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EXHIBIT 10(e)
FIRSTMERIT CORPORATION
1997 STOCK PLAN
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FIRSTMERIT CORPORATION
1997 STOCK PLAN
TABLE OF CONTENTS
I. INTRODUCTION ..................................................... 1
A. Purpose of the Plan ..................................... 1
B. Definitions ............................................. 1
II. EMPLOYEES STOCK OPTION PROGRAM.................................... 5
A. Administration .......................................... 5
B. Participation ........................................... 5
C. Maximum Number of Shares Available ...................... 5
D. Adjustments ............................................. 5
E. Registration Conditions ................................. 6
F. Committee Action ........................................ 6
G. Stock Options.............................................6
H. Dividend Units............................................9
I. Amendment and Termination................................10
III. DIRECTORS STOCK OPTION PROGRAM .................................. 10
A. Administration ......................................... 10
B. Participation .......................................... 10
C. Maximum Number of Shares Available ..................... 11
D. Adjustments ............................................ 11
E. Registration Conditions ................................ 11
F. Stock Options............................................11
G. Dividend Units...........................................12
H. Amendment and Termination................................13
IV. RESTRICTED STOCK PROGRAM ........................................ 14
A. Administration ......................................... 14
B. Participation .......................................... 14
C. Maximum Number of Shares Available ..................... 15
D. Awards ................................................. 15
E. Restrictions ........................................... 16
F. Enforcement of Restrictions..............................16
G. Privileges of Employee-Participant.......................16
H. Non-Transferability......................................17
I. Withholding Taxes........................................17
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J. Lien on Shares..........................................17
K. Share Issuance and Transfer Restrictions................17
L. Acceleration on Change of Control.......................18
M. Effective Date and Duration.............................19
N. Exclusivity.............................................19
O. Amendment and Termination...............................19
V. GENERAL PROVISIONS ............................................. 19
A. Government and Other Regulations ...................... 19
B. Other Compensation Plans and Programs ................. 19
C. Miscellaneous Provisions .............................. 20
D. Effective Date ........................................ 22
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FIRSTMERIT CORPORATION
1997 STOCK PLAN
FIRSTMERIT CORPORATION (the "Company") hereby adopts this 1997 Stock
Plan ("Plan"), effective as of January 1, 1997, but subject to shareholder
approval at the 1997 Annual Shareholders Meeting. The number of shares of Common
Stock approved and reserved under the Plan is 1,000,000 for the Employees Stock
Option Program and the Restricted Stock Program, and 100,000 for the Directors
Stock Option Program. The maximum number of shares of Common Stock which can be
granted as part of the 1,000,000 shares under the Restricted Stock Program is
250,000.
I. INTRODUCTION
A. PURPOSE OF THE PLAN
FirstMerit Corporation has established the Plan to further its
long-term financial success by creating the opportunity to key employees and
non-employee Directors of the Company and its Subsidiaries to receive stock and
stock-based compensation whereby they can share in achieving and sustaining such
success. The Plan also provides a means to attract and retain the executive
talent needed to achieve the Company's long-term growth and profitability
objectives.
B. DEFINITIONS
When used in the Plan, the following terms shall have the meanings set
forth below:
"Award(s)" shall mean Incentive Stock Options, Non-Qualified Stock
Options, Reload Stock Options, Restricted Stock Awards or Dividend Units granted
under the Plan.
"Award Agreement" shall mean an agreement which shall evidence the
particular terms, conditions, rights and duties of the Company and the
Participant with respect to an Award.
"Board" shall mean the Board of Directors of the Company.
"Change of Control" shall mean (a) the attainment of beneficial
ownership by any Person (as defined herein) of capital stock of the Company, the
voting power of which constitutes 30 percent or more of the voting power of all
of the Company's outstanding capital stock; or (b) a change in the composition
of a majority of the Board during any period of two (2) years or less, provided
that in determining such change, any Director whose election has been approved
in advance by at least two-thirds (2/3) of the Directors then in office shall
not be considered a new Director. No sale to underwriters or private placement
of capital stock by the Company, nor any acquisition by the Company, through
merger, purchase of assets or otherwise, effected in whole or in part by
issuance or reissuance of shares of its capital stock, shall constitute a Change
of Control.
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For purposes of determining a Change of Control under the Plan, the
following definitions shall be applicable:
1. The term "Person" shall mean any individual, corporation or
other entity.
2. Any Person shall be deemed to be the beneficial owner of any
shares of capital stock of the Company:
a. which that Person owns directly, whether or not of
record,
b. which that Person has the right to acquire pursuant
to any agreement or understanding or upon exercise
of conversion rights, warrants or options, or
otherwise,
c. which are beneficially owned, directly or indirectly
(including shares deemed owned through application
of Paragraph 2.b. above), by an "affiliate" or
"associate" (as defined in the rules of the
Securities and Exchange Commission) of that Person,
or
d. which are beneficially owned, directly or indirectly
(including shares deemed owned through application of
Paragraph 2.b. above), by any other Person with which
that Person or his "affiliate" or "associate" has any
agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of
capital stock of the Company.
3. For purposes of determining whether a Person has acquired beneficial
ownership of 30 percent or more of the Company, the outstanding shares of
capital stock of the Company shall include shares deemed owned by such Person
through application of Paragraphs 2.b., 2.c. and 2.d. above, but shall not
include any other shares which may be issuable pursuant to any agreement or upon
exercise of conversion rights, warrants or options, or otherwise, but which are
not actually outstanding.
"Committee" shall mean the Compensation Committee of the Board, or such
other Committee of the Board which shall be designated by the Board to
administer the Plan. If the Board does not designate the Compensation Committee
as the Committee, the Committee will be composed of two (2) or more persons who
are from time to time appointed to serve by the Board. Each member of the
Committee will be a "non-employee director" within the meaning of Rule 16b-3 of
the Securities Exchange Act or any successor rule, as any such rule may be
amended from time to time and will qualify as an "outside director" within the
meaning of Code Section 162(m) ("Qualified Director"). A person may be appointed
to the Committee who does not qualify as a "non-employee director" if the
Committee adopts and follows a recusal procedure which qualifies under the
Section 16 Rules.
