Exhibit 10.5
LAKELAND BANCORP, INC.
2000 EQUITY COMPENSATION PROGRAM
(AS AMENDED THROUGH FEBRUARY 15, 2001)
1. Purposes. This Equity Compensation Program (the "Program")
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is intended to secure for Lakeland Bancorp, Inc. (the "Corporation"), its direct
and indirect present and future subsidiaries, including without limitation any
entity which the Corporation reasonably expects to become a subsidiary (the
"Subsidiaries"), and its shareholders, the benefits arising from ownership of
the Corporation's common stock ("Common Stock") by those selected directors,
officers and key employees of the Corporation and the Subsidiaries who are most
responsible for future growth. The Program is designed to help attract and
retain superior individuals for positions of substantial responsibility with the
Corporation and the Subsidiaries and to provide these persons with an additional
incentive to contribute to the success of the Corporation and the Subsidiaries.
2. Elements of the Program. In order to maintain flexibility
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in the award of benefits, the Program is comprised of three parts -- the
Incentive Stock Option Plan ("Incentive Plan"), the Supplemental Stock Option
Plan ("Supplemental Plan"), and the Independent Director Plan ("Independent
Director Plan"). Copies of the Incentive Plan, Supplemental Plan, and
Independent Director Plan are attached hereto as Parts I, II, and III,
respectively. Each such plan is referred to herein as a "Plan" and all such
plans are collectively referred to herein as the "Plans." The grant of an option
under one of the Plans shall not be construed to prohibit the grant of an option
under any of the other Plans.
3. Applicability of General Provisions. Unless any Plan
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specifically indicates to the contrary, all Plans shall be subject to the
general provisions of the Program set forth below under the heading "General
Provisions of the Equity Compensation Program" (the "General Provisions").
GENERAL PROVISIONS OF THE EQUITY COMPENSATION PROGRAM
Article 1. Administration. The Program shall be administered
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by the Board of Directors of the Corporation (the "Board" or the "Board of
Directors") or any duly created committee appointed by the Board and charged
with the administration of the Program. To the extent required in order to
satisfy the requirements of Section 162(m) of the Internal Revenue Code of 1986,
as amended (the "Code"), such committee shall consist solely of "Outside
Directors" (as defined herein). The Board, or any duly appointed committee, when
acting to administer the Program, is referred to as the "Program Administrator".
Any action of the Program Administrator shall be taken by majority vote at a
meeting or by unanimous written consent of all members without a meeting. No
Program Administrator or member of the Board of the Corporation shall be liable
for any action or determination made in good faith with respect to the Program
or with respect to any option granted pursuant to the Program. For purposes of
the Program, the term "Outside Director" shall mean a director who (a) is not a
current employee of the Corporation or the Subsidiaries; (b) is not a former
employee of the Corporation or the Subsidiaries who receives compensation for
prior services (other than benefits under a tax-qualified retirement plan)
during the then current taxable year; (c) has not been an officer of the
Corporation or the Subsidiaries; and (d) does not receive remuneration (which
shall be deemed to include any payment in exchange for goods or services) from
the Corporation or the Subsidiaries, either directly or indirectly, in any
capacity other than as a director, except as otherwise permitted under Code
Section 162(m) and the regulations thereunder.
Article 2. Authority of Program Administrator. Subject to the
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other provisions of this Program, and with a view to effecting its purpose, the
Program Administrator shall have the authority: (a) to construe and interpret
the Program; (b) to define the terms used herein; (c) to prescribe, amend and
rescind rules and regulations relating to the Program; (d) to determine the
persons to whom options shall be granted under the Program; (e) to determine the
time or times at which options shall be granted under the Program; (f) to
determine the number of shares subject to any discretionary option under the
Program as well as the option price, and the duration of each option and any
other terms and conditions of options; and (g) to make any other determinations
necessary or advisable for the administration of the Program and to do
everything necessary or appropriate to administer the Program. All decisions,
determinations and interpretations made by the Program Administrator shall be
binding and conclusive on all participants in the Program and on their legal
representatives, heirs and beneficiaries.
