ALTERNATIVE RESOURCES CORPORATION
AMENDED AND RESTATED
INCENTIVE STOCK OPTION PLAN
1. PURPOSE. The Alternative Resources Corporation Incentive Stock
Option Plan (the "PLAN"), as amended and restated, is intended to provide
incentives which will attract and retain highly competent persons as
officers, key employees and independent contractor consultants of Alternative
Resources Corporation and its subsidiaries (the "COMPANY"), by providing them
opportunities to acquire shares of Common Stock of the Company ("COMMON
STOCK") or to receive monetary payments based on the value of such shares
pursuant to the Awards described herein.
2. ADMINISTRATION. The Plan will be administered by the Compensation
Committee (the "COMMITTEE") appointed by the Board of Directors of the
Company from among its members which shall be comprised of not less than two
non-employee members of the Board; PROVIDED, HOWEVER, that as long as the
Common Stock of the Company is registered under the Securities Exchange Act
of 1934, members of the Committee must qualify as disinterested persons
within the meaning of Securities and Exchange Commission Regulation Section
240.16b-3. The Committee is authorized, subject to the provisions of the
Plan, to establish such rules and regulations as it deems necessary for the
proper administration of the Plan and to make such determinations and
interpretations and to take such action in connection with the Plan and any
Awards granted hereunder as it deems necessary or advisable. All
determinations and interpretations made by the Committee shall be binding and
conclusive on all participants and their legal representatives. No member of
the Board, no member of the Committee and no employee of the Company shall be
liable for any act or failure to act hereunder, by any other member or
employee or by any agent to whom duties in connection with the administration
of this Plan have been delegated or, except in circumstances involving his or
her bad faith, gross negligence or fraud, for any act or failure to act by
such member of the Board or employee.
3. PARTICIPANTS. Participants will consist of such officers, key
employees and independent contractor consultants of the Company as the
Committee in its sole discretion determines to be significantly responsible
for the success and future growth and profitability of the Company and whom
the Committee may designate from time to time to receive Awards under the
Plan. Designation of a participant in any year shall not require the
Committee to designate such person to receive an Award in any other year or,
once designated, to receive the same type or amount of Awards as granted to
the participant in any year. The Committee shall consider such factors as it
deems pertinent in selecting participants and in determining the amount and
type of their respective Awards. In addition, non-employee directors of the
Company shall have the benefits provided in Section 6(h) hereof.
4. TYPES OF AWARDS. Awards under the Plan may be granted in any one or
a combination of (a) Stock Options, (b) Stock Appreciation Rights, (c) Stock
Awards, and (d) Performance Units, all as described below (collectively
"AWARDS").
5. SHARES RESERVED UNDER THE PLAN. There is hereby reserved for
issuance under the Plan an aggregate of four million (4,000,000) shares of
Common Stock, which may be authorized but unissued or treasury shares. Any
shares subject to an Award hereunder may thereafter be subject to new Awards
under this Plan if there is a lapse, cancellation, expiration, or termination
of any such Awards prior to issuance of the shares or if shares are issued
under such Awards and thereafter are reacquired by the Company pursuant to
rights reserved by the Company upon issuance thereof.
6. STOCK OPTIONS. "STOCK OPTIONS" will consist of awards from the
Company, in the form of agreements, which will enable the holder to purchase
a specific number of shares of Common Stock, at set terms and at a fixed
purchase price. Stock Options may be "INCENTIVE STOCK OPTIONS" within the
meaning of Section 422 of the Internal Revenue Code ("INCENTIVE STOCK
OPTIONS") or Stock Options which do not constitute Incentive Stock Options
("NONQUALIFIED STOCK OPTIONS"). The Committee will have the authority to
grant to any participant one or more Incentive Stock Options, Nonqualified
Stock Options, or both types of Stock Options (in each case with or without
Stock Appreciation Rights). Each Stock Option shall be subject to such terms
and conditions consistent with the Plan as the Committee may impose from time
to time, subject to the following limitations:
(a) EXERCISE PRICE. Each Stock Option granted hereunder shall
have such per-share exercise price as the Committee may determine at the date
of grant provided, however, that the per-share exercise price for Incentive
Stock Options shall not be less than 100% of the Fair Market Value of the
Common Stock on the date the option is granted and provided further that the
per-share exercise price for Nonqualified Stock Options shall not be less
than 85% of the Fair Market Value of the Common Stock on the date the option
is granted.
