SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange
Act of 1934
(Amendment No.___)
Filed by the Registrant X
Filed by a Party other than the Registrant
Check the appropriate box:
Preliminary Proxy Statement
Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
X Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to <section> 240.14a-11(c) or
<section> 240.14a-12
MID-WISCONSIN FINANCIAL SERVICES, INC.
(Name of Registrant as Specified In Its Charter)
NOT APPLICABLE
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
X No fee required
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how
it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
Fee paid previously with preliminary materials.
<PAGE>
Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule and the
date of its filing.
(1) Amount Previously Paid: ___________________________
(2) Form, Schedule or Registration Statement No: ________________
(3) Filing Party: ___________________________
(4) Date Filed: ___________________________
MID-WISCONSIN FINANCIAL SERVICES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
_______________
The annual meeting of shareholders of Mid-Wisconsin Financial
Services, Inc. will be held at Simek Recreational Center, 1037 W.
Broadway Avenue, Medford, Wisconsin, on April 25, 2000, at 5:00 p.m.*
for the following purposes:
1. To elect one Class I director for a term which will expire at the
annual meeting of shareholders to be held in 2002 and four Class
II directors for terms which will expire at the annual meeting of
shareholders to be held in 2003;
2. To consider and act upon a proposal to approve the 1999 Stock
Option Plan;
3. To consider and act upon a proposal to approve the Employee Stock
Purchase Plan;
4. To approve the appointment of Wipfli Ullrich Bertelson LLP as
independent auditors for the year ending December 31, 2000; and
5. To transact such other business as may properly come before the
meeting.
PLEASE PROMPTLY VOTE, SIGN, DATE AND RETURN THE ENCLOSED PROXY IN THE
ENCLOSED ENVELOPE.
*Registration will begin at 4:30 p.m. to allow the meeting to begin
promptly at 5:00 p.m.
March 25, 2000
BY ORDER OF THE BOARD OF
DIRECTORS
WILLIAM A. WEILAND
William A. Weiland
Secretary/Treasurer
<PAGE>
____________________________
A PROXY CARD AND POSTAGE FREE ENVELOPE ARE ENCLOSED.
PROXY STATEMENT
MID-WISCONSIN FINANCIAL SERVICES, INC.
132 WEST STATE STREET
MEDFORD, WISCONSIN 54451
MARCH 25, 2000
SOLICITATION OF PROXIES
The enclosed proxy is solicited by the Board of Directors of Mid-
Wisconsin Financial Services, Inc. (the "Company") for use at the annual
meeting of shareholders to be held at 5:00 p.m., at Simek Recreational
Center, 1037 W. Broadway Avenue, Medford, Wisconsin, on April 25, 2000,
and at any adjournment thereof (the "Annual Meeting").
In addition to solicitation by mail, officers, directors and
employees of the Company and its subsidiaries, none of whom will be
compensated for such services, may solicit proxies in person or by
telephone, facsimile, electronic mail or other forms of communication.
Expenses in connection with the solicitation of proxies, including the
reasonable expenses of brokers, fiduciaries and other nominees in
forwarding proxy material to beneficial owners of the Company's common
stock, will be borne by the Company.
VOTING OF PROXIES
Each holder of the Company's common stock is entitled to one vote in
person or by proxy for each share held of record on all matters to be
voted upon at the Annual Meeting. Only shareholders of record on March
3, 2000 (the "Record Date") are entitled to notice of and to vote at the
Annual Meeting. Votes cast by proxy or in person at the Annual Meeting
will be tabulated by the Secretary of the Company.
Brokers who are the holders of record of Company common stock for
customers generally have discretionary authority to vote on certain
routine matters. However, such brokers generally will not have
authority to vote on other matters if they have not received
instructions from their customers. In determining the vote of
the shareholders on matters for which the broker does not have the
authority to vote shares held of record by the broker, the shares will be
recorded as a "broker non-vote."
Although there is no controlling Wisconsin precedent regarding the
treatment of broker non-votes, the Company believes Wisconsin law
provides for, and the Company intends to apply, the following principles
with respect to broker non-votes and the other voting requirements for
the matters to be presented to the Annual Meeting. The discussion of
voting
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<PAGE>
requirements assumes, with respect to each matter to be presented to
shareholders, that a quorum is present.
Quorum. For purposes of determining a quorum, shareholders who are
present in person or are represented by proxy, but who abstain from
voting, are considered present and count toward the determination of the
quorum. Shares reported as broker non-votes are also considered to be
shares present for purposes of determining whether a quorum is present.
Election of Directors. Directors are elected by a plurality of the
votes cast by the shares entitled to vote. For this purpose, a
"plurality" means that the individuals receiving the largest number of
votes are elected as directors, up to the maximum of one Class I and four
Class II directors to be chosen at the Annual Meeting. Shareholders may
vote in favor of the nominees specified on the accompanying form of proxy
or may withhold their vote as to one or more of such nominees. Shares
withheld or not otherwise voted in the election of directors (because of
abstention, broker non-vote, or otherwise) will have no effect on the
election of directors.
Approval of the 1999 Stock Option Plan and Employee Stock Purchase
Plan. The approval of a majority of the shares present and voting at the
Annual Meeting is required to approve each plan. Abstentions will have
the same effect as a "no" vote, but broker non-votes will have no effect.
Approval of Auditors. The appointment of auditors will be approved
if more shares are voted in favor of approval than are voted against
approval. Shares not voted (because of abstention, broker non-vote, or
otherwise) will have no effect on the approval of auditors.
A shareholder who executes a proxy may revoke it at any time before
it is voted by giving written notice to the Secretary of the Company at
the Company's principal office, by filing another duly executed proxy
bearing a later date with the Secretary, or by giving oral notice to the
presiding officer at the Annual Meeting.
The persons named in the accompanying form of proxy, as members of
the Proxy Committee of the Board of Directors, will vote the shares
subject to each proxy. The proxy in the accompanying form will be voted
as specified by each shareholder, but if no specification is made, each
proxy will be voted:
(1) TO ELECT James P. Hager to a term of office as a Class I director
which will expire at the annual meeting of shareholders to be
held in 2002 (see "Election of Directors");
(2) TO ELECT Kathryn M. Hemer, Gene C. Knoll, Kurt D. Mertens, and
Fred J. Schroeder to terms of office as Class II directors which
will expire at the annual meeting of shareholders to be held in
2003 (see "Election of Directors");
(3) TO APPROVE the 1999 Stock Option Plan (see "Approval of 1999
Stock Option Plan");
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(4) TO APPROVE the Employee Stock Option Plan (see "Approval of
Employee Stock Purchase Plan");
(5) TO APPROVE the appointment of Wipfli Ullrich Bertelson LLP as the
Company's independent auditors for the year ending December 31,
2000 (see "Approval of Appointment of Auditors"); and
<PAGE>
(6) IN THE BEST JUDGMENT of those named as proxies on the
accompanying form of proxy on any other matters to properly come
before the Annual Meeting.