Article 3. Maximum Number of Shares Subject to the Program.
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The maximum aggregate number of shares of Common Stock issuable pursuant to the
Program shall be 950,000 shares. No one person participating in the Program may
receive options for more than 300,000 shares of Common Stock in any calendar
year. All such shares may be issued under any Plan which is part of the Program.
If any of the options (including incentive stock options) granted under the
Program expire or terminate for any reason before they have been exercised in
full, the unissued shares subject to those expired or terminated options shall
again be available for purposes of the Program. Any shares of Common Stock
delivered pursuant to the Program may consist, in whole or in part, of
authorized and unissued shares or treasury shares.
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Article 4. Eligibility and Participation. All directors,
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officers and employees of the Corporation and the Subsidiaries shall be eligible
to participate in the Program. The term "employee" shall include any person who
has agreed to become an employee.
Article 5. Effective Date and Term of Program. The Program
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shall become effective immediately upon approval of the Program by the Board of
Directors of the Corporation, subject to approval of the Program by the
shareholders of the Corporation within twelve months after the date of approval
of the Program by the Board of Directors. The Program shall continue in effect
for a term of ten years from the date that the Program is adopted by the Board
of Directors, unless sooner terminated by the Board of Directors of the
Corporation.
Article 6. Adjustments. In the event that the outstanding
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shares of Common Stock of the Corporation are hereafter increased, decreased,
changed into or exchanged for a different number or kind of shares or securities
through merger, consolidation, combination, exchange of shares, other
reorganization, recapitalization, reclassification, stock dividend, stock split
or reverse stock split (an "Adjustment Event"), an appropriate and proportionate
adjustment shall be made by the Program Administrator in the maximum number and
kind of shares as to which options may be granted under the Program. A
corresponding adjustment changing the number or kind of shares allocated to
unexercised options which shall have been granted prior to any such Adjustment
Event shall likewise be made. Any such adjustment in outstanding options shall
be made without change in the aggregate purchase price applicable to the
unexercised portion of the option but with a corresponding adjustment in the
price for each share or other unit of any security covered by the option. In
making any adjustment pursuant to this Article 6, any fractional shares shall be
disregarded.
Article 7. Termination and Amendment of Program and Awards. No
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options shall be granted under the Program after the termination of the Program.
The Program Administrator may at any time amend or revise the terms of the
Program or of any outstanding option issued under the Program, provided,
however, that (a) any shareholder approval required by applicable law or
regulation shall be obtained and (b) no amendment, suspension or termination of
the Program or of any outstanding option shall, without the consent of the
person who has received an option, impair any of that person's rights or
obligations under such option.
Article 8. Privileges of Stock Ownership. Notwithstanding the
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exercise of any option granted pursuant to the terms of the Program, no person
shall have any of the rights or privileges of a stockholder of the Corporation
in respect of any shares of stock issuable upon the exercise of his or her
option until certificates representing the shares of Common Stock covered
thereby have been issued and delivered. No adjustment shall be made for
dividends or any other distributions for which the record date is prior to the
date on which any stock certificate is issued pursuant to the Program.
Article 9. Reservation of Shares of Common Stock. During the
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term of the Program, the Corporation will at all times reserve and keep
available such number of shares of its Common Stock as shall be sufficient to
satisfy the requirements of the Program.
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Article 10. Tax Withholding. The exercise of any option under
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the Program is subject to the condition that, if at any time the Corporation
shall determine, in its discretion, that the satisfaction of withholding tax or
other withholding liabilities under any state or federal law is necessary or
desirable as a condition of, or in any connection with, such exercise, then, in
such event, the exercise of the option shall not be effective unless such
withholding tax or other withholding liabilities shall have been satisfied in a
manner acceptable to the Corporation.
Article 11. Employment; Service as a Director. Nothing in the
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Program gives to any person any right to continued employment by the Corporation
or the Subsidiaries or to continued service as a director of the Corporation or
the Subsidiaries or limits in any way the right of the Corporation or the
Subsidiaries at any time to terminate or alter the terms of that employment or
service.
