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EXHIBIT 10.1
OHIO LEGACY CORP
OMNIBUS STOCK OPTION, STOCK OWNERSHIP
AND LONG TERM INCENTIVE PLAN
THIS IS THE OMNIBUS STOCK OPTION, STOCK OWNERSHIP AND LONG TERM
INCENTIVE PLAN ("Plan") of Ohio Legacy Corp (the "Corporation" or "Company"), an
Ohio corporation, under which (1) Incentive Stock Options and Non-Qualified
Options to acquire shares of the Stock, Restricted Stock, Stock Appreciation
Rights, and/or Units may be granted from time to time to Eligible Persons of the
Corporation and of any of its subsidiaries (collectively, the "Subsidiaries"),
and (2) Non-Qualified Options to acquire shares of the Stock may be granted to
Non-Employee Directors of the Corporation or any of its Subsidiaries, subject to
the following provisions:
ARTICLE I
DEFINITIONS
The following terms shall have the meanings set forth below. Additional
terms defined in this Plan shall have the meanings ascribed to them when first
used herein.
BOARD. The Board of Directors of Ohio Legacy Corp.
CHANGE IN CONTROL TRANSACTION. The dissolution or liquidation of the
Corporation; a reorganization, merger or consolidation of the Corporation as a
result of which the outstanding securities of the class then subject to Rights
hereunder are changed into or exchanged for cash or property or securities
(other than securities issued by the Corporation); or a sale of all or
substantially all of the assets of the Corporation to, or the acquisition of
stock representing more than ten percent (10%) of the voting power of he capital
stock of the Corporation then outstanding by, another corporation, bank, other
entity or person.
CODE. The Internal Revenue Code of 1986, as amended, together with the
rules and regulations promulgated thereunder.
COMMITTEE. The Compensation Committee of the Board.
COMMON STOCK. The common stock, without par value, of the Corporation.
DEATH. The date of death (as established by the relevant death
certificate) of an Eligible Person or a Non-Employee Director who has received
Rights.
DIRECTOR OPTION. The award of a Nonqualified Option to a Non-Employee
Director pursuant to Article VII.
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DIRECTOR OPTION AGREEMENT. The agreement entered into with respect to a
Director Option pursuant to Article VII.
DISABILITY. The date on which an Eligible Person or Non-Employee
Director who has received Rights becomes permanently and totally disabled within
the meaning of Section 22 (e) (3) of the Code, which shall be determined by the
Committee on the basis of such medical or other evidence as it may reasonably
require or deem appropriate.
EFFECTIVE DATE. The date as of which this Plan is effective, which
shall be the date it is approved by the Company's shareholders.
ELIGIBLE PERSONS. Any (i) Employee regularly employed by the Company,
or a Subsidiary, (ii) Non-Employee Director of the Company or a Subsidiary,
including a Non-Employee Director serving on the Committee, or (iii) consultant
to the Company or a Subsidiary, who meets the following conditions:
(1) If no Registration shall have occurred with respect to the Rights
or Stock underlying the Rights granted, such individual must have such
knowledge and experience in financial and business matters that he or
she is capable of evaluating the merits and risks of the investment
involved in the receipt and/or exercise of a Right.
(2) Such individual, being otherwise an Eligible Person under the
foregoing items, shall have been selected by the Committee as a person
to whom a Right or Rights shall be granted under the Plan.
EMPLOYEE. An individual with whom the Corporation or a Subsidiary has
the legal and bona fide relationship of employer and employee. In determining
whether such relationship exists, the regulations of the United States Treasury
Department relating to the determination of such relationship for the purpose of
collection of income tax at the source on wages shall be applied.
FAIR MARKET VALUE. With respect to the Corporation's Common Stock, the
market price per share of such Common Stock determined by the Committee,
consistent with the requirements of Section 422 of the Code and to the extent
consistent therewith, as follows, as of the date specified in the context within
which such term is used:
(i) if the Common Stock was traded on a stock exchange on the date
in question, then the Fair Market Value will be equal to the
closing price reported by the applicable
composite-transactions report for such date;
(ii) if the Common Stock was traded over-the-counter on the date in
question, and was classified as a national market issue, then
the Fair Market Value will be equal to the last transaction
price quoted by the National Association of Securities Dealers
Automated Quotation System ("NASDAQ"), National Market System
("NMS");
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(iii) if the Common Stock was traded over-the-counter on the date in
question but was not classified as a national market issue,
then the Fair Market Value will be equal to the average of the
last reported representative bid and asked prices quoted by
the NASDAQ for such date; and
(iv) if none of the foregoing provisions is applicable, then the
Fair Market Value will be determined by the Committee in good
faith on such basis as it deems appropriate, subject to the
approval of the Board. In such case, the Committee shall
maintain a written record of its method of determining Fair
Market Value.
ISO. An "incentive stock option" as defined in Section 422 of the Code.
JUST CAUSE TERMINATION. A termination by the Corporation or a
Subsidiary of an Eligible Person's employment by the Corporation or the
Subsidiary in connection with the good faith determination of the Board or the
Board of Directors of the Subsidiary, as applicable, that the Eligible Person is
incompetent or otherwise has engaged in any acts involving dishonesty or moral
turpitude or in any acts that materially and adversely affect the business,
affairs or reputation of the Corporation or the Subsidiary.
NON-EMPLOYEE DIRECTOR. A director of the Company who is not also an
Employee.
NON-QUALIFIED OPTION. Any Option granted under Article III whether
designated by the Committee as a Non-Qualified Option or otherwise, (other than
an Option designated by the Committee as an ISO) or any Option designated as an
ISO but which, for any reason, fails to qualify as an ISO pursuant to Section
422 of the Code and the rules and regulations thereunder, and any Option granted
under Article VII.
OPTION AGREEMENT. The agreement between the Corporation and an Optionee
with respect to Options granted to such Optionee under Article III.
OPTIONS. ISOs and Non-Qualified Options are collectively referred to
herein as "Options"; provided, however, whenever reference is specifically made
only to ISOs or Non-Qualified Options, such reference shall be deemed to be made
to the exclusion of the other.
PLAN POOL. A total of one hundred thousand (100,000) shares of
authorized, but unissued, Common Stock, as adjusted pursuant to Section 2.3(b),
which shall be available as Stock under this Plan.
REGISTRATION. The registration by the Corporation under the 1933 Act
and applicable state "Blue Sky" and securities laws of this Plan, the offering
of Rights under this Plan, the offering of Stock under this Plan, and/or the
Stock acquirable under this Plan.
RESTRICTED STOCK. The Stock which a holder shall be awarded with
restrictions when, as, in the amounts and with the restrictions described in
Article IV.
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RESTRICTED STOCK GRANT AGREEMENT. The agreement between the Corporation
and a holder with respect to Rights to Restricted Stock, including such terms
and provisions as are necessary or appropriate under Article IV.
RETIREMENT. "Retirement" shall mean
(i) the termination of an Eligible Person's employment under
conditions which would constitute "normal retirement" or
"early retirement" under any tax qualified retirement plan
maintained by the Corporation or a Subsidiary, or
(ii) termination of employment after attaining age 65 (except in
the case of a Just Cause Termination).
RIGHTS. The rights to exercise, purchase or receive any one or more of
the Options, Restricted Stock, Units and SARs described herein.
RIGHTS AGREEMENT. Any of an Option Agreement, a Restricted Stock Grant
Agreement, a Unit Agreement, an SAR Agreement, or a Director Option Agreement.
SAR. The Right of an SAR recipient to receive cash when, as and in the
amounts described in Article VI.
SAR AGREEMENT. The agreement between the Corporation and an SAR
recipient with respect to the SAR awarded to the SAR recipient, including such
terms and conditions as are necessary or appropriate under Article VI.
SEC. The Securities and Exchange Commission.
STOCK. The shares of Common Stock in the Plan Pool available for
issuance pursuant to the valid exercise of a Right or on which the cash value of
a Right is to be based.
TAX WITHHOLDING LIABILITY. All federal and state income taxes, social
security tax, and any other taxes applicable to the compensation income arising
from the transaction required by applicable law to be withheld by the
Corporation or any Subsidiary.
TRANSFER. The sale, assignment, transfer, conveyance, pledge,
hypothecation, encumbrance, loan, gift, attachment, levy upon, assignment for
the benefit of creditors, by operation of law (by will or descent and
distribution), transfer by a qualified domestic relations order, a property
settlement or maintenance agreement, transfer by result of the bankruptcy laws
or otherwise of a share of Stock or of a Right.
