Exhibit 10(aq)
CRESTAR FINANCIAL CORPORATION
CRESTAR/CITIZENS STOCK OPTION PLAN
Introduction
Effective December 31, 1996, Citizens Bancorp (Citizens)
merged with and into Crestar Financial Corporation (Crestar). The terms of that
transaction are set forth in an Agreement and Plan of Reorganization (the
Reorganization Agreement) between Citizens and Crestar.
Options to purchase common stock of Citizens (the Citizens
Options) were granted prior to December 31, 1996, pursuant to the terms of the
Citizens Bancorp 1986 Incentive Stock Option Plan and the Citizens Bancorp 1988
Stock Option Plan. The Citizens Options were surrendered to Citizens for
cancellation, without receipt of consideration from Citizens, prior to the
effectiveness of the merger with and into Crestar.
The Reorganization Agreement provides that Crestar will grant
options (the Crestar Options) to purchase Crestar common stock to those persons
who surrendered Citizens Options. The number of shares covered by the Crestar
Options and the option price per share will be the same as under the Citizens
Options, as adjusted in accordance with the Reorganization Agreement. The
remaining terms of the Crestar Options will be the same as the terms of the
Citizens Options.
Crestar Financial Corporation adopted this Crestar/Citizens
Stock Option Plan (the Plan) on December 20, 1996. The Plan is comprised of two
distinct Chapters.
Chapter I of the Plan pertains to Crestar Options that were
granted in substitution of Citizens Options that had been granted under the
Citizens Bancorp 1986 Incentive Stock Option Plan. Those Crestar Options will be
governed by Chapter I and the terms of the original Citizens Option agreement,
as adjusted by the Reorganization Agreement.
Chapter II of the Plan pertains to Crestar Financial
Corporation Options that were granted in substitution of Citizens Options that
had been granted under the Citizens Bancorp 1988 Stock Option Plan. Those
Crestar Options will be governed by Chapter II and the terms of the original
Citizens Option agreement, as adjusted by the Reorganization Agreement.
Any reference in Chapters I and II to Citizens shall be
interpreted as a reference to Crestar. Any reference in Chapters I and II to the
common stock of Citizens shall be interpreted as a reference to the common stock
of Crestar.
CRESTAR/CITIZENS STOCK OPTION PLAN
CHAPTER II
Relating to Crestar Options Granted to Individuals Who Surrendered
Citizens Options Granted Under the Citizens Bancorp 1986 Incentive Stock Option
Plan.
CITIZENS BANCORP
1986 INCENTIVE STOCK OPTION PLAN
1. Purpose of the Plan
This 1986 Incentive Stock Option Plan, as amended (hereinafter called
the "Plan") for CITIZENS BANCORP (hereinafter called the "Corporation") is
intended to advance the interests of the Corporation by providing senior
officers and other key employees who have substantial responsibility for the
direction and management of the Corporation with additional incentive for them
to promote the success of the business, to increase their proprietary interest
in the success of the Corporation, and to encourage them to remain in its
employ. The above aims will be effectuated through the granting of certain stock
options. It is intended that options issued under the Plan and designated by the
Board of Directors under Section 3(b) will qualify as incentive stock options
(hereinafter called "ISOs") under Section 422A of the Internal Revenue Code of
1986, as amended (the "Code") and the terms of the Plan shall be interpreted in
accordance with this intention. The Plan, as amended, shall only be applicable
to options granted hereunder on or after January 1, 1987.
2. Administration of the Plan
Subject to the provisions of the Plan, the Board of Directors (the
"Board") or a duly appointed committee thereof shall have plenary authority, in
its discretion: (a) to determine the employees of the Corporation and its
subsidiaries (from among the class of employees eligible under Section 3 to
receive options under the Plan) to whom options shall be granted; (b) to
determine the time or times at which options shall be granted; (c) to determine
the option price of the shares subject to each option, which price shall not be
less than the minimum specified in Section 5; (d) to determine (subject to
Section 7) the time or times when each option shall become exercisable and the
duration of the exercise period; (e) to interpret the Plan and to prescribe,
amend, and rescind rules and regulations relating to it; and (f) to make all
other action which the Board shall deem necessary or advisable for the
administration of the Plan.
