EXHIBIT 10(a)
1998 STOCK OPTION PLAN
EXHIBIT 10(a)
REPUBLIC BANCORP INC.
1998 STOCK OPTION PLAN
A. PURPOSE AND SCOPE
1. The purposes of this 1998 Stock Option Plan are to encourage
stock ownership by key management employees of the Company and its
Subsidiaries, to provide an incentive for such employees to expand and
improve the profits and prosperity of the Company and its Subsidiaries, and
to assist the Company and its Subsidiaries in attracting and retaining key
personnel through the grant of Options to purchase shares of the Company's
common stock.
2. The Plan is intended to comply with Rule 16b-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as such
Rule may be amended from time to time ("Rule 16b-3") and shall be construed
to so comply.
B. DEFINITIONS
Unless otherwise required by the context:
1. "Board" shall mean the Board of Directors of the Company.
2. "Committee" shall mean the Personnel, Nominating and Compensation
Committee, which is appointed by the Board and which shall be composed of at
least two members of the Board, each of whom is a "Non-Employee Director" as
defined in Rule 16b-3. Unless the Board determines otherwise, the Committee
shall be comprised solely of "outside" directors within the meaning of Code
Section 162(m)(4)(C)(i).
3. "Company" shall be REPUBLIC BANCORP INC., a Michigan corporation.
4. "Code" shall mean the Internal Revenue Code of 1986, as amended.
5. "Disability" shall mean the inability of a Participant to perform
the duties of his position for a continuous period of more than six months by
reason of any medically determinable physical or mental impairment.
6. "Fair Market Value" shall be the closing price per share of Stock
on the date in question in the over-the-counter market, as such price is
reported by the National Association of Securities Dealers through its Nasdaq
system or any successor system. If there is no reported closing price for the
Stock on the date in question, then the closing price on the last preceding
date for which such quotation exists shall be determinative of fair market
value.
7. "Incentive Stock Option" means an Option meeting the requirements
and containing the limitations and restrictions set forth in Code Section
422.
8. "Non-Qualified Stock Option" means an Option other than an
Incentive Stock Option.
9. "Option" shall mean a right to purchase Stock granted pursuant
to the Plan. An Option may be either an Incentive Stock Option or a
Non-Qualified Stock Option.
10. "Option Price" shall mean the purchase price for Stock under an
Option, as determined in Section F below.
11."Participant" shall mean an employee of the Company, or of any
Subsidiary of the Company, to whom an Option is granted under the Plan.
12."Plan" shall mean this REPUBLIC BANCORP INC. 1998 Stock Option
Plan.
13. "Stock" shall mean the common stock of the Company, $5.00 par
value.
14."Subsidiary" shall mean a subsidiary corporation of the Company,
as defined in Code Sections 424(f) and 424(g).
15."Ten-Percent Shareholder" means an individual who "owns" (as
defined in Code Section 424) stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company or a
Subsidiary.
16."Voluntary Management Stock Accumulation Program" means that
program, administered by the Committee, under which employees identified by
the Committee are authorized to purchase Stock at Fair Market Value, subject
to restrictions as established by the Committee, and are granted tandem
options to purchase Stock pursuant to this Plan.
C. STOCK TO BE OPTIONED
1. Subject to the provisions of Section L of the Plan, the maximum
number of shares of Stock that my be optioned or sold under the Plan is
1,000,000 shares. Such shares may be authorized but unissued shares of Stock
of the Company or issued shares that were reacquired by the Company.
2. The maximum number of shares of Stock with respect to which
Options may be granted during any fiscal year to any Participant shall not
exceed 50,000 subject to adjustments noted in Section L, herein (provided
that such annual maximum shall not include tandem options issued under the
Voluntary Management Stock Accumulation Program, which are subject to maximum
limits established by the terms of that Program).
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D. ADMINISTRATION
The Plan shall be administered by the Committee. The Committee shall
make all decisions with respect to participation in the Plan by employees of
the Company and its Subsidiaries, and with respect to the extent of that
participation. The interpretation and construction of any provision of the
Plan by the Committee shall be final. No member of the Committee shall be
liable for any action or determination made by him in good faith. Each member
of the Committee shall be indemnified and held harmless by the Company from
and against any cost, liability or expense imposed or incurred in connection
with such person's or the Committee's taking or failing to take any action
under the Plan.