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"Company" shall mean FirstMerit Corporation and any successor in a
reorganization or similar transaction.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Common Stock" shall mean the common stock of the Company, no par value
per share, and may be either stock previously authorized but unissued, or stock
reacquired by the Company.
"Director" shall mean a duly elected member of the Board.
"Directors Stock Option Program" shall mean the stock option program
delineated in Article III of this Plan.
"Director-Participant" shall mean a Director who is not also a
full-time employee of the Company or any of its Subsidiaries.
"Disability" shall mean the inability of an Employee-Participant to
perform the services normally rendered due to any physical or mental impairment
that can be expected to be of either permanent or indefinite duration, as
determined by the Committee on the basis of appropriate medical evidence, and
that results in the Employee-Participant's Termination of Employment; provided,
however, that with respect to any Employee-Participant who has entered into an
employment agreement with the Company or any of its Subsidiaries, the term of
which has not expired at the time a determination concerning Disability is to be
made, Disability shall have the meaning attributed to "permanent disability" in
such employment agreement.
"Employees Stock Option Program" shall mean the stock option program,
as delineated in Article II of this Plan.
"Employee-Participant" shall mean an officer or full-time salaried
employee (including a Director who is also a full-time employee) of the Company
or any of its Subsidiaries who, in the judgment of the Committee, is in a
position to make a substantial contribution to the management, growth and
success of the Company and is thus designated by the Committee to receive an
Award.
"Fair Market Value" shall mean with respect to a given day, the closing
sales price of a share of Common Stock, as reported by such responsible
reporting service as the Committee may select, or if there were no transactions
in the Common Stock on such day, then the last preceding day on which
transactions took place. The foregoing notwithstanding, the Committee may
determine the Fair Market Value in such other manner as it may deem more
appropriate for Plan purposes or as is required by applicable laws or
regulations.
"Incentive Stock Option" or "ISO" shall mean a right to purchase the
Company's Common Stock which is intended to comply with the terms and conditions
for an incentive stock option as set forth in Section 422 of the Code, or such
other sections of the Code as may be in effect from time to time.
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"Non-Qualified Stock Option" or "NQSO" shall mean a right to purchase
the Company's Common Stock which is not intended to comply with the terms and
conditions for a tax-qualified stock option, as set forth in Section 422 of the
Code, or such other sections of the Code as may be in effect from time to time.
"Participant" shall mean an Employee-Participant or a Director-
Participant.
"Plan" shall mean the Company's 1997 Stock Plan, as set forth herein.
"Reload Stock Option" shall mean an option granted to an
Employee-Participant who has paid for shares subject to option through the
delivery of shares of Common Stock having an aggregate Fair Market Value as
determined on the date of exercise equal to the option price.
"Restricted Shares" shall mean those shares of Common Stock reserved
for issuance as Awards under the Restricted Stock Program, as further provided
in Article IV(D).
"Restricted Stock Program" shall mean the restricted stock program, as
delineated in Article IV of this Plan.
"Retirement" shall mean an Employee-Participant's Termination of
Employment by reason of retirement at his normal retirement date, pursuant to
and in accordance with a pension, retirement or similar plan or other regular
retirement practice of the Company or any of its Subsidiaries, or in accordance
with the early retirement provision(s) thereof.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securities Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
"Subsidiaries" shall mean the majority-owned subsidiaries of the
Company.
"Termination of Employment" shall mean a cessation of the
employee-employer relationship between an Employee-Participant and the Company
or its Subsidiaries for any reason.
"Termination of Service" shall mean a cessation of the Director's
relationship with the Company for any reason.
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II. EMPLOYEES STOCK OPTION PROGRAM
A. ADMINISTRATION
The Employees Stock Option Program shall be administered by the
Committee, which, subject to the express provisions of the Employees Stock
Option Program, shall have full and exclusive authority to interpret the
Employees Stock Option Program, to prescribe, amend and rescind rules and
regulations relating to the Employees Stock Option Program and to make all other
determinations deemed necessary or advisable in the implementation and
administration of the Employees Stock Option Program; provided, however, that
subject to the express provisions hereof or unless required by applicable law or
regulation, no action of the Committee shall adversely affect the terms and
conditions of any Award made to, or any rights hereunder or under any Award
Agreement of, any Employee-Participant, without such Employee-Participant's
consent. The Committee's interpretation and construction of the Employees Stock
Option Program shall be conclusive and binding on all persons, including the
Company and all Employee-Participants.
B. PARTICIPATION
The Committee shall, from time to time, make recommendations to the
Board with respect to the selection of Employee-Participants and the Award or
Awards to be granted to each Employee-Participant, and thereafter grant such
Award or Awards upon the approval of a majority of the members of the Board
present and voting upon such approval, who are Qualified Directors. In making
its recommendations, the Committee may take into account the nature of the
services rendered or expected to be rendered by the respective
Employee-Participants, their present and potential contributions to the
Company's success, and such other factors as the Committee in its discretion
shall deem relevant.
C. MAXIMUM NUMBER OF SHARES AVAILABLE
The maximum number of shares which may be granted under the Employees
Stock Option Program is one million (1,000,000) shares, less shares granted
under the Restricted Stock Program.
No Incentive Stock Options shall be granted after January 1, 2007, or
such other period required under the Code.
