2002 LONG-TERM INCENTIVE STOCK BENEFIT PLAN

 

 

                                                                      Exhibit 10

 

                       FIRST NIAGARA FINANCIAL GROUP, INC.

                              AMENDED AND RESTATED

                   2002 LONG-TERM INCENTIVE STOCK BENEFIT PLAN

 

      1. PURPOSE. The purpose of the First Niagara Financial Group, Inc. 2002

Long-term Incentive Stock Benefit Plan (the "Plan") is to advance the interest

of First Niagara Financial Group, Inc. (the "Company") and to increase

shareholder value by providing outside directors and key employees of the

Company and its affiliates, upon whose judgment, initiative and efforts the

successful conduct of the business of the Company and its affiliates largely

depends, with additional incentive in the form of a proprietary interest in the

growth and performance of the Company and to encourage their continued service

with the Company and its affiliates. A purpose of the Plan is also to attract

and retain people of experience and ability to the Company and its affiliates.

 

      2. TERM. The Plan initially became effective as of March 7, 2002 (the

"Initial Effective Date") and was to remain in effect for ten years thereafter,

unless sooner terminated by the Company's Board of Directors (the "Board"). The

Plan, as amended and restated, is being submitted to shareholders, and is

expected to be approved on May 3, 2005 (the "Restatement Effective Date"), in

order to (i) reserve additional shares of common stock under the Plan, (ii)

extend the term of the Plan for ten (10) years from the date of the Restatement

Effective Date, and (iii) bring the Plan into compliance with the requirements

of (A) Section 409A of the Internal Revenue Code and (B) final regulations

issued Sections 421, 422 and 424 of the Internal Revenue Code. After termination

of the Plan, no future awards may be granted but previously made awards shall

remain outstanding in accordance with their applicable terms and conditions and

the terms and conditions of the Plan.

 

      3. PLAN ADMINISTRATION. A committee (the "Committee") appointed by the

Board shall be responsible for administering the Plan. The Committee shall be

comprised of either (i) at least two "Non-Employee Directors" of the Company, or

(ii) the entire Board of the Company. A "Non-Employee Director" means, for

purposes of the Plan, a director who (a) is not employed by the Company or an

affiliate; (b) does not receive compensation directly or indirectly as a

consultant (or in any other capacity than as a director) greater than $60,000;

(c) does not have an interest in a transaction requiring disclosure under Item

404(a) of Regulation S-K; or (d) is not engaged in a business relationship for

which disclosure would be required pursuant to Item 404(b) of Regulation S-K.

Actions and decisions of the Committee shall be approved by a majority of the

members of the Committee. The Committee shall have full and exclusive power to

interpret, construe and implement the Plan and any rules, regulations,

guidelines or agreements adopted hereunder and to adopt such rules, regulations

and guidelines for carrying out the Plan as it may deem necessary or proper.

These powers shall include, but not be limited to, (i) determination of the type

or types of awards to be granted under the Plan; (ii) determination of the terms

and conditions of any awards under the Plan; (iii) determination of whether, to

what extent and under what circumstances awards may be settled, paid or

exercised in cash, shares, other securities, or other awards, or other property,

or accelerated, canceled, extended, forfeited or suspended; (iv) adoption of

modifications, amendments, procedures, subplans and the like as are necessary;

(v) subject to the rights of participants, modification, change, amendment or

cancellation of any award to correct an administrative error; and (vi) taking

any other action the Committee deems necessary or desirable for the

administration of the Plan. All determinations, interpretations, and other

decisions under or with respect to the Plan or any award by the Committee shall

be final, conclusive and binding upon the Company, any participant, any holder

or beneficiary of any award under the Plan and any employee of the Company.

 

      4. ELIGIBILITY. Any employee of the Company or an Affiliate shall be

eligible to receive Incentive Stock Options, Non-Statutory Stock Options, Stock

Awards, Stock Appreciation Rights, and Accelerated Ownership Option Rights under

the Plan, provided, however, that no Stock Appreciation Rights shall be granted

under the Plan after October 3, 2004 unless such Stock Appreciation Rights are

settled solely in shares of common stock of the Company ("Common Stock").

Outside directors shall be eligible to receive Non-Statutory Stock Options,

Accelerated Ownership Option Rights and Stock Awards under the Plan. An "outside

director" means a director of the Company or an Affiliate who is not an employee

of the Company or an Affiliate. For these purposes, "Affiliate" includes any

entity that is directly or indirectly controlled by the Company or under common

control with the Company or any entity in which the Company has a significant

equity interest, as determined by the Committee.

