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EXHIBIT 10.1
MICHIGAN HERITAGE BANCORP, INC.
1997 EMPLOYEE STOCK OPTION PLAN
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Effective January 15, 1997
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MICHIGAN HERITAGE BANCORP, INC.
1997 EMPLOYEE STOCK OPTION PLAN
Subject to shareholder approval, effective January 15, 1997, the plan
described herein is hereby adopted as the Michigan Heritage Bancorp, Inc. 1996
Employee Stock Option Plan (the "Plan").
1. Purpose. The purpose of this Plan is to promote the best interests of
the Corporation and its shareholders by encouraging Employees of the Corporation
to acquire a proprietary interest in the Company through the grant of Options,
thus identifying their interests with those of shareholders and encouraging
Employees to make greater efforts on behalf of the Corporation to achieve its
long-term business plans and objectives.
2. Definitions. As used in this Plan, the following terms have the
meaning described below:
(a) "Agreement" means the written agreement that sets forth the
terms of a Participant's Option.
(b) "Board" means the Board of Directors of the Corporation.
(c) "Change in Control" means the occurrence of any of the following
events:
(i) If any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), or group of persons acting in concert,
other than the Corporation, a Subsidiary or an employee benefit plan
or employee benefit plan trust maintained by the Corporation or a
Subsidiary, becomes the "beneficial owner" (as such term is defined in
Rule 13d-3 of the Exchange Act, except that a person also shall be
deemed the beneficial owner of all securities which such person may
have a right to acquire, whether or not such right is presently
exercisable), directly or indirectly, of securities of the Corporation
representing fifty (50%) or more of the combined voting power of the
Corporation's then outstanding securities ordinarily having the right
to vote in the election of directors; or
(ii) A liquidation or dissolution of the Corporation, sale of
substantially all of the assets of the Corporation, or a merger,
consolidation or combination in which the Corporation is not the
survivor; or
(iii) The addition of new members to the Board within any
consecutive twenty-four (24) month period, which members constitute a
majority of the Board, unless a majority of the Board consists of
incumbent members of the
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Board in office prior to the commencement of such twenty-four (24)
month period, plus new members who were recommended or appointed by a
majority of the incumbent directors in office immediately prior to the
addition of such new members to the Board.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means the Compensation Committee of the Board of
Directors, consisting of two or more disinterested members of the Board, as
defined in Rule 16b-3 of the Exchange Act (i.e., a director who is not,
during the one year prior to service as a member of the Committee, or
during such service, granted or awarded securities pursuant to this Plan or
any other plan of the Corporation or any of its affiliates), who have been
appointed by the Board to act as the committee for purposes of
administering this Plan.
(f) "Common Stock" means shares of the Corporation's authorized
Common Stock.
(g) "Corporation" means Michigan Heritage Bancorp, Inc., a Michigan
corporation.
(h) "Disability" means total and permanent disability, as defined in
Section 22(e) of the Code.
(i) "Employee" means a salaried employee of the Corporation or
Subsidiary who has an "employment relationship" with the Corporation or a
Subsidiary, as defined in Treasury Regulation 1.421-7(h) and who is either
an executive officer of the Company or a director of one of the Company's
principal departments (but does not mean a member of the Committee), and
the term "employment" means employment with the Corporation or a Subsidiary
of the Corporation.
(j) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time and any successor thereto.
(k) "Fair Market Value" means, for purposes of determining the value
of Common Stock, the average of the published closing bid and asked prices
of the Common Stock on the NASD OTC Bulletin Board (the "Bulletin Board"),
or if the Common Stock has become listed on The Nasdaq Stock Market
("Nasdaq"), then on Nasdaq instead; or if the Common Stock is not quoted on
either the Bulletin Board or Nasdaq, a value determined by any fair and
reasonable means prescribed by the Committee.
(l) "Grant Date" means the date on which the Committee authorizes an
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individual Option or such later date as shall be designated by the
Committee.
(m) "Incentive Stock Option" means an Option that is intended to
meet the requirements of Section 422 of the Code.
(n) "Initial Offering Price" means the price per share of Common
Stock received by the Company, excluding any underwriters' fees or
commissions in connection with its initial public offering of Common
Stock.
(o) "Nonqualified Stock Option" means an Option that is not intended
to constitute an Incentive Stock Option.
(p) "Option" means either an Incentive Stock Option or a
Nonqualified Stock Option.
(q) "Option Agreement" means either or both of an Incentive Stock
Option Agreement between a Participant and the Corporation relative to
the grant of an Option as described in Section 6(a) of this Plan.
(r) "Participant" means an Employee designated by the Committee to
participate in this Plan.
(s) "Retirement" means termination of a Participant's employment
under the terms of the Corporation's profit sharing plan.
