Exhibit
99.2
VIRGINIA NATIONAL
BANKSHARES CORPORATION
2014 STOCK INCENTIVE PLAN*
1. Purpose and Effective Date.
(a) The purpose of the
Virginia National Bankshares Corporation 2014 Stock Incentive Plan (the “Plan”)
is to further the long-term stability and financial success of the Company (as
defined below) by attracting and retaining personnel, including employees,
directors and consultants, through the use of stock incentives. The Company
believes that ownership of Company Stock will stimulate the efforts of those
persons upon whose judgment, interest and efforts the Company and its Affiliates
are and will be largely dependent for the successful conduct of their businesses
and will further the identification of those persons’ interests with the
interests of the Company’s shareholders.
(b) The Plan was adopted by
the Board of Directors of the Company on March 18, 2014 (the “Effective Date”),
subject to the approval of the Plan by the Company’s shareholders.
2. Certain Definitions. The following terms have the meanings indicated:
(a) Act. The Securities Exchange Act of 1934, as amended.
(b) Affiliate. The meaning assigned to the term “affiliate” under Rule 12b-2 of the Act.
(c) Applicable Withholding Taxes. The aggregate amount of federal, state and local
income and payroll taxes that the Company or an Affiliate is required to
withhold (based on the minimum applicable statutory withholding rates) in
connection with any exercise of an Option or the award, lapse of restrictions or
payment with respect to Restricted Stock.
(d) Award. The award of an Option, Restricted Stock or Other Stock-Based Award under
the Plan.
(e) Board. The Board of Directors of the Company.
(f) Cause. With respect to any employee or Consultant (1) if the employee or
Consultant is a party to any employment or service agreement with the Company or
its Affiliates and such agreement provides for a definition of Cause, the
definition contained therein; or (2) if no such agreement exists, or is such
agreement does not define Cause then (i) the commission of, or plea of guilty or
no contest to, a felony or a crime involving moral turpitudes or the commission
of any other act involving willful malfeasance or material fiduciary breach with
respect to the Company or an Affiliate; (ii) conduct that results in or is
reasonably likely to result in harm to the reputation or business of the company
or any of its Affiliates; (iii) gross negligence or willful misconduct with
respect to the Company or an Affiliate; (iv) materials breach of an agreement
with the Company or an Affiliate (including, without limitation, any loyalty,
noncompetition, nonsolicitation or confidentiality agreement); or (v) material
violation of state or federal securities law. With respect to any Director, a
determination by a majority of the disinterested Board members that the Director
has engaged in any of the following: (i) malfeasance in office; (ii) gross
misconduct or neglect; (iii) false or fraudulent misrepresentation inducing the
director's appointment; (iv) willful conversion of corporate funds; or (v)
repeated failure to participate in Board meetings on a regular basis despite
having received proper notice of the meetings in advance. The Committee, in its
absolute discretion, shall determine the effect of all matters and questions
relating to whether a Participant has been discharged for Cause.
(g) Change in Control.
(i) The acquisition by any
Person (as defined below) of beneficial ownership of 50% or more of the then
outstanding shares of common stock of the Company;
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(ii) Individuals who
constitute the Board on the Effective Date of this Plan (the “Incumbent Board”)
cease to constitute a majority of the Board, provided that any director whose
nomination was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board will be considered a member of the Incumbent
Board, but excluding any such individual whose initial assumption of office is
in connection with an actual or threatened election contest or actual or
threatened solicitation of proxies or consents by or on behalf of a person other
than the Board of directors of the Company, as such terms are used in Rules
14a-11 and 12 under the Act;
(iii) Approval by the
shareholders of the Company and consummation of a reorganization, merger, share
exchange or consolidation (a “Reorganization”), provided that shareholder
approval of a Reorganization will not constitute a Change in Control if, upon
consummation of the Reorganization, each of the following conditions is
satisfied:
(I) no Person beneficially
owns 50% or more of either (1) the then outstanding shares of common stock or
voting securities of the corporation or other entity resulting from the
transaction or (2) the combined voting power of the then outstanding voting
securities of such corporation or other entity entitled to vote generally in the
election of members of the board of directors (or similar governing body); or
(II) at least a majority of
the members of the board of directors (or similar governing body) of the
corporation or other entity resulting from the Reorganization were members of
the Incumbent Board at the time of the execution of the initial agreement
providing for the Reorganization; or
(iv) Approval by the
shareholders of the Company of a complete liquidation or dissolution of the
Company, or of the sale or other disposition of all or substantially all of the
assets of the Company.
