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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter Ended June 30, 1996
Commission File Number 1-11482
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Transition Period from to
FIRST COLONY CORPORATION
(Exact name of registrant as specified in its charter)
VIRGINIA 54-1200334
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification
No.)
RIVERFRONT PLAZA, WEST TOWER SUITE 1350
901 EAST BYRD STREET
RICHMOND, VIRGINIA 23219
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code - (804)
775-0300
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports); and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Number of shares of common stock, no par value, outstanding as of
July 31, 1996: 49,303,281
FIRST COLONY CORPORATION
I N D E X
Page
Number
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements (Unaudited)
Consolidated Balance Sheets
June 30, 1996 and December 31, 1995 3 - 4
Consolidated Statements of Income
Three Months and Six Months Ended
June 30, 1996 and 1995 5
Consolidated Statements of Shareholders' Equity
Six Months Ended June 30, 1996 and 1995 6
Consolidated Statements of Cash Flows
Six Months Ended June 30, 1996 and 1995 7
Notes to Consolidated Financial Statements 8 - 9
ITEM 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition 10-16
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K 17
SIGNATURES 18
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
FIRST COLONY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands)
(1996 Unaudited)
June 30 December 31
1996 1995
Investments:
Fixed maturities held to maturity, at
amortized cost:
Bonds (Fair value: 1996 $4,223,121;
1995, $4,660,947) $ 4,032,551 $ 4,070,476
Fixed maturities available for sale,
at fair value:
Bonds (Amortized cost: 1996, $4,678,704;
1995, $4,242,361) 4,709,322 4,602,319
Preferred stock, redeemable (Amortized
cost: 1996, $73,698; 1995, $77,465) 81,748 96,479
Equity securities, at market value
Preferred stock, nonredeemable (cost: 1996,
$230,933; 1995, $274,328) 256,721 321,118
Common stock (cost: 1996, $29,594;
1995, $28,476) 37,125 32,935
Policy loans 216,935 207,854
Other long-term investments 38,277 40,637
Short-term investments 11,790 14,160
Total investments 9,384,469 9,385,978
Cash and cash equivalents 42,456 46,125
Accrued investment income 165,478 161,689
Deferred policy acquisition costs 977,361 874,586
Reinsurance receivable 126,106 115,344
Property and equipment, less
accumulated depreciation 45,181 44,697
Goodwill, less accumulated amortization 30,789 31,385
Other assets 69,243 60,805
Total assets $10,841,083 $10,720,609
See accompanying notes to consolidated financial statements.
FIRST COLONY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands)
(1996 Unaudited)
June 30 December 31
LIABILITIES AND SHAREHOLDERS' EQUITY 1996 1995
Liabilities:
Policy liabilities:
Future policy benefits $ 6,198,404 $ 5,932,338
Claims 52,084 52,569
Total policy liabilities
and accruals 6,250,488 5,984,907
Deposits on investment contracts 2,621,971 2,521,657
Other policyholder funds 116,636 132,678
Other liabilities 117,233 93,881
Long-term debt 174,852 174,843
Deferred income taxes 214,010 328,238
Total liabilities 9,495,190 9,236,204
Shareholders' equity:
Preferred stock - No par value; authorized
15,000 shares; issued and outstanding,
3,200 80,000 80,000
Common stock - No par value; authorized
150,000 shares; issued and outstanding
49,303 shares 312,917 312,888
Net unrealized appreciation of
fixed maturities 13,937 208,288
Net unrealized appreciation of equity
securities 22,989 34,644
Retained earnings 916,050 848,585
Total shareholders' equity 1,345,893 1,484,405
Total liabilities and shareholders'
equity $10,841,083 $10,720,609
See accompanying notes to consolidated financial statements.
FIRST COLONY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands)
(Unaudited)
Three months ended Six months ended
June 30 June 30
1996 1995 1996 1995
Revenues:
Life insurance premiums $ 96,862 $ 84,978 $ 188,968 $163,988
Life contingent
annuity premiums 78,879 106,069 164,239 186,791
Total premiums 175,741 191,047 353,207 350,779
Net investment income 198,925 184,055 395,156 363,522
Mortality, surrender &
administrative charges 29,172 25,619 56,897 51,484
Realized gains on
investments 11,008 20,909 21,309 32,377
Total revenues 414,846 421,630 826,569 798,162
Benefits:
Life and annuity
benefits paid 131,353 123,003 264,841 240,356
Increase in reserves 175,098 196,269 349,756 366,433
Total benefits 306,451 319,272 614,597 606,789
Expenses:
Commissions 8,648 9,103 16,625 17,852
General and administrative
and other expenses 17,942 16,492 35,382 32,281
Amortization of intangible
assets 14,248 9,128 29,140 19,823
Debt service cost 3,052 3,024 6,121 6,049
Total expenses 43,890 37,747 87,268 76,005
Total benefits
and expenses 350,341 357,019 701,865 682,794
Income before income taxes 64,505 64,611 124,704 115,368
Income taxes 22,800 22,850 44,076 40,672
Net income 41,705 41,761 80,628 74,696
Dividends on preferred stock 935 997 1,823 1,746
Earnings available for common
shareholders $ 40,770 $ 40,764 78,805 72,950
Net income per share of common
stock $ 0.82 $ 0.83 $ 1.59 $ 1.48
Cash dividends paid per share of
common stock $ 0.115 $ 0.100 $ 0.230 $ 0.200
Shares used to compute net income
per share of common stock 49,429 49,361 49,429 49,361
See accompanying notes to consolidated financial statements.
FIRST COLONY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In Thousands)
(Unaudited)
Six Months Ended
June 30
1996 1995
Shares Amounts Shares Amounts
Preferred Stock, no par value
(authorized 15,000 shares
issued and outstanding 3,200)
Beginning and ending balance 3,200 $ 80,000 3,200 $ 80,000
Common Stock, no par value
(authorized 150,000 shares
issued and outstanding 49,303
in 1996 and 49,302 in 1995)
Beginning balance 49,302 $ 312,888 49,301 $ 312,879
Exercise of stock options 1 29 1 9
Ending balance 49,303 312,917 49,302 312,888
Net unrealized appreciation
of fixed maturities:
Beginning balance 208,288 (114,937)
Net change in unrealized gains or
losses net of (i) deferred
taxes (benefit) of ($104,650) in 1996
and $106,924 in 1995; (ii) deferred
policy acquisition costs of($38,800)
in 1996 and $52,500 in 1995 (194,351) 198,575
Ending balance, net of (i)
deferred taxes of $7,505 in
1996 and $45,035 in 1995; (ii)
deferred policy acquisition
costs of $10,000 in 1996 and
$25,500 in 1995. 13,937 83,638
Net unrealized appreciation of
equity securities:
Beginning balance 34,644 16,293
Net change in unrealized gains or
losses net of deferred taxes
(benefit) of ($6,275) in 1996 and
$12,085 in 1995. (11,655) 22,443
Ending balance, net of deferred
taxes of $10,330 in 1996 and
$18,809 in 1995. 22,989 38,736
Retained earnings:
Beginning balance 848,585 720,307
Net income 80,628 74,696
Cash dividends to shareholders:
Preferred stock (1,823) (1,746)
Common stock (11,340) (9,860)
Ending balance 916,050 783,397
Total shareholders' equity $1,345,893 $1,298,659
See accompanying notes to consolidated financial statements.
FIRST COLONY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
Six Months Ended
June 30
1996 1995
Cash and cash equivalents at beginning
of period $ 46,125 $ 54,817
Cash flows from operating activities:
Net income 80,628 74,696
Adjustments to reconcile net income to cash
provided from operating activities:
Increase in policy liabilities
and accruals 213,127 233,440
Depreciation, depletion and amortizaton 31,997 22,546
Federal income taxes (6,224) 23,316
Change in other policyholders' funds (19,274) 30,077
Accrual of discounts on fixed maturities (52,833) (49,389)
Deferred policy acquisition costs (92,121) (101,418)
Change in reinsurance recoverable (10,762) (16,889)
Realized gains on investments (21,309) (32,377)
Other 7,574 1,087
Net cash provided from
operating activities 130,803 185,089
Cash flows used in investing activities
Fixed maturities available-for-sale:
Purchases (674,849) (606,635)
Sales 105,909 224,507
Maturities, calls and redemptions 155,462 60,244
Fixed maturities held-to-maturity:
Purchases (72,034) (297,815)
Maturities, calls and redemptions 152,958 56,704
Purchase of other investments (3,325) (31,558)
Sale or maturity of other investments 54,783 72,971
Other (9,640) (24,443)
Net cash used by
investing activities (290,736) (546,025)
Cash flows from financing activities:
Investment contracts 104,147 245,597
Universal life contracts 42,505 83,003
Short term borrowing 17,071
Dividend to shareholders (7,488) (11,653)
Other 29 9
Net cash provided from
financing activities 156,264 316,956
Decrease in cash and cash equivalents (3,669) (43,980)
Cash and cash equivalents at end of period $ 42,456 $ 10,837
See accompanying notes to consolidated financial statements.
FIRST COLONY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands)
(Unaudited)
1. The accompanying unaudited consolidated financial statements
have been prepared in accordance with the instructions to
Form 10-Q and in conformity with generally accepted
accounting principles and reflect all adjustments which are,
in the opinion of management, necessary for a fair
presentation of the interim periods. All such adjustments are of
a normal recurring nature. The results for the six-month
period ended June 30, 1996 are not necessarily indicative of
the results to be expected for the full year ending December
31, 1996. For further information, refer to the
consolidated financial statements and footnotes included in
the Company's annual report on Form 10-K for the year ended
December 31, 1995.
The accompanying consolidated financial statements of First
Colony Corporation (First Colony or the Company) include
the accounts of the Company and its wholly-owned subsidiary,
First Colony Life Insurance Company (First Colony Life), and
its wholly-owned subsidiaries, American Mayflower Life
Insurance Company of New York (American Mayflower) and
Jamestown Life Insurance Company (Jamestown). First Colony Life,
American Mayflower, and Jamestown are life insurance
companies and are referred to collectively as the "Insurance
Companies."
2. For the quarters ended June 30, 1996 and 1995, the effective
tax rate was 35.3%. For the six months ended June 30, 1996
and 1995, the effective tax rate increased to 35.3%, up from
35.2%.
Income tax payments totalled $41,089 and $50,300 for the
three and six- month periods ended June 30, 1996, compared to
$26,559 and $17,355 for the three and six-month periods
ended June 30, 1995.
3. Interest paid on indebtedness was $5,797 for the six months
ended June 30, 1996 and 1995. No interest payments were due
or paid during the second quarter of 1996 or 1995.
FIRST COLONY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands)
(Unaudited)
4. The effect of reinsurance on premiums and expenses is as
follows:
Three Months Ended Six Months Ended
June 30 June 30
1996 1995 1996 1995
Direct Premiums $179,546 $190,034 $352,664 $353,520
Reinsurance assumed 18,516 20,866 45,379 34,685
Reinsurance ceded (22,321) (19,853) (44,836) (37,426)
Total net premiums $175,741 $191,047 $353,207 $350,779
Ceded reinsurance netted
against benefits and
expenses $ 29,578 $ 38,977 $ 61,759 $ 73,456
Net reinsurance (costs)
for universal life
contracts $ (4,705) $ (4,112) $ (9,348)$(8,117)
Components of the reinsurance recoverable asset are as
follows:
June 30 December 31
1996 1995
Ceded reserves $106,518 $ 94,102
Ceded claims liability 11,347 12,468
Ceded - Other 8,241 8,774
Total $126,106 $ 115,344
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The following is management's discussion and analysis of
certain significant factors which have affected the Company's
results of operations during the periods included in the
accompanying consolidated statements of income and changes in the
Company's financial condition since year-end 1995.
RESULTS OF OPERATIONS
First Colony operates principally in a single business
segment selling individual life and annuity products. For the
purpose of analyzing operating results it splits the segment into
three lines: annual life insurance, single premium immediate
annuities (SPIAs), and accumulation products.
Following is an analysis of income before income taxes (in
thousands):
Three Months Ended Six Months Ended
June 30 June 30
1996 1995 1996 1995
Pretax operating income $52,721 $43,557 $102,880 $83,123
Realized gains on
investments 11,008 20,909 21,309 32,377
Amortization effects related to
realized gains on investments 776 145 515 (132)
Income before income taxes $64,505 $64,611 $124,704 $115,368
Pretax operating income is defined as income before income taxes
excluding net realized gains or losses on investments and the
effect of related amortization. Pretax operating income was
$52.7 million for the quarter ended June 30, 1996, up 21% over
the same period last year. Pretax operating income was $102.9
million for the six months ended June 30, 1996, up 24% from the
same period a year ago. Pretax operating income for the quarter
and the six months benefited from the earnings on the growing
life and immediate annuity in force business and relatively
better life insurance and annuity mortality costs.
Realized gains are not included as part of the Company's
operating income for analytical purposes. Realized gains on
fixed maturities are an accelerated source of profit and the
"amortization effects" related to these gains refer to the
amortization of deferred policy acquisition costs. In accordance
with generally accepted accounting principles, the amortization
of deferred policy acquisition costs for certain products is
based on estimated gross profits, including profits from
investment gains, prepayment speeds of principal underlying
investments in CMOs and mortality. Changes in market interest
rates affect bond calls and CMO prepayment speeds, which affect
the amount and timing of the receipt of the investment income
from these investments. Periodically, the gross profit and the
cumulative amortization for the books of business are re-
estimated and adjusted by a cumulative charge or credit to the
statement of income.
The following table sets forth revenues, income before income
taxes and assets for the periods indicated for each of the lines
of business. Operating revenues include premiums, net investment
income, mortality, surrender and administrative charges and
exclude realized gains on investments. Assets, investment
income, net realized gains and certain expense elements are
allocated to a line of business on bases that management
considers reasonable.
Dollars in millions Three months ended Six months ended
June 30 June 30
1996 1995 1996 1995
Revenues:
Annual Life Insurance
- Operating $ 150.4 $ 129.9 $ 293.4 $ 256.4
- Net realized gains 2.6 9.4 2.8 15.1
- Total 153.0 139.3 296.2 271.5
SPIA
- Operating 196.7 214.7 398.2 399.9
- Net realized gains 9.3 9.9 21.8 14.3
- Total 206.0 224.6 420.0 414.2
Accumulation Products
- Operating 56.8 56.1 113.7 109.5
- Net realized gains (0.9) 1.6 (3.3) 3.0
- Total 55.9 57.7 110.4 112.5
Total
- Operating 403.9 400.7 805.3 765.8
- Net realized gains 11.0 20.9 21.3 32.4
- Total $ 414.9 $ 421.6 $ 826.6 $ 798.2
Income before income taxes:
Annual Life Insurance
- Operating $ 28.6 $ 22.7 $ 52.5 $ 41.8
- Net realized gains 2.6 9.4 2.8 15.1
- Amortization effects 0.2 0.3 0.2 0.3
- Total 31.4 32.4 55.5 57.2
SPIA
- Operating 10.2 10.3 24.3 21.3
- Net realized gains 9.3 9.9 21.8 14.3
- Amortization effects 0.0 0.0 0.0 0.0
- Total 19.5 20.2 46.1 35.6
Accumulation Products
- Operating 13.9 10.5 26.1 20.0
- Net realized gains (0.9) 1.6 (3.3) 3.0
- Amortization effects 0.6 (0.1) 0.3 (0.4)
- Total 13.6 12.0 23.1 22.6
Total
- Operating 52.7 43.5 102.9 83.1
- Net realized gains 11.0 20.9 21.3 32.4
- Amortization effects 0.8 0.2 0.5 (0.1)
- Total $ 64.5 $ 64.6 $ 124.7 $ 115.4
Assets:
Annual Life Insurance $2,301.3 $1,963.6 $2,301.3 $1,963.6
SPIA 5,856.8 5,368.2 5,856.8 5,368.2
Accumulation Products 2,683.0 2,753.2 2,683.0 2,753.2
Total $10,841.1$10,085.0 $10,841.1 $10,085.0
PERIODS ENDED JUNE 30, 1996 AND 1995
Total revenues for the quarter ended June 30, 1996 decreased
2% compared to the second quarter of 1995. The decrease for the
quarter is due principally to lower premium revenues from life-
contingent SPIA's, offset by higher premium revenues from life
insurance and higher net investment income. For the six months
ended June 30, 1996, revenues increased 4% over last year. The
increase for the six months is due principally to higher premium
revenues from life insurance and higher net investment income,
offset by lower premium revenues from life contingent SPIA's.
