EXHIBIT 10.1
MainSource Financial Group, Inc.
2003 Stock Option Plan
1. Purpose. The purpose of this Plan is to promote share ownership by key
employees, directors, and outside service providers of MainSource Financial
Group, Inc and its Affiliates, thereby reinforcing a mutuality of interest with
other shareholders, and to enable MainSource Financial Group, Inc. to attract,
retain and motivate key employees, directors, and outside service providers by
permitting them to share in its growth.
2. Definitions. As used in this Plan:
(1) "Affiliate" means (a) a corporation that, for purposes of Section 422
of the Code, is a parent or subsidiary of the Company, and (b) any other entity
in which the Company has a substantial equity investment, as designated by the
Board.
(2) "Board" means the Board of Directors of the Company and, to the extent
of any delegation by the Board to a committee (or subcommittee thereof) pursuant
to Section 11 of this Plan, such committee (or subcommittee).
(3) "Code" means the Internal Revenue Code of 1986, as amended.
(4) "Common Shares" means the common shares of Main Source Financial Group,
Inc.
(5) "Company" means MainSource Financial Group, Inc., an Indiana
corporation.
(6) "Date of Grant" means the date specified by the Board on which a grant
of Options shall become effective (which date shall not be earlier than the date
on which the Board takes action with respect thereto).
(7) "Director" means a member of the Board of Directors of the Company.
(8) "Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder, as such law, rules and regulations may
be amended.
(9) "Fair Market Value" means, as of any given day, the per share closing
price of a Common Share on NASDAQ on the day preceding the day such
determination is being made or, if there was no closing price reported on such
day, on the most recently preceding day on which such a closing price was
reported; or if the Common Shares are not listed or admitted to trading on
NASDAQ on the day as of which the determination is being made, the amount
determined by the Board to be the fair market value of a Common Share on such
day.
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(10) "Incentive Stock Options" means Options that are intended to qualify
as "incentive stock options" under Section 422 of the Code or any successor
provision.
(11) "NASDAQ" means The NASDAQ Stock Market.
(12) "Optionee" means a Participant named in an agreement evidencing an
outstanding Option.
(13) "Option Price" means the purchase price payable on exercise of an
Option.
(14) "Option" means the right to purchase Common Shares upon exercise of an
option granted pursuant to Section 4 of this Plan.
(15) "Participant" means a person who is selected by the Board to receive
benefits under this Plan and who is at the time a key employee or outside
service provider of the Company or an Affiliate, a Director, or a member of the
board of directors of an Affiliate of the Company, or who has agreed to commence
serving in any of such capacities within 30 days of the Date of Grant.
(16) "Plan" means this MainSource Financial Group, Inc. 2003 Stock Option
Plan, as it may be amended from time to time.
(17) "Rule 16b-3" means Rule 16b-3 under the Exchange Act (or any successor
rule to the same effect) as in effect from time to time.
3. Shares Available.
(1) Subject to adjustment as provided in Section 5 of this Plan, the total
number of Common Shares that may be issued and sold under Options granted
pursuant to this Plan shall not exceed 350,000 Common Shares. Such shares may be
treasury shares or shares of original issue or a combination of the foregoing.
(2) Notwithstanding anything in this Section 3 or elsewhere in this Plan to
the contrary, and subject to the exception provided in the following proviso and
adjustment as provided in Section 5 of this Plan, no individual Participant
shall be granted Options under this Plan for more than 35,000 Common Shares
during any twelve-month period; provided, however, that this limitation shall
not apply to a grant of Options to a Participant not previously an employee or
Director of the Company or an Affiliate of the Company, as an inducement
material to the individual's entering into employment with the Company or an
Affiliate of the Company.
(3) Any Common Shares issued and sold under Options may be subject to such
restrictions on transfer as the Board may provide in a Stock Option Agreement.
(4) Each grant shall specify the number of Common Shares to which it
pertains, subject to the limitations set forth in Section 3 of this Plan, if
any.
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(5) Each grant shall specify an Option Price per share, which may not be
less than the Fair Market Value on the Date of Grant.
(6) The Option Price shall be payable (i) in cash or by other consideration
acceptable to the Company, (ii) by the actual or constructive transfer to the
Company of Common Shares owned by the Optionee for at least 6 months having a
value at the time of exercise equal to the total Option Price, or (iii) by a
combination of such methods of payment.
(7) Any grant may provide for deferred payment of the Option Price from the
proceeds of sale through a broker on a date satisfactory to the Company of some
or all of the Common Shares to which such exercise relates.
(8) Any grant may provide for payment of the Option Price in installments,
with interest on the unpaid balance payable at such rate necessary to avoid
imputed interest or original interest discount under the Code.
