filed with the Securities and
Exchange Commission.
By /s/ CARLTON E. LANGER
Carlton E. Langer, Assistant
Secretary April 30, 1996
April 30, 1996
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Exhibit 4.3
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
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<S> <C>
Additional Information ..................................................... i
Incorporation of Certain Documents by Reference ............................ i
Introduction to the Plan ................................................... 1
Description of the Plan .................................................... 1
1. Administration .............................................. 1
2. Eligibility ................................................. 2
3. Total Shares Available for Options .......................... 2
4. Types of Options ............................................ 2
5. Option Price ................................................ 2
6. Option Period and Exercise of Options ....................... 3
7. Payment ..................................................... 3
8. Alternative Settlement Method ............................... 3
9. Options Not Transferable .................................... 4
10. Surrender of Options ........................................ 4
11. Adjustments ................................................. 4
12. Amendment or Discontinuance ................................. 4
13. Withholding ................................................. 4
Federal Income Tax Consequences ............................................ 5
Incentive Stock Options - General Rules ............................ 5
Incentive Stock Options Exercised by Delivery
of previously-Owned Shares ....................................... 6
Non-Statutory Stock Options - General Rules ........................ 8
Alternative Settlement Method ...................................... 8
Optionees Subject to Short-Swing Profits Restrictions .............. 9
Taxation of Capital Gains and Losses ............................... 10
Alternative Minimum Taxes .......................................... 10
Restrictions on Resale by Officers and Directors ........................... 11
Shareholder Reports and Current Information about the Plan ................. 11
Experts .................................................................... 11
Legal Matters .............................................................. 12
Indemnification of Officers and Directors .................................. 12
Exhibit A: Integra Financial Corporation Employee Stock Option Plan......... A-1
</TABLE>
No person has been authorized to give any information or to make
any representation other than as contained in this Prospectus in connection with
any offer described in this Prospectus, and, if given or made, such information
or representations must not be relied upon as having been authorized. This
Prospectus does not constitute an offer to sell or a solicitation of an offer to
buy any of these securities to or by any person in any state in which such
offering may not lawfully be made. Neither the delivery of this Prospectus nor
any sale made hereunder shall tender any circumstances nor create any
implication that there has not been any change in the affairs of the
Corporation since the date hereof.
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INTEGRA FINANCIAL CORPORATION
EMPLOYEE STOCK OPTION PLAN
SECTION 1. ESTABLISHMENT OF THE PLAN AND TYPES OF OPTIONS.
(a) There is hereby established the Integra Financial
Corporation Employee Stock Option Plan (hereinafter called the "Plan"), pursuant
to which employees of Integra Financial Corporation (hereinafter called the
"Corporation") and its subsidiaries may be granted options to purchase shares of
common stock of the Corporation (hereinafter called "Common Stock"), in order to
provide a long-range incentive and a shareholder's proprietary interest and
perspective to those persons responsible for the continued growth and financial
success of the Corporation.
(b) Options granted pursuant to the Plan may be either options
which are incentive stock options under Section 422A of the Internal Revenue
Code of 1986, as amended (hereinafter called "Incentive Stock Options"), or
other options (hereinafter called "Non-Statutory Stock Options"). Incentive
Stock Options and Non-Statutory Stock Options shall be designated as such by the
Committee and shall be granted separately hereunder.
(c) The aggregate Fair Market Value (as defined in Section 9),
determined on the Grant Date, of shares of Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by an optionee during
any calender year shall not exceed $100,000 as provided in Section 422A (b)(7)
of the Internal Revenue Code of 1986, as amended (hereinafter, the "Code").
(d) The Committee (as defined in Section 3 of the Plan), in its
sole discretion, shall determine whether and to what extent options granted
under the Plan shall be designated as Incentive Stock Options or Non-Statutory
Stock Options.
SECTION 2. DURATION. All options granted under this Plan must be
granted within ten years from the effective date set forth in Section 16 hereof.
Any options outstanding after the expiration of such ten-year period may be
exercised within the periods prescribed by Section 7(c).
SECTION 3. ADMINISTRATION. The Plan shall be administered by a
committee (hereinafter called the "Committee") of not less than five directors
of the Corporation, none of whom shall be eligible, or shall have been eligible
at any time within one year prior to becoming a Committee member, to participate
in the Plan or any other plan of the Corporation or any of its affiliates which
entitles its participants to receive stock, stock options or stock appreciation
rights of the Corporation or any of its affiliates, who shall be appointed and
serve at the pleasure of the Board of Directors. A majority of the Committee
shall constitute a quorum, and the acts of a majority of the members present at
any meeting at which a quorum is present, or acts approved in writing by a
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majority of the Committee, shall be deemed the acts of the Committee. Subject to
the provisions of the Plan and to policies determined by the Board of
Directors, the Committee is authorized to interpret the Plan, adopt rules and
regulations, and to take action in the administration of the Plan, all as it
shall deem proper.
SECTION 4. ELIGIBILITY. Employees of the Corporation and its
subsidiaries (including officers and other employees who are directors of the
Corporation) who, in the opinion of the Committee, are responsible for the
continued growth and development and future financial success of the business
shall be eligible to participate in the Plan. The Committee shall, in its sole
discretion, from time to time select from such eligible persons those to whom
options shall be granted and determine the type or types of options and the
number of shares to be included in such options. No officer or other employee
shall have any right to receive an option except as the Committee in its
discretion shall determine. The term "subsidiary" where used in the Plan or in
any stock option agreement means a corporation the majority of the outstanding
voting stock of which is directly or indirectly owned by the Corporation.
SECTION 5. SHARES SUBJECT TO THE PLAN. Options may be granted
pursuant to the Plan to purchase up to 1,000,000 shares of Common Stock (subject
to adjustment as provided in Section 8), which may be either authorized and
unissued shares or shares held in the treasury of the Corporation, and which
shares are hereby reserved for the purposes of the Plan. To the extent that
options granted under the Plan shall expire or terminate without being
exercised, shares covered thereby shall remain available for purposes of the
Plan. To the extent that an optionee shall elect the alternative settlement
method provided in Section 7(d) hereof, then upon the surrender of an option, or
portion thereof, to effectuate such alternative settlement method, such option
shall be deemed to have been exercised but only for the number of shares which
are received from the Corporation by the optionee, and, with respect to the
balance of the shares covered by such option, or portion thereof with respect to
which the optionee shall have elected such alternative settlement method, such
option shall be deemed to have terminated without being exercised.
SECTION 6. AUTHORITY OF THE COMMITTEE. Subject to the provisions
of the Plan, the Committee shall have full and final authority to determine the
persons to whom options shall be awarded and the number of shares to be covered
by each option. The Committee's determinations under the Plan, including without
limitation determination of the persons to receive options, the terms and
provisions of such options, and the agreements evidencing the same, need not be
uniform and may be made selectively among persons who receive, or are eligible
to receive, options under the Plan, whether or not such persons are similarly
situated. The Committee shall have the authority, in its discretion, to include
the alternative method of settlement as provided in Section 7(d) hereof in an
option either at the time of grant of the option or by amendment thereto. The
Committee, in its sole discretion, may permit an optionee voluntarily to
surrender for cancellation an option granted under the Plan, such surrender to
be conditioned upon the granting to such optionee of a new option
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under the Plan for the same or a different number of shares as the option
surrendered, or may require such voluntary surrender as a condition precedent to
the grant of a new option to such optionee. For purposes of Section 5 hereof,
options so surrendered for cancellation shall be deemed to have terminated
without being exercised. Any such new option shall be exercisable at the price,
during the period, and in accordance with any other terms and conditions
specified by the Committee at the time the new option is granted, all determined
in accordance with the provisions of the Plan, without regard to the price,
period of exercise, or any other terms or conditions of the option surrendered
for cancellation. The grant of such new option shall not be deemed an amendment
of the Plan or the option surrendered. After the death of an optionee, his or
her option may be surrendered to the Corporation for cancellation, but only upon
such terms and conditions, if any, as the Board of Directors may determine. For
purposes of Section 5 hereof, options so surrendered for cancellation shall be
deemed to have terminated without being exercised.
SECTION 7. TERMS OF OPTIONS. Each option granted under the Plan
shall be evidenced by a stock option agreement between the Corporation and the
person to whom such option is granted and shall be subject to the following
terms and conditions:
(a) Subject to adjustment as provided in Section 8 of the Plan,
the price at which each share covered by an option may be purchased shall be
determined in each case by the Committee, provided however, that the price of
Non-statutory Stock Options shall be not less than 50% of the Fair Market Value
thereof at the time the option is granted and that the price of Incentive Stock
Options shall be not less than the Fair Market Value thereof at the time the
option is granted. If an optionee owns (or is deemed to own under applicable
provisions of the Code and rules and regulations promulgated thereunder) more
than 10% of the combined voting power of all classes of the stock of the
Corporation (or any parent or subsidiary corporation of the Corporation) and an
option granted to such optionee is intended to qualify as an Incentive Stock
Option, the option price shall be not less than 110% of the Fair Market Value of
the shares covered by the option on the date the option is granted.
(b) During the lifetime of the optionee, the option may be
exercised only by the optionee or by his or her guardian or legal
representative. The option shall not be transferable by the optionee otherwise
than by will or by the laws of descent and distribution, except that the
Committee may permit transfer, upon the optionee's death, to beneficiaries
designated by the optionee in a manner and on a form authorized by the
Corporation; provided that the Committee determines that such exercise and such
transfer are consonant with requirements for exemption from Section 16(b) of the
Securities Exchange Act of 1934, as amended, and, with respect to an incentive
Stock Option, the requirements of Section 422A(b)(5) of the Code.
(c) An option may be exercised in whole at any time, or in part
from time to time, within such period or periods not to exceed ten years from
the granting of the option as may be determined by the Committee and set forth
in the stock option agreement (such period or periods being hereinafter referred
to as the option period) provided that:
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(i) if the optionee shall cease to be employed by the Corporation or a
subsidiary, except as provided in Subsections (ii) through (v) below, the option
may be exercised only within three months after the termination of his or her
employment and within the option period; provided, however, if such termination
of employment shall be for cause, the option shall forthwith terminate;
(ii) if the optionee shall retire, the option to exercise shall lapse at
the earlier of the expiration of the option period or five years after the
effective date of retirement, except in the case of an Incentive Stock Option in
which case the option to exercise shall lapse three months after the effective
date of retirement. "Retirement" means the optionee's termination of employment
with the Corporation and all of its subsidiaries at a time when the optionee is
eligible to receive an immediately payable retirement benefit under the
Corporation retirement plan or under any other retirement plan that is
niaintained by a Corporation subsidiary and that is determined by the Committee
to be the functional equivalent of the Corporation's retirement plan;
(iii) if the optionee shall die, the option may be exercised only within
eighteen months after his or her death and within the option period as provided
in Section 7(b) hereof;
(iv) the option may not be exercised for more shares (subject to
adjustment, as provided in Section 8) after the termination of the optionee's
employment or his or her death than the optionee was entitled to purchase,
thereunder at the time of the termination of the optionee s employment or his or
her death;
(v) if the optionee shall become totally and permanently disabled, the
option may be exercised only within twelve months after his or her total and
permanent disability and within the option period. "Total and Permanent
Disability," as applied to an optionee, means that the optionee: (i) has
established to the satisfaction of the Corporation that the optionee is unable
to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a continuous period of
not less than one year (all within the meaning of Section 22(e)(3) of the Code);
and (ii) has satisfied any requirement imposed by the Committee; and
(vi) if an optionee owns (or is deemed to own under applicable
provisions of the Code and rules and regulations promulgated thereunder) more
than 10% of the combined voting power of all classes of the stock of the
Corporation (or any parent or subsidiary of the Corporation) and an option
granted to such optionee is intended to qualify as an Incentive Stock Option,
the option by its terms may not be exercisable after the expiration of five
years from the date such option is granted.
(d) Subject to the limitations herein set forth, the option may be
exercised in whole or in part from time to time by written request made to the
Treasurer of the Corporation. Payment in full in cash for the number of shares
purchased shall be made to the Corporation at the time of each exercise,
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except in the case of the election of the alternative settlement method as
provided hereafter in this subsection; provided, however, that the Committee, in
its discretion, may provide that an option by its terms may permit payment to be
made either (A) in cash, or (B) in the discretion of the Committee, (1) by
delivering to the Corporation shares of Common Stock or (2) any combination of
such shares and cash, having in either case an aggregate Fair Market Value, as
determined by the Committee, equal to the option price of the shares being
purchased pursuant to the exercise of the option. The Fair Market Value of such
Common Stock shall be determined in accordance with the provisions of Section 9
of the Plan.
(i) The Committee, in its discretion, may provide that any option by its
terms may permit the optionee upon surrender of his or her option, or a portion
thereof, to elect the alternative settlement method set forth in subparagraph
(ii) below; provided, however, that an optionee may elect the alternative
settlement method with respect to an Incentive Stock Option only when the Fair
Market Value of the shares subject to such option exceeds the option price.
(ii) The optionee may elect the alternative settlement method and
receive that number of shares having an aggregate value equal to the excess of
the Fair Market Value of one share over the option price per share times the
number of shares as to which the option, or portion thereof, is surrendered. No
fractional shares will be issued but instead cash will be paid for a fraction.
(e) The Committee, in its discretion, may provide that any option
intended to be an Incentive Stock Option shall also be subject to such
additional or more restrictive terms and conditions as may, from time to time,
be required to constitute such option an incentive stock option under the
provisions of Section 422A of the Code.
(f) The Committee may include such other terms and conditions not
inconsistent with the foregoing as the Committee shall approve. Without limiting
the generality of the preceding sentence, the Committee shall be authorized to
impose conditions on the exercise of options relating to the performance of the
Corporation or any subsidiary or of optionee(s) or any combination of the
foregoing. The Committee shall, in its sole judgment, determine whether such
conditions have been fulfilled and may require that the Corporation receive from
the Committee a written certificate as to the fulfillment of such conditions
before shares are issued and sold pursuant to options surrendered for exercise.
SECTION 8. ADJUSTMENT OF NUMBER AND PRICE OF SHARES.
(a) In the event that a dividend shall be declared upon the Common Stock
payable in shares of said stock, the number of shares of Common Stock covered by
each outstanding option and the number of shares available for issuance pursuant
to the Plan but not covered by options 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 shareholders entitled to
receive such stock dividend.
A-5
<PAGE> 7
(b) In the event that the outstanding shares of Common Stock
shall be changed into or exchanged for a different number or kind of shares of
stock or other securities of the Corporation or of another corporation, whether
through reorganization, recapitalization, stock split-up, combination of shares,
merger or consolidation, then there shall be substituted for the shares of
Common Stock covered by each outstanding option and for the shares available for
issuance pursuant to the Plan but not covered by an option, the number and kind
of shares of stock or other securities which would have been substituted
therefor if such shares had been outstanding on the date fixed for determining
the shareholders entitled to receive such changed or substituted stock or other
securities.
(c) In the event there shall be any change, other than specified
above in this Section 8, in the number or kind of outstanding shares of Common
Stock or of any stock or other securities into which such Common Stock shall be
changed or for which it shall have been exchanged, then if the Board of
Directors shall determine, in its discretion, that such change equitably
requires an adjustment in the number or kind of shares covered by outstanding
options or which are available for issuance pursuant to the Plan but not covered
by options, such adjustment shall be made by the Board of Directors and shall be
effective and binding for all purposes of the Plan and on each outstanding stock
option agreement.
(d) In the event that, by reason of a corporate merger,
consolidation, acquisition of property or stock, separation, reorganization or
liquidation, the Board of Directors shall authorize the issuance or assumption
of a stock option or stock options in a transaction to which Section 425(a) of
the Code applies, then, notwithstanding any other provision of the Plan, the
Committee may grant an option or options upon such terms and conditions as it
may deem appropriate for the purpose of assumption of the old option, in
conformity with the provisions of such Section 425(a) and the regulations
thereunder, as they may be amended from time to time.
(e) No adjustment or substitution provided for in this Section 8
shall require the Corporation to issue or to sell a fractional share under any
stock option agreement and the total adjustment or substitution with respect to
each stock option agreement shall be limited accordingly.
(f) In the case of any adjustment or substitution provided for
in this Section 8, the option price per share in each stock option agreement
shall be equitably adjusted by the Board of Directors to reflect the greater or
lesser number of shares of stock or other securities into which the stock
covered by the option may have been changed or which may have been substituted
therefor.
SECTION 9. FAIR MARKET VALUE.
(a) In any determination of Fair Market Value under the Plan,
the Fair Market Value of one share shall mean the average of the high and low
sales prices per share of the Common Stock as reported on the National
Association of Securities Dealers Automated Quotations System (hereinafter the
"NASDAQ System")
A-6
<PAGE> 8
on the relevant date under the Plan. If sales of Common Stock are not reported
on the NASDAQ System on that date, the Fair Market Value of one share will be
determined on the basis of the average of the high and low sales prices per
share of such stock on the closest preceding day on which there were sales
reports.
(b) If, in the opinion of the Committee, the sales of Common
Stock on the relevant date are insufficient to constitute a representative
market, the Fair Market Value of a share of Common Stock on such date shall be
deemed equal to the average between the high and low sales prices per share of
Common Stock on the NASDAQ System for the first preceding date on which sales of
Common Stock are included that do, in the opinion of the Committee, constitute a
representative market.
SECTION 10. NO RIGHT TO EMPLOYMENT. Nothing in the Plan or in
any instrument executed pursuant thereto shall confer upon any employee any
right to continue in the employ of the Corporation or any subsidiary or affect
the right of the Corporation or a subsidiary to terminate the employment of any
employee, with or without cause.
SECTION 11. NO RIGHTS AS SHAREHOLDERS. No optionee, and no
beneficiary or other person claiming through an optionee, shall have any
interest in any shares of Common Stock allocated for the purposes of the Plan or
subject to any option until such shares of Common Stock shall have been
transferred to the optionee or such person. Furthermore, the existence of the
options shall not affect: the right or power of the Corporation or its
shareholders to make adjustments, recapitalizations, reorganizations or other
changes in the Corporation's capital structure or its business; any issue of
bonds, debentures, preferred or prior preference stocks affecting the Common
Stock or the rights thereof; the dissolution or liquidation of the Corporation,
or sale or transfer of any part of its assets or business; or any other
corporate act, whether of a similar character or otherwise.
SECTION 12. CHOICE OF LAW. The validity, interpretation and
administration of the Plan and of any rules, regulations, determinations or
decisions made thereunder, and the rights of any and all persons having or
claiming to have any interest therein or thereunder, shall be determined
exclusively in accordance with the laws of the Commonwealth of Pennsylvania.
SECTION 13. AMENDMENT AND DISCONTINUANCE. The Board of Directors
may alter, amend, suspend or discontinue the Plan, provided that no such action
shall deprive any person without his or her consent of any rights theretofore
granted pursuant hereto, and provided further that, except as provided in
Section 8, no action of the Board of Directors, unless taken with the approval
of the shareholders of the Corporation, may:
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<PAGE> 9
(a) increase the total number of shares available for
issuance pursuant to the Plan,
(b) reduce the minimum option price,
(c) increase the period in which options granted under the
Plan may be exercised,
(d) extend the termination date of the Plan, or
(e) change the class of employees eligible to receive
options granted under the Plan.
SECTION 14. COMPLIANCE WITH GOVERNMENTAL REGULATIONS.
Notwithstanding any provision of the Plan or the terms of any stock option
agreement issued under the Plan, the Corporation shall not be required to issue
any shares hereunder prior to registration of the shares subject to the Plan
under the Securities Act of 1933 or the Securities Exchange Act of 1934, if such
registration shall be necessary, or before compliance by the Corporation or any
participant with any other provisions of either of those acts or of regulations
or rulings of the Securities and Exchange Commission thereunder, or before
compliance with all other applicable Federal and state laws and regulations and
rulings thereunder. The Corporation shall use its best efforts to effect such
registrations and to comply with such laws, regulations and rulings forthwith
upon advice by its counsel that any such registration or compliance is
necessary.
SECTION 15. WITHHOLDING.
(a) Whenever shares are to be issued under the Plan, the
Corporation shall have the right to require the optionee to remit to the
Corporation an amount sufficient to satisfy Federal, state and local tax
withholding requirements prior to the delivery of any certificate for such
shares. If an optionee makes a disposition of shares acquired upon the exercise
of an Incentive Stock Option within either two years after grant or one year
after the receipt of Common Stock by the optionee, the optionee shall promptly
notify the Corporation and the Corporation shall have the right to require the
optionee to pay to the Corporation an amount sufficient to satisfy Federal,
state and local tax withholding requirements.
(b) An optionee who is obligated to pay to the Corporation an
amount required to be withheld under applicable income tax laws in connection
with the exercise of Non-Statutory Stock Options under the Plan may elect to
satisfy this withholding obligation, in whole or in part, by requesting that the
Corporation withhold shares of Common Stock otherwise issuable to the optionee
upon exercise of the option or by delivering to the Corporation already owned
shares of Common Stock of the Corporation having a Fair Market Value on the date
on which the amount of tax to be withheld is determined (the "Tax Date") equal
to the amount of the tax required to be withheld. Any fractional amount shall
A-8
<PAGE> 10
be paid to the Corporation by the optionee in cash or shall be withheld from the
optionee's next regular paycheck.
