PERSONNEL MANAGEMENT, INC.
1994 DIRECTOR STOCK OPTION PLAN
(As amended May 19, 1997,
subject to shareholder approval)
I. PURPOSE
The purpose of this 1994 Director Stock Option Plan (the "Plan") of
Personnel Management, Inc. (the "Corporation") is to encourage
ownership in the Corporation by outside directors of the
Corporation whose continued services are considered essential to
the Corporation's continued progress, and to provide them with a
further incentive to continue as directors of the Corporation, and
to increase the value of the Corporation.
II. ELIGIBILITY
Each director of the Corporation is eligible to participate in the
Plan and shall receive the options provided for by formula herein,
unless he or she is an officer or employee of the Corporation or
any subsidiary of the Corporation ("Eligible Director").
III. STOCK SUBJECT TO THE PLAN
A. Common Stock. The stock which is the subject of
options granted under the Plan shall be the Corporation's
authorized but unissued Common Stock, no par value per share
("Stock"). In connection with the issuance of shares of Stock
under the Plan, the Corporation may utilize shares repurchased
in the open market or otherwise.
B. Aggregate Amount. The total number of shares subject
to options granted under the Plan shall not exceed forty
thousand (40,000) shares (subject to adjustment under Article
VIII).
IV. TERMS, CONDITIONS AND FORM OF OPTIONS
Each option granted under this Plan shall be evidenced by a written
agreement in substantially the form attached hereto as Exhibit A,
which agreement shall comply with and be subject to the following
terms and conditions:
A. Non-Statutory Stock Options. All options granted
under the Plan shall be non-statutory options not entitled to
special tax treatment under Section 422A of the Internal
Revenue Code of 1986, as amended to date and as may be further
amended from time to time (the "Code").
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B. Option Grant Dates. Options shall be granted on
January 31, 1995 for each Eligible Director's service to the
Corporation during the two fiscal quarters ended October 31,
1994 and January 31, 1995, and on the last day of each fiscal
quarter thereafter for each Eligible Director's service to the
Corporation during such quarter.
C. Number of Option Shares. An option granted to an
Eligible Director relating to such Eligible Director's service
to the Corporation during the fiscal quarter ended October 31,
1994 or during any quarter within the fiscal year ended
October 31, 1995, shall be an option to acquire a number of
shares equal to (i) 500 shares of Stock for each meeting of
the Corporation's Board of Directors actually attended by such
Eligible Director during such quarter, plus (ii) 250 shares of
Stock for each meeting of a committee of the Board of
Directors actually attended by such Eligible Director during
such quarter. For each quarter during a fiscal year after the
fiscal year ended October 31, 1995, the number of shares which
an Eligible Director shall be entitled to receive for each
board meeting attended and each board committee meeting
attended shall be set by a standing resolution of the
Corporation's Board of Directors, which resolution may not be
amended more than once each fiscal year.
D. Transferability. Each option granted under the Plan
by its terms shall not be transferable by the Eligible
Director otherwise than by will or by the laws of descent and
distribution, and shall be exercised during the lifetime of
the Eligible Director only by such Eligible Director.
E. Term of Option. Options become exercisable with
respect to fifty percent (50%) of the shares covered thereby
on the date upon which they were granted and become
exercisable with respect to the remaining shares covered
thereby on the first anniversary of the date upon which they
were granted. Unless terminated earlier in accordance with
the terms of the Plan or the applicable option agreement, each
option shall terminate upon the expiration of five (5) years
after such option was granted.
F. Manner of Exercise. Options may be exercised only by
written notice to the Corporation, which notice must specify
the date of the stock option and the number of shares of Stock
covered by the exercise, accompanied by payment of the full
consideration for the shares as to which they are exercised in
one or a combination of the following alternative forms:
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(i) cash (including check, bank draft or money
order); or
(ii) shares of Stock previously acquired and held
for at least six (6) months and standing in the name of
the Eligible Director having a fair market value (as
defined in Article VI) on the date of exercise equal to
the Option Price (as defined in Article V) of the shares
being exercised hereunder. If the value of a certificate
for shares tendered is in excess of the Option Price, the
excess representing any fraction of a share value will be
refunded to the Eligible Director in cash by the
Corporation, and any excess representing whole share
values will be refunded to the Eligible Director by the
issuance of a new Stock Certificate representing such
whole shares. If the Eligible Director desires that the
shares of Stock be registered in his or her name and that
of another as joint tenants with rights of survivorship,
he or she should so state in the notice. In no case may
fewer than one hundred (100) of such shares be purchased
at any one time, except to purchase a residue of fewer
than one hundred (100) shares. An option may not be
exercised for a fractional share.
G. Replacement Options. In the event that an Eligible
Director tenders Stock owned by such Eligible Director in
payment (in whole or in part) of the purchase price of the
shares that such Eligible Director has elected to purchase
under an option, the Corporation shall issue to such Eligible
Director a replacement option (a "Replacement Option") with
the same expiration date as the option exercised (the
"Exercised Option"). Such Replacement Option shall entitle
such Eligible Director to purchase a number of shares equal to
the number of shares tendered to the Corporation to purchase
shares under the Exercised Option, and shall specify an
exercise price equal to the fair market value (as determined
in Article VI) of the Stock on the date of exercise of the
Exercised Option. Such Replacement Option shall not be
exercisable during the twelve (12) months following the date
of exercise of the Exercised Option and shall be cancelled if,
during such twelve (12) month period, the Eligible Director
sells any Stock other than in payment of the exercise price of
another option under the Plan, or following the death of the
Eligible Director.
