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EXHIBIT 10.4
LAKE FOREST BANCORP, INC.
1991 STOCK OPTION PLAN
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Lake Forest Bancorp, Inc.
1991 Stock Option Plan
TABLE OF CONTENTS
Article Section Page
1 ESTABLISHMENT, PURPOSE, AND
EFFECTIVE DATE OF PLAN
1.1 Establishment of the Plan 6
1.2 Purpose of the Plan 6
1.3 Duration of the Plan 7
2 DEFINITIONS AND CONSTRUCTION
2.1 Definitions 7
2.2 Gender and Number 12
2.3 Severability 12
3 ADMINISTRATION
3.1 The Committee 12
3.2 Authority of the Committee 12
3.3 Selection of Participants 13
3.4 Decisions Binding 13
3.5 Delegation of Certain
Responsibilities 13
3.6 Procedures of the Committee 14
3.7 Award Agreements 15
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4 STOCK SUBJECT TO THE PLAN
4.1 Number of Shares 15
4.2 Lapsed Awards 16
4.3 Adjustments in Authorized Shares 16
Article Section Page
5 ELIGIBILITY AND PARTICIPATION
5.1 Eligibility 16
5.2 Actual Participation 17
6 STOCK OPTIONS
6.1 Grant of Options 17
6.2 Option Agreement 17
6.3 Option Price 18
6.4 Duration of Options 18
6.5 Exercise of Options 18
6.6 Payment 18
6.7 Restrictions on Stock
Transferability 19
6.8 Termination of Employment Due to
Death, Disability, or Retirement 19
6.9 Termination of Employment for
Other Reasons 20
6.10 Nontransferability of Options 20
7 RESTRICTED STOCK
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7.1 Grant of Restricted Stock 21
7.2 Restricted Stock Agreement 21
7.3 Transferability 21
7.4 Other Restrictions 21
7.5 Certificate Legend 22
7.6 Removal of Restrictions 22
7.7 Voting Rights 23
7.8 Dividend and Other Distributions 23
Article Section Page
7.9 Termination of Employment Due to
Retirement 23
7.10 Termination of Employment Due to
Death or Disability 23
7.11 Termination of Employment for
Other Reasons 24
7.12 Nontransferability of Restricted
Stock 24
8 BENEFICIARY DESIGNATION
8.1 Beneficiary Designation 25
9 RIGHTS OF EMPLOYEES
9.1 Employment 25
9.2 Participation 25
10 CHANGE IN CONTROL
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10.1 In General 25
11 AMENDMENT, MODIFICATION, AND TERMINATION
11.1 Amendment, Modification, and
Termination 26
11.2 Awards Previously Granted 26
12 WITHHOLDING
12.1 Tax Withholding 26
12.2 Stock Withholding Elections 27
12.3 Special Insider Stock Withholding
Restrictions 27
12.4 Stock Withholding Delivery
Requirements 28
13 INDEMNIFICATION
13.1 Indemnification 29
Article Section Page
14 SUCCESSORS
14.1 Successors 29
15 REQUIREMENTS OF LAW
15.1 Requirements of Law 30
15.2 Governing Law 30
16 RIGHTS OF FIRST REFUSAL
16.1 Rights of First Refusal 30
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LAKE FOREST BANCORP, INC.
1991 Stock Option Plan
ARTICLE 1. ESTABLISHMENT, PURPOSE, AND EFFECTIVE DATE OF PLAN
1.1 Establishment of the Plan. Lake Forest Bancorp, Inc. (hereinafter
referred to as the "Company"), hereby establishes an incentive compensation
plan to be known as the "1991 Stock Option Plan" (hereinafter referred to as
the "Plan"), as set forth in this document. The Plan permits the grant of
incentive stock options, nonqualified stock options, and restricted stock.
Subject to ratification by a majority of the shareholders of the Company within
twelve (12) months, the Plan shall become effective as of December 27, 1991
(the "Effective Date"), and shall remain in effect as provided in Section 1.3
herein. Awards may be granted hereunder on or after the Effective Date but in
no event be exercisable or payable to a participant prior to such stockholder
approval; and, if such approval is not obtained within twelve (12) months after
the Effective Date, such awards shall be of no force and effect.