(t) "Subsidiary" means a corporation of which at least fifty-one
percent (51%) of the outstanding voting stock is owned by the Company,
either directly or indirectly through one or more other Subsidiaries.
3. Administration. This Plan shall be administered by the Committee, in
accordance with Rule 16b-3 of the Exchange Act. The Committee shall interpret
this Plan, prescribe, amend, and rescind rules and regulations relating to this
Plan, and make all other determinations necessary or advisable for the
administration of this Plan. The Committee will make determinations with respect
to the officers and other key employees who will participate in the Plan and the
extent of their participation, including the type of option. In making such
determinations, the Committee may consider the position and responsibilities of
the employee, the nature and value of his or her services and accomplishments,
the present and potential contribution of the employee to the success of the
Company, and such other factors as the Committee may deem relevant. The decision
of the Committee on any question concerning the interpretation of this Plan or
any Option granted under this Plan shall be final and binding upon all
Participants.
4. Participants. Participants in this Plan shall be such Employees
(including
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Employees who are directors) of the Corporation and its Subsidiaries as the
Committee may select from time to time. The Committee may grant Options to an
individual upon the condition that the individual become an Employee of the
Corporation or of a Subsidiary, provided that the Option award shall be deemed
to be granted only on the date that the individual becomes an Employee.
5. Stock. Subject to adjustment as provided in Section 9, the total
number of shares of Common Stock available for grants of Options under this Plan
shall be forty thousand (40,000). Shares subject to any unexercised portion of a
terminated, cancelled or expired Option granted hereunder may again be
subjected to grants under this Plan.
6. Grant of Options.
(a) Terms and Conditions; Designations. The Committee, at any time
and from time to time, subject to the terms and conditions of this Plan,
may grant Options to such Employees and for such number of shares of Common
Stock as it shall designate. The Committee shall determine the general
terms and conditions of exercise, including any applicable vesting
requirements, and the Committee may designate any Option granted as either
an Incentive Stock Option or a Nonqualified Stock Option, or may designate
a portion of an Option as an Incentive Stock Option or a Nonqualified Stock
Option. Each grant of an Option shall be evidenced by an Incentive Stock
Option Agreement or a Nonqualified Stock Option Agreement, as the case may
be, which shall specify the applicable terms and conditions and
designations relative to such grant as determined by the Committee. Each
Option granted under this Plan shall meet all of the terms and conditions
of this Plan, except that an Incentive Stock Option shall comply with the
additional requirements of Section 6(b) below.
(b) Additional Requirements of Incentive Stock Options. Any Option
intended to constitute an Incentive Stock Option shall meet all of the
terms and conditions of this Plan and, in addition, shall comply with all
of the following requirements of this Section 6(b):
(i) No Incentive Stock Option shall be granted with an exercise
price below its Fair Market Value on the Grant Date or with an
exercise term that extends beyond ten (10) years from the Grant Date.
(ii) An Incentive Stock Option shall not be granted to any
Participant who owns (within the meaning of Section 424(d) of the
Code) stock of the Corporation or any Subsidiary possessing more than
ten percent (10%) of the total combined voting power of all classes of
stock of the Corporation or a Subsidiary unless, at the Grant Date,
the exercise price for the Option is at least one hundred ten percent
(110%) of the Fair Market Value of the shares subject to the Option
and the Option, by its terms, is not exercisable more than five (5)
years after the Grant
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Date.
(iii) The aggregate Fair Market Value of the underlying Common Stock
(determined at the Grant Date) as to which Incentive Stock Options
granted under this Plan (including a plan of a Subsidiary) may first
be exercised by a Participant in any one calendar year shall not
exceed one hundred thousand dollars ($100,000). To the extent that an
Option intended to constitute an Incentive Stock Option shall violate
the foregoing one hundred thousand dollar ($100,000) limitation, the
portion of the Option that exceeds the one hundred thousand dollar
($100,000) limitation shall be deemed to constitute a Nonqualified
Stock Option.
(c) Option Price. The Committee shall determine the Option price per
share for each Option granted under this Plan. The option price will not be
less than the Fair Market Value of the shares of Common Stock at the time
the option is granted except in the case of an incentive stock option
granted to a 10% shareholder where the option price will be equal to 110%
of Fair Market Value; provided that for all Options granted during the 12
month period following an initial public offering of Common Stock by the
Company, the Option price shall not be less than the Initial Offering
Price. The option price shall be paid in cash or through the delivery of
previously owned shares of the Company's Common Stock, or by a
combination of cash and Common Stock.
(d) Notice of Exercise and Payment.
(i) A Participant shall exercise an Option by delivery to the
Corporation of a notice of exercise in substantially the form set
approved by the Committee.
