Exhibit 10
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PEOPLES BANCORP INC.
1998 STOCK OPTION PLAN
1. Name and Purpose. The purposes of this Plan, which shall be known as the
"Peoples Bancorp Inc. 1998 Stock Option Plan" (hereinafter referred to as
the "Plan") are to advance the interests of Peoples Bancorp Inc. (the
"Company") (i) by providing material incentive for the continued services
of those key employees and directors of the Company and its Subsidiaries
and Consultant/Advisors to the Company and its Subsidiaries, each of whom
makes significant contributions toward the Company's success and develop-
ment, by encouraging those key employees, directors and Consultant/Advisors
to increase their proprietary interest in the Company; and (ii) by
attracting new able executives to employment with the Company and its
Subsidiaries or to serve as directors of the Company or of one or more of
its Subsidiaries.
2. Definitions. For purposes of this Plan, the following terms when
capitalized shall have the meanings designated herein unless a different
meaning is plainly required by the context. Where applicable, the
masculine pronoun shall mean or include the feminine and the singular
shall include the plural.
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Cause" shall mean that an act of (i) fraud or intentional
misrepresentation or (ii) embezzlement, misappropriation or
conversion of assets or opportunities of the Company or any
Subsidiary, has occurred.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended,
and the regulations and rulings thereunder. References to a
particular section of the Code shall include references to successor
provisions.
(d) "Committee" shall mean the committee which administers the Plan,
whose membership shall be determined under Subsection 3(a) below.
(e) "Common Shares" shall mean the common shares of Peoples Bancorp Inc.
(f) "Company" shall mean Peoples Bancorp Inc.
(g) "Consultant/Advisor" shall mean any consultant or advisor who renders
bona fide services to the Company and/or one or more of the
Subsidiaries and who is neither an employee nor a director of the
Company or any Subsidiary.
(h) "Effective Date" shall mean the date on which this Plan shall become
effective, as provided in Section 15 below.
(i) "Employee Director" shall mean a director of the Company who is also
an employee of the Company.
(j) The "Fair Market Value" of a Common Share on any relevant date for
purposes of any provision of this Plan shall mean the last reported
sales price of a Common Share of the Company on The Nasdaq National
Market or on any securities exchange on which the Common Shares may
be listed on such date or, if there are no reported sales on such
date, then the last reported sales price on the next preceding day
on which such a sale was transacted.
(k) "Incentive Option" shall mean an Option granted under this Plan which
is an incentive stock option under the provisions of Section 422 of
the Code; and any provisions elsewhere in this Plan or in any such
Incentive Option which would prevent such Option from being an
incentive stock option may be deleted and/or voided retroactively
to the date of the granting of such option, by action of the
Committee; and the Committee may retroactively add provisions to
this Plan or to any Incentive Option if necessary to qualify such
Option as an incentive stock option.
(l) "Key Employee" shall mean any employee of the Company and/or one of
the Subsidiaries (as defined in Subsection 2(r) below) who in the
opinion of the Committee has demonstrated a capacity for contributing
in a substantial measure to the success of the Company and its
Subsidiaries.
(m) "Non-employee Director" shall mean a director of the Company who is
not also an employee of the Company or of one of the Subsidiaries.
(n) "Non-qualified Option" shall mean an Option granted under this Plan
which is not an Incentive Option. Such Non-qualified Option shall
not be affected by any actions taken retroactively as provided in
Subsection 2(k) above with respect to Incentive Options.
(o) "Participant" shall mean (i) a Key Employee selected by the Committee
(under Subsection 3(b) below) to receive Options granted under this
Plan; (ii) a Subsidiary Director selected by the Committee (under
Subsection 3(b) below) to receive Non-qualified Options granted under
this Plan; (iii) a Consultant/Advisor selected by the Committee
(under Subsection 3(b) below) to receive Non-qualified Options
granted under this Plan; and (iv) a Non-employee Director receiving
Non-qualified Options pursuant to Subsection 5(j) below.
(p) "Option" shall mean an option granted under this Plan, whether such
option is an Incentive Option or a Non-qualified Option.