1.2 Purpose of the Plan. The purpose of the Plan is to promote the
success of the Company by providing incentives to Key Employees that will link
their personal interests to the long-term financial success of the Company and
to the growth in shareholder
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value. The Plan is intended to provide flexibility to the Company in its
ability to motivate, attract, and retain the services of Key Employees upon
whose judgement, interest, and special effort the successful conduct of its
operation is largely dependent.
1.3 Duration of the Plan. The Plan shall commence on the Effective Date,
as described in Article 1.1. herein, and shall remain in effect, subject to the
right of the Board of Directors to terminate the Plan at any time pursuant to
Article 11, until all Stock subject to it shall have been purchased or acquired
according to the provisions herein. However, in no event may an Award be
granted under the Plan on or after the tenth (10th) anniversary of the Plan's
Effective Date.
ARTICLE 2. DEFINITIONS AND CONSTRUCTION
2.1 Definitions. Whenever used in the Plan, the following terms shall
have the meanings set forth below and, when the meaning is intended, the
initial letter of the word is capitalized:
(a) "Award" means, individually or collectively, a
grant under this Plan of Incentive Stock Options, Nonqualified
Stock Options, or Restricted Stock.
(b) "Beneficial Owner" shall have the meaning
ascribed to such terms in Rule 13d-3 of the General Rules and
Regulations under the Securities Exchange Act
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of 1934, as amended (the "Exchange Act").
(c) "Board" or "Board of Directors" means the Board
of Directors of the Company.
(d) "Change in Control" shall be deemed to have
occurred if the conditions set forth in any one of the
following paragraphs shall have been satisfied:
(i) A change in the ownership of
sixty-six and two thirds percent (66.67%) or more of the
Corporation's outstanding common stock, within a twelve
month period; or,
(ii) The stockholders of the Company
approve a merger or consolidation of the Company with
any other corporation, other than a merger or
consolidation which would result in the voting Stock
outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or being
converted into voting securities of the surviving
entity) at least 80% of the total voting power
represented by the voting Stock or the voting securities
of such surviving entity outstanding immediately after
such merger or consolidation; or
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(iii) The stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for
the sale or disposition by the Company of all or
substantially all of the Company's assets.
However, in no event shall a Change in Control be deemed to have occurred,
with respect to the Participant, if the Participant is part of a purchasing
group which consummates the Change in Control transaction. The Participant
shall be deemed "part of a purchasing group..." for purposes of the preceding
sentence if the Participant is an equity participant or has agreed to become an
equity participant in the purchasing company or group (except for (a) passive
ownership of less than 5% of the Stock of the purchasing company or (b)
ownership of equity participation in the purchasing company or group which is
otherwise not deemed to be significant, as determined prior to the Change in
Control by a majority of the nonemployee continuing directors). The Board has
final authority to determine the exact date on which a change in control has
been deemed to have occurred under (i), (ii), and (iii) above.
(e) "Cause" means:
(i) misappropriation of any funds or
property of
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the Corporation; or
(ii) attempting to obtain any personal profit from any transaction in
which the Participant has a personal financial interest, unless
the Participant shall have first obtained the consent of the
Board of Directors; or
(iii) material neglect or refusal to perform the duties reasonably
assigned to the Participant; or
(iv) participating in a course of conduct which is injurious to the
Corporation or its subsidiaries, as interpreted by the Board of
Directors; or
(v) being convicted of a felony; or
(vi) being adjudicated a bankrupt; or
(vii) suspension due to the direction of any authorized bank
regulatory agency.
(f) "Code" means the Internal Revenue Code of 1986, as amended from time
to time.
(g) "Committee" means the Stock Option Committee of the Board, or any
other committee appointed by the Board to administer the Plan
pursuant to Article 3
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herein.
(h) "Company" means Lake Forest Bancorp, Inc., a bank
holding corporation or any successor thereto as provided in
Article 14 herein.
(i) "Disability" means a permanent and total
disability as determined by the Committee in good faith, upon
receipt of sufficient competent medical advice.
(j) "Fair Market Value" means the average of the
highest and lowest price at which the Stock was traded on the
twenty trading days prior to the relevant date, as reported by
the established market in which the shares are traded. If the
shares are not really tradable, a determination of Fair Market
Value shall be made by the Board of Directors of the Company.