(b) PAYMENT OF EXERCISE PRICE. The option exercise price may be
paid by check or, in the discretion of the Committee, by the delivery of
shares of Common Stock of the Company then owned by the participant;
provided, however, that option agreements may provide that payment of the
exercise price by delivery of shares of Common Stock of the Company then
owned by the participant may be made only if such payment does not result in
a charge to earnings for financial accounting purposes as determined by the
Committee. In the discretion of the Committee, payment may also be made by
delivering a properly executed exercise notice to the Company together with a
copy of irrevocable instructions to a broker to deliver promptly to the
Company the amount of sale or loan proceeds to pay the exercise price. To
facilitate the foregoing, the Company may enter into agreements for
coordinated procedures with one or more brokerage firms.
-2-
(c) EXERCISE PERIOD. Stock Options granted under the Plan shall
be exercisable at such time or times and subject to such terms and conditions
as shall be determined by the Committee, PROVIDED, HOWEVER that no Stock
Options shall be exercisable earlier than six months after the date they are
granted. In addition, Stock Options shall not be exercisable later than ten
years after the date they are granted. All Stock Options shall terminate at
such earlier times and upon such conditions or circumstances as the Committee
shall in its discretion set forth in such option at the date of grant,
provided however that if a participant's employment or engagement with the
Company is terminated other than by reason of the participant's death or
disability, the participant's option will terminate thirty (30) days after
such termination, and in the event of a termination due to death or
disability, the participant's option will terminate six (6) months after such
termination.
(d) LIMITATIONS ON STOCK OPTIONS. Incentive Stock Options may be
granted only to participants who are employees of the Company or one of its
subsidiaries (within the meaning of Section 424(f) of the Internal Revenue
Code) at the date of grant. The aggregate Fair Market Value (determined as
of the time the option is granted) of the Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by a participant
during any calendar year (under all option plans of the Company) shall not
exceed $100,000. Stock Options may not be granted to any participant who, at
the time of grant, owns stock possessing (after the application of the
attribution rules of Section 424(d) of the Code) more than 10% of the total
combined voting power of all classes of stock of the Company, unless the
option price is fixed at not less than 110% of the Fair Market Value of the
Common Stock on the date of grant and the exercise of such option is
prohibited by its terms after the expiration of five years from the date of
grant of such option.
(e) REDESIGNATION AS NON-QUALIFIED STOCK OPTIONS. Options
designated as "INCENTIVE STOCK OPTIONS" that fail to continue to meet the
requirements of Section 422 of the Internal Revenue Code shall be
redesignated as non-qualified options for Federal income tax purposes
automatically without further action by the Committee on the date of such
failure to continue to meet the requirements of Section 422 of the Code.
(f) LIMITATION OF RIGHTS IN SHARES. The recipient of a Stock
Option shall not be deemed for any purpose to be a stockholder of the Company
with respect to any of the shares subject thereto except to the extent that
the Stock Option shall have been exercised and, in addition, a certificate
shall have been issued and delivered to the participant.
(g) INDIVIDUAL LIMITATION ON NUMBER OF SHARES. The number of
shares subject to Stock Options which may be granted during any calendar year
to any one participant shall not exceed two hundred six thousand four hundred
(206,400) shares.
(h) AUTOMATIC GRANT TO NON-EMPLOYEE DIRECTORS. Each non-employee
director of the Company who is a member of the Board on the date of the
Company's annual meeting of shareholders, beginning with the 1995 annual
meeting and continuing for each
-3-
annual meeting thereafter, and each non-employee director of the Company who
becomes a member of the Board for the first time other than at the time of
the Company's annual meeting of shareholders, shall automatically receive, on
the date of such annual meeting, or on the date such person first becomes a
member of the Board, as the case may be, a Nonqualified Stock Option to
purchase 5,000 shares of Common Stock, at an exercise price per share equal
to 100% of the Fair Market Value of the Common Stock on the date of receipt
of such option. Any options granted under this Section 6(h) shall not be
exercisable for a period of one year from the date of grant and will
terminate upon the earlier of (i) ninety (90) days after the date on which
the director ceases to serve on the Board or (ii) ten (10) years after the
date of grant of the option. For purposes of this Plan, a non-employee
director is any person who is a member of the Board of the Company and who is
neither an employee of the Company nor affiliated with a controlling
shareholder of the Company.
