HMN FINANCIAL, INC.
1995 STOCK OPTION AND INCENTIVE PLAN
AS AMENDED JULY 29, 1998
1. PLAN PURPOSE. The purpose of the Plan is to promote the long-term
interests of the Corporation and its stockholders by providing a means for
attracting and retaining directors, officers and employees of the Corporation
and its Affiliates. It is intended that designated Options granted pursuant to
the provisions of this Plan to persons employed by the Corporation or its
Affiliates will qualify as Incentive Stock Options. Options granted to persons
who are not employees will be Non-Qualified Stock Options.
2. DEFINITIONS. The following definitions are applicable to the Plan:
"Affiliate" - means any "parent corporation" or "subsidiary corporation" of
the Corporation, as such terms are defined in Section 424(e) and (f),
respectively, of the Code.
"Award" - means the grant of an Incentive Stock Option, a Non-Qualified
Stock Option, a Stock Appreciation Right or a Limited Stock Appreciation Right,
or any combination thereof, as provided in the Plan.
"Bank" - means Home Federal Savings Bank and any predecessor or successor
entity.
"Cause" - means personal dishonesty, willful misconduct, any breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, or the willful violation of any law, rule, regulation (other than
traffic violations or similar offenses) or a final cease and desist order which
results in a loss to the Bank or any Affiliate.
"Code" - means the Internal Revenue Code of 1986, as amended.
"Committee" - means the Committee referred to in Section 3 hereof.
"Continuous Service" - means the absence of any interruption or termination
of service as a director, director emeritus, advisory director, officer or
employee of the Corporation or an Affiliate, except that when used with respect
to any Options or Rights which at the time of exercise are intended to be
Incentive Stock Options, continuous service means the absence of any
interruption or termination of service as an employee of the Corporation or an
Affiliate. Service shall not be considered interrupted in the case of sick
leave, military leave or any other leave of absence approved by the Corporation
or in the case of transfers between payroll locations of the Corporation or
between the Corporation, its parent, its subsidiaries or its successor. With
respect to any director emeritus or advisory director, continuous service shall
mean availability to perform such functions as may be required of the Bank's
directors emeriti or advisory directors, as the case may be.
"Corporation" - means HMN Financial, Inc., a Delaware corporation.
"Disinterested Person" - means any member of the Board of Directors of the
Corporation who is not being and within the prior year has not been granted any
awards related to the Shares under this Plan or any other plan of the
Corporation or any of its Affiliates except for awards which (i) are calculated
in accordance with a formula as contemplated in paragraph (c)(2)(ii) of Rule
16b-3 ("Rule 16b-3") under the Securities Exchange Act of 1934; (ii) result
from participation in an ongoing securities acquisition plan meeting the
conditions of paragraph (d)(2) of Rule 16b-3; or (iii) arise from an election by
a director to receive all or part of his board fees in securities. No recipient
of a stock award granted pursuant to Section 20 hereof shall be deemed not to be
a Disinterested Person solely by reason of such grant.
"Employee" - means any person, including an officer or director, who is
employed by the Corporation or any Affiliate.
"ERISA" - means the Employee Retirement Income Security Act of 1974, as
amended.
"Exercise Price" - means (i) in the case of an Option, the price per Share
at which the Shares subject to such Option may be purchased upon exercise of
such Option and (ii) in the case of a Right, the price per Share (other than the
Market Value per Share on the date of exercise and the Offer Price per Share as
defined in Section 10 hereof) which, upon grant, the Committee determines shall
be utilized in calculating the aggregate value which a Participant shall be
entitled to receive pursuant to Sections 9, 10 or 11 hereof upon exercise of
such Right.
"Incentive Stock Option" - means an option to purchase Shares granted by the
Committee pursuant to Section 6 hereof which is subject to the limitations and
restrictions of Section 8 hereof and is intended to qualify under Section 422 of
the Code.
"Limited Stock Appreciation Right" - means a stock appreciation right with
respect to Shares granted by the Committee pursuant to Sections 6 and 10 hereof.