(c) An election by an optionee to have shares of Common Stock
withheld or to deliver to the Corporation already owned shares of Common Stock
of the Corporation to satisfy Federal, state and local tax withholding
requirements pursuant to subparagraph (b) above (the "Election"), shall be
subject to the following restrictions:
(i) The Election must be in writing and delivered to the
Corporation prior to the Tax Date;
(ii) The Election shall be irrevocable by the optionee; and
(iii) The Election shall be subject to approval by the
committee, which approval may be granted or withdrawn at any time prior to the
Tax Date.
(d) With respect to the Election by an optionee who is subject to
Section 16(b) of the Securities Exchange Act ("Sec. 16(b)"), the following
additional restrictions apply:
(i) The Election may not be made during the six-month period
following the date on which the option was granted; provided, however, that this
limitation shall not apply in the event of death or disability of the optionee
occurs prior to the expiration of the six-month period; and
(ii) The Election must be made either at least six months prior
to the Tax Date or during a ten day "window period" beginning on the third day
following the release of the Corporation's quarterly or annual summary statement
of earnings and ending on the twelfth business day following such date.
(e) Where the Tax Date of an optionee who is subject to Sec.
16(b) is deferred until six months after exercise of the Non-Statutory Stock
Option and said optionee makes the Election pursuant to subparagraph (b) above,
the full number of option shares shall be issbed to said optionee upon exercise
of the option but said 6ptionee shall be unconditionally obligated to tender
back to the Corporation, on the Tax Date, the number of shares of Common Stock,
the Fair Market Value of which shall equal the amount of the tax withholding
obligation determined on the Tax Date.
SECTION 16. EFFECTIVE DATE OF THE PLAN. The Plan shall become
effective immediately after the approval of the Plan by a majority of the
outstanding shares of Pennbancorp and of Union National Corporation,
consummation of the consolidation between Pennbancorp and Union National
Corporation, and the assumption of the Plan by the Corporation, but no options
shall be granted hereunder until, the Committee shall have been advised by the
Corporation's counsel that all applicable legal requirements have been satisfied
and that appropriate rulings, if any are required from governmental agencies,
have been obtained.
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<PAGE> 1
Exhibit 4.4
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
AVAILABILITY OF ADDITIONAL INFORMATION ABOUT THE COMPANY i
INTRODUCTION TO THE PLAN ....................................... 1
DESCRIPTION OF THE PLAN ........................................ 1
1. Administration ...................................... 1
2. Eligibility ......................................... 1
3. Shares Available for Awards ......................... 1
4. Types of Awards ..................................... 2
A. Stock Options ..................................... 2
B. Restricted Stock Awards ........................... 3
C. Restricted Stock Units ............................ 5
D. Performance Shares ................................ 5
E. Performance Units ................................. 8
F. Annual Incentive Awards ........................... 8
G. Other Awards ...................................... 8
5. Nontransferability .................................. 8
6. Changes in Capitalization ........................... 9
7. Change of Control ................................... 9
8. Amendment and Termination of Awards ................. 9
9. Amendment and Termination of the Plan ............... 9
10. Withholding ......................................... 10
FEDERAL INCOME TAX CONSEQUENCES ................................ 11
Non-Statutory Options ................................... 11
Incentive Stock Options ................................. 11
Alternative Minimum Taxes ............................... 11
Participants Subject to Short-Swing
Profits Restrictions .................................... 12
Restricted Stock and Performance Share Awards ........... 12
Performance Units and Restricted Stock Units ............ 13
ADDITIONAL INFORMATION REGARDING THE PLAN ...................... 13
</TABLE>
-ii-
<PAGE> 2
<TABLE>
<CAPTION>
<S> <C>
RESTRICTIONS ON REOFFERS AND RESALES .......................... 13
SUPPLEMENTS TO PROSPECTUS ..................................... 13
</TABLE>
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No person has been authorized to give any information or to make any
representations other than as contained in the Prospectus in connection with any
offer described in this Document, and, if given or made, such information or
representatives must not be relied upon as having been authorized. The
Prospectus does not constitute an offer to sell or a solicitation of an offer to
buy nor shall there be any sale of any of these securities to or by any person
in any state in which such offer, solicitation or sale may not lawfully be made.
Neither the delivery of this Document nor any sale made hereunder shall under
any circumstances create any implication that there has not been any change in
the affairs of the Corporation since the date hereof.
- --------------------------------------------------------------------------------
-iii-
<PAGE> 3
INTEGRA FINANCIAL CORPORATION
MANAGEMENT INCENTIVE PLAN
INTRODUCTION TO THE PLAN
Integra Financial Corporation (the "Corporation"), Four PPG Place,
Pittsburgh, Pennsylvania 15222-5408 (telephone: (412) 644-7669) is the
sponsoring employer of and issuer of securities pursuant to the Management
Incentive Plan (the "Plan"). The Plan was adopted by the Board of Directors of
the Corporation in January 26, 1994 and approved by the shareholders of the
Corporation on April 27, 1994. The Plan provides for the issuance of shares of
common stock, par value $1.00 per share, of the Corporation ("Common Stock") in
accordance with the terms of the Plan.
The purposes of the Plan are: (a) to enhance the growth and profitability
of the Corporation and its subsidiaries by providing the incentive of annual and
long-term rewards to key employees who are capable of having a significant
impact on the performance of the Corporation and its subsidiaries; (b) to
attract and retain employees of outstanding competence and ability; (c) to
encourage long-term stock ownership by employees; and (d) to further align the
interests of such employees with those of shareholders of the Corporation.
DESCRIPTION OF THE PLAN
The following description is intended to summarize certain provisions of
the Plan and is qualified in its entirety by reference to the complete text of
the Plan. A current copy of the Plan is on file with the Secretary of the
Corporation and may be reviewed by participants in the Plan upon request.
1. ADMINISTRATION. The Plan will be administered by the Management
Development and Compensation Committee of the Board (the "Committee"), which has
the exclusive authority to make awards under the Plan and all interpretations
and determinations affecting the Plan. Committee members are appointed and serve
at the pleasure of the Board and will be removed from the Committee if the
member ceases to be a director of the Corporation. No Committee member will be
eligible to participate in the Plan.
2. ELIGIBILITY. Participation in the Plan will be limited to officers (who
may also be members of the Board of Directors) and other salaried key employees
of the Corporation and its subsidiaries who are selected from time to time by
the Committee.
3. SHARES AVAILABLE FOR AWARDS. No more than 1,500,000 shares of Common
Stock may be issued under the Plan (subject to adjustment as described below to
prevent dilution or enlargement of rights) ; provided, however, that no more
than an aggregate of 300,000 shares of Common Stock may be awarded in the form
of
<PAGE> 4
performance shares and restricted stock awards. The total number of units
payable in cash under the Plan is limited to 300,000 units. Shares of Common
Stock distributed under the Plan may be treasury shares or authorized but
unissued shares. Shares that have been granted as restricted stock or that have
been reserved for distribution in payment for performance shares on stock
options but are later forfeited, terminated or expired, or for any other reason
are not payable under the Plan, will remain available for future grants under
the Plan.
4. TYPES OF AWARDS. Awards under the Plan may be in the form of stock
options, restricted stock awards, restricted stock units, performance shares,
performance units, cash incentive awards and other awards payable in cash or in
other securities of the Corporation. Each of these different types of awards is
described in more detail below.
A. STOCK OPTIONS. The Plan provides for the Committee, in its
discretion, to grant options to participants either in the form of incentive
stock options ("ISOs") which meet the requirements of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code") or other options
("Non-Statutory Stock Options"). See "Federal Income Tax Consequences" below
for a summary of the differing tax consequences of the grant and exercise of
Incentive Stock Options and Non-Statutory Stock Options. Stock options give the
holder the right to acquire Common Stock in the future at a price (the exercise
price) established at the date of the grant. The term of options granted under
the Plan will be fixed by the Committee; however, such term may not exceed ten
(10) years from the grant date. Each stock option granted under the Plan shall
be evidenced by a written instrument containing such terms and conditions as the
Committee may deem appropriate.
i. EXERCISE PRICE AND PAYMENT. The per share exercise price of any
option will be determined by the Committee at the time of the grant but may not
be less than 100% of the Fair Market Value of the shares of Common Stock
underlying the option on the date the option is granted. However, Incentive
Stock Options granted to a participant who is deemed, under applicable Federal
tax rules, to own more than 10% of all of the voting stock of the Corporation
(or any direct or indirect parent or subsidiary of the Corporation) must have an
exercise price of not less than 110% of the Fair Market Value of the shares of
Common Stock underlying such options on the date such options are granted. For
purposes of the Plan, the "Fair Market Value" is defined as the average of the
high and low sales prices per share of Common Stock as reported on the New York
Stock Exchange Composite Tape for the date in question or, if no sales were made
on such date, on the next preceding date on which sales of the Common Stock were
made. Each option will vest and become exercisable on the date or dates
specified by the Committee at the time of the grant. Each option will be
exercisable in full or in part by payment of the option price in
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<PAGE> 5
cash or, in the discretion of the Committee, in shares of Common Stock or in any
combination of cash and shares of Common Stock. Payment may also be made by such
other means as the Committee, in its sole discretion, may determine.
ii. DEATH, DISABILITY, RETIREMENT OR OTHER TERMINATION OF PARTICIPANT.
Upon the death of a participant, all outstanding options granted to such
participant will vest and be exercisable for a period of 18 months after the
date of death and within the option period), unless such period is extended by
the Committee. If a participant terminates employment due to total and permanent
disability, all outstanding options held by the participant will vest and be
exercisable for a period of 12 months after termination (and within the option
period), unless such period is extended by the Committee. If a participant
retires, all outstanding options held by the participant will vest and be
exercisable for a period of five years after such retirement (and within the
option period), unless such period is extended by the Committee. In the event a
retiring or disabled participant engages in or assists any business that the
Committee in its sole discretion determines to be in competition with the
Corporation without the written consent of the Corporation, then such
outstanding options held by such participant shall be deemed to have expired on
the date of such participant's disability or retirement, as the case may be. In
the event of any other termination of the participant's employment, vested
options will be exercisable for a period of three months after such termination
(and within the option period), unless such period is extended by the Committee,
provided that in the event that the participant is terminated for cause, all
outstanding options will expire and will not be exercisable.
B. RESTRICTED STOCK AWARDS. Restricted stock awards are shares of Common
Stock that are granted to participants under the Plan subject to the
satisfaction of certain conditions by the participant including, for example,
continued service with the Corporation for a specified period of time. Under the
Plan, the Committee may make restricted stock awards on such terms and
conditions as it determines to be appropriate. Such terms and conditions will
include the circumstances under which such shares will be forfeited by reason of
termination of employment. Each grant shall be evidenced by a written instrument
stating the number of shares of restricted stock granted, the restricted periods
applicable to such shares and any other terms the Committee may deem
appropriate.
i. RESTRICTED PERIODS. The Committee shall establish one or more
restricted periods applicable to restricted stock. Each such restricted period
shall last not less than one (1) nor more than ten (10) consecutive years.
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<PAGE> 6
ii. RIGHTS AND RESTRICTIONS. A stock certificate representing the
number of shares of the Corporation's Common Stock designated by the Committee
as a restricted stock award granted to a participant will be registered in the
participant's name but will be held in custody by the Corporation for the
participant's account. Participants will generally have the rights and
privileges of a shareholder as to the shares awarded pursuant to a restricted
share award, including the right to vote and the right to receive dividends,
except that the shares will remain in the custody of the Corporation until all
restrictions have lapsed. None of the shares subject to a restricted stock award
may be assigned, transferred, pledged or sold until the conditions to the
receipt of the shares are satisfied and certificates for the shares are
delivered to the holder of the restricted stock award.
iii. DEATH, DISABILITY, RETIREMENT OR OTHER TERMINATION OF
PARTICIPANT. If, during a restriction period, a participant terminates
employment for any reason other than death, disability or retirement, the
participant will forfeit all rights to the payment of any restricted stock award
unless otherwise provided by the Committee. If, during a restriction period, a
participant's termination is due to death, all restricted stock granted to such
participant shall vest and the Common Stock underlying such restricted stock
award shall be paid to the participant's beneficiary or estate in accordance
with subsection 4Bv below. If, during a restriction period, a participant's
termination is due to disability or retirement, the participant will be entitled
to payment of his or her restricted stock upon expiration of the applicable
restriction period unless such participant, without the consent of the
Corporation, engages in or assists any business which the Committee determines
to be in competition with the Corporation.
iv. LEAVES OF ABSENCE. For purposes of restricted stock awards,
approved leaves of absence of one year or less shall not be deemed to be
terminations of employment. Leaves of absence of more than one year will be
deemed termination of employment, unless the Committee determines otherwise.
v. PAYMENT OF RESTRICTED STOCK. At the end of a restriction period,
all restrictions applicable to a restricted stock award shall lapse and one or
more stock certificates for the appropriate number of shares shall be delivered
to the participant (or his or her estate or beneficiary if the participant is
deceased) or, shall be credited to a brokerage account if so directed by the
participant or beneficiary.
vi. ADJUSTMENTS. The Committee may at any time shorten any restricted
period if it determines that conditions, including but not limited to, the
Corporation or participant's performance, changes, in the economy, changes in
competitive conditions, changes in laws or governmental regulations, changes in
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<PAGE> 7
generally accepted accounting principles, changes in the Corporation's
accounting policies, acquisitions or dispositions, or the occurrence of other
unusual, unforeseen or extraordinary events, including a possible change of
control, so warrant.
C. RESTRICTED STOCK UNITS. A restricted stock unit represents a right to
receive at the end of the applicable restriction period, either Common Stock or
a payment of cash in an amount equal to the fair market value of one share of
Common Stock. Under the Plan, the Committee may make restricted stock unit
awards on such terms and conditions as it determines to be appropriate. Such
terms and conditions will include the circumstances under which such shares will
be forfeited by reason of termination of employment. Generally, restricted stock
units are subject to the same terms and conditions applicable to restricted
stock awards. The holder of a restricted stock unit, however, will not have the
rights and privileges of a shareholder as to the shares underlying the
restricted stock unit. Accordingly, the holder of a restricted stock unit will
not have a right to vote the shares underlying the award or the right to receive
dividends; provided, however, that the Committee may provide that during the
restricted period for a restricted stock unit, participants may be paid dividend
equivalents in the same manner and at the same time dividends on the shares of
Common Stock are paid to shareholders.
D. PERFORMANCE SHARES.
i. PERFORMANCE SHARES AND PERFORMANCE PERIODS. A performance share
entitles a participant to receive a target number of shares of Common Stock
based upon the Corporation's attainment of predetermined performance goals over
a specified performance period. Under the Plan, the Committee shall establish
performance periods applicable to performance shares and performance units. Each
such performance period shall commence with the beginning of a fiscal year in
which the performance shares are granted and shall last not less than two (2)
nor more than five (5) consecutive years. The Committee may make performance
share awards on such terms and conditions as it determines to be appropriate.
The number of shares actually payable to a participant at the end of a
performance period will be based upon the Corporation's attainment of the
predetermined performance goals established by the Committee at the time of the
grant. If the minimum performance goals established by the Committee are not
met, no performance shares will be earned by the participant. If the performance
goals are fully achieved, 100% of the performance shares will be earned by the
participant. In addition, the Committee may, in its discretion, establish
intermediate levels at which portions of a performance share award are earned.
The Committee may provide that, during the performance period, the participant
will be entitled to dividend equivalents payable in cash or additional
restricted shares with respect to each performance share held.
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<PAGE> 8
ii. RESTRICTED PERIOD. At the time a performance share grant is made,
the Committee may, in its discretion, establish a restricted period applicable
to such shares. Restricted periods shall commence at the end of the performance
period and shall last not less than one (1) nor more than five (5) years. During
the restricted period, if any, the performance shares may not be assigned,
transferred, pledged or sold and will be subject to forfeiture if the
participant terminates employment for any reason other than death, disability or
retirement.
iii. GRANTS OF PERFORMANCE SHARES. The Committee may select employees
to become participants and grant performance shares or performance units to such
participants at any time prior to or during the first four (4) months of the
fiscal year commencing a performance period. Grants shall be deemed to have been
made as of the beginning of the first fiscal year of the performance period.
Each grant shall be evidenced by a written instrument stating the number of
performance shares granted, the performance period, restricted period, if any,
the performance objectives and any other terms and conditions of the award.
iv. PAYMENT OF PERFORMANCE SHARES. Within 90 days after the end of the
performance period applicable to any performance share, the Committee shall
determine the extent to which the performance objectives have been met and the
extent to which such performance shares are payable. If the Committee has
established a restricted period with respect to the performance shares, a stock
certificate representing the number of shares of the Corporation's Common Stock
designated by the Committee as performance shares earned by a participant will
be registered in the participant's name but will be held in custody by the
Corporation for the participant's account. During the restricted period, the
participant will generally have the rights and privileges of a shareholder as to
the shares of Common Stock earned pursuant to a performance share grant,
including the right to vote and to receive dividends, except that the shares
will remain in the custody of the Corporation until all restrictions have
lapsed. Stock certificates for performance shares that are not subject to a
restriction period will be delivered to the participant (or his or her
beneficiary or estate in the event that the participant is deceased) or credited
to a brokerage account if so directed by the participant or estate or
beneficiary. Such shares will be free of restrictions .
v. DEATH, DISABILITY, RETIREMENT OR OTHER TERMINATION OF PARTICIPANT
DURING A PERFORMANCE PERIOD. If, during a performance period, a participant
terminates employment for any reason other than death, disability or retirement,
the participant will forfeit all rights to the payment of any performance
shares, unless otherwise provided by the Committee. If, during a performance
period, a participant's termination is due to death, the participant's estate or
beneficiary will be entitled to receive
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<PAGE> 9
a pro rata portion of the participant's performance shares as soon as
practicable following the end of the applicable performance period. In the event
of disability or retirement during a performance period, the participant's right
to receive payment of his or her performance shares will not be forfeited and
the participant will be entitled to receive, at the end of the applicable
performance period, a pro rata portion of his or her performance shares, if any,
unless the participant, without the Corporation's consent, engages in or assists
a business that the Committee determines to be in competition with the
Corporation.
In the event of death, disability or retirement, the amount, if any,
that will become payable following the end of the applicable performance period
shall be calculated by multiplying the award to which the participant is
entitled (based upon the extent that the applicable performance objectives are
met) by a fraction, the numerator of which is the number of months that have
elapsed since the beginning of the applicable performance period at the date of
death, disability or retirement, as the case may be, and the denominator of
which is the total number of months in the performance period. Thus, in the
event of death,
# of months elapsed from beginning of
Payment = Award x performance period at date of death
--------------------------------------
# of months in the performance period
vi. TERMINATION OF PARTICIPANT AFTER THE END OF A PERFORMANCE PERIOD
BUT PRIOR TO THE END OF A RESTRICTED PERIOD. If, following a performance period
but prior to the end of the restricted period, if any, a participant terminates
employment for any reason other than death, disability or retirement, the
participant will forfeit all performance shares subject to a restriction period,
unless otherwise provided by the Committee. If, during such period, a
participant terminates employment by reason of death, disability or retirement,
all performance shares earned will be payable to the participant, or in the case
of death, the participant's estate or beneficiary, and any restrictions
applicable to such shares will lapse.
vii. LEAVES OF ABSENCE. For purposes of performance shares, approved
leaves of absence of one year or less shall not be deemed to be terminations of
employment. Leaves of absence of more than one year will be deemed terminations
of employment, unless the Committee determines otherwise.
viii. ADJUSTMENTS. The Committee may at any time adjust performance
objectives and performance levels, adjust the way performance objectives are
measured or calculated, or shorten any restricted period if it determines that
conditions, including but not limited to, the Corporation or participant's
performance, changes, in the economy, changes in competitive conditions, changes
in laws or governmental regulations, changes in generally accepted
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accounting principles, changes in the Corporation's accounting policies,
acquisitions or dispositions, or the occurrence of other unusual, unforeseen or
extraordinary events, including a possible change of control, so warrant.
E. PERFORMANCE UNITS. A performance unit entitles a participant to
receive a target award of cash based upon the Corporation's attainment of
predetermined performance goals over a specified performance period. Under the
Plan, the Committee may make grants of performance units on such terms and
conditions as it determines to be appropriate. Generally, performance units are
subject to the same terms and conditions applicable to performance shares. The
amount of cash actually payable to a participant at the end of a performance
period is based upon the Corporation's attainment of the predetermined
performance goals established by the Committee at the time of the grant. If the
minimum performance goals established by the Committee are not met, no cash will
be earned by the participant in relation to the performance unit award. If the
performance goals are fully achieved, 100% of the performance unit value will be
earned by the participant. In addition, the Committee, in its discretion, may
establish intermediate levels at which a portion of the performance unit value
is earned.
F. ANNUAL INCENTIVE AWARDS. Under the Plan, the Committee will have
the authority to grant annual incentive awards in recognition of the
contributions of a participant to the performance of the Corporation. Annual
incentive awards will be based upon the Corporation attaining annual performance
objectives established by the Committee at the beginning of the Plan year.
Annual incentive awards will be payable in restricted stock and/or cash, as
determined by the Committee. Restricted stock delivered pursuant to Annual Award
Incentive Awards shall be subject to the same terms and conditions as restricted
stock awards described in Subsection 4B above.
G. OTHER AWARDS. In order to enable the Corporation to respond to the
future development in the area taxes and other legislation, regulations and
interpretations thereof and to trends in executive compensation, the Plan
authorizes the Committee grant other forms of cash compensation and to make
awards that are denominated or payable, valued in whole or in part by reference
to, or otherwise based on or related to securities of the Corporation.