ELECTION OF DIRECTORS
The Board of Directors is composed of three classes of directors,
consisting of four Class I, four Class II, and three Class III directors.
One class of directors is to be elected each year to serve a three-year
term and any vacancy may be filled by the Board until the next succeeding
annual meeting of shareholders. Directors may not continue to serve on
the Board beyond the end of the calendar quarter in which they attain age
65.
James P. Hager was elected by the Board to fill the vacancy caused by
the resignation of Roger B. Olson on March 15, 2000 in anticipation of
his attaining mandatory retirement date on March 31. Mr. Hager is a
candidate for reelection as a Class I director for a term which will
expire at the annual meeting to be held in 2002.
Kathryn M. Hemer was elected in May, 1999, to fill the vacancy
resulting from the retirement of John P. Selz upon his reaching the
Board's mandatory retirement age. Ms. Hemer's term of office will expire
at the Annual Meeting and she is a candidate for reelection as a Class II
director. In addition to Ms. Hemer, Gene C. Knoll, Kurt D. Mertens, and
Fred J. Schroeder will be candidates for reelection as Class II directors
at the Annual Meeting.
Each of the nominees for director has consented to serve if elected,
but in case any of the nominees is not a candidate at the Annual Meeting,
it is the intention of the proxies to vote for such substitute or
substitutes as may be designated by the Board.
<PAGE>
<TABLE>
The following information is furnished with respect to the nominees
and all other directors:
<CAPTION>
NAME, AGE, CLASS AND
PRINCIPAL OCCUPATION YEAR IN WHICH YEAR FIRST
OR EMPLOYMENT AND TERM WILL BECAME A
OTHER AFFILIATIONS* EXPIRE DIRECTOR
NOMINEES
<S> <C> <C>
JAMES P. HAGER, 48 Class I 2000
General Manager, 2002
Harmony Country Cooperatives
-3-
KATHRYN M. HEMER, 40 Class II 1999
Family Nurse Practitioner 2000
The Medford Clinic
GENE C. KNOLL, 46 Class II 1988
President and Chief Executive Officer 2000
of the Company and President and
Chief Executive Officer of
Mid-Wisconsin Bank
KURT D. MERTENS, 44 Class II 1997
Secretary and Treasurer, Loos 2000
Machine Shop, Inc.
FRED J. SCHROEDER, 62 Class II 1986
Vice President of the Company, 2000
Mayor of City of Medford; formerly
Executive Vice President and
Trust Officer of Mid-Wisconsin Bank
CONTINUING DIRECTORS
JAMES N. DOUGHERTY, 62 Class I 1991
Retired Veterinarian, formerly a 2002
consultant for Miles Animal Health
JAMES R. PETERSON, 63 Class I 1986
Vice President, James Peterson
Sons, Inc. (road construction)
JACK E. WILD, 63 Class I 1996
President, Abbotsford 2002
Oil, Inc.
NORMAN A. HATLESTAD, 58 Class III 1992
President, Medford Auto Supply,
Inc./NAPA 2001
RONALD D. ISAACSON, 63 Class III 1986
Chairman of the Company 2001
and retired Chairman of the Board of
Mid-Wisconsin Bank
JAMES F. MELVIN, 50 Class III 1996
Vice Chairman of the Board of 2001
the Company, Chairman of the Board of
Mid-Wisconsin Bank, and President of
the Melvin Companies
<FN>
* Each director of the Company is also a director of Mid-Wisconsin Bank.
-4-
</TABLE>
<PAGE>
COMMITTEES AND COMPENSATION OF THE BOARD OF DIRECTORS
COMMITTEES
The Board of Directors does not appoint audit, compensation, or
nominating committees. The functions of audit and compensation
committees are fulfilled by committees appointed by the Board of
Directors of Mid-Wisconsin Bank (the "Bank"), the Company's wholly owned
subsidiary. Members of the Company's Board who sit on such committees do
so in their capacities as members of the Bank's Board of Directors.
During 1999, Mr. Peterson, Mr. Mertens, and Ms. Hemer served as members
of the Bank's Audit Committee. The Bank's Audit Committee held six
meetings during 1999 to review the audit of the previous fiscal year, the
scope of the current audit engagement and the range of audit and nonaudit
fees.
The functions of a nominating committee are performed by the Board which
will consider nominations for directors submitted by shareholders.
Recommendations concerning nominations with pertinent background
information should be directed to the Chairman of the Board, in care of
the Company. The Board has not adopted formal procedures with respect to
nominee recommendations.
The Personnel Committee of the Bank reviews and establishes executive
compensation and recommended the grant of stock options in 1999. Mr.
Peterson, Mr. Melvin, Mr. Isaacson, Mr. Hager, and Dr. Kim A. Gowey, a
director of the Bank, served on the Personnel Committee during 1999. The
Committee met six times during 1999. See "Committees' Report on
Executive Compensation Policies", page 10.
During 1999, the Board of Directors met eight times. All of the
directors of the Company attended at least 75% of the aggregate number of
meetings of the Board and meetings of committees of the Board on which
they served.
DIRECTOR COMPENSATION
Directors received an annual retainer of $1,200 from the Company and
$2,400 from the Bank in addition to board and committee meeting fees of
$250 and $150, respectively. Directors were also eligible in 1999 for
special directors' fees under plans of the Company and the Bank which
provide for a maximum payment of 60% of the directors' annual retainers.
Special fees are determined by the extent of the Company's and Bank's
achievement of three key performance indicators established by the Board
of Directors prior to each fiscal year. In 1999, directors received
special fees equal to 12% of the annual retainers. During 1999, no
director received more than the standard arrangements described above.
Through 1999, the Directors' Deferred Compensation Plan permitted
directors to elect to defer fees otherwise payable in cash during the
year. Deferred fees through 1999 were credited with interest each fiscal
year at a rate equal to 300 basis points less than the Company's return
on equity for the preceding fiscal year. During 1999, Mr. Dougherty, Ms.
Hemer, Mr. Isaacson, Mr. Schroeder, Mr. Hatlestad, and Mr. Wild
-5-
<PAGE>
participated in the plan and deferred the director or meeting fees
otherwise payable to them.
The Plan was amended effective January, 2000 to provide that deferred
fees will be credited to either a stock equivalent account or a cash
account. Stock equivalent units represent the number of shares of common
stock of the Company which could have been purchased with the amount of
fees deferred if the fees had been paid in cash. A director's account is
also credited with stock equivalent units representing the common stock
which could, hypothetically, have been purchased with the hypothetical
cash dividends which would have been paid on the accumulated stock
equivalent units had they been actual common stock. No actual stock is
made available to the directors under the plan. Deferred fees credited
to the cash account are credited with interest each fiscal year at a rate
equal to 400 basis points less than the Company's return on equity for
the preceding fiscal year.