Premiums. Premiums for the quarter ended June 30, 1996, were
$175.7 million, a decrease of 8% from the second quarter of 1995.
Life insurance premiums increased to $96.9 million, up 14% from
the prior year. Life contingent SPIA premiums of $78.8 million
for the quarter decreased 26% compared to the second quarter of
1995.
For the six months ended June 30, 1996, premiums of $353.2
million were 1% higher than last year. Life insurance premiums
increased to $189.0 million, up 15% from 1995. Life insurance
premiums for both the quarter and six months reflect new sales
and renewal premiums on the in-force business. Annuity premiums
of $164.2 million were 12% lower than 1995. The decrease for
both the quarter and six months is due to lower sales of life
contingent single premium immediate annuities.
Net Investment Income. Net investment income increased to
$199.0 million for the quarter ended June 30, 1996, up 8% over
the comparable 1995 period. The increase reflects primarily a 8%
growth of invested assets, excluding FASB 115, from June 30,
1995 due primarily to new deposits on investment contracts and
premium income. For the quarter, higher CMO prepayment speeds
generated higher investment income of $2.7 million net of related
deferred acquisition cost amortization, compared to $0.1MM higher
investment income related to CMO prepayments in 1995.
For the six months ended June 30, 1996, net investment income of
$395.2 million was 9% higher than last year, reflecting primarily
growth of invested assets, up $0.5 billion from June 30, 1995.
New deposits on investment contracts and premium income account
for the increase in invested assets. Higher CMO prepayment
speeds generated higher investment income for the six months of
$3.2 million net of related deferred acquisition cost
amortization while lower CMO prepayment speeds in 1995 generated
lower investment income of $0.2 million net of related
amortization. The effective yield on invested assets was 8.84%
for the six months ended June 30, 1996, compared to 8.91% for the
six months ended June 30, 1995.
Mortality, Surrender and Administrative Charges. Mortality,
surrender and administrative charges increased to $29.2 million
for the quarter ended June 30, 1996, up 14% over the comparable
1995 period. For the six months ended June 30, 1996, mortality,
surrender and administrative charges increased to $56.9 million,
up 10% over 1995. Both the quarter and year-to-date periods
benefited from higher mortality and administrative charges for
universal life products due to new sales and retention of the in-
force business.
Total Benefits. Total benefits for the quarter ended June
30, 1996, decreased to $306.5 million, down 4% from the second
quarter of 1995. Life insurance benefits for the quarter
increased to $88.7 million, up 9% over the comparable 1995
period. The increase was primarily the result of higher life
mortality benefits, which increased 5%, to $48.5 million in 1996,
and higher life policy reserves and other life benefits which
increased 15%, to $40.2 million in 1996 on new sales. For the
quarter, SPIA benefits and reserves decreased to $178.8 million,
down 9% from 1995. The decrease is due principally to lower
sales of life contingent SPIAs. Accumulation product benefits
decreased to $39.0 million, down 8% from 1995, reflecting $3.6
million lower reserves and other benefit costs.
Total benefits for the six months ended June 30, 1996 increased
to $614.6 million, up 1% from 1995. Life insurance benefits
increased to $178.3 million, up 11% over 1995, reflecting $8.8
million higher life mortality benefits and $8.7 million higher
life policy reserves and other life benefits. The increase in
policy benefits is attributable to a 20% growth of the in-force
business. Life insurance mortality for the quarter and six
months was lower than assumed in pricing and lower relative to
1995's mortality for the comparable periods. Year-to-date, SPIA
benefits and reserves decreased to $358.2 million, down 1% from
1995, reflecting lower sales of life contingent SPIA's.
Accumulation product benefits for the six months decreased to
$78.1 million, down 5% over 1995, reflecting primarily $4.6
million lower reserves and other benefit costs.
Total Expenses. Total expenses for the quarter ended June
30, 1996 increased to $43.9 million, up 16% from last year.
Commissions net of deferral decreased to $8.6 million for the
quarter, down 5%. Amortization of intangible assets increased to
$14.2 million for the quarter ended June 30, 1996, up 56% from
the comparable 1995 period. The increase is due to $5.2 million
higher amortization of deferred policy acquisition costs related
to the growing life insurance in force.
Total expenses for the six months ended June 30, 1996 increased
to $87.3 million, up 15% from 1995. Commissions net of deferral
decreased to $16.6 million, down 7% from last year. The decrease
to commissions for the quarter and year is attributable to lower
sales of life contingent SPIAs. Amortization of intangible assets
increased to $29.1 million, up 47% from last year. The increase
is due to an $9.4 million increase in amortization of deferred
policy acquisition costs related to the growing life insurance in
force.
Income Before Income Taxes. Income before income taxes,
which includes realized investment gains and the effect of
related amortization was $64.5 million for the quarter ended June
30, 1996, down slightly from the comparable 1995 period. Income
before income taxes for the six months ended June 30, 1996 was
$124.7 million, up 8% from last year.
Pretax operating income, which excludes realized investment gains
and the effect of related amortization, was $52.7 million for the
quarter, up 21% from 1995. For the six months ended June 30,
1996, pretax operating income of $102.9 million was up 24% from
the comparable 1995 period. Pretax operating income for the
quarter and year-to-date benefited from the earnings on the
growing life and immediate annuity in force business and
relatively better life insurance and immediate annuity mortality.
Income Taxes. Income taxes were $22.8 million for the
quarter ended June 30, 1996, level with 1995. For the six months
ended June 30, 1996, income taxes increased to $44.1 million, up
8% compared to 1995. Both the quarter and year to date were
affected by higher operating earnings offset by lower realized
investment gains. The effective tax rate for the six month period
was 35.3%, up slightly from 35.2% for the same period in 1995.
Realized Gains on Investments. After-tax realized
investment gains including the effect of related amortization
were $7.6 million for the quarter ended June 30, 1996, compared
to $13.6 million for the comparable 1995 period. After tax
realized investment gains including the effect of related
amortization were $14.1 million for the six months ended June 30,
1996, compared to $20.8 million in 1995. The decrease is due
primarily to the Company's election to take capital gains in the
common stock portfolio during 1995, which was not repeated in
1996.
Net income. Net income was $41.7 million for the quarter
ended June 30, 1996, down slightly from $41.8 million in 1995.
For the six months ended June 30, 1996, net income increased to
$80.6 million, up 8% from the comparable 1995 period. The
increase for the year is principally due to higher net operating
earnings offset by lower investment gains.
FINANCIAL CONDITION
Liquidity and Capital Resources. First Colony Life's
businesses produce positive cash flows which are invested
primarily in investment grade bonds with maturities closely
matched with future cash flow needs. Principal sources of funds
at First Colony Life are premiums and other considerations
received, net investment income received and proceeds from
investments called, matured, redeemed or sold. The principal
uses of these funds by First Colony Life are the payment of
benefits on life insurance and annuity policies, operating
expenses and the purchase of investments.
Net cash provided by operating activities was $130.8 million
and $185.1 million in the six months ended June 30, 1996 and
1995, respectively. Cash provided by operating activities was
lower in the current period due primarily to higher tax payments
in 1996.
First Colony Life's financing activities relate primarily to
its universal life insurance and annuity products with benefits
payable for a stated period. First Colony Life's cash management
strategy occasionally results in the need for short term
borrowing to meet current commitments. The net cash provided by
financing activities amounted to $156.3 million and $316.9
million for the six months ended June 30, 1996 and 1995,
respectively. The 1996 period reflects lower sales of single
premium universal life and investment contracts.
Net cash used by investing activities was $290.7 million and
$546.0 million in the six months ended June 30, 1996 and 1995,
respectively. The cash used by investing activities in the
current period was lower than last year as explained above.
First Colony is an insurance holding company and its
principal sources of cash are dividends from and an investment
management and services agreement with First Colony Life. The
Company's primary uses of cash have been for common and preferred
shareholder dividends, debt service, operating expenses and a
common stock investment portfolio. Future cash requirements will
be primarily for debt service cost on the Company's Senior Notes,
dividends on the Variable Term Preferred Stock, common
shareholder dividends and operating expenses.
Given First Colony's cash flow and current financial
results, management of the Company believes that the cash flow
from the operating and financing activities of First Colony Life
over the next year will provide sufficient liquidity for the
operations of the Company, as well as provide sufficient funds so
that the Company will be able to make dividend payments, satisfy
debt service obligations and pay other operating expenses.
First Colony Life's investment portfolio consists of high
quality assets which produce a reasonable rate of return with
maturities closely matched to future cash flow needs. At June 30,
1996, the bond portfolio had an average Moody's rating of A-1. At
June 30, 1996, bonds below investment grade represented 2.1% of
the bond portfolio based on par value.
The mark-to-market requirements of FASB 115 for the
available-for-sale portfolio resulted in unrealized gains of
$13.9 million (net of the related effect of deferred policy
acquisition costs and deferred income taxes) or $0.28 per share
at June 30, 1996, compared to unrealized gains of $208.3 million,
or $4.22 per share at December 31, 1995. Market values decreased
during the six month period as a result of rising yields in the
bond market. Fixed maturity investments in the held-to-maturity
category represented approximately 46% of the fixed maturity
portfolio. The Company does not have a trading portfolio, nor
does it invest in derivative financial instruments.
At June 30, 1996, approximately 16% of First Colony's
investment portfolio was invested in mortgage-backed obligations,
99% of which are collateralized mortgage obligations (CMOs)
secured by residential mortgages. Certain of these CMOs are
subject to prepayment risk in a falling interest rate environment
which impacts total yield but does not affect the recoverability
of principal. During the first six months of 1996, cash payments
of principal received on CMOs were $117.5 million versus $32.2
million last year. Future levels of CMO prepayments are
dependent principally upon the direction of future interest
rates.
During the second quarter, First Colony Life's AA+
(excellent) rating was downgraded to AA- (excellent) by Standard
& Poor's. Also, in light of the announcement that the Company
was considering various strategic options, Standard & Poor's
placed First Colony Life on CreditWatch with developing
implications. This reflects the possibility that the rating
could be raised or lowered based on the outcome of this review.
Subsequent Event
On August 5, 1996, the Company and General Electric Capital
Corporation announced the signing of a definitive agreement for
the sale of the Company to GE Capital. The Company's principal
subsidiaries, First Colony Life Insurance Company and American
Mayflower Life Insurance Company of New York, will become
subsidiaries of GE Capital Assurance, a GE Capital company.
The cash purchase price will be $36.15 per share of the Company's
common stock for a total value to First Colony shareholders of
approximately $1.8 billion. Following regulatory and shareholder
approval, the transaction is expected to close by year-end.
Ratings
Concurrent with the acquisition announcement the following rating
agencies have adjusted their ratings for First Colony Life and
American Mayflower Life of New York.
A.M. Best Company has placed the A++ (Superior) Best's rating of
First Colony Life and its subsidiary, American Mayflower Life of
New York, under review with developing implications.
Standard & Poor's has revised its CreditWatch implications on the
double-A'-minus claims-paying ability ratings of First Colony
Life Insurance Company and its primary subsidiary, American
Mayflower Life of New York, to positive from "developing."
Duff & Phelps Credit Rating Company has placed the AA+ (Double-A-
Plus) claims paying ability ratings of First Colony Life and its
wholly owned subsidiary American Mayflower Life of New York, and
the 'AA (Double-A) senior debt rating and 'AA-" (Double-A-Minus)
preferred stock rating of First Colony Corporation on Rating
Watch--Developing.
Moody's Investors Service placed the senior debt and preferred
stock ratings of A2 of First Colony Corporation and the financial
strength rating of Aa3 of First Colony Life and American
Mayflower Life of New York under review for possible upgrade.
PART II - OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
a. Exhibits
10.12.1 Form of Change in Control and Termination
Agreement, dated March 23, 1995, as amended April 2, 1996, and
May 15, 1996, with Messrs. Gottwald, Dolan and Karras.
10.12.2 Form of Change in Control and Termination
Agreement, dated March 23, 1995, as amended April 2, 1996, and
May 15, 1996, with Messrs. Britton, Whaley, and Larsen.
10.12.3 Form of Change in Control and Termination
Agreement, dated March 23, 1995, as amended April 2, 1996, and
May 15, 1996, with Messrs. Weishan, Guengerich, Smith and certain
officers of subsidiaries of First Colony Corporation.
10.13.1 Form of Option Agreement, dated December 22,
1993, as amended effective November 28, 1995 and April 2,
1996, with Messrs. Gottwald, Dolan, Karras, Britton,
Whaley, Weishan, Guengerich, Larsen, Smith and one
officer of a subsidiary of First Colony Corporation.
10.13.2 Form of Option Agreement, dated December 12,
1994, as amended effective November 28, 1995 and April 2,
1996, with Messrs. Gottwald, Dolan, Karras, Britton,
Whaley, Weishan, Guengerich, Larsen, Smith and one
officer of a subsidiary of First Colony Corporation.
10.13.3 Form of Option Agreement, dated November 28,
1995, as amended effective April 2, 1996, with Messrs.
Gottwald, Dolan, Karras, Britton, Whaley, Weishan,
Guengerich, Larsen, Smith and one officer of a subsidiary
of First Colony Corporation.
b. Reports on Form 8-K
Registrant filed a Form 8-K on August 8, 1996, which
contained the Agreement and Plan of Merger with General
Electric Capital Corporation ("General
Electric") and a wholly-owned subsidiary of General
Electric ("Merger Subsidiary") and a press release with
respect to the merger of the Registrant with a Merger
Subsidiary.
In addition, Registrant submitted a supplemental
financial report concurrent with the press release of
the current quarter's operating results for the
period ended June 30, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly
authorized.
FIRST COLONY CORPORATION
(Registrant)
Date: August 14, 1996 By: s/Ronald V. Dolan
President
Date: August 14, 1996 By: s/Peter W. Karras, CPA
Secretary and Treasurer
EXHIBIT INDEX
Page
10.12.1 Form of Change in Control and Termination Agreement,
executed March 23, 1995, as amended April 2, 1996,
and May 15, 1996, with Messrs. Gottwald, Dolan and
Karras.
10.12.2 Form of Change in Control and Termination Agreement,
executed March 23, 1995, as amended April 12, 1996,
and May 15, 1996, with Messrs. Britton, Whaley,
and Larsen.
10.12.3 Form of Change in Control and Termination
Agreement, dated March 23, 1995, as amended April 2, 1996, and
May 15, 1996, with Messrs. Weishan, Guengerich, Smith and certain
officers of subsidiaries of First Colony Corporation.
10.13.1 Form of Option Agreement, dated December 22, 1993,
as amended effective November 28, 1995 and April 2,
1996, with Messrs. Gottwald, Dolan, Karras, Britton,
Whaley, Weishan, Guengerich, Larsen, Smith and one
officer of a subsidiary of First Colony Corporation.
10.13.2 Form of Option Agreement, dated December 12, 1994,
as amended effective November 28, 1995 and April 2,
1996, with Messrs. Gottwald, Dolan, Karras, Britton,
Whaley, Weishan, Guengerich, Larsen, Smith and one
officer of a subsidiary of First Colony Corporation.
10.13.3 Form of Option Agreement, dated November 28, 1995,
as amended effective April 2, 1996, with Messrs.
Gottwald, Dolan, Karras, Britton, Whaley, Weishan,
Guengerich, Larsen, Smith and one
officer of a subsidiary of First Colony Corporation.