7. STOCK APPRECIATION RIGHTS. The Committee may, in its discretion,
grant Stock Appreciation Rights to the holders of any Stock Options granted
hereunder. In addition, Stock Appreciation Rights may be granted
independently of and without relation to options. Each Stock Appreciation
Right shall be subject to such terms and conditions consistent with the Plan
as the Committee shall impose from time to time, including the following:
(a) A Stock Appreciation Right relating to a Nonqualified Stock
Option may be made part of such option at the time of its grant or at any
time thereafter up to six months prior to its expiration, and a Stock
Appreciation Right relating to an Incentive Stock Option may be made part of
such option only at the time of its grant.
(b) Each Stock Appreciation Right will entitle the holder to elect
to receive the appreciation in the Fair Market Value of the shares subject
thereto up to the date the right is exercised. In the case of a right issued
in relation to a Stock Option, such appreciation shall be measured from not
less than the option price and in the case of a right issued independently of
any Stock Option, such appreciation shall be measured from not less than 85%
of the Fair Market Value of the Common Stock on the date the right is
granted. Payment of such appreciation shall be made in cash or in Common
Stock, or a combination thereof, as set forth in the award, but no Stock
Appreciation Right shall entitle the holder to receive, upon exercise
thereof, more than the number of shares of Common Stock (or cash of equal
value) with respect to which the right is granted.
(c) Each Stock Appreciation Right will be exercisable at the times
and to the extent set forth therein, but no Stock Appreciation Right may be
exercisable earlier than six months after the date it was granted or later
than the earlier of (i) the term of the related option, if any, or (ii)
fifteen years after it was granted. Exercise of a Stock Appreciation Right
shall reduce the number of shares issuable under the Plan (and the related
option, if any) by the number of shares with respect to which the right is
exercised.
-4-
(d) The number of shares subject to Stock Appreciation Rights
which may be granted during any calendar year to any one participant shall
not exceed two hundred six thousand four hundred (206,400) shares.
8. STOCK AWARDS. Stock Awards will consist of Common Stock transferred
to participants without other payment therefor as additional compensation for
services rendered or to be rendered to the Company. Stock Awards shall be
subject to such terms and conditions as the Committee determines appropriate,
including, without limitation, restrictions on the sale or other disposition
of such shares and rights of the Company to reacquire such shares for no
consideration upon termination of the participant's employment within
specified periods. The Committee may require the participant to deliver a
duly signed stock power, endorsed in blank, relating to the Common Stock
covered by such an Award. The Committee may also require that the stock
certificates evidencing such shares be held in custody until the restrictions
thereon shall have lapsed. Except as otherwise provided in the written Stock
Award, each participant shall have, with respect to the shares of Common
Stock subject to a Stock Award, all of the rights of a holder of shares of
Common Stock of the Company, including the right to receive dividends and to
vote the shares.
9. PERFORMANCE UNITS. Performance Units may be awarded either alone or
in addition to other Awards granted under this Plan and shall consist of the
right to receive Common Stock or cash of an equivalent value at the end of a
specified Performance Period (defined below). The Committee shall determine
the participants to whom and the time or times at which shall be awarded,
the number of Performance Units to be awarded to any person, the duration of
the period (the "PERFORMANCE PERIOD") during which, and the conditions under
which, receipt of the Shares will be deferred, and the other terms and
conditions of the Award in addition to those set forth in this Section 9.
The Committee may condition the grant of Performance Units upon the
attainment of specified performance goals or such other factors or criteria
as the Committee shall determine. Performance Units awarded pursuant to this
Section 9 shall be subject to the following terms and conditions:
(a) DIVIDENDS. Unless otherwise determined by the Committee at
the time of the grant of the Award, amounts equal to any dividends declared
during the Performance Period with respect to the number of shares of Common
Stock covered by a Performance Unit Award will not be paid to the participant.
(b) PAYMENT. Subject to the provisions of the written Award and
this Plan, at the expiration of the Performance Period, share certificates
and/or cash of an equivalent value (as the Committee may determine) shall be
delivered to the participant, or his or her legal representative, in a number
or amount equal to the vested shares covered by the Performance Unit Award.
