Exhibit 10.1
THE MIDLAND COMPANY
2000 Associate Discount Stock Purchase Plan
1. PURPOSE.
The purpose of this Plan is to provide employees of Midland and its
subsidiaries added incentive to their employment and to encourage their
increased efforts to promote the best interests of Midland. The Plan seeks to
accomplish this purpose by permitting eligible employees to purchase Common
Shares of Midland (the "Common Shares") at below-market prices. For purposes of
the Plan, a subsidiary of the corporation of which Midland is the common parent,
is as defined by the Internal Revenue Code of 1986, as amended (the "Code") in
Section 424(f). As used in this Plan, the term "Midland" means The Midland
Company and all such subsidiaries. This Plan is intended to qualify as an
"employee stock purchase plan" under Section 423 of the Code, and all provisions
of this Plan are to be construed so as to meet that tax objective.
2. ELIGIBILITY.
This Plan is available to all Eligible Employees. Eligible Employees
are those individuals who perform services for Midland, who are treated as
employees by Midland for federal income tax purposes, who customarily work in
excess of 20 hours per week for Midland and who customarily work for Midland in
excess of five months in any calendar year. In the event an individual not
treated as an employee for federal income tax purposes is reclassified as an
employee by the Internal Revenue Service, such individual shall be treated as an
Eligible Employee as of the date Midland receives notice of the individual's
reclassification from the Internal Revenue Service, and shall not be considered
an Eligible Employee as of any prior date.
3. EFFECTIVE DATE; TERM; PURCHASE PERIODS.
This Plan shall become effective on April 15, 2000 or on such later date
as may be specified by the Board of Directors. This Plan shall cease to be
effective unless, within 12 months after the date of its adoption by the Board,
it has been approved at a meeting of the shareholders of Midland.
This Plan shall remain in effect until all Common Shares issuable under
the Plan have been issued or April 15, 2010, whichever occurs first.
A "Purchase Period" shall consist of the three month period beginning on
each March 1, June 1, September 1 and December 1, each commencing on or after
the effective date and prior to termination of the Plan.
4. ADMINISTRATION OF THE PLAN.
The Plan shall be administered by a committee (the "Committee")
designated by the Board of Directors of Midland. The Committee shall have full
power and authority to: (i) interpret and administer the Plan and any
instrument or agreement entered into under the Plan; (ii) establish such rules
and regulations and appoint such agents as it shall deem appropriate for the
proper administration of the Plan; and (iii) make any other determination and
take any other action that the Committee deems necessary or desirable for
administration of the Plan.
Decisions of the Committee shall be final, conclusive and binding upon
all persons, including Midland, any participant and any other employee of
Midland. A majority of the members of the Committee may determine its actions
and fix the time and place of its meetings. The Plan shall be administered so
as to ensure all participants have the same rights and privileges as are
provided by Section 423(b)(5) of the Code.
5. BASIS OF PARTICIPATION.
5.1 Enrollment. Each Eligible Employee shall be entitled to
enroll in the Plan as of the first day of the Purchase Period which begins after
such employee has become an Eligible Employee. On the first day of each
Purchase Period, an Eligible Employee will, for purposes of Section 423 of the
Code and the regulations promulgated thereunder, be deemed to have been granted
an option to purchase a maximum number of Common Shares in an amount equal to
(i) the dollar amount or percentage of such Eligible Employee's base pay which
he has elected through payroll deduction to purchase Common Shares in accordance
with the provisions of this Plan, divided by (ii) the purchase price for the
Purchase Period as determined in accordance with Section 6 of this Plan. To
enroll in the Plan, an Eligible Employee shall execute and deliver a payroll
deduction authorization to Midland or its designated agent.
5.2 Bonus Participation. A participant shall be able to
designate that any amount of the participant's cash bonus be deducted for
purchase of Common Shares under the Plan. The cash bonus amount designated by
a participant through a payroll deduction authorization shall be used to
purchase Common Shares at the end of the Purchase Period in which the
participant's cash bonus is paid by Midland.
5.3 Payroll Deduction. A payroll deduction authorization
shall become effective on the first day of the Purchase Period following the
execution and delivery of such authorization. Each authorization shall direct
that payroll deductions be made by the Eligible Employee's employer for each
payroll period during which the Eligible Employee is a participant in the Plan.
The amount of each payroll deduction for each such payroll period shall be a
dollar amount constituting not less than $5 per payroll period nor more than 10%
of such person's salary, or such greater or lesser percentages as may be
determined by the Committee, of the participant's current regular wage or salary
(before withholding or other deductions) paid to the participant by Midland.
Notwithstanding the foregoing, a payroll deduction authorization applicable to a
bonus pursuant to Section 5.2 shall not be limited, but may be authorized for
any amount of the participant's cash bonus.
Payroll deductions (and any other amount paid under the Plan pursuant to
Section 5.5) shall be made for each participant in accordance with the
participant's authorization until participation in the Plan terminates, the
authorization is revised, or the Plan terminates.