UNITS. The Right of a Unit recipient to receive a combination of cash
and Stock when, as and in the amounts described in Article V.
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UNIT AGREEMENT. The agreement between the Corporation and a Unit
recipient with respect to the award of Units to the Unit recipient, including
such terms and conditions as are necessary or appropriate under Article V.
1933 ACT. The Securities Act of 1933, as amended, together with the
rules and regulations promulgated thereunder.
1934 ACT. The Securities Exchange Act of 1934 as amended, together with
the rules and regulations promulgated thereunder.
ARTICLE II
GENERAL
SECTION 2.1. PURPOSE.
The purpose of this Plan is to attract directors and qualified
employees in the employ of the Corporation and its Subsidiaries and motivate
them to contribute to the successful performance of the Corporation and its
Subsidiaries and the growth of the market value of the Corporation's Common
Stock. The Plan aims to unify the interests of such directors and employees with
those of shareholders in achieving the Corporation's and Subsidiaries' long-term
performance objectives by providing the former with ownership opportunities, and
to retain such directors and employees by rewarding them with potentially
tax-advantageous future compensation. These objectives will be promoted through
the granting of Rights to designated Eligible Persons and Non-employee Directors
pursuant to the terms of this Plan.
SECTION 2.2. ADMINISTRATION.
(a) The Plan shall be administered by the Committee. Subject to
the provisions of SEC Rule 16b-3(d), the Committee may
designate any officers or employees of the Corporation or any
Subsidiary to assist in the administration of the Plan, to
execute documents on behalf of the Committee and to perform
such other ministerial duties as may be delegated to them by
the Committee.
(b) Subject to the provisions of the Plan, the determinations and
the interpretation and construction of any provision of the
Plan by the Committee shall be recommended to the Board for
approval, and when so approved by the Board shall be final and
conclusive upon persons affected thereby. By way of
illustration and not of limitation, the Committee shall have
the discretion, subject to the approval by the Board:
(i) to construe and interpret the Plan and all Rights
granted hereunder and to determine the terms and
provisions (and amendments thereof) of the Rights
granted under the Plan (which need not be identical);
(ii) to define the terms used in the Plan and in the
Rights granted hereunder;
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(iii) to prescribe, amend and rescind the rules and
regulations relating to the Plan;
(iv) to determine the Eligible Persons to whom and the
time or times at which such Rights shall be granted,
the number of shares of Stock, as and when
applicable, to be subject to each Right, the exercise
price or other relevant purchase price or value
pertaining to a Right, and the determination of
leaves of absence which may be granted to Eligible
Persons without constituting a termination of their
employment for the purposes of the Plan; and
(v) to make all other determinations and interpretations
necessary or advisable for the administration of the
Plan.
(c) Notwithstanding the foregoing, or any other provision of this
Plan, the Committee will have no authority to determine any
matters, or exercise any discretion, to the extent that the
power to make such determinations or to exercise such
discretion would cause the loss of the exemption under SEC
Rule 16b-3 of any grant or award hereunder.
(d) It shall be in the discretion of the Committee, subject to
approval by the Board, to grant Options to purchase shares of
Stock which qualify as ISOs under the Code or which will be
given tax treatment as Non-Qualified Options. Any Options
granted which fail to satisfy the requirements for ISOs shall
become Non-Qualified Options.
(e) The intent of the Corporation is to effect the Registration.
In such event, the Corporation shall make available to
Eligible Persons and Non-Employee Directors receiving Rights
and/or shares of Stock in connection therewith all disclosure
documents required under such federal and state laws. If such
Registration shall not occur, the Committee shall be
responsible for supplying the recipient of a Right and/or
shares of Stock in connection therewith with such information
about the Corporation as is contemplated by the federal and
state securities laws in connection with exemptions from the
registration requirements of such laws, as well as providing
the recipient of a Right with the opportunity to ask questions
and receive answers concerning the Corporation and the terms
and conditions of the Rights granted under this Plan.
In addition, if such Registration shall not occur, the
Committee shall be responsible, subject to approval by the
Board, for determining the maximum number of Eligible Persons
and Non-Employee Directors and the suitability of particular
persons to be Eligible Persons in order to comply with
applicable federal and state securities statutes and
regulations governing such exemptions.
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(f) In determining the Eligible Persons to whom Rights may be
granted and the number of shares of Stock to be covered by
each Right, the Committee and the Board shall take into
account the nature of the services rendered by such Eligible
Persons, their present and potential contributions to the
success of the Corporation and/or a Subsidiary and such other
factors as the Committee and the Board shall deem relevant. An
Eligible Person who has been granted a Right under this Plan
may be granted an additional Right or Rights under this Plan
if the Committee and the Board shall so determine. If,
pursuant to the terms of this Plan, or otherwise in connection
with this Plan, it is necessary that the percentage of stock
ownership of an Eligible Person be determined, the ownership
attribution provisions set forth in Section 424(d) of the Code
shall be controlling.
(g) With the exception of Director Options, the granting of Rights
pursuant to this Plan is in the exclusive discretion of the
Board, and until the Board acts, no individual other than a
Non-Employee Director shall have any rights under this Plan.
The terms of this Plan shall be interpreted in accordance with
this intent.
SECTION 2.3. STOCK AVAILABLE FOR RIGHTS.
(a) Shares of the Stock shall be subject to, or underlying, grants
of Options, Restricted Stock, SARs and Units under this Plan.
The total number of shares of Stock for which, or with respect
to which, Rights may be granted (including the number of
shares of Stock in respect of which SARs and Units may be
granted) under this Plan shall be those designated in the Plan
Pool. In the event that a Right granted under this Plan to any
Eligible Person or Non-Employee Director expires or is
terminated unexercised as to any shares of Stock covered
thereby, such shares thereafter shall be deemed available in
the Plan Pool for the granting of Rights under this Plan;
provided, however, if the expiration or termination date of a
Right is beyond the term of existence of this Plan as
described in Section 8.3, then any shares of Stock covered by
unexercised or terminated Rights shall not reactivate the
existence of this Plan.
(b) In the event the outstanding shares of Common Stock are
increased, decreased, changed into or exchanged for a
different number or kind of securities as a result of a stock
split, reverse stock split, stock dividend, recapitalization,
merger, share exchange acquisition, combination or
reclassification, appropriate proportionate adjustments will
be made in: (i) the aggregate number and/or kind of shares of
Stock in the Plan Pool that may be issued pursuant to the
exercise of, or that are underlying, Rights granted hereunder;
(ii) the exercise or other purchase price or value pertaining
to, and the number and/or kind of shares of Stock called for
with respect to, or underlying, each outstanding Right granted
hereunder; and (iii) other rights and matters determined on a
per share basis under this Plan or any Rights Agreement. Any
such adjustments will be made only by the Committee, subject
to approval by the Board, and when so approved will be
effective, conclusive and binding for all purposes with
respect to this Plan and all Rights then outstanding. No such
adjustments will be required by reason of
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(i) the issuance or sale by the Corporation for cash of
additional shares of its Common Stock or securities
convertible into or exchangeable for shares of its Common
Stock, or (ii) the issuance of shares of Common Stock in
exchange for shares of the capital stock of any corporation,
financial institution or other organization acquired by the
Corporation or any Subsidiary in connection therewith.
(c) The grant of a Right pursuant to this Plan shall not affect in
any way the right or power of the Corporation to make
adjustments, reclassifications, reorganizations or changes of
its capital or business structure or to merge or to
consolidate or to dissolve, liquidate, or sell, or transfer
all or any part of its business or assets.
(d) No fractional shares of Stock shall be issued under this Plan
for any adjustment under Section 2.3(b).
SECTION 2.4. SEVERABLE PROVISIONS.
The Corporation intends that the provisions of each of Articles III,
IV, V, VI and VII, in each case together with Articles I, II and VIII, shall
each be deemed to be effective on an independent basis, and that if one or more
of such Articles, or the operative provisions thereof, shall be deemed invalid,
void or voidable, the remainder of such Articles shall continue in full force
and effect.
ARTICLE III
DISCRETIONARY GRANT OF OPTIONS
SECTION 3.1. GRANT OF OPTIONS.