D. ADJUSTMENTS
In the event of stock dividends, stock splits, recapitalizations,
mergers, consolidations, combinations, exchanges of shares, spin-offs,
liquidations, reclassifications or other similar changes in the capitalization
of the Company, the number of shares of Common Stock available for grant under
this Employees Stock Option Program shall be adjusted proportionately or
otherwise by the Board and, where deemed appropriate, the number of shares
covered by outstanding stock options and the option price of outstanding stock
options shall be similarly adjusted. Also, in instances where another
corporation or other business entity is acquired by the Company, and the Company
has
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assumed outstanding employee option grants under a prior existing plan of the
acquired entity, similar adjustments are permitted at the discretion of the
Committee. In the event of any other change affecting the Common Stock reserved
under the Employees Stock Option Program, such adjustment, if any, as may be
deemed equitable by the Board, shall be made to give proper effect to such
event.
E. REGISTRATION CONDITIONS
Unless issued pursuant to a registration statement under the Securities
Act, no shares shall be issued to an Employee-Participant under the Employees
Stock Option Program unless the Employee-Participant represents to and agrees
with the Company that such shares are being acquired for investment and not with
a view to the resale or distribution thereof, or such other documentation as may
be required by the Company unless, in the opinion of counsel to the Company,
such representation, agreement or documentation is not necessary to comply with
the Securities Act.
Any restriction on the resale of shares shall be evidenced by an
appropriate legend on the stock certificate.
The Company shall not be obligated to deliver any Common Stock until it
has been listed on each securities exchange on which the Common Stock may then
be listed or until there has been qualification under or compliance with such
federal or state laws, rules or regulations as the Company may deem applicable.
The Company shall use reasonable efforts to obtain such listing, qualification
and compliance.
F. COMMITTEE ACTION
The Committee may, through Award Agreements, limit its discretion under
this Employees Stock Option Program. To the extent such discretion is not
specifically waived in an Award Agreement, the Committee shall retain such
discretion.
G. STOCK OPTIONS
All stock options granted to Employee-Participants under the Employees
Stock Option Program shall be evidenced by Award Agreements which shall be
subject to applicable provisions of the Employees Stock Option Program, and such
other provisions as the Committee may adopt, including the following provisions:
1. PRICE. The option price per share of Non-Qualified Stock
Options ("NQSOs") shall be set by the Committee at the time of
grant. The option price per share of Incentive Stock Options
("ISOs") shall not be less than 100 percent of the Fair Market
Value of a share of Common Stock on the date of grant. If a
NQSO is to meet the requirements of Section 162(m) of the
Code, it shall be issued at Fair Market Value.
2. PERIOD. An ISO shall not be exercisable for a term longer
than ten (10) years from date of grant. NQSOs shall have a
term as established by the Committee.
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3. TIME OF EXERCISE. The Committee may prescribe the timing of
the exercise of the stock option and any minimums and
installment provisions and may accelerate the time at which a
stock option becomes exercisable, provided that with respect
to ISOs, no such acceleration shall result in a violation of
Section 6 of this Paragraph G.
4. EXERCISE PROCEDURES. A stock option, or portion thereof,
shall be exercised by delivery of a written notice of exercise
to the Company and payment of the full price of the shares
being purchased.
5. PAYMENT. The price of an exercised stock option, or portion
thereof, may be paid pursuant to Paragraph V.C.11.
6. SPECIAL RULE FOR INCENTIVE STOCK OPTIONS. If the aggregate
Fair Market Value of Common Stock with respect to which ISOs
are exercisable for the first time by an Employee-Participant
during any calendar year (under this Employees Stock Option
Program and all other plans of the Company and its
Subsidiaries) exceeds One Hundred Thousand Dollars ($100,000),
such ISOs shall be treated as NQSOs to the extent of the
excess. In applying the foregoing limitation, ISOs shall be
taken into account in the order in which they were granted,
and the Fair Market Value of Common Stock subject to such ISOs
shall be determined as of the date of grant. If such limit
is exceeded in any calendar year, the Company shall have the
right to designate which shares of Common Stock purchased
pursuant to such ISOs shall be treated as having been acquired
by the Employee-Participant pursuant to an ISO.
7. RELOAD STOCK OPTIONS. A Reload Stock Option may be granted
by the Committee in an Award Agreement. If a reload option
is granted and a stock option is exercised while the
Employee-Participant is employed by the Company and the
Employee-Participant pays for the shares subject to option
through the delivery of Common Stock having an aggregate Fair
Market Value as determined on the date of exercise equal to
the option price, the Employee-Participant will be granted a
Reload Stock Option on the date of such exercise. The Award
shall equal the number of whole shares of Common Stock used
to pay the purchase price, and the exercise price of the
Reload Stock Option shall equal the Fair Market Value of the
Common Stock on the date of grant. If the Company withholds
shares of Common Stock to cover applicable income and
employment taxes related to the exercise of an option, then
the Award shall equal the number of whole shares of Common
Stock used to pay the purchase price less the number of
shares withheld.
Subject to the provisions of the Employees Stock Option
Program, the Reload Stock Option may be exercised between its
date of grant and the date of expiration of an option. Shares
of stock acquired upon the exercise of a Reload Stock Option
are restricted from sale for two years. A Reload Stock Option
shall be evidenced by an Award Agreement containing such other
terms and conditions as the Committee approves. No Reload
Stock Option shall be granted with respect to a stock option
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exercised after the Employee-Participant's Retirement,
Disability, death or other Termination of Employment. No
Dividend Units shall be granted in connection with a Reload
Stock Option.
8. EFFECT OF LEAVES OF ABSENCE. It shall not be considered a
Termination of Employment when an Employee-Participant is
placed by the Company or any of its Subsidiaries on military
leave, sick leave or other bona fide leave of absence. In
case of such leave of absence, the employment relationship
for Employees Stock Option Program purposes shall be
continued until the later of the date when such leave of
absence equals ninety (90) days or when the Employee-
Participant's right to reemployment with the Company or any
of its Subsidiaries shall no longer be guaranteed either by
statute or contract.
9. TERMINATION OF EMPLOYMENT. In the event of Termination of
Employment, the following provisions shall apply with respect
to ISOs and NQSOs unless waived by the Committee, or as
otherwise specifically provided in the Award Agreement.
a. TERMINATION DUE TO DEATH, DISABILITY OR RETIREMENT.