"Market Value" - means the average of the high and low quoted sales price on
the date in question (or, if there is no reported sale on such date, on the last
preceding date on which any reported sale occurred) of a Share on the Composite
Tape for the New York Stock Exchange Listed Stocks, or, if on such date the
Shares are not quoted on the Composite Tape, on the New York Stock Exchange, or,
if the
Shares are not listed or admitted to trading on such Exchange, on the principal
United States securities exchange registered under the Securities Exchange Act
of 1934 on which the Shares are listed or admitted to trading, or, if the
Shares are not listed or admitted to trading on any such exchange, the mean
between the closing high bid and low asked quotations with respect to a Share on
such date on the National Association of Securities Dealers, Inc., Automated
Quotations System, or any similar system then in use, or, if no such quotations
are available, the fair market value on such date of a Share as the Committee
shall determine.
"Non-Qualified Stock Option" - means an option to purchase Shares granted by
the Committee pursuant to Section 6 hereof, which option is not intended to
qualify under Section 422(b) of the Code.
"Option" - means an Incentive Stock Option or a Non-Qualified Stock Option.
"Participant" - means any director, officer or employee of the Corporation
or any Affiliate who is selected by the Committee to receive an Award and any
director, director emeritus or advisory director of the Corporation who is
granted an Award pursuant to Section 20 hereof.
"Plan" - means the 1995 Stock Option and Incentive Plan of the Corporation.
"Related" - means (i) in the case of a Right, a Right which is granted in
connection with, and to the extent exercisable, in whole or in part, in lieu of,
an Option or another Right and (ii) in the case of an Option, an Option with
respect to which and to the extent a Right is exercisable, in whole or in part,
in lieu thereof has been granted.
"Right" - means a Limited Stock Appreciation Right or a Stock Appreciation
Right.
"Shares" - means the shares of comrnon stock of the Corporation.
"Senior Officer" - means the Corporation's president, principal financial
officer, or principal accounting officer, any vice president of the Corporation
in charge of a principal business unit, division or function (such as sales,
administration or finance), any other officer who performs a policy-making
function, or any other person who performs similar policy-making functions for
the Corporation. Officers of the Corporation's Affiliates shall be deemed Senior
Officers of the Corporation if they perform such policy-making functions for the
Corporation.
"Stock Appreciation Right" - means a stock appreciation right with respect
to Shares granted by the Committee pursuant to Sections 6 and 9 hereof.
"Ten Percent Beneficial Owner" - means the beneficial owner of more than ten
percent of any class of the Corporation's equity securities registered pursuant
to Section 11 of the Securities Exchange Act of 1934.
3. ADMINISTRATION. The Plan shall be administered by a Committee consisting
of three or more members, each of whom shall be a Disinterested Person and each
of whom shall be an "outside director" as set forth in Section 162(m) of the
Code and defined in the regulations promulgated thereunder; provided, however,
that with respect to awards made to any member of the Board of Directors of the
corporation who is not a full-time employee of the corporation, the Plan shall
be administered by the Board of Directors of the corporation. The members of the
Committee shall be appointed by the Board of Directors of the corporation. The
Committee or the Board of Directors, as the case may be, shall have sole and
complete authority and discretion to (i) select Participants and grant Awards;
(ii) determine the number of Shares to be subject to types of Awards generally
as well as to individual Awards granted under the Plan; (iii) determine the
terms and conditions upon which Awards shall be granted under the Plan; (iv)
describe the form and terms of instruments evidencing such grants; and (v)
establish from time to time regulations for the administration of the Plan,
interpret the Plan and make all determinations deemed necessary or advisable for
the administration of the Plan. A majority of the Committee or the Board of
Directors, as the case may be, shall constitute a quorum and the acts
of a majority of the members present at any meeting at which a quorum
is present, or acts approved in writing by a majority of the Committee
or Board of Directors without a meeting shall be acts of the Committee or
Board of Directors.
4. PARTICIPATION IN COMMITTEE AWARDS. The Committee may select from time to
time Participants in the Plan from those directors, officers, employees and
other participants (other than Disinterested Persons), of the Corporation or its
Affiliates who, in the opinion of the Committee, have the capacity for
contributing to the successful performance of the Corporation or its Affiliates.