(a) The Company may grant Options to Eligible Persons as provided
in this Article III. Options will be deemed granted pursuant
to this Article III only upon (i) authorization by the
Committee, (ii) the approval of such grant by the Board, and
(iii) the execution and delivery of an Option Agreement by the
Eligible Person optionee (the "Optionee") and a duly
authorized officer of the Company. Options will not be deemed
granted hereunder merely upon authorization of such grant by
the Committee. The aggregate number of shares of Stock
potentially acquirable under all Options granted shall not
exceed the total number of shares of Stock remaining in the
Plan Pool, less all shares of Stock potentially acquired
under, or underlying, all other Rights outstanding under this
Plan.
(b) Subject to approval by the Board, the Committee shall
designate Options at the time a grant is authorized as either
ISOs or Non-Qualified Options, provided that only those
Eligible Persons who are Employees of the Corporation or a
Subsidiary are eligible to receive ISOs. In accordance with
Section 422(d) of the Code, the aggregate Fair Market Value
(determined as of the date an ISO is granted) of the shares of
Stock as to which an ISO may first become exercisable by an
Optionee
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in a particular calendar year (pursuant to Article III and all
other plans of the Company and/or its Subsidiaries) may not
exceed $100,000 (the "$100,000 Limitation"). If an Optionee is
granted Options in excess of the $100,000 Limitation, or if
such Options otherwise become exercisable with respect to a
number of shares of Stock which would exceed the $100,000
Limitation, such excess Options shall be Non-Qualified
Options.
SECTION 3.2. EXERCISE PRICE.
(a) Subject to approval by the Board, the initial exercise price
of each Option granted under this Plan (the "Exercise Price")
shall be determined by the Committee in its sole discretion;
provided, however, that the Exercise Price of an ISO shall not
be less than (i) the Fair Market Value of the Common Stock on
the date of grant of the Option, in the case of any Eligible
Person who does not own stock possessing more than ten percent
(10%) of the total combined voting power of all classes of the
capital stock of the Company (within the meaning of Section
422(b)(6) of the Code), or (ii) one hundred ten percent (110%)
of such Fair Market Value in the case of any Eligible Person
who owns stock in excess of such amount.
(b) Subject to the approval of the Board and the provisions of
Section 3.2(a) (as to the establishment of the Exercise Price
of an Option on the date of grant), the Committee may
establish that the Exercise Price of an Option shall be
adjusted upward or downward, on a quarterly basis based upon
the market value performance of the Common Stock in comparison
with the aggregate market value performance of one or more
indices composed of publicly-traded financial institutions and
financial institution holding companies deemed by the
Committee to be similar (in terms of asset size,
capitalization, trading volumes and other factors deemed
relevant by the Committee) to the Company (an "Index" and the
"Indices"); provided, however, that the Exercise Price of an
ISO shall not be adjustable if, under the Code, such
adjustable Exercise Price would disqualify the ISO as an ISO.
The Committee may utilize Indices published by third parties
and/or may construct one or more Indices meeting the
characteristics described above. The Indices utilized will be
recalculated quarterly, including in such quarterly
recalculation such adjustments for stock splits, reverse stock
splits and stock dividends of the companies in the indices and
of the Company as are appropriate. Each such Index shall
include no fewer than fifteen (15) publicly-traded financial
institutions and financial institution holding companies. If
more than one Index is utilized by the Committee, it may give
such weighting to each Index utilized as the Committee may
determine in its sole discretion, consistent with the
provisions of this Article III.
SECTION 3.3. TERMS AND CONDITIONS OF OPTIONS.
(a) All Options must be granted within ten (10) years of the
Effective Date.
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(b) The Committee, subject to approval by the Board, may grant
ISOs and Non-Qualified Options, either separately or jointly,
to an Eligible Person.
(c) Each grant of Options shall be evidenced by an Option
Agreement in form and substance satisfactory to the Committee
in its discretion, consistent with the provisions of this
Article III.
(d) At the discretion of the Committee, an Optionee, as a
condition to the granting of an Option, must execute and
deliver to the Company a confidentiality agreement approved by
the Committee.
(e) Nothing contained in Article III, any Option Agreement or in
any other agreement executed in connection with the granting
of an Option under this Article III will confer upon any
Optionee any right with respect to the continuation of his or
her status as an Employee of the Company or any of its
Subsidiaries.
(f) Except as otherwise provided herein, each Option Agreement may
specify the period or periods of time within which each Option
or portion thereof will first become exercisable (the "Vesting
Period") with respect to the total number of shares of Stock
acquirable thereunder. Such Vesting Periods will be fixed by
the Committee in its sole discretion, and may be accelerated
or shortened by the Committee in its sole discretion;
provided, however, that the Vesting Period for any portion of
each ISO shall be at least one year (1) from the date such
Option was granted.
(g) Not less than one hundred (100) shares of Stock may be
purchased at any one time through the exercise of an Option
unless the number purchased is the total number at that time
purchasable under all Options granted to the Optionee.
(h) An Optionee shall have no rights as a shareholder of the
Company with respect to any shares of Stock covered by Options
granted to the Optionee until payment in full of the Exercise
Price by such Optionee for the shares being purchased. No
adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property)
or distributions or other rights for which the record date is
prior to the date such Stock is fully paid for, except as
provided in Sections 2.3(b) and 3.2(b).
(i) In the sole discretion of the Committee, all shares of Stock
obtained pursuant to an Option which qualifies as an ISO shall
be held in escrow for a period which ends on the later of (i)
two (2) years from the date of the granting of the ISO or (ii)
one (1) year after the issuance of such shares pursuant to the
exercise of the ISO. Such shares of Stock shall be held by the
Company or its designee. The Optionee who has exercised the
ISO shall have all rights of a shareholder, including, but not
limited to, the rights to vote, receive dividends and sell
such shares. The sole purpose of the escrow is to inform the
Company of a
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disqualifying disposition of the shares of Stock acquired
within the meaning of Section 422 of the Code, and it shall be
administered solely for this purpose.
(j) Additionally and notwithstanding any other provisions of this
Article III, no shares of Stock obtained pursuant to an Option
may be Transferred until at least six (6) months and one (1)
day shall have elapsed since the date such Option was granted.
SECTION 3.4. EXERCISE OF OPTIONS.
(a) An Optionee must be an Eligible Person at all times from the
date of grant until the exercise of the Options granted,
except as provided in Section 3.5(b).
(b) An Option may be exercised to the extent exercisable (i) by
giving written notice of exercise to the Company, specifying
the number of full shares of Stock to be purchased and, if
applicable, accompanied by full payment of the Exercise Price
thereof and the amount of the Tax Withholding Liability
pursuant to Section 3.4(c) below; and (ii) by giving
assurances satisfactory to the Company that the shares of
Stock to be purchased upon such exercise are being purchased
for investment and not with a view to resale in connection
with any distribution of such shares in violation of the 1933
Act; provided, however, that in the event the prior occurrence
of the Registration or in the event resale of such Stock
without such Registration would otherwise be permissible, this
second condition will be inoperative if, in the opinion of
counsel for the Company, such condition is not required under
the 1933 Act or any other applicable law, regulation or rule
of any governmental agency.
(c) As a condition to the issuance of the shares of Stock upon
full or partial exercise of a Non-Qualified Option, the
Optionee will pay to the Company in cash, or in such other
form as the Committee may determine in its discretion, the
amount of the Company's Tax Withholding Liability required in
connection with such exercise.
(d) The Exercise Price of an Option shall be payable to the
Company either (i) in United States dollars, in cash or by
check, or money order payable to the order of the Company, or
(ii) at the discretion of the Committee and the Board, through
the delivery of shares of Stock owned by the Optionee
(including, if the Committee so permits, a portion of the
shares of Stock as to which the Option is then being
exercised) having a Fair Market Value as of the date of
delivery equal to the Exercise Price, or (iii) at the
discretion of the Committee and the Board, by a combination of
(i) and (ii) above, or (iv) at the discretion of the Committee
and the Board, by the delivery (on a form approved by the
Committee) of an irrevocable direction to a securities broker
approved by the Committee to sell the shares of Stock as to
which the Option is then being exercised and to deliver such
portion of the sales proceeds to the Company as is necessary
in payment of all of the Exercise Price and all withholding
taxes required to be withheld by the
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Company by reason of such exercise. No shares of Stock shall
be delivered until full payment has been made.
SECTION 3.5. TERM AND TERMINATION OF OPTION.
(a) Subject to approval by the Board, the Committee shall
determine, and each Option Agreement shall state, the
expiration date or dates of each Option, but such expiration
date shall be not later than ten (10) years after the date
such Option was granted (the "Option Period"). In the event an
ISO is granted to a 10% Shareholder, the expiration date or
dates of each Option Period shall be not later than five (5)
years after the date such Option is granted. Subject to
approval by the Board, the Committee may extend the expiration
date or dates of an Option Period of any Non-Qualified Option
after such date was originally set; provided, however such
expiration date may not exceed the maximum expiration date
described in this Section 3.5(a).