NQSOs and ISOs shall be exercisable for a period
equal to the lesser of five (5) years or the
remaining option term; provided, however, that if the
Employee-Participant elects to exercise his ISOs (i)
later than three (3) months after the date of his
Termination of Employment due to Retirement or (ii)
twelve (12) months after the date of his Termination
of Employment due to Disability, such ISOs shall be
treated as NQSOs under the Code for purposes of
calculating the federal income tax applicable as a
result of the exercise of such ISOs and the
subsequent disposition of the acquired shares.
b. OTHER TERMINATION. If an Employee-Participant's
employment with the Company or any of its
Subsidiaries is terminated for any reason other than
death, Disability or Retirement, all Awards under
this Employees Stock Option Program shall be
immediately canceled, except that if the termination
is by the Company or any of its Subsidiaries or for
any reason other than misconduct or misfeasance, the
Employee-Participant shall have thirty (30) days
thereafter within which to exercise his options to
the extent that the options are otherwise exercisable
immediately prior to such termination; and further,
if such termination is attributable to a Change of
Control, such Award shall not be canceled but shall
continue as though the Employee-Participant remained
in the employ of the Company or any of its
Subsidiaries during the remaining option term of the
Award.
c. LIMITATIONS ON EXERCISE. Notwithstanding the
foregoing, the Committee may rescind the right to
exercise stock options following Termination of
Employment if the Employee-Participant has been found
to be directly or indirectly engaged in any activity
which is in competition with the Company
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or any of its Subsidiaries or is otherwise adverse
to, or not in the best interest of, the Company or
any of its Subsidiaries. Further, no option
agreement for ISOs may extend their exercise period
beyond the time allowed by the Code.
H. DIVIDEND UNITS
1. AWARDS OF DIVIDEND UNITS
a. The Committee may, at its discretion, award to an
Employee-Participant one (1) Dividend Unit with
respect to each share of Common Stock for which an
option has been granted under the Employees Stock
Option Program. No Dividend Units shall be awarded in
connection with a Reload Stock Option.
b. An Award of a Dividend Unit by the Committee may be
made only in conjunction with a stock option for
Common Stock granted to the Employee-Participant
under the Employees Stock Option Program.
2. VALUATION
a. The amount payable to an Employee-Participant in
respect of each Dividend Unit awarded to such
Employee-Participant shall be equal to the aggregate
dividends actually paid on one (1) share of Common
Stock to the extent that such Employee-Participant
held such Dividend Unit on the record date
established by the Board for payment of each such
dividend. An Employee-Participant shall be deemed
to have held a Dividend Unit from the date on which
the Award of such Dividend Unit was made (or such
later date as may be specified in the related Award
Agreement) to and including the date on which the
term of the Dividend Unit expires.
b. The Committee shall, at the time it awards a Dividend
Unit to an Employee-Participant, specify the term of
the Dividend Unit (which term shall not be longer
than the term of the stock option to which it is
attached) and the period of time during the term over
which the Dividend Unit will accrue dividends.
3. PAYMENT
a. The amount payable to an Employee-Participant in
respect of a Dividend Unit shall be paid out by the
Company to such Employee-Participant only at the date
of exercise of the stock option to which the Dividend
Unit is attached. The Dividend Unit shall expire upon
the expiration of any stock option which has not been
exercised.
b. Upon payment to an Employee-Participant in respect
of a Dividend Unit, such Dividend Unit shall be of no
further force or effect.
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4. TERMINATION OF EMPLOYMENT. In the event of Termination of
Employment, any Dividend Unit shall remain outstanding for the
duration of the stock option to which it is attached until
paid upon exercise or until termination or expiration of such
stock option.
5. ACCELERATION OF PAYMENTS. Unless the Committee determines
otherwise, in the event of a Change of Control, the Company
shall, promptly after such Change of Control, make payment to
each Employee-Participant in an amount equal to the aggregate
amount accrued on the Dividend Units held by such Employee-
Participant on the date of such Change of Control.
Notwithstanding anything to the contrary or any Award
Agreement, after such Change of Control and for so long as an
Employee-Participant holds any Dividend Unit and dividends are
accrued thereon, the Company shall make payment to the
Employee-Participant in respect of any such Dividend Unit at
the same time as payment of dividends on Common Stock is made.
I. AMENDMENT AND TERMINATION
The Board may, at any time and from time to time, suspend or terminate
the Employees Stock Option Program in whole or amend it from time to time in
such respects as the Board may deem appropriate, subject, however, to the
regulatory requirements of Section 16(b) of the Securities Exchange Act and the
requirements of the Code.
III. DIRECTORS STOCK OPTION PROGRAM
A. ADMINISTRATION
The Directors Stock Option Program is a self-executing grant program
which shall be administered by the Secretary of the Company. Subject to the
express provisions of the Directors Stock Option Program, the Secretary shall
have full and exclusive authority to interpret the Directors Stock Option
Program, and to make such determinations deemed necessary or advisable in the
implementation and administration of the Directors Stock Option Program;
provided, however, that subject to the express provisions hereof or unless
required by applicable law or regulation, no action of the Secretary shall
adversely affect the terms and conditions of any Award made to, or any rights
hereunder or under any Award Agreement of, any Director-Participant without
such Director-Participant's consent.
B. PARTICIPATION
All Directors who are not also full-time employees of the Company or a
Subsidiary shall be Director-Participants in the Directors Stock Option Program
and shall be awarded options to purchase one thousand two hundred (1,200) shares
each year on the date following the annual shareholders meeting.
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C. MAXIMUM NUMBER OF SHARES AVAILABLE
The maximum number of shares which may be granted under this Directors
Stock Option Program is one hundred thousand (100,000) shares.