(k) "Incentive Stock Option" or "ISO" means an option
to purchase Stock, granted under Article 6 herein, which is
designated as an Incentive Stock Option and is intended to
meet the requirements of Section 422A of the Code.
(l) "Key Employee" means an employee of the Company,
including an employee who is an officer or a
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director of the Company, who, in the opinion of members of
the Committee, can contribute significantly to the growth and
profitability of the Company. "Key Employee" also may
include those employees, identified by the Committee, in
situations concerning extraordinary performance, promotion,
retention, or recruitment. The granting of an Award under
this Plan shall be deemed a determination by the Committee
that such employee is a Key Employee.
(m) "Nonqualified Stock Option" or "NSO" means an
option to purchase Stock, granted under Article 6 herein,
which is not intended to be an Incentive Stock Option.
(n) "Option" means an Incentive Stock Option or a
Nonqualified Stock Option.
(o) "Participant" means a Key Employee of the Company
who has been granted an Award under the Plan.
(p) "Period of Restriction" means the period during
which the transfer of Shares of Restricted Stock is
restricted, during which the Participant is subject to a
substantial risk of forfeiture, pursuant to
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Article 8 herein.
(q) "Person" shall have the meaning ascribed to such
term in Section 3(a)(9) of the Exchange Act and used in
Sections 13(d) and 14(d) thereof, including a group as defined
in Section 13(d).
(r) "Plan" means the Lake Forest Bancorp 1991 Stock
Option Plan, as herein described.
(s) "Restricted Stock" means a Stock Award granted to
a Participant pursuant to Article 8 herein.
(t) "Stock" or "Shares" means the common Stock of the
Company.
2.2 Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural
shall include the singular and the singular shall include the plural.
2.3 Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.
ARTICLE 3. ADMINISTRATION
3.1 The Committee. The Plan shall be administered by a
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committee (the "Committee") consisting of not less than three directors who
shall be appointed from time to time by, and shall serve at the discretion of,
the Board of Directors.
3.2 Authority of the Committee. Subject to the provisions of the Plan
and subject to ratification by the Board, the Committee shall have full power
to construe and interpret the Plan; to establish, amend or waive rules and
regulations for its administration to accelerate the exercisability of any
Award or the end of a Period of Restriction or the termination of any Award
Agreement, or any other instrument relating to an Award under the Plan; and
(subject to the provisions of Article 12 herein) to amend the terms and
conditions of any outstanding Option, or Restricted Stock Award to the extent
such terms and conditions are within the discretion of the Committee as
provided in the Plan. Notwithstanding the foregoing, no action of the
Committee may, without the consent of the person or persons entitled to
exercise any outstanding Option or to receive payment of any other outstanding
Award, adversely affect the rights of such person or persons.
3.3 Selection of Participants. The Committee shall have the authority to
grant Awards under the Plan, from time to time, to such Key Employees of the
Company (including officers and directors
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who are employees) as may be selected by it. The committee shall select
Participants from among those who they have identified as being Key Employees.
3.4 Decisions Binding. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan and all related orders or
resolutions of the Board of Directors shall be final, conclusive and binding on
all persons, including the Company, its stockholders, Employees, Participants
and their estates and beneficiaries.
3.5 Delegation of Certain Responsibilities. The Committee may, in its
sole discretion, delegate to appropriate officers of the Company the
administration of the Plan under this Article 3; provided, however, that no
such delegation by the Committee shall be made with respect to the
administration of the Plan as it affects officers or directors of the Company
and provided further that the Committee may not delegate its authority to
correct errors, omissions or inconsistencies in the Plan. All authority
delegated by the Committee under this Section 3.5 shall be exercised in
accordance with the provisions of the Plan and any guidelines for the exercise
of such authority that may from time to time be established by the Committee.