For purposes of this Section
2(g), “Person” means any individual, entity or group (within the meaning of
Section 13(d)(3) of the Act), other than any employee benefit plan (or related
trust) sponsored or maintained by the Company or any affiliated company, and
“beneficial ownership” has the meaning given the term in Rule 13d-3 under the
Act.
(h) Code. The Internal Revenue Code of 1986, as amended.
(i) Committee. The Committee appointed to administer the Plan pursuant to Plan Section
16, or if no such Committee has been appointed, the Board.
(j) Company. Virginia National Bankshares Corporation, a Virginia corporation.
(k) Company Stock. Common stock of the Company. If the par value of
the Company Stock is changed, or in the event of a change in the capital
structure of the Company (as provided in Section 14), the shares resulting from
such a change shall be deemed to be Company Stock within the meaning of the
Plan.
(l) Consultant. A person or entity rendering services to the
Company or an Affiliate who is not an “employee” for purposes of employment tax
withholding under the Code.
(m) Date of Grant. The effective date of an Award granted by the
Committee.
(n) Disability or Disabled. As to an Incentive Stock Option, a Disability
within the meaning of Code Section 22(e)(3). As to all other Awards, the
Committee shall determine whether a Disability exists and such determination
shall be conclusive.
(o) Fair Market Value.
(i) If the Company Stock is
listed on any established stock exchange or quoted on any established stock
market system, its Fair Market Value shall be the closing price for such stock
on the Date of Grant as reported by such exchange or stock market system, or, if
there are no trades on such date, the value shall be determined as of the last
preceding day on which the Company Stock was traded.
(ii) If the Company Stock is
not publicly traded, the Fair Market Value shall be determined by the Committee
using any reasonable method in good faith, provided that the fair market value
of Company Stock subject to an Incentive Stock Option shall be determined in
good faith within the meaning of Treasury Regulation § 1.422-2(e)(2).
(iii) Fair Market Value shall
be determined as of the Date of Grant specified in the Award.
(p) Incentive Stock Option. An Option intended to meet the requirements of,
and qualify for favorable federal income tax treatment under, Code Section 422.
(q) Nonstatutory Stock Option. An Option that does not meet the requirements of
Code Section 422, or that is otherwise not intended to be an Incentive Stock
Option and is so designated.
(r) Option. A right to purchase Company Stock granted under the Plan, at a price
determined in accordance with the Plan.
(s) Other Stock-Based Award. A right granted under Section 9.
(t) Participant. Any individual who is granted an Award under the
Plan.
(u) Restricted Stock. Company Stock awarded upon the terms and subject
to the restrictions set forth in Section 8.
(v) Retirement. Means:
(i) the termination of an
employee’s employment under conditions which would constitute “normal
retirement” or “early retirement” under any tax qualified retirement plan
maintained by the Company;
(ii) the termination of an
employee’s employment after attaining age 65 (except in the case of termination
for Cause); or
(iii) the termination of a
Non-Employee Director’s service as a member of the Board after attaining age
65.
(w) Rule 16b-3. Rule 16b-3 promulgated under the Act, including
any corresponding subsequent rule or any amendments to Rule 16b-3 enacted after
the Effective Date of the Plan.
(x) 10% Shareholder. A person who owns, directly or indirectly and
within the meaning of Section 422 or 424 of the Code, stock possessing more than
10% of the total combined voting power of all classes of stock of the Company or
any parent or subsidiary of the Company. Indirect ownership of stock shall be
determined in accordance with Code Section 424(d).
3. General. Awards of Options or Restricted Stock may be granted under the Plan.
Options granted under the Plan may be Incentive Stock Options or Nonstatutory
Stock Options.
4. Stock.
(a) Subject to Section 14 of
the Plan, there shall be reserved for issuance under the Plan an aggregate of
250,000 shares of Company Stock; which may include authorized, but unissued,
shares. Not more than 250,000 of such shares shall be available as any type of
awards other than Incentive Stock Options. Shares allocable to Options granted
under the Plan that expire or otherwise terminate and shares that are forfeited
pursuant to restrictions on Restricted Stock awarded under the Plan may again be
subjected to an Award under this Plan.
(b) The maximum number of
shares with respect to which an Award may be granted in any calendar year to any
employee during such calendar year shall be 50,000 shares.