5. NONTRANSFERABILITY. Notwithstanding other provisions of the Plan or any
award agreement, awards which constitute derivative securities, including stock
options and other rights, shall not be transferable by a participant except by
will or the laws of descent and distribution and shall be exercisable during a
participant's lifetime only by such participant or the participant's guardian or
legal representative; provided, however, that the Committee may determine that
these restrictions on transferability shall not
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apply to awards granted to any participant who, at the time of the initial grant
and the transfer, is not subject to Section 16 of the Exchange Act.
6. CHANGES IN CAPITALIZATION. The Plan contains provisions which require
the Committee to make equitable adjustments to awards and to the Plan to
preserve the full benefit of awards to participants in the event that any change
shall occur in or affect shares of Common Stock on account of a merger,
consolidation, reorganization, stock dividend, stock split or combination,
reclassification, recapitalization, or distribution to holders of shares of
Common Stock (other than cash dividends) including, without limitation, a merger
or other reorganization event in which the shares of Common Stock cease to
exist, or, in the opinion of the Committee, after consultation with the
Corporation's independent public accountants, changes in the Corporation's
accounting policies, acquisitions, divestitures, distributions, or other unusual
or extraordinary event.
7. CHANGE OF CONTROL. Upon the occurrence of a change of control of the
Corporation (as defined in the Plan): (i) all stock options will become
immediately exercisable; (ii) any restriction imposed on restricted stock and
restricted units will lapse; (iii) the maximum value attainable under annual
incentive awards will be deemed to have been fully earned for the entire
performance period; and (iv) the maximum performance objectives with respect to
outstanding performance shares or performance units will be deemed to have been
earned; provided, however that with respect to performance shares and
performance units the value paid out to a participant will be prorated through
the end of the year in which the change of control occurs.
8. AMENDMENT AND TERMINATION OF AWARDS. The Committee may (i) amend, alter,
revoke, suspend, discontinue or terminate any outstanding award without the
consent of a participant if the Committee determines that such participant was
terminated for cause or engaged in intentional misconduct that is injurious to
the Corporation; or (ii) prior to a change of control of the Corporation, amend,
alter, revoke, discontinue or terminate, without the consent of any participant,
any award or any rights granted by the Plan in connection with a change of
control if the Committee determines that the failure to take such action would
have a material adverse effect on the Corporation. Notwithstanding the
foregoing, upon a change of control, no action may be taken which would
adversely affect the rights of any participant with respect to any award to
which a participant may be entitled.
9. AMENDMENT AND TERMINATION OF THE PLAN. The Board of Directors may
modify, amend, or terminate the Plan at any time except that, to the extent then
required by applicable law, rule, or regulation, approval of the holders of a
majority of shares of Common Stock represented in person or by proxy at a
meeting of the
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shareholders will be required to increase the maximum number of shares of Common
Stock available for distribution under the Plan (other than increases due to
adjustments in accordance with the Plan and a one time increase of no more than
10%).
10. WITHHOLDING. At the discretion of the Committee, the terms of any award
under the Plan may permit the participant to satisfy any income tax withholding
obligation of the corporation with respect to the award by withholding a portion
of the shares otherwise distributable in payment of the award. Notwithstanding
the foregoing, in the case of a participant subject to the reporting
requirements of Section 16(a) of the Exchange Act, no such election shall be
effective unless made in compliance with any applicable requirements of Rule
16b-3 or any successor Rule under the Exchange Act.
11. DEFERRAL OF PAYMENT. The Committee may, in its sole discretion, offer a
participant the right to defer the receipt of all or any portion of the payment
of any award. If such election to defer is made by a participant, the shares of
Common Stock receivable in payment for such awards shall be deferred as stock
units equal in number to and exchangeable, at the end of the deferral period,
for the number of shares of Common Stock that would have been paid to the
participant. Such stock units shall represent only a contractual right and shall
not give the participant any interest, right, or title to any shares of Common
Stock during the deferral period. The cash receivable in payment for such awards
shall be deferred as cash units. Deferred cash units may be credited annually
with the appreciation factor contained in the deferred compensation agreement,
which may include dividend equivalents. All other terms and conditions of
deferred payment shall be determined by the Committee.
12. DESIGNATION OF BENEFICIARY. A participant may designate, in a writing
delivered to and satisfactory in form to Integra before the participant's death,
a person or persons to receive, in the event of the participant's death, any
rights to which the participant would be entitled under the Plan. A participant
may also designate alternate beneficiaries to receive payments if the primary
beneficiary or primary alternate beneficiary does not survive the participant. A
participant may designate more than one person as the participant's beneficiary
or alternate beneficiary, in which case such persons would receive payments as
joint tenants with a right of survivorship. Beneficiary designations may be
changed or revoked by filing a written statement of such change or revocation
with the Corporation. If a participant fails to designate a beneficiary, his or
her estate shall be deemed to be the participant's beneficiary.
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FEDERAL INCOME TAX CONSEQUENCES
The following summary describes certain federal income tax consequences of
awards under the Plan based on the law and applicable regulations as currently
in effect. This summary will be inapplicable if such laws and regulations are
changed. The Plan is not subject to the protective provisions of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") and is not
qualified under Section 401(a) of the Code.
NON-STATUTORY OPTIONS. Under the current applicable provisions of the
Internal Revenue Code, no tax will be payable by the recipient of an option at
the time of grant. Upon exercise of a non-statutory option, the excess, if any,
of the fair market value of the shares with respect to which the option is
exercised over the total option price of such shares will be treated for federal
tax purposes as ordinary income. Any profit or loss realized on the sale or
exchange of any share actually received will be treated as a capital gain or
loss. The Corporation will be entitled to deduct the amount, if any, by which
the fair market value on the date of exercise of the shares with respect to
which the option was exercised exceeds the exercise price.
INCENTIVE STOCK OPTIONS. With respect to an incentive stock option (ISO),
generally, no taxable gain or loss will be recognized when the option is granted
or exercised. ISOs exercised more than three months after termination of
employment will be taxed in the same manner as non-statutory options described
above. Generally, upon exercise of an ISO, the spread between the fair market
value and the exercise price will be an item of tax preference for purposes of
the alternative minimum tax.
If the shares acquired upon the exercise of an ISO are held for at least
(i) two years following the date on which the ISO is granted, and (ii) one year
following the date on which the ISO is exercised, any gain or loss realized upon
their sale will be treated as long-term capital gain or loss. The Corporation
will not be entitled to a deduction. If the shares are not held for the two-year
and one-year holding periods, ordinary income will be recognized in an amount
equal to the difference between the exercise price and the fair market value of
the Common Stock on the date the option is exercised. The Corporation will be
entitled to a deduction equal to the amount of any ordinary income so
recognized. If the shares are not held for the two-year and one-year holding
periods and the amount realized upon sale is less than the exercise price, such
difference will be a capital loss.
ALTERNATIVE MINIMUM TAXES. The rules with respect to ISOs
described above do not apply for the purpose of determining
"alternative minimum taxable income." Thus, for alternative
minimum tax purposes the excess of the fair market value of shares
received upon exercises of an ISO over the price paid is
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<PAGE> 14
alternative minimum taxable income under the timing rules discussed below in the
section "Participants Subject to Short-Swing Profit Restrictions." The
alternative minimum tax is equal to the excess of (I) 26% (increased to 28% with
respect to income above specified levels) of "alternative minimum taxable
income" in excess of the exemption amount ($45,000 for married taxpayers filing
joint returns; $33,750 for single individuals; $22,500 for married taxpayers
filing separately) over (II) the regular tax for the taxable year minus certain
tax credits. The exemption amounts are phased out at certain levels of
alternative minimum taxable income. Upon sale of the shares acquired upon the
exercise of an ISO, the participant may be entitled to a credit against or a
reduction of alternative minimum tax for that tax year. Whether a participant
may be subject to the alternative minimum tax in any given year will depend upon
the participant's overall tax situation.
PARTICIPANTS SUBJECT TO SHORT-SWING PROFITS RESTRICTIONS. Participants who
are subject to the short-swing profits restrictions of Section 16(b) of the
Exchange Act ("Section 16(b)") should be aware that special federal income tax
rules will apply to them in the event that they exercise an option within six
months of the date of grant. Otherwise, participants subject to the Section
16(b) short-swing profits restrictions will be taxed under the regular rules
applicable to non-statutory stock options and ISOs.
RESTRICTED STOCK AND PERFORMANCE SHARE AWARDS. With respect to restricted
stock awards and performance shares granted under the Plan, the participant will
generally recognize ordinary income equal to the excess of (i) the fair market
value of the shares received (determined as of the date on which the shares
become transferable or not subject to a substantial risk of forfeiture,
whichever occurs first) over (ii) the amount paid for the shares. The
Corporation will be entitled to a tax deduction in the same amount. A
participant may elect to recognize income, with respect to restricted stock
awards, when the shares are granted, and with respect to performance shares,
when such shares are earned upon expiration of the performance period, rather
than, in each case, upon expiration of the risk of forfeiture. The amount of
ordinary income will be determined as of the date of receipt rather than upon
expiration of the applicable restriction. The Corporation's tax deduction will
be determined at the same time. Any subsequent gain or loss will be a capital
gain or loss.
PERFORMANCE UNITS AND RESTRICTED STOCK UNITS. There will be no Federal
income tax consequences to the participant or the Corporation upon the grant of
performance units or restricted stock units. Participants will recognize income
for federal tax purposes when payment for the performance units and restricted
stock units is received. The amount of income which a participant must recognize
will be equal to the aggregate amount of cash and the fair market value of
shares of Common Stock acquired. The
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<PAGE> 15
Corporation will be entitled to a deduction equal to the amount includable in
the participant's income.
ADDITIONAL INFORMATION REGARDING THE PLAN
Requests for additional information about the Plan and the Committee should
be directed to Integra Financial Corporation, Four PPG Place, Pittsburgh,
Pennsylvania 15222-5408, Attention: Robert H. Stevenson, Senior Vice President
and General Counsel, (412) 644-7515.
RESTRICTIONS ON REOFFERS AND RESALES
The Prospectus will not be available for the reoffer or resale of Common
Stock acquired by "affiliates" of the Corporation pursuant to the Plan.
Directors, officers and control persons of the Corporation may be considered
"affiliates" of the Corporation and, as such, may transfer shares of Common
Stock only in compliance with the registration requirements of the Securities
Act or an exemption therefrom. Generally, in the absence of registration under
the Act, shares of Common Stock held by such persons may be sold pursuant to an
available exemption from the registration requirements of the Securities Act
such as Rule 144 of the Commission. Participants who may be "affiliates" are
urged to consult legal counsel prior to any proposed sale of Common Stock.
Consistent with the provisions of the Securities Act, the Corporation may place
a restrictive legend on Common Stock issued to such persons and issue stop order
instructions to the Corporation's transfer agent.
Persons who are not "affiliates" of the Corporation generally may make
unregistered public reoffers and resales of Common Stock acquired pursuant to
the Plan without compliance with the registration requirements of the Securities
Act and in reliance upon the exemption set forth in Section 4(1) of the
Securities Act. Nevertheless, participants who are not "affiliates" are urged to
consult legal counsel prior to any proposed sale of Common Stock acquired
pursuant to the Plan.
SUPPLEMENTS TO PROSPECTUS
A supplement to the Prospectus may be furnished to all participants in the
Plan from time to time as appropriate to reflect changes in the information
contained in the Prospectus such as material amendments to the Plan.
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Exhibit 4.5
EXHIBIT B
INTEGRA FINANCIAL CORPORATION
NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
1. PURPOSE
The purpose of the Integra Financial Corporation Non-Employee Directors
Stock Option Plan (the "Plan") is to promote the interests of Integra Financial
Corporation (the "Company") and its stockholders by strengthening the Company's
ability to attract and retain the services of experienced and knowledgeable
nonemployee directors and by encouraging such directors to acquire an increased
proprietary interest in the Company.
2. SHARES SUBJECT TO THE PLAN
Subject to adjustment as provided in Article 7, the total number of
shares of common stock of the Company (the "Shares") for which options may be
granted under the Plan shall be 150,000. The Shares shall be currently
authorized but unissued or currently held or subsequently acquired by the
Company as treasury shares, including shares purchased in the open market or in
private transactions. If any option granted under the Plan expires or
terminates for any reason without having been exercised in full, the Shares
subject to, but not delivered under, such option may become available for the
grant of other options under the Plan. No shares deliverable to the Company in
full or partial payment of an option purchase price payable pursuant to
Paragraph 6.6 shall become available for the grant of other options under the
Plan.
3. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Nominating Committee of the
Company's Board of Directors (the "Committee"). Subject to the terms of the
Plan, the Committee shall have the power to construe the provisions of the
Plan, to determine all questions arising thereunder, and to adopt and amend
such rules and regulations for administering the Plan as the Committee deems
desirable.
4. PARTICIPATION IN THE PLAN
Each member of the Company's Board of Directors (a "Director") who is
not otherwise an employee of the Company or any subsidiary of the Company (an
"Eligible Director") shall be eligible to participate in the Plan.
5. NONSTATUTORY STOCK OPTIONS
All options granted under the Plan shall be nonstatutory options not
intended to qualify under Section 422 of the Internal Revenue code of 1986, as
amended.
6. OPTION TERMS
Each option granted to an Eligible Director under the Plan and the
issuance of Shares thereunder shall be subject to the following terms:
6.1 OPTION AGREEMENTS
Each option granted under the Plan shall be evidenced by an option
agreement (an "Agreement") duly executed on behalf of the Company and by the
Eligible Director to whom such option is granted and dated as of the applicable
date of grant. Each Agreement shall comply with and be subject to the terms and
conditions of the Plan. Any Agreement may contain such other terms, provisions
and conditions not inconsistent with the Plan as may be determined by the
Committee.
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6.2 OPTION GRANT SIZE AND GRANT DATES
An option to purchase 1,000 Shares shall be automatically granted each
year, on the date of the first regularly scheduled meeting of the Board of
Directors, to each Director who is an Eligible Director at such time.
6.3 OPTION EXERCISE PRICE
The option exercise price per share for an option awarded under the
Plan shall be 100% of the Fair Market Value of the underlying Shares on the
date the option is granted. For purposes of the Plan, "Fair market Value" is
defined as the average of the high and low sales prices per share of the
Company's common stock as reported on the New York Stock Exchange (composite
tape) on the relevant date or, if no sales were made on such date, on the next
preceding date on which sales of the Common Stock were made.
6.4 VESTING; EXERCISABILITY
Fifty percent (50%) of an option shall vest and become nonforfeitable
and exercisable when, and only if, the optionee continues to serve as a Director
for one year following the date on which the option was granted. The remaining
portion of an option shall vest and become nonforfeitable and exercisable when,
and only if, the optionee continues to serve as a Director for two years
following the date on which the option was granted.
6.5 TIME AND MANNER OF OPTION EXERCISE
Any vested and exercisable option is exercisable in whole or in part at
any time, or from time to time, during the option period by giving written
notice, signed by the person exercising the option, to the Company stating the
number of Shares with respect to which the option is being exercised,
accompanied by payment in full of the option exercise price for the number of
Shares to be purchased. The earliest date that both such notice and payment are
received by the office of the Secretary of the Company shall be the date of
exercise of the stock option as to such number of Shares. No option may at any
time be exercised with respect to a fractional share.
6.6 PAYMENT OF EXERCISE PRICE
Payment of the option exercise price may be in cash or by
bank-certified, cashier's, or personal check or payment may be in whole or part
by transfer to the Company of shares of the Common Stock having a Fair Market
Value equal to the option exercise price at the time of such exercise. If, in
the latter case, the Fair Market Value of the number of whole shares is less
than the total exercise price of the options, the shortfall must be made up in
cash.
6.7 TERMS OF OPTIONS
Each option shall expire ten years from its date of grant, but shall be
subject to earlier termination as follows:
(a) the optionee shall cease to serve as a Director for reasons other
than retirement or total and permanent disability (each of which
is defined below), the option may be exercised only within three
months after such termination and within the option period unless
such termination of service as a Director shall be removal for
cause, in which case the option shall forthwith terminate.
(b) In the event of the termination of an optionee's service as a
Director by reason of retirement or total and permanent
disability, the then-outstanding options of such optionee shall
thereupon vest and become exercisable, and each such option shall
expire five years after the date of such termination or on the
stated grant expiration date, whichever is earlier. For purposes
of the Plan, the term "by reason of retirement" means (i)
mandatory retirement pursuant to Board policy or (ii) termination
of service at a time when the optionee would be entitled to a
retirement benefit under the
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<PAGE> 3
Company's employee Retirement Plan, as then in effect, if the
Eligible Director were an employee of the Company. "Disability", as
applied to an optionee, means total and permanent disability as
defined in the Internal Revenue Code of 1986, as amended (the
"Code").
(c) In the event of the death of an optionee while the optionee is a
Director, the then-outstanding options of such optionee shall
thereupon vest and become exercisable, and each such option shall
expire eighteen months after the date of death of such optionee or
on the stated grant expiration date, whichever is earlier.
Exercise of a deceased optionee's options that are still
exercisable shall be by the estate of such optionee or by a person
or persons whom the optionee has designated in a writing filed
with the Company, or, if no such designation has been made, by the
person or persons to whom the optionee's rights have passed by
will or the laws of descent and distribution.
6.8 TRANSFERABILITY
The right of any optionee to exercise an option granted under the Plan
shall, during the lifetime of such optionee, be exercisable only by such
optionee or, if then permitted by Rule 16b-3 promulgated under Section 16 of
the Securities Exchange Act of 1934, as amended, pursuant to a qualified
domestic relations order as defined by the Code, or Title I of the Employee
Retirement Income Security Act, or the rules thereunder ( a "QDRO") and shall
not be assignable or transferable by such optionee other than by will or the
laws of descent and distribution or, if then permitted by Section 16, a QDRO.
6.9 LIMITATION OF RIGHTS
6.9.1 LIMITATION AS TO SHARES. Neither an optionee nor an optionee's
successor or successors in interest shall have any rights as a stockholder of
the Company with respect to any shares subject to an option granted to such
person until the date of exercise.
6.9.2 LIMITATION AS TO DIRECTORSHIP. Neither the Plan, nor the
granting of an option, nor any other action taken pursuant to the Plan shall
constitute or be evidence of any agreement or understanding, express or implied,
that an Eligible Director has a right to continue as a Director for any period
of time or at any particular rate of compensation.
6.10 CHANGE OF CONTROL.
In the event of a Change of Control, all outstanding options shall
become immediately exercisable. For purposes of the Plan a "Change of Control"
shall mean any of the following events:
(a) The sale or other disposition by the Company of all or
substantially all of its assets to a single purchaser or to a
group of purchasers, other than to a corporation with respect to
which, following such sale or disposition, more than eighty
percent (80%) of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of
directors is then owned beneficially, directly or indirectly by
all or substantially all of the individuals and entities who were
the beneficial owners, respectively, of the outstanding Company
common stock and the combined voting power of the then outstanding
voting securities immediately prior to such sale or disposition in
substantially the same proportion as their ownership of the
outstanding Company common stock and voting power immediately
prior to such sale or disposition;
(b) The acquisition in one or more transactions by any person or
group, directly or indirectly, of beneficial ownership of twenty
percent (20%) or more of the outstanding shares or the combined
voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors;
provided, however, that any acquisition by (x) the Company or any
of its subsidiaries, or any employee benefit plan (or related
trust) sponsored or maintained by the Company or any of its
subsidiaries or (y) any person that is eligible, pursuant to Rule
13d-1(b) under the Exchange Act (as such rule is in effect as of
January 1, 1994), to file a statement on Schedule
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<PAGE> 4
13G with respect to its beneficial ownership of Company Common Stock or
other voting securities whether or not such person shall have filed a
statement on Schedule 13G, unless such person shall have filed a
statement on Schedule 13D with respect to beneficial ownership of 15
percent (15%) or more of the Company's voting securities, shall not
constitute a Change of Control;
(c) The Company's termination of its business and liquidation of its
assets;
(d) The reorganization, merger or consolidation of the Company into or with
another person or entity, by which reorganization, merger or
consolidation the shareholders of the Company receive less than
fifty percent (50%) of the outstanding voting shares of the new or
continuing corporation; or
(e) If, during any period of twenty-four (24) consecutive months,
individuals who at the beginning of such period constitute the Board
of Directors (or individuals who were elected, nominated or recommended
by at least two-thirds of such individuals or individuals who were so
elected, nominated or recommended) cease for any reason to constitute
at least a majority of the Board of Directors.
6.11 REGULATORY APPROVAL AND COMPLIANCE
The Company shall not be required to issue any certificate or
certificates for Shares upon the exercise of an option granted under the Plan
or to record as a holder of record of Shares the name of the individual
exercising an option under the Plan, without obtaining to the complete
satisfaction of the Committee the approval of all regulatory bodies deemed
necessary by the Committee and without complying, to the Committee's complete
satisfaction, with all rules and regulations under federal, state, or local law
deemed applicable by the Committee.
7. CAPITAL ADJUSTMENTS
The number and class of Shares subject to each outstanding option, and
the exercise price per share specified in each such option shall be
proportionaltely adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a split-up or consolidation of shares or
any like capital adjustment or the payment of any stock dividend, or other
increase or decrease in the number of such shares effected without receipt of
consideration by the Company.