E. ELIGIBILITY
The Committee may grant Options to any employee (including an
employee who is a director) of the Company or its Subsidiaries. Options may
be awarded by the Committee at any time and from time to time to new
Participants, or to then Participants, or to a greater or lesser number of
Participants, and may include or exclude previous Participants as the
Committee shall determine. Options granted at different times need not
contain similar provisions.
F. OPTION PRICE
The purchase price for Stock under each Option shall be one hundred
percent (100%) of the Fair Market Value of the Stock on the date the Option
is granted, but in no event less than the par value of the Stock.
Notwithstanding anything herein to the contrary, in the event an Incentive
Stock Option is granted to a Participant who, at the time such Incentive
Stock Option is granted, is a Ten-Percent Shareholder, then the Option price
per share of such Incentive Stock Option shall not be less than one hundred
ten percent (110%) of the Fair Market Value of the shares covered by the
Incentive Stock Option on the date the Incentive Stock Option is granted.
G. TERMS AND CONDITIONS OF OPTIONS
Options granted pursuant to the Plan shall be authorized by the
Committee and shall be evidenced by agreements in such form as the Committee
shall from time to time approve. Such agreements shall comply with and be
subject to the following terms and conditions.
1. Condition of Employment. The Committee may, in its discretion,
include in any Option granted under the Plan a condition that the Participant
shall agree to remain in the employ, and to render services to, the Company
or any of its Subsidiaries for a period of time (specified in the agreement)
following the
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date the Option is granted. No such agreement shall impose upon the Company
or any of its Subsidiaries, however, any obligation to employ the Participant
for any period of time.
2. Types of Options. Options granted under this Plan may be (a)
Incentive Stock Options, (b) Non-Qualified Stock Options, or (c) a
combination of the foregoing. The Option Agreement shall designate whether an
Option is an Incentive Stock Option or a Non-Qualified Stock Option. Any
Option which is designated as a Non-Qualified Stock Option shall not be
treated by the Company or the Participant to whom the Option is granted as an
Incentive Stock Option for federal income purposes.
3. Method of Exercise. To exercise an Option, a Participant (or in
the case of an exercise after a Participant's death, such Participant's
personal representative, heir or legatee, as the case may be) must take the
following action:
(a) execute and deliver to the Company a written notice of
exercise signed in writing by the person exercising the Option specifying the
number of shares of Stock with respect to which the Option is being
exercised;
(b) pay the aggregate Option Price in one of the alternate
forms as set forth in Section G.4 below, and
(c) furnish appropriate documentation that the person or
persons exercising the Option (if other than the Participant) has the right
to exercise such Option.
As soon as practical after the exercise date, the Company will mail or
deliver to or on behalf of the Participant (or any other person or persons
exercising this Option under the Plan) a certificate or certificates
representing the Stock acquired upon exercise of the Option. A Participant
shall have none of the rights of a shareholder until shares are issued to
him, and no adjustment will be made for dividends or other rights for which
the record date is prior to the date such stock certificate is issued, except
as noted in Section L, herein.
4. Payment Price. The aggregate Option Price shall be payable in one
of the alternative forms specified below:
(a) Full payment in cash or check made payable to the
Company's order, or
(b) Full payment through a sale and remittance procedure
pursuant to which the Participant (i) shall provide irrevocable written
instructions to a designated brokerage firm to effect the immediate sale of
the Stock to be purchased and remit to the Company, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the Stock to be purchased and (ii) shall
concurrently provide written directives to the Company to deliver the
certificates for
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the Stock to be purchased directly to such brokerage firm in order to
complete the sale transaction.
5. Number of Shares. Each Option agreement shall state the total
number of shares of Stock to which it pertains, the exercise price for the
shares covered by the Option, the time at which the Option vests and become
exercisable, the Option's scheduled expiration date, and such other terms and
conditions not inconsistent with the Plan as the Committee shall determine.
6. Option Period and Limitations on Exercise of Options. The
Committee may, in its discretion, provide that an Option may not be exercised
in whole or in part for any period or periods of time specified in the Option
Agreement. The following additional conditions shall pertain to Options
granted under this Plan:
(a) Except as to Options granted pursuant to the Voluntary
Management Stock Accumulation Program, the right to purchase Stock pursuant
to an Option Agreement shall become vested in accordance with the following
schedule:
Percentage of Shares Covered Time Elapsed Since
By the Option Agreement Option Grant Date
--------------------------- -----------------
0 % Less than 1 year
25 % 1 but less than 2 years
50 % 2 but less than 3 years
75 % 3 but less than 4 years
100 % 4 years or more;
provided, that the Committee may vary or omit the above vesting
requirements in its discretion.