(q) "Plan" shall mean the Peoples Bancorp Inc. 1998 Stock Option Plan.
(r) "Subsidiary" shall mean a corporation which is a subsidiary
corporation of the Company as that term is defined in Subsection
424(f) of the Code.
(s) "Subsidiary Board" shall mean the board of directors of a Subsidiary.
(t) "Subsidiary Director" shall mean a director of one or more of the
Subsidiaries of the Company who is neither a director of the Company
nor an employee of the Company or of any of the Subsidiaries.
3. Administration: Selection of Participants.
(a) The Plan shall be administered by the Committee which shall consist
of three or more members of the Board appointed by the Board from
time to time and serving at the pleasure of the Board.
(b) The Committee shall select the Key Employees who are to receive
Options and shall grant to such Key Employees Options under, and in
accordance with, the provisions of the Plan. The Committee shall
also select the Subsidiary Directors and the Consultant/Advisors
who are to receive Non-qualified Options and shall grant to such
persons Non-qualified Options under, and in accordance with, the
provisions of the Plan. The Non-employee Directors shall receive
non-discretionary Non-qualified Options in accordance with
Subsection 5(j) below.
(c) Subject to the express provisions of this Plan, the Committee shall
have authority to adopt administrative regulations and procedures
which are consistent with the terms of this Plan; to adopt and amend
such option agreements as it deems advisable; to determine the terms
and provisions of such option agreements (including, but not limited
to, provisions addressing the form of Options (Incentive Options
and/or Non-qualified Options) granted to Key Employees, the number
of Common Shares covered by each Option granted to a Key Employee,
the option price for each Option granted to a Key Employee, the date
or dates when each Option granted to a Key Employee (or parts of it)
may be exercised (including the effect of termination of employment
prior to the exercise of an Option in full), the number of Common
Shares covered by each Option granted to a Subsidiary Director or to
a Consultant/Advisor, the option price for each Non-qualified Option
granted to a Subsidiary Director or to a Consultant/Advisor and the
date or dates when each Non-qualified Option granted to a Subsidiary
Director or to a Consultant/Advisor (or parts of it) may be exercised)
-- which terms shall comply with the requirements of Section 5 below;
to construe and interpret the provisions of option agreements entered
into pursuant to this Plan; to impose such limitations and
restrictions as are deemed necessary or advisable by counsel for
the Company so that compliance with the federal securities laws and
with the securities laws of the various states may be assured; and
to make all other determinations necessary or advisable for
administering this Plan. Decisions by the Committee may be made
either by a majority of its members at a meeting of the Committee
duly called and held or without a meeting by a writing signed by all
of the members of the Committee. All decisions and interpretations
made by the Committee shall be binding and conclusive on all
Participants, their legal representatives and beneficiaries.
(d) At least once each calendar year, the Committee shall report to
the Board describing the action which it has taken in administering
the Plan and making such recommendations for amendments or otherwise
as it may deem necessary.
(e) The Committee may designate any officers or employees of the Company
or the Subsidiaries to assist the Committee in the administration of
this Plan but the Committee may not delegate to them duties imposed
on the Committee under this Plan with respect to Options which may be
and are granted to Participants who are subject to Section 16 of the
Securities Exchange Act of 1934, as amended.
4. Shares Subject to the Plan.
(a) The shares to be issued and delivered by the Company upon exercise
of Options granted under this Plan are Common Shares which may be
either authorized but unissued shares or treasury shares, in the
discretion of the Committee.
(b) The aggregate number of Common Shares which may be issued under this
Plan shall not exceed 100,000 Common Shares; subject, however, to the
adjustment provided in Section 10 of this Plan in the event of stock
splits, stock dividends, combinations or exchanges of shares or other
similar capital adjustments occurring after the Effective Date. If
any outstanding Option under the Plan for any reason expires or is
terminated without having been exercised in full, the Common Shares
allocable to the unexercised portion of such Option shall (unless the
Plan shall have been terminated) become available for subsequent
grants of Options under the Plan. No Option may be granted under
this Plan which could cause the maximum limit to be exceeded.
