Exhibit 10.4
FIRST MIDWEST BANCORP, INC.
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DIRECTORS' 1997 STOCK
OPTION PLAN
May 19, 1997
FIRST MIDWEST BANCORP, INC.
NON-EMPLOYEE DIRECTORS' 1997 STOCK OPTION PLAN
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Section 1. Establishment, Purposes and Effective Date of Plan
1.1 Establishment. First Midwest Bancorp, Inc., a Delaware corporation,
hereby establishes the "NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN" (the "Plan").
The Plan provides for the grant of nonqualified stock options to the Company's
Non-Employee Directors.
1.2 Purposes. The purpose of the Plan is to advance the interests of the
Company and its stockholders by augmenting the Company's traditional
compensation program for Non-Employee Directors with awards of nonqualified
stock options, thereby increasing their stake in the future growth and
prosperity of the Company, and furthering the Directors' identity of interest
with those of the Company's stockholders. By thus compensating Non-Employee
Directors, the Company seeks to attract, retain, compensate and motivate those
highly competent individuals whose judgment, initiative, leadership, and efforts
are important to the success of the Company.
1.3 Effective Date. The effective date of the Plan is May 21, 1997.
Section 2. Definitions
As used herein, the following terms shall have the meanings hereinafter set
forth:
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Common Stock" or "Share" means the Common Stock, par value $.01
per share, of the Company or such other class of shares or other securities
as may be applicable pursuant to the provisions of subsection 4.3.
(d) "Company" means First Midwest Bancorp, Inc., a Delaware
corporation.
(e) "Director Options" means options granted hereunder to non-employee
directors.
(f) "Effective Date" means May 21, 1997, the date on which the Plan
was approved by the Board.
(g) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(h) "Fair Market Value" means, as to any date, the average of the
highest and lowest prices of a share of Common Stock as reported in the
consolidated tape of the NASDAQ National Market System. In the event there
are no transactions reported for such date, the Fair Market Value shall be
determined as of the immediately preceding date on which such prices of
Common Stock are so quoted.
(i) "Grant Date" means November 19, 1997, with respect to each
individual who is a Non-Employee Director on that date, and thereafter,
means with respect to each individual who is a Non-Employee Director, the
date of the first regularly-scheduled Board meeting held in each calendar
year (generally in February), beginning with the first Board meeting held
in 1998. With respect to any individual who first becomes a Non-Employee
Director after the date of the first Board meeting held in 1998, the date
the individual first becomes a Non-Employee Director shall also be a Grant
Date.
(j) "Non-Employee Director" means any person who is a member of the
Board and who is not, as of the date of an award under the Plan, an
employee of the Company or any of its subsidiaries.
Section 3. Eligibility
Each Non-Employee Director as of the Effective Date and each person who
becomes a Non-Employee Director after the Effective Date shall be eligible to
participate in the Plan.
Section 4. Shares of Common Stock Available
4.1 Number. The total number of shares of Common Stock of the Company
subject to issuance under the Plan, and subject to adjustment upon occurrence of
any of the events indicated in subsection 4.3, may not exceed 25,000. The
Shares to be delivered under the Plan may consist, in whole or in part, of
authorized but unissued stock or treasury stock not reserved for any other
purpose.
4.2 Unused Stock. In the event any shares of Common Stock that are
subject to an Director Option which, for any reason, expires, terminates or is
canceled as to such shares, such shares again shall become available for
issuance under the Plan.
4.3 Adjustment in Capitalization. In the event of any change in the
outstanding shares of Common Stock that occurs after ratification of the Plan by
the stockholders of the Company by reason of a Common Stock dividend or split,
recapitalization, merger, consolidation, combination, exchange of shares, or
other similar corporate change, the aggregate number of shares of Common Stock
subject to Director Options to be granted or outstanding pursuant to Section 5
hereof, and/or the stated option price, shall be appropriately adjusted by the
Board, whose determination shall be conclusive; provided, however, that
fractional shares shall be rounded to the nearest whole share.
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Section 5. Director Options
5.1 Grant and Eligibility. On each Grant Date, Director Options for the
purchase of shares of Common Stock will be granted to each individual who is a
Non-Employee Director. The number of shares of Common Stock subject to each
Director Option shall be determined by dividing (a) the average cash
compensation earned by the Non-Employee Directors during the calendar year
immediately preceding the calendar year in which the Grant Date occurs, by (b)
the Fair Market Value of the Common Stock on the Grant Date (provided, however,
that such number shall be rounded down to the nearest whole Share).
5.2 Director Option Agreement. Each Director Option shall be evidenced by
a Director Option Agreement that shall specify the option price, the duration of
the option, the number of shares of Common Stock to which the option pertains,
and such other provisions as the Board shall determine.
5.3 Tax Status. Director Options shall be options in the form of
nonqualified stock options which are intended not to fall under the provisions
of Code Section 422.