As now in effect, the plan provides that each director's annual retainer
will automatically be deferred and credited to the director's stock
equivalent account under the plan. This feature of the plan is intended
to create a greater identity of interest between the directors and the
shareholders as the value of the directors account will ultimately depend
upon the value of the common stock on which the stock equivalent units
are based. Directors may also elect to defer committee, meeting fee and
other director compensation into the stock equivalent account or the cash
account. Account balances at December 31, 1999 were credited, at the
election of each director, to either stock equivalent or cash accounts.
Account balances may not be transferred between funds.
Accounts become payable after the director's termination of service as a
director in a lump sum or in installments over a period not in excess of
five years. The timing and form of payments are elected by each
participating director based on deferral elections filed with the
Company. In the event a director's service terminates because of a
change of control of the Company, as defined in the plan, payment of all
deferred amounts will be made in a lump sum.
Directors who complete 20 years of service are eligible to receive a
retirement benefit equal to the retainer fees in effect at the Company
and the Bank for their first year of retirement. Directors who retire
with less than 20 years of service receive a prorated retirement benefit
(with a minimum of 50%) of the retainer fees in effect for their first
year of retirement. Retired directors remain available for consultation
for a one year period following retirement.
BENEFICIAL OWNERSHIP OF COMMON STOCK
As of the close of business on the Record Date, the Company had
outstanding 1,824,718 shares of common stock.
Based on information publicly available from the Securities and Exchange
Commission, on the Record Date, no shareholder was known to the Company
to be the beneficial owner of more than 5% of the outstanding shares of
the Company's common stock.
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<PAGE>
The following table sets forth, based on statements filed with the
Securities and Exchange Commission or otherwise made to the Company, the
amount of common stock of the Company which is deemed beneficially owned
on the Record Date by each of the directors and each of the executive
officers of the Company named in the summary compensation table on page
8. The amounts indicated include, as applicable, shares subject to
options exercisable within 60 days, shares held by spouses and minor
children and shares held indirectly in trust for the benefit of the
directors and/or their spouses, children or parents.
<TABLE>
<CAPTION>
Shares of Common Percent
NAME STOCK BENEFICIALLY OWNED OF CLASS
<S> <C> <C>
James N. Dougherty 26,108 1.43%
James P. Hager 200 *
Norman A. Hatlestad 3,464 *
Kathryn M. Hemer 3,020 *
Ronald D. Isaacson 22,663 1.24%
Gene C. Knoll 6,354 *
James F. Melvin 39,047 2.14%
Kurt D. Mertens 10,466 *
James R. Peterson 21,360 1.17%
Fred J. Schroeder 18,529 1.02%
Jack E. Wild 610 *
William A. Weiland 3,313 *
All directors, nominees
and executive officers as a
group (13 persons) 155,164 8.50%
<FN>
*Less than 1%
</TABLE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and officers and persons who own more than 10% of the
Company's common stock ("reporting persons") to file reports of ownership
and changes in ownership with the Securities and Exchange Commission
("SEC"). Reporting persons are also required by SEC regulations to
furnish the Company with copies of all section 16(a) forms filed by them
with the SEC. Based solely on its review of the copies of the section
16(a) forms received by it or upon written representations from certain
of these reporting persons as to compliance with the section 16(a)
regulations, the Company is of the opinion that during the 1999 fiscal
year, all filing requirements applicable under section 16 to the
reporting persons were satisfied.
EXECUTIVE OFFICER COMPENSATION
SUMMARY COMPENSATION TABLE
The table below sets forth compensation awarded, earned or paid by
the Company and its subsidiaries for services in all capacities during
the three years ended December 31, 1999, 1998, and 1997 to the Company's
<PAGE>
-7-
Chief Executive Officer and each other executive officer of the Company
as of December 31, 1999 whose total annual salary and bonus compensation
for the most recent fiscal year exceeded $100,000.
<TABLE>
Summary Compensation Table
<CAPTION>
Long Term
Annual Compensation Compensation
Awards
Securities
Underlying
Name and Principal Other Annual Options/ All Other
Position Year Salary(1) Bonus(2) Compensation SARs(#) Compensation
<S> <C> <C> <C> <C> <C> <C>
Gene C. Knoll 1999 $130,000 $29,679 $0 500 $23,390(2)
President and CEO 1998 $120,000 $19,344 $0 440 $27,490
and a director of 1997 $109,720 $34,014 $0 457 $23,048
the Company and the
Bank
William A. Weiland 1999 $ 93,900 $17,331 $0 358 $10,587(3)
Secretary and
Treasurer of the
Company and Exec.
Vice President of
the Bank
<FN>
(1) Includes amounts deferred under Company's 401(k) plan.
(2) Includes director and meeting fees of $8,202 paid by the Company and the
Bank, and contributions of $15,188 under the Company's retirement plans.
(3) Contributions under the Company's retirement plans.
</TABLE>
STOCK OPTIONS
OPTION GRANTS. The Company maintains a stock option plan pursuant to
which options to purchase the Company's common stock may be granted to
key employees. The following table presents certain information with
respect to grants of stock options during 1999 to each executive officer
named in the summary compensation table.
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<PAGE>
<TABLE>
<CAPTION>
Option/SAR Grants in Last Fiscal Year
Potential Realizable
Value at Assumed Annual
Rates of Stock Price
Individual Grants Appreciation for Option Term
% of Total
Options/
Number of SARs
Securities Granted to
Underlying Employees Exercise or
Options/SARs in Fiscal Base Price Expiration 5% 10%
Name Granted(#)(1) Year ($/Sh) Date ($)(2) ($)(2)
<S> <C> <C> <C> <C> <C> <C>
Mr. Knoll 500 21.6% $26.00 12/31/03 $3,592 $7,937
Mr. Weiland 358 15.4% $26.00 12/31/03 $2,572 $5,683
<FN>
(1) Options can be exercised only between the fourth anniversary of the date of
grant and the expiration date. Optionees must enter into an agreement with
the Company that provides, among other things, that the Company has an option
to purchase the option shares (a) during the first 180 days following
termination of employment for a reason other than voluntary retirement or
disability, (b) if the option shares are transferred by the optionee pursuant
to divorce, bankruptcy or in any other involuntary transfer or (c) if the
optionee wishes to transfer the option shares to a third party. The optionee
has an option to sell the option shares to the Company (a) during the first
180 days following termination of employment for any reason or (b) if the
optionee experiences severe financial hardship.
(2) Assumes price of common stock is $33.18 (5%) and $41.87 (10%) on December
31, 2003. The actual value, if any, an optionee will realize upon exercise of
an option will depend on the excess of the market value of the Company's
common stock over the exercise price on the date the option is exercised.