8. EXPENSES OF THE PLAN
All costs and expenses of the adoption and administration of the Plan
shall be borne by the Company, and none of such expenses shall be charged to
any optionee.
9. EFFECTIVE DATE AND DURATION OF THE PLAN
The Plan shall be effective immediately following approval by the
Company's shareholders; provided, however, that grants may be made prior to the
effective date if such grants are made subject to shareholders approval of the
Plan. The Plan shall continue in effect until it is terminated by action of the
Board or the Company's shareholders, but such termination shall not affect the
terms of any then-outstanding options.
10. CHOICE OF LAW
The validity, interpretation and administration of the Plan and of any
rules, regulations, determinations or decisions made thereunder, and the rights
of any and all persons having or claiming to have any interest therein or
thereunder, shall be determined exclusively in accordance with the laws of the
Commonwealth of Pennsylvania.
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<PAGE> 5
11. TERMINATION AND AMENDMENT OF THE PLAN
The Board of Directors may amend, terminate or suspend the Plan at any
time, in its sole and absolute discreation: provided, however, that if required
to qualify the Plan under Rule 16b-3 promulgated under Section 16 of the
Securities Exchange Act of 1934, as amended, no amendment shall be made more
than once every six months that would change the amount, price or timing of
options granted under the Plan, other than to comport with changes in the
Internal Revenue Code of 1986, as amended, or the rules and regulations
promulgated thereunder: provided, further, that if required to qualify the Plan
under Rule 16b-3, no amendment that would do any of the following shall be made
without the approval of the Company's shareholders:
(a) Materially increase the number of Shares that may be issued
under the Plan;
(b) Materially modify the requirements as to eligibility for
participation in the Plan; or
(c) Otherwise materially increase the benefits accruing to
participants under the Plan.
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<PAGE> 1
Exhibit 4.6
EQUIMARK CORPORATION
1987 NON-QUALIFIED STOCK OPTION PLAN
-----------------------
I. PURPOSES
The purposes of the Equimark Corporation 1987 Non-Qualified Stock
Option Plan (the "Plan") are to promote the interests of Equimark Corporation
(the "Corporation") and its shareholders by providing the executives and other
key employees of the Corporation and its consolidated subsidiaries with an
opportunity to acquire a proprietary interest in the Corporation and thereby
develop a stronger incentive to put forth maximum effort for the long-term
success and growth of the Corporation, and to assist the Corporation in
attracting and retaining the services of highly qualified persons. It is the
view of the Corporation that this goal may best be achieved by granting stock
options to its executives and other key employees from time to time.
II. DEFINITIONS.
2.1 BENEFICIARY means any person or persons by whom a Participant's
Options are exercisable under the Plan after the death of the Participant.
2.2 CHAIRMAN OF THE BOARD means the Chairman of the Board of the
Corporation as of December 16, 1986.
2.3 COMMITTEE means the Personnel, Management, Compensation,
Nomination and Affirmative Action Committee appointed and designated by the
Board of Directors of the Corporation to manage and administer the Plan.
2.4 COMMON STOCK means any series of Common Stock of the
Corporation authorized in its Certificate of Incorporation, as designated by the
Committee in the Option Agreement.
2.5 CORPORATION means Equimark Corporation.
2.6 EMPLOYER means Equimark Corporation or any of its subsidiaries.
2.7 FAIR MARKET VALUE of a share of Common Stock as of any date
means the closing price of a share of Common Stock as recorded by the New York
Stock Exchange Composite Transactions Tape on such date or, if no sale of the
Common Stock shall have been made on the New York Stock Exchange on that date,
on the next preceding date on which such a closing price was recorded.
2.8 MERGER ANNOUNCEMENT Date means the date on which one of the
parties to a Merger Event (as defined in Section 9.1 herein), including a
federal or state governmental agency or body having an interest therein, first
publicly announces such Merger Event.
<PAGE> 2
2.9 OPTION means an option granted under the Plan to a Participant
to purchase Common Stock and includes both Type A Options and Type B Options.
2.10 OPTION AGREEMENT means the written agreement between a
Participant and the Corporation evidencing an Option.
2.11 OPTION PRICE means the price per share at which Common Stock may
be purchased pursuant to an Option.
2.12 PARTICIPANT means a key employee of an Employer who has received
an Option under the Plan.
2.13 PLAN means the Equimark Corporation 1987 Non-Qualified Stock
Option Plan.
2.14 RELATED OPTION means the Option associated with and related to a
particular Stock Appreciation Right.
2.15 STOCK APPRECIATION RIGHT means a right under the Plan for a
Participant to receive the excess of the Fair Market Value of a share of Common
Stock on the date of the Stock Appreciation Right is exercised over the Option
Price for the Related Option.
2.16 TERMINATION FOR CAUSE means
(a) Continuing and habitual failure to perform the material
duties of the Participant, except in the event of Participant's disability, or
willful breach in material respects of the obligations of Participant to the
Employer, either of which causes significant harm to the Employer;
(b) An act of willful or gross negligence in the performance of
a Participant's material duties or obligations to the Employer, except in the
event of Participant's disability, causing significant harm to the Employer;
(c) An act of dishonesty or breach of trust on the part of a
Participant resulting or intended to result directly or indirectly in gain or
personal enrichment at the expense of the Employer; or
(d) Failure to be acquitted of an act or acts constituting a
felony under the laws of the United States of America or any State or territory
thereof.
2.17 TERMINATION WITHOUT CAUSE means any termination other than a
voluntary termination (except as set forth below), a Termination for Cause, or a
termination based on early, normal or disability retirement or death.
Termination without cause shall include any voluntary termination based upon any
material change in executive duties, responsibilities and authority which are
not equal in responsibility, importance or scope to, or commensurate with, a
Participant's current position with an Employer, or based upon any significant
reduction in a Participant's compensation.
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2.18 TYPE A OPTION means an Option of the type specified in
Section 7.4(a) hereof.
2.19 TYPE B OPTION means an Option of the type specified in
Section 7.4(b) hereof.
III. ADMINISTRATION OF THE PLAN
3.1 PERSONNEL, MANAGEMENT, COMPENSATION, NOMINATION AND
AFFIRMATIVE ACTION COMMITTEE. The Committee consisting of such members as may be
designated by the Board of Directors of the Corporation from time to time, shall
be the Plan administrator. The Committee shall consist of one or more persons,
who may be directors, officers or other employees of the Employer, or any other
individuals, and who shall serve at the pleasure of the board of Directors of
the Corporation. Members of the Committee shall not be eligible to receive
Options. Any member of the Committee may resign by delivering his written
resignation to the Corporation and to the other members of the Committee.
Vacancies in the Committee arising by resignation, death, removal or otherwise,
shall be filled by the Board of Directors.
3.2 ALLOCATION OF RESPONSIBILITIES TO THE COMMITTEE. The
Committee shall have responsibility and authority to control the operation and
administration of the Plan in accordance with the terms of the Plan, including,
without limiting the generality of the foregoing: (i) construction and
interpretation of Plan provisions; (ii) all functions set forth under the terms
of the Plan; (iii) determination of the terms of Options, benefit eligibility
and amount of allocation (other than for the Chairman of the Board); (iv) hiring
of persons to provide necessary services to the Plan; (v) issuance of directions
to the Employer to pay any fees, taxes, charges or other costs incidental to the
operation and management of the Plan; (vi) preparation and filing of all reports
required to be filed by the Plan with any agency of government; (vii) compliance
with all disclosure requirements imposed by state or federal law; (viii)
maintenance of all records of the Plan; (ix) granting of types of Options under
the Plan; (x) cancellation or exchange of Options and (xi) performance of other
acts reasonably required to administer the Plan in accordance with its
provisions or as may be provided for or required by law. In granting Options
under the Plan, the Committee may take into account the nature of the services
rendered by the respective employees, their present and potential contribution
to the Employer and such other factors as the Committee may deem relevant. The
Committee may solicit and act upon recommendations from the Chairman of the
Board of the Corporation or his representative, but final authority with regard
to the determination of grants under the Plan shall be reserved to the
Committee.
3.3 ALLOCATION OF RESPONSIBILITIES TO THE BOARD OF
DIRECTORS. The Board of Directors of the Corporation shall have the authority
and responsibility for design of the Plan, including the right to amend the
Plan.
3.4 COMMITTEE ACTION. The Committee shall act by a
majority of its members in office at that time and such action may be taken
either by vote at a meeting or in writing without a meeting. The Committee may
adopt such by-laws
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and regulations as it deems desirable to assist in administering and enforcing
the Plan. The Committee may engage such accountants, counsel, specialists and
other persons as it deems necessary or desirable in connection with the
administration of this Plan. Members of the Committee shall not be precluded
from serving the Committee in one or more of such individual capacities. The
Committee shall be entitled to rely conclusively upon, and shall be fully
protected in any action taken by it in good faith reliance upon, any opinions
which shall be furnished to it by its advisors.
3.5 DELEGATION TO ONE OR MORE COMMITTEE MEMBERS. The Committee may
authorize any one or more of its members to execute any document or documents on
behalf of the Committee, in which event the committee shall notify the
Corporation in writing of such action and the name of its member or members so
designated. The Employer thereafter shall accept and rely upon any documents
executed by such member or members as representing action by the Committee until
the Committee shall file with the Employer a written revocation of such
designation.
3.6 COMPENSATION AND EXPENSES. Except for regular Board of Director
Committee fees, the members of the Committee shall service without compensation
for services as such, but all expenses of the Committee shall be paid by the
Employer.
IV. STOCK SUBJECT TO THE PLAN
4.1 SHARES OF STOCK. The Common Stock to be issued pursuant to the
Plan may be authorized but unissued shares of Common Stock or shares of Common
Stock held as treasury stock by the Corporation, as determined by the Board of
Directors of the Corporation.
4.2 AGGREGATE LIMIT. Subject to Section VIII, no more than
1,500,000 shares of Common Stock may be issued pursuant to Options granted under
the Plan. The Chairman of the Board will be granted options to purchase 200,000
shares of Common Stock and may be granted options to purchase an additional
200,000 shares of Common Stock provided any options previously granted to the
Chairman of the Board under the Corporation's 1987 Performance Stock Option Plan
have been exchanged and cancelled. If any Option granted hereunder shall be
cancelled, lapse or terminate for any reason without having been exercised in
full, the unpurchased shares of Common Stock allocable thereto shall again be
made available for purposes of the Plan. Any such shares which remain unissued
upon the termination (but not cancellation) of all Options granted under this
Plan shall cease to be reserved for purposes of the Plan, but until termination
of all such outstanding Options, the Corporation shall at all times reserve a
sufficient number of shares of Common Stock to meet the requirements of the
Plan.
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<PAGE> 5
V. EFFECTIVE DATE AND DURATION
Upon approval by the shareholders of the Corporation, the Plan
shall take effect as of January 1, 1987. Options may be granted under the Plan
at any time after January 1, 1987, provided that the exercise of any such
Options is conditioned upon the approval of the Plan by the shareholders of the
Corporation. The Plan shall terminate on March 18, 1997 unless it shall sooner
terminate under the provisions of Section X hereof or by there having been
granted and fully exercised Options covering the entire 1,500,000 shares of
Common Stock subject to this Plan, as such stock may be adjusted under Section
VIII. Except as provided in Section X, no Options shall be granted under the
Plan after March 31, 1993, except Options which have terminated, lapsed or have
been cancelled may be regranted.
VI. ELIGIBILITY
Participants shall be selected by the Committee from among
those key officers and employees of an Employer who in the opinion of the
Committee, have the capacity to contribute significantly to the long-term
performance and growth of the Corporation. Subject to the provisions of Sections
7.7 and VIII hereof, the Chairman of the Board shall only receive such Options
under the Plan as are specified in Section 4.2 hereof. A Participant, other than
the Chairman of the Board, may receive such grants of Options under the Plan as
may be determined by the Committee.
VII. STOCK OPTIONS
7.1 GRANT OF OPTIONS. Each Option granted under the Plan
shall be authorized by the Committee and shall be evidenced by an Option
Agreement in such form as the Committee shall from time to time approve, which
agreement shall state the number of shares of Common Stock to which the Option
pertains and shall comply with and be subject to the terms and conditions of the
Plan and contain such additional provisions not inconsistent with the Plan as
the Committee deems appropriate in each case.
7.2 OPTION PRICE. Subject to the provisions of Sections
VIII and 9.1 hereof, the price at which a share of Common Stock may be purchased
pursuant to the exercise of an Option shall be determined by the Committee, but
shall not be less than the Fair Market Value per share of the Common Stock on
the date the Option is granted or on another date specified by the Committee in
the Option Agreement. The Committee shall have full authority and discretion in
fixing the Option Price and shall be fully protected in doing so.
7.3 PERIOD OF OPTION. Subject to Sections 7.6 and 7.7
hereof, each Option shall be exercisable for a period from the later to occur of
shareholder approval of the Plan or the date of its vesting until the
termination of the Plan.
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<PAGE> 6
7.4 EXERCISE OF OPTIONS. Each outstanding Options may be
exercised at any time within the Option period in accordance with the terms of
the Option Agreement and this Plan. The Committee may at its discretion,
accelerate the right to exercise all or any part of the installments of any
Option. Subject to Sections 7.6 and IX hereof, and unless the Committee shall
otherwise designate in the Option Agreement, the right to exercise the Option
shall vest, with all rights cumulative, as follows:
(a) Type A Options shall vest and be exercisable with
respect to the total number of shares subject to the Option on such date as is
determined by the Committee and specified in the Option Agreement; provided,
however, that no Type A Option shall vest or be exercisable on the date the
Option is granted.
(b) Type B Options shall, unless otherwise required by law
or the applicable rules and regulations promulgated by the Securities and
Exchange Commission, vest and be immediately exercisable with respect to the
total number of shares subject to the Option on the date the Option is granted.
7.5 MANNER OF EXERCISE. To the extent the right to
purchase shares has accrued thereunder, an Option may be exercised by a
Participant (or other holder entitled to exercise the Option) by written notice
delivered to the Secretary of the Corporation at its principal office in
Pittsburgh, Pennsylvania in person or by registered or certified mail,
specifying the number of full shares to be purchased. Such notice shall: (i)
state the election to exercise the Option and the number of shares in respect to
which it is being exercised, (ii) be signed by the person or persons exercising
the Option, (iii) in the event that the Option is being exercised by any person
or persons other than the Participant, be accompanied by proof, satisfactory to
counsel for the Corporation, of the right of such person or persons to exercise
the Option, and (iv) be accompanied by (a) a check payable to the order of the
Corporation in an amount equal to the Option Price of the shares in respect of
which the Option is being exercised, or (b) certificates, duly endorsed to the
Corporation or in blank, representing shares of Common Stock having a Fair
Market Value equal to the Option Price of the shares in respect of which the
Option is being exercised. In lieu of providing such certificates, a Participant
may provide evidence, satisfactory to the Corporation, of his right to the
prompt delivery of such certificates from the Corporation. Upon the exercise of
an Option, in compliance with the provisions of this paragraph, the Corporation
shall deliver or cause to be delivered to the optionee so exercising his Option
a certificate or certificates for the number of shares of Common Stock with
respect to which the Option is so exercised and payment is so made. The shares
of Common Stock shall be registered in the name of the exercising Participant
(or the Beneficiary) or in such name jointly as such Participant (or the
Beneficiary) may direct in the written notice of exercise referred to in this
paragraph, provided that in no event shall any shares of Common Stock be issued
pursuant to the exercise of an Option until full payment therefor shall have
been made, and not until the shares have been issued shall the exercising
Participant (or the Beneficiary) have any of the rights of a shareholder.
Further, the time of such delivery of the certificate or certificates for the
shares of Common Stock may be postponed by the Corporation for such period as
may be required for it with reasonable diligence to comply with any requirements
of law. Further, at or
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<PAGE> 7
before the time of the delivery of the shares with respect to which the exercise
of an Option has been made, the exercising Participant (or the Beneficiary) may
be required to deliver to the Corporation a written statement that he or she
intends to hold the shares, so acquired on exercise of his or her Option, for
investment and not with a view to resale or other distribution thereof to the
public. Further, in the event that the Corporation shall determine that, in
compliance with the Securities Act of 1933 or other applicable statute or
regulation, it is necessary to register any of the shares of Common Stock with
respect to which an exercise of an Option has been made, or to qualify any such
shares for exemption from any of the requirements of the Securities Act of 1933
or other applicable statute or other regulations, then the Corporation shall
take such action at its own expense, but not until such action has been
completed shall the shares of Common Stock issuable pursuant to the exercise of
an Option be delivered to the exercising Participant (or the Beneficiary).
7.6 TERMINATION OF EMPLOYMENT, RETIREMENT, OR DEATH. If a
Participant voluntarily terminates his or her employment with the Employer or is
subject to a Termination for Cause, any Option granted to the Participant which
has vested must be exercised within 90 days after the date the Participant's
employment terminates or on or before March 18, 1997, whichever shall first
occur. Options that would vest within 90 days after the date the Participant's
employment terminates will accelerate and may also be exercised during said 90
day period. All other Options granted to the Participant lapse. whether an
authorized leave of absence constitutes voluntary termination of employment for
the purpose of the Plan shall be determined by the Committee, which
determination shall be final and conclusive. If a Participant's employment with
the Employer is subject to a Termination without Cause, all unvested Options
granted to the Participant accelerate and become vested. Such Options must be
exercised within 18 months after the date the Participant's employment
terminates without cause or on or before March 18, 1997, whichever shall first
occur. If a Participant's employment with the Employer terminated by reason of
the Participant's early, normal or disability retirement as defined under the
terms of The Equibank Employee Savings and Retirement Plan, all unvested Options
granted to the Participant accelerate and become vested. Such Options must be
exercised within 18 months after the date of the Participant's retirement or on
or before March 18, 1997, whichever shall first occur. In the event of the
death of a Participant while employed by an Employer, all unvested Options
granted to the Participant accelerate and become vested. Such Options must be
exercised within 18 months after the date of the Participant's death or on or
before March 18, 1997, whichever shall first occur. Such Option shall be
exercisable by the Participant's Beneficiary under the Plan.
7.7 CANCELLATION OR EXCHANGE OF OPTIONS. No Option may be
cancelled without the consent of the Participant. The Committee may, however,
with such consent, cancel Options or condition the grant of any Option under the
Plan upon the cancellation or exchange of a prior Option granted to a
Participant. The Committee may grant Options conditioned upon such cancellation
or exchange for any reason consistent with the purposes of the Plan and may
grant further O1)tions to the Chairman of the Board conditioned upon the
exchange and cancellation of all prior Options granted to him under the Plan.
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<PAGE> 8
VIII. ADJUSTMENTS ON CHANGES IN STOCK
In the vent of a subdivision or consolidation of shares, the payment of
a stock dividend on the Common Stock, any other increase or decrease in the
number of outstanding shares of Common Stock effected without receipt of
consideration by the Corporation, or in any other event in which the Committee
deems an adjustment to be appropriate, the Committee shall make equitable and
proportionate adjustments in the aggregate number and kind of shares of Common
Stock available under the plan and in the number and Option Price of Options
theretofore and thereafter granted to Participants.
IX. SALE, MERGER, CONSOLIDATION OR REORGANIZATION
9.1 MERGER EVENT. Subject to any required action by the
shareholders of the Corporation, if the Corporation is the surviving corporation
in any merger or consolidation, each Option would apply to the proportionate
number of shares of common stock of the new corporation, and proportionate and
equitable adjustments shall be made in the Option Price. If the Corporation is
not the surviving corporation in any merger or consolidation but it is the
"acquiring" or "controlling" corporation in the transaction, each Option would
apply to the proportionate number of shares of common stock of the new
corporation, and proportionate and equitable adjustments shall be made in the
Option Price. If all or substantially all of the Common Stock or assets of the
Corporation or Equibank were to be sold, if any person, company or a group of
affiliated persons or companies obtains in any manner the power to elect a
majority of the directors of the Corporation or Equibank (other than the power
to elect the Equibank directors as a wholly owned subsidiary of the
Corporation), or the Corporation were to undergo a dissolution, liquidation,
reorganization or a merger or consolidation where the Corporation is not the
"acquiring" or "controlling" corporation in such transaction (collectively, a
"Merger Event"), then all unvested Options would accelerate and become vested on
the date when final bank regulatory approval of the transaction is granted.
Options not exercised on or before the date of such Merger Event would apply to
the proportionate number of shares of common stock of the new corporation, and
proportionate and equitable adjustments shall be made in the Option Price. The
Option Price of any Option which (i) is not vested prior to the Merger
Announcement Date and (ii) which has an Option Price based on the Fair market
Value of a share of Common Stock on the date of vesting (an "Unvested Option")
shall be equal to the Option Price of a Participant's most recently vested
Option under the Plan, unless such Option vested within 60 days of the Merger
Announcement Date, in which case, the Option Price for any Unvested Option shall
be equal to the Fair Market Value of a share of Common Stock on the
corresponding calendar month and day one year prior to the Merger Announcement
Date.
9.2 STOCK APPRECIATION RIGHTS. On the date when final bank
regulatory approval of a Merger Event occurs, Stock Appreciation Rights shall
attach to each Option then outstanding under the Plan for an equal number of
shares of Common Stock as subject to the Related Option.