5. Eligibility.
(a) Any employee of, director
of, or Consultant to the Company or an Affiliate who, in the judgment of the
Committee, has contributed or can be expected to contribute to the profits or
growth of the Company or the Affiliate is eligible to become a Participant. The
Committee shall have the power and complete discretion, as provided in Section
16, to select eligible Participants and to determine for each Participant the
terms, conditions and nature of the Award and the number of shares to be
allocated as part of the Award; provided, however, that any Award made to a
member of the Committee must be approved by the Board. The Committee is
expressly authorized to make an Award to a Participant conditioned on the
surrender for cancellation of an existing Award.
(b) The grant of an Award
shall not obligate the Company or any Affiliate to pay an employee any
particular amount of remuneration, to continue the employment of the employee
after the grant or to make further grants to the employee at any time
thereafter.
(c) Non-Employee Directors and
Consultants shall not be eligible to receive the Award of an Incentive Stock
Option.
6. Stock Options.
(a) Grant. Whenever the Committee deems it appropriate to grant Options, notice
shall be given to the Participant stating the number of shares for which Options
are granted, the exercise price per share, whether the options are Incentive
Stock Options or Nonstatutory Stock Options, and the conditions to which the
grant and exercise of the Options are subject. This notice, when duly accepted
in writing by the Participant, shall become a stock option agreement between the
Company and the Participant. A Participant’s stock option agreement shall set
forth all restrictions on disposition and transfer applicable to the Option
shares.
(b) Exercise Price. The Committee shall establish the exercise price
of Options. The exercise price of an Option shall be not less than 100% of the
Fair Market Value of such shares on the Date of Grant, provided that if the
Participant is a 10% Shareholder, the exercise price of an Incentive Stock
Option shall not be less than 110% of the Fair Market Value of such shares on
the Date of Grant.
(c) Term. The Committee shall establish the term of each Option in the
Participant’s stock option agreement. The term of an Incentive Stock Option
shall not be longer than ten years from the Date of Grant, except that an
Incentive Stock Option granted to a 10% Shareholder shall not have a term in
excess of five years. No Option may be exercised after the expiration of its
term or, except as set forth in the Participant’s stock option agreement, after
the termination of the Participant’s employment with the Company and/or its
Affiliates.
(d) Time of Exercise.
(i) During Participant’s
Employment. Options may be exercised during their terms in whole or in part at
such times as may be specified by the Committee in the Participant’s stock
option agreement. The Committee may impose such vesting conditions and other
requirements as the Committee deems appropriate, and the Committee may include
such provisions regarding a Change in Control as the Committee deems
appropriate.
(ii) After Participant’s
Termination of Employment. The Committee shall set forth in the Participant’s
stock option agreement when, and under what circumstances, an Option may be
exercised after termination of the Participant’s employment or period of
service; provided that no Incentive Stock Option may be exercised after the
earlier of (a) (i) three months from the Participant’s termination of employment
with the Company for reasons other than Disability or death, or (ii) one year
from the Participant’s termination of employment on account of Disability or
death; or (b) the expiration of the Option’s term.
(iii) After Participant’s
Death. If a Participant dies and if the Participant’s stock option agreement
provides that part or all of the Option may be exercised after the Participant’s
death, then such portion may be exercised by the executor or administrator of
the Participant’s estate during the time period specified in the stock option
agreement, but not later than the expiration of the Option’s term.
(e) Limit on Exercise of Incentive Stock Options.
An Incentive Stock Option, by its
terms, shall be exercisable in any calendar year only to the extent that the
aggregate Fair Market Value (determined at the Date of Grant) of the Company
Stock with respect to which Incentive Stock Options are exercisable by the
Participant for the first time during the calendar year does not exceed $100,000
(the “Limitation Amount”). Incentive Stock Options granted under the Plan and
all other plans of the Company (or Affiliate) and any parent or subsidiary of
the Company (or Affiliate) shall be aggregated for purposes of determining
whether the Limitation Amount has been exceeded. The Board may impose such
conditions as it deems appropriate on an Incentive Stock Option to ensure that
the foregoing requirement is met. If Incentive Stock Options that first become
exercisable in a calendar year exceed the Limitation Amount, the excess Options
will be treated as Nonstatutory Stock Options to the extent permitted by law.
(f) Options Forfeited Upon Termination of Employment
for Cause. If a Participant’s
employment or services is terminated by the Company or by any Affiliate for
Cause, the Participant’s Options, both vested and unvested, shall terminate as
of the date of the misconduct, as determined by the Committee in its sole
discretion.