EXHIBIT 10.12.1
CHANGE IN CONTROL AND TERMINATION AGREEMENT
THIS CHANGE IN CONTROL AND TERMINATION AGREEMENT (the
"Agreement"), to be effective as of the 23rd day of March, 1995,
made and entered into by and between FIRST COLONY CORPORATION,
("FCC"), FIRST COLONY LIFE INSURANCE COMPANY ("FCL") a wholly-
owned subsidiary of FCC, (collectively "First Colony"), both of
which are corporations organized and existing under the laws of
the Commonwealth of Virginia, and ______________________________,
(the "Executive").
R E C I T A L S:
First Colony acknowledges that Executive's
contributions to the past and future growth and success of First
Colony have been and will continue to be substantial. As a
publicly held corporation, First Colony recognizes that there
exists a possibility of a Change in Control of First Colony.
First Colony also recognizes that the possibility of such a
Change in Control may contribute to uncertainty on the part of
senior management and may result in the departure or distraction
of senior management from their operating responsibilities.
Outstanding management of First Colony is always
essential to advancing the best interests of First Colony and its
shareholders. In the event of a threat or occurrence of a bid to
acquire or change control of First Colony or to effect a business
combination, it is particularly important that the First Colony's
business be continued with a minimum of disruption. First Colony
believes that the objective of securing and retaining outstanding
management will be achieved if the First Colony's key management
employees are given assurances of employment security so they
will not be distracted by personal uncertainties and risks
created by such circumstances.
NOW, THEREFORE, in consideration of the mutual
covenants and obligations herein and the compensation First
Colony agrees herein to pay the Executive, and of other good and
valuable consideration, the receipt of which is hereby
acknowledged, First Colony and the Executive agree as follows:
ARTICLE 1. TERM; EMPLOYMENT PERIOD.
1.1 Term. This Agreement is effective from the date
of its execution by First Colony ("Effective Date"). The
Agreement automatically continues in effect from year to year
thereafter unless First Colony notifies Executive in writing
thirty days before any anniversary of its Effective Date that the
Agreement will terminate as of that anniversary date. After a
Change in Control of FCC (as defined in section 1.3), First
Colony may not terminate this Agreement for sixty months from the
Control Change Date (as defined in section 1.4) and the Agreement
automatically continues in effect from year to year thereafter
unless First Colony notifies Executive in writing thirty days
before the end of the initial sixty month period or thirty days
before any anniversary of the end of that period that the
Agreement will terminate as of that date.
1.2 Employment Period. If Executive is employed by
First Colony on the Control Change Date, First Colony agrees that
First Colony will continue to employ Executive and Executive
further agrees that Executive will continue as an employee of
First Colony for the Employment Period. For purposes of this
Agreement, the Employment Period begins on the Control Change
Date and ends on the earlier of the fifth anniversary of the
Control Change Date or on Executive's Normal Retirement Date (as
defined under the First Colony Life Insurance Company Pension
Plan).
1.3 Change in Control, means if: (i) after the date of
the Agreement, any person, including a "group" as defined in
section 13(d)(3) of the Securities Exchange Act of 1934, becomes,
directly or indirectly, the beneficial owner of FCC securities
having 30% or more of the combined voting power of the then
outstanding FCC securities that may be cast for the election of
FCC's directors (other than as a result of an issuance of
securities initiated by FCC, or open market purchases approved by
FCC's Board, as long as the majority of FCC's Board approving the
purchases are directors at the time the purchases are made); or
(ii) as the direct or indirect result of, or in connection with,
a cash tender or exchange offer, a merger or other business
combination, a sale of assets, a contested election of directors,
or any combination of these transactions, the persons who were
directors of FCC before any such transactions cease to constitute
a majority of FCC's Board, or any successor's board, within
[two/three] years of the last of such transactions.
1.4 Control Change Date, means the date on which an
event described in section 1.3 occurs. If a Change in Control
occurs on account of a series of transactions, the Control Change
Date is the date of the last of such transactions.
ARTICLE 2. TERMINATION OF EMPLOYMENT.
2.1 General. Executive is entitled to receive
Termination Compensation according to the remaining provisions of
this section if Executive's employment with First Colony
terminates during the Employment Period because of an event
described in section 2.2 or 2.3. If Executive's employment
terminates during the Employment Period and if an event described
in section 2.2 or 2.3 has not occurred, this Agreement
terminates.
2.2 Termination by First Colony. Executive is
entitled to receive Termination Compensation if Executive's
employment is terminated by First Colony without Cause. Cause,
means, for purposes of this Agreement, (i) willful and continued
failure by the Executive to perform his duties as established by
the Board of Directors of First Colony; (ii) a material breach
by the Executive of his fiduciary duties or loyalty of care to
First Colony; (iii) conviction of a felony; or (iv) willful,
flagrant, deliberate and repeated infractions of material
published policies and regulations of First Colony of which the
Executive has actual knowledge (the "Cause Exception"). If First
Colony desires to discharge the Executive under the Cause
Exception, it shall give notice to the Executive as provided in
section 2.6 and the Executive shall have thirty (30) days after
notice has been given to him in which to cure the reason for
First Colony's exercise of the Cause Exception. If the reason
for First Colony's exercise of the Cause Exception is timely
cured by the Executive (as determined by a majority of the
members of the Board of Directors following a hearing), First
Colony's notice shall become null and void.
2.3 Voluntary Termination. Executive is entitled to
receive Termination Compensation if Executive voluntarily
terminates employment with Good Reason. Good Reason means, for
purposes of this Agreement, the Executive's resignation from
First Colony's employment on account of
(a) the failure by the FCC or FCL Board (as
applicable) to reelect the Executive to
Executive's current position with First
Colony (as of the Control Change Date) and the
Executive then elects to leave First Colony's employment
within six (6) months of such failure to so reelect or
reappoint the Executive;
(b) a material modification by the FCC or FCL
Board (as applicable) of the duties,
functions and responsibilities of the
Executive as the _______________________________ of
FCL or __________________ of FCC without his consent
within six (6) months of such modification; or
(c) the failure of First Colony to permit the
Executive to exercise such responsibilities
as are consistent with the Executive's
position and are of such a nature as are
usually associated with such offices of a corporation
engaged in substantially the same business as First
Colony;
(d) First Colony causes the Executive to relocate
his employment more than 50 miles from
[Lynchburg/Richmond],
Virginia, without the consent of the
Executive;
(e) First Colony shall fail to make a payment
when due to the Executive; or
(f) First Colony's reduction of the Executive's
total direct compensation (base salary,
incentive bonus, and benefits).
2.4 Termination Compensation. Termination
Compensation equal to 2.99 times Executive's Base Period Income
and shall be paid in a single sum payment in cash or in common
stock of FCC, at the election of the Executive. Termination
Compensation payments to Executive shall commence on the later of
the thirtieth business day after Executive's employment
termination or the first day of the month following his
employment termination. Termination Compensation is subject to
reduction according to Article 3.
2.5 Base Period Income. Executive's Base Period
Income equals his annual base salary as of Executive's
termination date, plus the average of any incentive bonus payable
to Executive for First Colony's last two completed fiscal years.
2.6 Notice of Termination. Any termination by First
Colony under the Cause Exception or by the Executive for Good
Reason shall be communicated by Notice of Termination to the
other party hereto. For purposes of sections 2.3 and 2.4, a
"Notice of Termination" means a written notice which (i)
indicates the specific termination provision in this Agreement
relied upon, (ii) sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated and (iii)
if the termination date is other than the date of receipt of such
notice, specifies the effective date of termination.
ARTICLE 3. REDUCTION IN PAYMENTS. In the event that
any amount required to be paid or distributed to the Executive
pursuant to this Agreement shall constitute a parachute payment
within the meaning of section 280G of the Internal Revenue Code
of 1986, as amended (the "Code"), and the aggregate of such
parachute payments and any other amounts otherwise required to be
paid or distributed to the Executive by First Colony would cause
the Executive to be subject to the excise tax on excess parachute
payments under section 4999 of the Code (the "Excise Tax"), or
any successor or similar provision thereof, Termination
Compensation must be reduced to the largest amount that will
result in no portion of such payment being subject to the Excise
Tax. The determination of any reduction pursuant to this Article
3 must be made by First Colony in good faith, before any payment
is due and payable to Executive.
ARTICLE 4. ATTORNEYS' FEES. In the event that the
Executive incurs any attorneys' fees in protecting or enforcing
his rights under this Agreement, First Colony shall reimburse the
Executive for such reasonable attorneys' fees and for any other
reasonable expenses related thereto. Such reimbursement shall be
made within thirty (30) days following final resolution of the
dispute or occurrence giving rise to such fees and expenses.
ARTICLE 5. DECISIONS BY COMPANY; FACILITY OF PAYMENT.
Any powers granted to the FCC or FCL Board (as applicable)
hereunder may be exercised by a committee, appointed by the
Board, and such committee, if appointed, shall have general
responsibility for the administration and interpretation of this
Agreement. If the Board or the committee shall find that any
person to whom any amount is or was payable hereunder is unable
to care for his affairs because of illness or accident, or has
died, then the Board or the committee, if it so elects, may
direct that any payment due him or his estate (unless a prior
claim therefore has been made by a duly appointed legal
representative) or any part thereof be paid or applied for the
benefit of such person or to or for the benefit of his spouse,
children or other dependents, an institution maintaining or
having custody of such person, any other person deemed by the
Board or committee to be a proper recipient on behalf of such
person otherwise entitled to payment, or any of them, in such
manner and proportion as the Board or committee may deem proper.
Any such payment shall be in complete discharge of the liability
of First Colony therefor.
ARTICLE 6. INDEMNIFICATION. First Colony shall
indemnify the Executive during his employment and thereafter to
the maximum extent permitted by applicable law for any and all
liability of the Executive arising out of, or in connection with,
his employment by First Colony or membership on the FCC or FCL
Board (as applicable); provided, that in no event shall such
indemnity of the Executive at any time during the period of his
employment by First Colony be less than the maximum indemnity
provided by First Colony at any time during such period to any
other officer or director under an indemnification insurance
policy or the bylaws or charter of First Colony or by agreement.
ARTICLE 7. SOURCE OF PAYMENTS; NO TRUST. The
obligations of First Colony to make payments hereunder shall
constitute a liability of First Colony to the Executive. Such
payments shall be from the general funds of First Colony, and
First Colony shall not be required to establish or maintain any
special or separate fund, or otherwise to segregate assets to
assure that such payments shall be made, and neither the
Executive nor his designated beneficiary shall have any interest
in any particular asset of First Colony by reason of its
obligations hereunder. Nothing contained in this Agreement shall
create or be construed as creating a trust of any kind or any
other fiduciary relationship between First Colony and the
Executive or any other person. To the extent that any person
acquires a right to receive payments from First Colony hereunder,
such right shall be no greater than the right of an unsecured
creditor of First Colony.
ARTICLE 8. SEVERABILITY. All agreements and covenants
contained herein are severable, and in the event any of them
shall be held to be invalid by any competent court, this
Agreement shall be interpreted as if such invalid agreements or
covenants were not contained herein.
ARTICLE 9. ASSIGNMENT PROHIBITED. This Agreement is
personal to each of the parties hereto, and neither party may
assign nor delegate any of his or its rights or obligations
hereunder.
ARTICLE 10. NO ATTACHMENT. Except as otherwise
provided in this Agreement or required by applicable law, no
right to receive payments under this Agreement shall be subject
to anticipation, commutation, alienation, sale, assignment,
encumbrance, charge, pledge or hypothecation or to execution,
attachment, levy, or similar process or assignment by operation
of law and any attempt, voluntary or involuntary, to effect any
such action shall be null, void and of no effect.
ARTICLE 11. HEADINGS. The headings of articles,
paragraphs and sections herein are included solely for
convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement.
ARTICLE 12. GOVERNING LAW. The parties intend that
this Agreement and the performance hereunder and all suits and
special proceedings hereunder shall be construed in accordance
with and under and pursuant to the laws of the Commonwealth of
Virginia and that in any action, special proceeding or other
proceeding that may be brought arising out of, in connection
with, or by reason of this Agreement, the laws of the
Commonwealth of Virginia shall be applicable and shall govern to
the exclusion of the law of any other forum, without regard to
the jurisdiction in which any action or special proceeding may be
instituted.
ARTICLE 13. BINDING EFFECT. This Agreement shall be
binding upon, and inure to the benefit of, the Executive and his
heirs, executors, administrators and legal representatives and
First Colony and its permitted successors and assigns.
ARTICLE 14. MERGER OR CONSOLIDATION. First Colony
will not consolidate or merge into or with another corporation,
or transfer all or substantially all of its assets to another
corporation (the "Successor Corporation") unless the Successor
Corporation shall assume this Agreement, and upon such
assumption, the Executive and the Successor Corporation shall
become obligated to perform the terms and conditions of this
Agreement.
ARTICLE 15. COUNTERPARTS. This Agreement may be
executed simultaneously in one or more counterparts, each of
which shall be deemed an original but all of which together shall
constitute one and the same instrument.
ARTICLE 16. ENTIRE AGREEMENT. This Agreement
expresses the whole and entire agreement between the parties with
reference to the employment of the Executive and, as of the
effective date hereof, supersedes and replaces any prior
employment agreement, understanding or arrangement (whether
written or oral) between First Colony and the Executive. Each of
the parties hereto has relied on his or its own judgment in
entering into this Agreement.
ARTICLE 17. NOTICES. All notices, requests and other
communications to any party under this Agreement shall be in
writing and shall be given to such party at its address set forth
below or such other address as such party may hereafter specify
for the purpose by notice to the other party:
(a) If to the Executive:
[Name]
[Address]
(b) If to First Colony:
First Colony Corporation
Riverfront Plaza, West Tower
901 East Byrd Street
Suite 1350
Richmond, Virginia 23219
[and, if applicable,
First Colony Life Insurance Company
700 Main Street
Lynchburg, Virginia 24504]
Each such notice, request or other communication shall be
effective (i) if given by mail, 72 hours after such communication
is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (ii) if given by any other means, when
delivered at the address specified in this ARTICLE 17.
ARTICLE 18. MODIFICATION OF AGREEMENT. No waiver or
modification of this Agreement or of any covenant, condition, or
limitation herein contained shall be valid unless in writing and
duly executed by the party to be charged therewith. No evidence
of any waiver or modification shall be offered or received in
evidence at any proceeding, arbitration, or litigation between
the parties hereto arising out of or affecting this Agreement, or
the rights or obligations of the parties hereunder, unless such
waiver or modification is in writing, duly executed as aforesaid.
The parties further agree that the provisions of this ARTICLE 18
may not be waived except as herein set forth.
ARTICLE 19. TAXES. To the extent required by
applicable law, First Colony shall deduct and withhold all
necessary Social Security taxes and all necessary federal and
state withholding taxes and any other similar sums required by
law to be withheld from any payments made pursuant to the terms
of this Agreement.
ARTICLE 20. RECITALS. The Recitals to this Agreement
are incorporated herein and shall constitute an integral part of
this Agreement.
IN WITNESS WHEREOF, the parties have executed this
Agreement on the day and year first above written.
EXECUTIVE:
By:
_______________________________
[Name of Executive]
[FIRST COLONY CORPORATION:
By:
_______________________________
Title:
_____________________________
FIRST COLONY LIFE INSURANCE
COMPANY:
By:
_______________________________
Title:
____________________________]
FIRST AMENDMENT TO THE
CHANGE IN CONTROL AND TERMINATION AGREEMENT
The Change in Control and Termination Agreement between
and First Colony Corporation, dated March 23, 1995, is amended,
as follows.
FIRST: Effective April 2, 1996, Section 2.4 is
amended to substitute "3.0" for the term "2.99" in the first
sentence of Section 2.4 of the Agreement.