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<PAGE> 9
9.3 EXERCISE OF STOCK APPRECIATION RIGHTS. Stock Appreciation Rights shall
be exercisable only after they have attached under Section 9.2 and only at such
time or times and to the extent that the Related Option is exercisable. The
Related Option or portion thereof of which a Stock Appreciation Right pertains
shall be surrendered and cancelled upon exercise of the Stock Appreciation
Right. Notwithstanding any other provision of the Plan, the Committee may at any
time impose such conditions on the exercise of a Stock Appreciation Right
(including, without limitation, limiting the time of exercise to specified
periods) as may be required to satisfy the limitations of Rule 16b-3 (or any
successor rule) promulgated by the Securities and Exchange Commission pursuant
to the Securities Exchange Act of 1934.
9.4 MANNER OF EXERCISE. To the extent the right to exercise has accrued
thereunder, a Stock Appreciation Right may be exercised by a Participant (or
other holder entitled to exercise the Stock Appreciation Right) by giving
written notice to the Secretary of the Corporation on a form prescribed by the
Committee and by surrendering the Related Option or portion of the Related
Option to which the Stock Appreciation Right pertains.
9.5 PAYMENT FOR STOCK APPRECIATION RIGHTS. Subject to Section 12.7, upon
exercise of a Stock Appreciation Right, the person exercising such Stock
Appreciation Right will receive an amount equal to the excess of the Fair Market
Value of the shares of Common Stock covered by the Related Option or portion
thereof surrendered determined on the date the Stock Appreciation Right is
exercised, over the aggregate Option Price of such shares. Such payment shall be
made in cash.
9.6 TERMINATION OF STOCK APPRECIATION RIGHTS. Unless otherwise terminated
under the Plan, a Stock Appreciation Right shall terminate upon the termination
of the Related Option.
X. AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN
The Board of Directors of the Corporation may amend the Plan in any respect
except that, without the approval of the Corporation's shareholders, no
amendment may be made which would (i) increase the maximum aggregate number of
shares available under paragraph 4.2, except for the operation of Section VIII;
(ii) change the eligibility requirements for participation in the Plan; (iii)
decrease the minimum Option Price, except for the operation of Section VIII or
through the issuance of a new Option conditioned upon the cancellation or
exchange of a prior Option; or (iv) extend the maximum term of Options or Stock
Appreciation Rights. The Committee may extend the period during which Options
may be granted, except that no Option may be granted after the termination of
the Plan on March 18, 1997. The Plan may be suspended or terminated by the Board
of Directors at any time. No amendment, suspension or termination of the Plan or
of any Option or Stock Appreciation Right shall, without the Participant's
consent, adversely affect the rights of a Participant in Options or Stock
Appreciation Rights previously granted except for such actions which are
necessary for compliance with the laws or regulations of any governmental body
or stock exchange.
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XI. REGULATORY AUTHORITIES
Each and every obligation and undertaking of the Corporation hereunder
is subject to the proviso that if at any time the Board of Directors shall, in
its sole discretion, determine that the listing, registration or qualification
of any Option or the Common Stock issuable in respect of any Option, upon any
securities exchange or under any state or federal law, or the consent or
approval of any governmental agency or regulatory body, is necessary as a
condition to or in connection with the grant of any Option, or the issuance of
any Common Stock in respect thereof, such grant or issuance shall be deemed to
be without effect hereunder until such listing, registration, qualification,
consent or approval shall have been effected or obtained free of any conditions
not acceptable to the Board of Directors.
XII. MISCELLANEOUS
12.1 LITIGATION BY PARTICIPANTS OR OTHER PERSONS. to the extent
permitted by law, if any legal action commenced against an Employer or any
employee or director thereof, or the Committee or any member thereof, by or on
behalf of any person results adversely to that person, or if a legal action
arises because of conflicting claims to an Option or Stock Appreciation Right
exercisable by a Participant or Beneficiary, the cost to an Employer or employee
or director thereof, or the Committee or any member thereof, of defending the
action will be charged to the extent possible to the sums, if any, that were
involved in the action or were payable to, or on account of, the Participant or
Beneficiary concerned.
12.2 INDEMNIFICATION. Any person who is or was a director, officer,
or employee of an Employer and each member of the Committee shall be indemnified
and saved harmless by the Employer from and against any and all liability or
claim of liability to which such person may be subjected by reason of any act
done or omitted to be done in good faith with respect to the administration of
the Plan, including all expenses reasonably incurred in the individual's defense
in the event that the Employers fail to provide such defense.
12.3 RIGHTS TO EMPLOYMENT. Grant under the Plan shall not confer
upon any Participant any right with respect to continued employment by an
Employer.
12.4 RIGHTS AS A SHAREHOLDER. The holder of an Option or Stock
Appreciation Right shall have no rights as a shareholder with respect to any
shares until the date of the issuance of a stock certificate to such holder for
such shares. No adjustment shall be made for dividends (ordinary or
extraordinary) whether in cash, securities or other property, or distributions,
or other rights for which the record date is prior to the date such stock
certificate is issued except as specifically provided in this Plan or in the
Option Agreement.
12.5 SPECIAL COMPENSATION. Benefits provided under the Plan shall
constitute special compensation and shall not affect the level of benefits
provided to or received by any Participant (or the Participant's estate or
Beneficiaries) as part of any employee benefit plan of any Employer.
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<PAGE> 11
12.6 ASSIGNABILITY OF RIGHTS. No Option or Stock Appreciation Right granted
to any Participant in the Plan shall be assignable or transferable (except by
will or by the laws of descent and distribution) or be subject to any lien, and
no right or interest of any Participant shall be liable for, or subject to, any
obligation or liability of such Participant. Options and Stock Appreciation
Rights granted under the Plan shall be exercisable during the participant's
lifetime only by the Participant. Options and Stock Appreciation Rights granted
under the Plan shall be exercisable after a Participant's death only by the
Participant's Beneficiary in accordance with Sections 7.5 and 7.6 hereof.
12.7 TAX WITHHOLDING. The Employer of each Participant shall have the right
to deduct any sums required by federal, state or local tax law to be withheld
with respect to the exercise of any Option or Stock Appreciation Right from any
compensation paid to any Participant.
12.8 USE OF PROCEEDS. The proceeds from the sale of Common Stock pursuant
to the exercise of Options will be used for the Corporation's general corporate
purposes.
12.9 EXPENSES. All expenses of administering the Plan shall be borne by the
Employer.
12.10 GOVERNING LAW. The Plan and Option Agreements shall be construed in
accordance with and governed by the laws of the Commonwealth of Pennsylvania,
except where such laws may be superseded by federal law.
12.11 OTHER PLANS. Nothing contained herein shall prevent the Employer from
establishing other incentive plans in which Participants in this Plan may also
participate.
12.12 NOTICES. Any communication, statement or notice addressed to a
Participant or a Participant's Beneficiary at the Participant's or Beneficiary's
last post office address shown on the Employer's records, will be binding upon
the Participant and Beneficiary for all purposes of the Plan. Neither the
Committee nor the Employer shall be obliged to search for or ascertain the
whereabouts of any Participant or Beneficiary.
12.13 INFORMATION TO BE FURNISHED BY PARTICIPANTS. Participants or their
Beneficiaries must furnish the Committee with such evidence, data or information
as the Committee considers desirable to administer the Plan. A Participant's or
Beneficiary's rights, as the case may be, under the Plan are upon the condition
that the Participant or Beneficiary promptly furnish true and complete evidence,
data and information requested by the Committee.
12.14 COMMITTEE'S DECISION FINAL. Any interpretation of the loan and any
decision on any matter within the Committee's discretion made by it in good
faith is binding on all persons. A misstatement or other mistake of fact shall
be corrected when it becomes known, and the Committee shall make such adjustment
on account thereof as it considers equitable and practicable.
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12.15 SEVERABILITY. Should any provision of this Plan or the rules and
regulations adopted hereunder be deemed or held to be unlawful or invalid for
any reason, such fact shall not adversely affect the provision herein or therein
contained unless such invalidity shall render impossible or impractical the
functioning of this Plan, and in such case, the appropriate parties shall
immediately adopt a new provision to take the places of the illegal or invalid
provision.
12.16 TITLES AND HEADINGS. The titles and headings of the Section in this
instrument are placed herein for convenience of reference only and in case of
any conflict, the text of this instrument, rather than such titles or headings,
shall control.
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Exhibit 4.7
EQUIMARK CORPORATION
EXECUTIVE OFFICER NON-QUALIFIED STOCK OPTION PLAN
-------------------------------
I. ESTABLISHMENT, PURPOSES AND EFFECTIVE DATE OF PLAN
1.1 ESTABLISHMENT. Equimark Corporation, a Delaware corporation, (the
"Corporation") hereby establishes the "Executive Officer Non-Qualified Stock
Option Plan" (the "Plan") for certain executive officers of the Corporation and
its subsidiaries. The Plan permits the grant of Stock Options to such executive
officers.
1.2 PURPOSE. The purpose of the Plan is to advance the interests of the
Corporation by encouraging and providing for the acquisition of an equity
interest in the Corporation by certain executive officers of the Corporation and
its subsidiaries and by enabling the Corporation to attract the services of such
key employees upon whose judgment, interest, and special effort the successful
conduct of its operations is largely independent.
1.3 EFFECTIVE DATE. The Plan shall become effective as of February 26,
1991, the date of its adoption by the Board of Directors of the Corporation.
II. DEFINITIONS. Whenever used herein, the following terms shall have their
respective meanings set forth below:
2.1 BENEFICIARY means any person or persons by whom a Participant's Options
are exercisable under the Plan after the death of the Participant.
2.2 CHANGE OF CONTROL DATE means the date specified by the Committee
pursuant to Section 9.1.
2.3 COMMITTEE means the Executive Committee of the Board of Directors of
the Corporation, except for those members of the Committee who are officers of
the Corporation.
2.4 COMMON STOCK means the Common Stock of the Corporation, $1.00 par
value.
2.5 EMPLOYER means Equimark Corporation or any of its subsidiaries.
2.6 FAIR MARKET VALUE of a share of Common Stock as of any date means the
closing price of a share of Common Stock as recorded by the New York Stock
Exchange Composite Transactions Tape on such date or, if no sale of the Common
Stock shall have been made on the New York Stock Exchange on that date, on the
next preceding date on which such a closing price was recorded.
2.7 OPTION means the right granted under the Plan to purchase Common Stock
at a stated price for a specified period of time.
<PAGE> 2
2.8 OPTION AGREEMENT means the written agreement between a Participant and
the Corporation evidencing an Option.
2.9 OPTION PRICE means the price per share at which Common Stock may be
purchased pursuant to an Option.
2.10 PARTICIPANT means an executive officer of the Corporation who has
received an Option under the Plan.
2.11 RELATED OPTION means the Option associated with and related to a
particular Stock Appreciation Right.
2.12 STOCK APPRECIATION RIGHT means a right under the Plan for a
Participant to receive in cash an amount equal to the excess of the Fair Market
Value of a share of Common Stock on the date of the Stock Appreciation Right is
exercised over the Option Price for the Related Option.
2.13 TERMINATION FOR CAUSE MEANS
(a) Continuing and habitual failure to perform the material duties of
the Participant, except in the event of Participant's disability, or willful
breach in material respects of the obligations of Participant to the Employer,
either of which causes significant harm to the Employer;
(b) An act of willful or gross negligence in the performance of a
Participant's material duties or obligations to the Employer, except in the
event of Participant's disability, causing significant harm to the Employer;
(c) An act of dishonesty or breach of trust on the part of a
Participant resulting or intended to result directly or indirectly in gain or
personal enrichment at the expense of the Employer; or
(d) Failure to be acquitted of an act or acts constituting a
felony under the laws of the United States of America or any State or territory
thereof.
2.14 TERMINATION WITHOUT CAUSE means any termination other than a voluntary
termination (except as set forth below), a Termination for Cause, or a
termination based on early, normal or disability retirement or death.
Termination without cause shall include any voluntary termination based upon any
material change in executive duties, responsibilities and authority which are
not equal in responsibility, importance or scope to, or commensurate with, a
Participant's current position with an Employer, or based upon any significant
reduction in a Participant's compensation.
III. ADMINISTRATION OF THE PLAN
The Committee shall be responsible for the administration of the Plan.
The Committee, by majority action thereof, is authorized to interpret the Plan,
to prescribe, amend, and rescind rules and regulations relating to the Plan, to
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provide for conditions and assurances deemed necessary or advisable to protect
the interests of the Corporation, and to make all other determinations necessary
or advisable for the administration of the Plan, but only to the extent not
contrary to the explicit 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 and binding and conclusive for all
purposes and upon all persons whomsoever.
IV. COMMON STOCK SUBJECT TO THE PLAN
4.1 SHARES OF STOCK. The Common Stock to be issued pursuant to the Plan may
be authorized but unissued shares of Common Stock or shares of Common Stock held
as treasury stock by the Corporation, as determined by the Board of Directors of
the Corporation.
4.2 AGGREGATE LIMIT. Subject to Section VIII, no more than 800,000 shares
of Common Stock may be issued pursuant to Options granted under the Plan. If any
Option granted hereunder shall be cancelled, lapse or terminate for any reason
without having been exercised in full, the unpurchased shares of Common Stock
allocable thereto shall again be made available for purposes of the Plan. Any
such shares which remain unissued upon the termination (but not cancellation) of
all Options granted under this Plan shall cease to be reserved for purposes of
the Plan, but until termination of all such outstanding Options, the Corporation
shall at all times reserve a sufficient number of shares of Common Stock to meet
the requirements of the Plan.
V. DURATION OF PLAN
The Plan shall remain in effect, subject to the Board of Director's right
to earlier terminate the Plan pursuant to Section X, until all Common Stock
subject to it shall have been purchased or acquired pursuant to the provisions
hereof. Notwithstanding the foregoing, no Option may be granted under the Plan
on or after February 26, 1993.
VI. ELIGIBILITY
Participants shall be selected by the Committee from among those executive
officers of the Corporation who, in the opinion of the Committee, have the
capacity to contribute significantly to the long-term performance and growth of
the Corporation.
VII. STOCK OPTIONS
7.1 GRANT OF OPTIONS. Each Option granted under the Plan shall be
authorized by the Committee and shall be evidenced by an Option Agreement in
such form as the Committee shall from time to time approve, which agreement
shall state the number of shares of Common Stock to which the Option pertains
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and shall comply with and be subject to the terms and conditions of the Plan and
contain such additional provisions not inconsistent with the Plan as the
Committee deems appropriate in each case.
7.2 OPTION PRICE. Subject to the provisions of Sections VIII, the price at
which a share of Common Stock may be purchased pursuant to the exercise of an
Option shall be determined by the Committee, but shall not be less than the Fair
Market Value per share of Common Stock on the date the Option is granted or on
another date specified by the Committee in the Option Agreement. The Committee
shall have full authority and discretion in fixing the Option Price.
7.3 PERIOD OF OPTION. Subject to Sections 7.6, each Option shall expire at
such time as the Committee shall determine at the time it is granted.
7.4 EXERCISE OF OPTIONS. Each outstanding Option may be exercised at any
time within the Option period in accordance with the terms of the Option
Agreement and this Plan; provided, however, that no Option shall be exercisable
until six months after the date of grant.
7.5 MANNER OF EXERCISE. The Option Price upon exercise of any Option shall
be payable to the Corporation in full either (i) in cash or its equivalent, or
(ii) by tendering shares of previously acquired Common Stock having a Fair
Market Value at the time of exercise equal to the total Option Price, or (iii)
by a combination of (i) and (ii). The proceeds from such a payment shall be
added to the general funds of the Corporation and shall be used for general
corporate purposes. As soon as practicable after receipt of full payment
(including the necessary tax withholding), the Corporation shall deliver to the
Participant Common Stock certificates in an appropriate amount based upon the
number of Options exercised, issued in the name of the Participant.
At the request of the Participant, and to the extent permitted by
applicable law, the Committee may approve arrangements with a brokerage firm
under which such firm, on behalf of the Participant, will pay the option price
to the Corporation and the Corporation will promptly deliver to such firm the
shares exercised, so that the firm may sell such shares, or a portion thereof,
for the account of the Participant.
7.6 TERMINATION OF EMPLOYMENT, RETIREMENT, OR DEATH. Subject to the
provisions of this Plan, if a Participant voluntarily terminates his or her
employment with the Employer or is subject to a Termination for cause, any
Option granted to the Participant which has vested must be exercised within 90
days after the date the Participant's employment terminates. Options that would
vest within 90 days after the date the Participant's employment terminates will
accelerate and may also be exercised during such 90 day period. All other
Options granted to the Participant lapse. If a Participant's employment with the
Employer is subject to a Termination without Cause, all unvested Options granted
to the Participant accelerate and become vested. Such Options must be exercised
within 12 months after the date the Participant's employment terminates. If a
Participant's employment with the Employer terminates by reason of the
Participant's early, normal or disability retirement as defined
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under the terms of The Equibank Employee Savings and Retirement Plan, all
unvested Options granted to the Participant accelerate and become vested. Such
options must be exercised within 18 months after the date of the Participant's
retirement. In the event of the death of a Participant while employed by an
Employer, all unvested Options granted to the Participant accelerate and become
vested. Such Options must be exercised within 18 months after the date of the
Participant's death. Such Option shall be exercisable by the Participant's
Beneficiary under the Plan.
7.7 CANCELLATION OR EXCHANGE OF OPTIONS. No Option may be cancelled without
the consent of the Participant. The Committee may, however, with such consent,
cancel Options or condition the grant of any Option under the Plan upon the
cancellation or exchange of a prior Option granted to a Participant.
VIII. ADJUSTMENTS ON CHANGES IN COMMON STOCK
In the event of a subdivision or consolidation of the outstanding shares of
Common Stock, the payment of a stock dividend on the Common Stock, any other
increase or decrease in the number of outstanding shares of Common Stock
effected without receipt of consideration by the Corporation, or in any other
event in which the Committee deems an adjustment to be appropriate, the
Committee shall make equitable and proportionate adjustments in the aggregate
number of Common Stock available under the Plan and in the number of shares
covered by and Option Price of each outstanding Option granted under the Plan.
Any such determination by the Committee shall be conclusive.
IX. CHANGE OF CONTROL; STOCK APPRECIATION RIGHTS
9.1 CHANGE IN CONTROL. In the event that (i) the Corporation is a party to
a merger or consolidation agreement, (ii) the Corporation is a party to an
agreement to sell substantially all of its assets, or (iii) there is a change in
control of the Corporation as defined below, the Committee may, in its sole
discretion, provide that all outstanding Options shall become immediately
exercisable.
For purposes of the Plan, a "change in control" shall mean any of the
following events:
(a) The acquisition of "beneficial ownership," as defined in Rule 13d-3
promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"), of
20% or more of the total voting securities of the Corporation then issued and
outstanding, by any person, or "group," as defined in Section 13(d)(3) of the
Exchange Act, or
(b) Individuals who were members of the Board of the Corporation
immediately prior to a meeting of the shareholders of the Corporation involving
a contest for the election of directors do not constitute a majority of the
Board immediately following such election, unless the election of such new
directors was recommended to the shareholders by management of the Corporation.
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The Committee has final authority to determine the exact date (the "Change
of Control Date") on which any of the events specified in (i), (ii) or (iii)
have been deemed to have occurred.
9.2 STOCK APPRECIATION RIGHTS. On the Change of Control Date, Stock
Appreciation Rights shall attach to each Option then outstanding under the Plan
for an equal number of shares of Common Stock as subject to the Related Option.
9.3 EXERCISE OF STOCK APPRECIATION RIGHTS. Stock Appreciation Rights shall
be exercisable only after they have attached under Section 9.2 and only at such
time or times and to the extent that the Related Option is exercisable. The
Related Option or portion thereof to which a Stock Appreciation Right pertains
shall be surrendered and cancelled upon exercise of the Stock Appreciation
Right.
9.4 MANNER OF EXERCISE. To the extent the right to exercise has accrued
thereunder, a Stock Appreciation Right may be exercised by a Participant (or
other holder entitled to exercise the Stock Appreciation Right) by giving
written notice to the Secretary of the Corporation on a form prescribed by the
Committee and by surrendering the Related Option or portion of the Related
Option to which the Stock Appreciation Right pertains.
9.5 PAYMENT FOR STOCK APPRECIATION RIGHTS. Subject to Section 11.4, upon
exercise of a Stock Appreciation Right, the person exercising such Stock
Appreciation Right will receive an amount equal to the excess of the Fair Market
Value of the shares of Common Stock covered by the Related Option or portion
thereof surrendered, determined on the date the Stock Appreciation Right is
exercised, over the aggregate Option Price of such shares. Such payment shall be
made in cash.
9.6 TERMINATION OF STOCK APPRECIATION RIGHTS. Unless other terminated under
the Plan, a Stock Appreciation Right shall terminate upon the termination of the
Related Option.
X. AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN
The Board of Directors of the Corporation may alter, amend or suspend the
Plan in any respect except that no alteration, amendment, suspension or
termination of the Plan or of any Option or Stock Appreciation Right shall,
without the Participant's consent, adversely affect the rights of a Participant
in Options or Stock Appreciation Rights previously granted except for such
actions which are necessary for the compliance with the laws or regulation of
any governmental body or stock exchange.
XI. MISCELLANEOUS
11.1 INDEMNIFICATION. Any person who is or was a director, officer, or
employee of the Corporation and each member of the Committee shall be
indemnified and saved harmless by the Corporation from and against any and all
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liability or claim of liability to which such person may be subjected by reason
of any act done or omitted to be done in good faith with respect to the
administration of the Plan, including all expenses reasonably incurred in the
individual's defense in the event that the Corporation fails to provide such
defense.