5. SHARES SUBJECT TO PLAN. Subject to adjustment by the operation of Section
11 hereof, the maximum number of Shares with respect to which Awards may be made
under the Plan is 10% of the total Shares issued in the Bank's conversion to the
capital stock form. The Shares with respect to which Awards may be made under
the Plan may be either authorized and unissued shares or issued shares
heretofore or hereafter reacquired and held as treasury shares. Shares which are
subject to Related Rights and Related Options shall be counted only once in
determining whether the maximum number of Shares with respect to which Awards
may be granted under the Plan has been exceeded. An Award shall not be
considered to have been made under the Plan with respect to any Option or Right
which terminates and new Awards may be granted under the Plan with respect to
the number of Shares as to which such termination has occurred. Any Award
made pursuant to this Plan, which Award is subject to the requirements of
Office of Thrift Supervision Regulations, shall vest in five equal annual
installments with the first installment vesting on the one-year anniversary of
the date of grant, except in the event of death, disability or a change in
control as defined in Section 13 of this Plan.
In the event Office of Thrift Supervision Regulations are amended (the
"Amended Regulations") to permit shorter vesting periods, any Award made
pursuant to this Plan, which Award is subject to the requirements of such
Amended Regulations, may vest, at the sole discretion of the Committee, in
accordance with such Amended Regulations.
6. GENERAL TERMS AND CONDITIONS OF OPTIONS AND RIGHTS. The Committee shall
have full and complete authority and discretion, except as expressly limited by
the Plan, to grant Options and/or Rights and to provide the terms and conditions
(which need not be identical among Participants) thereof. In particular, the
Committee shall prescribe the following terms and conditions: (i) the Exercise
Price of any Option or Right, which shall not be less than the Market Value per
Share at the date of grant of such Option or Right, (ii) the number of Shares
subject to, and the expiration date of, any Option or Right, which expiration
date shall not exceed ten years from the date of grant, (iii) the manner, time
and rate (cumulative or otherwise) of exercise of such Option or Right, and (iv)
the restrictions, if any, to be placed upon such Option or Right or upon Shares
which may be issued upon exercise of such Option or Right. The Committee may, as
a condition of granting any Option or Right, require that a Participant agree
not to thereafter exercise one or more Options or Rights previously granted to
such Participant. Notwithstanding the foregoing, no individual shall be granted
Awards with respect to more than 50% of the shares reserved for issuance under
the Plan in any calendar year.
7. EXERCISE OF OPTIONS OR RIGHTS.
(a) Except as provided herein, an Option or Right granted under the Plan
shall be exercisable during the lifetime of the Participant to whom such
Option or Right was granted only by such Participant and, except as
provided in paragraphs (c) and (d) of this Section 7,
no such Option or Right may be exercised unless
at the time such Participant exercises such Option or Right, such Participant
has maintained Continuous Service since the date of grant of such Option or
Right. Cash settlements of Rights may be made only in accordance with any
applicable restrictions pursuant to Rule 16b-3(e) under the Securities
Exchange Act of 1934 or any similar or successor provision.
(b) To exercise an Option or Right under the Plan, the Participant to whom
such Option or Right was granted shall give written notice to the
Corporation in form satisfactory to the Committee (and, if partial exercises
have been permitted by the Committee, by specifying the number of Shares
with respect to which such Participant elects to exercise such Option or
Right) together with full payment of the Exercise Price, if any and to the
extent required. The date of exercise shall be the date on which such notice
is received by the Corporation. Payment, if any is required, shall be made
either (i) in cash (including check, bank draft or money order) or (ii) if
permitted by the Committee, by delivering (A)
Shares already owned by the Participant and having a fair market value equal
to the applicable exercise price, such fair market value to be
determined in such appropriate manner as may be provided by the Committee or
as may be required in order to comply with or to conform to requirements of
any applicable laws or regulations, or (B) a combination of cash and such
Shares.