SECOND: Effective April 2, 1996, Article 3 is deleted
and the following Article 3 is substituted therefor:
ARTICLE 3. EXCISE TAXES. In addition, if the
excise tax imposed under Code section 4999 on "excess
parachute payments," as defined in Code section 280G,
is provoked by (i) any amount paid or payable to or for
the benefit of the Executive under this section as
legal fees and expenses, or (ii) any payments or
benefits which the Executive receives or has the right to receive
from the Company or any affiliated entity or any
payments or benefits under any plan maintained by the
Company or any affiliated entity (the "Change in
Control Benefits"), the Company must indemnify the
Executive and hold him harmless against all claims,
losses, damages, penalties, expenses, and excise taxes. To
effect this indemnification, the Company must pay the
Executive an Additional Amount that is sufficient to
pay any excise tax imposed by Code section 4999 on the
payments and benefits to which the Executive is
entitled without the Additional Amount within 15 days
after the Executive provides a copy of his tax return
in accordance with subsection (a) below. The Additional
Amount shall be equal to the amount that is sufficient to
indemnify and hold the Executive harmless from (i) the
excise tax imposed on the Executive under section 4999
of the Code with respect to the Change of Control
Benefits and (ii) the amount required to satisfy (x)
the additional excise tax under section 4999 of the
Code, (y) the hospital insurance tax under section 3111(b) of the
Code and (z) the federal, state and local income taxes
for which the Executive is liable on account of the
payment of the amount described in item (i) and the
payment of the excise, hospital insurance and income
taxes in accordance with this item (ii).
(a) For purposes of determining the amount and
timing of the payments of the Additional Amount, the
Company and the Executive shall, as soon as practicable
after the event or series of events has occurred giving
rise to the imposition of the excise tax, seek the
advice of independent tax counsel and shall cooperate in
establishing at least tentatively the amount of the Executive's
excise tax liability for purposes of paying estimated tax.
The Executive shall thereafter furnish to the Company a
copy of each tax return which reflects a liability for
an excise tax payment under section 4999 of the Code
with respect to the Change of Control Benefits at least
20 days before the date on which such return is
required to be filed with the Internal Revenue Service. Except
as provided under subsection (b), the liability
reflected on such return shall be dispositive for
purposes of calculating the Additional Amount unless,
within 15 days after such notice is given, the Company
furnishes to the Executive an opinion from the
Company's independent auditors or a tax advisor selected by the
Company's independent auditors indicating that a different
Additional Amount is payable or to the effect that the
matter is not free from doubt under applicable laws and
regulations and the Executive may, in such auditor's or
advisor's opinion, take a different position without
risk of penalty, which shall be set forth in the
opinion with respect to the payment in question. Such
opinion shall be addressed to the Executive and shall state that
the Executive is entitled to rely thereon. If the
Company furnishes such opinion to the Executive, the
position reflected in such letter shall be dispositive
for purposes of calculating the Additional Amount,
except as provided under this subsection (a).
(b) If the Executive's liability for the excise
tax under section 4999 of the Code and the additional
excise tax and the hospital insurance tax under section
3111(b) of the Code and federal, state or local income
taxes attributable to the Company's payment of such
excise tax is subsequently determined to be less than
the amount of the Additional Amount paid to the Executive,
the Executive shall repay to the Company at the time that the
amount of such liability is finally determined the portion
of the Additional Amount payment attributable to such
reduction (plus interest on the amount of such
repayment at the rate provided in section 1274(b)(2)(B)
of the Code). If the Executive's liability for the
excise tax under section 4999 of the Code and the additional
excise tax and the hospital insurance tax under section
3111(b) of the Code and federal, state or local income
taxes attributable to the Company's payment of such
excise tax is subsequently determined to be more than
the amount of the Additional Amount paid to the
Executive, the Company shall make an additional payment in
respect of such excess, as well as the amount of any penalty or
interest assessed with respect thereto at the time that
the amount of such excess, penalty or interest is
finally determined.
THIRD: Effective May 15, 1996, the Agreement is
amended to add the following language as Article 4:
ARTICLE 4. MITIGATION. The Executive shall not
be required to mitigate damages or the amount of any
payment provided for under this Agreement by seeking or
accepting other employment or otherwise, and
compensation earned from such employment or otherwise
shall not reduce the amounts otherwise payable under
this Agreement.
FOURTH: Effective May 15, 1996, the Agreement is
amended to renumber current Articles 4 through 20 as
Articles 5 through 21 and to renumber all references to
such Articles accordingly.
IN WITNESS WHEREOF, the parties have executed this
First Amendment to the Change in Control and Termination
Agreement on the date set forth below:
EXECUTIVE:
By:
_______________________________
Date:
_____________________________
FIRST COLONY CORPORATION:
By:
_______________________________
Title:
_____________________________
EXHIBIT 10.12.2
CHANGE IN CONTROL AND TERMINATION AGREEMENT
THIS CHANGE IN CONTROL AND TERMINATION AGREEMENT (the
"Agreement"), to be effective as of the 23rd day of March, 1995,
made and entered into by and between [FIRST COLONY CORPORATION,
("FCC")/FIRST COLONY LIFE INSURANCE COMPANY ("FCL")] (the
"Company"), a corporation organized and existing under the laws
of the Commonwealth of Virginia, and
______________________________, (the "Executive").
R E C I T A L S:
The Company acknowledges that Executive's contributions
to the past and future growth and success of the Company have
been and will continue to be substantial. As a [wholly-owned
subsidiary of a] publicly held corporation, the Company
recognizes that there exists a possibility of a Change in Control
of [the Company/its parent corporation, First Colony Corporation
("FCC")]. The Company also recognizes that the possibility of
such a Change in Control may contribute to uncertainty on the
part of senior management and may result in the departure or
distraction of senior management from their operating
responsibilities.
Outstanding management of the Company is always
essential to advancing the best interests of the Company and
FCC's shareholders. In the event of a threat or occurrence of a
bid to acquire or change control of FCC or to effect a business
combination, it is particularly important that the Company's
business be continued with a minimum of disruption. The Company
believes that the objective of securing and retaining outstanding
management will be achieved if the Company's key management
employees are given assurances of employment security so they
will not be distracted by personal uncertainties and risks
created by such circumstances.
NOW, THEREFORE, in consideration of the mutual
covenants and obligations herein and the compensation the Company
agrees herein to pay the Executive, and of other good and
valuable consideration, the receipt of which is hereby
acknowledged, the Company and the Executive agree as follows:
ARTICLE 1. TERM; EMPLOYMENT PERIOD.
1.1 Term. This Agreement is effective from the date
of its execution by the Company ("Effective Date"). The
Agreement automatically continues in effect from year to year
thereafter unless the Company notifies Executive in writing
thirty days before any anniversary of its Effective Date that the
Agreement will terminate as of that anniversary date. After a
Change in Control of FCC (as defined in section 1.3), the Company
may not terminate this Agreement for sixty months from the
Control Change Date (as defined in section 1.4) and the Agreement
automatically continues in effect from year to year thereafter
unless the Company notifies Executive in writing thirty days
before the end of the initial sixty month period or thirty days
before any anniversary of the end of that period that the
Agreement will terminate as of that date.
1.2 Employment Period. If Executive is employed by
the Company on the Control Change Date, the Company agrees that
the Company will continue to employ Executive and Executive
further agrees that Executive will continue as an employee of the
Company for the Employment Period. For purposes of this
Agreement, the Employment Period begins on the Control Change
Date and ends on the earlier of the fifth anniversary of the
Control Change Date or on Executive's Normal Retirement Date (as
defined under the First Colony Life Insurance Company Pension
Plan).
1.3 Change in Control, means if: (i) after the date of
the Agreement, any person, including a "group" as defined in
section 13(d)(3) of the Securities Exchange Act of 1934, becomes,
directly or indirectly, the beneficial owner of FCC securities
having 30% or more of the combined voting power of the then
outstanding FCC securities that may be cast for the election of
FCC's directors (other than as a result of an issuance of
securities initiated by FCC, or open market purchases approved by
FCC's Board, as long as the majority of FCC's Board approving the
purchases are directors at the time the purchases are made); or
(ii) as the direct or indirect result of, or in connection with,
a cash tender or exchange offer, a merger or other business
combination, a sale of assets, a contested election of directors,
or any combination of these transactions, the persons who were
directors of FCC before any such transactions cease to constitute
a majority of FCC's Board, or any successor's board, within three
years of the last of such transactions.
1.4 Control Change Date, means the date on which an
event described in section 1.3 occurs. If a Change in Control
occurs on account of a series of transactions, the Control Change
Date is the date of the last of such transactions.
ARTICLE 2. TERMINATION OF EMPLOYMENT.
2.1 General. Executive is entitled to receive
Termination Compensation according to the remaining provisions of
this section if Executive's employment with the Company
terminates during the Employment Period because of an event
described in section 2.2 or 2.3. If Executive's employment
terminates during the Employment Period and if an event described
in section 2.2 or 2.3 has not occurred, this Agreement
terminates.
2.2 Termination by the Company. Executive is entitled
to receive Termination Compensation if Executive's employment is
terminated by the Company without Cause. Cause, means, for
purposes of this Agreement, (i) willful and continued failure by
the Executive to perform his duties as established by the Board
of Directors of the Company; (ii) a material breach by the
Executive of his fiduciary duties or loyalty of care to the
Company; (iii) conviction of a felony; or (iv) willful, flagrant,
deliberate and repeated infractions of material published
policies and regulations of the Company of which the Executive
has actual knowledge (the "Cause Exception"). If the Company
desires to discharge the Executive under the Cause Exception, it
shall give notice to the Executive as provided in section 2.6 and
the Executive shall have thirty (30) days after notice has been
given to him in which to cure the reason for the Company's
exercise of the Cause Exception. If the reason for the Company's
exercise of the Cause Exception is timely cured by the Executive
(as determined by a majority of the members of the Board of
Directors following a hearing), the Company's notice shall become
null and void.
2.3 Voluntary Termination. Executive is entitled to
receive Termination Compensation if Executive voluntarily
terminates employment with Good Reason. Good Reason means, for
purposes of this Agreement, the Executive's resignation from the
Company's employment on account of
(a) the failure by the FCC or FCL Board (as
applicable) to reelect the Executive to
Executive's current position with the Company
(as of the Control Change Date) and the
Executive then elects to leave the Company's employment
within six (6) months of such failure to so reelect or
reappoint the Executive;
(b) a material modification by the FCC or FCL
Board (as applicable) of the duties,
functions and responsibilities of the
Executive as the _________________________ of the
Company without his consent within six (6) months of such
modification; or
(c) the failure of the Company to permit the
Executive to exercise such responsibilities
as are consistent with the Executive's
position and are of such a nature as are
usually associated with such offices of a corporation
engaged in substantially the same business as the Company;
(d) the Company causes the Executive to relocate
his employment more than 50 miles from
Lynchburg, Virginia, without the consent of
the Executive;
(e) the Company shall fail to make a payment when
due to the Executive; or
(f) the Company's reduction of the Executive's
total direct compensation (base salary,
incentive bonus, and benefits).
2.4 Termination Compensation. Termination
Compensation equal to 1.00 times Executive's Base Period Income
and shall be paid in a single sum payment in cash or in common
stock of FCC, at the election of the Executive. Termination
Compensation payments to Executive shall commence on the later of
the thirtieth business day after Executive's employment
termination or the first day of the month following his
employment termination. Termination Compensation is subject to
reduction according to Article 3.
2.5 Base Period Income. Executive's Base Period
Income equals his annual base salary as of Executive's
termination date, plus the average of any incentive bonus payable
to Executive for the Company's last two completed fiscal years.
2.6 Notice of Termination. Any termination by the
Company under the Cause Exception or by the Executive for Good
Reason shall be communicated by Notice of Termination to the
other party hereto. For purposes of sections 2.3 and 2.4, a
"Notice of Termination" means a written notice which (i)
indicates the specific termination provision in this Agreement
relied upon, (ii) sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated and (iii)
if the termination date is other than the date of receipt of such
notice, specifies the effective date of termination.
ARTICLE 3. REDUCTION IN PAYMENTS. In the event that
any amount required to be paid or distributed to the Executive
pursuant to this Agreement shall constitute a parachute payment
within the meaning of section 280G of the Internal Revenue Code
of 1986, as amended (the "Code"), and the aggregate of such
parachute payments and any other amounts otherwise required to be
paid or distributed to the Executive by the Company would cause
the Executive to be subject to the excise tax on excess parachute
payments under section 4999 of the Code (the "Excise Tax"), or
any successor or similar provision thereof, Termination
Compensation must be reduced to the largest amount that will
result in no portion of such payment being subject to the Excise
Tax. The determination of any reduction pursuant to this Article
3 must be made by the Company in good faith, before any payment
is due and payable to Executive.
ARTICLE 4. ATTORNEYS' FEES. In the event that the
Executive incurs any attorneys' fees in protecting or enforcing
his rights under this Agreement, the Company shall reimburse the
Executive for such reasonable attorneys' fees and for any other
reasonable expenses related thereto. Such reimbursement shall be
made within thirty (30) days following final resolution of the
dispute or occurrence giving rise to such fees and expenses.
ARTICLE 5. DECISIONS BY COMPANY; FACILITY OF PAYMENT.
Any powers granted to the FCC or FCL Board (as applicable)
hereunder may be exercised by a committee, appointed by the
Board, and such committee, if appointed, shall have general
responsibility for the administration and interpretation of this
Agreement. If the Board or the committee shall find that any
person to whom any amount is or was payable hereunder is unable
to care for his affairs because of illness or accident, or has
died, then the Board or the committee, if it so elects, may
direct that any payment due him or his estate (unless a prior
claim therefore has been made by a duly appointed legal
representative) or any part thereof be paid or applied for the
benefit of such person or to or for the benefit of his spouse,
children or other dependents, an institution maintaining or
having custody of such person, any other person deemed by the
Board or committee to be a proper recipient on behalf of such
person otherwise entitled to payment, or any of them, in such
manner and proportion as the Board or committee may deem proper.
Any such payment shall be in complete discharge of the liability
of the Company therefor.
ARTICLE 6. INDEMNIFICATION. The Company shall
indemnify the Executive during his employment and thereafter to
the maximum extent permitted by applicable law for any and all
liability of the Executive arising out of, or in connection with,
his employment by the Company or membership on the FCC or FCL
Board (as applicable); provided, that in no event shall such
indemnity of the Executive at any time during the period of his
employment by the Company be less than the maximum indemnity
provided by the Company at any time during such period to any
other officer or director under an indemnification insurance
policy or the bylaws or charter of the Company or by agreement.
ARTICLE 7. SOURCE OF PAYMENTS; NO TRUST. The
obligations of the Company to make payments hereunder shall
constitute a liability of the Company to the Executive. Such
payments shall be from the general funds of the Company, and the
Company shall not be required to establish or maintain any
special or separate fund, or otherwise to segregate assets to
assure that such payments shall be made, and neither the
Executive nor his designated beneficiary shall have any interest
in any particular asset of the Company by reason of its
obligations hereunder. Nothing contained in this Agreement shall
create or be construed as creating a trust of any kind or any
other fiduciary relationship between the Company and the
Executive or any other person. To the extent that any person
acquires a right to receive payments from the Company hereunder,
such right shall be no greater than the right of an unsecured
creditor of the Company.
ARTICLE 8. SEVERABILITY. All agreements and covenants
contained herein are severable, and in the event any of them
shall be held to be invalid by any competent court, this
Agreement shall be interpreted as if such invalid agreements or
covenants were not contained herein.
ARTICLE 9. ASSIGNMENT PROHIBITED. This Agreement is
personal to each of the parties hereto, and neither party may
assign nor delegate any of his or its rights or obligations
hereunder.
ARTICLE 10. NO ATTACHMENT. Except as otherwise
provided in this Agreement or required by applicable law, no
right to receive payments under this Agreement shall be subject
to anticipation, commutation, alienation, sale, assignment,
encumbrance, charge, pledge or hypothecation or to execution,
attachment, levy, or similar process or assignment by operation
of law and any attempt, voluntary or involuntary, to effect any
such action shall be null, void and of no effect.