3.6 Procedures of the Committee. All determinations of the
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committee shall be made by not less than a majority of its members present at
the meeting (in person or otherwise) at which a quorum is present. A majority
of the entire Committee shall constitute a quorum for the transaction of
business. Any action required or permitted to be taken at a meeting of the
Committee may be taken without a meeting if a unanimous written consent, which
sets for the action, is signed by each member of the Committee and filed with
the minutes for proceedings of the Committee. No member of the Committee shall
be liable, in the absence of bad faith, for any act or omission with respect to
his or her other services on the committee. Service on the Committee shall
constitute service as a director of the Company so that members of the
committee shall be entitled to indemnification (as provided in Article 14
herein), and limitation of liability and reimbursement with respect to their
services as members of the Committee to the same extent as for services as
directors of the Company.
3.7 Award Agreements. Each Award under the Plan shall be evidenced by an
Award Agreement which shall be signed by an officer of the Company and by the
Participant, and shall contain such terms and conditions as may be approved by
the Committee, which need not be the same in all cases. Any Award Agreement
may be supplemented or amended in writing from time to time as approved by the
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Committee, proved that the term so such agreements as amended or supplemented,
as well as the terms of the original award agreement, are not inconsistent with
the provisions of the Plan.
Nothing contained in the Plan or any resolutions adopted or to be adopted
by the Board of Directors or by the stockholders of the Company shall
constitute the granting of an Award under the Plan. An Employee who receives
an Award under the Plan will not, with respect to such Award, be deemed to have
become a Participant, or to have any rights with respect to such Award, unless
and until such Employee has executed an Award Agreement or other instrument
evidencing the Award and shall have delivered an executed copy thereof to the
Company, and has otherwise complied with the applicable terms and conditions of
the Award.
ARTICLE 4. STOCK SUBJECT TO THE PLAN
4.1 Number of Shares. Subject to adjustment as provided in Article 4.3
herein, the aggregate number of Shares of Stock subject to Awards under the
Plan shall not exceed 20,000. Stock delivered under the Plan may consist, in
whole or in part, of authorized and unissued Shares or treasury Shares.
4.2 Lapsed Awards. If any Award granted under this Plan terminates,
expires or lapses for any reason any Stock subject to such Award again shall be
available for the grant of an Award under
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the Plan.
4.3 Adjustments in Authorized Shares. In the event of any merger,
reorganization, consolidation, recapitalization, separation, liquidation, Stock
divided, split-up, share combination, or other change in the corporate
structure of the Company affecting the Stock, such adjustment shall be made in
the number and class of Shares which may be delivered under the Plan, and in
the number and class of and/or price of Shares subject to outstanding Options,
and Restricted Stock Awards granted under the Plan, as may be determined to be
appropriate and equitable by the Committee, in its sole discretion, to prevent
dilution or enlargement of rights; and provided that the number of Shares
subject to any Award shall always be a whole number. Any adjustment of an
Incentive Stock Option under this paragraph shall be made in such a manner so
as not to constitute a "modification" within the meaning of Section 425(h)(3)
of the Code.
ARTICLE 5. ELIGIBILITY AND PARTICIPATION
5.1 Eligibility. Persons eligible to participate in this Plan include
all employees of the Company who, in the opinion of the members of the
Committee, are Key Employees. "Key Employees" may include employees who are
members of the Board, but may not include directors who are not full-time
employees.
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5.2 Actual Participation. Subject to the provisions of the Plan, the
Committee may from time to time select from Key Employees, those of whom Awards
shall be granted and determine the nature and amount of each Award. No
employee shall have nay rights to be granted an Award under this Plan.
ARTICLE 6. STOCK OPTIONS
6.1 Grant of Options. Subject to the terms and provisions of the Plan,
Options may be granted to Key Employees at anytime and from time to time as
shall be determined by the Committee. The Committee shall have complete
discretion in determining the number of Shares of Stock subject to Options
granted to each Participant. The Committee may grant any type of option to
purchase Stock that is permitted by law at the time of grant including, but not
limited to, ISOs and NSOs. However, no employee may receive an Award of
Incentive Stock Options that are first exercisable during any calendar year to
the extent that the aggregate Fair Market Value of the Stock (determined at the
time the options are granted) exceeds $100,000. Nothing in this Article 6
shall be deemed to prevent the grant of NSOs in excess of the maximum
established by Section 422A of the Code. Unless otherwise expressly provided
at the time of grant, options granted under the Plan will be NSOs.