D. ADJUSTMENTS
In the event of stock dividends, stock splits, recapitalizations,
mergers, consolidations, combinations, exchanges of shares, spin-offs,
liquidations, reclassifications or other similar changes in the capitalization
of the Company, the number of shares of Common Stock available for grant under
this Directors Stock Option Program shall be adjusted proportionately.
E. REGISTRATION CONDITIONS
Unless issued pursuant to a registration statement under the Securities
Act, no shares shall be issued to a Director-Participant under the Directors
Stock Option Program unless the Director-Participant represents to and agrees
with the Company that such shares are being acquired for investment and not with
a view to the resale or distribution thereof, or such other documentation as may
be required by the Company unless, in the opinion of counsel to the Company,
such representation, agreement or documentation is not necessary to comply with
the Securities Act.
Any restriction on the resale of shares shall be evidenced by an
appropriate legend on the stock certificate.
The Company shall not be obligated to deliver any Common Stock until it
has been listed on each securities exchange on which the Common Stock may then
be listed or until there has been qualification under or compliance with such
federal or state laws, rules or regulations as the Company may deem applicable.
The Company shall use reasonable efforts to obtain such listing, qualification
and compliance.
F. STOCK OPTIONS
All stock options granted to Director-Participants under the Directors
Stock Option Program shall be evidenced by Award Agreements which shall be
subject to applicable provisions of the Directors Stock Option Program,
including the following provisions:
1. PRICE. The option price per share shall be 100 percent of the
Fair Market Value of a share of Common Stock on the date of
grant.
2. PERIOD. Any option granted under the Directors Stock Option
Program shall be exercisable for a term of ten (10) years
from the date of grant.
3. TIME OF EXERCISE. Will be established by the Committee.
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4. EXERCISE PROCEDURES. A stock option, or portion thereof,
shall be exercised by delivery of a written notice of exercise
to the Company and payment of the full price of the shares
being purchased.
5. PAYMENT. The price of an exercised stock option, or portion
thereof, may be paid pursuant to Paragraph V.C.11.
6. TERMINATION OF SERVICE. In the event of Termination of
Service, the following provisions shall apply:
a. DISCHARGE FOR CAUSE. All outstanding options shall
be canceled at termination.
b. TERMINATION OTHER THAN FOR CAUSE. Options shall be
exercisable for a period equal to the lesser of five
(5) years or the remaining option term.
G. DIVIDEND UNITS
1. AWARDS OF DIVIDEND UNITS
a. One (1) Dividend Unit shall be awarded to a
Director-Participant with respect to each share of
Common Stock for which an option has been granted
under the Directors Stock Option Program. When a
Director-Participant receives an Award of Dividend
Units, the Secretary shall cause to be issued to such
Director-Participant an Award Agreement specifying
the number of Dividend Units granted and the
applicable terms and conditions of the Award.
b. An Award of a Dividend Unit shall be made only in
conjunction with a stock option for Common Stock
granted to the Director-Participant under this
Directors Stock Option Program.
2. VALUATION
a. The amount payable to a Director-Participant in
respect of each Dividend Unit awarded to such
Director-Participant shall be equal to the aggregate
dividends actually paid on one share of Common Stock
to the extent that such Director-Participant held
such Dividend Unit on the record date established
by the Board for payment of each such dividend. A
Director-Participant shall be deemed to have held a
Dividend Unit from the date on which the Award of
such Dividend Unit was made (or such later date as
may be specified in the related grant letter) to and
including the date on which the term of the Dividend
Unit expires.
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b. The term of a Dividend Unit shall be the term of the
stock option to which it is attached. However,
Dividend Units will accrue dividends only for the
first five (5) years following grant.
3. PAYMENT
a. The amount payable to a Director-Participant in
respect of a Dividend Unit shall be paid out by the
Company to such Director-Participant only upon the
exercise of the option to which it is attached.
b. Upon payment to a Director-Participant in respect of
a Dividend Unit, such Dividend Unit shall be of no
further force or effect.
4. TERMINATION OF SERVICE. In the event of Termination of
Service, any Dividend Unit shall remain outstanding for the
duration of the stock option to which it is attached until
paid upon exercise, but it shall terminate upon termination,
cancellation or expiration of such stock option.
5. ACCELERATION OF PAYMENTS. In the event of a Change of
Control, the Company shall, promptly after such Change of
Control, make payment to each Director-Participant in an
amount equal to the aggregate amount accrued on the Dividend
Units held by such Director-Participant on the date of such
Change of Control. Notwithstanding anything to the contrary
or any Award Agreement, after such Change of Control and for
so long as a Director-Participant holds any Dividend Unit
and dividends are accrued thereon, the Company shall make
payment to the Director-Participant in respect of any such
Dividend Unit at the same time as payment of dividends on
Common Stock is made.
H. AMENDMENT AND TERMINATION
The Board may, at any time and from time to time, amend, suspend or
terminate the Directors Stock Option Program, subject to the applicable
requirements and restrictions of the Code and securities laws. The Directors
Stock Option Program may not be materially amended without shareholder approval.
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IV. RESTRICTED STOCK PROGRAM
A. ADMINISTRATION
The Restricted Stock Program shall be administered by the Committee. A
majority of members of the Committee shall constitute a quorum, and all
determinations of the Committee shall be made by a majority of its members. Any
determination of the Committee under the Restricted Stock Program may be made
without notice or meeting, by a writing signed by a majority of the Committee
members.
In accordance with and subject to the provisions of the Restricted
Stock Program, the Committee shall, from time to time, recommend to the Board:
1. the Employee-Participants from those employees meeting the
eligibility criteria described in Paragraph B,
2. the number of shares to be subject to each Award,
3. the time at which Awards are made,
4. the duration and nature of Award restrictions,
5. fix such other provisions of the Awards as may be deemed
necessary or desirable, consistent with the terms of the
Restricted Stock Program, and
6. the form or forms of the Award Agreements with Employee-
Participants.