3. Eligibility and Limitations on Options Granted Under the Plan
(a) Options will be granted only to persons who are key employees of
the Corporation or a subsidiary corporation of the Corporation who agree, in
writing, to remain in the employ of, and render services to, the Corporation or
a subsidiary corporation of the Corporation for a period of at least two (2)
years from the date of the granting of the option. The term "key employee" shall
include senior officers, directors and other executives of the Corporation or a
subsidiary corporation of the Corporation. The term, "subsidiary corporation"
shall, for the purposes of the Plan, be defined in the same manner as such term
is defined in Section 425(f) of the Internal Revenue Code.
(b) At the time of the grant of each option under this Plan, the Board
shall determine whether such option is to be designated as an ISO. If an option
is so designated as an ISO, then
the provisions of Section 7(d) of this Plan shall be made applicable to such
option. In addition, no option granted to any employee, who at the time of such
grant, owns stock possessing more than 10 percent of the total combined voting
power of all classes of stock of the Corporation or any of its subsidiaries, may
be designated as an ISO, unless at the time of such grant, the option price is
fixed at not less than 110 percent of the fair market value of the stock subject
to the option, and exercise of such option is prohibited by its terms after the
expiration of five (5) years from the date such option is granted.
(c) The aggregate fair market value (determined at the time an ISO is
granted) of the Common Stock with respect to which all ISOs are exercisable for
the first time by an optionee during any calendar year shall not exceed One
Hundred Thousand Dollars ($100,000).
4. Shares of Stock Subject to the Plan
There will be reserved for use upon the exercise of options to be
granted from time to time under the Plan (subject to the provisions of Section
13) an aggregate of 100,000 shares of the common stock of the Corporation, par
value of $2.50 per share (the "Common Stock"), which shares may be in whole or
in part, as the Board shall from time to time determine, authorized but unissued
shares or issued shares that shall have been reacquired by the Corporation. Any
shares of Common Stock subject to an option under the Plan, which option for any
reason expires or is terminated unexercised as to such shares, may again be
subjected to an option under the Plan.
5. Option Price
The exercise price of each option under the Plan shall be determined by
the Board at the time the option is granted, but in no event shall such exercise
price be less than one hundred percent (100%) of the fair market value of the
Common Stock on the date of grant.
The term "fair market value" shall be defined as the average of the
high and low sale prices of the Common Stock as reported on the NASDAQ National
Market System on the date of grant of the option, or, if there are no sales on
such date, on the most recent date upon which such stock was traded.
6. Dilution or Other Adjustment
(a) In the event that additional shares of Common Stock are issued
pursuant to a stock split or a stock dividend, the number of shares of Common
Stock then covered by each outstanding option granted hereunder shall be
increased proportionately with no increase in the total exercise price of the
shares then so covered, and the number of shares of Common Stock reserved for
the purpose of the Plan shall be increased by the same proportion. In the event
that the shares of Common Stock of the Corporation from time to time issued and
outstanding are reduced by a combination of shares, the number of shares of
Common Stock then covered by each outstanding option granted hereunder shall be
reduced proportionately with no reduction
in the total exercise price of the shares then so covered, and the number of
shares of Common Stock reserved for the purposes of the Plan shall be reduced by
the same proportion.
(b) In the event that the Corporation transfers assets to another
corporation and distributes the stock of such other corporation without the
surrender of Common Stock of the Corporation, and if such distribution is not
taxable as a dividend and no gain or loss is recognized by reason of Section 355
of the Internal Revenue Code of 1986, or some similar section, then the total
purchase price of the shares then covered by each outstanding option shall be
reduced by an amount which bears the same ratio to the total purchase price then
in effect as the market value of the stock distributed in respect of a share of
Common Stock, immediately following the distribution, bears to the aggregate of
the market value at such time of a share of Common Stock and the stock
distributed in respect thereof.
(c) For purposes of this Section 5(g)(ii) the term "option shares"
shall mean the number of shares of Common Stock on which an option under the
Plan originally was granted, as from time to time adjusted pursuant to Section
5(g)(i). In the event that shares of Common Stock are issued to holders of the
Common Stock upon the exercise of any rights distributed or issued to such
holders to purchase shares of Common Stock at a price that is less than the
then- fair market value of the Common Stock, the number of shares of Common
Stock subject to the Plan and to an option and the exercise price of the option
shall be adjusted in the following manner:
(A) The number of shares of Common Stock subject to the
option shall be adjusted to equal the number of
option shares immediately before such rights become
exercisable plus the total number of shares of Common
Stock that would be issuable upon the exercise in
full of all such rights to which the optionee would
be entitled if he were the holder of record of the
option shares as of the record date for such rights.