Subject to Section 8, a participant may not change the amount of payroll
deduction during any Purchase Period. Any requested changes on the amount of
payroll deductions will be effective beginning on the first day of the next
Purchase Period, subject to a participant's right to terminate participation in
the Plan at any time as provided in Section 8.
Payroll deductions shall be credited to an account established for each
participant. At the end of each Purchase Period, the amount in each
participant's account will be applied to purchase Common Shares for such
Purchase Period. No interest shall accrue at any time for any amount credited
to a participant's account.
5.4 Dividend Reinvestment. Cash dividends credited to a
participant's account with respect to Common Shares held in a participant's
account will be held for the benefit of the participant and applied to the
purchase of Common Shares at the end of the Purchase Period.
5.5 Other Methods of Participation. The Committee may
establish additional procedures whereby Eligible Employees may participate in
the Plan by means other than payroll deduction, such as delivery of funds by
participants in a lump sum or automatic charges to participants' bank accounts.
In addition, the Committee may allocate one or more shares to the account of any
Eligible Employee to be held in such account, but any such shares shall not be
subject to the other terms and conditions of the Plan or Section 423 of the
Code.
5.6 Rules and Conditions of Participation. Participants
shall be subject to such rules and conditions as the Committee may establish,
including, but not limited to the following:
(i) No participant may purchase more than $25,000 of
Common Shares (based upon the Fair Market Value)
in one year.
(ii) An Eligible Employee may not purchase additional
Common Shares if immediately thereafter the
Eligible Employee would own 5% or more of the
total combined voting power or value of all
classes of stock of Midland or any subsidiary
including stock attributable to the Eligible
Employee under Section 424(d) of the Code, and
including outstanding options to purchase stock.
(iii) The Committee may at any time amend, suspend or
terminate any participation procedures
established pursuant to this paragraph without
prior notice to any participant or Eligible
Employee.
6. PURCHASE PRICE.
The Board of Directors will have the discretion to determine the
purchase price for Common Shares purchased under the Plan. The purchase price
will be determined based on a percentage of the Fair Market Value of the Common
Shares. The purchase price shall be equal to or greater than the lesser of
(i) 85% of the Fair Market Value of the Common Shares on the first day of such
Purchase Period or (ii) 85% of the Fair Market Value of the Common Shares on the
last day of such Purchase Period. "Fair Market Value" means the last closing
price for a Common Share on the Nasdaq National Market. If the Shares are not
so traded or reported, Fair Market Value shall be set under procedures
established by the Committee.
7. ISSUANCE OF SHARES.
Common Shares purchased by each participant shall be considered to be
issued and outstanding to the participant's credit as of the close of business
on the last day of each Purchase Period. In addition, participants will be
deemed, for purposes of Section 423 of the Code and the regulations promulgated
thereunder, to have exercised their option to purchase Common Shares, that was
granted on the first day of the Purchase Period, on the last day of the Purchase
Period.
Upon 30 days prior written notice to Midland, a participant may withdraw
certificates for all or a portion of the Common Shares credited to the
participant's account; provided, however, that (i) no such request may be made
more frequently than once per Purchase Period; (ii) such request shall be for at
least 25 Common Shares; (iii) a participant will be unable to participate in the
Plan for 12 months following the withdrawal of the certificate; and (iv) no
participant shall be entitled to receive a certificate for any fractional share.
A participant may withdraw certificates pursuant to the requirements of Sections
(i), (ii) and (iv) without the application of Section (iii), if the request is
made for reasons of hardship as determined in the discretion of the Committee.
Midland will pay any stamp taxes imposed in connection with the issuance of any
certificate under the Plan.
After the close of each Purchase Period, a report will be sent to each
participant stating entries made to the account, the number of Common Shares
purchased and the applicable purchase price.
8. TERMINATION OF PARTICIPATION.
A participant may at any time terminate participation in the Plan,
provided such termination is received by Midland or its designated agent in
writing prior to the last business day of the Purchase Period for which such
termination is to be effective. After termination, a participant may not again
commence participation for a period of 12 months. A participant may terminate
participation in the Plan without the application of the 12-month restriction on
participation if the termination is made for reasons of hardship as determined
in the discretion of the Committee. Upon any such termination and upon request
by the participant, Midland or its designated agent shall promptly deliver to
such participant certificates for the number of full Common Shares held in the
account and cash equal to any remaining balances and in lieu of any fractional
shares. Such cash equivalent shall be determined by multiplying the fractional
share by the Fair Market Value of a Common Share on the last day of the Purchase
Period immediately preceding such termination.
If the participant dies, terminates employment with Midland for any
reason, or otherwise ceases to be an Eligible Employee, participation in the
Plan shall immediately terminate. In such event, certificates for the number of
full Common Shares held in the account, cash equal to any remaining balances and
the cash equivalent of any fractional share so held, shall be delivered promptly
to such participant.