(b) Options granted pursuant to the Voluntary Management Stock
Accumulation Program shall first vest and become fully exercisable on the
third anniversary of the Purchase Date (as defined under such Program),
except as otherwise provided under the terms of such Program.
(c) All Option granted hereunder may be exercised, to the extent
vested, in whole or in part, at any time during its term. No Option may be
exercised after the expiration of ten (10) years from the date it is granted.
Notwithstanding anything herein to the contrary, in the event an Incentive
Stock Option is granted to a Participant who, at the time such Incentive
Stock Option is granted, is a Ten-Percent Shareholder, then such Incentive
Stock Option shall not be exercisable more than five (5) years from the date
of grant and shall be subject to earlier termination as hereinafter provided.
No Option may be exercised for a fractional share of Stock.
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7. Limit on Fair Market Value of Incentive Stock Options. In any
calendar year, no Participant may be granted an Incentive Stock Option
hereunder to the extent that the aggregate Fair Market Value (such Fair
Market value being determined as of the date of grant of the Option in
question) of the Stock with respect to which Incentive Stock Options first
become exercisable by the Participant during any calendar year (under all
such plans of the Participant's employer corporation, its parent, if any, and
its Subsidiaries, if any) exceeds the sum of One Hundred Thousand Dollars
($100,000). For purposes of the preceding sentence, Options shall be taken
into account in the order in which they were granted. Any Option granted
under the Plan which is intended to be an Incentive Stock Option, but which
exceeds the limitation set forth in this Section G.7, shall be a
Non-Qualified Stock Option to the extent that a portion of the Option exceeds
this limitation.
8. Option Modification. The Committee may amend, modify or terminate
any outstanding Option held by a Participant, including substituting therefor
another Option of the same or different type, changing the date of exercise
or vesting and converting an Incentive Stock Option to a Non-Qualified Stock
Option, provided that the Participant's consent to such action shall be
required unless the Committee determines in its sole discretion that the
action, taking into account any related action, would not materially and
adversely affect the Participant.
H. TERMINATION OF EMPLOYMENT
Except as provided in this Section and in Section I below, if a
Participant ceases to be employed by the Company or any of its Subsidiaries,
his Options shall terminate immediately. If a Participant's cessation of
employment with the Company and its Subsidiaries is due to his retirement
after attaining age 65 (or prior to age 65 with the consent of the
Committee), the Participant may, at any time within three (3) months after
such cessation of employment, exercise his Options to the extent that he was
entitled to exercise them on the date of cessation of employment, but in no
event shall any Option be exercisable more than ten (10) years from the date
it was granted. If a Participant's cessation of employment with the Company
and its Subsidiaries is due to Disability, the Participant will have three
(3) months after the date of termination of employment, but in no event after
the stated expiration date of the Participant's Options, to exercise Options
that the Participant was entitled to exercise on the date the Participant's
employment terminated as a result of the Disability. The Committee may cancel
an Option during the three (3) month periods referred to in this Section, if
the Participant engaged in employment or activities contrary, in the opinion
of the Committee, to the best interests of the Company or any of its
Subsidiaries. The Committee shall determine in each case whether a
termination of employment shall be considered a retirement with the consent
of the Company or a Subsidiary, whether a Disability exists and, subject to
applicable law, whether a leave of absence shall constitute a
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termination of employment. Any such determination of the Committee
shall be final and conclusive.
I. RIGHTS IN EVENT OF DEATH
If a Participant dies while employed by the Company or any of its
Subsidiaries or within six (6) months after having retired after attaining
age 65 or with the consent of the Company or any of its Subsidiaries, and
without having fully exercised his Options, the personal representative,
legatees or heirs, of his estate shall have the right to exercise such
Options during the six (6) month period following the Participant's date of
death, to the extent that such deceased Participant was entitled to exercise
the Options on the date of his death; provided, however, that in no event
shall the Options be exercisable more than ten (10) years from the date they
were granted.
J. NO OBLIGATIONS TO EXERCISE OPTION
The granting of an Option shall impose no obligation upon the
Participant to exercise such Option.