(c) Of the 100,000 Common Shares which may be issued under the Plan, an
aggregate of 30,000 Common Shares shall be issuable to Non-employee
Directors, Subsidiary Directors and Consultant/Advisors upon the
exercise of Non-qualified Options to be granted to them under the
terms of the Plan and an aggregate of 70,000 Common Shares shall be
issuable to Key Employees upon the exercise of Options to be granted
to them under the terms of the Plan; provided, however, that if
Non-qualified Options covering an aggregate of 30,000 Common Shares
have not been granted to Non-employee Directors, Subsidiary Directors
and Consultant/Advisors on or before the date of the 2002 Annual
Meeting, that portion of the 30,000 Common Shares not covered by
Non-qualified Options so granted may be the subject of Options to
be granted to Key Employees under the terms of the Plan.
(d) During the period in which this Plan remains in effect, no Key
Employee may be granted Options covering, in the aggregate, more
than 25,000 Common Shares (subject to adjustment as provided in
Section 10 of this Plan).
5. Terms of Options.
Options granted under this Plan shall contain such terms as the Committee
determines subject to the following limitations and requirements:
(a) Option price: Subject to the limitations of Subsection 5(h)
below, the option price per Common Share of each Incentive Option
and each Non-qualified Option granted under the Plan shall be not
less than 100% of the Fair Market Value of the Company's Common
Shares on the date of the grant of the related option.
(b) Period within which Options may be exercised: Subject to the
limitations of Subsections 5(c), 5(h), 5(j) and 5(k) below, each
Incentive Option and each Non-qualified Option granted under this
Plan to a Key Employee shall have a term of not more than ten years,
each Non-qualified Option granted under this Plan to a Subsidiary
Director or to a Consultant/Advisor shall have a term of not more
than ten years and each Non-qualified Option granted under this Plan
to a Non-employee Director shall have a term of ten years.
(c) Termination of Options granted to Key Employees by reason of
termination of employment:
(i) Incentive Options. If a Participant's employment with the
Company and the Subsidiaries terminates for any reason other
than (A) the death of the Participant, (B) the disability of
the Participant within the meaning of Section 22(e)(3) of the
Code, (C) the retirement of the Participant under the
provisions of any retirement plan of the Company or any
Subsidiary, or (D) any reason (other than for Cause) after
the Participant has been employed by the Company and/or one
or more Subsidiaries for at least 10 consecutive years prior
to the Participant's termination of employment, the portion
of all Incentive Options granted under this Plan to such
Participant which are not then exercisable under Subsection
5(i) of this Plan on the date of termination of employment,
shall terminate effective immediately upon termination of
employment. If the termination of employment of the
Participant was due to retirement under the provisions of any
retirement plan of the Company or any Subsidiary or if the
termination of employment was due to a reason other than for
Cause and the Participan had been employed by the Company
and/or one or more Subsidiaries for at least 10 consecutive
years prior to the Participant's termination of employment,
all of such Participant's Incentive Options may be exercised in
full, whether or not then exercisable under Subsection 5(i) of
this Plan, and the right of the Participant to exercise the
Incentive Options shall terminate upon the earlier to occur of
the expiration of the term of such Incentive Options or three
months after the date of termination of employment. If the
termination of employment was due to the death of a Participant
who was an employee of the Company and/or any Subsidiary at
the time of his death, such Incentive Options may be exercised
in full, whether or not then exercisable under Subsection 5(i)
of this Plan, and the right of the representative or
representatives of the Participant's estate (or the person or
persons who acquire (by bequest or inheritance) the right to
exercise the Participant's Incentive Options) to exercise the
Incentive Options shall terminate upon the earlier to occur of
the expiration of the term of such Incentive Options or one
year after the date of death of the Participant. If the
termination of employment was due to the disability of the
Participant within the meaning of Section 22(e)(3) of the Code,
such Incentive Options may be exercised in full, whether or not
then exercisable under Subsection 5(i) of this Plan, and the
right of the Participant to exercise the Incentive Options shall
terminate upon the earlier to occur of the expiration of the term
of such Incentive Options or one year after the date of
termination of employment. If the termination of employment of
the Participant was due to reasons other than for Cause and the
Participant had not been employed by the Company and/or one or
more Subsidiaries for at least 10 consecutive years prior to the
Participant's termination of employment, the Participant's
Incentive Options may be exercised only to the extent then
exercisable under Subsection 5(i) of this Plan on the date of
termination of employment, and the right of the Participant to
exercise the Incentive Options shall terminate upon the earlier
to occur of the expiration of the term of such Incentive Options
or three months after the date of termination of employment.