(c) Except as provided in Section 14, hereof, if a Participant to whom an
Option or Right was granted shall cease to maintain Continuous Service for
any reason (including normal or early retirement, but excluding disability,
death and termination of employment by the Corporation or any Affiliate for
cause), such Participant may, but only within the period of three months
immediately succeeding such cessation of Continuous Service and in no event
after the expiration date of such Option or Right, exercise such Option or
Right to the extent that such Participant was entitled to exercise such
Option or Right at the date of such cessation, provided, however, that such
right of exercise after cessation of Continuous Service shall not be
available to a Participant if the Committee otherwise determines and so
provides in the applicable instrument or instruments evidencing the grant of
such Option or Right. Notwithstanding the foregoing, if a Participant to whom
an Option or Right was granted shall cease to maintain Continuous Service due
to a disability and such Participant has served the Corporation or the Bank
for at least ten years, such Option or Right granted to such Participant
shall become immediately exercisable, and the
Participant may exercise such Option or Right, but only during the shorter of
the following periods (A) the two-year period immediately succeeding such
cessation of Continuous Service, or (B) the period remaining until the
expiration date of such Option or Right. If the Continuous Service of a
Participant to whom an Option or Right was granted by the Corporation is
terminated for Cause, all rights under any Option or Right of such
Participant shall expire immediately upon the giving to the Participant of
notice of such termination.
(d) In the event of the death of a Participant while in the Continuous
Service of the Corporation or an Affiliate or within the two-year period
referred to in paragraph (c) of this Section 7, the person to whom any
Option or Right held by the Participant at the time of his death is
transferred by will or the laws of descent and distribution, or in the case
of an Award other than an Incentive Stock Option, pursuant to a qualified
domestic relations order, as defined in
the Code or Title 1 of ERISA or the rules thereunder may, but only to the
extent such Participant was entitled to exercise such Option or Right
immediately prior to his death, exercise such Option or Right at any time
within a period of one year succeeding the date of death of such Participant,
but in no event later than ten years from the date of grant of such Option or
Right. Following the death of any Participant to whom an Option was granted
under the Plan, irrespective of whether any Related Right shall have
theretofore been granted to the Participant or whether the person entitled to
exercise such Related Right desires to do so, the Committee may, as an
alternative means of settlement of such Option, elect to pay to the person to
whom such Option is transferred by
will or by the laws of descent and distribution, or in the case of an Option
other than an Incentive Stock Option, pursuant to a qualified domestic
relations order, as defined in the Code or Title I of ERISA or the rules
thereunder, the amount by which the Market Value per Share on the date of
exercise of such Option shall exceed the Exercise Price of such Option,
multiplied by the number of Shares with respect to which such Option is
properly exercised. Any such settlement of an Option shall be considered an
exercise of such Option for all purposes of the Plan.
8. INCENTIVE STOCK OPTIONS. Incentive Stock Options may be granted only to
Participants who are Employees. Any provision of the Plan to the contrary
notwithstanding, (i) no Incentive Stock Option shall be granted more than ten
years from the date the Plan is adopted by the Board of Directors of the
Corporation and no Incentive Stock Option shall be exercisable more than
ten years from the date such Incentive Stock Option is granted, (ii)
the Exercise Price of any Incentive Stock Option shall not be less
than the Market Value per Share on the date such Incentive Stock
Option is granted, (iii) any Incentive Stock Option shall not be
transferable by the Participant to whom such Incentive Stock Option is granted
other than by will or the laws of descent and distribution, and shall be
exercisable during such Participant's lifetime only by such Participant, (iv) no
Incentive Stock Option shall be granted to any individual who, at the time such
Incentive Stock Option is granted, owns stock possessing more than ten percent
of the total combined voting power of all classes of stock of the Corporation or
any Affiliate unless the Exercise Price of such Incentive Stock Option is at
least 110 percent of the Market Value per Share at the date of grant and such
Incentive Stock Option is not exercisable after the expiration of five
years from the date such Incentive Stock Option is granted, and (v) the
aggregate Market Value (determined as of the time any Incentive
Stock Option is granted) of the Shares with respect to which
Incentive Stock Options are exercisable for the first time by a
Participant in any calendar year shall not exceed $100,000.