(B) The per share exercise price of the option shall be
adjusted to equal the total exercise price of the
option (option shares times exercise price)
immediately before any such rights became exercisable
plus the total exercise price of all such rights to
which the optionee would be entitled if he were the
holder of record of the option shares as of the
record date for any such rights, divided by the
number of option shares, as adjusted in Section
5(g)(ii)(A).
(C) The number of shares of Common Stock subject to the
Plan shall be adjusted to equal the number of shares
subject to the Plan immediately before such rights
became exercisable (for purposes of this Section
5(g)(ii), the "Plan shares") plus the product of the
Plan shares multiplied by the number of shares of
Common Stock issuable upon the exercise of one such
right.
(d) All adjustments pursuant to this Section 6 shall be made by
the Board, whose determination shall be final and binding upon optionee. No
fractional shares shall be issued, and
any fractional shares resulting from the computations pursuant to this Section 6
shall be eliminated from the respective option. No adjustment shall be made for
cash dividends or the issuance to stockholders of rights to subscribe for
additional Common Stock or other securities.
7. Period of Option and Certain Limitations on Right to Exercise
(a) All options issued under the Plan shall be for such period as the
Board shall determine, but in no event for more than ten (10) years from the
date of grant thereof.
(b) The period of the option, once it is granted, may be reduced only
as provided for in Section 9 in connection with the termination of employment of
the optionee.
(c) The Board of Directors may in its discretion provide that an option
granted under the Plan may be exercised in whole at any time or in part from
time to time during any period or periods of the term of the option. Except as
otherwise provided herein or in an option agreement hereunder, any option
granted under the Plan may be exercised in whole at any time or in part from
time to time during its term. Notwithstanding the foregoing and subject to
Section 9 hereof, no option may be exercised unless the optionee is at the time
of such exercise in the employ of the Corporation or of a subsidiary corporation
of the Corporation and shall have been continuously so employed since the grant
of his option. Absence or leave approved by the management of the Corporation
shall not be considered an interruption of employment for any purpose under the
Plan.
(d) The exercise of any option shall also be contingent upon receipt by
the Corporation of cash or certified bank check drawn to its order, shares of
the Corporation's Common Stock, or any combination of the foregoing in an amount
equal to the aggregate exercise price of the shares being purchased. For
purposes of this paragraph, shares of the Corporation's Common Stock that are
delivered in payment of the option price shall be valued at their fair market
value determined as set forth in Section 5 as of the date of the exercise of the
option. However, in order to facilitate the accumulation of funds to enable
employees to exercise their option, they will have the right, if they so elect,
to direct the Corporation or a subsidiary corporation of the Corporation to
withhold from their compensation regular amounts to be applied toward the
exercise of the options. Funds credited to the stock option accounts will be
under the control of the Corporation until applied to the payment of the
exercise price at the direction of the employee or returned to the employee in
the event the amount is not used for purchase of shares under option, and all
funds received or held by the Corporation under the Plan may be used for any
corporate purpose, and no interest shall be payable to a participant on account
of any amounts so held. Such amounts may be withdrawn by the employee at any
time, in whole or in part, for any reason.
(e) No optionee or his legal representative, legatees, or distributees,
as the case may be, will be, or will be deemed to be, a holder of any Common
Stock subject to an option unless and until certificates for such shares are
issued to him or them under the terms of the Plan. No adjustment shall be made
for dividends or other rights for which the record date is prior to the date
such stock certificate is issued.
(f) Exercise of an option in any manner shall result in a decrease in
the number of shares of Common Stock which thereafter may be available under the
Plan by the number of shares as to which the option is exercised.
(g) Upon exercise of an option not designated as an ISO pursuant to
Section 3(b) of the Plan, the optionee shall remit to the Corporation at the
time of exercise the amount of any taxes required to be withheld by the
Corporation under federal, state or local law as result of the exercise of such
option. Failure to remit the amount of any such taxes at the time of exercise
shall constitute an authorization by the optionee for the Corporation to
withhold the amount of such taxes from any regular cash compensation payable to
the optionee.