If the termination of employment of the Participant was for
Cause, all Incentive Options which have not been exercised as
of the date of termination of employment shall terminate
immediately as of the date of termination of employment.
(ii) Non-qualified Options. Non-qualified Options granted to Key
Employees under the Plan shall be exercisable following
termination of employment for such period of time and under
such conditions as the Committee may impose at the time of
grant of such Non-qualified Options. If, however, the
Committee does not specify another exercisability schedule
in the event of termination of employment, the provisions
outlined in the following paragraph of this Subsection 5(c)(ii)
shall be applicable.
Default schedule of exercisability upon termination of employment.
If a Participant's employment with the Company and the Subsidiaries terminates
for any reason other than (A) the death of the Participant, (B) the disability
of the Participant within the meaning of Section 22(e)(3) of the Code, (C)
the retirement of the Participant under the provisions of any retirement plan
of the Company or any Subsidiary, or (D) any reason (other than for Cause)
after the Participant has been employed by the Company and/or one or more
Subsidiaries for at least 10 consecutive years prior to the Participant's
termination of employment, the portion of all Non-qualified Options granted
under the Plan to such Participant which are not then exercisable under
Subsection 5(i) of this Plan on the date of termination of employment, shall
terminate effective immediately upon termination of employment. If the
termination of employment of the Participant was due to retirement under
the provisions of any retirement plan of the Company or any Subsidiary or
if the termination of employment was due to a reason other than for Cause
and the Participant had been employed by the Company and/or one or more
Subsidiaries for at least 10 consecutive years prior to the Participant's
termination of employment, all of such Participant's Non-qualified Options
may be exercised in full, whether or not then exercisable under Subsection
5(i) of this Plan, and the right of the Participant (or the representative
of the Participant's estate) to exercise the Non-qualified Options shall
terminate upon the earlier to occur of the expiration of the term of such
Non-qualified Options or two years following the date of death of the
Participant. If the termination of employment was due to the death of a
Participant who was an employee of the Company and/or any Subsidiary at the
time of his death, such Non-qualified Options may be exercised in full,
whether or not then exercisable under Subsection 5(i) of this Plan, and
the right of the representative or representatives of the Participant's
estate (or the person or persons who acquire (by bequest or inheritance)
the right to exercise the Participant's Non-qualified Options) to exercise
the Non-qualified Options shall terminate upon the earlier to occur of the
expiration of the term of such Non-qualified Options or two years after the
date of death of the Participant. If the termination of employment was due
to the disability of the Participant within the meaning of Section 22(e)(3)
of the Code, such Non-qualified Options may be exercised in full, whether or
not then exercisable under Subsection 5(i) of this Plan, and the right of
the Participant (or the representative of the Participant's estate) to
exercise the Non-qualified Options shall terminate upon the earlier to
occur of the expiration of the term of such Non-qualified Options or two
years following the date of death of the Participant. If the termination
of employment of the Participant was due to reasons other than for Cause
and the Participant had not been employed by the Company and/or one or
more of the Subsidiaries for at least 10 consecutive years prior to the
Participant's termination of employment, the Participant's Non-qualified
Options may be exercised only to the extent then exercisable under
Subsection 5(i) of this Plan on the date of termination of employment,
and the right of the Participant (or the representative of the Participant's
estate) to exercise the Non-qualified Options shall terminate upon the
earlier to occur of the expiration of the term of such Non-qualified
Options or two years following the date of death. If the termination
of employment of the Participant was for Cause, all Non-qualified Options
which have not been exercised as of the date of termination of employment
shall terminate immediately as of the date of termination of employment.