(c) TERMINATION OF EMPLOYMENT. Subject to the applicable
provisions of the written Award and this Plan, upon termination of a
participant's employment with the
-5-
Company for any reason during the Performance Period for a given Award, the
Performance Units in question will vest or be forfeited in accordance with
the terms and conditions established by the Committee.
10. ADJUSTMENT PROVISIONS.
(a) If the Company shall at any time change the number of issued
shares of Common Stock without new consideration to the Company (such as by
stock dividend, stock split, recapitalization, reorganization, exchange of
shares, liquidation, combination or other change in corporate structure
affecting the Common Stock) or make a distribution of cash or property which
has a substantial impact on the value of issued Common Stock, the total
number of shares available for Awards under this Plan shall be appropriately
adjusted and the number of shares covered by each outstanding Award and the
reference price or Fair Market Value for each outstanding Award shall be
adjusted so that the net value of such Award shall not be changed.
(b) In the case of any sale of assets, merger, consolidation,
combination or other corporate reorganization or restructuring of the Company
with or into another corporation which results in the outstanding Common Stock
being converted into or exchanged for different securities, cash or other
property, or any combination thereof (an "ACQUISITION"), subject to the
provisions of this Plan and any limitation applicable to the Award:
(i) any Participant to whom a Stock Option has been granted
shall have the right thereafter and during the term of the Stock
Option, to receive upon exercise thereof the Acquisition Consideration
(as defined below) receivable upon the Acquisition by a holder of the
number of shares of Common Stock which might have been obtained upon
exercise of the Stock Option or portion thereof, as the case may be,
immediately prior to the Acquisition;
(ii) any Participant to whom a Stock Appreciation Right has
been granted shall have the right thereafter and during the term of
such right to receive upon exercise thereof the difference on the
exercise date between the aggregate Fair Market Value of the
Acquisition Consideration receivable upon such acquisition by a holder
of the number of shares of Common Stock which are covered by such
right and the aggregate reference price of such right; and
(iii) any Participant to whom Performance Units have been
awarded shall have the right thereafter and during the term of such
Award, upon fulfillment of the term of the Award, to receive on the
date or dates set forth in the Award, the Acquisition Consideration
receivable upon such
-6-
acquisition by a holder of the number of shares of Common Stock which
are covered by such Award.
The term "ACQUISITION CONSIDERATION" shall mean the kind and amount of
securities, cash or other property or any combination thereof receivable in
respect of one share of Common Stock upon consummation of an Acquisition.
(c) Notwithstanding any other provision of this Plan, the
Committee may authorize the issuance, continuation or assumption of Awards or
provide for other equitable adjustments after changes in the Common Stock
resulting from any other merger, consolidation, sale of assets, acquisition
of property or stock, recapitalization, reorganization or similar occurrence
upon such terms and conditions as it may deem equitable and appropriate.
(d) In the event that another corporation or business entity is
being acquired by the Company, and the Company assumes outstanding employee
stock options and/or stock appreciation rights and/or the obligation to make
future grants of options or rights to employees of the acquired entity, the
aggregate number of shares of Common Stock available for Awards under this
Plan shall be increased accordingly.
11. NONTRANSFERABILITY.
(a) Each Award granted under the Plan to a participant shall not
be transferable by him otherwise than by law or by will or the laws of
descent and distribution, and shall be exercisable, during his lifetime, only
by him. In the event of the death of a participant while the participant is
rendering services to the Company, each Award theretofore granted to him
shall be exercisable during the period of six (6) months after his death (but
not beyond the stated duration of the Award) and then only: (i) by the
executor or administrator of the estate of the deceased participant or the
person or persons to whom the deceased participant's rights under the Award
shall pass by will or the laws of descent and distribution; and (ii) to the
extent that the deceased participant was entitled to do so at the date of his
death.
(b) Notwithstanding Section 11(a), in the discretion of the
Committee, Awards granted hereunder may be transferred to members of the
participant's immediate family (which for purposes of this Plan shall be
limited to the participant's children, grandchildren and spouse), or to one
or more trusts for the benefit of such family members or partnerships in
which such family members and/or trusts are the only partners, but only if
the Award expressly so provides.