 

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      5. SHARES OF STOCK SUBJECT TO THE PLAN. As initially adopted, the Plan

authorized 2,158,423 shares of Common Stock (adjusted in accordance with the

exchange ratio in the Company's second-step conversion) for issuance (subject to

adjustment as provided in Section 6) pursuant to the exercise of stock options,

granted under Sections 7(a) and (c) of the Plan, or Stock Awards, under Section

7(d) of the Plan. With respect to the shares originally reserved for issuance

under the Plan (as adjusted), the maximum number of shares that may be subject

to all awards granted to any one employee of the Company is 776,043 (as

adjusted). Of the shares initially reserved under the Plan, 1,848,805 shares are

subject to awards that have been granted under the Plan as of March 9, 2005. Of

this amount 114,664 shares have been cancelled and returned to the Plan.

Accordingly, 424,282 shares remain available for the grant of awards under the

Plan.

 

      In connection with the amendment and restatement of the Plan, an

additional 5,862,031 shares of Common Stock are reserved for issuance under the

Plan. Of the additional shares of Common Stock reserved for issuance under the

Plan, no more than 1,600,000 shares may be awarded to any one employee of the

Company or an Affiliate, and no more than 5,862,031 shares may be awarded as

Incentive Stock Options, provided, however, that no Incentive Stock Options

shall be awarded hereunder after the tenth (10th) anniversary of the Initial

Effective Date of the Plan. If any shares underlying awards granted prior to the

Restatement Effective Date again become available for issuance under this Plan,

they may be awarded as Incentive Stock Options.

 

      Any shares that are issued by the Company, and any awards that are granted

by, or become obligations of, the Company, and any awards that are granted by,

or become obligations of, the Company, through the assumption by the Company or

an Affiliate of, or in substitution for, outstanding awards previously granted

by an acquired company shall not be counted against the shares available for

issuance under the Plan. In addition, any shares that are used for the full or

partial payment of the exercise price of any Stock Option in connection with an

Accelerated Ownership Option Right will not be counted as issued under the Plan

and will be available for future grants under the Plan.

 

      Any shares issued under the Plan may consist in whole or in part, of

authorized and unissued shares or of treasury shares, and no fractional shares

shall be issued under the Plan. Cash may be paid in lieu of any fractional

shares in settlements of awards under the Plan.

 

      6. ADJUSTMENTS AND REORGANIZATIONS.

 

      (a)   Changes in Stock. If the number of outstanding shares of Common

            Stock is increased or decreased or the shares of Common Stock are

            changed into or exchanged for a different number of kind of shares

            or other securities of the Company on account of any

            recapitalization, reclassification, stock split, reverse split,

            combination of shares, exchange of shares, stock dividend or other

            distribution payable in capital stock, or other increase or decrease

            in such shares effected without receipt of consideration by the

            Company occurring after the Effective Date, the number and kinds of

            shares for which grants of Stock Options or Stock Awards may be made

            under the Plan shall be adjusted proportionately and accordingly by

            the Company. In addition, the number and kind of shares for which

            grants are outstanding shall be adjusted proportionately and

            accordingly so that the proportionate interest of the grantee

            immediately following such event shall, to the extent practicable,

            be the same as immediately before such event. Any such adjustment in

            outstanding Stock Options shall not change the aggregate Stock

            Option purchase price payable with respect to shares that are

            subject to the unexercised portion of the Stock Option outstanding

            but shall include a corresponding proportionate adjustment in the

            Stock Option purchase price per share.

 

      (b)   Reorganization in Which the Company Is the Surviving Entity and in

            Which No Change of Control Occurs. Subject to Section 23 hereof, if

            the Company shall be the surviving entity in any reorganization,

            merger, or consolidation of the Company with one or more other

            entities, any Stock Option or Stock Awards theretofore granted

            pursuant to the Plan shall pertain to and apply to the securities to

            which a holder of the number of shares of stock subject to such

            Stock Option or Stock Awards would have been entitled immediately

            following such reorganization, merger or consolidation, with a

            corresponding proportionate adjustment of the Stock Option purchase

            price per share so that the aggregate Stock Option purchase price

            thereafter shall be the same as the aggregate Stock Option purchase

            price of the shares remaining subject to the Stock Option

            immediately prior to such reorganization, merger, or consolidation.