7. Method of Exercise of
Options.
(a) Exercise. Options may be exercised by giving written notice of the exercise to the
Company, stating the Option being exercised and the number of shares the
Participant has elected to purchase under the Option.
(b) Payment. In no event shall any shares be issued pursuant to the exercise of an
Option until the Participant has made full payment for the shares of Company
Stock (including payment of the exercise price and any Applicable Withholding
Taxes). Company Stock purchased upon the exercise of an Option granted under the
Plan shall be paid for as follows, provided that the Committee may impose such
limitations and restrictions on payments with shares of Company Stock as the
Committee, in its discretion, deems advisable:
(i) in cash or by check,
payable to the order of the Company;
(ii) by delivery of Company
Stock that the Participant has previously acquired and owned (valued at Fair
Market Value on the date of exercise), provided that such method of payment is
then permitted under applicable law and the Company Stock was owned by the
Participant at least six months prior to such delivery (or such longer or
shorter period of time required to avoid a charge to earnings for financial
accounting purposes);
(iii) by withholding and
retention by the Company of sufficient shares of Company Stock issuable in
connection with the exercise to cover the exercise price (a "net share
exercise");
(iv) by delivery of a properly
executed exercise notice together with irrevocable instructions to a
creditworthy broker to deliver promptly to the Company, from the sale or loan
proceeds with respect to the sale of Company Stock or a loan secured by Company
Stock, the amount necessary to pay the exercise price and, if required by the
Committee, Applicable Withholding Taxes; or
(v) by any combination of the
above permitted forms of payment.
(c) Delivery of Shares. Upon the exercise of an Option in compliance with
the provisions of this section, the receipt by the Company of the payment for
the shares of Company Stock so acquired, and satisfaction of the provisions of
this Section 7 of the Plan, the Company shall deliver or cause to be delivered,
within a reasonable time, to the Participant exercising the Option, a
certificate or certificates for the number of shares of Company Stock with
respect to which the Option is exercised. The shares of Company Stock shall be
registered in the name of the exercising Participant or in such name jointly
with the Participant as the Participant may direct in the written notice of
exercise. The Company may place on any certificate representing Company Stock
issued upon the exercise of an Option any legend deemed desirable by the
Company’s counsel to comply with federal or state securities laws. The Company
may require of the Participant a customary indication of his or her investment
intent.
(d) Disqualifying Disposition. If a Participant disposes of shares acquired upon
exercise of an Incentive Stock Option within two (2) years from the date the
Option is granted or within one (1) year after the issuance of such shares to
the Participant, the Participant shall notify the Company of such disposition
and provide information regarding the date of disposition, sale price, number of
shares disposed of, and any other information relating thereto that the Company
may reasonably request.
(e) Compliance with Rule 16b-3. Notwithstanding anything herein to the contrary,
Awards shall always be granted and exercised in such a manner as to conform to
the provisions of Rule 16b-3.
8. Restricted Stock Awards.
(a) Grant. Whenever the Committee deems it appropriate to grant a Restricted Stock
Award, notice shall be given to the Participant stating the number of shares of
Restricted Stock for which the Award is granted, the Date of Grant, and the
terms and conditions to which the Award is subject. Certificates representing
the shares shall be issued in the name of the Participant, subject to the
restrictions imposed by the Plan and the Committee. A Restricted Stock Award may
be made by the Committee in its discretion without cash consideration.
(b) Restrictions on Transferability and Vesting of
Restricted Stock Awards. The
Committee may place such restrictions on the transferability and vesting of
Restricted Stock as the Committee deems appropriate, including restrictions
relating to continued employment and financial performance goals. Without
limiting the foregoing, the Committee may provide performance or Change in
Control acceleration parameters under which all, or a portion, of the Restricted
Stock will vest on the Company’s (or an Affiliate’s) achievement of established
performance objectives. Restricted Stock may not be sold, assigned, transferred,
disposed of, pledged, hypothecated or otherwise encumbered until the
restrictions on such shares shall have lapsed or shall have been removed
pursuant to subsection (c) below.
(c) Lapse of Restrictions on
Transferability. The Committee
shall establish as to each Restricted Stock Award the terms and conditions upon
which the restrictions on transferability set forth in paragraph (b) above shall
lapse. Such terms and conditions may include, without limitation, the passage of
time, the meeting of performance goals, the lapsing of such restrictions as a
result of the Disability, death or retirement of the Participant, or the
occurrence of a Change in Control.