(ii) The purchase price for shares of Common Stock to be acquired
upon exercise of an Option granted hereunder shall be paid in full in
cash or by personal check, bank draft or money order at the time of
exercise; provided, however, that in lieu of such form of payment a
Participant may pay such purchase price in whole or in part by
tendering shares of Common Stock, duly endorsed for transfer (or with
duly executed stock powers attached), or in any combination of the
above. Shares of Common Stock surrendered upon exercise shall be
valued at Fair Market Value on the business day preceding the date on
which the certificate(s) for such shares, duly endorsed for transfer
or accompanied by appropriate stock powers, are surrendered to the
Corporation. Participants who are subject to short swing profit
restrictions under the Exchange Act and who exercise an Option by
tendering previously-acquired shares shall do so only in accordance
with the provisions of Rule 16b-3 of the Exchange Act. Notwithstanding
the foregoing, any Option shall be deemed exercised by delivery to the
Corporation of a properly executed exercise notice, acceptable to the
Corporation, together with irrevocable instructions to the
Participant's broker to
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deliver to the Corporation sufficient cash to pay the exercise price
and any applicable income and employment withholding taxes, in
accordance with a written agreement between the Corporation and the
brokerage firm ("cashless exercise procedure").
(e) Acceleration of Exercise of Option. The Committee, in its sole
discretion, may accelerate the time at which any option may be exercised in
whole or in part.
7. Termination of Employment.
(a) Options.
(i) If, prior to the date that an Option first becomes
exercisable, a Participant's employment is terminated for any reason
other than a Change in Control, the Participant's right to exercise
the Option shall terminate and all rights thereunder shall cease.
(ii) In the event that the employment of an optionee to whom an
option has been granted under the Plan shall terminate (except as set
forth below) such option may be exercised, to the extent that the
option was exercisable on the date of termination of employment, only
until the earlier of three (3) months after such termination or the
original expiration date of the option; provided however, that if
termination of employment results from death or total and permanent
disability, such three (3) month period shall be extended to twelve
(12) months.
(iii) The Committee, at the time of a Participant's termination of
employment, may, in its sole discretion, accelerate the term of an
Option or extend the exercise period of an Option.
8. Adjustments. The total amount of Common Stock for which Options may be
granted under this Plan, and the number of shares subject to any such grants
(both as to the number of shares of Common Stock and the Option price), shall be
appropriately adjusted for any increase or decrease in the number of
outstanding shares of Common Stock resulting from payment of a stock dividend on
Common Stock, a subdivision or combination of shares of Common Stock, a stock
split, a recapitalization or otherwise. The foregoing adjustments and the manner
of application of the foregoing provisions shall be determined by the Committee
in its sole discretion. Any such adjustment may provide for the elimination of
any fractional share which might otherwise become subject to an Option.
9. Change in Control; Golden Parachutes. Notwithstanding anything
contained herein to the contrary, upon a Change in Control, any outstanding
Option granted hereunder shall immediately become exercisable in full,
regardless of any installment provision applicable to
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such Option; provided, however, that to the extent that the acceleration of a
grant is deemed to constitute a "golden parachute payment" under Section 280G of
the Code and such payment, when aggregated with other golden parachute payments
to the Participant results in an "excess golden parachute payment" under Section
280G of the Code, any accelerated payment under this Section 11 shall be reduced
to the highest permissible amount that shall not subject the Participant to an
excess golden parachute excise tax under Section 4999 of the Code and shall
entitle the Corporation to retain its full compensation tax deduction for the
payment.
10. Securities Laws.
(a) Compliance. Notwithstanding anything contained herein to the
contrary, the Corporation's obligation to sell and deliver Common Stock pursuant
to the exercise of an Option is subject to such compliance with federal and
state laws, rules and regulations applying to the authorization, issuance or
sale of securities as the Corporation deems necessary or advisable. No shares
shall be issued until counsel for the Corporation has determined that the
Corporation has complied with all requirements under appropriate securities
laws.
(b) Assurance of No Violation. The Corporation shall not be required to
sell and deliver Common Stock unless and until it receives satisfactory
assurance that the issuance or transfer of such shares shall not violate any of
the provisions of the Securities Act of 1933, as amended, or the Exchange Act,
or the rules and regulations of the Securities Exchange Commission promulgated
thereunder or those of the National Association of Securities Dealers, Inc. (the
"NASD") with respect to NASDAQ or any stock exchange on which the Common Stock
may be listed, the provisions of any state laws governing the sale of
securities, or that there has been compliance with the provisions of such acts,
rules, regulations and laws.
(c) Restrictions. The Committee may impose such restrictions on any
shares of Common Stock acquired pursuant to the exercise of an Option under this
Plan as it may deem advisable, including, without limitation, restrictions (i)
under applicable federal securities laws, (ii) under the requirements of the
NASD with respect to NASDAQ or any stock exchange or other recognized trading
market upon which such shares of Common Stock are then listed or traded, and
(iii) under any blue sky or state securities laws applicable to such shares.