9. STOCK APPRECIATION RIGHTS. A Stock Appreciation Right shall, upon its
exercise, entitle the Participant to whom such Stock Appreciation Right was
granted to receive a number of Shares or cash or combination thereof, as the
Committee in its discretion shall determine, the aggregate value of which
(i.e., the sum of the amount of cash and/or Market Value of such Shares
on date of exercise) shall equal (as nearly as possible, it being understood
that the Corporation shall not issue any fractional shares) the amount by
which the Market Value per Share on the date of such exercise shall exceed
the Exercise Price of such Stock Appreciation Right,
multiplied by the number of Shares with respect of which such Stock Appreciation
Right shall have been exercised. A Stock Appreciation Right may be Related to an
Option or may be granted independently of any Option as the Committee shall from
time to time in each case determine. At the time of grant of an Option the
Committee shall determine whether and to what extent a Related Stock
Appreciation Right shall be granted with respect thereto, provided, however,
and notwithstanding any other provision of the Plan, that if the Related Option
is an Incentive Stock Option, the Related Stock Appreciation Right shall
satisfy all the restrictions and limitations of Section 8 hereof as if such
Related Stock Appreciation Right were an Incentive Stock Option and as if other
rights which are Related to Incentive Stock Options were
Incentive Stock Options.
In the case of a Related Option, such Related Option shall cease to be
exercisable to the extent of the Shares with respect to which the Related Stock
Appreciation Right was exercised. Upon the exercise or termination of a
Related Option, any Related Stock Appreciation Right shall terminate to the
extent of the Shares with respect to which the Related Option was exercised or
terminated. Notwithstanding the foregoing, no Stock Appreciation Right shall be
exercisable by a director, Senior Officer or Ten Percent Beneficial Owner of the
Corporation within six months of the date of its grant.
10. LIMITED STOCK APPRECIATION RIGHTS. At the time of grant of an Option or
Stock Appreciation Right to any Participant, the Committee shall have full and
complete authority and discretion to also grant to such Participant a Limited
Stock Appreciation Right which is Related to such Option or Stock Appreciation
Right, provided, however and notwithstanding any other provision of the Plan,
that if the Related Option is an Incentive Stock Option, the Related Limited
Stock Appreciation Right shall satisfy all the restrictions and limitations of
Section 8 hereof as if such Related Limited Stock Appreciation Right were an
Incentive Stock Option and as if all other Rights which are Related to Incentive
Stock Options were Incentive Stock Options. Subject to vesting, a Limited Stock
Appreciation Right shall be exercisable only during the period beginning on the
first day following the date of expiration of any "offer" (as such term is
hereinafter defined) and ending on the 45th day following such date, provided,
however, that no Limited Stock Appreciation Right shall be exercisable by a
director, Senior Officer or Ten Percent Beneficial Owner within six months of
the date of its grant.
A Limited Stock Appreciation Right shall, upon its exercise, entitle the
Participant to whom such Limited Stock Appreciation Right was granted to receive
an amount of cash equal to the amount by which the "Offer Price per Share" (as
such term is hereinafter defined) or the Market Value on the date of such
exercise, as shall have been provided by the Committee in its discretion at
the time of grant, shall exceed the Exercise Price of such Limited Stock
Appreciation Right, multiplied by the number of Shares with respect to which
such Limited Stock Appreciation Right shall have been exercised. Upon the
exercise of a Limited Stock Appreciation Right, any Related Option and/or
Related Stock Appreciation Right shall cease to be exercisable to the extent of
the Shares with respect to which such Limited Stock Appreciation Right was
exercised. Upon the exercise or termination of a Related Option or Related Stock
Appreciation Right, any Related Limited Stock Appreciation Right
shall terminate to the extent of the Shares with respect to which
such Related Option or Related Stock Appreciation Right was
exercised or terminated.