(d) Rights of the Participant and
Restrictions. A Participant shall
hold shares of Restricted Stock subject to the restrictions set forth in the
Award agreement and in the Plan. In other respects, the Participant shall have
all the rights of a shareholder with respect to the shares of Restricted Stock,
including, but not limited to, the right to vote such shares and the right to
receive all cash dividends and other distributions paid thereon. Certificates
representing Restricted Stock shall bear a legend referring to the restrictions
set forth in the Plan and the Participant’s Award agreement. If stock dividends
are declared on Restricted Stock, such stock dividends or other distributions
shall be subject to the same restrictions as the underlying shares of Restricted
Stock and shall be paid no later than 2 ½ months after the end of the year in
which the underlying Restricted Stock vests.
9. Other Stock-Based Awards.
(a) The Committee is
authorized to grant other types of equity-based or equity-related Awards not
otherwise described by the terms of the Plan (including the grant or offer for
sale of unrestricted shares of Company Stock) to Participants in such amounts
and subject to such terms and conditions as the Committee shall determine. Such
Awards shall be referred to as “Other Stock-Based Awards.” Each such Other
Stock-Based Award may involve the transfer of actual shares to Participants or
payment in cash or otherwise of amounts based on the value of shares of Company
Stock.
(b) Each Other Stock-Based
Award shall be expressed in terms of shares or units or an equivalent
measurement based on shares, as determined by the Committee. If the value of an
Other Stock-Based Award will be based on the appreciation of shares from an
initial value determined as of the date of grant, then such initial value shall
not be less than the Fair Market Value of a share on the date of grant of such
Other Stock-Based Award.
10. Applicable Withholding
Taxes. Each Participant shall agree, as a condition of
receiving an Award, to pay to the Company or the Affiliate, or make arrangements
satisfactory to the Company or the Affiliate regarding the payment of, all
Applicable Withholding Taxes with respect to the Award. Until the Applicable
Withholding Taxes have been paid or arrangements satisfactory to the Company or
the Affiliate have been made, no stock certificates (or, in the case of
Restricted Stock, no stock certificates free of a restrictive legend) shall be
issued to the Participant. As an alternative to making a cash payment to the
Company or the Affiliate to satisfy Applicable Withholding Tax obligations, the
Committee may establish procedures permitting the Participant to elect to (a)
deliver shares of already owned Company Stock or (b) have the Company or the
Affiliate retain that number of shares of Company Stock that would satisfy all
or a specified portion of the Applicable Withholding Taxes. Any such election
shall be made only in accordance with procedures established by the Committee to
avoid a charge to earnings for financial accounting purposes and in accordance
with Rule 16b-3.
11. Conditions on Delivery of
Stock. The Company will not be obligated to deliver any
shares of Company Stock pursuant to the Plan or to remove restrictions from
shares previously delivered under the Plan until (i) all conditions of the Award
have been met or removed to the satisfaction of the Company, (ii) in the opinion
of the Company’s counsel, all other legal matters in connection with the
issuance and delivery of such shares have been satisfied, including any
applicable securities laws and any applicable stock exchange or stock market
rules and regulations, and (iii) the Participant has executed and delivered to
the Company such representations or agreements as the Company may consider
appropriate to satisfy the requirements of any applicable laws, rules, or
regulations. The Company may place on a certificate representing Company Stock
any legend required to reflect restrictions pursuant to the Plan, and any legend
deemed necessary by the Company’s counsel to comply with federal or state
securities laws. The Company may require a customary written indication of a
Participant’s investment intent. Until a Participant has been issued a
certificate for the shares of Company Stock acquired, the Participant shall
possess no shareholder rights with respect to the shares.
12. Nontransferability of
Awards.
(a) In general, Awards, by
their terms, shall not be transferable by the Participant except by will or by
the laws of descent and distribution or except as described below, without prior
written approval from the Committee. Options shall be exercisable, during the
Participant’s lifetime, only by the Participant or by his guardian or legal
representative.
(b) Notwithstanding the
provisions of (a) and subject to federal and state securities laws, the
Committee may on a case by case basis grant or amend Nonstatutory Stock Options
that permit a Participant to transfer the Options to one or more immediate
family members, to a trust for the benefit of immediate family members, or to a
partnership, limited liability company, or other entity the only partners,
members, or interest-holders of which are among the Participant’s immediate
family members. Consideration may not be paid for the transfer of Options. The
transferee of an Option shall be subject to all conditions applicable to the
Option prior to its transfer. The agreement granting the Option shall set forth
the transfer conditions and restrictions. The Committee may impose on any
transferable Option and on stock issued upon the exercise of an Option such
limitations and conditions as the Committee deems appropriate in its sole
discretion.