Article 12. Investment Letter; Lock-Up Agreement; Restrictions
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on Obligation of the Corporation to Issue Securities; Restrictive Legend. Any
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person acquiring or receiving Common Stock or other securities of the
Corporation pursuant to the Program, as a condition precedent to receiving the
shares of Common Stock or other securities, may be required by the Program
Administrator to submit a letter to the Corporation (a) stating that the shares
of Common Stock or other securities are being acquired for investment and not
with a view to the distribution thereof and (b) providing other assurances
determined by the Corporation to be necessary or appropriate in order to assure
that the issuance of such shares is exempt from any applicable securities
registration requirements. The Corporation shall not be obligated to sell or
issue any shares of Common Stock or other securities pursuant to the Program
unless, on the date of sale and issuance thereof, the shares of Common Stock or
other securities are either registered under the Securities Act of 1933, as
amended, and all applicable state securities laws, or exempt from registration
thereunder.
Article 13. Rights Upon Termination of Employment or Service
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as a Director. Notwithstanding any other provision of the Program, any benefit
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granted to an individual who has agreed to become an employee of the Corporation
or any Subsidiary or to become an employee of any entity which the Corporation
reasonably expects to become a Subsidiary, shall immediately terminate if the
Program Administrator determines, in its sole discretion, that such person will
not become an employee of the Corporation or any Subsidiary. If a recipient
ceases to be employed by or to provide services as a director to the Corporation
or any Subsidiary, or a corporation or a parent or subsidiary of such
corporation issuing or assuming a stock option in a transaction to which Section
424(a) of the Code applies, for any reason other than death, disability or
retirement (subject to satisfaction of the criteria set forth in the following
sentence), then, unless any other provision of the Program provides for earlier
termination, all options shall terminate immediately in the event the
recipient's employment or services as a director are terminated for cause and in
all other circumstances may be exercised, to the extent exercisable on the date
of termination, until 30 days after the date of termination, provided, however,
that the Program Administrator may, in its discretion, allow such options to be
exercised (to the extent exercisable on the date of termination) at any time
within 90 days after the date of termination. Notwithstanding the foregoing, in
the event an employee of the Corporation or any Subsidiary retires on or after
attaining the age of 62, and provided such employee has at least five years of
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continuous service with the Corporation or any Subsidiary at the time of such
retirement, then all options exercisable on the date of retirement as well as
all options that would otherwise vest within one year following the date of
retirement may be exercised until 30 days after the date of retirement or, at
the discretion of the Program Administrator, until 90 days after the date of
retirement.
Article 14. Rights Upon Disability. If a recipient becomes
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disabled within the meaning of Section 22(e)(3) of the Code while employed by or
while rendering services as a director to the Corporation or any Subsidiary (or
a corporation or a parent or subsidiary of such corporation issuing or assuming
a stock option in a transaction to which Section 424(a) of the Code applies),
then, unless any other provision of the Program provides for earlier
termination, all options may be exercised, to the extent exercisable on the date
of termination (or to such greater extent as shall be determined by the Plan
Administrator before or after the date of termination), at any time within one
year after the date of termination due to disability.
Article 15. Rights Upon Death. If a recipient dies while
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employed by or while rendering services as a director to the Corporation or any
Subsidiary (or a corporation or a parent or subsidiary of such corporation
issuing or assuming a stock option in a transaction to which Section 424(a) of
the Code applies), then, unless any other provision of the Program provides for
earlier termination, all options may be exercised by the person or persons to
whom the recipient's rights shall pass by will or by the laws of descent and
distribution, to the extent exercisable on the date of death (or to such greater
extent as shall be determined by the Plan Administrator before or after the date
of termination), at any time within one year after the date of death unless any
other provision of the Program provides for earlier termination.