6.2 Option Agreement. Each Option grant shall be evidenced
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by an option agreement that shall specify the type of option granted, the
option price, the duration of the option, the number of Shares of Stock to
which the option pertains, and such other provisions as the Committee shall
determine. The option agreement shall specify whether the option is intended
to be an Incentive Stock Option within the meaning of Section 422A of the Code,
or a Nonqualified Stock Option whose grant is intended not to fall under the
Code provisions of Section 422A.
6.3 Option Price. The purchase price per share of Stock covered by an
Option shall not be less than 100% of the Fair Market Value of such Stock on
the date the option is granted.
An Incentive Stock Option granted to an Employee who, at the time of grant
owns (within the meaning of Section 425(d) of the Code) Stock possessing more
than 10% of the total combined voting power of all classes of Stock of the
Company, shall have an exercise price which is at least 110% of the Fair Market
Value of the Stock subject to the Option.
6.4 Duration of Options. Each Option shall expire at such time as the
Committee shall determine at the time of grant provided, however, that no ISO
shall be exercisable later than the tenth (10th) anniversary date of its grant.
6.5 Exercise of Options. Options granted under the Plan
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shall be exercisable at such time and be subject to such restrictions and
conditions as the Committee shall in each instance approve, which need not be
the same for all Participants.
6.6 Payment. Options shall be exercised by the delivery of a written
notice to the Company setting forth the number of Shares of Stock with respect
to which the Option is to be exercised, accompanied by full payment for the
Shares. The Option price upon exercise of any Option shall be payable to the
Company in full either (a) in cash or its equivalent, or (b) by tendering
Shares of previously acquired stock having a Fair Market Value at the time of
exercise equal to the total Option price, or (c) by combination of (a) and (b).
The proceeds from such a payment shall be added to the general funds of the
Company and shall be used for general corporate purposes. As soon as
practicable, after receipt of written notification and payment, the Company
shall deliver to the participant, Stock certificates in an appropriate amount
based upon the number of Option exercised, issued in the Participant's name.
6.7 Restrictions on Stock Transferability. The Committee shall impose
such restrictions on any Shares of Stock acquired pursuant to the exercise of
an Option under the Plan as it may deem advisable, including, with limitation,
restrictions under applicable Federal securities law, under the requirements of
any
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stock exchange upon which such Shares of Stock are then listed and under any
blue sky or state securities laws applicable to such shares.
6.8 Termination of Employment Due to Death, Disability, or Retirement.
In the event the employment of a Participant is terminated by reasons of death,
any outstanding Option shall become immediately exercisable at any time prior
to the expiration date of the Options or within 90 days after such date of
termination of employment, whichever period is shorter, by such person or
persons as shall have acquired the Participant's rights under the Option by
will or by the laws of descent and distribution. In the event the employment
of Participant is terminated by reason of Disability, any outstanding Options
shall become immediately exercisable at any time prior to the expiration date
of the Options or within 90 days after such date of termination of employment,
whichever period is shorter. In the event the employment of a Participant is
terminated by reason of retirement (as defined under the then established rules
of the Company), any outstanding Options shall become immediately exercisable
at any time prior to the expiration date of the Options or within one year
after such date of termination of employment, whichever period is shorter. In
the case of Incentive Stock Options, the favorable tax treatment
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prescribed under Section 422A of the Internal Revenue Code of 1986, as amended
may not be available if the options are not exercised within the Section 422A
prescribed time period after termination of employment for death, disability,
or retirement.
6.9 Termination of Employment for Other Reasons. If the employment of
the Participant shall terminate for any reason other than death, disability,
retirement, or for Cause, all outstanding Options shall terminate one month
after such date of termination. In its sole discretion, the Committee may
extend the exercisability of outstanding Option for up to 180 days but,
however, in no event beyond the expiration date of the Option.
If the employment of the Participant shall terminate for Cause, rights
under all outstanding Options shall be immediately terminated upon termination
of employment.
6.10 Nontransferability of Options. No Option granted under the Plan may
be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, otherwise than by will or by the laws of decent and distribution.
Further, all options granted to a Participant under the Plan shall be
exercisable during his lifetime only by such Participant.
ARTICLE 7. RESTRICTED STOCK
7.1 Grant of Restricted Stock. Subject to the terms and
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provisions of the Plan, the Committee, at any time and from time to time, may
grant Shares of Restricted Stock under the Plan to such Participants and in
such amounts as it shall determine.