12. OTHER PROVISIONS. Awards under the Plan may also be subject to
such other provisions (whether or not applicable to the Award granted to any
other participant) as the Committee determines appropriate, including without
limitation, provisions for the
-7-
installment purchase of Common Stock under Stock Options, provisions for the
installment exercise of Stock Appreciation Rights, provisions to assist the
participant in financing the acquisition of Common Stock, provisions for the
forfeiture of, or restrictions on resale or other disposition of Shares
acquired under any form of Award, provisions for the acceleration of vesting
and/or the payment of the value of Awards to participants in the event of a
change of control of the Company, provisions for the forfeiture of, or
provisions to comply with Federal and state securities laws, or
understandings or conditions as to the participant's employment in addition
to those specifically provided for under the Plan.
13. FAIR MARKET VALUE. For purposes of this Plan and any Benefits
awarded hereunder, Fair Market Value of Common Stock shall be the mean
between the highest and lowest sale prices for the Company's Common Stock as
reported in THE WALL STREET JOURNAL under the heading "NASDAQ NATIONAL
MARKET" (or equivalent recognized source of quotations) on the date of
calculation (or on the next preceding trading date if Common Stock was not
traded on the date of calculation), provided, however, that if the Company's
Common Stock is not at any time listed for trading on the NASDAQ National
Market System, Fair Market Value shall mean the amount determined in good
faith by the Committee as the fair market value of the Common Stock of the
Company.
14. WITHHOLDING. All payments or distributions made pursuant to the
Plan shall be net of any amounts required to be withheld pursuant to
applicable federal, state and local tax withholding requirements. If the
Company proposes or is required to distribute Common Stock pursuant to the
Plan, it may require the recipient to remit to it an amount sufficient to
satisfy applicable federal, state and local tax withholding requirements, if
any, prior to the delivery of any certificates for such Common Stock. The
Committee may, in its discretion and subject to such rules as it may adopt,
permit an optionee or award holder to (i) pay all or a portion of the
federal, state and local withholding taxes arising in connection with the
exercise of a Stock Option, or (ii) the receipt of a Stock Award, by electing
to have the Company withhold shares of Common Stock having a Fair Market
Value equal to the amount to be withheld.
15. TENURE. A participant's right, if any, to continue to serve the
Company as an officer, employee, independent contractor consultant or
otherwise, shall not be enlarged or otherwise affected by his or her
designation as a participant under the Plan, nor shall this Plan in any way
interfere with the right of the Company, subject to the terms of any separate
employment agreement or other agreement to the contrary, at any time to
terminate such employment or engagement or to increase or decrease the
compensation of the participant from the rate in existence at the time of the
grant of an Award.
16. DURATION, AMENDMENT AND TERMINATION. No Award shall be granted
after December 31, 2003; provided, however, that the terms and conditions
applicable to any Award granted prior to such date may thereafter be amended
or modified by mutual agreement between the Company and the participant or
such other persons as may then have
-8-
an interest therein. Also, by mutual agreement between the Company and a
participant hereunder or under any other present or future plan of the
Company, Awards may be granted to such participant in substitution and
exchange for, and in cancellation of, any Awards previously granted such
participant under this Plan, or any other present or future plan of the
Company. The Board of Directors may amend the Plan from time to time or
terminate the Plan at any time PROVIDED, HOWEVER, that Section 6(h) of this
Plan may not be amended more frequently than once every six months. However,
no action authorized by this paragraph shall change the terms and conditions
of any existing Award without the participant's consent. No amendment of the
Plan shall, without approval of the stockholders of the Company, (i)
materially increase the total number of shares which may be issued under the
Plan; (ii) materially modify the requirements as to eligibility for Awards
under the Plan; (iii) result in any member of the Committee losing his or her
status as a disinterested person under Securities and Exchange Commission
Regulation Section 240.16b-3 to the extent applicable; (iv) result in the
Plan losing its status as a protected plan under Securities and Exchange
Commission Rule 16b-3 to the extent applicable; or (v) extend the term of
this Plan.
17. GOVERNING LAW. This Plan and actions taken in connection herewith
shall be governed and construed in accordance with the laws of the State of
Illinois (regardless of the law that might otherwise govern under applicable
Illinois principles of conflict of laws).
18. STOCKHOLDER APPROVAL. The Plan as amended and restated has been
approved by the stockholders of the Company on April 29, 1997.
-9-