EXHIBIT 4.1
REPUBLIC BANCORP INC.
1997 STOCK OPTION PLAN
A. PURPOSE AND SCOPE
1. The purposes of this 1997 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 mean REPUBLIC BANCORP INC., a Michigan corporation.
4. "Code" shall mean the Internal Revenue Code of 1986, as amended.
5. "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.
1
6. "Incentive Stock Option" means an Option meeting the requirements and
containing the limitations and restrictions set forth in Code Section 422.
7. "Non-Qualified Stock Option" means an Option other than an Incentive
Stock Option.
8. "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.
9. "Option Price" shall mean the purchase price for Stock under an
Option, as determined in Section F below.
10."Participant" shall mean an employee of the Company, or of any
Subsidiary of the Company, to whom an Option is granted under the Plan.
11."Plan" shall mean this REPUBLIC BANCORP INC. 1997 Stock Option
Plan.
12."Stock" shall mean the common stock of the Company, $5.00 par
value.
13."Subsidiary" shall mean a subsidiary corporation of the Company, as
defined in Code Sections 425(f) and 425(g).
14. "Ten-Percent Shareholder" means an individual who "owns" (as defined
in Code Section 425) stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or a Subsidiary.
C. STOCK TO BE OPTIONED
1. Subject to the provisions of Section L of the Plan, the maximum
number of shares of Stock that may be optioned or sold under the Plan is 750,000
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 37,500
subject to adjustments noted in paragraph L, herein.
2
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.
E. ELIGIBILITY
The Committee may grant Options to any key employee (including an
employee who is a director or an officer) 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 per
cent (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.
3
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 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 tax 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 executor,
administrator, 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.
4
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 paragraph 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 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 becomes
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.
Except as provided in the Option agreement, an Option may be exercised 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.
5
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 a 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 paragraph 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 with the consent
of the Company or any of its Subsidiaries, 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 permanent disability (within the
meaning of Code Section 22(e)(3)), the Participant will have twelve (12) 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) or twelve (12) month periods
6
referred to in this paragraph, 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 is "permanent"
and, subject to applicable law, whether a leave of absence shall constitute a
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 three (3) months after having retired with the consent of
the Company or any of its Subsidiaries, and without having fully exercised his
Options, the executors or administrators, or legatees or heirs, of his estate
shall have the right to exercise such Options 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 all 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
7
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.
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
8
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 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 was effective on January 16, 1997, the date that the Plan was
approved by the Board. 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.
9
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.
10
To record the adoption of the Plan by the Board on January 16, 1997, the
Company has caused its authorized officer to affix the corporate name and seal
hereto.
REPUBLIC BANCORP INC.
By: /s/ Jerry D. Campbell
-----------------------------
Jerry D. Campbell
Chief Executive Officer &
Chairman of the Board