There is no assurance that the market price of the common stock will increase
as assumed for purposes of this pricing model and no projections as to the
actual future value of the Company's common stock are intended or made.
</TABLE>
OPTION EXERCISES AND YEAR END HOLDINGS. The following table sets
forth information regarding the exercise of stock options in 1999 by the
executive officers named in the summary compensation table and the
December 31, 1999 value of unexercised stock options held by such
officers.
<PAGE>
<TABLE>
Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values
<CAPTION>
Number of Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Shares Options/SARs at Options/SARs at
Acquired on Value FY-End(#) FY-End($)
Name Exercise(#) Realized($) Unexercisable* Unexercisable*
<S> <C> <C> <C> <C>
Mr. Knoll 552 $6,348 1,935 $6,410
Mr. Weiland 417 $4,796 1,394 $4,618
<FN>
*All options outstanding at December 31, 1999 were unexercisable.
</TABLE>
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COMMITTEES' REPORT ON EXECUTIVE COMPENSATION POLICIES
During 1999, compensation policies were established by the Personnel
Committee of the Bank. See "Committees and Compensation of the Board of
Directors." The Personnel Committee established and reviewed base
salaries of executive officers of the Bank and was also responsible for
the administration of executive bonus and incentive programs. No
salaries or bonuses are paid by the Company to executive officers,
although the Company reimburses the Bank for services provided to it by
the Bank officers.
The compensation program for executive officers may include various
grants under the Company's stock option plan. The Company's stock option
plan is administered by the Stock Option Plan Committee appointed by the
Board of Directors. The Stock Option Plan Committee generally considers
recommendations of the Personnel Committee with respect to grants, but
the Stock Option Plan Committee has full discretion and control over
whether a grant will be made and the amount and terms of any such grant.
Insofar as this report includes a description of the compensation
policies relating to the stock option plan, this report is a joint report
of the Personnel Committee and of the Stock Option Plan Committee.
This report describes the policies of the Personnel Committee, the
Stock Option Plan Committee, and the Company as in effect in 1999.
Policies in effect from time to time for years after 1999 may change as
circumstances change and the committees deem it appropriate to revise the
Company's compensation programs.
GENERAL. The executive compensation policies are designed to attract
and retain individuals who have experience in banking or who otherwise
have particular training or skills which will satisfy particular
requirements of the Company and the Bank and to reward job performance
which the Personnel Committee believes to be at or above the level
expected of the Bank's executive officers. The total compensation paid
to executive officers and the retirement and other fringe benefit
programs are designed to offer a level of compensation which is
competitive with other Wisconsin banks or bank holding companies of
comparable size. In making compensation comparisons, the Personnel
<PAGE>
Committee attempts to use only those bank holding companies or banks
whose size and operations are similar to the Company. Few, if any, of
those bank holding companies or banks are publicly traded or included in
the Nasdaq Bank Stock Index of bank holding companies' stock performance
under the heading "Stock Price Performance Graph." Given the disparity
in size between financial institutions and the fact that many, but not
all, bank holding company executives also serve as executive officers of
bank subsidiaries, it is difficult to draw exact comparisons with the
compensation policies of other bank holding companies or banks. The
determination of appropriate compensation levels by the Personnel
Committee is, therefore, subjective.
The Bank's overall compensation policy is designed so that
approximately 20% to 35% of each executive officer's compensation is
directly tied to the performance of the Bank through a combination of
annual incentive bonuses which are based on each fiscal year's financial
performance and stock based incentive programs which reflect the
performance of the Company's common stock.
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BASE SALARIES. The Personnel Committee considers and reviews a
general survey of bank or financial industry compensation prepared by the
Wisconsin Bankers Association and Sheshunoff Bank Data, an independent
provider of data concerning financial institutions, in order to gauge the
relationship of the Bank's base salary levels to the levels of comparable
financial institutions. Base salaries of the Company's executive
officers primarily reflect the services performed for the respective Bank
or holding company operations for which the individual has principal
management responsibilities.
Annual increases in base salary are determined by the overall
objective of maintaining competitive salary levels, more general factors
such as the rate of inflation and individual job performance. Individual
job performance, including satisfaction of individual performance
objectives and goals and the accomplishment of specified programs in
appropriate cases, is the most important factor considered by the
Personnel Committee in determining appropriate increases in base
compensation.
During 1999, the Company's Chief Executive Officer ("CEO")
established individual performance objectives and goals for executive
officers other than himself, including the accomplishment of specified
programs in appropriate cases, and reviewed each individual's performance
in relationship to those criteria with the Personnel Committee and the
Board of Directors of the Company. Based on such performance
evaluations, the CEO made recommendations to the Personnel Committee with
respect to increases in the base salary of the executive officers. The
Company's Board of Directors makes the final determination of the
executive officers' base salaries.
The CEO's base salary is reviewed by the Personnel Committee on the
same basis as that of the Company's other executive officers, except that
in 1999, it was the Boards of Directors of the Bank and of the Company
which established individual performance objectives for the CEO and
reviewed his accomplishment of those objectives. The Company's Board of
Directors makes the final determination of the CEO's base salary.
<PAGE>
INCENTIVE COMPENSATION BASED ON FINANCIAL PERFORMANCE OF THE COMPANY
AND INDIVIDUAL PERFORMANCE. Executive officers participated in the
Bank's TeamBank Bonus Plan which is maintained for all Bank employees.
The TeamBank Bonus Plan is intended to promote shareholder value and
bonuses are based on achievement of three key performance indicators.
The bonuses payable under the TeamBank Bonus Plan are expected to range
from approximately 2.4% to approximately 30% of base salary on an annual
basis.
STOCK BASED COMPENSATION. Executive officers of the Company and
employees of the Bank were eligible in 1999 to participate in the
Company's 1991 Employee Stock Option Plan. The Stock Option Plan
Committee has not established formal criteria by which the size of plan
grants are determined, but does consider the amount and terms of each
grant already held by an executive officer in determining the size and
amount of any new grant. The value of options granted under the plan are
related to the long-term performance of the Company's common stock and
therefore provide an identity of interests between the Company's
executive officers and its shareholders.
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The Stock Option Plan Committee may impose conditions or restrictions
as to exercise or vesting of grants under the plan. All options must
have an option price equal to the fair market value of the shares on the
date the option is granted. Unless otherwise provided by the committee,
options are not exercisable before the fourth, or after the fifth,
anniversary of the date of grant. Optionees must enter into an agreement
with the Company that provides for certain repurchase rights for the
Company and the right to sell option stock to the Company. See footnote
(1) to table entitled "Option/SAR Grants in Last Fiscal Year," page 9.
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. During 1999, the
Personnel Committee consisted of directors of the Bank. The Personnel
Committee met at various times throughout the 1999 fiscal year to review
and establish executive compensation levels and programs. No member of
the Committee or the Stock Option Plan Committee was an employee of the
Company or the Bank in 1999. See "Committees and Compensation of the
Board of Directors."