8. Assignability
Each option granted under this Plan shall be transferable only by will
or by the laws of descent and distribution and shall be exercisable, during his
lifetime, only by the employee to whom the option is granted. Except as
permitted by the preceding sentence, no option granted under the Plan or any of
the rights and privileges thereby conferred shall be transferred, assigned,
pledged, or hypothecated in any way (whether by operation of law or otherwise),
and no such option, right, or privilege shall be subject to execution,
attachment, or similar process. Upon any attempt so to transfer, assign, pledge,
hypothecate, or otherwise dispose of the option, or of any right or privilege
conferred thereby, contrary to the provisions thereof, or upon the levy of any
attachment or similar process upon such option, right or privilege, the option
and such rights and privileges shall immediately become null and void.
9. Termination of Employment
(a) In the event that an optionee ceases to be an employee of the
Corporation due to death or Disability, all of the optionee's options shall
immediately become fully vested and exercisable and shall remain so for a period
of one (1) year from the date of termination of employment, but in no event
after their respective expiration dates.
(b) In the event that an optionee ceases to be an employee of the
Corporation as a result of Retirement, all of the optionee's options that were
fully vested and exercisable on the date of termination of employment shall
remain fully vested and exercisable (i) for a period of three (3) months from
the date of termination of employment with respect to an ISO or (ii) until their
respective termination dates, with respect to all other options. All of the
optionee's options that were not fully vested and exercisable on such date shall
terminate immediately.
(c) In the case of an option that was not designated as an ISO under
Section 3(b), if the optionee voluntarily ceases to be an officer or employee of
the Corporation for any Good Reason, other than through Retirement, with one (1)
year after a Change in Control, or in the event an optionee involuntarily ceases
to be an officer or employee of the Corporation for any reason other than death,
Disability or Cause within two (2) years after a Change in Control, all of the
optionee's options that were fully vested and exercisable on the date of such
termination of service shall remain fully vested and exercisable for a period of
three (3) years from the date of such termination of service as an officer or of
employment, but in no event after their
respective expiration dates. All of the Optionee's options that were not fully
vested and exercisable on the date of such termination shall continue to accrue
to vest in accordance with their respective terms.
(d) In the event that an optionee ceases to be an employee of the
Corporation for any other reason, all of the optionee's options shall terminate
immediately.
10. Listing and Registration of Shares
Each option shall be subject to the requirement that if at any time the
Board shall determine, in its discretion, that the listing, registration or
qualification of the shares covered thereby upon any securities exchange or
under any state or federal law or the consent or approval of any governmental
regulatory body is necessary or desirable as a condition of, or in connection
with, the granting of such option or the issuance or purchase of shares
thereunder, such option may not be exercised in whole or in part unless and
until such listing, registration, qualification, consent or approval shall have
been effected or obtained free of any conditions not acceptable to the Board.
11. Certain Definitions
For purposes of the Plan, the following terms shall have the meanings
set forth below:
(a) "Cause" shall mean the occurrence of one of the following acts;
(i) a conviction of the optionee for a felony or for any
lesser crime or offense than a felony involving the property of the Corporation
or one of its subsidiaries;
(ii) the engaging by the optionee in conduct which has caused
demonstrable and serious injury to the Corporation, monetary or otherwise, as
evidenced by a determination in a binding and final judgment, order or decree of
a court or administrative agency of competent jurisdiction, in effect after
exhaustion or lapse of all rights or appeal, in an action, suit or proceeding,
whether civil, criminal, administrative or investigative; or
(iii) gross neglect of his duties as a director, officer or
employee, gross dereliction of duty or other grave misconduct by the optionee
and failure to cure such situation within thirty (30) days after receipt of
notice hereof from-the President of the Corporation.
(b) "Change in Control" shall mean the occurrence of any one of the
following events:
(i) any "person" (as that term is used in Sections 13(d) and
14(d)of the Securities Exchange Act of 1934, as amended (the "Exchange Act")),
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of twenty-five percent (25%) or more of
the Common Stock; or
(ii) any person (as defined above) is or becomes the
beneficial owner (as defined above), directly or indirectly, of securities of
Citizens representing forty percent (40%) or more of the combined voting power
of the Corporation's then outstanding securities; or
(iii) the sale by Citizens of all or substantially all of the
capital stock of Citizens Bank of Maryland (formally known as Citizens Bank and
Trust Corporation of Maryland) (the "Bank") owned by it or the sale by Citizens
of substantially all of the assets of the Bank.
(c) "Disability" shall mean a permanent and total disability as defined
by Section 72(m)(7) of the Code or other applicable section of the Code, or any
successor thereto of similar import.
