THE CHERRY CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSES OF THE EMPLOYEE PLAN.
The purposes of the Employee Stock Purchase Plan
("Employee Plan") are to encourage employees of The Cherry
Corporation (the "Company") and its present or future
subsidiaries (the "Subsidiary Companies") to become stockholders
in the Company, to stimulate increased interest on their part in
the affairs of the Company and Subsidiary Companies, and to
afford them an opportunity to share in the profits and growth of
the Company and its Subsidiary Companies. These purposes are
sought to be accomplished under the Employee Plan by enabling
employees to purchase directly from the Company authorized but
unissued shares of the Company's Common Stock or treasury stock
at a discount from the market price at the time that the
purchases are made and to allow employees to pay the purchase
price through payroll deductions. The Employee Plan has been
found desirable by the Board of Directors of the Company and is
believed to be advantageous to employees desiring to become
holders of the Common Stock of the Company and in the best
interests of the Company and the Subsidiary Companies.
Participation in the Employee Plan is entirely voluntary.
2. ADMINISTRATION OF EMPLOYEE PLAN.
The Employee Plan will be administered for the Company
by a committee to be known as the Employee Stock Purchase Plan
Committee ("Committee"). Such Committee shall consist of three
members to be appointed annually by the Board of Directors of the
Company. The responsibility for recording and maintaining the
Committee's records may be delegated by the Committee to a
banking institution of its choice. The responsibility for
selling the shares to participants under the Employee Plan in any
state or jurisdiction may be delegated by the Committee to
broker-dealers of its choice.
Each participant in the Employee Plan shall have a
separate account, and each participant in the Employee Plan will
receive a quarterly statement of his account. In addition, each
participant will receive annually a current Prospectus for the
Employee Plan and copies of the same communications sent to all
holders of Company Common Stock, including the Company's current
quarterly report to stockholders, the Annual Report to
Stockholders, the Notice of Annual Meeting and Proxy Statement
and Internal Revenue Service information for reporting dividends
paid.
The Company and the Committee, in administering the
Employee Plan, will not be liable for any act done in good faith
or for any good faith omission to act, including, without
limitation, any claim of liability arising out of failure to
terminate a participant's account upon such participant's death
prior to receipt of notice in writing of such death.
The Company will pay all administrative costs of the
Employee Plan and no brokerage fees or other charges will be
payable by any participant.
3. EMPLOYEES ELIGIBLE TO PARTICIPATE.
Any full-time employee of the Company or the Subsidiary
Companies shall be eligible ("Eligible Employee") to purchase
shares of the Company's Common Stock under the Employee Plan,
subject to such eligibility requirements as may be determined
from time to time by the Committee.
An Eligible Employee may join the Employee Plan at any
time.
4. PARTICIPATION THROUGH PAYROLL DEDUCTION.
An Eligible Employee may participate in the Employee
Plan by filing with the Company (or any Subsidiary Company), on a
Payroll Deduction Form furnished by the Company (or any
Subsidiary Company), an authorization for the Company (or any
Subsidiary Company) to make payroll deductions in an amount
selected by the employee which is not less than $5.00 per week
nor more than $50.00 per week. Employees may increase or
decrease, within the above limits, the amount of such deduction
by notifying the Company (or any Subsidiary Company) on forms to
be furnished by the Company (or any Subsidiary Company); provided
that no employee shall be permitted to make changes in the amount
of such deduction more than once during any four payroll
deduction periods. Payroll deductions, or any changes therein,
will begin with the next payroll deduction period after receipt
by the Company (or Subsidiary Companies) of the Completed Payroll
Deduction Form or notification of a change therein if such
receipt occurs at least five business days prior to such payroll
deduction period.
Payroll deductions will be used by the Company, along
with any dividends available for investment (see Section 5), to
purchase authorized but unissued shares of the Company's Common
Stock.
No interest will be paid by the Company on payroll
deductions.
All communications shall be given to the: Employee
Stock Purchase Plan Committee c/o The Cherry Corporation,
3600 Sunset Avenue, Waukegan, Illinois 60085.
5. REINVESTMENT OF DIVIDENDS.
Until the Company is notified of a participant's death
or withdrawal from the Employee Plan or the Employee Plan is
terminated by the Company, or a participant ceases to be an
Eligible Employee all cash dividends paid on shares of the
Company's Common Stock credited to a participant's account under
the Employee Plan will be used to purchase additional shares of
the Company's Common Stock.
6. NUMBER AND PRICE OF SHARES PURCHASED UNDER THE EMPLOYEE
PLAN.
The number of shares which may be purchased for each
participant depends upon the amount of the participant's payroll
deductions, and dividends available for investment, if any, the
price of the shares of Common Stock and the number of shares
available for sale pursuant to the Employee Plan as set forth in
Section 7. Except as limited by the provisions of Section 7,
each participant's account will be credited on each Common Stock
Purchase Date with that number of shares, including any fraction
of a share computed to four decimal places, equal to the total
amount in the participant's account available for investment on
the Common Stock Purchase Date divided by the purchase price.
The price of shares of Company Common Stock purchased
pursuant to the Employee Plan will be 95% of the average of the
over-the-counter market's closing bid and closing asked price of
the Company's Common Stock as reported on the NASDAQ System of
the National Association of Securities Dealers, Inc. ("NASDAQ")
on the appropriate Common Stock Purchase Date (or the next
preceding trading day if the Common Stock Purchase Date is not an
over-the-counter market trading day). For purposes hereof, the
Common Stock Purchase Date shall be the date set by the Board of
Directors or the Committee and if no date is set it shall be the
15th day of each calendar month (or the next preceding trading
day if such date is not an NASDAQ trading day).