(b) To the extent not previously exercised, each Option will
terminate upon the expiration of the Option Period specified
in the Option Agreement; provided, however, that, subject to
the provisions of Section 3.5(a), each ISO will terminate upon
the earlier of: (i) ninety (90) days after the date that the
Optionee ceases to be an Eligible Person for any reason, other
than by reason of Death, Disability, or a Just Cause
Termination; (ii) twelve (12) months after the date that the
Optionee ceases to be an Eligible Person by reason of
Disability; or (iii) immediately as of the date that the
Optionee ceases to be an Eligible Person by reason of a Just
Cause Termination. The Committee may, subject to approval by
the Board, specify other events that will result in the
termination of an ISO (including, without limitation,
termination of employment by reason of Death). In the case of
Non-Qualified Options, the Committee shall have discretion,
subject to approval by the Board, to specify what, if any,
events will terminate the Option prior to the expiration of
the Option Period.
SECTION 3.6. CHANGE IN CONTROL TRANSACTION.
At any time prior to the date of consummation of a Change in Control
Transaction, the Committee may, in its absolute discretion, determine that all
or any part of the Options theretofore granted under this Article III shall
become immediately exercisable in full and may thereafter be exercised at any
time before the date of consummation of the Change in Control Transaction
(except as otherwise provided in Article II hereof, and except to the extent
that such acceleration of exercisability would result in an "excess parachute
payment" within the meaning of Section 280G of the Code). Any Option that has
not been fully exercised before the date of consummation of the Change in
Control Transaction shall terminate on such date, unless a provision has been
made in writing in connection with such transaction for the assumption of all
Options theretofore granted, or the substitution for such Options of options to
acquire the voting stock of a successor employer corporation, or a parent or a
subsidiary thereof, with appropriate adjustments as to the number and kind of
shares and prices, in which event the Options theretofore granted shall continue
in the manner and under the terms so provided.
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SECTION 3.7. RESTRICTIONS ON TRANSFER.
An Option granted under Article III may not be Transferred except by
last will and testament or the laws of descent and distribution and, during the
lifetime of the Optionee to whom it was granted, may be exercised only by such
Optionee.
SECTION 3.8. STOCK CERTIFICATES.
Certificates representing the Stock issued pursuant to the exercise of
options will bear all legends required by law and necessary to effectuate the
provisions hereof. The Company may place a "stop transfer" order against such
shares of Stock until all restrictions and conditions set forth in this Article
III, the applicable Option Agreement, and in the legends referred to in this
Section 3.8 have been complied with.
SECTION 3.9. AMENDMENT AND DISCONTINUANCE.
The Board may amend, suspend or discontinue the provisions of this
Article III at any time or from time to time; provided that no action of the
Board will cause ISOs granted under this Plan not to comply with Section 422 of
the Code unless the Board specifically declares such action to be made for that
purpose; and, provided, further, that no such action may, without the approval
of the shareholders of the Company, materially increase (other than by reason of
an adjustment pursuant to Section 2.3(b) hereof) the aggregate number of shares
of Stock in the Plan Pool, materially increase the benefits accruing to Eligible
Persons or materially modify eligibility requirements for participation under
this Article III. Moreover, no such action may alter or impair any Option
previously granted under this Article III without the consent of the applicable
Optionee.
SECTION 3.10. COMPLIANCE WITH RULE 16b-3.
With respect to persons subject to Section 16 of the 1934 Act,
transactions under this Article III are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the 1934 Act. To the extent any
provision of this Article III or action by the Board or the Committee fails so
to comply, it shall be deemed null and void, to the extent permitted by law and
deemed advisable by the Committee and the Board.
ARTICLE IV
DISCRETIONARY GRANT OF RESTRICTED STOCK
SECTION 4.1. GRANTS OF RESTRICTED STOCK.
(a) The Company may issue Restricted Stock to Eligible Persons as
provided in this Article IV. Restricted Stock will be deemed
issued only upon (i) authorization by the Committee, (ii)
approval by the Board, and (iii) the execution and delivery of
a Restricted Stock Grant Agreement by the Eligible Person to
whom such
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Restricted Stock is to be issued (the "holder") and a duly
authorized officer of the Company. Restricted Stock will not
be deemed to have been issued merely upon authorization by the
Committee.
(b) Each issuance of Restricted Stock pursuant to this Article IV
will be evidenced by a Restricted Stock Grant Agreement
between the Company and the holder in form and substance
satisfactory to the Committee in its sole discretion,
consistent with this Article IV. Each Restricted Stock Grant
Agreement will specify the purchase price per share, if any,
paid by the holder for the Restricted Stock, such amount to be
fixed by the Committee and the Board.
(c) Without limiting the foregoing, each Restricted Stock Grant
Agreement shall set forth the terms and conditions of any
forfeiture provisions regarding the Restricted Stock,
(including any provisions for accelerated vesting in the event
of a Change in Control Transaction) as determined by the
Committee and the Board.
(d) At the discretion of the Committee, the holder, as a condition
to such issuance, may be required (i) to execute and deliver
to the Company a confidentiality agreement approved by the
Committee, and/or (ii) to pay to the Corporation in cash, or
in such other form as the Committee may determine in its
discretion, the amount of the Corporation's Tax Withholding
Liability required in connection with such issuance.
(e) Nothing contained in this Article IV, any Restricted Stock
Grant Agreement or in any other agreement executed in
connection with the issuance of Restricted Stock under this
Article IV will confer upon any holder any right with respect
to the continuation of his or her status as an employee of the
Company or any of its Subsidiaries.
SECTION 4.2. RESTRICTIONS ON TRANSFER OF RESTRICTED STOCK.
(a) Shares of Restricted Stock acquired by a holder may be
Transferred only in accordance with the specific limitations
on the Transfer of Restricted Stock imposed by applicable
state or federal securities laws or as set forth below, and
subject to certain undertakings of the transferee set forth in
Section 4.2(c). All Transfers of Restricted Stock not meeting
the conditions set forth in this Section 4.2(a) are expressly
prohibited. Certificates for shares of Restricted Stock shall
bear the following legend:
The shares of Common Stock represented by this
certificate are subject to restrictions set out in an
agreement between the registered owner and the
Company which is on file with the Secretary of the
Company. No sale, transfer, assignment, pledge or
other encumbrance or disposition of the shares
represented by this certificate is authorized or
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shall be recognized by the Company except
specifically in accordance with said agreement.
(b) Any prohibited Transfer of Restricted Stock is void and of no
effect. Should such a Transfer purport to occur, the Company
may refuse to carry out the Transfer on its books, attempt to
set aside the Transfer, enforce any undertaking or right under
this Section 4.2(b), and/or exercise any other legal or
equitable remedy.
(c) Any Transfer of Restricted Stock that would otherwise be
permitted under the terms of this Plan is prohibited unless
the transferee executes such documents as the Company may
reasonably require to ensure that the Company's rights under a
Restricted Stock Grant Agreement and this Article IV are
adequately protected with respect to the Restricted Stock so
Transferred. Such documents may include, without limitation,
an agreement by the transferee to be bound by all of the terms
of this Plan applicable to Restricted Stock and of the
applicable Restricted Stock Grant Agreement, as if the
transferee were the original holder of such Restricted Stock.
(d) To facilitate the enforcement of the restrictions on Transfer
set forth in this Article IV, the Committee may, at its
discretion, require the holder of shares of Restricted Stock
to deliver the certificate(s) for such shares with a stock
power executed in blank by the holder and the holder's spouse,
to the Secretary of the Company or his or her designee, and
the Company may hold said certificate(s) and stock power(s) in
escrow and take all such actions as are necessary to insure
that all Transfers and/or releases are made in accordance with
the terms of this Plan. The certificates may be held in escrow
so long as the shares of Restricted Stock whose ownership they
evidence are subject to any restriction on Transfer under this
Article IV or under a Restricted Stock Grant Agreement. Each
holder acknowledges that the Secretary of the Company (or his
or her designee) is so appointed as the escrow holder with the
foregoing authorities as a material inducement to the issuance
of shares of Restricted Stock under this Article IV, that the
appointment is coupled with an interest, and that it
accordingly will be irrevocable. The escrow holder will not be
liable to any party to a Restricted Stock Grant Agreement (or
to any other party) for any actions or omissions unless the
escrow holder is grossly negligent relative thereto. The
escrow holder may rely upon any letter, notice or other
document executed by any signature purported to be genuine.