(d) Assignability: With the permission of the Committee, a Participant
who has been granted a Non-qualified Option under the Plan may
transfer such Non-qualified Option to a revocable inter vivos trust
as to which the Participant is the settlor or may transfer such
Non-qualified Option to a "Permissible Transferee." A Permissible
Transferee shall be defined as any member of the immediate family
of the Participant, any trust, whether revocable or irrevocable,
solely for the benefit of members of the Participant's immediate
family, or any partnership whose only partners are members of the
Participant's immediate family. Any such transferee of a Non-
qualified Option shall remain subject to all of the terms and
conditions applicable to such Non-qualified Option and subject
to the rules and regulations prescribed by the Committee. A
Non-qualified Option may not be retransferred by a Permissible
Transferee except by will or the laws of descent and distribution
and then only to another Permissible Transferee. Other than
described above, an Option granted under the Plan may not be
transferred except by will or the laws of descent and distribution
and, during the lifetime of a Participant to whom granted, may be
exercised only by him, his guardian or legal representative.
(e) More than one Option granted to a Participant: More than one Option
(and, in the case of a Key Employee, more than one form of Option)
may be granted to a Participant under this Plan.
(f) Aggregate annual limit on Incentive Options: The aggregate Fair
Market Value (determined at the time of the grant of the Option) of
the Common Shares with respect to which Incentive Options are first
exercisable by any Key Employee in any calendar year under this
Plan and any other plans of the Company and the Subsidiaries shall
not exceed $100,000. To the extent that the aggregate Fair Market
Value of Common Shares with respect to which Incentive Options are
exercisable for the first time by a Participant during any calendar
year (under all plans of the Company and the Subsidiaries) exceeds
$100,000, such Options shall be treated as Non-qualified Options,
to the extent required by Section 422 of the Code.
(g) Partial exercise: Unless otherwise provided in the applicable option
agreement, any exercise of an Option granted under this Plan may be
made in whole or in part.
(h) 10% Shareholder: If a Participant owns (including constructive
ownership pursuant to Section 424(d) of the Code) more than ten
percent (10%) of the total combined voting power of all classes of
stock of the Company or any of the Subsidiaries, then each Incentive
Option granted under this Plan to such Participant shall by its terms
fix the option price per Common Share to be at least 110% of the Fair
Market Value of the Common Shares on the date of the grant of such
Incentive Option and such Incentive Option shall terminate (become
non-exercisable) after the expiration of five years from the date of
the grant of such Incentive Option.
(i) Exercisability: Options awarded to Key Employees, Subsidiary
Directors and Consultant/Advisors under the Plan shall be
exercisable at such times and shall be subject to such restrictions
and conditions, including the performance of a minimum period of
service, as the Committee may impose at the time of grant of such
Options; provided, however, that if the Committee does not specify
another vesting schedule at the time of grant, each Option granted
to a Key Employee shall become exercisable as follows: (i) with
respect to 25% of the Common Shares covered thereby after 24 months
of continuous employment by the Company and/or one or more
Subsidiaries; (ii) with respect to an additional 25% of the Common
Shares covered thereby after 36 months of continuous employment by
the Company and/or one or more Subsidiaries; (iii) with respect to
an additional 25% of the Common Shares covered thereby after 48
months of continuous employment by the Company and/or one or more
Subsidiaries; and (iv) with respect to an additional 25% of the
Common Shares covered thereby after 60 months of continuous
employment by the Company and/or one or more Subsidiaries. If a
Key Employee, a Subsidiary Director or a Consultant/Advisor does
not purchase in any one year the full number of Common Shares which
may be purchased with his then exercisable Options, such Key
Employee, Subsidiary Director or Consultant/Advisor, as appropriate,
may purchase those Common Shares in any subsequent year during the
term of the Options.