<TABLE>
<CAPTION>
1999 STOCK OPTION PLAN COMMITTEE PERSONNEL COMMITTEE
<S> <C>
JAMES N. DOUGHERTY JAMES R. PETERSON
JAMES P. HAGER RONALD D. ISAACSON
DR. KIM A. GOWEY JAMES F. MELVIN
JAMES P. HAGER
DR. KIM A. GOWEY
</TABLE>
STOCK PRICE PERFORMANCE GRAPH
The following graph and table compares the yearly percentage change
in the cumulative total shareholder return on the Company's common stock
for the five year period beginning December 31, 1994 with the University
of Chicago Center for Research in Security Prices ("CRSP") Nasdaq Bank
Stock Index, the Media General Financial Services Nasdaq Stock Market
Index, and Media General Financial Services' Russell 2000 Index. The
<PAGE>
CRSP Nasdaq Bank Stock Index indicates the performance of the stock of
financial institutions or bank holding companies over the five year
period. The Media General Financial Services Nasdaq Stock Market Index
indicates the performance of all stocks which were traded on the Nasdaq
Stock Market (including the Nasdaq National Market and the Nasdaq
SmallCap Market) during the entire five year period. The Russell 2000
Index includes the 2000 smallest companies in the Russell 3000 Index
(which consists of the 3,000 largest companies whose stock is traded in
U.S. markets, based on market capitalization). The Company's common
stock is not included in any of these indices. The Company believes that
a comparison of its common stock with the performance of the Russell 2000
Index is more appropriate given the greater disparity in size between the
Company and the companies included in the Nasdaq Stock Market Index.
The graph and table assume that the value of an initial investment in
the Company's common stock and each index on December 31, 1994 was $100
-12-
and that all dividends were reinvested. Prices of the Company's common
stock for the year ended December 31, 1998 represent the bid quotations
as published in the MILWAUKEE JOURNAL SENTINEL and, for 1999, the bid
prices reported on the OTC Bulletin Board. The prices do not reflect
retail mark-up, mark-down or commissions, and may not necessarily
represent actual transactions. There is no active established trading
market in the Company's common stock.
[Stock Price Performance Graph deleted pursuant to Rule 304(d) of
Regulation S-T. Data reported in the graph is also reported in the
following tabular form in the proxy statement delivered to
shareholders.]
<TABLE>
<CAPTION>
Value of Hypothetical Investment
December 31,
1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C>
Mid-Wisconsin Financial 100.00 143.41 181.70 212.23 208.67 230.27
Services, Inc.*
MG Nasdaq Market Index 100.00 129.71 161.18 197.16 278.08 490.46
CRSP Bank Stock Index 100.00 149.00 196.70 329.40 327.10 314.40
Russell 2000 Index 100.00 128.44 149.77 183.23 178.09 212.98
<FN>
*There is no active established trading market in the Company's common
stock. The values represented for the Company common stock are based on bid
quotations as published in the MILWAUKEE JOURNAL SENTINEL for the year through
December 31, 1998 and on the OTC Bulletin Board for 1999.
</TABLE>
-13-
APPROVAL OF 1999 STOCK OPTION PLAN
THE FOLLOWING SUMMARY OF THE MATERIAL FEATURES OF THE COMPANY'S 1999
STOCK OPTION PLAN (THE "1999 PLAN") DOES NOT PURPORT TO BE COMPLETE AND
IS QUALIFIED BY REFERENCE TO THE TEXT OF THE PLAN WHICH IS AVAILABLE UPON
REQUEST FROM THE SECRETARY OF THE COMPANY.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE 1999
PLAN.
<PAGE>
ADOPTION AND PURPOSE
On December 15, 1999, the Board adopted the 1999 Plan, subject to the
approval of the shareholders at the Annual Meeting. The purpose of the
1999 Plan is to (1) enable the Company to attract and retain superior
employees by providing competitive incentive opportunities, (2) further
identify the interests of participating employees with those of the
Company's other shareholders through compensation based on the
performance of the Company's common stock, and (3) promote the long-term
financial interests of the Company and its shareholders.
ADMINISTRATION
The 1999 Plan is administered by the Board's Stock Option Committee.
The Committee consists of not less than three members of the Board who
may not be employees of the Company and who must satisfy other conditions
prescribed for "non-employee directors" under SEC Rule 16b-3 and "outside
directors" under Section 162(m) of the Internal Revenue Code (the
"Code"). Mr. Dougherty, Mr. Hager, and Dr. Gowey currently serve on the
Committee.
The Committee is authorized, in its sole discretion, to select those
eligible employees who will receive stock option awards, determine the
number of shares covered by such awards, impose conditions on the vesting
or exercise of options, and administer and interpret the plan.
PERSONS ELIGIBLE TO RECEIVE OPTIONS
Employees, prospective employees who have accepted offers of
employment, and directors of the Company and its subsidiaries are
eligible to participate in the 1999 Plan. Membership in the eligible
class of persons does not provide a right to participate in the 1999
Plan. Options will be granted only to those eligible persons who are
selected by the Committee. As of March 3, 2000, the Company estimates
that the number of employees in the eligible class is 15.
NEW PLAN BENEFITS
As of the date hereof, options have been granted to the following
persons and are outstanding under the 1999 Option Plan, subject to
shareholder approval of the plan.
-14-
<TABLE>
<CAPTION>
Number of Options Granted
NAME AND POSITION ON JANUARY 12, 2000
<S> <C>
Gene C. Knoll 478
President and CEO
William A. Weiland 340
Secretary and Treasurer
Executive Officer Group 983
Non-Executive Director Group 0
Non-Executive Officer Group 0
Employee Group (other than
Executive Officers) 1,592
</TABLE>
<PAGE>
OPTIONS
GENERAL. Options awarded to employees under the 1999 Plan may be
either incentive stock options ("ISOs") under Internal Revenue Code
Section 422 or options which do not satisfy the requirements of the Code
for ISOs ("non-qualified options").
SHARES TO BE AWARDED. The number of shares which may be awarded
under an ISO in any year is limited to that number which, when the option
first becomes exercisable, will have a value which is not in excess of
$100,000. In addition, under the terms of the Plan no employee may be
awarded options with respect to more than 5,000 shares (subject to
adjustment for future stock splits, stock dividends or other similar
increases in the number of shares outstanding) in any calendar year.
EXERCISE PRICE. All options must be awarded at an option price which
is not less than the fair market value of the common stock on the date
the option is awarded. For purposes of the Plan, the "fair market value"
of a share of the Company's common stock generally means the average of
the highest bid and lowest ask prices as reported on the OTC Bulletin
Board (or the market on which the stock is then listed) on the day before
the date such value is being determined.