(d) "Good Reason" shall mean the occurrence of any one of the following
events:
(i) without his express written consent, the assignment to the
optionee of any duties materially inconsistent with his position, duties,
responsibilities and status with the Corporation prior to the Change in Control
or a change in his reporting responsibilities;
(ii) the removal of the optionee from, or the failure to
re-elect the optionee to, any of the positions held by him prior to the Change
in Control, except in connection with promotions to higher office or the
termination of employment by reason of his death or for Cause; or
(iii) a failure by the Corporation to provide or pay to the
optionee any of the perquisites, benefits or compensation provided prior to the
Change in Control or a reduction in any of such perquisites, benefits or
compensation, except to the extent that the perquisites or benefits provided to
all other key officers or employees of the Corporation (whichever is applicable
to the optionee) are similarly modified or reduced.
(e) "optionee" shall mean an officer or employee of the Corporation to
whom an option is granted under the Plan.
(f) "Retirement" shall mean the termination of employment of an
individual pursuant to the regular retirement policy of the Corporation upon his
or her attaining age 65 or upon his or her attaining early retirement age and
with the consent of the Corporation.
12. Expiration and Termination of the Plan
Options may be granted under the Plan at any time or from time to time
as long as the total number of shares optioned or purchased under this Plan does
not exceed 100,000 shares of Common Stock (subject to adjustment under Section
6). The Plan may be abandoned or terminated at any time by the Board of
Directors of the Corporation except with respect to any options then outstanding
under the Plan. No option shall be granted pursuant to the Plan after five (5)
years from the effective date of the Plan.
13. Amendment of the Plan
The Board of Directors may at any time and from time to time modify and
amend the Plan in any respect; provided, however, that no such amendment shall:
(a) increase (except in accordance with Section 6) the maximum number of shares
for which options may be granted under the Plan either in the aggregate or to
any individual employee; or (b) reduce (except in accordance with Section 6) the
minimum exercise price that may be established under the Plan; or (c) change the
provisions relating to the determination of employees to whom options shall be
granted and the number of shares to be covered by such options; or (d) change
the provisions relating to adjustments to be made upon changes in
capitalization. The termination or any modification or amendment of the Plan
shall not, without the consent of an optionee, affect his rights under an option
theretofore granted to him.
14. Effective Date of the Plan
This Plan shall become effective on the later of the date of its
adoption by the Board of Directors of the Corporation or its approval by the
vote of the holders of a majority of the outstanding shares of the Common Stock.
This Plan shall not become effective unless such shareholder approval shall be
obtained within twelve (12) months before or after the adoption of the Plan by
the Board of Directors.
Adopted by the Board of Directors: February 19, 1986
Approved by the Stockholders: April 2, 1986
Amended by the Board of Directors: February 15, 1989
Amended by the Board of Directors: November 9, 1993
CRESTAR/CITIZENS STOCK OPTION PLAN
CHAPTER II
Relating to Crestar Options Granted to Individuals Who Surrendered
Citizens Options Granted Under the Citizens Bancorp 1988 Stock Option Plan.
CITIZENS BANCORP
1988 STOCK OPTION PLAN
1. Purpose This 1988 Stock Option Plan, as amended (herein the "Plan")
is intended as an employment incentive and to encourage stock ownership by
certain key officers and employees of Citizens Bancorp ("Citizens") and its
subsidiaries (together, the "Corporation") so that they may increase their
proprietary interest in the Corporation's success. In this way, the Corporation
will be assisted in its efforts to attract and retain highly qualified
management personnel.
2. Administration The Plan shall be administered, construed and
interpreted by the Compensation Committee, as appointed by the Board of
Directors of Citizens (herein the "Committee"). The Committee shall consist of
not less than three members of the Board of Directors. The Board of Directors
may from time to time remove members from or add members to the Committee, and
vacancies on the Committee, however caused, shall be filled by the Board of
Directors. No member of the Committee shall be or have been eligible to
participate in the Plan during the period of service on the Committee or during
the twelve months immediately prior to commencement of such service. Subject to
the provisions of the Plan and to the approval of the Board of Directors, the
Committee shall determine:
(a) The officers and employees to whom options shall be granted;
(b) The number of shares on which options shall be granted to each
officer and employee;
(c) The price to be paid for the shares upon the exercise of option;
(d) The termination date of such options; and
(e) All other matters deemed necessary or advisable for the
administration of the Plan.