The Committee shall have the authority, subject to the provisions of
the Restricted Stock Program, to establish, adopt and revise such rules and
regulations relating to the Restricted Stock Program as it may deem necessary or
desirable for the administration of the Restricted Stock Program. Each
determination, interpretation or other action made or taken by the Committee
pursuant to the provisions of the Restricted Stock Program shall be conclusive
and binding for all purposes and on all persons, including without limitation
the Company, the stockholders of the Company, the Committee and each of the
members thereof, the Board, officers and employees of the Company and the
Employee-Participants and their respective successors in interest.
B. PARTICIPATION
Employee-Participants shall be such key employees (including officers)
of the Company and any present or future Subsidiary as the Committee, in its
sole discretion, determines to be mainly responsible for the success and future
growth and profitability of the Company and value to its stockholders and whom
the Committee may designate from time to time to receive Awards under the
Restricted Stock Program. Awards may be granted under this Restricted Stock
Program to persons who have previously received Awards or other benefits under
this or other plans of the Company.
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The Committee shall, from time to time, make recommendations to the
Board with respect to the selection of Employee-Participants and the Award or
Awards to be granted to each Employee-Participant, and thereafter grant such
Award or Awards upon the approval of a majority of the members of the Board
present and voting upon such approval, who are Qualified Directors. In making
its recommendations, the Committee may take into account the nature of the
services rendered or expected to be rendered by the respective
Employee-Participants, their present and potential contributions to the
Company's success, and such other factors as the Committee in its discretion
shall deem relevant.
C. MAXIMUM NUMBER OF SHARES AVAILABLE
The maximum number of shares which may be granted under the Restricted
Stock Program is two hundred fifty thousand (250,000) shares, which may be
authorized but unissued or treasury shares.
Any shares subject to Awards may thereafter be subject to new Awards
under this Restricted Stock Option Program if shares of Common Stock are issued
under such Awards and are thereafter reacquired by the Company pursuant to
rights reserved by the Company upon issuance thereof, including, without
limitation, the forfeiture of shares subject to an Award prior to the lapse of
restrictions.
If the Company shall at any time change the number of issued shares of
Common Stock without new considerations to the Company (by stock dividends,
stock splits or similar transactions), the total number of shares reserved for
issuance under the Restricted Stock Option Program shall be adjusted
proportionately. Awards may also contain provisions for their continuation or
for other equitable adjustments after changes in the Common Stock resulting from
reorganization, sale, merger, consolidation or similar circumstances.
D. AWARDS
Awards may consist of grants of Restricted Shares to
Employee-Participants as a bonus for service rendered to the Company without
other payment therefor or for payment at less than Fair Market Value. In
addition to the restrictions described in Paragraph E, any Award under the
Restricted Stock Option Program may be subject to such other provisions (whether
or not applicable to an Award to any other Employee-Participant) as the
Committee deems appropriate, including, without limitation, provisions for the
forfeiture of and restrictions on the sale, resale or other disposition of
shares acquired under any Award, provisions giving the Company the right to
repurchase shares acquired under any Award, provisions to comply with federal
and state securities laws, or understandings or conditions as to the
Employee-Participant's employment in addition to those specifically provided for
under the Restricted Stock Option Program.
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E. RESTRICTIONS
An Employee-Participant shall not have a right to retain any Restricted
Shares granted under an Award unless and until such restrictions have by their
terms lapsed. The lapsing of such restrictions is referred to herein as vesting,
and the shares after Vesting has occurred are referred to herein as vested
shares. The restrictions which the Committee may place on the Awards include,
without limitation, the Employee-Participant's continued employment with the
Company for certain periods of time as determined by the Committee and the
attainment of various performance goals by the Employee-Participant and/or the
Company as specified by the Committee with respect to such Award. The Committee
may, in its sole discretion, require different periods of employment or
different performance goals with respect to different Employee-Participants,
with respect to different Awards or with respect to separate, designated
portions of an Award. The Committee may, in its sole discretion, terminate
restrictions on shares issued pursuant to an Award prior to the time such
restrictions otherwise would have lapsed. Any Restricted Shares granted under an
Award which have not become Vested Shares on or before the termination date, if
any, set forth in the Award Agreement shall permanently be forfeited, and shall
thereafter become available for reissuance under the Plan.
F. ENFORCEMENT OF RESTRICTIONS
The Committee, in its sole discretion, may employ one or more methods
of enforcing the restrictions referred to in Paragraphs E, G, H and J including,
without limitation, the following:
1. placing a legend on the stock certificates referring to the
restrictions,
2. requiring the Employee-Participant to keep stock certificates,
duly endorsed, in the custody of the Company or its designated
agent while the restrictions remain in effect,
3. not issuing certificates for Restricted Shares until the
shares become Vested Shares, or
4. retaining a possessory lien in the Award Shares as provided
in Paragraph J below.
G. PRIVILEGES OF EMPLOYEE-PARTICIPANT
Restricted Shares shall constitute issued and outstanding shares of
the Company for all corporate purposes, and the Employee-Participant shall have
all voting and (subject to any Award restrictions) all dividend, liquidation and
other rights with respect to Restricted Shares while the corresponding Award
remains in effect, as if such Employee-Participant were a holder of record of
unrestricted shares of Common Stock. Notwithstanding the foregoing, prior to the
time at which a Restricted Share becomes a Vested Share, the Employee-
Participant's right to assign or transfer such Restricted Share shall be subject
to the limitations of Paragraph H. Certificates representing Restricted Shares
shall bear a restrictive legend disclosing the restrictions, the existence of
the Restricted Stock Option Program and the existence of the applicable Award.