13. Termination, Modification,
Change.
(a) If not sooner terminated
by the Board, this Plan shall terminate at the close of business on the day
prior to the tenth anniversary of the Effective Date. The Board may at any time
terminate, suspend, or modify the Plan; provided that the Board shall not,
without stockholder approval, make any revision or amendment that would cause
the Plan to fail to comply with any requirement of applicable law, regulation,
or rule if such amendment were not approved by the stockholders of the Company
including, (1) increasing the total number of shares of Company Stock reserved
for issuance pursuant to Awards granted under the Plan (except pursuant to
Section 14), (2) expanding the class of persons eligible to receive Awards, or
(3) materially increasing the benefits accruing to Participants under the Plan.
Notwithstanding the foregoing, the Board may unilaterally amend the Plan and
Awards as it deems appropriate to ensure compliance with Rule 16b-3 and to cause
Incentive Stock Options to meet the requirements of the Code and regulations
thereunder.
(b) No Awards shall be made
under the Plan after its termination, and no termination or amendment of the
Plan shall, without the consent of the Participant or his representative,
adversely affect a Participant’s rights under an Award previously granted to
him, but it shall be conclusively presumed that any adjustment to cause
Incentive Stock Options to meet the requirements of the Code and regulations
thereunder or any adjustment pursuant to Section 14, does not adversely affect
any such right.
(c) Except in connection with
a corporate transaction involving the Company (including, without limitation,
any stock dividend, stock split, extraordinary cash dividend, recapitalization,
reorganization, merger, consolidation, split-up, spin-off, combination, or
exchange of shares), the terms of outstanding Awards may not be amended to
reduce the exercise price of outstanding Options or Other Stock-Based Awards or
cancel outstanding Options or Other Stock-Based Awards in exchange for cash,
other Awards or Options or Other Stock-Based Awards with an exercise price that
is less than the exercise price of the original Options or Other Stock-Based
Awards without shareholder approval.
14. Change in Capital Structure.
(a) In the event of a stock
dividend, stock split or combination of shares, spin-off, reorganization,
recapitalization or merger in which the Company is the surviving corporation, or
other change in the Company’s capital stock (including, but not limited to, the
creation or issuance to shareholders generally of rights, options or warrants
for the purchase of common stock or preferred stock of the Company), the number
and kind of shares of stock or securities of the Company to be issued under the
Plan (under outstanding Awards and Awards to be granted in the future), the
exercise price of options, and other relevant provisions shall be appropriately
adjusted by the Committee, whose determination shall be binding on all persons.
If the adjustment would produce fractional shares with respect to any Award, the
Committee may adjust appropriately the number of shares covered by the Award so
as to eliminate the fractional shares.
(b) In the event of a
reorganization, recapitalization or merger in which the Company is the surviving
corporation, the result of which is that the Company becomes a majority owned
subsidiary of another entity (the “Parent”), then the Committee may take such
actions with respect to Awards as the Committee deems appropriate (whose
determination shall be binding on all persons), including without limitation
causing any such Award then outstanding to be assumed, or new rights substituted
therefor, by the Parent.
(c) In the event the Company
distributes to its stockholders a dividend, or sells or causes to be sold to a
person other than the Company or a subsidiary shares of stock in any corporation
(a “Spinoff Company”) which, immediately before the distribution or sale, was a
majority owned subsidiary of the Company, the Committee shall have the power, in
its sole discretion, to make such adjustments as the Committee deems
appropriate. The Committee may make adjustments in the number and kind of shares
or other securities to be issued under the Plan (under outstanding Awards and
Awards to be granted in the future), the exercise price of Options, and other
relevant provisions, and, without limiting the foregoing, may substitute
securities of a Spinoff Company for securities of the Company. The Committee
shall make such adjustments as it determines to be appropriate, considering the
economic effect of the distribution or sale on the interests of the Company’s
shareholders and the Participants in the businesses operated by the Spinoff
Company. The Committee’s determination shall be binding on all persons. If the
adjustment would produce fractional shares with respect to any Award, the
Committee may adjust appropriately the number of shares covered by the Award so
as to eliminate the fractional shares.