ARTICLE 11. HEADINGS. The headings of articles,
paragraphs and sections herein are included solely for
convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement.
ARTICLE 12. GOVERNING LAW. The parties intend that
this Agreement and the performance hereunder and all suits and
special proceedings hereunder shall be construed in accordance
with and under and pursuant to the laws of the Commonwealth of
Virginia and that in any action, special proceeding or other
proceeding that may be brought arising out of, in connection
with, or by reason of this Agreement, the laws of the
Commonwealth of Virginia shall be applicable and shall govern to
the exclusion of the law of any other forum, without regard to
the jurisdiction in which any action or special proceeding may be
instituted.
ARTICLE 13. BINDING EFFECT. This Agreement shall be
binding upon, and inure to the benefit of, the Executive and his
heirs, executors, administrators and legal representatives and
the Company and its permitted successors and assigns.
ARTICLE 14. MERGER OR CONSOLIDATION. The Company will
not consolidate or merge into or with another corporation, or
transfer all or substantially all of its assets to another
corporation (the "Successor Corporation") unless the Successor
Corporation shall assume this Agreement, and upon such
assumption, the Executive and the Successor Corporation shall
become obligated to perform the terms and conditions of this
Agreement.
ARTICLE 15. COUNTERPARTS. This Agreement may be
executed simultaneously in one or more counterparts, each of
which shall be deemed an original but all of which together shall
constitute one and the same instrument.
ARTICLE 16. ENTIRE AGREEMENT. This Agreement
expresses the whole and entire agreement between the parties with
reference to the employment of the Executive and, as of the
effective date hereof, supersedes and replaces any prior
employment agreement, understanding or arrangement (whether
written or oral) between the Company and the Executive. Each of
the parties hereto has relied on his or its own judgment in
entering into this Agreement.
ARTICLE 17. NOTICES. All notices, requests and other
communications to any party under this Agreement shall be in
writing and shall be given to such party at its address set forth
below or such other address as such party may hereafter specify
for the purpose by notice to the other party:
(a) If to the Executive:
[Name]
[Address]
(b) If to the Company:
First Colony Life Insurance Company
700 Main Street
Lynchburg, Virginia 24504
or, if applicable,
First Colony Corporation
Riverfront Plaza, West Tower
901 East Byrd Street
Suite 1350
Richmond, Virginia 23219
Each such notice, request or other communication shall be
effective (i) if given by mail, 72 hours after such communication
is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (ii) if given by any other means, when
delivered at the address specified in this ARTICLE 17.
ARTICLE 18. MODIFICATION OF AGREEMENT. No waiver or
modification of this Agreement or of any covenant, condition, or
limitation herein contained shall be valid unless in writing and
duly executed by the party to be charged therewith. No evidence
of any waiver or modification shall be offered or received in
evidence at any proceeding, arbitration, or litigation between
the parties hereto arising out of or affecting this Agreement, or
the rights or obligations of the parties hereunder, unless such
waiver or modification is in writing, duly executed as aforesaid.
The parties further agree that the provisions of this ARTICLE 18
may not be waived except as herein set forth.
ARTICLE 19. TAXES. To the extent required by
applicable law, the Company shall deduct and withhold all
necessary Social Security taxes and all necessary federal and
state withholding taxes and any other similar sums required by
law to be withheld from any payments made pursuant to the terms
of this Agreement.
ARTICLE 20. RECITALS. The Recitals to this Agreement
are incorporated herein and shall constitute an integral part of
this Agreement.
IN WITNESS WHEREOF, the parties have executed this
Agreement on the day and year first above written.
EXECUTIVE:
By:
_______________________________
[Name of Executive]
[FIRST COLONY LIFE INSURANCE
COMPANY:
By:
_______________________________
Title:
_____________________________
FIRST COLONY CORPORATION:
By:
_______________________________
Title:
_____________________________]
FIRST AMENDMENT TO THE
CHANGE IN CONTROL AND TERMINATION AGREEMENT
The Change in Control and Termination Agreement between
and [First Colony Corporation/First Colony Life Insurance
Company], dated March 23, 1995, is amended, as follows.
FIRST: Effective April 2, 1996, Section 2.4 is amended
to substitute "2.0" for the term "1.0" in the first sentence of
Section 2.4 of the Agreement.
SECOND: Effective April 2, 1996, Article 3 is deleted
and the following Article 3 is substituted therefor:
ARTICLE 3. EXCISE TAXES. In addition, if the
excise tax imposed under Code section 4999 on "excess
parachute payments," as defined in Code section 280G,
is provoked by (i) any amount paid or payable to or for
the benefit of the Executive under this section as
legal fees and expenses, or (ii) any payments or
benefits which the Executive receives or has the right to receive
from the Company or any affiliated entity or any
payments or benefits under any plan maintained by the
Company or any affiliated entity (the "Change in
Control Benefits"), the Company must indemnify the
Executive and hold him harmless against all claims,
losses, damages, penalties, expenses, and excise taxes. To
effect this indemnification, the Company must pay the
Executive an Additional Amount that is sufficient to
pay any excise tax imposed by Code section 4999 on the
payments and benefits to which the Executive is
entitled without the Additional Amount within 15 days
after the Executive provides a copy of his tax return
in accordance with subsection (a) below. The Additional
Amount shall be equal to the amount that is sufficient to
indemnify and hold the Executive harmless from (i) the
excise tax imposed on the Executive under section 4999
of the Code with respect to the Change of Control
Benefits and (ii) the amount required to satisfy (x)
the additional excise tax under section 4999 of the
Code, (y) the hospital insurance tax under section 3111(b) of the
Code and (z) the federal, state and local income taxes
for which the Executive is liable on account of the
payment of the amount described in item (i) and the
payment of the excise, hospital insurance and income
taxes in accordance with this item (ii).
(a) For purposes of determining the amount and
timing of the payments of the Additional Amount, the
Company and the Executive shall, as soon as practicable
after the event or series of events has occurred giving
rise to the imposition of the excise tax, seek the
advice of independent tax counsel and shall cooperate in
establishing at least tentatively the amount of the Executive's
excise tax liability for purposes of paying estimated tax.
The Executive shall thereafter furnish to the Company a
copy of each tax return which reflects a liability for
an excise tax payment under section 4999 of the Code
with respect to the Change of Control Benefits at least
20 days before the date on which such return is
required to be filed with the Internal Revenue Service. Except
as provided under subsection (b), the liability
reflected on such return shall be dispositive for
purposes of calculating the Additional Amount unless,
within 15 days after such notice is given, the Company
furnishes to the Executive an opinion from the
Company's independent auditors or a tax advisor selected by the
Company's independent auditors indicating that a different
Additional Amount is payable or to the effect that the
matter is not free from doubt under applicable laws and
regulations and the Executive may, in such auditor's or
advisor's opinion, take a different position without
risk of penalty, which shall be set forth in the
opinion with respect to the payment in question. Such
opinion shall be addressed to the Executive and shall state that
the Executive is entitled to rely thereon. If the
Company furnishes such opinion to the Executive, the
position reflected in such letter shall be dispositive
for purposes of calculating the Additional Amount,
except as provided under this subsection (a).
(b) If the Executive's liability for the excise
tax under section 4999 of the Code and the additional
excise tax and the hospital insurance tax under section
3111(b) of the Code and federal, state or local income
taxes attributable to the Company's payment of such
excise tax is subsequently determined to be less than
the amount of the Additional Amount paid to the Executive,
the Executive shall repay to the Company at the time that the
amount of such liability is finally determined the portion
of the Additional Amount payment attributable to such
reduction (plus interest on the amount of such
repayment at the rate provided in section 1274(b)(2)(B)
of the Code). If the Executive's liability for the
excise tax under section 4999 of the Code and the additional
excise tax and the hospital insurance tax under section
3111(b) of the Code and federal, state or local income
taxes attributable to the Company's payment of such
excise tax is subsequently determined to be more than
the amount of the Additional Amount paid to the
Executive, the Company shall make an additional payment in
respect of such excess, as well as the amount of any penalty or
interest assessed with respect thereto at the time that
the amount of such excess, penalty or interest is
finally determined.
THIRD: Effective May 15, 1996, the Agreement is
amended to add the following language as Article 4:
ARTICLE 4. MITIGATION. The Executive shall not
be required to mitigate damages or the amount of any
payment provided for under this Agreement by seeking or
accepting other employment or otherwise, and
compensation earned from such employment or otherwise
shall not reduce the amounts otherwise payable under
this Agreement.
FOURTH: Effective May 15, 1996, the Agreement is
amended to renumber current Articles 4 through 20 as Articles 5
through 21 and to renumber all references to such Articles
accordingly.
IN WITNESS WHEREOF, the parties have executed this
First Amendment to the Change in Control and Termination
Agreement on the date set forth below:
EXECUTIVE:
By:
_______________________________
Date:
_____________________________
FIRST COLONY LIFE INSURANCE
COMPANY:
By:
_______________________________
Title:
_____________________________
EXHIBIT 10.12.3
CHANGE IN CONTROL AND TERMINATION AGREEMENT
THIS CHANGE IN CONTROL AND TERMINATION AGREEMENT (the
"Agreement"), to be effective as of the 23rd day of March, 1995,
made and entered into by and between [FIRST COLONY CORPORATION,
("FCC")/FIRST COLONY LIFE INSURANCE COMPANY ("FCL")] (the
"Company"), a corporation organized and existing under the laws
of the Commonwealth of Virginia, and
______________________________, (the "Executive").
R E C I T A L S:
The Company acknowledges that Executive's
contributions to the past and future growth and success of the
Company have been and will continue to be substantial. As a
[wholly-owned subsidiary of a] publicly held corporation, the
Company recognizes that there exists a possibility of a Change in
Control of [the Company/its parent corporation, First Colony
Corporation ("FCC")]. The Company also recognizes that the
possibility of such a Change in Control may contribute to
uncertainty on the part of senior management and may result in
the departure or distraction of senior management from their
operating responsibilities.
Outstanding management of the Company is always
essential to advancing the best interests of the Company and
FCC's shareholders. In the event of a threat or occurrence of a
bid to acquire or change control of FCC or to effect a business
combination, it is particularly important that the the Company's
business be continued with a minimum of disruption. The Company
believes that the objective of securing and retaining outstanding
management will be achieved if the Company's key management
employees are given assurances of employment security so they
will not be distracted by personal uncertainties and risks
created by such circumstances.
NOW, THEREFORE, in consideration of the mutual
covenants and obligations herein and the compensation the Company
agrees herein to pay the Executive, and of other good and
valuable consideration, the receipt of which is hereby
acknowledged, the Company and the Executive agree as follows:
ARTICLE 1. TERM; EMPLOYMENT PERIOD.
1.1 Term. This Agreement is effective from the date
of its execution by the Company ("Effective Date"). The
Agreement automatically continues in effect from year to year
thereafter unless the Company notifies Executive in writing
thirty days before any anniversary of its Effective Date that the
Agreement will terminate as of that anniversary date. After a
Change in Control of FCC (as defined in section 1.3), the Company
may not terminate this Agreement for sixty months from the
Control Change Date (as defined in section 1.4) and the Agreement
automatically continues in effect from year to year thereafter
unless the Company notifies Executive in writing thirty days
before the end of the initial sixty month period or thirty days
before any anniversary of the end of that period that the
Agreement will terminate as of that date.
1.2 Employment Period. If Executive is employed by
the Company on the Control Change Date, the Company agrees that
the Company will continue to employ Executive and Executive
further agrees that Executive will continue as an employee of the
Company for the Employment Period. For purposes of this
Agreement, the Employment Period begins on the Control Change
Date and ends on the earlier of the fifth anniversary of the
Control Change Date or on Executive's Normal Retirement Date (as
defined under the First Colony Life Insurance Company Pension
Plan).
1.3 Change in Control, means if: (i) after the date of
the Agreement, any person, including a "group" as defined in
section 13(d)(3) of the Securities Exchange Act of 1934, becomes,
directly or indirectly, the beneficial owner of FCC securities
having 30% or more of the combined voting power of the then
outstanding FCC securities that may be cast for the election of
FCC's directors (other than as a result of an issuance of
securities initiated by FCC, or open market purchases approved by
FCC's Board, as long as the majority of FCC's Board approving the
purchases are directors at the time the purchases are made); or
(ii) as the direct or indirect result of, or in connection with,
a cash tender or exchange offer, a merger or other business
combination, a sale of assets, a contested election of directors,
or any combination of these transactions, the persons who were
directors of FCC before any such transactions cease to constitute
a majority of FCC's Board, or any successor's board, within three
years of the last of such transactions.
1.4 Control Change Date, means the date on which an
event described in section 1.3 occurs. If a Change in Control
occurs on account of a series of transactions, the Control Change
Date is the date of the last of such transactions.
ARTICLE 2. TERMINATION OF EMPLOYMENT.
2.1 General. Executive is entitled to receive
Termination Compensation according to the remaining provisions of
this section if Executive's employment with the Company
terminates during the Employment Period because of an event
described in section 2.2 or 2.3. If Executive's employment
terminates during the Employment Period and if an event described
in section 2.2 or 2.3 has not occurred, this Agreement
terminates.
2.2 Termination by the Company. Executive is entitled
to receive Termination Compensation if Executive's employment is
terminated by the Company without Cause. Cause, means, for
purposes of this Agreement, (i) willful and continued failure by
the Executive to perform his duties as established by the Board
of Directors of the Company; (ii) a material breach by the
Executive of his fiduciary duties or loyalty of care to the
Company; (iii) conviction of a felony; or (iv) willful, flagrant,
deliberate and repeated infractions of material published
policies and regulations of the Company of which the Executive
has actual knowledge (the "Cause Exception"). If the Company
desires to discharge the Executive under the Cause Exception, it
shall give notice to the Executive as provided in section 2.6 and
the Executive shall have thirty (30) days after notice has been
given to him in which to cure the reason for the Company's
exercise of the Cause Exception. If the reason for the Company's
exercise of the Cause Exception is timely cured by the Executive
(as determined by a majority of the members of the Board of
Directors following a hearing), the Company's notice shall become
null and void.
2.3 Voluntary Termination. Executive is entitled to
receive Termination Compensation if Executive voluntarily
terminates employment with Good Reason. Good Reason means, for
purposes of this Agreement, the Executive's resignation from the
Company's employment on account of
(a) the failure by the FCC or FCL Board (as
applicable) to reelect the Executive to Executive's current
position with the Company (as of the Control Change Date) and the
Executive then elects to leave the Company's employment
within six (6) months of such failure to so reelect or reappoint
the Executive;
(b) a material modification by the FCC or FCL
Board (as applicable of the duties, functions and
responsibilities of the Executive as the
_______________________________________________ of the Company
without his consent within six (6) months of such modification;
or
(c) the failure of the Company to permit the
Executive to exercise such responsibilities as are consistent
with the Executive's position and are of such a nature as are
usually associated with such offices of a corporation engaged in
substantially the same business as the Company;
(d) the Company causes the Executive to relocate
his employment more than 50 miles from Lynchburg, Virginia,
without the consent of the Executive;
(e) the Company shall fail to make a payment
when due to the Executive; or
(f) the Company's reduction of the Executive's
total direct compensation (base salary, incentive bonus, and
benefits).
2.4 Termination Compensation. Termination
Compensation equal to 1.00 times Executive's Base Period Income
and shall be paid in a single sum payment in cash or in common
stock of FCC, at the election of the Executive. Termination
Compensation payments to Executive shall commence on the later of
the thirtieth business day after Executive's employment
termination or the first day of the month following his
employment termination. Termination Compensation is subject to
reduction according to Article 3.
2.5 Base Period Income. Executive's Base Period
Income equals his annual base salary as of Executive's
termination date, plus the average of any incentive bonus payable
to Executive for the Company's last two completed fiscal years.