7.2 Restricted Stock Agreement. Each Restricted Stock grant shall be
evidenced by a Restricted Stock Agreement that shall specify the Period of
Restriction, or periods, the number of Restricted Stock Shares granted, and
such other provisions as the Committee shall determine.
7.3 Transferability. Except as provided in this Article 7, the Shares of
Restricted Stock granted hereunder may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated until the termination of the
applicable Period of Restriction or for such period of time as shall be
established by the Committee and as shall be specified in the Restricted Stock
Agreement, or upon earlier satisfaction of other conditions as specified by the
Committee in its sole discretion and set forth in the Restricted Stock
Agreement. All rights with respect to the Restricted Stock granted to a
Participant under the Plan shall be exercisable during his lifetime only by
such Participant.
7.4 Other Restrictions. The Committee shall impose such other
restrictions on any Shares of Restricted Stock granted pursuant to the Plan as
it may deem advisable including, without
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limitation, restrictions under applicable Federal or state securities laws, and
may legend the certifications representing Restricted Stock to give appropriate
notice of such restrictions.
7.5 Certificate Legend. In addition to any legends placed on
certificates pursuant to Section 7.4 herein, each certificate representing
Shares of Restricted Stock granted pursuant to the Plan shall bear the
following legend:
"The sale or other transfer of the Shares of Stock represented by this
certificate, whether voluntary, involuntary, or by operation of law, is
subject to certain restrictions on transfer set forth in the 1991 Stock
Option Plan of Lake Forest Bancorp, Inc., in the rules and administrative
procedures adopted pursuant to such Plan, and in a Restricted Stock
Agreement dated . A copy of the Plan, such rules and
procedures, and such Restricted Stock Agreement may be obtained from the
Secretary of Lake Forest Bancorp, Inc."
7.6 Removal of Restrictions. Except as otherwise provided in this
Article, Shares of Restricted Stock covered by each Restricted Stock grant made
under the Plan shall become freely transferable by the Participant after the
last day of the Period of Restriction. Once the Shares are released from the
restrictions, the Participant
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shall be entitled to have the legend required by Article 7.5 removed from his
Stock certificate.
7.7 Voting Rights. During the Period of Restriction, Participants
holding Shares of Restricted Stock granted hereunder may exercise full voting
rights with respect to those Shares.
7.8 Dividends and Other Distributions. During the Period of Restriction,
participants holding Shares of Restricted Stock granted hereunder shall be
entitled to receive all dividends and other distributions paid with respect to
those Shares while they are so held. If any such dividends or distributions
are paid in Shares of Stock, the Shares shall be subject to the same
restrictions on transferability as the Shares of Restricted Stock with respect
to which they were paid.
7.9 Termination of Employment Due to Retirement. In the event that a
Participant terminates his employment with the Company because of normal
retirement (as defined under the then established rules of the Company), any
remaining Period of Restriction applicable to the Restricted Stock pursuant to
Article 7.3 hereof shall automatically terminate and, except as otherwise
provided in Article 7.4, the Shares of Restricted Stock shall thereby be free
of restrictions and freely transferable. In the event that a Participant
terminates his employment with the Company because of
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early retirement (as defined under the then established rules of the Company),
the Committee, in its sole discretion, may waive the restrictions remaining on
any or all Shares of Restricted Stock pursuant to Article 7.3 herein and add
such new restrictions to those Shares of Restricted Stock as it deems
appropriate.
7.10 Termination of Employment Due to Death or Disability. In the event
a Participant's employment is terminated because of death or Disability during
the Period of Restriction, any remaining Period of Restriction applicable to
the Restricted Stock pursuant to Article 7.3 herein shall automatically
terminate and, except as otherwise provided in Article 7.4, the Shares of
Restricted Stock shall thereby be free of restrictions and fully transferable.
