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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 and/or Restricted Stock may be granted
from time to time to Eligible Persons of the Corporation and of any of its
subsidiaries (collectively, the "Subsidiaries", and, individually, a
Subsidiary), 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 V.
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DIRECTOR OPTION AGREEMENT. The agreement entered into with respect to a
Director Option pursuant to Article V.
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, or (ii) Non-Employee Director of the Company or a Subsidiary,
including a Non-Employee Director serving on the Committee, 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 V.
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 and Restricted Stock described herein.
RIGHTS AGREEMENT. Any of an Option Agreement, a Restricted Stock Grant
Agreement or a Director Option Agreement.
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.
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.
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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;
(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
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(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.
(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.
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(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 and Restricted Stock under this Plan. The total
number of shares of Stock for which, or with respect to which,
Rights 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 6.3, 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 (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.
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(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
and V, in each case together with Articles I and II, 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 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
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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.
SECTION 3.3. TERMS AND CONDITIONS OF OPTIONS.
(a) All Options must be granted within ten (10) years of the
Effective Date.
(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 three (3) years 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
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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 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 in United States dollars, in cash or by check, or
money order payable to the order of the Company,
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or (ii) 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 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
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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.
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.
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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 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
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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
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.
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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 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.
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SECTION 4.5. 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.
ARTICLE V
AUTOMATIC GRANT OF OPTIONS TO NON-EMPLOYEE DIRECTORS
SECTION 5.1. 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 5.2. 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.
SECTION 5.3 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 V.
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<PAGE> 17
(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.
(g) Additionally and notwithstanding any other provisions of this
Article V, 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 5.4. 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
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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 5.5. 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 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 5.6. 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 V
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.
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SECTION 5.7. 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 V.
SECTION 5.8. 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 V, the applicable Director Option Agreement, and in the legends
referred to in this Section 5.8 have been complied with.
SECTION 5.9. AMENDMENT AND DISCONTINUANCE.
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 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 V.
SECTION 5.10. 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.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1. 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 6.2. NO OBLIGATION TO EXERCISE RIGHT.
The granting of a Right shall impose no obligation upon the recipient
to exercise such Right.
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SECTION 6.3. 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.
SECTION 6.4 SPECIAL RULE RELATING TO CAPITAL,
Notwithstanding anything contained in this Plan to the contrary, in the
event the Company's Subsidiary's capital falls below minimum statutory
requirements, as determined by the Company state or primary federal regulator,
the Company's primary federal regulator may direct the Company to require
participants in this Plan to either immediately exercise or forfeit their rights
under this Plan.
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