No member of the Board of Directors or the Committee shall be liable
for any action or determination made in good faith, and the members shall be
entitled to indemnification and reimbursement in the manner provided in
Citizens' Articles of Incorporation or otherwise provided by law. The Committee
shall furnish the Board with copies of all decisions, orders and determinations
made by the Committee.
3. Eligibility The individuals who shall be eligible to participate in
the Plan shall be such key salaried officers and employees of the Corporation as
the President of Citizens shall recommend to the Committee or as the Committee
shall determine from time to time. An optionee may hold more than one (1)
option, but only on the terms and conditions herein set forth.
4. Stock The stock subject to the options and other provisions of the
Plan shall be shares of Citizens' common stock, par value $2.50 per share, which
is authorized but unissued, or reacquired common stock (the "Common Stock").
Subject to adjustment in accordance with the provisions of Section 5(g) hereof,
the total amount of Common Stock on which options may be granted to persons
under the Plan shall not exceed in the aggregate 750,000 shares.
5. Terms and Conditions of Options Stock Options granted pursuant to
the Plan shall be evidenced by agreements in such form as the Board of Directors
shall, from time to time, approve, which agreements shall in substance include
and comply with and be subject to the following terms and conditions:
(a) Medium and Time of Payment The option price shall be payable in
United States dollars upon the exercise of the option and may be paid
in cash or by certified check, bank draft or money order payable to the
order of the Corporation. The option price may also be paid in the form
of shares of Common Stock already owned by the Optionee, which shall be
valued at the average of the high and low sale prices of the Common
Stock as reported in the NASDAQ National Market System on the date that
the option is exercised (or the most recent date prior to the date of
exercise on which a transaction in the Common Stock was reported in
such system). The "date that the option is exercised" shall be the date
on which the Optionee delivers written notice of exercise of the option
to the Secretary of Citizens.
(b) Number of Shares The option shall state the total number of shares
to which it pertains. No option may be exercised for less than one
hundred (100) shares unless the issue of a lesser number is sufficient
to exhaust the option.
(c) Option Price The option price shall be the fair market value of the
shares of Common Stock on the date of the granting of the option. The
fair market value per share of the Common Stock shall be the average of
the high and low sale prices of the Common Stock as reported in the
NASDAQ National Market System. The "date that the option is granted"
shall be the date on which Citizens issues a letter to the optionee
advising him of the award of such option; provided, however, that the
Optionee shall have no rights under such option until he exercises the
option agreement described in this Section.
(d) Expiration of Options Each option granted under the Plan shall
expire not more than ten (10) years from the date such option is
granted, as determined by the Committee.
(e) Date of Exercise The Committee may in its discretion provide that
an option may be exercised in whole or in part during any period or
periods of time specified by the Committee. Except as herein otherwise
provided, any option granted hereunder may be exercised in whole at any
time, or in part from time to time, during its term.
(f) Termination of Employment
(i) In the event an Optionee ceases to be an employee of the
Corporation due to Death or Disability, all of the Optionee's
options shall immediately become fully vested and exercisable
and shall remain so for a period of one (1) year from the date
of termination of employment, but in no event after their
respective expiration dates.
(ii) In the event an Optionee ceases to be an employee of the
Corporation as a result of Retirement, all of the Optionee's
options that were fully vested and exercisable on the date of
termination of employment shall remain fully vested and
exercisable until their respective termination dates. All of
the Optionee's options that were not fully vested and
exercisable on such date shall terminate immediately.
(iii) In the event an Optionee voluntarily ceases to be an
officer or employee of the Corporation for any Good Reason,
other than through Retirement, within one (1) year after a
Change in Control, or in the event an Optionee involuntarily
ceases to be an officer or employee of the Corporation for any
reason other than Death, Disability or Cause within two (2)
years after a Change of Control, all of the Optionee's options
that fully vested and exercisable on the date of such
termination shall remain fully vested and exercisable for a
period of three (3) years from the date of such termination of
service as an officer or of employment, but in no event after
their respective expiration dates. All of the Optionee's
options that were not fully vested and exercisable on the date
of such termination shall continue to accrue to vest in
accordance with their respective terms.
(iv) In the event an Optionee ceases to be an employee of the
Corporation for any other reason, all of the Optionee's
options shall be terminated immediately.