(9) Successive grants may be made to the same Optionee whether or not any
Options previously granted to such Optionee remains unexercised.
(10) Each grant shall specify the period or periods of continuous service
by the Optionee with the Company or any of its Affiliates that is necessary
before the Options or installments thereof will become exercisable and may
provide for earlier exercise of the Option, including, without limitation, in
the event of a change in control of the Company or similar event.
(11) Options granted under this Plan may be (i) options that are intended
to qualify under particular provisions of the Code, including, without
limitation, Incentive Stock Options, (ii) options that are not intended so to
qualify under the Code, or (iii) combinations of the foregoing.
(12) Except as otherwise determined by the Board, no Option shall be
transferable by the Optionee except by will or the laws of descent and
distribution. Except as otherwise determined by the Board, Options shall be
exercisable during the Optionee's lifetime only by the Optionee or, in the event
of the Optionee's legal incapacity to do so, the Optionee's guardian or legal
representative acting on behalf of the Optionee in a fiduciary capacity under
state law and court supervision.
(13) No Option shall be exercisable more than 10 years from the Date of
Grant.
(14) An Optionee may exercise an Option in whole or in part at any time and
from time to time during the period within which an Option may be exercised. To
exercise an Option, an Optionee shall give written notice to the Company
specifying the number of Common Shares to be purchased and provide payment of
the Option Price and any other documentation that may be required by the
Company.
(15) An Optionee shall be treated for all purposes as the owner of record
of the number of Common Shares purchased pursuant to exercise of the Option (in
whole or in part) as of the date the conditions set forth in this Section are
satisfied and the Option is exercised.
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(16) To the extent required for "Incentive Stock Option" status under
Section 422 of the Code, the aggregate Fair Market Value (determined as of the
Date of Grant) of the Common Shares with respect to which Incentive Stock
Options are exercisable for the first time by the Optionee during any calendar
year under the Plan and/or any other stock option plan of the Company (within
the meaning of Section 424 of the Code) shall not exceed $100,000.
(17) The Board may permit Optionees to elect to defer the issuance of
Common Shares under this Plan pursuant to such rules, procedures, or programs as
it may establish for purposes of this Plan. The Board also may provide that
deferred issuances and settlements include the payment or crediting of dividend
equivalents or interest on the deferral amounts.
4. Options. The Board may, from time to time and upon such terms and
conditions as it may determine, authorize the granting of Options to
Participants. Each such grant shall be subject to all of the requirements
contained in the following provisions and to such other terms as the Board may
from time to time provide in a Stock Option Agreement:
5. Adjustments. The Board may make or provide for such adjustments in the
Option Price and in the number or kind of shares or other securities covered by
outstanding options as the Board in its sole discretion may in good faith
determine to be equitably required in order to prevent dilution or enlargement
of the rights of Optionees that would otherwise result from any (a) stock
dividend, stock split, combination of shares, recapitalization or other change
in the capital structure of the Company, (b) merger, consolidation, separation,
reorganization, partial or complete liquidation, issuance of rights or warrants
to purchase stock, or (c) other corporate transaction or event having an effect
similar to any of the foregoing. Moreover, in the event of any such transaction
or event, the Board, in its discretion, may provide in substitution for any or
all outstanding options under this Plan such alternative consideration as it, in
good faith, may determine to be equitable in the circumstances and may require
in connection therewith the surrender of all options so replaced. The Board may
also make or provide for such adjustments in the number of shares specified in
Section 3 of this Plan as the Board in its sole discretion, exercised in good
faith, may determine is appropriate to reflect any transaction or event
described in this Section.
Notwithstanding anything herein to the contrary, the Company may, in its
sole discretion, accelerate the timing of the exercise provisions of any Option
in the event of a tender offer for the Company's Common Shares, the adoption of
a plan of merger or consolidation under which a majority of the Common Shares of
the Company would be eliminated, or a sale of substantially all of the Company's
assets. Alternatively, the Company may, in its sole discretion, cancel any or
all Options upon any of the foregoing events and provide for the payment to
Participants in cash of an amount equal to the value or appreciated value,
whichever is applicable, of the Option, as determined in good faith by the
Board, at the close of business on the date of such event.
6. Stock Option Agreement. The form of each Stock Option Agreement shall be
prescribed, and any Stock Option Agreement evidencing an outstanding Option may
with the concurrence of the affected Optionee be amended, by the Board, provided
that the terms and conditions of each Stock Option Agreement and amendment are
not inconsistent with this Plan
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and that no amendment shall adversely affect the rights of the Optionee with
respect to any outstanding Option without the Optionee's consent.