2.6 Notice of Termination. Any termination by the
Company under the Cause Exception or by the Executive for Good
Reason shall be communicated by Notice of Termination to the
other party hereto. For purposes of sections 2.3 and 2.4, a
"Notice of Termination" means a written notice which (i)
indicates the specific termination provision in this Agreement
relied upon, (ii) sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated and (iii)
if the termination date is other than the date of receipt of such
notice, specifies the effective date of termination.
ARTICLE 3. REDUCTION IN PAYMENTS. In the event
that any amount required to be paid or distributed to the
Executive pursuant to this Agreement shall constitute a parachute
payment within the meaning of section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"), and the aggregate
of such parachute payments and any other amounts otherwise
required to be paid or distributed to the Executive by the
Company would cause the Executive to be subject to the excise tax
on excess parachute payments under section 4999 of the Code (the
"Excise Tax"), or any successor or similar provision thereof,
Termination Compensation must be reduced to the largest amount
that will result in no portion of such payment being subject to
the Excise Tax. The determination of any reduction pursuant to
this Article 3 must be made by the Company in good faith, before
any payment is due and payable to Executive.
ARTICLE 4. ATTORNEYS' FEES. In the event that
the Executive incurs any attorneys' fees in protecting or
enforcing his rights under this Agreement, the Company shall
reimburse the Executive for such reasonable attorneys' fees and
for any other reasonable expenses related thereto. Such
reimbursement shall be made within thirty (30) days following
final resolution of the dispute or occurrence giving rise to such
fees and expenses.
ARTICLE 5. DECISIONS BY COMPANY; FACILITY OF
PAYMENT. Any powers granted to the FCC or FCL Board (as
applicable) hereunder may be exercised by a committee, appointed
by the Board, and such committee, if appointed, shall have
general responsibility for the administration and interpretation
of this Agreement. If the Board or the committee shall find that
any person to whom any amount is or was payable hereunder is
unable to care for his affairs because of illness or accident, or
has died, then the Board or the committee, if it so elects, may
direct that any payment due him or his estate (unless a prior
claim therefore has been made by a duly appointed legal
representative) or any part thereof be paid or applied for the
benefit of such person or to or for the benefit of his spouse,
children or other dependents, an institution maintaining or
having custody of such person, any other person deemed by the
Board or committee to be a proper recipient on behalf of such
person otherwise entitled to payment, or any of them, in such
manner and proportion as the Board or committee may deem proper.
Any such payment shall be in complete discharge of the liability
of the Company therefor.
ARTICLE 6. INDEMNIFICATION. The Company shall
indemnify the Executive during his employment and thereafter to
the maximum extent permitted by applicable law for any and all
liability of the Executive arising out of, or in connection with,
his employment by the Company or membership on the FCC or FCL
Board (as applicable); provided, that in no event shall such
indemnity of the Executive at any time during the period of his
employment by the Company be less than the maximum indemnity
provided by the Company at any time during such period to any
other officer or director under an indemnification insurance
policy or the bylaws or charter of the Company or by agreement.
ARTICLE 7. SOURCE OF PAYMENTS; NO TRUST. The
obligations of the Company to make payments hereunder shall
constitute a liability of the Company to the Executive. Such
payments shall be from the general funds of the Company, and the
Company shall not be required to establish or maintain any
special or separate fund, or otherwise to segregate assets to
assure that such payments shall be made, and neither the
Executive nor his designated beneficiary shall have any interest
in any particular asset of the Company by reason of its
obligations hereunder. Nothing contained in this Agreement shall
create or be construed as creating a trust of any kind or any
other fiduciary relationship between the Company and the
Executive or any other person. To the extent that any person
acquires a right to receive payments from the Company hereunder,
such right shall be no greater than the right of an unsecured
creditor of the Company.
ARTICLE 8. SEVERABILITY. All agreements and
covenants contained herein are severable, and in the event any of
them shall be held to be invalid by any competent court, this
Agreement shall be interpreted as if such invalid agreements or
covenants were not contained herein.
ARTICLE 9. ASSIGNMENT PROHIBITED. This Agreement is
personal to each of the parties hereto, and neither party may
assign nor delegate any of his or its rights or obligations
hereunder.
ARTICLE 10. NO ATTACHMENT. Except as otherwise
provided in this Agreement or required by applicable law, no
right to receive payments under this Agreement shall be subject
to anticipation, commutation, alienation, sale, assignment,
encumbrance, charge, pledge or hypothecation or to execution,
attachment, levy, or similar process or assignment by operation
of law and any attempt, voluntary or involuntary, to effect any
such action shall be null, void and of no effect.
ARTICLE 11. HEADINGS. The headings of articles,
paragraphs and sections herein are included solely for
convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement.
ARTICLE 12. GOVERNING LAW. The parties intend that
this Agreement and the performance hereunder and all suits and
special proceedings hereunder shall be construed in accordance
with and under and pursuant to the laws of the Commonwealth of
Virginia and that in any action, special proceeding or other
proceeding that may be brought arising out of, in connection
with, or by reason of this Agreement, the laws of the
Commonwealth of Virginia shall be applicable and shall govern to
the exclusion of the law of any other forum, without regard to
the jurisdiction in which any action or special proceeding may be
instituted.
ARTICLE 13. BINDING EFFECT. This Agreement shall be
binding upon, and inure to the benefit of, the Executive and his
heirs, executors, administrators and legal representatives and
the Company and its permitted successors and assigns.
ARTICLE 14. MERGER OR CONSOLIDATION. The Company
will not consolidate or merge into or with another corporation,
or transfer all or substantially all of its assets to another
corporation (the "Successor Corporation") unless the Successor
Corporation shall assume this Agreement, and upon such
assumption, the Executive and the Successor Corporation shall
become obligated to perform the terms and conditions of this
Agreement.
ARTICLE 15. COUNTERPARTS. This Agreement may be
executed simultaneously in one or more counterparts, each of
which shall be deemed an original but all of which together shall
constitute one and the same instrument.
ARTICLE 16. ENTIRE AGREEMENT. This Agreement
expresses the whole and entire agreement between the parties with
reference to the employment of the Executive and, as of the
effective date hereof, supersedes and replaces any prior
employment agreement, understanding or arrangement (whether
written or oral) between the Company and the Executive. Each of
the parties hereto has relied on his or its own judgment in
entering into this Agreement.
ARTICLE 17. NOTICES. All notices, requests and
other communications to any party under this Agreement shall be
in writing and shall be given to such party at its address set
forth below or such other address as such party may hereafter
specify for the purpose by notice to the other party:
(a) If to the Executive:
[Name]
[Address]
(b) If to the Company:
First Colony Life Insurance Company
700 Main Street
Lynchburg, Virginia 24504
or, if applicable,
First Colony Corporation
Riverfront Plaza, West Tower
901 East Byrd Street
Suite 1350
Richmond, Virginia 23219
Each such notice, request or other communication shall be
effective (i) if given by mail, 72 hours after such communication
is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (ii) if given by any other means, when
delivered at the address specified in this ARTICLE 17.
ARTICLE 18. MODIFICATION OF AGREEMENT. No waiver or
modification of this Agreement or of any covenant, condition, or
limitation herein contained shall be valid unless in writing and
duly executed by the party to be charged therewith. No evidence
of any waiver or modification shall be offered or received in
evidence at any proceeding, arbitration, or litigation between
the parties hereto arising out of or affecting this Agreement, or
the rights or obligations of the parties hereunder, unless such
waiver or modification is in writing, duly executed as aforesaid.
The parties further agree that the provisions of this ARTICLE 18
may not be waived except as herein set forth.
ARTICLE 19. TAXES. To the extent required by
applicable law, the Company shall deduct and withhold all
necessary Social Security taxes and all necessary federal and
state withholding taxes and any other similar sums required by
law to be withheld from any payments made pursuant to the terms
of this Agreement.
ARTICLE 20. RECITALS. The Recitals to this
Agreement are incorporated herein and shall constitute an
integral part of this Agreement.
IN WITNESS WHEREOF, the parties have executed this
Agreement on the day and year first above written.
EXECUTIVE:
By: _______________________________
[Name of Executive]
FIRST COLONY LIFE INSURANCE COMPANY:
By: _______________________________
Title: _____________________________
FIRST COLONY CORPORATION:
By: _______________________________
Title: _____________________________
FIRST AMENDMENT TO THE
CHANGE IN CONTROL AND TERMINATION AGREEMENT
The Change in Control and Termination Agreement between and
[First Colony Corporation/First Colony Life Insurance Company],
dated March 23, 1995, is amended, as follows.
FIRST: Effective April 2, 1996, Article 3 is
deleted and the following Article 3 is substituted therefor:
ARTICLE 3. EXCISE TAXES. In addition, if the excise
tax imposed under Code section 4999 on "excess parachute
payments," as defined in Code section 280G, is provoked by
(i) any amount paid or payable to or for the benefit of the
Executive under this section as legal fees and expenses, or
(ii) any payments or benefits which the Executive receives or
has the right to receive from the Company or any affiliated
entity or any payments or benefits under any plan maintained by
the Company or any affiliated entity (the "Change in Control
Benefits"), the Company must indemnify the Executive and hold
him harmless against all claims, losses, damages, penalties,
expenses, and excise taxes. To effect this indemnification,
the Company must pay the Executive an Additional Amount that is
sufficient to pay any excise tax imposed by Code section 4999
on the payments and benefits to which the Executive is entitled
without the Additional Amount within 15 days after the
Executive provides a copy of his tax return in accordance with
subsection (a) below. The Additional Amount shall be equal to
the amount that is sufficient to indemnify and hold the
Executive harmless from (i) the excise tax imposed on the
Executive under section 4999 of the Code with respect to the
Change of Control Benefits and (ii) the amount required to
satisfy (x) the additional excise tax under section 4999 of the
Code, (y) the hospital insurance tax under section 3111(b) of the
Code and (z) the federal, state and local income taxes for which
the Executive is liable on account of the payment of the amount
described in item (i) and the payment of the excise, hospital
insurance and income taxes in accordance with this item (ii).
(a) For purposes of determining the amount and timing of
the payments of the Additional Amount, the Company and the
Executive shall, as soon as practicable after the event or series
of events has occurred giving rise to the imposition of the
excise tax, seek the advice of independent tax counsel and
shall cooperate in establishing at least tentatively the amount
of the Executive's excise tax liability for purposes of paying
estimated tax. The Executive shall thereafter furnish to the
Company a copy of each tax return which reflects a liability
for an excise tax payment under section 4999 of the Code with
respect to the Change of Control Benefits at least 20 days
before the date on which such return is required to be filed
with the Internal Revenue Service. Except as provided under
subsection (b), the liability reflected on such return shall be
dispositive for purposes of calculating the Additional Amount
unless, within 15 days after such notice is given, the Company
furnishes to the Executive an opinion from the Company's
independent auditors or a tax advisor selected by the Company's
independent auditors indicating that a different Additional
Amount is payable or to the effect that the matter is not free
from doubt under applicable laws and regulations and the
Executive may, in such auditor's or advisor's opinion, take a
different position without risk of penalty, which shall be set
forth in the opinion with respect to the payment in question.
Such opinion shall be addressed to the Executive and shall
state that the Executive is entitled to rely thereon. If the
Company furnishes such opinion to the Executive, the position
reflected in such letter shall be dispositive for purposes of
calculating the Additional Amount, except as provided under
this subsection (a).
(b) If the Executive's liability for the excise tax under
section 4999 of the Code and the additional excise tax and the
hospital insurance tax under section 3111(b) of the Code and
federal, state or local income taxes attributable to the
Company's payment of such excise tax is subsequently determined
to be less than the amount of the Additional Amount paid to the
Executive, the Executive shall repay to the Company at the time
that the amount of such liability is finally determined the
portion of the Additional Amount payment attributable to such
reduction (plus interest on the amount of such repayment at the
rate provided in section 1274(b)(2)(B) of the Code). If the
Executive's liability for the excise tax under section 4999 of
the Code and the additional excise tax and the hospital
insurance tax under section 3111(b) of the Code and federal,
state or local income taxes attributable to the Company's
payment of such excise tax is subsequently determined to be
more than the amount of the Additional Amount paid to the
Executive, the Company shall make an additional payment in
respect of such excess, as well as the amount of any penalty or
interest assessed with respect thereto at the time that the
amount of such excess, penalty or interest is finally
determined.
SECOND: Effective May 15, 1996, the Agreement is
amended to add the following language as Article 4:
ARTICLE 4. MITIGATION. The Executive shall not
be required to mitigate damages or the amount of any payment
provided for under this Agreement by seeking or accepting other
employment or otherwise, and compensation earned from such
employment or otherwise shall not reduce the amounts otherwise
payable under this Agreement.
THIRD: Effective May 15, 1996, the Agreement is
amended to renumber current Articles 4 through 20 as Articles 5
through 21 and to renumber all references to such Articles
accordingly.
IN WITNESS WHEREOF, the parties have executed this First
Amendment to the Change in Control and Termination Agreement on
the date set forth below:
EXECUTIVE:
By: _______________________________
Date: _____________________________
FIRST COLONY LIFE INSURANCE COMPANY:
By: _______________________________
Title: _____________________________
FIRST COLONY CORPORATION:
By: _______________________________
Title: _____________________________
EXHIBIT 10.13.1
FIRST COLONY CORPORATION
Stock Option Agreement
Participant:
Date of Grant:
Number of Shares Granted:
Option Price Per Share: $
199_ Earnings: $
THIS AGREEMENT dated the 22nd day of December, 1993, between
FIRST COLONY CORPORATION, a Virginia corporation (the
"Corporation"), and the Participant named above, is made pursuant
and subject to the provisions of the Corporation's 1992 Omnibus
Stock Incentive Plan (the "Plan"), a copy of which has been given
to Participant. All terms used herein that are defined in the
Plan have the same meaning given them in the Plan.
1. Grant of Option. Pursuant to the Plan, the
Corporation, on the date of grant set forth above, granted to
Participant, subject to the terms and conditions of the Plan and
subject further to the terms and conditions herein set forth, the
right and option to purchase from the Corporation all or any part
of the above stated number of shares of Common Stock at the above
stated price per share (the "Option Price"), being not less than
the Fair Market Value per share of the Common Stock on the date
of grant. Such option will be exercisable as hereinafter
provided. This option is not intended to be a statutory stock
option subject to Sections 421 and 422 of the Code.
2. Terms and Conditions. This option is subject to the
following terms and conditions:
(a) Expiration Date. This option shall expire ten
years from the date of grant of this option. This
option may not be exercised on or after the tenth
anniversary of its grant.
(b) Exercise of Option. Except as provided in
paragraphs 3, 4, and 5:
(i) the first 20% of the shares subject to this
option shall be exercisable whenever:
(A) the Average Share Price exceeds $_____,
or
(B) Earnings for any year exceed
$___________;
(ii) the second 20% of the shares subject to this
option shall be exercisable whenever:
(A) the Average Share Price exceeds $_____,
or
(B) Earnings for any year exceed
$___________;
(iii)the third 20% of the shares subject to this
option shall be exercisable whenever:
(A) the Average Share Price exceeds $_____,
or
(B) Earnings for any year exceed
$___________;
(iv) the fourth 20% of the shares subject to this
option shall be exercisable whenever:
(A) the Average Share Price exceeds $_____,
or
(B) Earnings for any year exceed
$___________;
(v) the final 20% of the shares subject to this
option shall be exercisable whenever:
(A) the Average Share Price exceeds $_____,
or
(B) Earnings for any year exceed
$___________;
Once any 20% increment of this option has become
exercisable in accordance with the preceding sentence
it shall continue to be exercisable until the
termination of Participant's rights hereunder pursuant
to paragraph 3, 4, or 5 until the option period has
expired. The Average Share Price means the average of the
closing price of the Corporation's stock for any five
consecutive trading days. For purposes of the
Agreement only, and for any calendar year during the
term of this Agreement, Earnings means income before
income taxes, cumulative effect of accounting changes, and
extraordinary items (as defined in APB30) and shall exclude
realized gains on investments and related amortization
of intangibles and reserve adjustments and includes a
deduction for preferred stock dividends.