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H. NON-TRANSFERABILITY
No right or interest of any Employee-Participant in any Award made
pursuant to the Restricted Stock Option Program shall, prior to the satisfaction
of all restrictions applicable thereto, be assignable or transferable, in whole
or in part, during the lifetime of the Employee-Participant, either voluntarily
or involuntarily, or be made subject to any lien (except as provided in
Paragraphs F and J), directly or indirectly, by operation of law or otherwise,
including execution, levy, garnishment, attachment, pledge or bankruptcy. In the
event of an Employee-Participant's death, his right and interest in any Award
shall, to the extent provided in the Award, be transferable by testamentary will
or the laws of descent and distribution, and the issuance of any shares subject
to an Award shall be made to the Employee-Participant's legal representatives,
heirs or legatees upon furnishing the Committee with evidence satisfactory to
the Committee of such status.
I. WITHHOLDING TAXES
The Company is entitled to withhold and deduct or take such other
action as delineated in Section V.C.4.
J. LIEN ON SHARES
The Company may, in its sole discretion, require that an Employee-
Participant, as a condition to the receipt of an Award, grant to the Company a
possessory lien on the Restricted Shares in order to secure retransfer of the
shares into the name of the Company, and ensure adequate provision for any tax
withholding obligations arising with respect to such Award, and to that end,
may require that certificates evidencing Restricted Shares be deposited by the
Employee-Participant with the Company, together with stock powers or other
instruments of assignment, each endorsed in blank, which will permit the
transfer to the Company of all or any portion of the Restricted Shares which are
forfeited or required to be retained to satisfy the Employee-Participant's
withholding obligations to the Company.
K. SHARE ISSUANCE AND TRANSFER RESTRICTIONS
1. SHARE ISSUANCE. Notwithstanding any other provision of the
Restricted Stock Program or any Award Agreement entered into
pursuant hereto, the Company shall not be required to issue or
deliver any certificate for shares under this Restricted Stock
Program unless and until both of the following are satisfied:
a. either:
i. there shall be in effect with respect to
such shares a registration statement under
the Securities Act and any applicable state
securities laws, if the Committee, in its
sole discretion, shall have determined to
file, cause to become effective and maintain
the effectiveness of such registration
statement, or
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ii. if the Committee has determined not to so
register the shares, exemptions from
registration under the Securities Act and
applicable state securities laws shall be
available for such issuance as determined
by counsel for the Company, and there shall
have been received from the Employee-
Participant (or in the event of death or
Disability, the Employee-Participant's
heir(s) or legal representative(s)) any
representations or agreements requested by
the Company in order to permit such issuance
to be made pursuant to such exemptions, and
b. there shall have been obtained any other consent,
approval or permit from any state or federal
government agency which the Committee shall, in its
sole discretion and upon the advice of counsel, deem
necessary or advisable.
2. TRANSFERS OF VESTED SHARES. Vested Shares may not be sold,
assigned, transferred, pledged, encumbered or otherwise
disposed of (whether voluntarily or involuntarily) except
pursuant to registration under the Securities Act and
applicable state securities laws or pursuant to exemptions
from such registrations. The Company may condition the sale,
assignment, transfer, pledge, encumbrance or other disposition
of such shares not issued pursuant to an effective and current
registration statement under the Securities Act and all
applicable state securities laws, on the receipt from the
party to whom the shares are to be so transferred of any
representations or agreements requested by the Company in
order to permit such transfer to be made.
3. LEGENDS. Unless a registration under the Securities Act is
in effect with respect to the issuance or transfer of Vested
Shares, each certificate representing such shares will be
endorsed with a legend in the form determined necessary by the
Committee or its counsel.
L. ACCELERATION ON CHANGE OF CONTROL
The Committee may provide, in its sole discretion, in one or more
Awards, that notwithstanding the provisions of each Award which would result in
a forfeiture as a result of the Employee-Participant's termination of employment
with the Company prior to the Vesting of Restricted Shares, the Restricted
Shares subject to such Award shall immediately become Vested Shares as a result
of a Change of Control. Notwithstanding anything to the contrary in the
Restricted Stock Option Program, unless expressly provided to the contrary in
the Award Agreement, if Restricted Shares experience an acceleration in Vesting
on a Change of Control as permitted by the preceding sentence, the portion of
the Restricted Shares which experience such acceleration will be limited to that
number which will not cause or contribute to an "excess parachute payment" with
respect to the Employee-Participant, as reasonably determined by the Committee
in accordance with Section 280G of the Code.
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M. EFFECTIVE DATE AND DURATION
The Restricted Stock Option Program shall continue in effect until it
is terminated by action of the Board, but such termination shall not affect the
then outstanding terms of any Award. No Award shall be granted more than ten
(10) years after the date of adoption of the Restricted Stock Option Program;
provided, however, that the terms and conditions applicable to any Award granted
within such period may thereafter be amended or modified by mutual agreement
between the Company and the Employee-Participant or such other persons as may
then have an interest therein. Also, by mutual agreement between the Company and
an Employee-Participant, or under any future plan of the Company, Awards may be
granted to such Employee-Participant in substitution and exchange for, and in
cancellation of, any Awards previously granted such Employee-Participant under
this Restricted Stock Option Program, or any benefit previously or thereafter
granted to him under any future plan of the Company.
N. EXCLUSIVITY
Nothing contained in this Restricted Stock Option Program is intended
to amend, modify or rescind any previously approved compensation plans or
programs adopted by the Company. The Restricted Stock Option Program will be
construed to be in addition to any and all such other plans or programs.
O. AMENDMENT AND TERMINATION
The Board may amend the Restricted Stock Option Program from time to
time or terminate the Restricted Stock Option Program at any time. In addition,
the Company may amend the terms of any Award previously granted under this
Restricted Stock Option Program, prospectively or retroactively, however, no
action authorized by this Paragraph O shall impair the rights of any
Employee-Participant without his consent.
V. GENERAL PROVISIONS
A. GOVERNMENT AND OTHER REGULATIONS
The obligation of the Company to issue Awards under the Plan shall be
subject to all applicable laws, rules and regulations, and to such approvals by
any government agencies as may be required.