7.11 Termination of Employment for Other Reasons. In the event that a
Participant terminates his employment with the Company for any reason other
than for Death, Disability, or Retirement, as set forth in Articles 7.9 and
7.10 herein, during the Period of Restriction, then any Shares of Restricted
Stock still subject to restrictions as of the date of such termination shall
automatically be forfeited and returned to the Company; provided, however,
that, in the event of an involuntary termination of employment of a Participant
by the Company other than for Cause, the Committee, in its sole discretion, may
waive the automatic forfeiture of any or
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all such Shares and may add such new restrictions to such Shares of Restricted
Stock as it deems appropriate.
7.12 Nontransferability of Restricted Stock. No shares of Restricted
Stock granted under the Plan may be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated, otherwise than by will or by the laws of
descent and distribution until the termination of the applicable Period of
Restriction. All rights with respect to Restricted Stock granted to a
Participant under the Plan shall be exercisable during his lifetime only by
such Participant.
ARTICLE 8. BENEFICIARY DESIGNATION
8.1 Beneficiary Designation. Each Participant under the Plan may, from
time to time, name any beneficiary or beneficiaries (who may be named
contingently or successively) to whom any benefit under the Plan is to be paid
in case of his death before he receives any or all of such benefit. Each
designation will revoke all prior designations by the same Participant, shall
be in a form prescribed by the Committee, and will be effective only when filed
by the Participant in writing with the Committee during his lifetime. In the
absence of any such designation, benefits remaining unpaid at the Participant's
death shall be paid to the Participant's estate.
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ARTICLE 9. RIGHTS OF EMPLOYEES
9.1 Employment. Nothing in the Plan shall interfere with or limit in any
way the right of the Company to terminate any Participant's employment at any
time, nor confer upon any Participant any right to continue in the employ of
the Company.
9.2 Participation. No employee shall have a right to be selected as a
Participant, or, having been so selected, to be selected again as a
Participant.
ARTICLE 10. CHANGE IN CONTROL
10.1 In General. In the event of a Change in Control of the Company as
defined, all awards under the Plan shall vest 100%, whereupon all Options shall
become exercisable in full, and the restrictions applicable to Restricted Stock
shall terminate.
ARTICLE 11. AMENDMENT, MODIFICATION, AND TERMINATION
11.1 Amendment, Modification, and Termination. With the approval of the
Board, at any time and from time to time, the Committee may terminate, amend,
or modify the Plan. However, without the approval of the stockholders of the
Company (as may be required by the Code, by the insider trading rules of
Section 16 of the Exchange Act, by any national securities exchange or system
on which the Stock is then listed or reported, or by a regulatory body
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having jurisdiction with respect hereto) no such termination, amendment or
modification may:
(a) Increase the total amount of Stock which may be issued under
this plan, except as provided in Article 4.3 herein; or
(b) Change the class of Employees eligible to participate in the
Plan; or
(c) Materially increase the cost of the Plan or materially
increase the benefits to Participants; or
(d) Extend the maximum period after the date of grant during
which Options may be exercised; or
(e) Change the provisions of the Plan regarding Option price.
11.2 Awards, Previously Granted. No termination, amendment or
modification of the Plan shall in any manner adversely affect any Award
theretofore granted under the Plan, without the written consent of the
Participant.
ARTICLE 12. WITHHOLDING
12.1 Tax Withholding. The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy Federal, State and local taxes (including the
participant's FICA obligation) required by law to be withheld with respect to
any grant, exercise, or
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payment made under or as a result of this Plan.
12.2 Stock Withholding Elections. Subject to the consent of the
Committee, due to the exercise of a (a) Nonstatutory (Nonqualified) Stock
Option, (b) lapse of restrictions on Restricted Stock, or (c) the issuance of
any other Stock Award under the Plan, a Participant may make an irrevocable
election to (i) have shares of Stock otherwise issuable under (a) withheld, or
(ii) tender back to the Company shares of Stock received pursuant to (a), (b),
or (c), or (iii) deliver back to the Company pursuant to (a), (b), or (c)
previously-acquired shares of Stock having a Fair Market Value sufficient to
satisfy all or part of the Participant's estimated total federal, state, and
local tax obligations associated with the transaction. Such elections must be
made by a Participant on or prior to the Tax Date. The Committee may
disapprove of any election, may suspend or terminate the right to make
elections, or may provide with respect to any Award under the Plan that the
right to make elections shall not apply to such Awards.