(c) Method of Exercising and Payment for Shares. This
option shall be exercised by written notice delivered to the
attention of the Corporation's Secretary or Assistant Secretary
at the Corporation's office at 700 Main Street, P.O. Box 1280,
Lynchburg, Virginia 24505. The exercise date shall be (i) in the
case of notice by mail, the date of postmark, or (ii) if
delivered in person, the date of delivery. Such notice shall be
accompanied by payment of the option price in full, in cash or
cash equivalent acceptable to the Committee, or by the surrender
of shares of Common Stock with an aggregate Fair Market Value
(determined as of the day preceding the exercise date) which is
not less than the option price or part thereof.
(d) Nontransferability. This option is
nontransferable except by will or by the laws of descent and
distribution. During Participant's lifetime, this option may be
exercised only by Participant.
3. Exercise in the event of Death. In the event the
Participant dies while employed by the Corporation or an
Affiliate or dies within three months following his termination
of employment, this option shall be exercisable at any time for
only all or part of the shares the Participant was entitled to
purchase pursuant to paragraph 2 above on the date of his death.
In such event this option may be exercised by Participant's
estate, or the person or persons to whom his rights under this
option shall pass by will or the laws of descent and
distribution. Participant's estate or such persons may exercise
this option within one year of the Participant's death or during
the remainder of the option period whichever is longer.
4. Exercise in the Event of Permanent and Total
Disability. If Participant becomes permanently and totally
disabled (within the meaning of Section 22(e)(3) of the Code)
while employed by the Corporation or an Affiliate, this option
shall be exercisable with respect to all or part of the number of
shares Participant was entitled to purchase pursuant to paragraph
2 above on the date Participant ceases to be employed by the
Corporation, and prior to the Expiration Date. In that event,
Participant may exercise this option during the remainder of the
period preceding the Expiration Date or within one year of the
date he ceases to be employed by the Corporation or an Affiliate,
whichever is shorter.
5. Exercise After Termination of Employment. Except as
provided in paragraphs 3 and 4, in the event Participant ceases
to be employed by the Corporation or an Affiliate, Participant
may exercise this option at any time within three months next
following such termination of employment with respect to all or
part of the number of shares he was entitled to purchase pursuant
to paragraph 2 above on the date his employment terminated.
6. Fractional Shares. Fractional shares shall not be
issuable hereunder, and when any provision hereof may entitle
Participant to a fractional share, such fraction shall be
disregarded.
7. No Right to Continued Employment. This option does not
confer upon Participant any right with respect to continuance of
employment by the Corporation or an Affiliate, nor shall it
interfere in any way with the right of the Corporation or an
Affiliate to terminate his employment at any time.
8. Change in Capital Structure. The terms of this option
shall be adjusted as the Committee determines is equitably
required in the event the Corporation effects one or more stock
dividends, stock split-ups, subdivisions or consolidations of
shares or other similar changes in capitalization.
9. Governing Law. This Agreement shall be governed by the
laws of the Commonwealth of Virginia.
10. Conflicts. In the event of any conflict between the
provisions of the Plan as in effect on the date hereof and the
provisions of this Agreement, the provisions of the Plan shall
govern. All references herein to the Plan shall mean the Plan as
in effect on the date hereof.
11. Participant Bound by Plan. Participant hereby
acknowledges receipt of a copy of the Plan and agrees to be bound
by all the terms and provisions thereof.
12. Binding Effect. Subject to the limitations stated
above and in the Plan, this Agreement shall be binding upon and
inure to the benefit of the legatees, distributees, and personal
representatives of Participant and the successors of the
Corporation.
13. Taxes. Participant shall make arrangements acceptable
to the Corporation for the satisfaction of income and employment
tax withholding requirements attributable to the exercise of this
option.
IN WITNESS WHEREOF, this Agreement has been signed by a duly
authorized officer of the Corporation and Participant.
FIRST COLONY CORPORATION PARTICIPANT
By: By:
Title:
First Colony Corporation
1992 Omnibus Stock Incentive Plan
Form of Amendments to Option Agreements
The option agreements are amended as follows:
1. Effective as of April 2, 1996, the section entitled
"Exercisability of Option" is amended to add the following
language at the end thereto:
Notwithstanding the preceding, this option shall be
exercisable with respect to all or part of the shares
subject to this option on a Control Change Date that
occurs before the Expiration Date.
2. Effective as of April 2, 1996, the following sections are
added:
Change in Control, means if: (i) after the date of the
Agreement, any person, including a "group" as defined in
section 13(d)(3) of the Securities Exchange Act of 1934,
becomes, directly or indirectly, the beneficial owner of
Company Stock having 30% or more of the combined voting
power of the then outstanding Company Stock that may be
cast for the election of the Company's directors (other
than as a result of an issuance of securities initiated
by the Company, or open market purchases approved by
the Company's Board, as long as the majority of the
Company's Board approving the purchases are directors
at the time the purchases are made); or (ii) as the
direct or indirect result of, or in connection with, a
cash tender or exchange offer, a merger or other
business combination, a sale of assets, a contested
election of directors, or any combination of these
transactions, the persons who were directors of the Company
before any such transactions cease to constitute a majority of
the Company's Board, or any successor's board, within
three years of the last of such transactions.
Control Change Date, means the date on which an event
described in the section entitled "Change in Control"
occurs. If a Change in Control occurs on account of a
series of transactions, the Control Change Date is the
date of the last of such transactions.
3. Effective as of November 28, 1995, Subparagraph 2(b) is
amended to add the following language:
Notwithstanding the preceding, this option shall be
exercisable with respect to all or part of the shares
subject to this option on the date that is thirty days
prior to the Expiration Date.
4. Effective as of November 28, 1995, Paragraph 3 is amended to
read as follows:
Exercise in the Event of Permanent and Total
Disability. If Participant becomes permanently and
totally disabled (within the meaning of Section
22(e)(3) of the Code) while employed by the Corporation
or an Affiliate and prior to the Expiration Date, this
option shall be fully exercisable with respect to all
or part of the shares subject to this option without regard to
the satisfaction of any performance standards set forth in
subparagraph 2(b). In that event Participant may
exercise this option during the remainder of the period
preceding the expiration date or within one year of the
date he ceases to be employed by the Corporation or an
Affiliate, whichever is shorter.
5. Effective as of November 28, 1995, Paragraph 4 is amended to
read as follows:
Exercise in the Event of Death. In the event
Participant dies while employed by the Corporation or
an affiliate or dies within three months following his
termination of employment with the Corporation or an
Affiliate, this option shall be fully exercisable with
respect to all or part of the shares subject to this
option without regard to the satisfaction of any
performance standards set forth in subparagraph 2(b). In that
event, this option may be exercised by Participant's estate
or the person or persons to whom his rights under this
option shall pass by will or the laws of descent and
distribution. For those shares exercisable prior to
death, Participant's estate or such persons may
exercise this option during one year of Participant's
death or during the remainder of the period preceding
the Expiration Date, whichever is longer. While for
the shares which only became exercisable because of
Participant's death, Participant's estate or such persons may
exercise this option within one year of Participant's death
or during the remainder of the period preceding the
Expiration Date, whichever is shorter. In the event
Participant dies more than three months after he ceases
to be employed by the Corporation or an Affiliate on
account of permanent and total disability or
Retirement, but prior to the termination of his rights
under paragraph 4 or 5, Participant's estate or the
person or persons to whom his rights under this option shall
pass by will or the laws of descent and distribution may
exercise this option during the remainder of the period
prescribed by paragraph 4 or 5.
6. Effective as of November 28, 1995, the following language is
added as Paragraph 5:
Exercise in the Event of Retirement. If Participant
Retires from the employ of the Company and its
Affiliates prior to the Expiration Date, this option
shall be fully exercisable with respect to all or part
of the shares subject to this option without regard to
the satisfaction of any performance standards set forth
in subparagraph 2(b). In that event, Participant may
exercise this option during the remainder of the period
preceding the Expiration Date or within one year of the
date of retirement, whichever is shorter. For purposes
of this Agreement, the terms "Retire" and "Retirement" mean
separation from service after Participant has satisfied the
requirements for an early, normal or delayed retirement
allowance under the First Colony Life Insurance Company
Pension Plan or any successor Plan of the Corporation or an
Affiliate in which Participant is eligible to participate;
provided however, that such terms shall not include a
separation from service following the date the participant
is advised that his employment is being, or will be
terminated for cause, on account of performance or
under circumstances that prevent him from being in good
standing (in each case as determined by the Committee
in its discretion).
EXHIBIT 10.13.2
FIRST COLONY CORPORATION
Stock Option Agreement
Participant:
Date of Grant:
Number of Shares Granted:
Option Price Per Share: $
199_ Earnings: $
THIS AGREEMENT dated the 12th day of December, 1994, between
FIRST COLONY CORPORATION, a Virginia corporation (the
"Corporation"), and the Participant named above, is made pursuant
and subject to the provisions of the Corporation's 1992 Omnibus
Stock Incentive Plan (the "Plan"), a copy of which has been given
to Participant. All terms used herein that are defined in the
Plan have the same meaning given them in the Plan.
1. Grant of Option. Pursuant to the Plan, the
Corporation, on the date of grant set forth above, granted to
Participant, subject to the terms and conditions of the Plan and
subject further to the terms and conditions herein set forth, the
right and option to purchase from the Corporation all or any part
of the above stated number of shares of Common Stock at the above
stated price per share (the "Option Price"), being not less than
the Fair Market Value per share of the Common Stock on the date
of grant. Such option will be exercisable as hereinafter
provided. This option is intended to be a statutory stock option
subject to Sections 421 and 422 of the Code to the extent that
the terms of the option, including its exercisability, satisfy
the requirements of those Code sections.
2. Terms and Conditions. This option is subject to the
following terms and conditions:
(a) Expiration Date. This option shall expire ten
years from the date of grant of this option. This option may not
be exercised on or after the tenth anniversary of its grant.
(b) Exercise of Option. Except as provided in
paragraphs 3, 4, and 5:
(i) the first 20% of the shares subject to this
option shall be exercisable whenever:
(A) the Average Share Price exceeds $_____,
or
(B) Earnings for any year exceed
$___________;
(ii) the second 20% of the shares subject to this
option shall be exercisable whenever:
(A) the Average Share Price exceeds $_____,
or
(B) Earnings for any year exceed
$___________;
(iii)the third 20% of the shares subject to this
option shall be exercisable whenever:
(A) the Average Share Price exceeds $_____,
or
(B) Earnings for any year exceed
$___________;
(iv) the fourth 20% of the shares subject to this
option shall be exercisable whenever:
(A) the Average Share Price exceeds $_____,
or
(B) Earnings for any year exceed
$___________;
(v) the final 20% of the shares subject to this
option shall be exercisable whenever:
(A) the Average Share Price exceeds $_____,
or
(B) Earnings for any year exceed
$___________;
Once any 20% increment of this option has become
exercisable in accordance with the preceding sentence,
it shall continue to be exercisable until the
termination of Participant's rights hereunder pursuant
to paragraph 3, 4, or 5, or until the option period has
expired. The Average Share Price means the average of the
closing price of the Corporation's stock for any five
consecutive trading days. For purposes of the
Agreement only, and for any calendar year during the
term of this Agreement, Earnings means income before
income taxes, cumulative effect of accounting changes, and
extraordinary items (as defined in APB30) and shall exclude
realized gains on investments and related amortization
of intangibles and reserve adjustments and includes a
deduction for preferred stock dividends.
(c) Method of Exercising and Payment for Shares. This
option shall be exercised by written notice delivered to the
attention of the Corporation's Secretary or Assistant Secretary
at the Corporation's office at 700 Main Street, P.O. Box 1280,
Lynchburg, Virginia 24505. The exercise date shall be (i) in the
case of notice by mail, the date of postmark, or (ii) if
delivered in person, the date of delivery. Such notice shall be
accompanied by payment of the option price in full, in cash or
cash equivalent acceptable to the Executive Compensation
Committee of the Board of Directors of the Corporation (the
"Committee"), or by the surrender of shares of Common Stock with
an aggregate Fair Market Value (determined as of the day
preceding the exercise date) which is not less than the option
price or part thereof.
(d) Nontransferability. This option is
nontransferable except by will or by the laws of descent and
distribution. During Participant's lifetime, this option may be
exercised only by Participant.
3. Exercise in the Event of Death. In the event the
Participant dies while employed by the Corporation or an
Affiliate or dies within three months following his termination
of employment with the Corporation or an Affiliate, this option
shall be exercisable with respect to the shares the Participant
was entitled to purchase on the date of his death and that remain
subject to this option. In either of such events, this option
may be exercised by Participant's estate, or the person or
persons to whom his rights under this option shall pass by will
or the laws of descent and distribution. Participant's estate or
such persons may exercise this option after the Participant's
death and during the remainder of the period preceding the
Expiration Date. Participant's estate or the person or persons
to whom his rights under this option shall pass by will or the
laws of descent and distribution may exercise this option in the
event Participant dies after he ceases to be employed by the
Corporation and its Affiliates on account of permanent and total
disability, but prior to the termination of his rights under
paragraph 4. Participant's estate or such persons may exercise
this option during the remainder of the period prescribed by
paragraph 4.
4. Exercise in the Event of Permanent and Total
Disability. If Participant becomes permanently and totally
disabled (within the meaning of Section 22(e)(3) of the Code)
while employed by the Corporation or an Affiliate and prior to
the Expiration Date, this option shall be exercisable with
respect to all or part of the shares the Participant was entitled
to purchase pursuant to paragraph 2 on the date he became totally
and permanently disabled and that remain subject to this option.
In that event, Participant may exercise this option during the
remainder of the period preceding the Expiration Date or within
one year of the date he ceases to be employed by the Corporation
or an Affiliate, whichever is shorter.
5. Exercise After Termination of Employment. Except as
provided in paragraphs 3 and 4, in the event Participant ceases
to be employed by the Corporation or an Affiliate prior to the
Expiration Date, this option shall be exercisable with respect to
all or part of the number of shares he was entitled to purchase
pursuant to paragraph 2 above on the date his employment
terminated and that remain subject to this option. In that
event, Participant may exercise this option at any time within
three months next following such termination of employment (but
in any event prior to the Expiration Date).
6. Fractional Shares. Fractional shares shall not be
issuable hereunder, and when any provision hereof may entitle
Participant to a fractional share, such fraction shall be
disregarded.
7. No Right to Continued Employment. This option does not
confer upon Participant any right with respect to continuance of
employment by the Corporation or an Affiliate, nor shall it
interfere in any way with the right of the Corporation or an
Affiliate to terminate his employment at any time.
8. Change in Capital Structure. The terms of this option
shall be adjusted as the Committee determines is equitably
required in the event the Corporation effects one or more stock
dividends, stock split-ups, subdivisions or consolidations of
shares or other similar changes in capitalization.
9. Governing Law. This Agreement shall be governed by the
laws of the Commonwealth of Virginia.
10. Conflicts. In the event of any conflict between the
provisions of the Plan as in effect on the date hereof and the
provisions of this Agreement, the provisions of the Plan shall
govern. All references herein to the Plan shall mean the Plan as
in effect on the date hereof.
11. Participant Bound by Plan. Participant hereby
acknowledges receipt of a copy of the Plan and agrees to be bound
by all the terms and provisions thereof.
12. Binding Effect. Subject to the limitations stated
above and in the Plan, this Agreement shall be binding upon and
inure to the benefit of the legatees, distributees, and personal
representatives of Participant and the successors of the
Corporation.
13. Taxes. Participant shall make arrangements acceptable
to the Corporation for the satisfaction of income and employment
tax withholding requirements attributable to the exercise of this
option.
IN WITNESS WHEREOF, the Corporation has caused this
Agreement to be signed by a duly authorized officer, and
Participant has affixed his signature hereto.