 

 

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Adjustments under this Section 6 related to shares of Common Stock or securities

of the Company shall be made by the Committee, whose determination in that

respect shall be final, binding and conclusive. No fractional shares or other

securities shall be issued pursuant to any such adjustment, and any fractions

resulting from any such adjustment shall be eliminated in each case by rounding

downward to the nearest whole share. The granting of awards pursuant to the Plan

shall not affect or limit in any way the right or power of the Company to make

adjustments, reclassifications, reorganizations, or changes of its capital or

business structure or to merge, consolidate, dissolve, or liquidate, or to sell

or transfer all or any part of its business or assets.

 

      7. AWARDS. The Committee shall determine the type or types of award(s) to

be made to each participant under the Plan and shall approve the terms and

conditions governing these awards in accordance with Section 12. Awards may be

granted singly, in combination or in tandem so that the settlement or payment of

one automatically reduces or cancels the other. Awards may also be made in

combination or in tandem with, in replacement of, as alternatives to, or as the

payment form for, grants or rights under any other employee or compensation plan

of the Company, including the plan of any acquired entity.

 

      (a)   Stock Option - is a grant of a right to purchase a specified number

            of shares of Common Stock during a specified period. The purchase

            price of each Stock Option shall be the Fair Market Value of a share

            on the date such award was granted. However, if a key employee owns

            stock possessing more than 10% of the total combined voting power of

            all classes of stock of the Company or its affiliates (or under

            Section 424(d) of the Internal Revenue Code of 1986, as amended (the

            "Code") is deemed to own stock representing more than 10% of the

            total combined voting power of all classes of stock of the Company

            or its affiliates by reason of the ownership of such classes of

            stock, directly or indirectly, by or for any brother, sister,

            spouse, ancestor or lineal descendent of such key employee, or by or

            for any corporation, partnership, estate or trust of which such key

            employee is a shareholder, partner or beneficiary), the purchase

            price per share of Common Stock deliverable upon the exercise of

            each Incentive Stock Option shall not be less than 110% of the Fair

            Market Value of the Company's Common Stock on the date the Incentive

            Stock Option is granted. A Stock Option may be exercised in whole or

            in installments, which may be cumulative. A Stock Option may be in

            the form of an Incentive Stock Option, which complies with Section

            422 of the Code, as amended, and the regulations thereunder at the

            time of grant, or a Non-Statutory Stock Option. A Non-Statutory

            Stock Option means a Stock Option granted by the Committee to (i) an

            outside director or (ii) to any other participant, and such Stock

            Option is either (A) not designated by the Committee as an Incentive

            Stock Option, or (B) fails to satisfy the requirements of an

            Incentive Stock Option as set forth in Section 422 of the Code and

            the regulations thereunder. The price at which shares of Common

            Stock may be purchased under a Stock Option shall be paid in full at

            the time of the exercise, in either cash or such other methods as

            provided by the Committee at the time of grant or as provided in the

            form of agreement approved in accordance herewith, including

            tendering (either actually or by attestation) Common Stock at Fair

            Market Value on the date of surrender, or any combination thereof.

            As set forth in Section 5 above, no Incentive Stock Options shall be

            awarded hereunder after the tenth (10th) anniversary of the Initial

            Effective Date of the Plan.

 

      (b)   Stock Appreciation Right - is a right to receive a payment, in cash

            and/or Common Stock, as determined by the Committee, equal to the

            excess of the Fair Market Value of a specified number of shares of

            Common Stock on the date the SAR is exercised over the Fair Market

            Value on the date of grant of the SAR as set forth in the applicable

            award agreement, except that, in the case of an SAR granted

            retroactively, in tandem with or as a substitution for another

            award, the exercise or designated price may be no lower than the

            Fair Market Value of a share on the date such other award was

            granted. Notwithstanding anything herein to the contrary, no SAR

            shall be granted after October 3, 2004, unless (i) such SAR is

            granted with an exercise price at least equal to the Fair Market

            Value of a share of Common Stock on the date of grant, (ii) the

            Common Stock of the Company is publicly traded, (iii) the SAR is

            settled solely in the publicly traded stock of the Company and (iv)

            there is no opportunity to further defer the income received on the

            exercise of the SAR.

 

 

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      (c)   Accelerated Ownership Option Rights, as defined in Section 12.

 

      (d)   Stock Award - is an award made in Common Stock or denominated in

            units of Common Stock. All or part of any stock award may be subject

            to conditions