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H. Termination of Directorship. All rights of an
Eligible Director in an option (including without limitation
a Replacement Option), to the extent that such rights have not
been exercised and have not otherwise expired, shall terminate
fifteen (15) months subsequent to the termination for any
reason of such Director's services as an Eligible Director of
the Corporation. If the reason for termination is the death
of an Eligible Director or an Eligible Director dies
subsequent to the termination of his or her services as an
Eligible Director, any option (including without limitation a
Replacement Option) may be exercised during the period
specified in the preceding sentence by the personal
representative of the Eligible Director's estate or by the
person or persons to whom the option is transferred pursuant
to the Eligible Director's will or in accordance with the laws
of descent and distribution.
V. OPTION PRICE
The option price per share (the "Option Price") for the shares
covered by an option (other than a Replacement Option) relating to
the fiscal quarter ended October 31, 1994 shall be the fair market
value (as determined in Article VI) of one share of Stock on
October 31, 1994 and the Option Price for the shares covered by any
option relating to any fiscal quarter thereafter (other than a
Replacement Option) shall be the fair market value (as determined
in Article VI) of one share of stock on the date of grant of the
option.
VI. VALUATION OF COMMON STOCK
For all valuation purposes under the Plan, the fair market value of
a share of Stock shall be the average of the closing bid and ask
prices recorded by the National Association of Securities Dealers
(NASD) for the five (5) trading days immediately receding the date
of grant.
VII. NO RIGHT TO CONTINUE AS A DIRECTOR
Neither the Plan nor the granting of an option nor any other action
taken pursuant to the Plan shall constitute or be evidence of any
agreement or understanding, express or implied, that the
Corporation will retain an Eligible Director for any period of time
or at any particular rate of compensation.
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VIII. ADJUSTMENT TO STOCK
In the event any change is made to the Stock subject to the Plan or
subject to any outstanding option granted under the Plan (whether
by reason of merger, consolidation, reorganization,
recapitalization, stock dividend, stock split, combination of
shares, exchange of shares, change in corporate structure or
otherwise), then appropriate adjustments shall be made to the
maximum number of shares that may be the subject of options granted
under the plan and the number of shares and price per share of
stock subject to outstanding options. The grant of options under
the Plan shall not affect the right of the Corporation to adjust,
reclassify, reorganize or otherwise change its capital or business
structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.
IX. EFFECTIVE DATE
The Plan shall take effect on January 31, 1995, but options may be
granted hereunder relating to an Eligible Director's service to the
Corporation for any fiscal quarter ended on or after October 31,
1994; provided, however, no shares of Stock shall be issued under
the Plan and no options granted under the Plan shall be exercisable
prior to six (6) months after the Plan is approved by the holders
of at least a majority of the Corporation's voting stock present or
represented and voting at a duly held meeting at which a quorum is
present or represented. If such shareholder approval is not
obtained, then any options previously granted under the Plan shall
terminate and no further options shall be granted.
X. AMENDMENT AND TERMINATION OF THE PLAN
The Board of Directors of the Corporation may suspend, discontinue
or terminate the Plan or revise or amend it in any respect
whatsoever; provided that the Board shall not, without the approval
of the Corporation's shareholders (i) materially increase the
number of shares of Stock which may be issued under the Plan
(unless necessary to effect the adjustments required under Article
VIII) or other benefits accruing to participants under the plan,
(ii) materially modify the eligibility requirements for awards
under the Plan, or (iii) make any other change with respect to
which the Board of Directors determines that shareholder approval
is required by applicable law or regulatory standards; nor shall
any amendment adversely affect an Eligible Director's rights under
any option previously granted without the Eligible Director's
consent. The provisions of this Plan that state or set forth a
formula for determining the amount, price and timing of awards of
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options and/or Stock shall not be amended more than once every six
(6) months, other than to comport with changes in the Code, the
Employee Retirement Income Security Act, or the rules thereunder.
XI. USE OF PROCEEDS
The cash proceeds received by the Corporation from the issuance of
shares pursuant to options under the Plan shall be used for general
corporate purposes.
XII. ADMINISTRATION
The Plan shall be self-administered. However, ministerial actions
and duties shall be performed by the President of the Corporation,
who has authority to execute and deliver options to Eligible
Directors and to execute and deliver all such other instruments,
and to take all other actions and to make all other determinations,
not inconsistent with this Plan, that he may deem, in his sole
discretion, necessary or desirable.
XIII. SECTION 16
Transactions under this Plan are intended to comply with all
applicable conditions of Rule 16b-3, generally, and Rule 16b-
3(c)(2)(ii), specifically, or their successors under the Exchange
Act. To the extent any provision of the Plan or action by the
President fails to so comply, it shall be deemed null and void to
the extent permitted by law and deemed advisable by the President.
XIV. DELIVERY AND REGISTRATION OF STOCK
The Corporation's obligation to deliver shares with respect to an
option shall, if the President 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 President shall determine to be necessary or advisable to
comply with the provisions of the Securities Act of 1933, as
amended, or any other federal, state or local securities
legislation. 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 or system 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 President shall determine to be necessary or
advisable.
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XV. GOVERNING LAW
The Plan and all determinations made and actions taken pursuant
hereto shall be governed by the laws of the State of Indiana and
construed accordingly.
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