11.2 RIGHTS OF A SHAREHOLDER. The holder of an Option or Stock Appreciation
Right shall have no rights as a shareholder with respect to any shares until the
date of the issuance of a stock certificate to such holder for such shares. No
adjustment shall be made for dividends (ordinary or extraordinary) whether in
cash, securities or other property, or distributions, or other rights for which
the record date is prior to the date such stock certificate is issued except as
specifically provided in this Plan or in the Option Agreement.
11.3 ASSIGNABILITY OF RIGHTS. No Option or Stock Appreciation Right granted
to any Participant in the Plan shall be assignable or transferable (except by
will or by the laws of descent and distribution) or be subject to any lien, and
no right or interest of any Participant shall be liable for, or subject to, any
obligation or liability of such Participant. Options and Stock Appreciation
Rights granted under the Plan shall be exercisable during the Participant's
lifetime only by the Participant. Options and Stock Appreciation Rights granted
under the Plan shall be exercisable after a Participant's death only by the
Participant's Beneficiary in accordance with Section 7.6 hereof.
11.4 TAX WITHHOLDING. The Employer of each Participant shall have the right
to deduct any sums required by federal, state or local tax law to be withheld
with respect to the exercise of any Option or Stock Appreciation Right from any
compensation paid to any Participant.
11.5 GOVERNING LAW. The Plan and Option Agreements shall be construed in
accordance with and governed by the laws of the State of Delaware, except where
such laws may be superseded by federal law.
11.6 TITLES AND HEADINGS. The titles and headings of the Sections in this
instrument are placed herein for convenience of reference only and in case of
any conflict, the text of this instrument, rather than such titles or headings,
shall control.
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Exhibit 4.8
PENNBANCORP
KEY EMPLOYEE STOCK OPTION PLAN
ARTICLE I
PURPOSE AND SCOPE OF THE PLAN
1.1 PURPOSE
The purpose of the Plan is to promote the long-term success of Pennbancorp
by providing financial incentives to key employees who are in positions to
make significant contributions toward such success. The Plan is designed to
attract individuals of outstanding ability to employment with Pennbancorp
and to encourage key employees to acquire a proprietary interest in
Pennbancorp to continue employment with Pennbancorp, and to render superior
performance during such employment.
1.2 DEFINITIONS
Unless the context clearly indicates otherwise, the following terms have the
meanings set forth below.
"Board of Directors" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1954, as amended.
"Committee" means the Compensation Committee of the Board of Directors,
which committee shall be composed of not less than five directors who have
not been eligible to receive an award under the Plan at any time within a
period of one year immediately preceding the date of their appointment to
such committee.
"Common Stock" means the common stock of the Company or such other class of
shares or other securities as to which the provisions of the Plan may be
applicable.
"Company" means Pennbancorp.
"Fair Market Value" of a share of Common Stock on any particular date is
the mean between the highest and lowest sales prices of a share of Common
Stock on the NASDAQ Report; provided, that (i) if no sales of Common Stock
are included on the Report for such date, or (ii) if in the opinion of the
Committee the sales of Common Stock on such date are insufficient to
constitute a representative market, the Fair Market Value of a share of
Common Stock on such date shall be deemed equal to the mean between the
highest and lowest sales prices of a share of Common Stock on the Report
for the first preceding date on which sales of Common Stock are included
and to which clause (ii) does not apply.
"Grant Date." as used with respect to a particular Option or Stock
Appreciation Right, means the date as of which such option or right is
granted by the Committee pursuant to the Plan.
"Grantee" means the individual to whom an Option or Stock Appreciation
Right is granted by the Committee pursuant to the Plan.
"Option" means an option, granted by the Committee pursuant to Article II,
to purchase shares of Common Stock and which shall be designated as either
an "Incentive Stock Option" or a "Supplemental Stock Option."
"Incentive Stock Option" means an option that qualifies as an Incentive
Stock Option as described in Section 422A of the Code of 1954. as amended.
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"Supplemental Stock Option" means any option granted under this Plan
other than an Incentive Stock Option.
"Option Period" means the period beginning on the Grant Date and ending the
day prior to the tenth anniversary of the Grant Date.
"Plan" means the Pennbancorp Key Employee Stock Option Plan as set forth
herein and as may be amended from time to time.
"Retirement." as applied to a Grantee, means the Grantee's termination of
employment with all Pennbancorp subsidiaries at a time when the Grantee
receives an immediately payable retirement benefit under the Pennbank
Retirement Plan or under any other retirement plan that is maintained by a
Pennbancorp subsidiary and that is determined by the Committee to be the
functional equivalent of the Company's Retirement Plan.
"Stock Appreciation Right" means the right, granted by the Committee
pursuant to Article III of the Plan, to receive payment equal to the
subsequent increase in the Fair Market Value of a share of Common Stock.
"Pennbancorp" means the Company, any stock corporation of which a majority
of the voting common or capital stock is owned directly or indirectly by
the Company, and any other company designated as such by the Committee, but
only during the period of such ownership or designation.
"Total and Permanent Disability," as applied to a Grantee, means that the
Grantee: (i) has established to the satisfaction of the Company that the
Grantee is unable to engage in any substantial gainful activity by reason
of any medically determinable physical or mental impairment which can be
expected to result in death or which has lasted or can be expected to last
for a continuous period of not less than 12 months (all within the meaning
of Section 105[d][4] of the Code): and (ii) has satisfied any requirement
imposed by the Committee.
1.3 AGGREGATE LIMITATION
(a) The aggregate number of shares of Common Stock with respect to which
Options and Stock Appreciation Rights may be granted shall not exceed
425,000 shares of Common Stock, subject to adjustment in accordance
with Section 4.1.
(b) Any shares of Common Stock to be delivered by the Company upon the
exercise of Options and Stock Appreciation Rights shall be issued
from the Company's authorized but unissued shares of Common Stock or
from Treasury Stock acquired by the Company at the discretion of the
Board of Directors.
(c) In the event that any Option or Stock Appreciation Right expires,
lapses or otherwise terminates prior to being fully exercised, any
share of Common Stock allocable to the unexercised portion of such
option or right may again be made subject to an Option or Stock
Appreciation Right.
1.4 ADMINISTRATION OF THE PLAN
(a) The Plan shall be administered by the Committee which shall have the
authority:
(i) to determine key employees of Pennbancorp to whom, and the times
at which, Options and Stock Appreciation Rights shall be granted
and the number of shares of Common Stock to be subject to each such
option and such rights, taking into account the nature of the
services rendered by the particular employee, the employee's
potential contribution to the long-term success of Pennbancorp and
such other factors as the Committee in its discretion shall deem
relevant:
(ii) to interpret the Plan and to establish rules and regulations
relating to it:
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(iii) to prescribe the terms and provisions of the agreements for the
grant of Options and Stock Appreciation Rights (which need not
be identical); and
(iv) to make all other determinations necessary or advisable in order to
administer the Plan.
(b) All decisions of the Committee upon questions concerning the Plan or any
Option or Stock Appreciation Right shall be conclusive.
1.5 ELIGIBILITY FOR AWARDS
The Committee shall designate from time to time the key employees of
Pennbancorp who are to be granted Options and Stock Appreciation Rights.
In no event may a member of the Committee or any nonemployee Director be
granted an Option or Stock Appreciation Right.
1.6 EFFECTIVE DATE AND DURATION OF PLAN
The Plan shall become effective upon its adoption by the Board of
Directors; provided, that any grant of Option or Stock Appreciation Rights
is subject to the approval of the Plan by the shareholders of the Company
within 12 months of adoption by the Board of Directors. Unless previously
terminated by the Board of Directors, the Plan shall terminate on the
tenth anniversary of its adoption by the Board of Directors.
ARTICLE II
STOCK OPTIONS
2.1 GRANT OF OPTIONS
The Committee may from time to time, subject to the provisions of the Plan,
grant Options to key employees to purchase shares of Common Stock allotted
in accordance with Section 1.3. The Committee may designate any Option
granted as either an Incentive Stock Option or a Supplemental Stock Option,
or the Committee may designate a portion of the Option as an "Incentive
Stock Option" and the remaining portion as a "Supplemental Stock Option."
Any portion of an Option that is not designated as an "Incentive Stock
Option" shall be a "Supplemental Stock Option" and shall satisfy the
requirements of Section 2.2, but shall not be subject to the requirements
of Section 2.3.
2.2 OPTION REQUIREMENTS
(a) An Option shall be evidenced by a written instrument specifying the
number of shares of Common Stock that may be purchased by its exercise
and containing such terms and conditions consistent with the Plan as
the Committee shall determine.
(b) An Option shall not be granted on or after the tenth anniversary of the
date upon which the Plan was adopted by the Board of Directors or, if
earlier, the tenth anniversary of the date upon which the Plan was
approved by the shareholders of the Company.
(c) An Option shall not be exercisable after the expiration of the Option
Period.
(d) The Committee may provide, in the instrument evidencing an Option, for
the lapse of the Option, prior to the expiration of the Option Period,
upon the occurrence of any event specified by the Committee.
(e) The option price per share of Common Stock shall be equal to the Fair
Market Value of a share of Common Stock on the Grant Date.
(f) An Option shall not be transferable other than by will or the laws of
descent and distribution and, during the Grantee's lifetime, an
Option shall be exercisable only by the Grantee; except, that the
Committee may permit;
(i) exercise, during the Grantee's lifetime, by Grantee's guardian
or legal representative; and
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(ii) transfer, upon Grantee's death, to beneficiaries designated by
Grantee in a manner authorized by the Company; provided that the
Committee determines that such exercise and such transfer are
consonant with requirements for exemption from Section 16(b) of
the Securities Exchange Act of 1934, as amended, and, with respect
to an Incentive Stock Option, the requirements of Section
422A(b)(5) of the Code.
(g) In the event of retirement, the option to exercise shall lapse at the
earlier of the term of the Option or three years after retirement
except in the case of an Incentive Stock Option in which case the
period shall be three months. In the event of voluntary termination of
employment at the election of the employee or termination for cause at
the election of the Company, all Options and Stock Appreciation Rights
shall lapse forthwith. In the event of termination due to death or
total and permanent disability, the Option and Stock Appreciation
Rights shall lapse at the earlier of the term of the Option or one year
after termination due to such causes.
(h) A person electing to exercise an Option shall give written notice, in
such form as the Committee may require, of such election to the
Company and shall tender to the Company the full purchase price of the
shares of Common Stock for which the election is made. Payment of the
purchase price shall be made in cash or in such other form as the
Company may approve, including shares of Common Stock of the Company
valued at the Fair Market Value on the date of exercise of the Option.
(i) The exercise or lapse of any number of Stock Appreciation Rights shall
cause a corresponding reduction in the number of shares of Common
Stock then available for purchase by exercise of the related Option.
2.3 INCENTIVE STOCK OPTION REQUIREMENTS
(a) An Option designated by the Committee as an "Incentive Stock Option" is
intended to qualify as an "incentive stock option" within the meaning of
Subsection (b) of Section 422A of the Code and shall satisfy, in
addition to the conditions of Section 2.2, the conditions set forth
in this Section 2.3.
(b) An Incentive Stock Option shall not be granted to an individual who,
on the date of grant, owns stock possessing more than ten percent of
the total combined voting power of all classes of stock of the
employing Pennbancorp or any subsidiary corporation.
(c) An Incentive Stock Option shall not be exercisable while there is
outstanding (within the meaning of Section 422A[c][7] of the Code)
any other "incentive stock option," within the meaning of Subsection
(b) of Section 422A of the Code, which was granted before the granting
of the Incentive Stock Option to the Grantee to purchase stock in the
employing Pennbancorp or in a corporation which, on the Grant Date,
is a parent or subsidiary company of the employing company or is a
predecessor corporation of any such corporations.
(d) The aggregate Fair Market Value, determined on the Grant Date, of the
shares of Common Stock with respect to which any Grantee may be
granted one or more Incentive Stock Options under the Plan (within
the meaning of Subsection [b] of Section 422A of the code) in any
calendar year shall not exceed $100,000.00 plus any "unused limit
carryover" to such year, determined in accordance with Section
422A(c)(4) of the Code.
ARTICLE III
STOCK APPRECIATION RIGHTS
3.1 GRANT OF RIGHTS
(a) In relation to any Option granted, the Committee may grant a Stock
Appreciation Right with respect to each share of Common Stock that
may be purchased by the exercise of the Option.
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(b) Upon exercise of a Stock Appreciation Right, the Company shall pay the
amount, if any, by which the Fair Market Value of a share of Common
Stock on the date of exercise exceeds the Fair Market Value of a share
of Common Stock on the Grant Date, but in no event shall such payment
exceed 100% of the Fair Market Value of a share of Common Stock on
the Grant Date.
(c) Such payment shall be made in shares of Common Stock, valued at Fair
Market Value on the date of exercise, or, in the sole discretion of
the Committee, in cash, or partly in cash and partly in shares of
Common Stock.
3.2 RIGHTS REQUIREMENTS
(a) Stock Appreciation Rights shall be evidenced by a written instrument
containing such terms and conditions consistent with the Plan as the
Committee shall determine.
(b) Stock Appreciation Rights granted in relation to an Option shall be
exercisable only to the extent the Option is exercisable.
(c) A person electing to exercise Stock Appreciation Rights shall give
written notice, in such form as the Committee may require, of such
election to the Company.
(d) The exercise or lapse of an Option to purchase any number of shares of
Common Stock shall cause a corresponding reduction in the same number of
related Stock Appreciation Rights.
(e) Stock Appreciation Rights shall not be transferable other than by will
or the laws of descent and distribution and, during the Grantee's
lifetime, the Stock Appreciation Rights shall be exercisable only by
the Grantee; except, that the Committee may permit;
(i) exercise during Grantee's lifetime, by a guardian or legal
representative; or
(ii) transfer, upon Grantee's death, to beneficiaries designated by
Grantee in a manner authorized by the Company; provided, that
the Committee determines that such exercise or such transfer is
consonant with requirements for exemption from Section 16(b) of
the Securities Exchange Act of 1934, as amended, and, with
respect to a Stock Appreciation Right granted in tandem with
an Incentive Stock Option, the requirements of Section 422A(b)(5)
of the Code.
ARTICLE IV
GENERAL PROVISIONS
4.1 ADJUSTMENT PROVISIONS
(a) If:
(i) any recapitalization, reclassification, split-up or
consolidation of Common Stock is effected;
(ii) the outstanding shares of Common Stock are exchanged, in
connection with a merger or consolidation of the Company or a
sale by the Company of all or a part of its assets, for a
different number or class of shares of stock or other securities
of the Company or for shares of the stock or other securities
of any other company;
(iii) new, different or additional shares or other securities of the
Company or of another company are received by the holders of
Common Stock; or
(iv) any distribution is made to the holders of Common Stock other
than a cash dividend; then the Committee shall make appropriate
adjustments to;
(i) the number and class of shares or other securities that may be
issued or transferred pursuant to Options or Stock Appreciation
Rights, and
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(ii) the purchase price to be paid per share under outstanding Options.
(b) Upon the dissolution or liquidation of the Company, the Plan shall
terminate, and all Options and Stock Appreciation Rights previously
granted shall lapse on the date of such dissolution or liquidation of
the Company.
(c) Adjustments under Subsection (a) shall be made according to the sole
discretion of the Committee, and its decision shall be binding and
conclusive.
(d) Except as provided in subparagraphs (a) and (b), the issuance by the
Company of shares of stock of any class, or securities convertible
into shares of stock of any class shall not affect the Options or
Stock Appreciation Rights.
4.2 ADDITIONAL CONDITIONS
Any shares of Common Stock issued or transferred under any provision of the
Plan may be issued or transferred subject to such conditions, in addition to
those specifically provided in the Plan, as the Committee or Company may
impose.
4.3 NO RIGHT TO EMPLOYMENT
Nothing in the Plan or in any instrument executed pursuant thereto shall
confer upon any employee any right to continue in the employ of
Pennbancorp or shall affect the right of the Company to terminate the
employment of any employee, with or without cause.
4.4 LEGAL RESTRICTIONS
The Company will not be obligated to issue shares of Common Stock or make
any payment if counsel to the Company determines that such issuance or
payment would violate any law or regulation of any governmental authority
or any agreement between the Company and any national securities exchange
upon which the Common Stock is listed. In connection with any stock
issuance or transfer, the person acquiring the shares shall, if requested
by the Company, give assurances satisfactory to counsel to the Company
regarding such matters as the Company may deem desirable to assure
compliance with all legal requirements. The Company shall in no event be
obliged to take any action in order to cause the exercise of any Option or
Stock Appreciation Right.
4.5 NO RIGHTS AS SHAREHOLDERS
No Grantee, and no beneficiary or other person claiming through a Grantee,
shall have any interest in any shares of Common Stock allocated for the
purposes of the Plan or subject to any Option or Stock Appreciation Rights
until such shares of Common Stock shall have been transferred to the
Grantee or such person. Furthermore, the existence of the Options and Stock
Appreciation Rights shall not affect; the right or power of the Company or
its stockholders to make adjustments, recapitalizations, reorganizations or
other changes in the Company's capital structure or its business; any issue
of bonds, debentures, preferred or prior preference stocks affecting the
Common Stock of the Company or the rights thereof; the dissolution or
liquidation of the Company, or sale or transfer of any part of its assets
of business; or any other corporate act, whether of a similar character or
otherwise.
4.6 WITHHOLDING TAXES
The Company may require Grantee, as a condition of exercise of an Option or
Stock Appreciation Right, to pay or reimburse any taxes which it determines
it is required to withhold in connection with the grant or exercise of the
Option or Stock Appreciation Right.
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4.7 CHOICE OF LAW
The validity, interpretation and administration of the Plan and of any
rules, regulations, determinations or decisions made thereunder, and the
rights of any and all persons having or claiming to have any interest
therein or thereunder, shall be determined exclusively in accordance with
the laws of the State of Pennsylvania.
Without limiting the generality of the foregoing, the period within which
any action in connection with the Plan must be commenced shall be governed
by the Laws of the State of Pennsylvania; without regard to the place where
the act or omission complained of took place, the residence of any party to
such action or the place where the action may be brought.
4.8 AMENDMENT, SUSPENSION AND TERMINATION OF PLAN
The Board of Directors may at any time terminate, suspend or amend the
Plan; however, no such amendment shall, without the approval of the
shareholders of the Company;
(i) increase the aggregate number of shares which may be issued in
connection with Options or Stock Appreciation Rights;
(ii) change the Option exercise price;
(iii) increase the maximum period during which Options or Stock Appreciation
Rights may be exercised;
(iv) increase the maximum payment to be made upon exercise of a Stock
Appreciation Right;
(v) extend the effective period of the Plan; or
(vi) materially modify the requirements as to eligibility for
participation in the Plan.
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Exhibit 4.9
UNION NATIONAL CORPORATION
EMPLOYEE STOCK OPTION PLAN OF 1984
INTRODUCTION TO THE PLAN
Union National Corporation (the "Corporation"), 670 Washington Road, Mt.
Lebanon, Pennsylvania 15228 (telephone: (412) 644-8782) is the sponsoring
employer of and issuer of securities pursuant to the Union National Corporation
Employee Stock Option Plan of 1984 (the "Plan"). The Plan was proposed by the
Board of Directors of the Corporation on February 13, 1984 and approved by the
shareholders of the Corporation on April 9, 1984. The Plan provides for the
issuance of up to 100,000 shares of Common Stock of the Corporation ("Common
Stock") in accordance with the terms of the Plan. All options granted under
the Plan must be granted before April 9, 1994.
The purpose of the Plan is to enable the Corporation to grant stock
options to purchase Common Stock to officers and other key employees of the
Corporation and its direct and indirect subsidiaries in order to provide a
long-range incentive and a shareholder's perspective to those persons
principally responsible for the Corporation's continued growth and future
financial success.
DESCRIPTION OF THE PLAN
The following description of the Plan is intended to summarize certain
provisions of the Plan. It is not a complete statement of the Plan and is
qualified in its entirety by reference to the complete text of the Plan, which
is set forth in Exhibit A of this Prospectus. A current copy of the Plan is
also on file with the Secretary of the Corporation and may be reviewed by
participants in the Plan upon request.
1. ADMINISTRATION. The Plan is administered by a Committee
consisting of at least three directors of the Corporation, none of whom are
eligible to receive an option. Subject to the terms of the Plan, the Committee
selects from eligible employees those persons to whom options will be granted
and determines the type of option, the
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number of shares to be included in each option and the option price. The
Committee also establishes the period during which each option may be
exercised, either in whole or in part, which may not exceed ten years from the
date of grant, and, in its discretion, may provide an alternative settlement
method of the option. The Committee may impose conditions to the exercise of
options relating to the performance of the Corporation or any subsidiary or
optionee(s) or any combination thereof and shall, in its sole judgment,
determine whether such conditions have been fulfilled.
Initially, the Committee will be the Management Development and
Compensation Committee of the Board of Directors of the Corporation, which
presently consists of five directors, E. Rodney Hornbake, Chairman, James S.
Beckwith, III, Thomas J. Gillespie, Jack A. Valoon and Donald Y. Clem, none of
whom are employees of the Corporation or any of its subsidiaries. Committee
members are appointed and serve at the pleasure of the Board of Directors of
the Corporation, without compensation from the Plan. Their address as Committee
members is Union Bank Building, Fourth Avenue and Wood Street, Pittsburgh,
Pennsylvania 15222.