9. TERMINATION OR AMENDMENT OF THE PLAN.
The Board may terminate the Plan at any time. Notice of termination
shall be given to all participants, but any failure to give such notice shall
not impair the effectiveness of the termination.
The Plan will terminate in any event when the maximum number of Common
Shares to be sold under the Plan has been purchased. Such termination shall not
impair any rights which under the Plan shall have vested on or prior to the date
of such termination. If at any time the number of shares remaining available
for purchase under the Plan are not sufficient to satisfy all then-outstanding
purchase rights, the Board may determine an equitable basis of allocating
available shares among all participants.
The Board may amend the Plan from time to time; provided, however, no
such amendment shall (i) materially adversely affect any purchase rights
outstanding under the Plan during the Purchase Period in which such amendment is
to be effected; (ii) increase the maximum number of Common Shares which may be
purchased under the Plan; (iii) decrease the purchase price of the Common Shares
for any purchase period below the lesser of 85% of Fair Market Value on the
first or last day of such Purchase Period; or (iv) adversely affect the
qualification of the Plan under Section 423 of the Code.
Upon termination of the Plan, certificates for the number of full Common
Shares held in the account, cash equal to any remaining balances and the cash
equivalent of any fractional share so held, determined as provided in Section 6,
shall be delivered promptly to such participant.
10. NON-TRANSFERABILITY.
No right or interest in this Plan shall be assignable or transferable,
or subject to any lien, directly or indirectly, by operation of law, or
otherwise, including execution, levy, garnishment, attachment, pledge or
bankruptcy. Any attempted assignment, transfer, pledge or other disposition of
any rights under this Plan shall be null and void and shall automatically
terminate all rights of a participant under the Plan.
11. SHAREHOLDER'S RIGHTS.
No Eligible Employee or participant shall by reason of this Plan have
any rights of a shareholder of Midland until and to the extent such person
acquires Common Shares as herein provided.
12. MAXIMUM NUMBER AND SOURCE OF SHARES; ADJUSTMENTS.
The maximum number of Common Shares which may be purchased under this
Plan is 250,000. Common Shares sold hereunder may be treasury shares,
authorized and unissued shares, or a combination thereof. The Committee may
also purchase (or direct to be purchased) Common Shares on behalf of the
participants through market transactions.
If Midland shall, at any time, change its issued Common Shares into a
different number through stock dividend, stock split, combination or otherwise,
the number of Common Shares specified in this Plan shall be proportionately
adjusted.
13. MISCELLANEOUS.
13.1 Any Authorization, election, notice or document under
this Plan from an Eligible Employee or participant shall
be delivered to Midland or its designee and shall be
effective when delivered.
13.2 This Plan, and Midland's obligation to sell and deliver
Common Shares hereunder, shall be subject to all
applicable federal, state and foreign laws, rules and
regulations, and to such approval by any regulatory or
governmental agency as may, in the opinion of counsel
for Midland, be required.
13.3 Neither the establishment of this Plan nor the purchase
of any Common Shares hereunder shall confer upon any
participant any right to continue in the employ of
Midland, or interfere in any way with the right of
Midland to terminate such employment at any time.
13.4 The value of, or income arising from, any Common Shares
purchased under this Plan shall not be treated as
compensation for purposes of any pension, profit
sharing, life insurance, disability or other retirement
or welfare benefit plan now maintained or hereafter
adopted by Midland, unless such plan specifically
provides to the contrary.
13.5 Midland may deduct from any payment to be made pursuant
to this Plan, or to otherwise require, prior to the
issuance or delivery of any Common Shares or the payment
of any cash to a participant, payment by the participant
of any federal, state, local or foreign taxes required
by law to be withheld. The Committee may permit any
such withholding obligation to be satisfied by reducing
the number of Common Shares otherwise deliverable or by
accepting the delivery of previously owned Common
Shares. Any fraction of a Common Share required to
satisfy such tax obligations shall be disregarded and
the amount due shall be paid instead in cash by the
participant.
13.6 The Committee may provide in its discretion that Midland
may reimburse a participant for federal, state, local
and foreign tax obligations incurred as a result of the
purchase of Common Shares issued under this Plan.
13.7 This Plan and actions taken in connection with it shall
be governed by the laws of the State of Ohio, without
giving effect to the conflict of law provisions thereof.
Any litigation involving or arising under this Plan
shall be maintained solely in the Common Pleas Court of
Clermont County, Ohio or in the United States District
Court for the Southern District of Ohio.
13.8 No employee of Midland or member of the Committee or the
Board shall be liable for any action or determination
taken or made in good faith with respect to the Plan or
any Common Shares hereunder and, to the fullest extent
not prohibited by law, all employees and members shall
be indemnified and held harmless by Midland for any
liability and expenses which may occur through any claim
or cause of action arising under or in connection with
this Plan or any Common Shares purchased under this
Plan.