PAYMENT FOR OPTIONS. No consideration is received by the Company
when an option is awarded. Upon exercise of an option, the Company will
receive payment for the shares in cash or with the consent of the Option
Committee, an optionee may elect to deliver common stock owned by the
optionee which has a fair market value equal to the exercise price or may
instruct the Company to withhold shares with a fair market value equal to
the exercise price.
TERM AND EXERCISE PERIODS OF OPTIONS. The Committee may establish
the term of any option, although under the 1999 Plan, all ISOs must be
exercised within ten years of their date of award and all non-qualified
options must be exercised within twenty years of their date of award.
Options must generally be exercised by the optionee prior to termination
of employment, although extended periods of up to two years apply if
termination was due to retirement, death or disability.
-15-
FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of the principal federal income
tax consequences associated with the award and exercise of options under
the 1999 Plan. The following discussion is general in nature and is not
intended to be a complete analysis of all potential tax consequences to
the Company or participants of such options nor does it describe state,
local or foreign tax consequences. The federal income tax consequences
arising out of the award or exercise of an option or the sale of shares
acquired upon exercise of an option ("Option Shares") depends upon
whether the option is an ISO or a non-qualified option. This discussion
is based on the Code as in effect as of the date of this proxy statement.
INCENTIVE STOCK OPTIONS. An optionee will not generally recognize
taxable income upon the award or upon the exercise of an ISO. Upon the
sale of shares acquired upon the exercise of an ISO, ("ISO Option
Shares"), the optionee will recognize income in an amount equal to the
difference, if any, between the exercise price of the ISO and the fair
<PAGE>
market value of the ISO Option Shares on the date of sale. The income is
taxed at long-term capital gains rates if the optionee: (1) has not
disposed of the ISO Option Shares within two years after the date of the
grant of the ISO, (2) has held the ISO Option Shares for at least one
year after the date of exercise and (3) had continuously remained in the
employ of the Company (or of an affiliate) from the date of grant until
three months before exercise (12 months if the employment has ceased as a
result of total and permanent disability). The employment and holding
period requirements are waived when an employee/optionee dies.
The exercise of ISOs may subject an optionee to alternative minimum
tax liability because the excess of the fair market value of the shares
at the time ISOs are exercised over the exercise price of the ISOs is
included in income for purposes of the alternative minimum tax, even
though it is not included in taxable income for purposes of determining
the regular tax liability of an optionee. Consequently, an optionee may
be obligated to pay alternative minimum tax in the year he or she
exercises incentive stock options.
If an optionee sells ISO Option Shares before having held it for at
least one year after the date of exercise and two years after the date of
grant, the optionee recognizes ordinary income to the extent of the
lesser of (1) the gain realized upon the sale or (2) the difference
between the option price and the fair market value of the ISO Option
Shares on the date of exercise. Any additional gain is treated as
long-term or short-term capital gain depending upon how long the optionee
holds the ISO Option Shares prior to disposing of it.
The Company receives no income tax deduction with respect to the
awarding or exercise of an ISO to or by an optionee if the ISO Option
Shares are held for the minimum holding periods described above. If the
ISO Option Shares are disposed of prior to the expiration of the minimum
holding periods, the amount realized by the optionee as ordinary income
will be deductible by the Company in the year of disposition of the
common stock by the optionee.
NON-QUALIFIED OPTIONS. No income for federal tax purposes is
required to be recognized by an optionee at the time a non-qualified
option is awarded. Upon exercise of a non-qualified option, the optionee
will
-16-
recognize ordinary income in an amount in excess of the fair market value
of the Option Shares on the date of exercise over the option price. Upon
exercise of a non-qualified option by an optionee, the Company is
entitled to a deduction equal to the amount of the ordinary income
realized by the optionee.
If an optionee sells Option Shares received upon the exercise of such
a non-qualified option, the optionee recognizes capital gain income to
the extent the sales proceeds exceed the fair market value of the Option
Shares on the date of exercise. The capital gains are long-term in
nature if the optionee has held the Option Shares for at least one year
and a day prior to selling it.
SHARES AVAILABLE FOR OPTIONS
<PAGE>
As of the Record Date, approximately 8,139 shares were subject to
outstanding options and 60,154 shares were available for the award of
options under the Company's 1991 Employee Stock Option Plan (the "1991
Plan"). If the 1999 Plan is approved by the shareholders, no further
options will be awarded under the 1991 Plan, but shares of common stock
which would have been available for options under the 1991 Plan will
become available for options to be awarded under the 1999 Plan. The 1999
Plan also authorizes the issuance of options with respect to 200,000
shares of common stock, or approximately 11% of the shares outstanding on
the Record Date. If approved by the shareholders, the shares available
for options under the 1999 Plan, including all shares now available under
the 1991 Plan, will represent approximately 14% of the shares outstanding
on the Record Date. On March 3, 2000, the mean between the bid and ask
prices of the common stock as reported on the OTC Bulletin Board, was
$28.25.
If any option awarded under the 1999 or 1991 Plans terminates without
having been exercised in full, the number of shares as to which such
option was not exercised will remain available for future option awards
under the 1999 Plan. Similarly, shares which are not delivered to an
optionee because the optionee elects to have shares withheld to pay the
optionee's withholding tax, or because the optionee has delivered shares
owned by the optionee in payment of the exercise price, will remain
available for future option awards.
The number of shares as to which options may be awarded under the
1999 Plan will be adjusted to reflect future stock splits, stock
dividends or other similar increases in the number of shares of common
stock outstanding. In addition, the Committee has the authority to make
such adjustment as it deems appropriate if there is any other change in
the capital structure of the Company.
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each option outstanding
on the date on which the change in control occurs will immediately become
exercisable in full. In the event of an optionee's termination of
employment within one year of a Change of Control, each option will be
exercisable for a period which is not less than one year from the date of
the Change of Control. Each optionee will also have the right, at his or
-17-
her election made during a period of 60 days following the date on which
the Change of Control occurs, to surrender all or part of any option for
an immediate lump-sum cash payment for each covered share which is
surrendered. This payment will be equal to the excess, if any, of (1)
the higher of (a) the highest fair market value on any date in the 60-day
period ending on the date on which the Change of Control occurred, or (b)
the highest per share price for common stock actually paid in connection
with the Change of Control, over (2) the per share exercise price of the
option surrendered. The Change of Control provisions may be modified or
terminated by the Committee in the event such provisions would render
pooling-of-interests accounting unavailable for a merger or other
acquisition transaction.
For purposes of the 1999 Plan, the term "Change of Control" is
defined to include (1) the acquisition, directly or indirectly, of at
<PAGE>
least 25% of the outstanding voting securities of the Company (other
than by the Company, or any employee benefit plan of the Company, or
directly from the Company); (2) certain mergers and consolidations
involving the Company which result in the shareholders of the Company
owning less than 60% of the new corporation; (3) the sale or other
disposition of all or substantially all of the Company's assets; (4) a
liquidation or dissolution of the Company approved by its shareholders;
and (5) a change in the majority of the members of the Board as in
existence on the effective date of the 1999 Plan.