2. ELIGIBILITY. Options may be granted under the Plan to officers
and other key employees of the Corporation and its direct and indirect
subsidiaries (including officers and employees who are directors of the
Corporation) who, in the opinion of the Committee, are mainly responsible for
the continued growth, development and future financial success of the business
of the Corporation. As of May 1, 1984, there were approximately 400 eligible
officers and other key employees of the Corporation and its subsidiaries, but
no options had yet been granted under the Plan.
3. TOTAL SHARES AVAILABLE FOR OPTIONS. Options may be granted
pursuant to the Plan to purchase up to 100,000 shares of Common Stock (subject
to adjustment as provided in the Plan to prevent dilution or enlargement of
rights under the Plan), which may be either authorized and unissued shares or
shares held in the treasury of the Corporation. Shares covered by options
granted under the Plan that terminate or expire without being exercised will
remain available for the granting of future options under the Plan. All options
granted under the Plan must be granted before April 9, 1994.
4. TYPES OF OPTIONS. The Plan provides for the Committee, in its
discretion, to grant options either in the form of incentive stock options
("Incentive Stock Options") qualified as such under Section 422A of the
Internal Revenue Code of 1954, as
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amended (the "Code"), or other options ("Non-Statutory Stock Options"). See
"Federal Income Tax Consequences" below for a summary of the differing tax
consequences of the grant and exercise of Incentive Stock Options and
Non-Statutory Stock Options. No participant may be granted in any one year
Incentive Stock Options to purchase shares having a fair market value exceeding
$100,000, valued at the time of grant, provided that one-half of the unused
portion of that maximum amount may be carried over for up to three years.
5. OPTION PRICE. The Plan provides that the price at which each share
covered by an option granted thereunder may be purchased shall not be less than
the fair market value thereof at the time the option is granted. However,
Incentive Stock Options granted to a participant who is deemed, under the
applicable Federal tax rules, to own more than 10% of all voting stock of the
Corporation must have an option price of not less than 110% of the fair market
value of the shares covered by the option on the date the option is granted and
cannot be exercisable for a period of more than five years. For purposes of the
Plan, the fair market value of Common Stock is defined as the average of the
high and low bid and asked prices for the common stock of the Corporation as
quoted on the NASDAQ (National Association of Securities Dealers Automated
Quotations) System for the date in question or, if such shares are not quoted
on the NASDAQ System on that date, on the closest preceding day on which there
were such quotations.
6. OPTION PERIOD AND EXERCISE OF OPTIONS. An option may be exercised in
whole at any time or in part from time to time within such period as may be
determined by the Committee, provided that:
(i) an option period may not exceed ten years from the granting
of the option and five years in the case of Incentive Stock Options
granted to participants who own or are deemed to own more than 10%
of all voting stock of the Corporation;
(ii) if the optionee ceases to be employed by the Corporation or a
subsidiary, the option may be exercised only within 3 months after the
termination of his or her employment and within the option period,
unless such termination of employment shall be for cause, in which
case the option shall forthwith terminate;
(iii) upon the death of the optionee, the option may be exercised
only within 18 months after his or her death and within the option
period and only by the optionee's personal representatives or persons
entitled thereto under his or her will or the laws of descent and
distribution;
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(iv) the option may not be exercised for more shares (subject to
adjustment as described below) after the termination of the optionee's
employment or his or her death than the optionee was entitled to
purchase thereunder at the time of termination of his or her
employment or death; and
(v) no later-granted Incentive Stock Option may be exercised
while the optionee has outstanding (within the meaning of the
applicable Federal tax rules) any Incentive Stock Option for stock of
the optionee's employer corporation (or a parent or subsidiary
thereof) which was granted to such optionee, pursuant to the Plan or
otherwise, before the granting of such later-granted Incentive Stock
Option.
7. PAYMENT. The option price of each share purchased pursuant to an
option under the Plan shall be paid in full at the time of each exercise of the
option, except in the case of the election of the alternative settlement method
described below; provided that the option by its terms may permit payment
either (i) in cash, or (ii) in the discretion of the Committee, (a) by
delivering shares of Common Stock or (b) a combination of such shares and cash,
having in either case an aggregate fair market value equal to the option price
of the shares being purchased.
8. ATERNATIVE SETTLEMENT METHOD. The Committee, in its discretion, may
provide that any option by its terms may permit the optionee, upon surrender of
his or her option or a portion thereof, to elect to receive that number of
shares having an aggregate value equal to the excess of the fair market value
of one share over the option price per share times the number of shares as to
which the option, or portion thereof, is surrendered. Cash will be paid for any
resulting fractional share. An optionee may elect such alternative settlement
method with respect to an Incentive Stock Option only when the fair market
value of the shares subject to such option exceeds the option price.
Exercising an option in any manner, including the alternative settlement
method, reduces the shares which are thereafter available for issuance under
the Plan, but only by the number of shares actually issued by the Corporation.
9. OPTIONS NOT TRANSFERABLE. Options are not transferable by the
optionee except by will or by the laws of descent and distribution and during
the lifetime of the optionee may be exercised only by the optionee or by his
or her guardian or legal representative.
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10. SURRENDER OF OPTIONS. The Committee, in its sole discretion, may
permit optionees to surrender outstanding options for cancellation and grant
new options to the surrendering optionees or require optionees to surrender
outstanding options as a condition precedent to the granting of new options.
The number of shares covered by the options, the option price, the option
period and other terms and conditions of the new options would all be
determined in accordance with the Plan and could be different from the
conditions for the surrendered options. Shares covered by surrendered options
would again be available for the granting of options under the Plan. Holders of
Incentive Stock Options, however, should recognize that, solely for purposes of
the rule described in paragraph 6(v) above relating to the sequential exercise
of Incentive Stock Options, an Incentive Stock Option will be deemed to be
outstanding within the meaning of the applicable Federal tax rules until it is
exercised in full (including an exercise by means of the alternative settlement
method) or expires by reason of the lapse of time. The surrender of an
Incentive Stock Option does not constitute such an exercise or expiration by
reason of lapse of time.
11. ADJUSTMENTS. The Plan contains provisions with respect to the
adjustment of the number, kind and price of shares covered by options and the
number and kind of shares available for issuance pursuant to the Plan which are
not covered by options as the result of stock dividends, distributions, stock
split-ups, combinations of shares, recapitalizations, reorganizations, mergers,
consolidations and other corporate changes.
12. AMENDMENT OR DISCONTINUANCE. The Board of Directors may alter,
amend, suspend or discontinue the Plan, but no such action, except the
adjustments described above, may be taken without the approval of the
shareholders of the Corporation which would (a) increase the total number of
shares available for issuance pursuant to the Plan, (b) reduce the minimum
option price, (c) increase the period in which options granted under the Plan
may be exercised, (d) extend the termination date of the Plan, or (e) change
the class of employees eligible to receive options granted under the Plan.
FEDERAL INCOME TAX CONSEQUENCES
The following summary is based upon an interpretation of present
Federal tax laws and regulations and may be inapplicable if such laws and
regulations are changed.
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Optionees should consult their personal tax advisors regarding the specific tax
consequences to them of exercising an option or disposing of the shares
acquired thereby.
Options granted under the Plan may be Incentive Stock Options under
Section 422A of the Code, or may be options not entitled to the tax treatment
provided therein ("Non-Statutory Stock Options"). The Plan is not subject to
the protective provisions of the Employee Retirement Income Security Act of
1974 and is not qualified under Section 40 1(a) of the Code.
INCENTIVE STOCK OPTIONS--GENERAL RULES. No taxable income will be
realized by an optionee upon the grant or exercise of an Incentive Stock
Option; provided, however, that the amount by which the fair market value of
the shares on the date of exercise of an Incentive Stock Option exceeds the
option price will be a tax preference item subject to the alternative minimum
tax. In general, the basis of shares acquired upon exercise of the option will
be equal to the option price, and the holding period of such shares will
commence at the time of exercise.
If the stock received upon exercise of an Incentive Stock Option is
held for more than one year after the date of transfer (the "One-Year Holding
Period") and more than two years after the option is granted (the "Two-Year
Holding Period"), the optionee will have a long-term capital gain or loss on
the sale of such stock measured by the difference between the amount realized
and his or her basis in such shares. Long-term capital gains are subject to a
lower tax than ordinary income. An individual may deduct from gross income 60%
of the amount of any net capital gain (i.e., the excess of net long-term
capital gains over net short-term capital losses for the year) and only the
remaining 40% of the net capital gain is subject to tax. In some cases,
however, the receipt of long-term capital gains may subject the optionee to
additional tax liability under the alternative minimum tax provisions of the
Code.
If an optionee disposes of any shares acquired upon the exercise of an
Incentive Stock Option prior to the expiration of the One-Year and Two-Year
Holding Periods, including a disposition by delivering those shares in full or
partial payment of the price of another option, this will be considered a
"disqualifying disposition." Generally, upon a disqualifying disposition the
optionee will realize compensation taxable as ordinary income in an amount
equal to the excess of the fair market value of the shares at the time of
exercise over the option price paid by the optionee for such shares. The new
basis of the shares will then be calculated as the option price plus the amount
included in
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income as compensation. Any further gain would be taxable as a long-term or
short-term capital gain depending on whether the shares have been held for more
than the one year long-term capital gains holding period. However, in any
event, the amount of ordinary income realized upon a disqualifying disposition
will be limited to the gain realized on the sale.
The Corporation generally will not be entitled to a deduction with
respect to an Incentive Stock Option; however, if the optionee realizes
ordinary income by disposing of shares which were acquired upon exercise of an
Incentive Stock Option prior to the expiration of the One-Year and Two-Year
Holding Periods, then the Corporation will be entitled to a deduction in the
same amount.
The following example illustrates the above rules. On June 1, 1984,
the Corporation grants an employee an Incentive Stock Option to purchase 10
shares of Common Stock at $10 per share, which is the fair market value of the
Common Stock on that date. The employee exercises the option on August 1, 1984,
when the fair market value of the stock is $20 per share. In order to satisfy
the One-Year and Two-Year Holding Periods, the employee must hold the shares
acquired pursuant to the exercise of the Incentive Stock Option until June 1,
1986, two years from the date the option was granted. If, instead, the employee
sells the shares for $25 per share on August 2, 1985, a disqualifying
disposition will occur. Upon such a disqualifying disposition, the employee
must recognize compensation of $100, taxable as ordinary income, in 1985,
calculated as the difference between the fair market value of the shares on
August 1, 1984, the date of exercise, and the amount paid for the shares. This
amount is also deductible by the Corporation in 1985. In addition, the
employee has a $50 long-term capital gain, calculated as the difference between
the amount realized, $250, and the new $200 basis for the stock ($100 initial
purchase price plus $100 included in income as compensation). If, rather than
selling the stock for $25 per share, the employee had sold the stock at $15 per
share, only $50 would have been included in income as compensation since the
amount of ordinary income realized upon a disqualifying disposition is limited
to the gain realized on the sale. In this situation there would be no capital
gain. Likewise, the Corporation's deduction would have been limited to $50.
Incentive Stock Options are also subject to special sequential
exercise rules. An Incentive Stock Option cannot be exercisable until all
Incentive Stock Options which were previously granted to the employee by the
Corporation or another employer have been exercised in full (including
exercises by means of the alternative settlement
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method) or have expired solely by reason of the lapse of time. A modification,
cancellation or surrender of an Incentive Stock Option does not constitute such
an expiration. Accordingly, if an option which was exercisable for a 10-year
period is revised to shorten to 1 year the period during which it may be
exercised, that option will nonetheless be treated as outstanding for the
original 10-year period unless sooner exercised. Thus no later-granted
Incentive Stock Option may be exercised until the earlier of the exercise of
the prior option or the expiration of the 10-year period.
INCENTIVE STOCK OPTIONS EXERCISED BY DELIVERY OF PREVIOUSLY-OWNED
SHARES. If an Incentive Stock Option is exercised by delivery of
previously-owned shares of the Corporation's Common Stock ("Old Stock") in
partial or full payment of the option price, no gain or loss will normally be
recognized by the optionee on the transfer of such Old Stock. If, however, the
Old Stock was acquired pursuant to an Incentive Stock Option (or other
statutory stock option) and such Old Stock does not meet the One-Year and
Two-Year Holding Periods, then a disqualifying disposition of such Old Stock
will have occurred. In that event, the optionee would realize compensation
taxable as ordinary income in an amount equal to the excess of the fair market
value of the Old Stock at the time the Old Stock was acquired over the option
price paid by the optionee for such Old Stock.
If shares of Old Stock are delivered in full or partial payment of the
option price of an Incentive Stock Option, the basis of such Old Stock will
carry over to an equal number of the new shares received. Likewise, the holding
period of the Old Stock for capital gains purposes (but not for purposes of the
One-Year and Two-Year Holding Periods) will carry over to an equal number of
the new shares received. The optionee's basis in the balance of the new shares
received will be zero and the holding period for such new shares for all
purposes (except the Two-Year Holding Period from date of grant of the option)
will begin on the exercise date. Under Proposed Treasury Regulations, if an
Incentive Stock Option is exercised using previously acquired stock and a part
of the stock so acquired is later transferred in a disqualifying disposition,
the stock with the lowest basis will be deemed to have been disposed of first.
The following example illustrates the above rules. Assume that on
June 1, 1984, the Corporation grants an Incentive Stock Option to an employee
entitling the employee to purchase 100 shares of Common Stock at $10 per share,
which is the fair market value of such shares on June 1, 1984. On June 1, 1985,
when the fair market value of the stock is $25, the employee exercises the
option in full by delivering to the
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Corporation 40 shares of Common Stock previously acquired on the open market on
June 1, 1982 for $5 per share. After exercising the option, the employee will
own 100 shares of the Corporation's Common Stock, 40 of which shares will have
a basis of $5 per share and a holding period for capital gains purposes of 3
years and 60 of which shares will have a basis of zero and a holding period
beginning June 1, 1985. The employee must hold all 100 shares until June 1,
1986 in order to meet the One-Year and Two-Year Holding Periods. If, instead,
the employee sells 75 shares of the Common Stock so acquired for $30 per share
on September 1, 1985, the result of such a disqualifying disposition will be as
follows. The employee will be deemed to have sold all 60 of the zero basis
shares and 15 of the shares with a $5 basis. The employee will recognize
ordinary income of $1500 in 1985, calculated as the difference between $1875,
the fair market value of the stock on the date of exercise, and $375, the
amount paid for the shares (60 shares at $0 and 15 shares at $25 per share).
The Corporation will also receive a $1500 deduction in 1985. In addition, the
employee will recognize long-term capital gain of $375, the difference between
the $30 selling price and the $5 basis for the 15 shares of stock which had a
carryover basis and 3-year holding period. The employee will also recognize
short-term capital gain of $300, calculated as the difference between the $30
selling price and the new $25 basis (resulting from the inclusion of $1500 in
income) for the remaining 60 shares.
NON-STATUTORY STOCK OPTIONS--GENERAL RULES. An optionee will not
normally realize any taxable income upon the grant of a Non-Statutory Stock
Option. Upon the exercise of a Non-Statutory Stock Option, the optionee will
realize compensation taxable as ordinary income in an amount equal to the
excess of the fair market value of the shares at the time of exercise over the
option price. The Corporation will be entitled to a deduction for compensation
paid in the same amount which the optionee realizes as ordinary income. In
general, the basis of shares acquired upon exercise of the option will be their
fair market value on the date of exercise, and the holding period will commence
at that time. Assuming that no disqualifying disposition of shares previously
acquired on exercise of an Incentive Stock Option is involved, the Internal
Revenue Service has ruled that no additional gain will be recognized by an
optionee as a result of his or her delivery of previously-owned shares of
Corporation stock in partial or full payment of the option price. However, if
shares of Common Stock of the Corporation are delivered in full or partial
payment of the option price, the basis and holding period of such shares will
carry over to an equal number of shares received. The basis of the balance of
the shares
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received will equal the amount the optionee is required to include in income as
compensation.
When an optionee sells shares acquired upon the exercise of a
Non-Statutory Stock Option, the optionee will realize a capital gain or loss
measured by the difference between the selling price and his or her basis in
such shares. Such gain or loss will be long-term if the shares have been held
for more than one year since the commencement of the holding period. Long-term
capital gains are subject to a lower tax than ordinary income. An individual
may deduct from gross income 60% of the amount of any net capital gain (i.e.,
the excess of net long-term capital gains over net short-term capital losses
for the year) and only the remaining 40% of the net capital gain will be
subject to tax. In some cases, however, the receipt of long-term capital gains
may subject the optionee to additional tax liability under the alternative
minimum tax provisions of the Code.
The following example illustrates the above rules. On June 1, 1984, the
Corporation grants an employee a Non-Statutory Stock Option to purchase 10
shares of Common Stock at $10 per share. The employee exercises the option on
September 15, 1984, when the fair market value of the stock is $15 per share.
The employee must recognize compensation of $50 in 1984, calculated as the
difference between the fair market value of the shares on September 15, 1984,
the date of exercise, and the option price. The Corporation will also receive a
deduction for $50 in 1984. If the employee sells the shares on October 1, 1985
for $20 per share, the employee will recognize a long-term capital gain of $50,
calculated as the difference between the amount realized, $200, and the new
$150 basis for the stock (the stock's fair market value on the date of
exercise).
NON-STATUTORY STOCK OPTIONEES SUBJECT TO SHORT-SWING PROFITS
RESTRICTIONS. Optionees who are subject to the short-swing profits restrictions
of Section 16(b) of the Securities Exchange Act of 1934 should be aware that a
special Federal income tax rule will apply to an exercise by them of a
Non-Statutory Stock Option. If, as provided in Section 83(b) of the Code, such
optionees so elect within 30 days after each exercise of a Non-Statutory Stock
Option, they will be taxed at the time of exercise of the option and the
holding period for the stock will begin at that time as described above.
Otherwise, the optionees will be taxed at the expiration of the six-month
period subject to the Section 16(b) restrictions and the holding period for the
stock will begin on such expiration as if the option had been exercised on said
expiration date.
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The following example illustrates the above rules. On June 1, 1984,
the Corporation grants an employee a Non-Statutory Stock Option to purchase 10
shares of Common Stock at $10 per share. The employee is also an officer of the
Corporation and subject to the short-swing profits restrictions of Section
16(b) of the Securities Exchange Act of 1934. The employee exercises the option
on October 1, 1984, when the fair market value of the stock is $18 per share.
If the optionee so elects no later than October 31, 1984, the optionee will
recognize compensation of $80 in 1984, calculated as the difference between the
fair market value of the shares on October 1, 1984, the date of exercise, and
the option price. If, instead, the optionee does not make the election and the
fair market value of the stock on April 1,1985 is $25 per share, the optionee
will recognize compensation of $150 in 1985, calculated as the difference
between the fair market value of the shares on April 1, 1985, at the expiration
of the six month period subject to the Section 16(b) restrictions, and the
option price.
ATERNATIVE SETTLEMENT METHOD. When an optionee is granted the right to
elect the alternative settlement method with respect to an Incentive Stock
Option or a Non-Statutory Stock Option, the optionee will not realize any
taxable income upon such grant. Upon surrender of an option and the election
of the alternative settlement method, however, the above discussion of the tax
consequences of Incentive Stock Options and Non-Statutory Stock Options will no
longer apply. Under these circumstances, the fair market value of the shares
and the cash in lieu of the fractional share, if any, received must be treated
as compensation taxable as ordinary income by the optionee in the year of such
exercise. The basis of the shares will equal the amount so included with
respect to such shares in income as compensation. An optionee may elect the
alternative settlement method with respect to an Incentive Stock Option only
when the fair market value of the shares subject to the option exceeds the
option price. The Corporation will be entitled to a deduction for compensation
paid in the same amount which the optionee realizes as ordinary income. If the
optionee receives shares and thereafter sells such shares, the difference
between any amount realized and the basis of the shares will be taxed as a
capital gain or loss.
The following example illustrates the above rules. On June 1, 1984, the
Corporation grants an employee an option to purchase 10 shares of Common Stock
at $10 per share and includes the right to elect the alternative settlement
method in the option. The employee exercises the option on June 1, 1985 when
the fair market value of
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the stock is $25 per share, electing the alternative settlement method. The
employee will receive shares of stock worth $150 (calculated as the excess of
the $25 fair market value over the $10 option price, or $15, multiplied times
10 shares) for a total of 6 shares. The employee will also recognize ordinary
income of $150 in 1984 and the Corporation will be entitled to a deduction in
the same amount. The basis of the shares received will equal $150, the amount
of compensation included in income. The above tax treatment will apply
regardless of whether the option initially granted to the employee was an
Incentive Stock Option or a Non-Statutory Stock Option.
RESTRICTIONS ON RESALE BY OFFICERS AND DIRECTORS
Directors and officers of the Corporation and certain officers of its
subsidiaries may be considered "affillates" of the Corporation and, as such, may
transfer shares of Common Stock, including shares received upon the exercise of
an option granted under the Plan, only in compliance with the registration
requirements of the Securities Act of 1933, as amended (the "Act"). Generally,
in the absence of registration under the Act, shares of Common Stock held by
such persons may be sold pursuant to an exemption from the registration
requirements of the Act such as Rule 144 of the Commission. Optionees who may
be "affiliates" are urged to consult legal counsel prior to any proposed sale
of Common Stock. Consistent with the provisions of the Act, the Corporation
may place a restrictive legend on Common Stock issued to such persons and issue
stop order instructions to the Corporation's transfer agent.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Securities and Exchange
Commission are incorporated by reference in this Prospectus:
1. The Corporation's Annual Report on Form 10-K for the year-ended
December 31,1983.