SECTION 4.3. COMPLIANCE WITH LAW.
Notwithstanding any other provision of this Article IV, Restricted
Stock may be issued pursuant to this Article IV only after there has been
compliance with all applicable federal and state securities laws, and such
issuance will be subject to this overriding condition. The Company may include
shares of Restricted Stock in a Registration, but will not be required to
register or qualify Restricted Stock with the SEC or any state agency, except
that the Company will register with, or as required by local law, file for and
secure an exemption from such
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registration requirements from, the applicable securities administrator and
other officials of each jurisdiction in which an Eligible Person would be issued
Restricted Stock hereunder prior to such issuance.
SECTION 4.4. STOCK CERTIFICATES.
Certificates representing the Restricted Stock issued pursuant to this
Article IV will bear all legends required by law and necessary to effectuate the
provisions hereof. The Company may place a "stop transfer" order against shares
of Restricted Stock until all restrictions and conditions set forth in this
Article IV, the applicable Restricted Stock Grant Agreement and the legends
referred to in this Section 4.4 have been complied with.
SECTION 4.5. MARKET STANDOFF.
To the extent requested by the Company and any underwriter of
securities of the Company in connection with a firm commitment underwriting, no
holder of any shares of Restricted Stock will Transfer any such shares not
included in such underwriting, or not previously registered in a Registration,
during the one hundred twenty (120) day period following the effective date of
the registration statement filed with the SEC under the 1933 Act in connection
with such offering.
SECTION 4.6. AMENDMENT AND DISCONTINUANCE.
The Board may amend, suspend or discontinue this Article IV at any time
or from time to time; provided, that no such action of the Board shall alter or
impair any rights previously granted to holders under this Article IV without
the consent of such affected holders; and provided, further, that no such action
may, without the approval of the Company's shareholders, materially increase
(other than by reason of all adjustment pursuant to Section 2.3(b) hereof) the
maximum aggregate number of shares of Stock in the Plan Pool, materially
increase the benefits accruing to Eligible Persons under this Article IV or
materially modify the requirements as to eligibility for participation under
this Article IV. Moreover, no such action may alter or impair any Restricted
Stock previously granted under this Article IV with the consent of the
applicable holder.
SECTION 4.7. COMPLIANCE WITH RULE 16b-3.
With respect to persons subject to Section 16 of the 1934 Act,
transactions under this Article IV are intended to comply with all applicable
conditions of Rule 16b-3 and/or its successor Rules under the 1934 Act. To the
extent any provision of this Article IV or action by the Board or the Committee
fails so to comply, it shall be deemed null and void, to the extent permitted by
law and deemed advisable by the Committee and the Board.
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ARTICLE V
DISCRETIONARY GRANT OF LONG-TERM
INCENTIVE COMPENSATION UNITS
SECTION 5.1. AWARDS OF UNITS.
(a) The Company may grant awards of Units to Eligible Persons as
provided in this Article V. Units will be deemed granted only
upon (i) authorization by the Committee, (ii) approval by the
Board, and (iii) the execution and delivery of a Unit
Agreement by the Eligible Person to whom Units are to be
granted (a "Unit recipient") and an authorized officer of the
Company. Units will not be deemed granted merely upon
authorization by the Committee. Units may be granted at such
times, in such amounts and to such Unit recipients as the
Committee may determine, subject to approval by the Board and
to the limitations and the terms and conditions in Sections
5.2 and 5.3 below.
(b) Each grant of Units pursuant to this Article V will be
evidenced by a Unit Award Agreement between the Company and
the Unit recipient in form and substance satisfactory to the
Committee in its sole discretion, consistent with this Article
V.
(c) Except as otherwise provided herein, Units will be distributed
only after the end of a performance period of ____ or more
years ("Performance Period") beginning with the year in which
such Units were awarded. The Performance Period shall be set
by the Committee and the Board for each year's awards.
(d) The percentage of the Units awarded under this Section 5.1 or
credited pursuant to Section 5.5 that will be distributed to
Unit recipients shall depend on the levels of financial
performance and other performance objectives achieved during
each year of the Performance Period; provided, however, that
the Committee may, subject to approval of the Board, adopt one
or more performance categories or eliminate all performance
categories other than financial performance. Financial
performance shall be based on the consolidated results of the
Company and its Subsidiaries prepared on the same basis as the
financial statements published for financial reporting
purposes and determined in accordance with Section 5.1(e)
below. Other performance categories adopted by the Committee
shall be based on measurements of performance as the Committee
shall deem appropriate.
(e) Distributions of Units awarded will be based on the Company's
financial performance with results from other performance
categories applied as a factor, not exceeding one (1), against
financial results. The annual financial and other performance
results will be averaged over the Performance Period and
translated into percentage factors according to granted
criteria established by the Committee, subject to approval of
the Board, for the entire Performance Period. The resulting
percentage factors shall determine the percentage of Units to
be distributed. No distributions of Units, based on financial
performance and other performance, shall be made if a minimum
average percentage of the applicable
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measurement of performance, to be established by the Committee
and approved by the Board, is not achieved for the Performance
Period. The performance levels achieved for each Performance
Period and percentage of Units to be distributed shall be
conclusively determined by the Committee, subject to approval
by the Board.
(f) The percentage of Units awarded which Unit recipients become
entitled to receive based on the levels of performance
(including those units credited under Section 5.5) will be
determined as soon as practicable after each Performance
Period and are called "Retained Units."
(g) As soon as practical after determination of the number of
Retained Units, such Retained Units shall be distributed in
the form of a combination of shares and cash in the relative
percentages as between the two as determined by the Committee,
subject to approval by the Board. The Units awarded, but which
Unit recipients do not become entitled to receive shall be
canceled.
(h) Notwithstanding any other provision in this Article V, the
Committee, if it determines that it is necessary or advisable
under the circumstances, may, subject to approval by the
Board, adopt rules pursuant to which Eligible Persons by
virtue of hire, or promotion or special individual
circumstances, may be granted the total award of Units or any
portion thereof, with respect to one or more Performance
Periods that began in prior years and at the time of the
awards have not yet been completed.
SECTION 5.2. LIMITATIONS.
The aggregate number of shares of Stock potentially distributable under
all Units granted, including those Units credited pursuant to Section 5.5, shall
not exceed the total number of Stock remaining in the Plan Pool, less all shares
of Stock potentially acquirable under, or underlying, all other Rights
outstanding under this Plan.
SECTION 5.3. TERMS AND CONDITIONS.
(a) All awards of Units must be made within ten (10) years of the
Effective Date.
(b) The award of Units shall be evidenced by a Unit Award
Agreement in form and substance satisfactory to the Committee
in its discretion, consistent with the provisions of this
Article V.
(c) At the discretion of the Committee and the Board, a Unit
recipient, as a condition to the award of Units, may be
required to execute and deliver to the Company a
confidentiality agreement approved by the Committee.
(d) Nothing contained in this Article V, any Unit Award Agreement
or in any other agreement executed in connection with the
award of Units under this Article V
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will confer upon any Unit recipient any right with respect to
the continuation of his or her status as an employee of the
Company or any of its Subsidiaries.
(e) A Unit recipient shall have no rights as a shareholder of the
Company with respect to any Units until the distribution of
shares of Stock in connection therewith. No adjustment shall
be made in the number of Units for dividends (ordinary or
extraordinary, whether in cash, securities or other property)
or distributions or other rights for which the record date is
prior to the date such Stock is fully paid for, except as
provided in Sections 2.3(b) and 5.6(a).
SECTION 5.4. SPECIAL DISTRIBUTION RULES.
(a) Except as otherwise provided in this Section 5.4, a Unit
recipient must be an Eligible Person from the date a Unit is
awarded to him or her continuously through and including the
date of distribution of such Unit.
(b) In case of the Death or Disability of a Unit recipient prior
to the end of any Performance Period, the number of Units
awarded to the Unit recipient for such Performance Period
shall be reduced pro rata based on the number of months
remaining in the Performance Period after the month of Death
or Disability. The remaining Units, reduced in the discretion
of the Committee and the Board to the percentage indicated by
the levels of performance achieved prior to the date of Death
or Disability, if any, shall be distributed within a
reasonable time after Death or Disability. All other Units
awarded to the Unit recipient for such Performance Period
shall be canceled.