(j) Non-employee Directors: Each Non-employee Director then serving on
the Board and who has served on the Board and/or a Subsidiary Board
for all or a portion of at least the five calendar years immediately
preceding the January 1 immediately prior to the date of grant,
shall automatically be granted a Non-qualified Option for 750 Common
Shares effective on the date on which the annual meeting of the
Company's shareholders is held in 1998 in accordance with the
Regulations of the Company (the "1998 Annual Meeting") and for 750
Common Shares effective on the date on which the annual meeting of
the Company's shareholders is held in 2000 in accordance with the
Regulations of the Company (the "2000 Annual Meeting"). Each Non-
Employee Director then serving on the Board and who has served on the
Board and/or a Subsidiary Board for fewer than the five calendar
years (including all or any portion of any such year) immediately
preceding the January 1 immediately prior to the date of grant,
shall automatically be granted a Non-qualified Option for 150 Common
Shares plus 150 Common Shares for all or any portion of each calendar
year preceding the date of grant during which such Non-Employee
Director has served on the Board and/or a Subsidiary Board as of such
January 1 effective on the date of each of the 1998 Annual Meeting
and the 2000 Annual Meeting. Any individual who was not a member of
the Board on the date of the 1998 Annual Meeting, (i) who is
subsequently appointed or elected to the Board at least six months
prior to the date on which the annual meeting of the Company's
shareholders is to be held in 1999 in accordance with the Regulations
of the Company (the "1999 Annual Meeting") shall automatically be
granted a Non-qualified Option on the date of such appointment or
election for the same number of Common Shares as such individual
would have received if he had been a member of the Board on the date
of the 1998 Annual Meeting; (ii) who is subsequently appointed or
elected to the Board less than six months prior to the date of the
1999 Annual Meeting but prior to such 1999 Annual Meeting shall
automatically be granted a Non-qualified Option on the date of such
appointment or election for 75% of the number of Common Shares which
such individual would have received if he had been a member of the
Board on the date of the 1998 Annual Meeting; (iii) who is
subsequently appointed or elected to the Board on or after the date
of the 1998 Annual Meeting but at least six months prior to the date
of the 2000 Annual Meeting shall automatically be granted a Non-
qualified Option on the date of such appointment or election for 50%
of the number of Common Shares which such individual would have
received if he had been a member of the Board on the date of the 1998
Annual Meeting; and (iv) who is subsequently appointed or elected to
the Board less than six months prior to the 2000 Annual Meeting but
prior to such 2000 Annual Meeting shall automatically be granted a
Non-qualified Option on the date of such appointment or election for
25% of the Common Shares which such individual would have received
if he had been a member of the Board on the date of the 1998 Annual
Meeting. Any individual who was not a member of the Board on the
date of the 2000 Annual Meeting and who is subsequently appointed or
elected to the Board prior to the date on which the annual meeting of
the Company's shareholders is to be held in 2002 in accordance with
the Regulations of the Company (the "2002 Annual Meeting") shall
automatically be granted a Non-qualified Option on the same basis as
described in the immediately preceding sentence. Notwithstanding
anything to the contrary in this Section 5(j), any individual who was
serving as a Subsidiary Director and is subsequently appointed or
elected as a Non-employee Director after the date of the 1998 Annual
Meeting but prior to the date of the 2000 Annual Meeting, or after
the date of the 2000 Annual Meeting but prior to the date of the 2002
Annual Meeting, as the case may be, and who is to be granted a
Non-qualified Option pursuant to either of the two immediately
preceding sentences, shall have deducted from the number of Common
Shares to be covered by the Non-qualified Option granted to him under
this Subsection 5(j), the number of Common Shares covered by any
Non-qualified Option which he previously received pursuant to this
Plan.
Each Non-qualified Option granted to a Non-employee Director shall
have an exercise price equal to 100% of the Fair Market Value of the
Common Shares on the date of the grant of such Non-qualified Option
and a term of ten years.
If a Non-employee Director does not purchase in any one year the full
number of Common Shares which may be purchased with his then
exercisable Non-qualified Options, such Non-employee Director may
purchase those Common Shares in any subsequent year during the term of
the Non-qualified Options.