7. Cancellation of Options. The Board may, with the concurrence of the
affected Optionee, cancel any option granted under this Plan. In the event of
any such cancellation, the Board may authorize the granting of new options
(which may or may not cover the same number of Common Shares that had been the
subject of any prior option) in such manner, at such Option Price and subject to
the same terms, conditions and discretion as would have been applicable under
this Plan had the canceled options not been granted.
8. Withholding. No later than the date as of which an amount first becomes
includible in the gross income of the Optionee for applicable income tax
purposes with respect to any Option under the Plan, the Optionee shall pay to
the Company, or make arrangements satisfactory to the Board regarding the
payment of, any Federal, state or local taxes of any kind required by law to be
withheld with respect to such amount. Unless otherwise determined by the Board,
the minimum required withholding obligations may be settled with Common Shares,
including Common Shares that are part of the award that gives rise to the
withholding requirement. The obligations of the Company under this Plan shall be
conditional on such payment or arrangements and the Company shall, to the extent
permitted by law, have the right to deduct any such taxes from any payment of
any kind otherwise due to the Optionee.
9. Governing Law. The Plan and all Options granted and actions taken
thereunder shall be governed by and construed in accordance with the laws of the
State of Indiana.
10. Fractional Shares. The Company shall not be required to issue any
fractional Common Shares pursuant to this Plan. The Board may provide for the
elimination of fractions or for the settlement of fractions for cash.
11. Administration. This Plan shall be administered by the Board, which may
from time to time delegate all or any part of its authority under this Plan to a
committee of not less than two Directors appointed by the Board. The members of
the committee shall be "Non-Employee Directors" within the meaning of Rule
16b-3. To the extent of any such delegation, references in this Plan to the
Board shall also refer to the committee. A majority of the members of the
committee shall constitute a quorum, and any action taken by a majority of the
members of the committee who are present at any meeting of the committee at
which a quorum is present, or any actions of the committee that are unanimously
approved by the members of the committee in writing, shall be the acts of the
committee. The Board shall have the authority to delegate responsibility and
authority for the operation and administration of this Plan, appoint employees
and officers of the Company and Affiliates to act on its behalf, and employ
persons to assist in fulfilling its responsibilities under this Plan. In
addition, the Board shall have complete authority to interpret all provisions of
the Plan; to prescribe the form of Agreements; to adopt, amend, and rescind
rules and regulations pertaining to the administration of the Plan; and to make
all other determinations necessary or advisable for the administration of the
Plan, including, without limitation, determinations of fact. The express grant
in the Plan of any specific power to the Board shall not be construed as
limiting the power or authority of the Board. Any decision made, or action
taken, by the Board in connection with the administration of the Plan shall be
final and conclusive. No member of the Board shall be liable for any act done in
good faith with
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respect to the Plan or any Agreement or Option. All expenses of administering
the Plan shall be borne by the Company.
12. Amendment. This Plan may be amended from time to time by the Board;
provided, however, that any amendment that must be approved by the shareholders
of the Company in order to comply with applicable law or the rules of NASDAQ, or
if the Common Shares are not quoted on NASDAQ, the principal national securities
exchange upon which the Common Shares are traded or quoted, shall not be
effective unless and until such approval has been obtained. Presentation of this
Plan or any amendment hereof for shareholder approval shall not be construed to
limit the Company's authority to offer similar or dissimilar benefits under
other plans without shareholder approval.
13. Effective Date. This Plan shall be effective immediately; provided,
however, that the effectiveness of this Plan is conditioned on its approval by
the shareholders of the Company at a meeting duly held in accordance with
Indiana law within 12 months after the date this Plan is adopted by the Board.
All awards under this Plan shall be null and void if the Plan is not approved by
the shareholders within such 12-month period.
14. Term. No Option shall be granted pursuant to this Plan on or after the
tenth anniversary of the date this Plan is adopted by the Board, but awards
granted prior to such tenth anniversary may extend beyond that. The date this
Plan is adopted by the Board shall be January 21, 2003.
15. Awards in Substitution for Awards Granted by Other Companies. To the
extent not otherwise provided in the Plan, Options may be granted under this
Plan in substitution for awards held by employees of a company who become
employees of the Company or an Affiliate as a result of the acquisition, merger
or consolidation of the employer company by or with the Company or an Affiliate.
The terms, provisions and benefits of the substitute awards so granted may vary
from those set forth in or authorized by this Plan to such extent as the Board
at the time of the grant may deem appropriate to conform, in whole or in part,
to the terms, provisions and benefits of awards in substitution for which they
are granted.
Executed this 21st day of January, 2003 but effective as provided above.
MAINSOURCE FINANCIAL GROUP, INC.
By:_________________________________
Robert E. Hoptry, Chairman of the Board
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