Article 16. Non-Transferability. Options granted under the
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Program may not be sold, pledged, assigned or transferred in any manner by the
recipient otherwise than by will or by the laws of descent and distribution and
shall be exercisable (a) during the recipient's lifetime only by the recipient
and (b) after the recipient's death only by the recipient's executor,
administrator or personal representative, provided, however that the Program
Administrator may permit the recipient of an option granted pursuant to Part II
or Part III of the Program to transfer such options to a family member or a
trust or partnership created for the benefit of family members. In the case of
such a transfer, the transferee's rights and obligations with respect to the
applicable options shall be determined by reference to the recipient and the
recipient's rights and obligations with respect to the applicable options had no
transfer been made. The recipient shall remain obligated pursuant to Articles 10
and 12 hereunder if required by applicable law.
Article 17. Change in Control. All options granted pursuant to
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the Program shall become fully exercisable upon the occurrence of a Change in
Control Event. As used in the Program, a "Change in Control Event" shall be
deemed to have occurred if any of the following events occur:
(a) the consummation of any consolidation or merger
of the Corporation in which the Corporation is not the continuing or surviving
corporation or pursuant to which shares of Common Stock would be converted into
cash, securities or other property,
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other than a merger of the Corporation in which the holders of the shares of the
Corporation's Common Stock immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation immediately
after the merger; or
(b) the consummation of any sale, lease, exchange or
other transfer (in one transaction or a series of related transactions) of all,
or substantially all, of the assets of the Corporation, other than to a
subsidiary or affiliate; or
(c) an approval by the shareholders of the
Corporation of any plan or proposal for the liquidation or dissolution of the
Corporation; or
(d) any action pursuant to which any person (as such
term is defined in Section 13(d) of the Exchange Act), corporation or other
entity (other than any person who owns more than ten percent (10%) of the
outstanding Common Stock on the date of adoption of this Program by the Board of
Directors, the Corporation or any benefit plan sponsored by the Corporation or
any of its subsidiaries) shall become the "beneficial owner" (as such term is
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of shares
of capital stock entitled to vote generally for the election of directors of the
Corporation ("Voting Securities") representing fifty-one (51%) percent or more
of the combined voting power of the Corporation's then outstanding Voting
Securities (calculated as provided in Rule 13d-3(d) in the case of rights to
acquire any such securities), unless, prior to such person so becoming such
beneficial owner, the Board shall determine that such person so becoming such
beneficial owner shall not constitute a Change in Control; or
(e) the individuals (A) who, as of the date on which
the Program is first adopted by the Board of Directors, constitute the Board
(the "Original Directors") and (B) who thereafter are elected to the Board and
whose election, or nomination for election, to the Board was approved by a vote
of at least two thirds of the Original Directors then still in office (such
Directors being called "Additional Original Directors") and (C) who thereafter
are elected to the Board and whose election or nomination for election to the
Board was approved by a vote of at least two thirds of the Original Directors
and Additional Original Directors then still in office, cease for any reason to
constitute a majority of the members of the Board.
Article 18. Merger or Asset Sale. For purposes of the Program,
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a merger or consolidation which would constitute a Change in Control Event
pursuant to Article 17 and a sale of assets which would constitute a Change in
Control Event pursuant to Article 17 are hereinafter referred to as "Article 18
Events". In the event of an Article 18 Event, each outstanding option shall be
assumed or an equivalent benefit shall be substituted by the entity determined
by the Board of Directors of the Corporation to be the successor corporation.
However, in the event that any such successor corporation does not agree in
writing, at least 15 days prior to the anticipated date of consummation of such
Article 18 Event, to assume or so substitute each such option, then each option
not so assumed or substituted shall be deemed to be fully vested and
exercisable. If an option becomes fully vested and exercisable pursuant to the
terms of this Article 18, the Program Administrator shall notify the holder
thereof in writing or electronically that (a) such holder's option shall be
fully exercisable until immediately prior to
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the consummation of such Article 18 Event and (b) such holder's option shall
terminate upon the consummation of such Article 18 Event. For purposes of this
Article 18, an option shall be considered assumed if, following consummation of
the applicable Article 18 Event, the option confers the right to purchase or
receive, for each share of Common Stock subject to the option immediately prior
to the consummation of such Article 18 Event, the consideration (whether stock,
cash or other securities or property) received in such Article 18 Event by
holders of Common Stock for each share of Common Stock held on the effective
date of such Article 18 Event (and, if holders of Common Stock are offered a
choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding shares of Common Stock); provided, however, that if
such consideration received in such Article 18 Event is not solely common stock
of such successor, the Program Administrator may, with the consent of such
successor corporation, provide for the consideration to be received in
connection with such option to be solely common stock of such successor equal in
fair market value to the per share consideration received by holders of Common
Stock in the Article 18 Event.