If a Non-employee Director ceases to be a director of the Company
for any reason other than his death or for Cause, the Non-qualified
Options granted to him under this Plan may be exercised in full,
whether or not then exercisable by their terms, on or before the
expiration of the term of the Non-qualified Options; provided,
however, that if the former Non-employee Director shall die prior
to the expiration of the term of the Non-qualified Options, such
Non-qualified Options may only beexercised on or before the earlier
of the expiration of such term or two years following the date of
death. If a Non-employee Director ceases to be a director of the
Company because of his death, such Non-qualified Options may be
exercised in full, whether or not then exercisable by their terms,
only on or before the earlier of the expiration of the term of the
Non-qualified Options or two years following the date of death.
If a Non-employee Director ceases to be a director of the Company
and/or any Subsidiary for Cause, all of his then unexercised
Non-qualified Options shall immediately terminate.
Non-employee Directors shall not be eligible to receive any Options
under the Plan other than pursuant to this Subsection 5(j).
(k) Termination of Non-qualified Options granted to Subsidiary Directors
by reason of termination of director status: Non-qualified Options
granted to Subsidiary Directors under the Plan shall be exercisable
after a Subsidiary Director ceases to be a director of a Subsidiary
and/or the Company for such period of time and under such conditions
as the Committee may impose at the time of grant of such Non-
qualified Options. If, however, the Committee does not specify
another exercisability schedule in the event of termination of
director status, the provisions outlined in the following paragraph
of this Subsection 5(k) shall be applicable.
Default schedule of exercisability upon termination of director
status. If a Subsidiary Director ceases to be a director of a
Subsidiary and/or the Company for any reason other than his death
or for Cause, the Non-qualified Options granted to him under this
Plan may be exercised in full, whether or not then exercisable by
their terms, on or before the expiration of the term of the Non-
qualified Options; provided, however, that if the former Subsidiary
Director shall die prior to the expiration of the term of the Non-
qualified Options, such Non-qualified Options may be exercised only
on or before the earlier of the expiration of such term or two years
following the date of death. If a Subsidiary Director ceases to be
a director of a Subsidiary and/or the Company because of his death,
such Non-qualified Options may be exercised in full, whether or not
then exercisable by their terms, only on or before the earlier of
the expiration of the term of the Non-qualified Options or two years
following the date of death. If a Subsidiary Director ceases to be
a director of a Subsidiary and/or the Company for Cause, all of his
then unexercised Non-qualified Options shall immediately terminate.
6. Period For Granting Options. No Options shall be granted under this Plan
subsequent to the tenth anniversary of the earlier of (a) the day prior to
the date on which this Plan is adopted by the Board or (b) the day prior to
the date on which this Plan is approved by the affirmative vote of the
holders of a majority of the outstanding shares of the Company.
7. No Effect Upon Employment Status. The fact that an employee has been
designated a Key Employee or selected as a Participant shall not limit or
otherwise qualify the right of his employer to terminate his employment at
any time.
8. Method of Exercise. An Option granted under this Plan may be exercised
only by written notice to the Committee, signed by the Participant (or, in
the case of Non-qualified Options, any Permitted Transferee), or in the event
of his death, by such other person as is entitled to exercise such option.
The notice of exercise shall state the number of Common Shares in respect
of which the Option is being exercised, and shall either be accompanied by
the payment of the full option price of such Common Shares, or shall fix a
date (not more than 10 business days from the date of such notice) for the
payment of the full option price of the Common Shares being purchased. The
option price shall be payable in cash or by tendering Common Shares (by
either actual delivery of Common Shares or by attestation, with such Common
Shares valued at Fair Market Value as of the date of exercise), or in any
combination thereof as determined by the Committee. The Committee may permit
a Participant to elect to pay the option exercise price upon the exercise of
an Option by authorizing a third party to sell Common Shares (or a sufficient
portion of the Common Shares) acquired upon exercise of the option and remit
to the Company a sufficient portion of the sale proceeds to pay the entire
option exercise price and any tax withholding resulting from such exercise.