B. OTHER COMPENSATION PLANS AND PROGRAMS
The Plan shall not be deemed to preclude the implementation by the
Company and its Subsidiaries of other compensation plans or programs which may
be in effect from time to time.
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C. MISCELLANEOUS PROVISIONS
1. NO RIGHT TO CONTINUE EMPLOYMENT. Nothing in the Plan or in any Award
or Award Agreement confers upon any Employee-Participant the right to continue
in the employ of the Company or its Subsidiaries or interferes with or restricts
in any way the rights of the Company or its Subsidiaries to discharge any
Employee-Participant at any time for any reason whatsoever, with or without
cause.
2. NON-TRANSFERABILITY. No right or interest of any Participant in any
Award under the Plan shall be (a) assignable or transferable, except by will or
the laws of descent and distribution or a valid beneficiary designation made in
accordance with procedures established by the Committee, or (b) liable for, or
subject to, any lien, obligation or liability. An ISO may be exercised only by
the Participant during his lifetime, by his estate or by the person who acquires
the right to exercise such option by bequest or inheritance.
3. DESIGNATION OF BENEFICIARY. A Participant, in accordance with
procedures established by the Committee, may designate a person or persons to
receive, in the event of the Participant's death, (a) any payments with respect
to which the Participant would then be entitled, and (b) the right to continue
to participate in the Plan to the extent of such Participant's outstanding
Awards. Such designation shall be made upon forms supplied by and delivered to
the Company and may be revoked in writing.
4. WITHHOLDING TAXES.
The Company's obligation to deliver shares of Common Stock or cash upon
the exercise of stock options granted will be subject to the satisfaction of all
applicable federal, state and local income tax and employment tax withholding
requirements. The Committee (or plan administrator) may, in its discretion and
in accordance with any applicable tax or securities laws (including the
applicable safe-harbor provisions of Securities and Exchange Commission Rule
16b-3), provide any or all holders of a NQSOs (other than the automatic grants
made pursuant to Directors Stock Option Program) or unvested shares under the
Plan, with the right to use shares of the Company's Common Stock in satisfaction
of all or part of the federal, state and local income tax and employment tax
liabilities incurred by such holders in connection with the exercise of their
options or the vesting of their shares (the "Taxes"). Such right may be provided
to any such option holder in either or both of the following formats:
(a) Stock Withholding: The holder of the NQSO or unvested
shares may be provided with the election to have the Company withhold,
from the shares of Common Stock otherwise issuable upon the exercise of
such NQSO or the vesting of such shares, a portion of those shares with
an aggregate fair market value not to exceed one hundred percent (100%)
of the applicable Taxes.
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(b) Stock Delivery: Provide the holder of the NQSO or the
unvested shares with the election to deliver to the Company, at the
time the NQSO is exercised or the shares vest, one or more shares of
Common Stock previously acquired by such individual (other than in
connection with the option exercise or share vesting triggering the
Taxes) with an aggregate fair market value equal to the designated
percentage (up to 100% as specified by the option holder) of the Taxes
incurred in connection with such option exercise or share vesting.
5. PLAN EXPENSES. Any expenses of administering the Plan shall
be borne by the Company.
6. CONSTRUCTION OF PLAN. The interpretation of the Plan and the
application of any rules implemented hereunder shall be determined solely in
accordance with the laws of the State of Ohio.
7. UNFUNDED PLAN. The Plan shall be unfunded, and the Company
shall not be required to segregate any assets which may at any time be
represented by Awards. Any liability of the Company to any person with
respect to an Award under this Plan shall be based solely upon any
obligations which may be created by this Plan; no such obligation of the
Company shall be deemed to be secured by any pledge or other encumbrance on
any property of the Company.
8. BENEFIT PLAN COMPUTATIONS. Any benefits received or amounts
paid to a Participant with respect to any Award granted under the Plan shall not
have any effect on the level of benefits provided to or received by any
Participant, or the Participant's estate or beneficiary, as part of any employee
benefit plan (other than the Plan) of the Company.
9. PRONOUNS, SINGULAR AND PLURAL. The masculine may be read as
feminine, the singular as plural and the plural as singular as necessary to give
effect to the Plan.
10. MAXIMUM ANNUAL GRANT. In no event shall any one individual
participating in the 1997 Stock Plan, be granted stock options and/or restricted
shares for more than one and one-half percent (1.5%) of the total outstanding
shares of Common Stock of the Company, in the aggregate, per calendar year.
11. PAYMENT. The exercise price will be payable in one of the
alternative forms specified below:
(a) full payment in cash or check made payable to the
Company's order; or
(b) full payment in shares of Common Stock held for the
requisite period necessary to avoid a charge to the Company's reported
earnings and valued at fair market value on the Exercise Date (as such
term is defined below); or
(c) full payment in a combination of shares of Common Stock
held for the requisite period necessary to avoid a charge to the
Company's reported earnings and valued at fair market value on the
Exercise Date and cash or check payable to the Company's order; or
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(d) full payment through a sale and remittance procedure
pursuant to which the Participant will provide irrevocable written
directives to a designated brokerage firm to effect the immediate sale
of the purchased shares and remit to the Company, out of the sale
proceeds available on the settlement date, sufficient funds to cover
the aggregate exercise price payable for the purchased shares and shall
concurrently provide written instructions to the Company to deliver the
certificates for the purchased shares directly to such brokerage firm
in order to complete the sale transaction.
For purposes of this subparagraph, the "exercise date" will be the date
on which written notice of the option exercise is delivered to the Company, and
the fair market value per share of Common Stock on any relevant date shall be
determined in accordance with the provisions of the Plan. Except to the extent
the sale and remittance procedure specified above is utilized for the exercise
of the option, payment of the option price for the purchased shares must
accompany the exercise notice.
D. EFFECTIVE DATE
The Plan will become effective on approval by shareholders of the
Company. The Plan and all outstanding Awards shall remain in effect until all
outstanding Awards have been exercised, expired or canceled.
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