Article 19. Method of Exercise. Any optionee may exercise his
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or her option from time to time by giving written notice thereof to the
Corporation at its principal office together with payment in full for the shares
of Common Stock to be purchased. The date of such exercise shall be the date on
which the Corporation receives such notice. Such notice shall state the number
of shares to be purchased. The purchase price of any shares purchased upon the
exercise of any option granted pursuant to the Program shall be paid in full at
the time of exercise of the option by certified or bank cashier's check payable
to the order of the Corporation or, if permitted by the Program Administrator,
by shares of Common Stock, or by a combination of checks and shares of Common
Stock. The Program Administrator may, in its sole discretion, permit an optionee
to make "cashless exercise" arrangements, to the extent permitted by applicable
law, and may require optionees to utilize the services of a single broker
selected by the Program Administrator in connection with any cashless exercise.
No option may be exercised for a fraction of a share of Common Stock. If any
portion of the purchase price is paid in shares of Common Stock, those shares
shall be valued at their then Fair Market Value as determined by the Program
Administrator in accordance with Section 4 of the Incentive Plan.
Article 20. Ten-Year Limitations. Notwithstanding any other
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provision of the Program, (a) no option may be granted pursuant to the Program
more than ten years after the date on which the Program was adopted by the Board
of Directors and (b) any option granted under the Program shall, by its terms,
not be exercisable more than ten years after the date of grant.
Article 21. Sunday or Holiday. In the event that the time for
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the performance of any action or the giving of any notice is called for under
the Program within a period of time which ends or falls on a Sunday or legal
holiday, such period shall be deemed to end or fall on the next day following
such Sunday or legal holiday which is not a Sunday or legal holiday.
Article 22. Governing Law. The Program shall be governed by
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and construed in accordance with the laws of the State of New Jersey.
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Article 23. Pooling Transactions. Notwithstanding anything
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contained in the Program to the contrary, in the event of a Change in Control
which is also intended to constitute a Pooling Transaction (as defined herein),
the Program Administrator shall take such actions, if any, which are
specifically recommended by an independent accounting firm retained by the
Corporation to the extent reasonably necessary in order to assure that the
Pooling Transaction will qualify as such, including but not limited to (a)
deferring the vesting, exercise, payment or settlement with respect to any
benefit granted under the Program, (b) providing that the payment or settlement
in respect of any such benefit be made in the form of cash, shares of common
stock or other assets or securities of a successor or acquirer of the
Corporation, or a combination of the foregoing and (c) providing for the
extension of the term of any such benefit to the extent necessary to accommodate
the foregoing, but not beyond the maximum term permitted for any such benefit.
For purposes of the Program, the term "Pooling Transaction" shall mean an
acquisition of the Corporation in a transaction which is intended to be treated
as a "pooling of interests" under generally accepted accounting principles.
Article 24. Covenant Against Competition. The Program
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Administrator shall have the right to condition the award to an employee of the
Corporation or the Subsidiaries of any option under the Program upon the
recipient's execution and delivery to the Corporation of an agreement not to
compete with the Corporation and the Subsidiaries during the recipient's
employment and for such period thereafter as shall be determined by the Program
Administrator. Such covenant against competition shall be in a form satisfactory
to the Program Administrator.
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PART I
INCENTIVE STOCK OPTION PLAN
The following provisions shall apply with respect to options
granted by the Program Administrator pursuant to Part I of the Program:
Section 1. General. This Incentive Stock Option Plan
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("Incentive Plan") is Part I of the Corporation's Program. The Corporation
intends that options granted pursuant to the provisions of the Incentive Plan
will qualify and will be identified as "incentive stock options" within the
meaning of Section 422 of the Code. Unless any provision herein indicates to the
contrary, this Incentive Plan shall be subject to the General Provisions of the
Program.