12.3 Special Insider Stock Withholding Restrictions. Elections by
Participants who are subject to the short swing profit restrictions of Section
16(b) of the Securities Exchange Act of 1934 are subject to the following
additional restrictions: (a) the
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election may not be made within six months after the grant of a Nonstatutory
(nonqualified) Stock Option or Restricted Stock Award (except that this
limitation does not apply if the Participant dies or becomes disabled prior tot
he expiration of the six-month period), and (b) the election must be made
either (i) at least six months prior to the Tax Date or (ii) on or prior to the
Tax Date and during the period beginning on the third business day and ending
on the twelfth business day following the date on which the Company has
released for publication its regular quarterly (or, in the case of the fourth
quarter of its fiscal year, annual) summary financial information. For
purposes of the preceding sentence, "business day" shall mean any calendar day
other than Saturday, Sunday, or a national holiday.
12.4 Stock Withholding Delivery Requirements. Pursuant to rules adopted
by the Committee, when the Tax Date of a Participant is deferred pursuant to
Code Section 83(c)(3) until six months after the exercise of a Nonstatutory
(Nonqualified) Stock Option the participant does not make an election under
Code Section 13.3 above, the full number of shares of Stock shall be issued or
transferred to the Participant upon the exercise of the Nonstatutory
(nonqualified) Stock Option, but the Participant shall be unconditionally
obligated to tender back or deliver to the
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Company the proper number of shares on the Tax Date. When the Tax Date occurs
in connection with the lapse of restrictions on Restricted Stock and the
Participant elects share withholding, the Participant shall be unconditionally
obligated to tender back or deliver to the Company a sufficient number of
shares of Stock of the Company to satisfy the tax obligations on the Tax Date.
ARTICLE 13. INDEMNIFICATION
13.1 Indemnification. Each person who is or shall have been a member of
the Committee, or of the Board, shall be indemnified and held harmless by the
Company against and from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by him in connection with or resulting from
any claim, action, suit, or proceeding to which he may be a party or in which
he may be involved by reason of any action taken or failure to act under the
Plan and against and from any and all amounts paid by him in settlement
thereof, with the Company's approval, or paid by him in satisfaction of any
judgement in any such action, suite, or proceeding against him, provided he
shall give the Company an opportunity, at its own expense, to handle and defend
the same before he undertakes to handle and defend it on his own behalf. The
foregoing right of indemnification shall not be exclusive of any other rights
of indemnification to which such persons may be
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entitled under the Company's Certificate of Incorporation or Bylaws, as a
matter of law, or otherwise, or any power that the Company may have to
indemnify them or hold them harmless.
ARTICLE 14. SUCCESSORS
14.1 Successors. All obligations of the Company under the Plan, with
respect to Awards granted hereunder, shall be binding on any successor to the
Company, whether the existence of such successor is the result of a direct or
indirect purchase, merger, consolidation or otherwise, of all or substantially
all of the business and/or assets of the Company.
ARTICLE 15. REQUIREMENTS OF LAW
15.1 Requirements of Law. The granting of Awards and the issuance of
Shares of Stock under this Plan shall be subject to all applicable laws, rules,
and regulations, and to such approvals by an governmental agencies or national
securities exchanges as may be required.
15.2 Governing Law. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of Illinois.
ARTICLE 16. RIGHTS OF FIRST REFUSAL
16.1 Rights of First Refusal. If any Shares issued under the Plan are
not readily tradable on an established market on the date
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an employee or his successor intends to sell such Shares, the employee or his
successor may offer such Shares to the Company for purchase at a price and the
Company shall have thirty days to exercise its right to purchase such Shares.
Payment may be in a lump sum or in substantially equal annual or more frequent
installments over a period not exceeding five years in the discretion of the
Board. If the Board selects a method of deferred payments, the unpaid balance
shall earn interest at a rate which is substantially equal to the rate at which
the Company could borrow the amount due and shall be secured by a pledge of the
Shares purchased or such other adequate security as agreed to by the Company
and the employee or his successor. For purposes of this Paragraph, Shares
shall be considered not readily tradable on an established market if such
Shares are not publicly tradable or because such Shares are subject to a
trading limitation under any Federal or state securities law or regulation
which would make such Shares less freely tradable than stock not so restricted.
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