FIRST COLONY CORPORATION PARTICIPANT
By: By:
First Colony Corporation
1992 Omnibus Stock Incentive Plan
Form of Amendments to Option Agreements
The option agreements are amended as follows:
1. Effective as of April 2, 1996, the section entitled
"Exercisability of Option" is amended to add the following
language at the end thereto:
Notwithstanding the preceding, this option shall be
exercisable with respect to all or part of the shares
subject to this option on a Control Change Date that
occurs before the Expiration Date.
2. Effective as of April 2, 1996, the following sections are
added:
Change in Control, means if: (i) after the date of the
Agreement, any person, including a "group" as defined in
section 13(d)(3) of the Securities Exchange Act of 1934,
becomes, directly or indirectly, the beneficial owner of
Company Stock having 30% or more of the combined voting
power of the then outstanding Company Stock that may be
cast for the election of the Company's directors (other
than as a result of an issuance of securities initiated
by the Company, or open market purchases approved by
the Company's Board, as long as the majority of the
Company's Board approving the purchases are directors
at the time the purchases are made); or (ii) as the
direct or indirect result of, or in connection with, a
cash tender or exchange offer, a merger or other
business combination, a sale of assets, a contested
election of directors, or any combination of these
transactions, the persons who were directors of the Company
before any such transactions cease to constitute a majority of
the Company's Board, or any successor's board, within
three years of the last of such transactions.
Control Change Date, means the date on which an event
described in the section entitled "Change in Control"
occurs. If a Change in Control occurs on account of a
series of transactions, the Control Change Date is the
date of the last of such transactions.
3. Effective as of November 28, 1995, Subparagraph 2(b) is
amended to add the following language:
Notwithstanding the preceding, this option shall be
exercisable with respect to all or part of the shares
subject to this option on the date that is thirty days
prior to the Expiration Date.
4. Effective as of November 28, 1995, Paragraph 3 is amended to
read as follows:
Exercise in the Event of Permanent and Total
Disability. If Participant becomes permanently and
totally disabled (within the meaning of Section
22(e)(3) of the Code) while employed by the Corporation
or an Affiliate and prior to the Expiration Date, this
option shall be fully exercisable with respect to all
or part of the shares subject to this option without regard to
the satisfaction of any performance standards set forth in
subparagraph 2(b). In that event Participant may
exercise this option during the remainder of the period
preceding the expiration date or within one year of the
date he ceases to be employed by the Corporation or an
Affiliate, whichever is shorter.
5. Effective as of November 28, 1995, Paragraph 4 is amended to
read as follows:
Exercise in the Event of Death. In the event
Participant dies while employed by the Corporation or
an affiliate or dies within three months following his
termination of employment with the Corporation or an
Affiliate, this option shall be fully exercisable with
respect to all or part of the shares subject to this
option without regard to the satisfaction of any
performance standards set forth in subparagraph 2(b). In that
event, this option may be exercised by Participant's estate
or the person or persons to whom his rights under this
option shall pass by will or the laws of descent and
distribution. For those shares exercisable prior to
death, Participant's estate or such persons may
exercise this option during one year of Participant's
death or during the remainder of the period preceding
the Expiration Date, whichever is longer. While for
the shares which only became exercisable because of
Participant's death, Participant's estate or such persons may
exercise this option within one year of Participant's death
or during the remainder of the period preceding the
Expiration Date, whichever is shorter. In the event
Participant dies more than three months after he ceases
to be employed by the Corporation or an Affiliate on
account of permanent and total disability or
Retirement, but prior to the termination of his rights
under paragraph 4 or 5, Participant's estate or the
person or persons to whom his rights under this option shall
pass by will or the laws of descent and distribution may
exercise this option during the remainder of the period
prescribed by paragraph 4 or 5.
6. Effective as of November 28, 1995, the following language is
added as Paragraph 5:
Exercise in the Event of Retirement. If Participant
Retires from the employ of the Company and its
Affiliates prior to the Expiration Date, this option
shall be fully exercisable with respect to all or part
of the shares subject to this option without regard to
the satisfaction of any performance standards set forth
in subparagraph 2(b). In that event, Participant may
exercise this option during the remainder of the period
preceding the Expiration Date or within one year of the
date of retirement, whichever is shorter; provided
however, that if Participant exercises this option more than
three months after the date of Retirement (other than under
circumstances described in paragraphs 6 and 7) this
option's intended status as an "incentive stock option"
within the meaning of Code section 422 may be lost.
For purposes of this Agreement, the terms "Retire" and
"Retirement" mean separation from service after
Participant has satisfied the requirements for an
early, normal or delayed retirement allowance under the
First Colony Life Insurance Company Pension Plan or any
successor Plan of the Corporation or an Affiliate in
which Participant is eligible to participate; provided
however, that such terms shall not include a separation
from service following the date the participant is
advised that his employment is being, or will be terminated
for cause, on account of performance or under circumstances
that prevent him from being in good standing (in each case
as determined by the Committee in its discretion).
EXHIBIT 10.13.3
FIRST COLONY CORPORATION
Stock Option Agreement
Participant:
Date of Grant:
Number of Shares Granted:
Option Price Per Share: $
199_ Earnings: $
THIS AGREEMENT dated the 28th day of November, 1995, between
FIRST COLONY CORPORATION, a Virginia corporation (the
"Corporation"), and the Participant named above, is made pursuant
and subject to the provisions of the Corporation's 1992 Omnibus
Stock Incentive Plan (the "Plan"), a copy of which has been given
to Participant. All terms used herein that are defined in the
Plan have the same meaning given them in the Plan.
1. Grant of Option. Pursuant to the Plan, the
Corporation, on the date of grant set forth above, granted to
Participant, subject to the terms and conditions of the Plan and
subject further to the terms and conditions herein set forth, the
right and option to purchase from the Corporation all or any part
of the above stated number of shares of Common Stock at the above
stated price per share (the "Option Price"), being not less than
the Fair Market Value per share of the Common Stock on the date
of grant. Such option will be exercisable as hereinafter
provided. This option is intended to be an incentive stock
option subject to Sections 421 and 422 of the Code to the extent
that the terms of the option, including its exercisability,
satisfy the requirements of those Code sections.
2. Expiration Date. This option shall expire ten years
from the date of grant of this option. This option may not be
exercised on or after the tenth anniversary of its grant.
3. Exercisability of Option. The number of shares for
which this option is exercisable as of any date shall be the
greater of the amount determined under the following
subparagraphs (a) or (b). Once this option has become
exercisable in accordance with the following subparagraphs (a) or
(b), it shall continue to be exercisable until the termination of
Participant's rights hereunder pursuant to paragraphs 6, 7, 8, or
9 or until the Expiration Date. A partial exercise of this
option shall not affect Participant's right to exercise this
option with respect to the remaining shares, subject to the
conditions of the Plan and this Agreement.
(a) Except as provided in subparagraphs (b):
(i) the first 20% of the shares subject to this
option shall be exercisable whenever:
(A) the Average Share Price exceeds $_____,
or
(B) Earnings for any year exceed
$___________;
(ii) the second 20% of the shares subject to this
option shall be exercisable whenever:
(A) the Average Share Price exceeds $_____,
or
(B) Earnings for any year exceed
$___________;
(iii)the third 20% of the shares subject to this
option shall be exercisable whenever:
(A) the Average Share Price exceeds $_____,
or
(B) Earnings for any year exceed
$___________;
(iv) the fourth 20% of the shares subject to this
option shall be exercisable whenever:
(A) the Average Share Price exceeds $_____,
or
(B) Earnings for any year exceed
$___________;
(v) the final 20% of the shares subject to this
option shall be exercisable whenever:
(A) the Average Share Price exceeds $_____,
or
(B) Earnings for any year exceed
$___________;
Once any 20% increment of this option has become
exercisable in accordance with the preceding sentence
it shall continue to be exercisable until the
termination of Participant's rights hereunder pursuant
to paragraph 6, 7, 8 or 9, or until the option period has
expired. The Average Share Price means the average of the
closing price of the Corporation's stock for any five
consecutive trading days. For purposes of the
Agreement only, and for any calendar year during the
term of this Agreement, Earnings means income before
income taxes, cumulative effect of accounting changes, and
extraordinary items (as defined in APB30) and shall exclude
realized gains on investments and related amortization
of intangibles and reserve adjustments and includes a
deduction for preferred stock dividends.
(b) Notwithstanding the preceding subparagraph (a),
this option shall be exercisable with respect to all or part of
the shares subject to this option on the date that is thirty days
prior to the Expiration Date.
4. Method of Exercising and Payment for Shares. This
option shall be exercised by written notice delivered to the
attention of the Corporation's Secretary or Assistant Secretary
at the Corporation's office at 700 Main Street, P.O. Box 1280,
Lynchburg, Virginia 24505. The exercise date shall be (i) in the
case of notice by mail, the date of postmark, or (ii) if
delivered in person, the date of delivery. Such notice shall be
accompanied by payment of the option price in full, in cash or
cash equivalent acceptable to the Executive Compensation
Committee of the Board of Directors of the Corporation (the
"Committee"), or by the surrender of shares of Common Stock with
an aggregate Fair Market Value (determined as of the day
preceding the exercise date) which is not less than the option
price or part thereof.
5. Nontransferability. This option is nontransferable
except by will or by the laws of descent and distribution.
During Participant's lifetime, this option may be exercised only
by Participant.
6. Exercise in the event of Death. In the event the
Participant dies while employed by the Corporation or an
Affiliate or within three months following his termination of
employment with the Corporation or an Affiliate, this option
shall be fully exercisable with respect to all or part of the
shares subject to this option without regard to the satisfaction
of any performance standards set forth in subparagraph 3(a). In
that event this option may be exercised by Participant's estate,
or the person or persons to whom his rights under this option
shall pass by will or the laws of descent and distribution.
Participant's estate or such persons may exercise this option
within one year of the Participant's death or during the
remainder of the period preceding the Expiration Date, whichever
is shorter. In the event Participant dies more than three months
after he ceases to be employed by the Corporation and its
Affiliates on account of permanent and total disability or
Retirement, but prior to the termination of his rights under
paragraph 7 or 8, Participant's estate or the person or persons
to whom his rights under this option shall pass by will or the
laws of descent and distribution may exercise this option during
the remainder of the period prescribed by paragraphs 7 and 8.
7. Exercise in the Event of Permanent and Total
Disability. If Participant becomes permanently and totally
disabled (within the meaning of Section 22(e)(3) of the Code)
while employed by the Corporation or an Affiliate and prior to
the Expiration Date, this option shall be fully exercisable with
respect to all or part of the shares remaining subject to this
option without regard to the satisfaction of any performance
standards set forth in subparagraph 3(a). In that event,
Participant may exercise this option during the remainder of the
period preceding the Expiration Date or within one year of the
date he ceases to be employed by the Corporation or an Affiliate,
whichever is shorter.
8. Exercise in the Event of Retirement. If Participant
retires from the employ of the Company and its Affiliates prior
to the Expiration Date, this option shall be fully exercisable
with respect to all or part of the shares subject to this option
without regard to the satisfaction of any performance standards
set forth in subparagraph 3(a). In that event, Participant may
exercise this option during the remainder of the period preceding
the Expiration Date or within one year of the date of retirement,
whichever is shorter; provided, however that if Participant
exercises this option more than three months after the date of
Retirement (other than under circumstances described in
paragraphs 6 and 7) this option's intended status as an
"incentive stock option" within the meaning of Code section 422
may be lost. For purposes of this Agreement, the terms "Retire"
and "Retirement" mean separation from service after Participant
has satisfied the requirements for an early, normal or delayed
retirement allowance under the First Colony Life Insurance
Company Pension Plan or any successor Plan of the Corporation or
an Affiliate in which Participant is eligible to participate;
provided, however, that such terms shall not include a separation
from service following the date the Participant is advised that
his employment is being, or will be terminated for cause, on
account of performance or under circumstances that prevent him
from being in good standing (in each case as determined by the
Committee in its discretion).
9. Exercise After Termination of Employment. Except as
provided in paragraphs 6, 7 and 8, in the event Participant
ceases to be employed by the Corporation or an Affiliate prior to
the Expiration Date, Participant may exercise this option with
respect to all or part of the number of shares he was entitled to
purchase pursuant to paragraph 3 above on the date his employment
terminated and that remain subject to this option. In that
event, Participant may exercise that option at any time within
three months next following such termination of employment (but
in any event prior to the Expiration Date). For purposes of
determining the number of shares for which this option is
exercisable on the basis of "Earnings" under paragraph 3 and this
paragraph 9, "Earnings" shall mean Earnings for any years as
publicly announced by the Corporation on or before the last date
of Participant's employment with the Corporation or an Affiliate.
10. Fractional Shares. Fractional shares shall not be
issuable hereunder, and when any provision hereof may entitle
Participant to a fractional share such fraction shall be
disregarded.
11. No Right to Continued Employment. This option does not
confer upon Participant any right with respect to continuance of
employment by the Corporation or an Affiliate, nor shall it
interfere in any way with the right of the Corporation or an
Affiliate to terminate his employment at any time.
12. Change in Capital Structure. The terms of this option
shall be adjusted as the Committee determines is equitably
required in the event the Corporation effects one or more stock
dividends, stock split-ups, subdivisions or consolidations of
shares or other similar changes in capitalization.
13. Governing Law. This Agreement shall be governed by the
laws of the Commonwealth of Virginia.
14. Conflicts. In the event of any conflict between the
provisions of the Plan as in effect on the date hereof and the
provisions of this Agreement, the provisions of the Plan shall
govern. All references herein to the Plan shall mean the Plan as
in effect on the date hereof.
15. Participant Bound by Plan. Participant hereby
acknowledges receipt of a copy of the Plan and agrees to be bound
by all the terms and provisions thereof.
16. Binding Effect. Subject to the limitations stated
above and in the Plan, this Agreement shall be binding upon and
inure to the benefit of the legatees, distributees, and personal
representatives of Participant and the successors of the
Corporation.
17. Taxes. Participant shall make arrangements acceptable
to the Corporation for the satisfaction of income and employment
tax withholding requirements attributable to the exercise of this
option.
IN WITNESS WHEREOF, the Corporation has caused this
Agreement to be signed by a duly authorized officer, and
Participant has affixed his signature hereto.
FIRST COLONY CORPORATION PARTICIPANT
By: By:
Title:
First Colony Corporation
1992 Omnibus Stock Incentive Plan
Form of Amendments to Option Agreements
The option agreements are amended as follows:
1. Effective as of April 2, 1996, the section entitled
"Exercisability of Option" is amended to add the following
language at the end thereto:
Notwithstanding the preceding, this option shall be
exercisable with respect to all or part of the shares
subject to this option on a Control Change Date that
occurs before the Expiration Date.
2. Effective as of April 2, 1996, the following sections are
added:
Change in Control, means if: (i) after the date of the
Agreement, any person, including a "group" as defined in
section 13(d)(3) of the Securities Exchange Act of 1934,
becomes, directly or indirectly, the beneficial owner of
Company Stock having 30% or more of the combined voting
power of the then outstanding Company Stock that may be
cast for the election of the Company's directors (other
than as a result of an issuance of securities initiated
by the Company, or open market purchases approved by
the Company's Board, as long as the majority of the
Company's Board approving the purchases are directors
at the time the purchases are made); or (ii) as the
direct or indirect result of, or in connection with, a
cash tender or exchange offer, a merger or other
business combination, a sale of assets, a contested
election of directors, or any combination of these
transactions, the persons who were directors of the Company
before any such transactions cease to constitute a majority of
the Company's Board, or any successor's board, within
three years of the last of such transactions.
Control Change Date, means the date on which an event
described in the section entitled "Change in Control"
occurs. If a Change in Control occurs on account of a
series of transactions, the Control Change Date is the
date of the last of such transactions.
3. Effective as of November 28, 1995, Paragraph 3 is amended to
add the following language:
Notwithstanding the preceding, this option shall be
exercisable with respect to all or part of the shares
subject to this option on the date that is thirty days
prior to the Expiration Date.