Section 2. Terms and Conditions. The Program Administrator may
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grant incentive stock options to purchase Common Stock to any employee of the
Corporation or its Subsidiaries. The terms and conditions of options granted
under the Incentive Plan may differ from one another as the Program
Administrator shall, in its discretion, determine, as long as all options
granted under the Incentive Plan satisfy the requirements of the Incentive Plan.
Section 3. Duration of Options. Each option and all rights
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thereunder granted pursuant to the terms of the Incentive Plan shall expire on
the date determined by the Program Administrator, but in no event shall any
option granted under the Incentive Plan expire later than ten years from the
date on which the option is granted. Notwithstanding the foregoing, any option
granted under the Incentive Plan to any person who owns more than 10% of the
combined voting power of all classes of stock of the Corporation or any
Subsidiary shall expire no later than five years from the date on which the
option is granted.
Section 4. Purchase Price. The option price with respect to
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any option granted pursuant to the Incentive Plan shall not be less than the
Fair Market Value of the shares on the date of the grant of the option; except
that the option price with respect to any option granted pursuant to the
Incentive Plan to any person who owns more than 10% of the combined voting power
of all classes of stock of the Corporation shall not be less than 110% of the
Fair Market Value of the shares on the date the option is granted. For purposes
of the Program, the phrase "Fair Market Value" shall mean the fair market value
of the Common Stock on the date of grant or other relevant date. If on such date
the Common Stock is listed on a stock exchange or is quoted on the automated
quotation system of NASDAQ, the Fair Market Value shall be the closing sale
price (or if such price is unavailable, the average of the high bid price and
the low asked price) of a share of Common Stock on such date. If no such closing
sale price or bid and asked prices are available, the Fair Market Value shall be
determined in good faith by the Program Administrator in accordance with
generally accepted valuation principles and such other factors as the Program
Administrator reasonably deems relevant.
Section 5. Maximum Amount of Options in Any Calendar Year. The
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aggregate Fair Market Value (determined as of the time the option is granted) of
the Common Stock with respect to which incentive stock options are exercisable
for the first time by any employee during
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any calendar year (under the terms of the Incentive Plan and all incentive stock
option plans of the Corporation and the Subsidiaries) shall not exceed $100,000.
Section 6. Exercise of Options. Unless otherwise provided by
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the Program Administrator at the time of grant or unless the installment
provisions set forth herein are subsequently accelerated pursuant to the General
Provisions of the Program or otherwise by the Program Administrator with respect
to any one or more previously granted options, incentive stock options may only
be exercised to the following extent during the following periods of time:
Maximum Percentage of
Shares Covered by
Option Which May be
During Purchased
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First 12 months after grant 0
First 24 months after grant 25%
First 36 months after grant 50%
First 48 months after grant 75%
Beyond 48 months after grant 100%
Section 7. Failure to Satisfy Applicable Requirements. In the
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event that an option is intended to be granted pursuant to the provisions of
this Incentive Plan but fails to satisfy one or more requirements of this
Incentive Plan, such option shall be deemed to have been granted pursuant to the
Supplemental Plan set forth as Part II of the Program, provided that such option
satisfies the requirements of the Supplemental Plan.
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PART II
SUPPLEMENTAL STOCK OPTION PLAN
The following provisions shall apply with respect to options
granted by the Program Administrator pursuant to Part II of the Program:
Section 1. General. This Supplemental Stock Option Plan
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("Supplemental Plan") is Part II of the Corporation's Program. Any option
granted pursuant to this Supplemental Plan shall not be an incentive stock
option as defined in Section 422 of the Code. Unless any provision herein
indicates to the contrary, this Supplemental Plan shall be subject to the
General Provisions of the Program.
Section 2. Terms and Conditions. The Program Administrator may
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grant supplemental stock options to any person eligible under Article 4 of the
General Provisions. The terms and conditions of options granted under this
Supplemental Plan may differ from one another as the Program Administrator
shall, in its discretion, determine as long as all options granted under this
Supplemental Plan satisfy the requirements of this Supplemental Plan.