AMENDMENT OF THE 1999 PLAN
The 1999 Plan may be amended by the Board at any time, subject to
certain limitations. No amendment which would cause the options awarded
under the 1999 Plan to fail to qualify as "performance-based
compensation" within the meaning of Code Section 162(m) may be made
without approval of the shareholders. Certain amendments, such as an
increase in the number of shares available for options, may also require
the approval of shareholders under the rules of a securities exchange if
the Company's common stock is then listed on the exchange. The Board may
not amend the Plan in a manner which would adversely affect the rights of
the holder of an option without the holder's consent.
TERMINATION OF PLAN
The 1999 Plan may be terminated at any time by the Board, but
termination of the Plan cannot, without the optionee's consent, reduce or
restrict the optionee's rights under any options previously awarded under
the plan. Unless the Board elects to terminate the Plan at an earlier
date, 1999 Plan will terminate on December 31, 2009.
APPLICATION OF SECTION 162(M) OF THE CODE
As described above, optionees who exercise non-qualified options and
optionees who exercise ISOs and do not satisfy the minimum holding
requirements will recognize taxable compensation to the extent the fair
market value of the common stock acquired upon exercise exceeds the
exercise price of the option (see "--Federal Income Tax Consequences").
Under Code Section 162(m), the Company may not deduct as a business
expense compensation paid to the CEO as of the last day of the fiscal
year or compensation paid to each of the four most highly-paid executive
-18-
officers named in the summary compensation table who are officers on the
last day of the fiscal year to the extent the compensation paid to the
individual officer as salary, bonus, options and any other form exceeds
$1 million for such fiscal year. Compensation attributable to the
exercise of stock options will not count against this limitation on
deductions to the extent the compensation qualified as "performance-based
compensation" under Code Section 162(m). The 1999 Plan is designed, and
is intended to be administered, by the Company to satisfy the criteria of
Section 162(m) and provide optionees with "performance-based
compensation" within the meaning of Section 162(m).
VOTE REQUIRED FOR APPROVAL OF THE 1999 PLAN
The 1999 Plan must also be approved by the Company's shareholders in
<PAGE>
order to qualify for the exemption from Code Section 162(m) limits as
deductible compensation. Approval of the 1999 Plan requires the vote of
a majority of the Company's common stock represented at the Annual
Meeting and entitled to vote. Abstentions will have the same effect as
a "no" vote, but broker non-votes will have no effect.
All shareholders are requested to specify their vote on the enclosed
form of proxy. If no specification is made, the proxy will be voted for
approval of the 1999 Plan. Copies of the 1999 Plan may be obtained upon
request to the Secretary of the Company.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE APPROVAL OF
THE 1999 PLAN. UNLESS OTHERWISE INDICATED BY A SHAREHOLDER'S PROXY, ALL
SHARES REPRESENTED BY PROXY WILL BE VOTED FOR APPROVAL OF THE 1999 PLAN.
APPROVAL OF EMPLOYEE STOCK PURCHASE PLAN
THE FOLLOWING SUMMARY OF THE MATERIAL FEATURES OF THE COMPANY'S
EMPLOYEE STOCK PURCHASE PLAN (THE "STOCK PURCHASE PLAN") DOES NOT PURPORT
TO BE COMPLETE AND IS QUALIFIED BY REFERENCE TO THE TEXT OF THE PLAN
WHICH IS AVAILABLE UPON REQUEST FROM THE SECRETARY OF THE COMPANY.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE STOCK
PURCHASE PLAN.
ADOPTION AND PURPOSE
On December 15, 1999, the Board adopted the Stock Purchase Plan,
subject to the approval of the shareholders at the Annual Meeting. The
purpose of the Stock Purchase Plan is to encourage employees of the
Company and its subsidiaries to purchase the Company's common stock in a
convenient manner through payroll deductions, so as to share in the
success of the Company. Under the terms of the Stock Purchase Plan,
eligible employees of the Company and its subsidiaries will be granted
options to purchase shares of common stock. If approved by the
shareholders at the Annual Meeting, the Stock Purchase Plan will be
effective on July 1, 2000.
-19-
SHARES AVAILABLE
The Company has reserved a total of 50,000 shares of common stock for
issuance under the Employee Stock Purchase Plan.
ADMINISTRATION
The Stock Purchase Plan is administered by the Stock Option Committee
of the Board.
ELIGIBLE EMPLOYEES
Any full-time employee of the Company or of any subsidiary of the
Company (as designated from time to time by the Board of Directors) is
eligible to participate in the plan. The Committee may establish
eligibility requirements that limits participation to employees who work
for at least 20 hours per week and are customarily employed for at least
<PAGE>
five months per year. The Company estimates that approximately 134
employees will be eligible to participate in the Plan on July 1, 2000.
PURCHASE OF SHARES
Under the Plan, options are granted to purchase common stock of the
Company during six-month offering periods. Offering periods will run
from July 1 through December 31 for the 2000 fiscal year and from January
1 through December 31, for subsequent years, unless the periods are
changed by the Committee.
Participating employees will elect to have amounts deducted from
their paycheck each pay period. As soon as practicable after the close
of each offering period, the Company will apply the total payroll
deductions received during the offering period to the purchase of common
stock at a purchase price equal to the lower of 95% of the common stock's
fair market value as of the first day of the offering period and 95% of
the fair market value of the common stock as of the last day of the
offering period. Purchases may be made by the plan administrator in the
open market, from treasury shares or with newly issued shares. No
interest is payable by the Company on accumulated payroll deductions.
EMPLOYEE PARTICIPATION
ENROLLMENT. Participation in the Stock Purchase Plan is voluntary.
Each eligible employee may elect to participate by filing an enrollment
form which specifies the dollar amount to be withheld each payroll
period. Payroll deductions will begin with paychecks issued during each
offering period, provided the election is delivered to the Company at
least 15 days prior to the first day of that offering period. A
participant may increase or decrease payroll deduction amounts only at
the beginning of an offering period. If a participant withdraws from the
Stock Purchase Plan, he or she may resume participation as of the first
day of a future offering period if a timely election is delivered to the
Company.
-20-
WITHDRAWAL. A participant may choose to reduce his payroll
deductions or to withdraw from the Stock Purchase Plan during an offering
period. Withdrawals will occur automatically when and if a participant
ceases to be an eligible employee.
LIMITATIONS UPON PARTICIPATION. Owners of 5% or more of the voting
power of the Company's common stock, or 5% of the stock of any
subsidiary, may not participate. In addition, no participant may
purchase common stock that exceeds $25,000 of the fair market value of
common stock in any calendar year.