(g) Adjustments on Changes in Stock
(i) The aggregate number of shares of Common Stock on which
options may be granted to persons eligible to participate in
the Plan, the number of shares thereof covered by each
outstanding option and the price per share thereof in each
such option, shall, subject to any required action by the
stockholders of Citizens, be proportionately adjusted by the
Committee for any increase or decrease in the number of issued
shares of Common Stock resulting from the subdivision or
consolidation of shares or other capital adjustment, or the
payment of a stock dividend, or other increase or decrease in
such shares, effected without receipt of consideration by
citizens; provided, however, that no such adjustment shall be
made unless and until the aggregate effect of all such
increases and decreases accruing after the effective date of
the Plan shall have increased or decreased the number of
issued shares of Common Stock by five percent (5%) or more;
and provided, further, that any fractional shares resulting
from any such adjustment
shall be eliminated. Any such determination by the Committee
shall be conclusive.
(ii) For purposes of this Section 5(g)(ii), the term "option
shares" shall mean the number of shares of Common Stock on
which an option under the Plan originally was granted, as from
time to time adjusted pursuant to Section 5(g)(i). In the
event that shares of Common Stock are issued to holders of the
Common Stock upon the exercise of any rights distributed or
issued to such holders to purchase shares of Common Stock at a
price that is less than the then-fair market value of the
Common Stock, the number of shares of Common Stock subject to
the Plan and to an option and the exercise price of the option
shall be adjusted in the following manner:
(A) The number of shares of Common Stock subject to
the option shall be adjusted to equal the number of
option shares immediately before such rights became
exercisable plus the total number of shares of Common
Stock that would be issuable upon the exercise in
full of all such rights to which the Optionee would
be entitled if he were the holder of record of the
option shares as of the record date for such rights.
(B) The per share exercise price of the option shall
be adjusted to equal the total exercise price of the
option (option shares times exercise price)
immediately before any such rights became exercisable
plus the total exercise price of all such rights to
which the Optionee would be entitled if he were the
holder of record Of the option shares as of the
record date for any such rights, divided by the
number of option shares, as adjusted in Section 5(g)
(ii) (A).
(C) The number of shares of Common Stock subject to
the Plan shall be adjusted to equal the number of
shares subject to the Plan immediately before such
rights became exercisable (for purposes of this
Section 5(g)(ii), the "Plan shares") plus the product
of the Plan shares multiplied by the number of shares
of Common Stock issuable upon the exercise of one
such right.
(iii) Except as hereinbefore expressly provided, the Optionee
shall have no rights by reason of any subdivision or
consolidation of shares of stock of any class or the payment
of any stock dividend or other increase or decrease in the
number of shares of stock of any class or by reason of any
dissolution, liquidation, merger or consolidation or spin-off
of assets or stock of another corporation; and any issue by
Citizens of shares of stock of any class or securities
convertible into shares of stock of any class shall not
affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock
subject to the option.
(iv) The grant of an option pursuant to the Plan shall not
affect in any way the right or power of Citizens to make
adjustments, reclassifications, reorganizations or changes of
its capital or business structure, to merge, consolidate,
dissolve or liquidate or to transfer all or part of its
business or assets.
(h) Assignability No option shall be assignable or transferable except
by will or by the laws of descent and distribution. During the lifetime of an
Optionee, an option shall be exercisable only by him.
(i) Agreement by Optionee If, at the time of the exercise of any
option, it is necessary or desirable that the Optionee exercising the option
shall agree that he or she will purchase the shares that are subject to the
option for investment and not with any present intention to resell the same, the
Optionee will, at the request of the Committee, execute and deliver to Citizens
an agreement to such effect.
(j) Tax Withholding The Optionee may remit to Citizens at the time of
exercise of an option any taxes required to be withheld by Citizens under
federal, state or local law as a result of the exercise of such option.
Alternatively, the Optionee may (i) direct Citizens to withhold from the shares
to be received upon such exercise the number of shares sufficient to satisfy the
applicable tax withholding requirements or (ii) deliver shares already owned by
the Optionee in satisfaction of the tax withholding requirements. In either
event, such shares will be valued at the fair market value (as defined in
Section 5(a)) of the Common Stock on the date of exercise of the option. If the
Optionee does not remit such taxes at the time of exercise of an option, the
Optionee will be deemed to have authorized the Corporation to withhold such
taxes in accordance with applicable law from any regular cash compensation
payable to him.
(k) Other Conditions The option agreement authorized under the Plan may
contain such other provisions as the Committee shall deem advisable.