Section 3. Duration of Options. Each option and all rights
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thereunder granted pursuant to the terms of this Supplemental Plan shall expire
on the date determined by the Program Administrator, but in no event shall any
option granted under this Supplemental Plan expire later than ten years from the
date on which the option is granted.
Section 4. Purchase Price. The option price with respect to
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any option granted pursuant to this Supplemental Plan shall be determined by the
Program Administrator at the time of grant.
Section 5. Exercise of Options. Unless otherwise provided by
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the Program Administrator at the time of grant or unless the installment
provisions set forth herein are subsequently accelerated pursuant to the General
Provisions of the Program or otherwise by the Program Administrator with respect
to any one or more previously granted options, supplemental stock options may
only be exercised to the following extent during the following periods of time:
Maximum Percentage of
Shares Covered by
Option Which May be
During Purchased
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First 12 months after grant 0
First 24 months after grant 25%
First 36 months after grant 50%
First 48 months after grant 75%
Beyond 48 months after grant 100%
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PART III
INDEPENDENT DIRECTOR PLAN
The following provisions shall apply with respect to options
granted by the Program Administrator pursuant to Part III of the Program:
Section 1. General. This Independent Director Plan
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("Independent Director Plan") is Part III of the Corporation's Program. Any
option granted pursuant to this Independent Director Plan shall not be an
incentive stock option as defined in Section 422 of the Code. Unless any
provision herein indicates to the contrary, this Independent Director Plan shall
be subject to the General Provisions of the Program.
Section 2. Definitions. As used in this Independent Director
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Plan, the following definitions shall apply.
(a) "Employee" shall mean any person employed on
a full-time basis by the Corporation or any present or future Subsidiary of the
Corporation.
(b) "Existing Independent Director" shall mean
each member of the Corporation's Board of Directors on the date the Program is
first adopted by such Board of Directors who did not serve as an Employee during
the preceding 12 months.
(c) "Fair Market Value" shall have the meaning
set forth in Section 4 of the Incentive Plan.
(d) "Independent Director" shall mean any member
of the Corporation's Board of Directors who, on the date such person is to
receive a grant of an Option pursuant to the Independent Director Plan, shall
not be an Employee.
(e) "New Independent Director" shall have the
meaning set forth in Section 4(a) of this Independent Director Plan.
(f) "Option" shall mean the right, granted
pursuant to Section 4 of this Independent Director Plan, to purchase one or more
shares of Common Stock.
(g) "Subsidiary" shall mean any present or
future corporation which would be a "subsidiary corporation" as defined in
Subsections 424(f) and (g) of the Code.
Section 3. Eligibility. The only persons eligible to receive
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Options under the Independent Director Plan shall be persons who, on the date
such Options are to be granted hereunder, constitute Independent Directors.
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Section 4. Option Grants.
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(a) Automatic Grants to New Independent
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Directors. The Corporation shall grant to each Independent Director who first
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becomes a director of the Corporation during the term of the Independent
Director Plan (a "New Independent Director") an Option to purchase 25,000 shares
of Common Stock on the date of his first appointment or election as a director
of the Corporation.
(b) Automatic Grants to Existing Independent
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Directors. On the date that the Program is first adopted by the Corporation's
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Board of Directors, the Corporation shall grant to each Existing Independent
Director an Option to purchase 25,000 shares of Common Stock.
Section 5. Option Price. The exercise price per share of the
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Common Stock covered by each Option granted under the Independent Director Plan
shall be the Fair Market Value of a share of the Common Stock on the date the
Option is granted.
Section 6. Term of Options. Subject to the General Provisions
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of the Program, each Option granted pursuant to the Independent Director Plan
shall expire ten years after the date of grant.
Section 7. Exercise of Options. Each Option granted pursuant
-------------------
to the Independent Director Plan shall be exercisable as follows:
Maximum Percentage of Shares Covered by
During Option Which May be Purchased
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First 12 months after grant 20%
First 24 months after grant 40%
First 36 months after grant 60%
First 48 months after grant 80%
Beyond 48 months after grant 100%
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