Whenever the Company proposes or is required to distribute Common Shares
under the Plan upon exercise of an Option, the Company may require the
person exercising the Option to remit to the Company an amount sufficient to
satisfy any federal, state and local tax withholding requirements prior to
the delivery of any certificate for such Common Shares or, in the discretion
of the Committee, the Company may withhold from the Common Shares to be
delivered Common Shares sufficient to satisfy all or a portion of the tax
withholding requirements.
During the option period, no person entitled to exercise any Option granted
under this Plan shall have any of the rights or privileges of a shareholder
with respect to any Common Shares issuable upon exercise of such Option until
the books of the Company evidence that such person has become the record
owner of such Common Shares.
9. Implied Consent of Participants. Every Participant, by his acceptance of
an Option under this Plan, shall be deemed to have consented to be bound, on
his own behalf and on behalf of his heirs, permitted assigns and legal
representatives, by all of the terms and conditions of this Plan.
10. Share Adjustments. In the event there is any change in the Common Shares
resulting from stock splits, stock dividends, combinations or exchanges of
shares, or other similar capital adjustments, equitable proportionate
adjustments shall be made by the Committee in (a) the number of Common
Shares available for the grant of Options under this Plan, (b) the number of
Common Shares subject to Options granted under this Plan, and (c) the
exercise price of outstanding Options.
11. Merger, Consolidation or Sale of Assets. In the event the Company
shall consolidate with, merge into, or transfer all or substantially all of
its assets (an "Acquisition Transaction") to, another corporation or
corporations (herein referred to as "successor employer corporation"), then
each Incentive Option and each Non-Qualified Option outstanding under the
Plan shall become exercisable in full, whether or not then exercisable by
its terms, immediately upon consummation of the Acquisition Transaction.
As a condition of any such Acquisition Transaction, the Company shall require
that the successor employer corporation obligate itself to continue this
Plan and to assume all obligations under the Plan in a manner consistent
with the provisions of Section 424(a) of the Code. In the event that such
successor employer corporation terminates for any reason the employment of
any Participant who is a Key Employee within the one-year period immediately
following the consummation of the Acquisition Transaction, such Participant
shall have the right to exercise his then unexercised Options during the
period ending on the earlier of the expiration of the term of the Options or
three months following the date of the Participant's termination of
employment.
12. Company Responsibility. All expenses of this Plan, including the cost
of maintaining records, shall be borne by the Company. The Company shall
have no responsibility or liability (other than under applicable securities
laws) for any act or thing done or left undone with respect to the price,
time, quantity or other conditions and circumstances of the purchase of
Common Shares under the terms of the Plan, so long as the Company acts in
good faith.
13. Securities Laws. The Committee shall take all necessary or appropriate
action to ensure that all grants of Options and all exercises thereof under
this Plan are in full compliance with all federal and state securities laws.
No Option granted under this Plan shall be exercised before the Common Shares
subject to the Plan have been registered or qualified for sale under
appropriate federal and state securities laws.
14. Amendment and Termination of the Plan. The Committee, with the
approval of the Board, may amend the Plan from time to time or terminate the
Plan at any time without the approval of the shareholders of the Company
except as such shareholder approval may be required (a) to satisfy the
requirements of Rule 16b-3 promulgated under the Securities Exchange Act of
1934, as amended, or any successor provision, (b) to satisfy applicable
requirements of the Code or (c) to satisfy applicable requirements of any
securities exchange on which are listed any of the Company's equity securities
or any requirements applicable to issuers whose securities are traded in The
Nasdaq National Market. No such action to amend or terminate the Plan shall
reduce the then existing number of any Participant's Options or adversely
change the term or conditions thereof without the Participant's consent.
If the Plan is terminated, any unexercised Option shall continue to be
exercisable in accordance with its terms.
15. Effective Date. The Plan was adopted by the Board on February 12, 1998.
The Plan shall become effective as of the date it is approved by the
affirmative vote of the holders of a majority of the outstanding shares
of the Company. The Plan shall be null and void if shareholder approval
is not obtained within twelve (12) months of the adoption of the Plan
by the Board.