(c) If Unit recipient enters into Retirement prior to the end of
any Performance Period, the Units awarded to such Unit
recipient under this Article V and not yet distributed shall
be prorated to the end of the year in which such Retirement
occurs and distributed at the end of the Performance Period
based upon the Company's performance for such period.
(d) In the event of the termination of the Unit recipient's status
as an Eligible Person prior to the end of any Performance
Period for any reason other than Death, Disability or
Retirement, all Units awarded to the Unit recipient with
respect to any such Performance Period shall be immediately
forfeited and canceled.
SECTION 5.5. DIVIDEND EQUIVALENT UNITS.
On each record date for dividends on the Common Stock, an amount equal
to the dividend payable on one share of Common Stock will be determined and
credited (the "Dividend Equivalent Credit") on the payment date to each Unit
recipient's account for each Unit which has been awarded to the Unit recipient
and not distributed or canceled. Such amount will be converted within the
account to an additional number of Units equal to the number of shares of Common
Stock that could be purchased at Fair Market Value on such dividend payment
date.
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These Units will be treated for purposes of this Article V in the same
manner as those Units granted pursuant to Section 5.1.
SECTION 5.6. ADJUSTMENTS.
(a) In addition to the provisions of Section 2.3(b), if an
extraordinary change occurs during a Performance Period which
significantly alters the basis upon which the performance
levels were established under Section 5.1 for that Performance
Period, to avoid distortion in the operation of this Article
V, but subject to Section 5.2, the Committee may, subject to
approval by the Board, make adjustments in such performance
levels to preserve the incentive features of this Article V,
whether before or after the end of the Performance Period, to
the extent it deems appropriate in its sole discretion, which
adjustments shall be conclusive and binding upon all parties
concerned. Such changes may include, without limitation,
adoption of, or changes in, accounting practices, tax laws and
regulatory or other laws or regulations; economic changes not
in the ordinary course of business cycles; or compliance with
judicial decrees or other legal authorities.
(b) At any time prior to the date of consummation of a Change in
Control Transaction, the Committee may, subject to approval by
the Board, determine that all or any part of the Units
theretofore awarded under this Article V shall become
immediately distributable (reduced pro rata based on the
number of months remaining in the Performance Period after the
consummation of the Change in Control Transaction) and may
thereafter be distributed at any time before the date of
consummation of the Change in Control Transaction (except as
otherwise provided in Article II hereof, and except to the
extent that such acceleration of distribution would result in
an "excess parachute payment" within the meaning of Section
280G of the Code). Any Units that have not been distributed
before the date of consummation of Use Change in Control
Transaction shall terminate on such date, unless a provision
has been made in writing in connection with such transaction
for the assumption of all awards of Units theretofore made, or
the substitution for such units of awards of compensation
units having comparable characteristics under a long term
incentive award plan of a successor employer corporation, or a
parent or a subsidiary thereof, with appropriate adjustments,
in which event the awards of Units theretofore made shall
continue in the manner and under the terms so provided.
SECTION 5.7. OTHER CONDITIONS.
(a) No person shall have any claim to be granted an award of Units
under this Article V and there is no obligation for uniformity
of treatment of Eligible Persons or Unit recipients under this
Article IV.
(b) The Company shall have the right to deduct from any
distribution or payment in cash under this Article V, and the
Unit recipient or other person receiving shares
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of Stock under this Article V shall be required to pay to the
Company, any Tax Withholding Liability. The number of shares
of Stock to be distributed to any individual Unit recipient
may be reduced by the number of shares of Stock, the Fair
Market Value of which on the Distribution Date (as defined in
Section 5.7(d) below) is equivalent to the cash necessary to
pay any Tax Withholding Liability, where the cash to be
distributed is not sufficient to pay such Tax Withholding
Liability, or the Unit recipient may deliver to the Company
cash sufficient to pay such Tax Withholding Liability.
(c) Any distribution of shares of Stock under this Article V may
be delayed until the requirements of any applicable laws or
regulations, and any stock exchange or NASDAQ-NMS
requirements, are satisfied. The shares of Stock distributed
under this Article V shall be subject to such restrictions and
conditions on disposition as counsel for the Company shall
determine to be desirable or necessary under applicable law.
(d) For the purpose of distribution of Units in cash, the value of
a Unit shall be the Fair Market Value on the Distribution
Date. Except as otherwise determined by the Committee, the
"Distribution Date" shall be the date upon which the Unit
recipient or other person is entitled to receive such
distribution.
(e) Notwithstanding any other provision of this Article V, no
Dividend Equivalent Credits shall be made and no distributions
of Units shall be made if at the time a Dividend Equivalent
Credit or distribution would otherwise have been made:
(i) The regular quarterly dividend on the Common Stock
has been omitted and not subsequently paid or there
exists any default in payment of dividends on any
such outstanding shares of capital stock of the
Corporation:
(ii) The rate of dividends on the Common Stock is lower
than at the time the Units to which the Dividend
Equivalent Credit relates were awarded, adjusted for
any change of the type referred to in Section 2.3(b).
(iii) Estimated consolidated net income of the Corporation
for the twelve month period preceding the month the
Dividend Equivalent Credit or distribution would
otherwise have been made is less than the sum of the
amount of the Dividend Equivalent Credits and Units
eligible for distribution under this Article V in
that month plus all dividends applicable to such
period on an accrual basis, either paid, declared or
accrued at the most recently paid rate, on all
outstanding shares of Common Stock; or
(iv) The Dividend Equivalent Credit or distribution would
result in a default in any agreement by which the
Corporation is bound.
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(f) In the event net income available under Section 5.7(e) above
for Dividend Equivalent Credits and awards eligible for
distribution under this Article V is sufficient to cover part
but not all of such amounts, the following order shall be
applied in making payments: (i) Dividend Equivalent Credits,
and then (ii) Units eligible for distribution under this
Article V.
SECTION 5.8. DESIGNATION OF BENEFICIARIES.
A Unit recipient may designate a beneficiary or beneficiaries to
receive all or part of the Stock and/or cash to be distributed to the Unit
recipient under this Article V in case of Death. A designation of beneficiary
may be replaced by a new designation or may be revoked by the Unit recipient at
any time. A designation or revocation shall be on a form to be provided for that
purpose and shall be signed by the Unit recipient and delivered to the
Corporation prior to the Unit recipient's Death. In case of the Unit recipient's
Death, any amounts to be distributed to the Unit recipient under this Article V
with respect to which a designation of beneficiary has been made (to the extent
it is valid and enforceable under applicable law) shall be distributed in
accordance with this Article V to the designated beneficiary or beneficiaries.
The amount distributable to a Unit recipient upon Death and not subject to such
a designation shall be distributed to the Unit recipient's estate. If there
shall be any question as to the legal right of any beneficiary to receive a
distribution under this Article V, the amount in question may be paid to the
estate of the Unit recipient, in which event the Corporation shall have no
further liability to anyone with respect to such amount.
SECTION 5.9. RESTRICTIONS ON TRANSFER.
Units granted under Article V may not be Transferred, except as
provided in Section 5.8, and, during the lifetime of the Unit recipient to whom
it was awarded, cash and stock receivable with respect to Units may be received
only by such Unit recipient.
SECTION 5.10. AMENDMENT AND DISCONTINUANCE.
No award of Units may be granted under this Article V more than ten
(10) years after the Effective Date. The Board may amend, suspend or discontinue
the provisions of this Article V at any time or from time to time, provided,
that no such action may, without the approval of the shareholders of the
Corporation, materially increase (other than by reason of an adjustment pursuant
to Section 2.3(b) hereof) the maximum number of shares of Stock in the Plan
Pool, materially increase the benefits accruing to Eligible Person under this
Article V or materially modify the eligibility requirements for participation
under this Article V.
SECTION 5.11. COMPLIANCE WITH RULE 16b-3.
With respect to persons subject to Section 16 of the 1934 Act,
transactions under this Article V are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the 1934 Act. To the extent any
provision of this Article V or action by the Board or the Committee fails so to
comply, it shall be deemed null and void, to the extent permitted by law and
deemed advisable by the Committee and the Board.
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ARTICLE VI
DISCRETIONARY GRANT OF STOCK
APPRECIATION RIGHTS
SECTION 6.1. GRANTS OF SARS.