Notwithstanding any other provision of this Plan, the Committee may impose such
conditions on the exercise of an Option as may be required to satisfy the
requirements of Rule 16b-3 of the Exchange Act.
11. Withholding Taxes--Nonqualified Stock Options.
(a) Corporation's Right to Withhold; Use of Previously-Acquired Shares
and Cashless Exercise Procedure. The Corporation shall have the right to
withhold from a Participant's compensation or require a Participant to remit
sufficient funds to satisfy applicable withholding for income and employment
taxes upon the exercise of a Nonqualified Stock Option. A Participant may make a
written election to tender previously-acquired shares of
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Common Stock or have shares of Common Stock withheld from the exercise,
provided that the shares have an aggregate Fair Market Value sufficient to
satisfy in whole or in part the applicable withholding taxes. The cashless
exercise procedure of Section 6(d)(ii) may be utilized to satisfy the
withholding requirements related to the exercise of a Nonqualified Stock
Option.
(b) Insider Trading Restrictions. Except as permitted under Rule 16b-3
of the Exchange Act, a Participant subject to the insider trading restrictions
of Section 16(b) of the Exchange Act may use Common Stock to satisfy the
applicable withholding requirements only if notice of election to exercise is
given to the Committee within the ten (10) day "window periods" set forth in
Rule 16b-3, or if such election is made at least six months prior to the date
on which the exercise of the Nonqualified Stock Option. Any election by a
Participant to utilize Common Stock for withholding purposes is subject to the
discretion of the Committee.
12. Termination and Amendment. The Board may terminate this Plan, or
the granting of Options under this Plan, at any time. An option may not be
granted pursuant to the Plan after December 31, 2006. The Board of Directors
may from time to time terminate the Plan or amend the Plan subject to
shareholder approval to the extent necessary to satisfy the requirements of
Rule 16b-3 under the Exchange Act, or any successor rule. The Board may amend
or modify this Plan at any time and from time to time, but no amendment or
modification, without the approval of the shareholders of the Corporation,
shall (a) materially increase the benefits accruing to Participants under this
Plan, (b) increase the amount of Common Stock for which grants and awards may
be made under this Plan, except as permitted under Section 11 hereof, or (c)
change the provisions relating to the eligibility of individuals to whom grants
and awards may be made under this Plan. No amendment, modification, or
termination of this Plan shall in any manner affect any Option granted under
this Plan without the consent of the Participant holding the Option.
13. Miscellaneous.
(a) Partial Exercise; No Fractional Shares. The Committee may permit,
and shall establish procedures for, the partial exercise of Options granted
under this Plan, provided that no fractional shares of Common Stock shall be
issued upon exercise of an Option.
(b) Rights Prior to Issuance of Shares. No Participant shall have any
rights as a shareholder with respect to shares covered by an Option until the
issuance of a stock certificate for such shares. No adjustment shall be made
for dividends or other rights with respect to such shares for which the record
date is prior to the date the certificate is issued.
(c) Non-Assignability. No Option shall be transferable by a Participant
except by will or the laws of descent and distribution. During the lifetime of
a Participant, an Option shall be exercised only by the Participant. Any
transferee of an Option shall take the same subject to the terms and conditions
of this Plan and the related Agreement. No transfer of an Option by
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will or the laws of descent and distribution shall be effective to bind the
Corporation unless the Corporation shall have been furnished with written
notice thereof and with a copy of the will and/or such other evidence as the
Corporation may deem necessary to establish the validity of the transfer and
the acceptance by the transferee of the terms and conditions of the Option.
(d) Effect on Employment. Neither the adoption of this Plan nor the
granting of any Option pursuant to this Plan shall be deemed to confer on any
person any right to continue in the employ of the Company or a Subsidiary or to
continue to perform services for the Company or a Subsidiary or interferes in
any way with the right of the Company or a Subsidiary to terminate such
person's service as an officer or employee at any time.
(e) Use of Proceeds. The proceeds received from the sale of Common
Stock pursuant to this Plan will be used for general corporate purposes of the
Corporation.
(f) Captions. The captions and headings of the sections and the
subsections have been inserted as a matter of convenience and reference only
and shall not control or affect the meaning or construction of this Plan.
14. Approval of Plan. This Plan shall be subject to the approval of
the holders of at least a majority of the Common Stock of the Corporation
present and entitled to vote at a meeting of shareholders of the Corporation
held within twelve (12) months after adoption of this Plan by the Board. No
Option granted under this Plan may be exercised in whole or in part until this
Plan has been approved by the shareholders as provided herein. If not approved
by shareholders within such twelve (12) month period, this Plan and any Options
granted hereunder shall be rescinded.
BOARD APPROVAL: January 15, 1997
SHAREHOLDER APPROVAL: January 15, 1997
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