7. TOTAL NUMBER OF SHARES AVAILABLE FOR ISSUANCE AND SALE
PURSUANT TO THE EMPLOYEE PLAN.
The number of shares of the Company's authorized but
unissued Common Stock reserved for issuance and sale pursuant to
the Employee Plan will be such number as the Board of Directors
may from time to time determine and will initially be 200,000
shares. The Company shall promptly institute the requisite
corporate and regulatory proceedings which may be necessary or
appropriate to assure continued availability of such shares for
issuance and sale pursuant to the Employee Plan. The Company is
entitled to substitute treasury stock for authorized and unissued
stock, but this shall not increase the ultimate number of shares
reserved for the Employee Plan.
In the event that payroll deductions and dividends
available for investment of all participants exceed, at any
Common Stock Purchase Date, the aggregate Purchase Price of
shares remaining available for issuance pursuant to the Employee
Plan, payroll deductions and dividends available for investment
of each participant will be applied pro rata to the purchase of
shares available under the Employee Plan. The portion of each
payroll deduction or dividends available for investment of any
participant not so applied will be returned promptly without
interest to the participant.
8. ISSUANCE OF CERTIFICATES FOR COMMON STOCK PURCHASE UNDER THE
EMPLOYEE PLAN.
Certificates for shares of Common Stock purchased under
the Employee Plan will automatically be issued to a participant
who has 25 or more shares credited to his account and a
participant is entitled to receive certificates for a lesser
number of whole shares credited to his account upon written
request. A participant's Employee Plan account will be reduced
by the number of such shares issued to a participant.
Certificates for whole shares, when issued, will be
registered in the names in which accounts under the Employee Plan
are maintained, or in such other manner as a participant may
direct.
9. PLEDGING OF COMMON STOCK CREDITED TO PARTICIPANT'S EMPLOYEE
PLAN ACCOUNT.
Shares credited to the account of a participant may not
be pledged.
10. NON-TRANSFERABILITY OF RIGHTS.
The right to purchase shares of the Company's Common
Stock pursuant to the Employee Plan shall not be transferable in
any manner otherwise than by will or the laws of descent and
distribution.
11. DEATH OF PARTICIPANT OR WITHDRAWAL FROM EMPLOYEE PLAN.
A participant may withdraw from the Employee Plan at
any time, but upon withdrawal an eligible employee will not be
able to begin participation again for four payroll deduction
periods after his withdrawal. A participant's death or
withdrawal from the Employee Plan will stop all investments prior
to a Common Stock Purchase Date if notification of death or
withdrawal is received not later than five business days prior to
such Common Stock Purchase Date. Any payroll deduction or
dividend reinvestment for which investment has been stopped by
timely notification of death or withdrawal from the Employee
Plan, will be refunded by the Company to the participant without
interest.
The Company or the Committee must be notified in
writing at the address set forth in Section 4 of participant's
death or withdrawal from the Employee Plan. Upon notification of
participant's death or withdrawal from the Employee Plan or upon
termination of the Employee Plan by the Company or upon a
participant's ceasing to be an eligible employee, certificates
for whole shares credited to the participant's account under the
Employee Plan will be issued and a cash payment will be made for
any fraction of a share credited to the employee's account. The
cash payment for any fractional share will be based on the
average of the over-the-counter market's closing bid and closing
asked price of the Company's Common Stock as reported on NASDAQ
on the Common Stock Purchase Date immediately prior to the date
notification of death or withdrawal is received by the Company,
or on the termination date of the Employee Plan or on the date
the participant ceases to be an eligible employee (or the next
preceding trading day if such date is not an over-the-counter
market trading day).
12. RIGHTS OFFERING.
In the event of a rights offering, warrants
representing rights on any whole shares credited to a
participant's account under the Employee Plan will be mailed
directly to the participant in the same manner as all other
shareholders.
Rights based on a fraction of a share credited to a
participant's Employee Plan account will be sold by the Company
and the proceeds will be credited to the participant's account
under the Employee Plan and applied as a cash payment to purchase
authorized but unissued shares of the Company's Common Stock on
the next Common Stock Purchase Date.
13. STOCK DIVIDENDS OR STOCK SPLITS.
Any stock dividends or shares issued pursuant to a
stock split distributed by the Company on shares credited to the
account of a participant under the Employee Plan will be added to
the participant's account.
14. VOTING RIGHTS OF SHARES CREDITED TO PARTICIPANT'S ACCOUNTS
UNDER THE EMPLOYEE PLAN.
For each meeting of shareholders each participant will
receive a proxy for voting whole shares credited to the
employee's account under the Employee Plan. A participant will
not be entitled to vote fractional shares credited to his
account.
15. SUSPENSION, MODIFICATION, AMENDMENT OR TERMINATION OF
EMPLOYEE PLAN.
The Board of Directors of the Company reserves the
right to suspend, modify, amend, or terminate the Employee Plan
at any time except that the Board of Directors cannot decrease
the purchase price of the shares offered pursuant to the Employee
Plan, or make more restrictive the eligibility requirements for
employees wishing to participate in the Employee Plan. All
participants will receive notice of any suspension, material
modification, amendment or termination of the Employee Plan.
16. IMPLEMENTATION, INTERPRETATION, OR REGULATION OF EMPLOYEE
PLAN.
The Company is authorized to take such actions to carry
out the Employee Plan as may be consistent with the Employee
Plan's terms and conditions.
The Company reserves the right to interpret and
regulate the Employee Plan as it deems desirable or necessary in
connection with the Employee Plan's operation.