EXHIBIT 4.4
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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