(a) The Corporation may grant SARs under this Article VI. SARs
will be deemed granted only upon (i) authorization by the
Committee, (ii) approval by the Board, and (iii) the execution
and delivery of a SAR Agreement by the Eligible Person to whom
the SARs are to be granted (the "SAR recipient") and a duly
authorized officer of the Corporation. SARs will not be deemed
granted merely upon authorization by the Committee. The
aggregate number of shares of Stock which shall underlie SARs
granted hereunder shall not exceed the total number of shares
of Stock remaining in the Plan Pool, less all shares of Stock
potentially acquirable under or underlying all other Rights
outstanding under this Plan.
(b) Each grant of SARs pursuant to this Article VI shall be
evidenced by a SAR Agreement between the Corporation and the
SAR recipient, in form and substance satisfactory to the
Committee in its sole discretion, consistent with this Article
VI.
SECTION 6.2. TERMS AND CONDITIONS OF SARS.
(a) All SARs must be granted within ten (10) years of the
Effective Date.
(b) Each SAR issued pursuant to this Article VI shall have an
initial base value (the "Base Value") equal to the Fair Market
Value of a share of Common Stock on the date of issuance of
the SAR.
(c) Subject to the approval of the Board and the provisions of
Section 6.2(b) (as to the establishment of the initial Base
Value of a SAR), the Committee may establish that the Base
Value of a SAR shall be adjusted, upward or downward, on a
quarterly basis, based upon the market value performance of
the Common Stock in comparison with the aggregate market value
performance of the Index or Indices utilized under Section
3.2(b).
(d) At the discretion of the Committee and the Board, a SAR
recipient, as a condition to the granting of a SAR, must
execute and deliver to the Corporation a confidential
information agreement approved by the Committee.
(e) Nothing contained in this Article VI, any SAR Agreement or in
any other agreement executed in connection with the granting
of a SAR under this Article VI will confer upon any SAR
recipient any right with respect to the continuation of his or
her status as an employee of the Corporation or any of its
Subsidiaries.
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(f) Except as otherwise provided herein, each SAR Agreement may
specify the period or periods of time within which each SAR or
portion thereof will first become exercisable (the "SAR
Vesting Period"). Such SAR Vesting Periods will be fixed by
the Committee, subject to approval by the Board, and may be
accelerated or shortened by the Committee, subject to approval
by the Board.
(g) SARs relating to no less than one hundred (100) shares of
Stock may be exercised at any one time unless the number
exercised is the total number at that time exercisable under
all SARs granted to the SAR recipient.
(h) A SAR recipient shall have no rights as a shareholder of the
Corporation with respect to any shares of Stock underlying
such SAR. No adjustment shall be made for dividends (ordinary
or extraordinary, whether in cash, securities or other
property) or distributions or other rights for which the
record date is prior to the date such Stock is fully paid for,
except as provided in Sections 2.3(b) and 6.2(c).
SECTION 6.3. RESTRICTIONS ON TRANSFER OF SARS.
SARs granted under this Article VI may not be Transferred, except as
provided in Section 6.7, and during the lifetime of the SAR recipient to whom it
was granted, may be exercised only by such SAR recipient.
SECTION 6.4. EXERCISE OF SARS.
(a) A SAR recipient (or his or her executors or administrators, or
heirs or legatees) shall exercise a SAR by giving written
notice of such exercise to the Corporation. SARs may be
exercised only upon the completion of the SAR Vesting Period,
if any, applicable to such SAR (the date such notice is
received by the Corporation being referred to herein as the
"SAR Exercise Date").
(b) Within ten (10) business days of the SAR Exercise Date
applicable to a SAR exercised in accordance with Section
6.4(a), the SAR recipient shall be paid in cash the difference
between the Base Value of such SAR (as adjusted, if applicable
under Section 6.2(c), as of the most recently preceding
quarterly period) and the Fair Market Value of the Common
Stock as of the SAR Exercise Date, as such difference is
reduced by the Company's Tax Withholding Liability arising
from such exercise.
SECTION 6.5. TERMINATION OF SARS.
Subject to approval by the Board, the Committee shall determine, and
each SAR Agreement shall state, the expiration date or dates of each SAR, but
such expiration date shall be not later than ten (10) years after the date such
SAR is granted (the "SAR Period"). Subject to approval by the Board, the
Committee may extend the expiration date or dates of a SAR Period
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after such date was originally set; provided, however, such expiration date may
not exceed the maximum expiration date described in this Section 6.5(a).
SECTION 6.6. CHANGE IN CONTROL TRANSACTION.
At any time prior to the date or consummation of a Change in Control
Transaction, the Committee may, in its absolute discretion, determine that all
or any part of the SARs theretofore granted under this Article VI shall become
immediately exercisable in full and may thereafter be exercised at any time
before the date of consummation of the Change in Control Transaction (except as
otherwise provided in Article II hereof, and except to the extent that such
acceleration of exercisability would result in an excess parachute payment
within the meaning of Section 280G of the Code). Any SAR that has not been fully
exercised before the date of consummation of the Change in Control Transaction
shall terminate on such date, unless a provision has been made in writing in
connection with such transaction for the assumption of all SARs theretofore
granted, or the substitution for such SARs of grants of stock appreciation
rights having comparable characteristics under a stock appreciation rights plan
of a successor employer corporation or bank, or a parent or a subsidiary
thereof, with appropriate adjustments, in which event the SARs theretofore
granted shall continue in the manner and under the terms so provided.
SECTION 6.7. DESIGNATION OF BENEFICIARIES.
A SAR recipient may designate a beneficiary or beneficiaries to receive
all or part of the cash to be paid to the SAR recipient under this Article VI in
case of Death. A designation of beneficiary may be replaced by a new designation
or may be revoked by the SAR recipient at any time. A designation or revocation
shall be on a form to be provided for that purpose and shall be signed by the
SAR recipient and delivered to the Corporation prior to the SAR recipient's
Death. In case of the SAR recipient's Death, the amounts to be distributed to
the SAR recipient under this Article VI with respect to which a designation of
beneficiary has been made (to the extent it is valid and enforceable under
applicable law) shall be distributed in accordance with this Article VI to the
designated beneficiary or beneficiaries. The amount distributable to a SAR
recipient upon Death and not subject to such a designation shall be distributed
to the SAQ recipient's estate. If there shall be any question as to the legal
right of any beneficiary to receive a distribution under this Article VI, the
amount in question may be paid to the estate of the SAR recipient in which event
the Corporation shall have no further liability to anyone with respect to such
amount.
SECTION 6.8. AMENDMENT AND DISCONTINUANCE.
The Board may amend, suspend or discontinue the provisions of this
Article VI at any time or from time to time provided that no action of the Board
may, without the approval of the shareholders of the Corporation materially
increase (other than by reason of an adjustment pursuant to Section 2.3(b)
hereof) the maximum aggregate number of shares of Stock in the Plan Pool,
materially increase the benefits accruing to Eligible Persons or materially
modify eligibility requirements for participation under this Article VI.
Moreover, no such action may alter or
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impair any SAR previously granted under this Article VI without the consent of
the applicable SAR recipient.
SECTION 6.9. COMPLIANCE WITH RULE 16b-3.
With respect to persons subject to Section 16 of the 1934 Act,
transactions under this Article VI are intended to comply with all applicable
conditions of Rule l6b-3 or its successors under the 1934 Act. To the extent any
provision of this Article VI or action by the Board or the Committee fails so to
comply, it shall be deemed null and void, to the extent permitted by law and
deemed advisable by the Committee and the Board.
ARTICLE VII
AUTOMATIC GRANT OF OPTIONS TO NON-EMPLOYEE DIRECTORS
SECTION 7.1. AUTOMATIC GRANT OF DIRECTOR OPTIONS.
A Non-Employee Director shall be automatically granted a Nonqualified
Option to purchase two thousand five hundred (2,500) shares of Stock (the
"Initial Option") on the date the Non-Employee Director begins service as a
Non-Employee Director on the Board (even if previously an employee director).
Thereafter, for the remainder of the term of the Plan and provided he or she
remains a Non-Employee Director of the Company, on the date of the Company's
Annual Meeting of Stockholders, each Non-Employee Director shall be
automatically granted without further action by the Board or the Committee a
Nonqualified Option to purchase one thousand (1,000) shares of Stock (the
"Annual Option"). All such Options granted to Non-Employee Directors shall
collectively hereinafter be referred as Director Options. The aggregate number
of shares of Stock potentially acquirable under all Director Options granted
shall not exceed the total number of shares of Stock remaining in the Plan Pool,
less all shares of Stock potentially acquired under, or underlying, all other
Rights outstanding under this Plan.
SECTION 7.2. EXERCISE PRICE.