For the purposes of this Section 10, the term "Offer" shall mean any tender
offer or exchange offer for Shares other than one made by the Corporation,
provided that the corporation, person or other entity making the offer acquires
pursuant to such offer either (i) 25% of the Shares outstanding immediately
prior to the commencement of such offer or (ii) a number of Shares which,
together with all other Shares acquired in any tender offer
or exchange offer (other than one made by the Corporation) which
expired within 60 days of the expiration date of the offer in
question, equals 25% of the Shares outstanding immediately prior to the
commencement of the offer in question. The term "Offer Price per Share" as used
in this Section 10 shall mean the highest price per Share paid in any Offer
which Offer is in effect any time during the period beginning on the 60th day
prior to the date on which a Limited Stock Appreciation Right is exercised and
ending on the date on which such Limited Stock Appreciation Right is exercised.
Any securities or property which are part or all of the consideration paid
for Shares in the Offer shall be valued in determining the Offer
Price per Share at the higher of (A) the valuation placed on such securities or
property by the corporation, person or other entity making such Offer or (B) the
valuation placed on such securities or property by the Committee.
11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of any change
in the outstanding Shares subsequent to the effective date of the Plan by
reason of any reorganization, recapitalization, stock split, stock
dividend, combination or exchange of shares, merger, consolidation
or any change in the corporate structure or Shares of the Corporation,
the maximum aggregate number and class of shares as to which Awards may be
granted under the Plan and the number and class of shares
with respect to which Awards theretofore have been granted under the Plan shall
be appropriately adjusted by the Committee, whose determination shall be
conclusive.
12. EFFECT OF MERGER. In the event of any merger, consolidation or
combinationof the Corporation (other than a merger, consolidation or
combination in which the Corporation is the continuing entity and which
does not result in the outstanding Shares being converted into or exchanged
for different securities, cash or other property, or any combination thereof)
pursuant to a plan or agreement the terms of which are binding upon all
stockholders of the Corporation (except to the extent
that dissenting stockholders may be entitled, under statutory provisions or
provisions contained in the certificate of incorporation, to receive the
appraised or fair value of their holdings), any Participant to whom an Option
or Right has been granted at least six months prior to such event shall have
the right (subject to the provisions of the Plan and any limitation applicable
to such Option or Right), thereafter and during the term of each such Option
or Right, to receive upon exercise of any such Option or Right an amount equal
to the excess of the fair market value on the date of such exercise of the
securities, cash or other property, or combination thereof, receivable upon
such merger, consolidation or combination in respect of a Share over the
Exercise Price of such Right or Option, multiplied by the number of Shares
with respect to which such Option or Right shall
have been exercised. Such amount may be payable fully in cash, fully in one or
more of the kind or kinds of property payable in such merger, consolidation or
combination, or partly in cash and partly in one or more of such kinder kinds of
property, all in the discretion of the Committee.
13. EFFECT OF CHANGE IN CONTROL. Each of the events specified in the
following clauses (i) through (iii) of this Section 13 shall be
deemed a "change of control": (i) any third person, including a group,
as defined in Section 13(d)(3) of the Securities Exchange Act of 1934,
shall become the beneficial owner of shares of the Corporation
with respect to which 25% or more of the total number of votes may
be cast for the election of the Board of Directors of the Corporation, (ii) as a
result of, or in connection with, any cash tender offer, exchange offer, merger
or other business combination, sale of assets or contested election, or
combination of the foregoing, the persons who were directors of the
Corporation shall cease to constitute a majority of the Board of Directors of
the Corporation, or (iii) the shareholders of the Corporation shall
approve an agreement providing either for a transaction in which the
Corporation will cease to be an independent publicly owned entity or for a
sale or other disposition of all or substantially all the assets of the
Corporation. If a tender offer or exchange offer for Shares (other
than such an offer by the Corporation) is commenced, or if the event
specified in clause (iii) above shall occur, unless the Committee shall have
otherwise provided in the instrument evidencing the grant of an Option or
Stock Appreciation Right, all Options and Stock Appreciation Rights
theretofore granted and not fully exercisable shall become exercisable in
full upon the happening of such event and shall remain so exercisable for a
period of sixty days following such date, after which they shall revert to
being exercisable in accordance with their terms,
provided, however, that no Option or Stock Appreciation Right shall be
exercisable by a director, Senior Officer or Ten Percent Beneficial Owner
of the Corporation within six months of the date of grant of such Option
or Stock Appreciation Right and no Option or Stock Appreciation Right
which has previously been exercised or otherwise terminated shall become
exercisable.