5.4 Option Price and Payment. The option price of each share of Common
Stock subject to a Director Option shall be 100% of the Fair Market Value on the
Grant Date. Director Options shall be exercised by the delivery of a written
notice to the Company setting forth the number of shares of Common Stock with
respect to which the option is to be exercised, accompanied by full payment for
the Shares. Upon exercise of any Director Option, the option price shall be
payable to the Company in full either (a) in cash or its equivalent (including
for this purpose, the proceeds from a cashless exercise as permitted under the
Federal Reserve Board's Regulation T, or other borrowed funds), or (b) by
tendering previously-acquired Common Stock having an aggregate Fair Market Value
at the time of exercise equal to the total option price (including for this
purpose Shares deemed tendered by affirmation of ownership) that have been owned
for six months or more, or (c) by a combination of (a) and (b). Notwithstanding
the foregoing, the exercise price payable upon the exercise of a Director Option
by a Non-Employee Director who has a deferral election in effect under the
Company's Nonqualified Stock Option -Gain Deferral Plan or similar plan (the
"Gain Deferral Plan"), shall be made solely by tendering previously-acquired
Shares in accordance with clause (b) above.
5.5 Vesting and Duration of Options. Each Director Option shall vest and
become exercisable in full upon the first to occur of (a) the expiration of one
year after the Grant Date, unless prior thereto the Non-Employee Director has
ceased to be a director for any reason other than death or disability, (b) the
death or disability of the Non-Employee Director, or (c) a Change in Control (as
provided in Section 6.1 hereof). Once vested, Director Options shall expire upon
the first to occur of the date which is (i) three years following termination of
the director's Board membership for any reason other than death, or (ii) one
year following the date of the Non-Employee Director's death; provided, however,
in no event may any Director Option be exercised beyond the tenth anniversary of
its Grant Date.
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5.6 Delivery of Certificate. As soon as practicable after receipt of each
notice of exercise and full payment of the exercise price, the Company shall
deliver to the Non-Employee Director a certificate or certificates representing
acquired shares of Common Stock. Notwithstanding the foregoing, in the event the
Non-Employee Director has in effect a deferral election under the Gain Deferral
Plan, the Company shall deliver to the trustee of the trust established under
the Gain Deferral Plan, a certificate or certificates representing such number
of Shares determined by dividing (a) the excess of the (i) Fair Market Value of
the Shares purchased pursuant to the option exercise, over (ii) the exercise
price for the Shares purchased, by (b) the Fair Market Value of one Share. The
Company shall deliver a certificate or certificates for the remainder of the
Shares, representing Shares with a Fair Market Value equal to the option
exercise price paid. For purposes of the foregoing, Fair Market Value shall be
determined on the date the Director Option is exercised.
Section 6. Coordination with 1989 Omnibus Stock and Incentive Plan
The following provisions of the Company's 1989 Omnibus Stock and Incentive
Plan, as from time to time amended (the "Omnibus Plan"), shall be applicable to
the Director Options as if such provisions were set forth in this Plan in full:
6.1 Change in Control. For purposes of this Plan, a "Change in Control"
shall be deemed to have occurred on the date a Change in Control occurs under
the Omnibus Plan. Notwithstanding any other provision of the Plan, if a Change
in Control occurs, then each Director Option shall become fully vested and
exercisable as of the date of the Change in Control.
6.2 Limited Transferability of Options; Beneficiary Designations. No
Director Option granted under this Plan may be sold, transferred, pledged,
assigned or otherwise alienated or hypothecated, otherwise than by will or the
laws of descent and distribution. Notwithstanding the foregoing, the Board may,
in its discretion, authorize all or a portion of the Director Options to be on
terms which permit the transfer by the Non-Employee Director to the extent the
Committee under the Omnibus Plan may permit such transfers. Non-Employee
Directors may designate beneficiaries with respect to Director Options granted
hereunder on the same basis as applicable to options under the Omnibus Plan.
Section 7. Amendment and Termination
The Board, or any committee to the extent authorized by the Board, may make
such modifications to the Plan as it shall deem advisable. The Plan shall
continue in effect unless and until the Board otherwise determines.
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Section 8. Miscellaneous
8.1 Rights of Directors. Neither the Plan nor any action taken hereunder
shall be construed as giving any Non-Employee Director any right to continue to
serve as a Director of the Company or otherwise to be retained in the service of
the Company.
8.2 Indemnification. Each person who is or shall have been a member 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 judgment in any such action, suit or
proceeding against him, provided he shall give the Company an opportunity, at
its 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
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.
8.3 Requirements of Law. The granting of Director Options and the
issuance of shares of Common Stock with respect to an option exercise, shall be
subject to all applicable laws, rules and regulations, and to such approvals by
any governmental agencies or national securities exchanges as may be required.
8.4 Governing Law. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of Delaware.
8.5 Administration. The Board may establish such rules and regulations
with respect to the proper administration of the Plan as it may determine, and
may amend or revoke any rule or regulation so established. This Plan shall be
interpreted by and all questions arising in connection therewith shall be
determined by a majority of the Board, whose interpretation or determination,
when made in good faith, shall be conclusive and binding.
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