K. NONASSIGNABILITY
Options shall not be transferable other than by will or by the laws
of descent and distribution, and during a Participant's lifetime shall be
exercisable only by such Participant.
L. EFFECT OF CHANGE IN STOCK SUBJECT TO THE PLAN
The aggregate number of shares of Stock available for Options under
the Plan, the shares subject to any Option, and the price per share shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Stock subsequent to the effective date of the Plan resulting from
(1) a subdivision or consolidation of shares or any other capital adjustment,
(2) the payment of a stock dividend, or (3) other increase or decrease in
such shares effected without receipt of consideration by the Company. If the
Company shall be the surviving corporation in any merger or consolidation,
any Option shall pertain, apply and relate to the securities to which a
holder of the number of shares of Stock subject to the Option would have been
entitled after the merger or consolidation. Upon dissolution or liquidation
of the Company, all Options outstanding under the Plan shall terminate;
provided, however, that each Participant (and each other person entitled
under Section I to exercise an Option) shall have the right, immediately
prior to such dissolution or liquidation, to exercise such Participant's
Options in whole or in part, but only to the extent that such Options are
otherwise exercisable under the terms of the Plan.
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M. AMENDMENT AND TERMINATION
The Board, by resolution, may terminate, amend or revise the Plan
with respect to any shares as to which Options have not been granted,
provided, that no amendment without the approval of the stockholders of the
Company shall be made if stockholder approval under Code Section 422 or Rule
16b-3 would be required. Neither the Board nor the Committee may, without the
consent of the holder of an Option, alter or impair any Option previously
granted under the Plan, except as authorized herein. Unless sooner
terminated, the Plan shall remain in effect for a period of ten (10) years
from the date the Plan was originally adopted by the Board. Termination of
the Plan shall not affect any Option previously granted.
N. WITHHOLDING FOR TAXES
The Company shall, before any payment is made or a certificate for
any Stock is delivered or any Stock is credited to any brokerage account,
deduct or withhold from any payment under the Plan any Federal, state, local
or other taxes, including transfer taxes, required by law to be withheld or
to require the Participant or his beneficiary or estate, as the case may be,
to pay any amount, or the balance of any amount, required to be withheld. The
Company may elect to deduct such taxes from any amounts payable then or any
time thereafter in cash to the Participant and, in the Participant's sole
discretion, the payment of such taxes may be made from Stock previously held
by such Participant. If the Participant disposes of Stock acquired pursuant
to an Incentive Stock Option in any transaction considered to be a
disqualifying transaction under Code Sections 421 and 422, the Participant
must give the Company written notice of such transfer and the Company shall
have the right to deduct any taxes required by law to be withheld from any
amounts otherwise payable to the Participant.
O. AGREEMENT AND REPRESENTATION OF EMPLOYEES
As a condition to the exercise of any portion of an Option, the
Company may require the person exercising such Option to represent and
warrant at the time of such exercise that any shares of Stock acquired at
exercise are being acquired only for investment and without any present
intention to sell or distribute such shares, if, in the opinion of counsel
for the Company, such a representation is required under the Securities Act
of 1933 or any other applicable law, regulation or rule of any governmental
agency.
P. RESERVATION OF SHARES OF STOCK
The Company, during the term of this Plan, will at all times reserve
and keep available, and will seek or obtain from any
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regulatory body having jurisdiction any requisite authority necessary to
issue and to sell, the number of shares of Stock that shall be sufficient to
satisfy the requirements of this Plan. The inability of the Company to obtain
from any regulatory body having jurisdiction the authority deemed necessary
by counsel for the Company for the lawful issuance and sale of its Stock
hereunder shall relieve the Company of any liability in respect of the
failure to issue or sell Stock as to which the requisite authority has not
been obtained.
Q. EFFECTIVE DATE OF PLAN
The Plan is effective on February 19, 1998. The Plan shall
thereafter be submitted to the Company's stockholders for approval and unless
the Plan is approved by the affirmative votes of the holders of shares having
a majority of the voting power of all shares represented at a meeting duly
held in accordance with Michigan law within twelve (12) months after being
approved by the Board, the Plan and all awards made under it shall be void
and of no force and effect.
R. GOVERNING LAW
This Plan and the rights of all persons claiming hereunder shall be
construed in accordance with the laws of the State of Michigan without giving
effect to the conflicts of laws principles thereof, except to the extent that
such laws are preempted by federal law.
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