(d) Notwithstanding anything
in the Plan to the contrary, the Committee may take the foregoing actions
without the consent of any Participant, and the Committee’s determination shall
be conclusive and binding on all persons for all purposes. The Committee shall
make its determinations consistent with Rule 16b-3 and the applicable provisions
of the Code.
(e) To the extent required to
avoid a charge to earnings for financial accounting purposes, adjustments made
by the Committee pursuant to this Section 14 to outstanding Awards shall be made
so that both (i) the aggregate intrinsic value of an Award immediately after the
adjustment is not greater than or less than the Award’s aggregate intrinsic
value before the adjustment and (ii) the ratio of the exercise price per share
to the market value per share is not reduced.
15. Change in Control. In the event of a Change in Control of the Company, the Committee may
take such actions with respect to Awards as the Committee deems appropriate.
These actions may include, but shall not be limited to, the following:
(a) At the time the Award is
made, provide for the acceleration of the vesting schedule relating to the
exercise or realization of the Award so that the Award may be exercised or
realized in full on or before a date initially fixed by the Committee;
(b) Provide for the purchase
or settlement of any such Award by the Company for any amount of cash equal to
the amount which could have been obtained upon the exercise of such Award or
realization of a Participant’s rights had such Award been currently exercisable
or payable;
(c) Make adjustments to Awards
then outstanding as the Committee deems appropriate to reflect such Change in
Control; provided, however, that to the extent required to avoid a charge to
earnings for financial accounting purposes, such adjustments shall be made so
that both (i) the aggregate intrinsic value of an Award immediately after the
adjustment is not less than or greater than the Award’s aggregate intrinsic
value before the Award and (ii) the ratio of the exercise price per share to the
market value per share is not reduced; or
(d) Cause any such Award then
outstanding to be assumed, or new rights substituted therefore, by the acquiring
or surviving corporation in such Change in Control.
16. Administration of the Plan.
(a) The Plan shall be
administered by the Committee, who shall be appointed by the Board. The Board
initially designates the Compensation Committee of the Board to be the Committee
for purposes of the Plan. If, at any time, the Compensation Committee is not
designated as the Committee and no Committee is appointed, the Plan shall be
administered by the Board. To the extent required by Rule 16b-3, all Awards
shall be made by members of the Committee who are “Non-Employee Directors” as
that term is defined in Rule 16b-3, or by the Board. Awards that are intended to
be performance-based for purposes of Code Section 162(m) shall be made by the
Committee, or subcommittee of the Committee, comprised solely of two or more
“outside directors” as that term is defined for purposes of Code Section 162(m).
(b) Subject to the express
provisions of the Plan, the Committee shall have full and final authority to
impose such limitations or conditions upon an Award as the Committee deems
appropriate to achieve the objectives of the Award and the Plan. Without
limiting the foregoing and in addition to the powers set forth elsewhere in the
Plan, the Committee shall have the power and complete discretion to determine
(i) which eligible persons shall receive an Award and the nature of the Award,
(ii) the number of shares of Company Stock to be covered by each Award, (iii)
whether Options shall be Incentive Stock Options or Nonstatutory Stock Options,
(iv) the Fair Market Value of Company Stock, (v) the time or times when an Award
shall be granted, (vi) whether an Award shall become vested over a period of
time, according to a performance-based vesting schedule or otherwise, and when
it shall be fully vested, (vii) the terms and conditions under which
restrictions imposed upon an Award shall lapse, (viii) to the extent permissible
under Code Section 409A, whether a Change in Control exists, (ix) factors
relevant to the lapse of restrictions on Restricted Stock or Options, (x) when
Options may be exercised, (xi) whether to approve a Participant’s election with
respect to Applicable Withholding Taxes, (xii) conditions relating to the length
of time before disposition of Company Stock received in connection with an Award
is permitted, (xiii) notice provisions relating to the sale of Company Stock
acquired under the Plan, and (xiv) any additional requirements relating to
Awards that the Committee deems appropriate. To the extent permitted by
applicable law, the Committee may delegate to the President and/or Chief
Executive Officer of the Company the power to designate other officers and
employees of the Company who will receive Awards and to determine the extent of
the Awards to be received by such Participant. Such delegation must be made by a
resolution of the Committee that specifies the maximum number of shares that may
be allocated as part of the Awards and such other terms and conditions as may be
established by the Committee.