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2. All other reports of the Corporation filed pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934
since December 31, 1983.
3. The description of the Common Stock contained in the
Corporation's Registration Statement No. 2-74213, as amended,
under the caption "Description of Bank Common Stock and Holding
Company Common Stock" of the prospectus portion thereof and in
the Corporation's registration statement filed under Section 12
of the Securities Exchange Act of 1934, as amended, including all
amendments and reports filed for the purpose of updating such
description.
All documents filed by the Corporation pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the date of this
Prospectus and prior the termination of the offering contained herein shall be
deemed to be incorporated by reference into this Prospectus and to be a part
hereof from the date of filing of such documents.
SHAREHOLDER REPORTS AND CURRENT SUPPLEMENTS TO PROSPECTUS
Copies of the Corporation's Annual Report to Shareholders for its most
recent fiscal year will be furnished with this Prospectus. Participants in
the plan who previously received a copy of such Annual Report may obtain an
additional copy, without charge, upon written request. Participants will
receive copies of all reports, proxy statements and communications distributed
to all shareholders of the Corporation.
A current Supplement to this Prospectus will also be furnished to all
participants in the Plan from time to time. The Supplement will provide
current information about the Committee members, the number of eligible and
participating employees and the options granted and outstanding under the Plan.
The Supplement will be updated as appropriate to provide current information
about the Plan. Changes in the information contained in this Prospectus, such
as amendments to the Plan and changes in the Federal income tax consequences of
options, also may be included in the current Supplement.
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EXPERTS
The financial statements incorporated by reference in the
Corporation's 1983 Annual Report on Form 10-K, also incorporated by reference
in this Prospectus and elsewhere in the Registration Statement, have been
examined by Arthur Andersen & Co., independent public accountants, as indicated
in their report with respect thereto, and are included herein in reliance upon
the authority of said firm as experts in accounting and auditing in giving said
report.
LEGAL MATTERS
The legality of the shares of Common Stock issued pursuant to the
Plan has been passed upon by Buchanan Ingersoll Professional Corporation, 57th
Floor - 600 Grant Street, Pittsburgh, Pennsylvania 15219, counsel for the
Corporation. Robert F. Patton, Esquire, a director and Chairman of the Board of
the Corporation, is of counsel to Buchanan Ingersoll Professional Corporation.
As of April 6, 1984, attorneys in that firm beneficially owned an aggregate of
8237 shares of Common Stock of the Corporation.
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Section 410 of the Pennsylvania Business Corporation Law permits the
indemnification of corporate officers, directors, employees and agents and
persons who are serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, and authorizes the purchase of insurance for the
purpose of indemnifying such persons. A copy of these provisions is included in
Exhibit 28(ii)(a) to the Registration Statement and is incorporated herein by
reference.
Reference is made to Article X of the Corporation's Bylaws (included in
Exhibit 28(ii)(a) to the Registration Statement and incorporated herein by
reference) which provides for the indemnification of the Corporation's officers
and directors acting as such or serving at its request as officers or directors
for other enterprises.
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<PAGE> 15
The Articles of Association of the Corporation's subsidiaries, The Union
National Bank of Pittsburgh, Keystone National Bank and McDowell National Bank,
respectively, also provide for the indemnification under certain circumstances
of directors, officers and employees of their respective banks and persons
serving as officers, directors or employees of any other organization at the
respective bank's request. Reference is made to Exhibit 28(ii)(a) of the
Registration Statement for the text of Article Seventh of The Union National
Bank of Pittsburgh's Articles of Association, which is also substantially
similar to an article of Keystone National Bank's Articles of Association and
an article of McDowell National Bank's Articles of Association and which is
incorporated herein by reference.
Insofar as indemnification by the Corporation for liabilities arising
under the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Corporation pursuant to the foregoing provisions, or
otherwise, the Corporation has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable.
The Corporation and its bank subsidiaries also carry insurance
insuring their officers and directors against certain liabilities which they
might incur as directors or officers of the Corporation or their respective
banks or of any other organization which they serve at the Corporation or
bank's request, including certain liabilities under the Securities Act of 1933.
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<PAGE> 16
EXHIBIT A
UNION NATIONAL CORPORATION
EMPLOYEE STOEK OPTION PLAN OF 1984
Section 1. ESTABLISHMENT OF THE PLAN AND TYPES OF OPTIONS.
(a) There is hereby established the Union National Corporation
Employee Stock Option Plan of 1984 (hereinafter called the "Plan"), pursuant to
which officers and other key employees of Union National Corporation
(hereinafter called the "Company") and its subsidiaries may be granted options
to purchase shares of common stock of the Company, in order to provide a
long-range incentive and a shareholder's perspective to those persons
principally responsible for the continued growth and financial success of the
Company.
(b) Options granted pursuant to the Plan may be either options
which are incentive stock options under Section 422A of the Internal Revenue
Code of 1954, as amended (hereinafter called "Incentive Stock Options"), or
other options (hereinafter called "Non-Statutory Stock Options"). Incentive
Stock Options and Non-Statutory Stock Options shall be granted separately
hereunder.
(c) No optionee may be granted Incentive Stock Options in any one
calendar year to purchase more than $100,000 of capital stock of the Company,
valued at the time of the grant; provided, however, that one-half of any unused
portion of such amount may be carried over for grants to such optionee in any
of the three succeeding calendar years as provided in Section 422A(c)(4) of the
Internal Revenue Code of 1954, as amended (hereinafter, the "IRC").
(d) The Committee (as defined in Section 3 of the Plan), in its sole
discretion, shall determine whether and to what extent options granted under
the Plan shall be designated as Incentive Stock Options or Non-Statutory Stock
Options.
Section 2. DURATION. All options granted under this Plan must be
granted within ten years from the effective date set forth in Section 13
hereof. Any options outstanding after the expiration of such ten-year period
may be exercised within the periods prescribed by Section 7(c).
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Section 3. ADMINISTRATION. The Plan shall be administered by a committee
(hereinafter called the "Committee") of not less than three directors of the
Company, none of whom shall be eligible, or shall have been eligible at any
time within one year prior to becoming a Committee member, to participate in
the Plan or any other plan of the Company or any of its affiliates which
entitles its participants to receive stock, stock options or stock appreciation
rights of the Company or any of its affiliates, who shall be appointed and
serve at the pleasure of the Board of Directors. A majority of the Committee
shall constitute a quorum, and the acts of a majority of the members present at
any meeting at which a quorum is present, or acts approved in writing by a
majority of the Committee, shall be deemed the acts of the Committee. Subject
to the provisions of the Plan and to policies determined by the Board of
Directors, the Committee is authorized to adopt such rules and regulations
and to take such action in the administration of the Plan as it shall deem
proper.
Section 4. ELIGIBILITY. Officers and other key employees of the
Company and its subsidiaries (including officers and other employees who are
directors of the Company) who, in the opinion of the Committee, are mainly
responsible for the continued growth and development and future financial
success of the business shall be eligible to participate in the Plan. The
Committee shall, in its sole discretion, from time to time select from such
eligible persons those to whom options shall be granted and determine the type
of option and the number of shares to be included in such option. No officer or
other employee shall have any right to receive an option except as the
Committee in its discretion shall determine. The term "subsidiary" where used
in the Plan or in any stock option agreement means a corporation the majority
of the outstanding voting stock of which is directly or indirectly owned by the
Company.
Section 5. SHARES SUBJECT TO THE PLAN. Options may be granted pursuant
to the Plan to purchase up to 100,000 shares of common stock of the Company
(subject to adjustment as provided in Section 8), which may be either
authorized and unissued shares or shares held in the treasury of the Company,
and which shares are hereby reserved for the purposes of the Plan. To the
extent that options granted under the Plan shall expire or terminate without
being exercised, shares covered thereby shall remain available for purposes of
the Plan. To the extent that an optionee shall elect the alternative settlement
method provided in Section 7(d)(i) and (ii) hereof, then upon the surrender of
an
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option, or portion thereof, to effectuate such alternative settlement method,
such option shall be deemed to have been exercised but only for the number of
shares which are received from the Company by the optionee, and, with respect
to the balance of the shares covered by such option, or portion thereof with
respect to which the optionee shall have elected such alternative settlement
method, such option shall be deemed to have terminated without being exercised.
Section 6. AUTHORITY OF THE COMMITTEE. Subject to the provisions of
the Plan, the Committee shall have full and final authority to determine the
persons to whom options shall be awarded and the number of shares to be covered
by each option. The Committee shall have the authority, in its discretion, to
include the alternative method of settlement as provided in Section 7(d)(i) and
(ii) hereof in an option either at the time of grant of the option or by
amendment thereto. The Committee, in its sole discretion, may permit an
optionee voluntarily to surrender for cancellation an option granted under the
Plan, such surrender to be conditioned upon the granting to such optionee of a
new option under the Plan for the same or a different number of shares as the
option surrendered, or may require such voluntary surrender as a condition
precedent to the grant of a new option to such optionee. For purposes of
Section 5 hereof, options so surrendered for cancellation shall be deemed to
have terminated without being exercised. Any such new option shall be
exercisable at the price, during the period, and in accordance with any other
terms and conditions specified by the Committee at the time the new option is
granted, all determined in accordance with the provisions of the Plan, without
regard to the price, period of exercise, or any other terms or conditions of
the option surrendered for cancellation. The grant of such new option shall
not be deemed an amendment of the Plan or the option surrendered. After the
death of an optionee, his or her option may be surrendered to the Company for
cancellation, but only upon such terms and conditions, if any, as the Board of
Directors may determine. For purposes of Section 5 hereof, options so
surrendered for cancellation shall be deemed to have terminated without being
exercised.
Section 7. TERMS OF OPTIONS. Each option granted under the Plan shall be
evidenced by a stock option agreement between the Company and the person to
whom such option is granted and shall be subject to the following terms and
conditions:
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(a) Subject to adjustment as provided in Section 8 of the Plan, the
price at which each share covered by an option may be purchased shall be
determined in each case by the Committee but shall be not less than the fair
market value thereof at the time the option is granted. If an optionee owns (or
is deemed to own under applicable provisions of the IRC and rules and
regulations promulgated thereunder) more than 10% of the combined voting power
of all classes of the stock of the Company (or any parent or subsidiary
corporation of the Company) and an option granted to such optionee is intended
to qualify as an Incentive Stock Option, the option price shall be not less
than 110% of the fair market value of the shares covered by the option on the
date the option is granted.
(b) During the lifetime of the optionee, the option may be
exercised only by the optionee or by his or her guardian or legal
representative. The option shall not be transferable by the optionee
otherwise than by will or by the laws of descent and distribution.
(c) An option may be exercised in whole at any time, or in part
from time to time, within such period or periods not to exceed ten years from
the granting of the option as may be determined by the Committee and set forth
in the stock option agreement (such period or periods being hereinafter referred
to as the option period) provided that:
(i) if the optionee shall cease to be employed by the
Company or a subsidiary, the option may be exercised only within
three months after the termination of his or her employment and
within the option period; provided, however, if such termination of
employment shall be for cause, the option shall forthwith terminate;
(ii) if the optionee shall die, the option may be exercised only
within eighteen months after his or her death and within the option
period and only by his or her personal representatives or persons
entitled thereto under his or her will or the laws of descent and
distribution;
(iii) the option may not be exercised for more shares (subject
to adjustment as provided in Section 8) after the termination of the
optionee's employment or his or her death than the optionee was
entitled to purchase thereunder at the time of the termination of
the optionee's employment or his or her death;
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(iv) no Incentive Stock Option (referred to in this subsection
as a "new Incentive Stock Option") granted pursuant to this Plan and
designated as an Incentive Stock Option by the Committee may be
exercised while there is outstanding (within the meaning of Section
422A(c)(7) of the IRC) any Incentive Stock Option granted pursuant to
this Plan or any other stock option plan to such individual optionee to
purchase stock in the optionee's employer corporation (or in a
corporation which, at the time of the granting of such New Incentive
Stock Option, is a parent or subsidiary corporation of said employer
corporation, or in a predecessor corporation of any of such
corporations) which Incentive Stock Option was granted to such employee
before the granting of such new Incentive Stock Option; whereas any
Non-Statutory Option granted pursuant to this Plan and designated as
such by the Committee shall be exercisable without regard to the above
limitations; and
(v) if an optionee owns (or is deemed to own under applicable
provisions of the IRC and rules and regulations promulgated thereunder)
more than 10% of the combined voting power of all classes of the stock
of the Company (or any parent or subsidiary corporation of the Company)
and an option granted to such optionee is intended to qualify as an
Incentive Stock Option, the option by its terms may not be exercisable
after the expiration of five years from the date such option is
granted.
(d) Subject to the limitations herein set forth, the option may be
exercised in whole or in part from time to time by written request made to the
Treasurer of the Company. Payment in full in cash for the number of shares
purchased shall be made to the Company at the time of each exercise, except in
the case of the election of the alternative settlement method as provided
hereafter in this subsection; provided, however, that the Committee, in its
discretion, may provide that an option by its terms may permit payment to be
made either (A) in cash, or (B) in the discretion of the Committee, (1) by
delivering to the Company shares of common stock of the Company or (2) any
combination of such shares and cash, having in either case an aggregate fair
market value, as determined by the Committee, equal to the option price of the
shares being purchased pursuant to the exercise of the option. The fair market
value of such common stock of the Company shall be determined in accordance
with the provisions of Section 9 of the Plan.
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<PAGE> 21
(i) The Committee, in its discretion, may provide that any
option by its terms may permit the optionee upon surrender of his or
her option, or a portion thereof, to elect the alternative settlement
method set forth in subparagraph (ii) below; provided, however,
that an optionee may elect the alternative settlement method with
respect to an Incentive Stock Option only when the fair market
value of the shares subject to such option exceeds the option price.
(ii) The optionee may elect the alternative settlement method
and receive that number of shares having an aggregate value equal
to the excess of the fair market value of one share over the option
price per share times the number of shares as to which the option,
or portion thereof, is surrendered. No fractional shares will be
issued but instead cash will be paid for a fraction.
(e) The Committee, in its discretion, may provide that any option
intended to be an Incentive Stock Option shall also be subject to such
additional or more restrictive terms and conditions as may, from time to time,
be required to constitute such option an incentive stock option under the
provisions of Section 422A of the IRC.
(f) The Committee may include such other terms and conditions not
inconsistent with the foregoing as the Committee shall approve. Without
limiting the generality of the preceding sentence, the Committee shall be
authorized to impose conditions to the exercise of options relating to the
performance of the Company or any subsidiary or of optionee(s) or any
combination of the foregoing. The Committee shall, in its sole judgment,
determine whether such conditions have been fulfilled and may require that the
Company receive from the Committee a written certificate as to the fulfillment
of such conditions before shares are issued and sold pursuant to options which
have been exercised.
Section 8. ADJUSTMENT OF NUMBER AND PRICE OF SHARES.
(a) In the event that a dividend shall be declared upon the common
stock of the Company payable in shares of said stock, the number of shares of
common stock covered by each outstanding option and the number of shares
available for issuance pursuant to the Plan but not covered by options 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 shareholders entitled to receive such stock dividend.
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(b) In the event that the outstanding shares of common stock of the
Company shall be changed into or exchanged for a different number or kind of
shares of stock or other securities of the Company or of another corporation,
whether through reorganization, recapitalization, stock split-up, combination
of shares, merger or consolidation, then there shall be substituted for the
shares of common stock covered by each outstanding option and for the shares
available for issuance pursuant to the Plan but not covered by an option, the
number and kind of shares of stock or other securities which would have been
substituted therefor if such shares had been outstanding on the date fixed for
determining the shareholders entitled to receive such changed or substituted
stock or other securities.
(c) In the event there shall be any change, other than specified
above in this Section 8, in the number or kind of outstanding shares of common
stock of the Company or of any stock or other securities into which such
common stock shall be changed or for which it shall have been exchanged, then
if the Board of Directors shall determine, in its discretion, that such change
equitably requires an adjustment in the number or kind of shares covered by
outstanding options or which are available for issuance pursuant to the Plan
but not covered by options, such adjustment shall be made by the Board of
Directors and shall be effective and binding for all purposes of the Plan and
on each outstanding stock option agreement.
(d) In the event that, by reason of a corporate merger,
consolidation, acquisition of property or stock, separation, reorganization or
liquidation, the Board of Directors shall authorize the issuance or assumption
of a stock option or stock options in a transaction to which Section 425(a) of
the IRC applies, then, notwithstanding any other provision of the Plan, the
Committee may grant an option or options upon such terms and conditions as it
may deem appropriate for the purpose of assumption of the old option, in
conformity with the provisions of such Section 425(a) and the regulations
thereunder, as they may be amended from time to time.
(e) No adjustment or substitution provided for in this Section 8 shall
require the Company to issue or to sell a fractional share under any stock
option agreement and the total adjustment or substitution with respect to each
stock option agreement shall be limited accordingly.
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(f) In the case of any adjustment or substitution provided for in
this Section 8, the option price per share in each stock option agreement
shall be equitably adjusted by the Board of Directors to reflect the greater
or lesser number of shares of stock or other securities into which the stock
covered by the option may have been changed or which may have been substituted
therefor.
Section 9. FAIR MARKET VALUE. In any determination of fair market
value under the Plan, the fair market value of one share shall mean the average
of the high and low bid and asked prices per share of the common stock of the
Company as quoted on the NASDAQ (National Association of Securities Dealers
Automated Quotations) System on the relevant date under the Plan. If shares of
common stock of the Company are not quoted on the NASDAQ System on that date,
the fair market value of one share will be determined on the basis of the
average of the high and low bid and asked prices per share of such stock on the
closest preceding day on which there were quotations.
Section 10. AMENDMENT AND DISCONTINUANCE. The Board of Directors may
alter, amend, suspend or discontinue the Plan, provided that no such action
shall deprive any person without his or her consent of any rights theretofore
granted pursuant hereto, and provided further that, except as provided in
Section 8, no action of the Board of Directors, unless taken with the approval
of the shareholders of the Company, may:
(a) increase the total number of shares available for issuance
pursuant to the Plan,
(b) reduce the minimum option price,
(c) increase the period in which options granted under the Plan may be
exercised,
(d) extend the termination date of the Plan, or
(e) change the class of employees eligible to receive options granted
under the Plan.
Section 11. COMPLIANCE WITH GOVERNMENTAL REGULATIONS. Notwithstanding
any provision of the Plan or the terms of any stock option agreement issued
under the Plan, the Company shall not be required to issue any shares
hereunder prior to registration of the shares subject to the Plan under the
Securities Act of 1933 or the Securities Exchange Act of 1934, if such
registration shall be necessary, or before compliance by the Company or any
participant with any other provisions of either of those acts or of
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<PAGE> 24
regulations or rulings of the Securities and Exchange Commission thereunder, or
before compliance with all other applicable Federal and state laws and
regulations and rulings thereunder. The Company shall use its best efforts to
effect such registrations and to comply with such laws, regulations and rulings
forthwith upon advice by its counsel that any such registration or compliance
is necessary.
Section 12. WITHHOLDING. The Company shall have the right, in
connection with the optionee's exercise of an option or the election of the
alternative settlement method, to require the recipient to pay to the Company
an amount sufficient to provide for any taxes required to be withheld by law.
Section 13. EFFECTIVE DATE OF THE PLAN. The Plan shall become effective
immediately after the approval of the Plan by a majority of the outstanding
shares of the Corporation at the annual meeting of the shareholders of the
Company on April 9, 1984, but no options shall be granted hereunder until the
Committee shall have been advised by the Company's counsel that all applicable
legal requirements have been satisfied and that appropriate rulings, if any are
required from governmental agencies, have been obtained.
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<PAGE> 1
Exhibit 5.1
April 30, 1996
National City Corporation
1900 East Ninth Street
Cleveland, OH 44114
Re: Shares of Common Stock, par value $4.00 per share, of National City
Corporation to be Registered in connection with the Post-Effective
Amendment No. 1 (on Form S-8) to Form S-4 Registration Statement
Gentlemen:
The Law Department acts as counsel to National City Corporation ("NCC")
and we are delivering this opinion in connection with the Merger (the "Merger")
of Integra Financial Corporation ("Integra") with and into NCC in accordance
with the Agreement and Plan of Merger, dated as of August 27, 1995 (the "Merger
Agreement"), by and between Integra and NCC.
We have examined such documents, records and matters of law as we have
deemed necessary for purposes of this opinion, and based thereon we are of the
opinion that the shares of common stock which may be issued will be, when
issued, validly issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as to the Post-Effective
Amendment No. 1 (on Form S-8) to Form S-4 Registration Statement by NCC to
effect registration of the shares issued in connection with various stock
option plans, and to the reference to me under the caption "LEGAL OPINIONS" in
the prospectus comprising a part of such Registration Statement.
Very truly yours,
/s/ Carlton E. Langer
National City Corporation
Carlton E. Langer
Vice President and Assistant
General Counsel
<PAGE> 1
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 33-01697) pertaining to the Post-Effective Amendment to No. 1 to
Form S-4 of our report dated January 22, 1996, with respect to the consolidated
financial statements of National City Corporation included in its Annual Report
on Form 10-K for the year ended December 31, 1995, filed with the Securities
and Exchange Commission.
Ernst & Young LLP
Cleveland, Ohio
April 26, 1996