(a) Subject to approval by the Board, the initial exercise price
of each Director Option granted under this Plan (the "Exercise
Price") shall be determined by the Committee in its
discretion; provided, however, that the Exercise Price of such
Director Option shall not be less than the Fair Market Value
of the Common Stock on the date of grant of the Director
Option.
(b) Subject to the approval of the Board and the provisions of
Section 7.2(a) (as to the establishment of the Exercise Price
of a Director Option on the date of grant), the Committee may
establish that the Exercise Price of a Director Option shall
be adjusted upward or downward, on a quarterly basis based
upon the market value performance of the Common Stock in
comparison with the aggregate market value performance of one
or more indices composed of publicly-traded financial
institutions and financial institution holding companies
deemed by the Committee
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to be similar (in terms of asset size, capitalization, trading
volumes and other factors deemed relevant by the Committee) to
the Company (an "Index" and the "Indices"). The Committee may
utilize Indices published by third parties and/or may
construct one or more Indices meeting the characteristics
described above. The Indices utilized will be recalculated
quarterly, including in such quarterly recalculation such
adjustments for stock splits, reverse stock splits and stock
dividends of the companies in the indices and of the Company
as are appropriate. Each such Index shall include no fewer
than fifteen (15) publicly-traded financial institutions and
financial institution holding companies. If more than one
Index is utilized by the Committee, it may give such weighting
to each Index utilized as the Committee may determine in its
sole discretion, consistent with the provisions of this
Article VII.
SECTION 7.3 TERMS AND CONDITIONS OF DIRECTOR OPTIONS.
(a) All grants of Director Options must be made within ten (10)
years of the Effective Date.
(b) Each Director Option shall be evidenced by a Director Option
Agreement, which shall contain such provisions as may be
determined by the Committee, consistent with this Article VII.
(c) At the discretion of the Committee, a Non-Employee Director
may be required to execute and deliver to the Company a
confidentiality agreement approved by the Committee.
(d) The Initial Option shall vest and become exercisable over a
period of five years at the rate of 20% of each grant annually
on each of the five consecutive anniversaries of the date of
grant directly following the date of grant provided the
Non-Employee Director's services as a director continue
through each such anniversary. Each Annual Option shall vest
and become exercisable upon the date of grant.
(e) Not less than one hundred (100) shares of Stock may be
purchased at any one time through the exercise of the Initial
or Annual Option unless the number purchased is the total
number at that time purchasable under all Options granted to
the Non-Employee Director.
(f) A Non-Employee Director shall have no rights as a shareholder
of the Company with respect to any shares of Stock covered by
Director Options granted to the Director until payment in full
of the Exercise Price by such Director for the shares being
purchased. No adjustment shall be made for dividends (ordinary
or extraordinary, whether in cash, securities or other
property) or distributions or other rights for which the
record date is prior to the date such Stock is fully paid for.
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(g) Additionally and notwithstanding any other provisions of this
Article VII, no shares of Stock obtained pursuant to a
Director Option may be Transferred until at least six (6)
months and one (1) day shall have elapsed since the date such
Director Option was granted.
SECTION 7.4. EXERCISE OF DIRECTOR OPTIONS.
(a) A Director Option may be exercised to the extent exercisable
(i) by giving written notice of exercise to the Company,
specifying the number of full shares of Stock to be purchased
and, if applicable, accompanied by full payment of the
Exercise Price thereof and the amount of the Tax Withholding;
and (ii) by giving assurances satisfactory to the Company that
the shares of Stock to be purchased upon such exercise are
being purchased for investment and not with a view to resale
in connection with any distribution of such shares in
violation of the 1933 Act; provided, however, that in the
event the prior occurrence of the Registration or in the event
resale of such Stock without such Registration would otherwise
be permissible this second condition will be inoperative if,
in the opinion of counsel for the Company, such condition is
not required under the 1933 Act or any other applicable law,
regulation or rule of any governmental agency.
(b) As a condition to the issuance of the shares of Stock upon
full or partial exercise of a Director Option, the
Non-Employee Director will pay to the Company in cash, or in
such other form as the Committee may determine in its
discretion, the amount of the Company's Tax Withholding
Liability required in connection with such exercise.
(c) The Exercise Price of a Director Option shall be payable to
the Company either (i) in United States dollars, in cash or by
check, or money order payable to the order of the Company, or
(ii) at the discretion of the Committee and the Board, through
the delivery of shares of Stock owned by the Non-Employee
Director (including, if the Committee so permits, a portion of
the shares of Stock as to which the Option is then being
exercised) having a Fair Market Value as of the date of
delivery equal to the Exercise Price, or (iii) at the
discretion of the Committee and the Board, by a combination of
(i) and (ii) above. No shares of Stock shall be delivered
until full payment has been made.
SECTION 7.5. TERM AND TERMINATION OF DIRECTOR OPTION.
(a) The term of each Director Option ("Term"), after which each
such Director Option shall expire, shall be ten years from the
date of grant.
(b) If prior to the expiration of the Term of a Director Option,
the Non-Employee Director shall cease to be a member of the
Board for any reason other than his Death or Disability, the
Director Option shall expire on the earlier of the expiration
of the Term or the date that is 90 days after the date of such
cessation. If prior to the expiration of the Term of a
Director Option, a Non-Employee
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Director shall cease to be a member of the Board by reason of
Death, the Director Option shall expire on the earlier of the
expiration of the Term or one year after the date of such
cessation. In the event a Non-Employee Director ceases to be a
member of the Board for any reason, any unexpired Director
Options shall thereafter be exercisable until their expiration
only to the extent that such Director Options were exercisable
at the time of such cessation.
SECTION 7.6. CHANGE IN CONTROL TRANSACTION.
At any time prior to the date of consummation of a Change in Control
Transaction, the Committee may, in its absolute discretion, determine that all
or any part of the Director Options theretofore granted under this Article VII
shall become immediately exercisable in full and may thereafter be exercised at
any time before the date of consummation of the Change in Control Transaction
(except as otherwise provided in Article II hereof). Any Director Option that
has not been fully exercised before the date of consummation of the Change in
Control Transaction shall terminate on such date, unless a provision has been
made in writing in connection with such transaction for the assumption of all
Director Options theretofore granted, or the substitution for such Director
Options of options to acquire the voting stock of a successor employer
corporation, or a parent or a subsidiary thereof, with appropriate adjustments
as to the number and kind of shares and prices, in which event the Director
Options theretofore granted shall continue in the manner and under the terms so
provided.
SECTION 7.7. RESTRICTIONS ON TRANSFER.
Director Options shall not be transferable except by last will and
testament or the laws of descent and distribution and shall be exercisable
during the Non-Employee Director's lifetime only by him. Non-Employee Directors
are eligible to receive awards under this Plan in addition to (and not in lieu
of) any awards pursuant to this Article VII.
SECTION 7.8. STOCK CERTIFICATES.
Certificates representing the Stock issued pursuant to the exercise of
Director Options will bear all legends required by law and necessary to
effectuate the provisions hereof. The Company may place a "stop transfer" order
against such shares of Stock until all restrictions and conditions set forth in
this Article VII, the applicable Director Option Agreement, and in the legends
referred to in this Section 7.8 have been complied with.
SECTION 7.9. AMENDMENT AND DISCONTINUANCE.
The Board may amend, suspend or discontinue the provisions of this
Article VII at any time or from time to time; provided, that no such action may,
without the approval of the shareholders of the Company, materially increase
(other than by reason of an adjustment pursuant to Section 2.3(b) hereof) the
aggregate number of shares of Stock in the Plan Pool, materially increase the
benefits accruing to Non-Employee Directors or materially modify eligibility
requirements for participation under this Article VII.
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SECTION 7.10. COMPLIANCE WITH RULE 16b-3.
With respect to persons subject to Section 16 of the 1934 Act,
transactions under this Article VII are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the 1934 Act. To the extent any
provision of this Article VII or action by the Board or the Committee fails so
to comply, it shall be deemed null and void, to the extent permitted by law and
deemed advisable by the Committee and the Board.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. APPLICATION OF FUNDS.
The proceeds received by the Corporation from the sale of Stock
pursuant to the exercise of Rights will be used for general corporate purposes.
SECTION 8.2. NO OBLIGATION TO EXERCISE RIGHT.
The granting of a Right shall impose no obligation upon the recipient
to exercise such Right.
SECTION 8.3. TERM OF PLAN.
Except as otherwise specifically provide herein, Rights may be granted
pursuant to this Plan from time to time within ten (10) years from the Effective
Date.
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