(c) The Committee shall have
the power to amend the terms of previously granted Awards so long as the terms
as amended are consistent with the terms of the Plan and, where applicable,
consistent with the qualification of an Option as an Incentive Stock Option. The
consent of the Participant must be obtained with respect to any amendment that
would adversely affect the Participant’s rights under the Award, except that
such consent shall not be required if such amendment is for the purpose of
complying with Rule 16b-3 or any requirement of the Code applicable to the
Award.
(d) The Committee may adopt
rules and regulations for carrying out the Plan. The Committee shall have the
express discretionary authority to construe and interpret the Plan and the Award
agreements, to resolve any ambiguities, to define any terms, and to make any
other determinations required by the Plan or an Award agreement. The
interpretation and construction of any provisions of the Plan or an Award
agreement by the Committee shall be final and conclusive. The Committee may
consult with counsel, who may be counsel to the Company, and shall not incur any
liability for any action taken in good faith in reliance upon the advice of
counsel.
(e) A majority of the members
of the Committee shall constitute a quorum, and all actions of the Committee
shall be taken by a majority of the members present. Any action may be taken by
a written instrument signed by all of the members, and any action so taken shall
be fully effective as if it had been taken at a meeting.
17. Notice. All notices and other communications required or permitted to be given
under this Plan shall be in writing and shall be deemed to have been duly given
if delivered personally, electronically, or mailed first class, postage prepaid,
as follows: (a) if to the Company - at its principal business address to the
attention of the Secretary; (b) if to any Participant - at the last address of
the Participant known to the sender at the time the notice or other
communication is sent.
18. Compliance with Code Section
409A. To the extent applicable, this Plan is intended to
comply with Section 409A of the Code, and the Committee shall interpret and
administer the Plan in accordance therewith. In addition, any provision,
including, without limitation, any definition, in this Plan document that is
determined to violate the requirements of Section 409A of the Code shall be void
and without effect and any provision, including, without limitation, any
definition, that is required to appear in this Plan document under Section 409A
of the Code that is not expressly set forth shall be deemed to be set forth
herein, and the Plan shall be administered in all respects as if such provisions
were expressly set forth. In addition, the timing of certain payment of benefits
provided for under this Plan shall be revised as necessary for compliance with
Section 409A of the Code.
19. Clawback. Notwithstanding any other provisions in this Plan, any Award which is
subject to recovery under any law, government regulation or stock exchange
listing requirement, will be subject to such deductions and clawback as may be
required to be made pursuant to such law, government regulation or stock
exchange listing requirement (or any policy adopted by the Company or any
Affiliate pursuant to any such law, government regulation or stock exchange
listing requirement).
20. Section 162(m).
To the extent the Committee issues any Award that is intended to be exempt from
the deduction limitation of Section 162(m) of the Code, the Committee may,
without shareholder or grantee approval, amend the Plan or the relevant
agreement for the Award retroactively or prospectively to the extent it
determines necessary in order to comply with any subsequent clarification of
Section 162(m) of the Code required to preserve the Company’s federal income tax
deduction for compensation paid pursuant to any such Award.
21. Rights Under the Plan. Title to and beneficial ownership of all benefits described in the Plan
shall at all times remain with the Company. Participation in the Plan and the
right to receive payments under the Plan shall not give a Participant any
proprietary interest in the Company or any Affiliate or any of their assets. No
trust fund shall be created in connection with the Plan, and there shall be no
required funding of amounts that may become payable under the Plan. A
Participant shall, for all purposes, be a general creditor of the Company or the
Affiliate. The interest of a Participant in the Plan cannot be assigned,
anticipated, sold, encumbered or pledged and shall not be subject to the claims
of his creditors.
22. Interpretation and Governing
Law. The terms of this Plan and Awards granted pursuant
to the Plan shall be governed, construed and administered in accordance with the
laws of the Commonwealth of Virginia, excluding any choice of law rules or
principles that might otherwise refer construction or interpretation of any
provision of the Plan or an Agreement to the substantive law of another
jurisdiction. The Plan and Awards are subject to all present and future
applicable provisions of the Code and, to the extent applicable; they are
subject to all present and future rulings of the Securities and Exchange
Commission with respect to Rule 16b-3. If any provision of the Plan or an Award
conflicts with any such Code provision or ruling, the Committee shall cause the
Plan to be amended, and shall modify the Award, so as to comply, or if for any
reason amendments cannot be made, that provision of the Plan or the Award shall
be void and of no effect.