6. Certain Definitions For purposes of the Plan, the following terms
shall have the meanings set forth below:
(a) "Cause" shall mean the occurrence of one of the following acts:
(i) A conviction of the Optionee for a felony or for any
lesser crime or offense than a felony involving the property
of the Corporation or one of is Subsidiaries;
(ii) The engaging by the Optionee in conduct which has caused
demonstrable and serious injury to the Corporation, monetary
or otherwise, as evidenced by a determination in a binding and
final judgment, order or decree of a court or administrative
agency of competent jurisdiction, in effect after exhaustion
or lapse of all rights of appeal, in an action, suit or
proceeding, whether civil, criminal, administrative or
investigative; or
(▇▇▇) ▇▇▇▇▇ neglect of his duties as a director, officer or
employee, gross dereliction of duty or other grave misconduct
by the Optionee and failure to cure
such situation within thirty (30) days after receipt of notice
thereof from the President of Citizens.
(b) "Change in Control" shall mean the occurrence of any one of the
following events:
(i) any "person" (as that term is used in Section 13(d) and
14(d) of the Securities Exchange Act of 1934 (the "Exchange
Act")), is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
twenty-five percent (25%) or more of the Common Stock; or
(ii) any "person", as described above, is or becomes the
"beneficial owner", directly or indirectly, of securities of
Citizens representing forty percent (40%) or more of the
combined voting power of the Corporation's then outstanding
securities; or
(iii) the sale by Citizens of all or substantially all of the
capital stock of Citizens Bank of Maryland (formally known as
Citizens Bank and Trust Company of Maryland) (the "Bank")
owned by it or the sale by Citizens of substantially all of
the assets of the Bank.
(c) "Disability" shall mean a permanent and total disability as defined
by Section 72(m)(7) of the Internal Revenue Code of 1986, as from time
to time amended, or any successor thereto of similar import.
(d) "Good Reason" shall mean the occurrence of any one of the following
events:
(i) without his express written consent, the assignment to the
Optionee of any duties materially inconsistent with his
position, duties, responsibilities and status with the
Corporation prior to the Change in Control or a change in his
reporting responsibilities;
(ii) the removal of the Optionee from, or the failure to
reelect the Optionee to, any of the positions held by him
prior to the Change in Control, except in connection with
promotions to higher office or the termination of employment
by reason of his death or for Cause; or
(iii) a failure by the Corporation to provide or pay to the
Optionee any of the perquisites, benefits or compensation
provided prior to the Change in Control or a reduction in any
of such perquisites, benefits or compensation, except to the
extent that the perquisites or benefits provided to all other
key officers or employees of the Corporation (whichever is
applicable to the Optionee) are similarly modified or reduced.
(e) "Optionee" shall mean an officer or employee of the Corporation to
whom an option is granted under the Plan.
(f) "Retirement" shall mean the termination of employment of an
individual pursuant to the regular retirement policy of the Corporation
upon his or her attaining age 65 or upon his or her attaining early
retirement age and with the consent of the Corporation.
7. Modification of Options Subject to the terms and conditions and
within the limitations of the Plan, the Board of Directors may modify, extend or
renew outstanding options (to the extent not theretofore exercised) and
authorize the granting of new options in substitution therefor; provided,
however, that any such modifications shall be limited to those which are not
adverse to the interests of the Optionee or are necessary to cause the Plan or
options to comply with any applicable legal requirements.
8. Amendment of the Plan The Board of Directors may, from time to time,
with respect to any shares reserved under the Plan but not subject to options,
revise or amend the Plan in any respect. However, the Board of Directors may
not, without stockholder approval, (a) increase the number of shares of Common
Stock which may be reserved for issuance under the Plan, except as provided in
Paragraph 5(g) hereof, (b) fix the option price at less than the fair market
value of the Common Stock on the date the option is granted, or (c) change the
provisions relating to the administration of the Plan by a Committee consisting
of directors of Citizens not eligible to receive options.
9. Termination The Board of Directors may terminate the Plan at any
time, and no option shall be granted thereafter. Such termination shall not
affect the validity of any option agreement then outstanding.
10. Effective Date The Plan shall become effective when it is
approved by the holders of a majority of the Common Stock.
o Adopted by the Board of Directors on December 16, 1987.
o Approved by the Stockholders on April 6, 1988.
o Amended by the Board of Directors on February 15, 1989.
o Amended Plan approved by Stockholders on May 9, 1990.
o Amended by the Board of Directors on December 10, 1992.
o Amended Plan approved by Stockholders on May 12, 1993.
o Amended by the Board of Directors on November 9, 1993.