14. ASSIGNMENTS AND TRANSFERS. No Award nor any right or interest of a
Participant under the Plan in any instrument evidencing any Award under the Plan
may be assigned, encumbered or transferred except, in the event of the death of
a Participant, by will or the laws of descent and distribution or in the case of
Awards other than Incentive Stock Options pursuant to a qualified domestic
relations order, as defined in the Code or Title I of ERISA or the rules
thereunder.
15. EMPLOYEE RIGHTS UNDER THE PLAN. No director, officer or employee shall
have a right to be selected as a Participant nor, having been so selected, to be
selected again as a Participant and no director, officer, employee or other
person shall have any claim or right to be granted an Award under the Plan or
under any other incentive or similar plan of the Corporation or any Affiliate.
Neither the Plan nor any action taken thereunder shall be construed as
giving any employee any right to be retained in the employ of the
Corporation or any Affiliate.
16. DELIVERY AND REGISTRATION OF STOCK. The Corporation's obligation to
deliver Shares with respect to an Award shall, if the Committee so requests,
be conditioned upon the receipt of a representation as to the investment
intention of the Participant to whom such Shares are to be delivered, in
such form as the Committee shall determine to be necessary or advisable to
comply with the provisions of the Securities Act of 1933 or any other
Federal, state or local securities legislation
or regulation. It may be provided that any representation requirement shall
become inoperative upon a registration of the Shares or other action
eliminating the necessity of such representation under such Securities Act
or other securities legislation. The Corporation shall not be required to
deliver any Shares under the Plan prior to (i) the admission
of such shares to listing on any stock exchange on which Shares may
then be listed, and (ii) the completion of such registration or other
qualification of such Shares under any state or Federal law, rule or
regulation, as the Committee shall determine to be necessary or advisable.
This Plan is intended to comply with Rule 16b-3 under the Securities
Exchange Act of 1934. Any provision of the Plan which is inconsistent with
said Rule shall, to the extent of such inconsistency, be inoperative and
shall not affect the validity of the remaining provisions of the Plan.
17. WITHHOLDING TAX. The Corporation shall have the right to deduct from all
amounts paid in cash with respect to the exercise of a Right under the Plan any
taxes required by law to be withheld with respect to such cash payments. Where a
Participant or other person is entitled to receive Shares pursuant to the
exercise of an Option or Right pursuant to the Plan, the Corporation shall
have the right to require the Participant or such other person to pay the
Corporation the amount of any taxes which the Corporation is required to
withhold with respect to such Shares.
No discretion or choice shall be conferred upon any Participant, or other
Person entitled to receive Shares, with respect to the form, timing or method of
any such tax withholding.
18. AMENDMENT OR TERMINATION. The Board of Directors of the Corporation
may amend, suspend or terminate the Plan or any portion thereof at any time, but
(except as provided in Section 11 hereof) no amendment shall be made without
approval of the stockholders of the Corporation which shall (i) increase the
aggregate number of Shares with respect to which Awards may be made under the
Plan (except pursuant to Section 11), (ii) materially increase the
benefits accruing to Participants, (iii) materially change the
requirements as to eligibility for participation in the Plan or (iv)
change the class of persons eligible to participate in the Plan, provided,
however, that no such amendment, suspension or termination shall impair
the rights of any Participant, without his consent, in any Award
theretofore made pursuant to the Plan.
Notwithstanding anything else in this Plan to the contrary, to the
extent that the Plan provides for formula awards, as defined in Rule 16b-3(c)(2)
(ii) under the Securities Exchange Act of 1934, such provisions may not be
amended more than once every six months, other than to comport with
changes in the Code, ERISA or the rules thereunder.
19. EFFECTIVE DATE AND TERM OF PLAN. The Plan shall become effective
upon its ratification by stockholders of the Corporation. It shall continue
in effect for a term of ten years unless sooner terminated under Section 18
hereof.