PLAN ACCOUNT
As soon as practicable following each purchase, each participant's
account in the Stock Purchase Plan will record the number of shares which
have been purchased by the plan administrator on behalf of the
participant. Participants will be entitled to vote shares held on their
behalf in the plan by giving instructions to the plan administrator or
agent which holds the shares. Participants will receive all dividends
paid by the Company on shares held in the plan.
<PAGE>
MISCELLANEOUS
STOCK CERTIFICATES. A participant may request delivery of a stock
certificate representing the number of shares purchased on his behalf
once during any 12-month period, and within 30 days of a termination of
employment.
EXPENSES. All costs of maintaining records and executing transfers
of common stock will be borne by the Company.
RECAPITALIZATIONS AND DIVIDENDS. In the event the Company declares a
stock spilt or a stock dividend, the number of shares available for
options under the Stock Purchase Plan will be adjusted to reflect such
dividend or split and the shares of common stock held in each
participant's account will also be adjusted. In the event of any other
change in the common stock through a recapitalization or otherwise, the
Committee shall make such adjustments to the number of shares available
for options under the plan and to the options then outstanding as it
deems equitable.
AMENDMENT OR TERMINATION OF THE STOCK PURCHASE PLAN.
If the adoption of the Stock Purchase Plan is not approved by the
Company's shareholders, it will be terminated. The Board may amend or
discontinue the Stock Purchase Plan at any time. No amendment will be
effective without the approval of the Company's shareholders if such
approval is required to maintain the plan's status under Code Section
423. No amendment may deprive a participant of any shares of common
stock acquired on his or her behalf prior to the effective date of the
amendment.
-21-
NEW PLAN BENEFITS - BENEFITS TO NAMED EXECUTIVE OFFICERS AND OTHERS
No offering period has begun and no purchases of common stock have
been made as of the date of this proxy statement. The Stock Purchase
Plan will not be in effect until July 1, 2000, pending approval by the
shareholders at the Annual Meeting.
FEDERAL INCOME TAX CONSEQUENCES
Set forth below is a general summary of the principal federal income
tax consequences to the Company and participants of participation in the
Plan. The following discussion is general in nature and is not intended
to be a complete analysis of all potential tax consequences to the
Company or participants of participation in the Plan nor does it
described state, local or foreign tax consequences. This discussion is
based on the Code as in effect as of the date of this proxy statement.
Contributions withheld from a participant's regular compensation
through payroll deductions are taxable income to the participant, and
the participant's cash contributions to the Stock Purchase Plan are
deductible to the Company.
The Plan is intended to qualify under Code Sections 421 and 423.
Under Code Section 423, a participant who purchases common stock through
the Plan will not recognize any income at the time of the purchase for
<PAGE>
the difference between the fair market value of the common stock at the
time of purchase and the purchase price (i.e. the discount below fair
market value). The Company will not receive a tax deduction on the
amount of the discount. Generally, if the participant holds the common
stock for at least two years after the date of purchase, the participant
will include as compensation in the participant's taxable income at the
time of sale or other taxable disposition of the common stock the lesser
of: (i) the amount by which the fair market value of the common stock
when purchased exceeds the purchase price (i.e., the discount below fair
market value); or (ii) the amount, if any, by which the common stock's
fair market value at the time of the sale or other taxable disposition
exceeds the purchase price. The participant's tax basis in the common
stock will be increased by the amount recognized as compensation and any
further gain recognized on the sale or other taxable disposition will be
treated, under current tax rules, as long-term capital gain.
However, if the participant disposes of shares of common stock
acquired under the Plan within two years after the date of purchase (a
"disqualifying disposition"), the participant will recognize compensation
income, and the Company (or one of its subsidiaries) will be entitled to
a deduction for tax purposes, in an amount equal to the excess of the
fair market value of the shares on the date of purchase over the purchase
price (i.e., the discount below fair market value) regardless of the
amount received by the participant in connection with the disqualifying
disposition. The participant's tax basis in the shares disposed of will
be increased by the amount recognized as compensation and any further
gain or loss realized upon the disqualifying disposition will be
short-term or long-term capital gain or loss, depending upon the length
of time between the purchase and the disqualifying disposition of the
shares.
-22-
VOTE REQUIRED FOR APPROVAL OF THE 1999 PLAN
The Board seeks shareholder approval because such approval is
required under the Code as a condition to favorable tax treatment for
participants under the Stock Purchase Plan. Approval of the Stock
Purchase Plan requires the vote of a majority of the Company's common
stock represented at the Annual Meeting and entitled to vote.
Abstentions will have the same effect as a "no" vote, but broker
non-votes will have no effect.
All shareholders are requested to specify their vote on the enclosed
form of proxy. If no specification is made, the proxy will be voted for
approval of the Stock Purchase Plan. Copies of the Stock Purchase Plan
may be obtained upon request to the Secretary of the Company.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE APPROVAL OF
THE STOCK PURCHASE PLAN. UNLESS OTHERWISE INDICATED BY A SHAREHOLDER'S
PROXY, ALL SHARES REPRESENTED BY PROXY WILL BE VOTED FOR APPROVAL OF THE
STOCK PURCHASE PLAN.
CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS
During 1999, in the ordinary course of business, directors and
<PAGE>
officers of the Company and its subsidiaries and many of their associates
and the firms for which they serve as directors and officers conducted
banking transactions with the Bank. All employees of the Bank are
eligible to borrow up to a maximum of $50,000 at rates that are adjusted
quarterly to an amount equal to the sum of (i) the average rate paid by
the Bank on certificates of deposit, (ii) 1.5%, and (iii) the FDIC
premium rate on deposits. All other loans to directors and officers and
to persons or firms affiliated with such directors and officers were made
at substantially the same interest rates as those prevailing at the time
for comparable transactions with unrelated persons. All loans made to
such directors and officers and their affiliates were subject to
substantially the same collateral requirements, did not involve more than
normal risk of collectability, and did not present other unfavorable
features as compared to loans made to unrelated persons. Management
expects that transactions such as those described above will continue in
the future.
APPROVAL OF THE
APPOINTMENT OF INDEPENDENT AUDITORS
At the Annual Meeting, shareholders will be asked to approve the
appointment of the firm of Wipfli Ullrich Bertelson LLP as independent
auditors to audit the books, records and accounts of the Company for the
fiscal year ending December 31, 2000. The firm has served as the
Company's auditors since 1990. The Company has a policy of reviewing the
provision of professional and other services to the Company based on such
factors as the cost, timeliness and quality of the services provided.
Pursuant to this policy, the Company has retained the right to appoint a
-23-
different firm of independent auditors to audit the Company for the 2000
fiscal year if such appointment is deemed in the best interests of the
Company.
Representatives of Wipfli Ullrich Bertelson LLP will be present at
the Annual Meeting and will have an opportunity to make a statement or
respond to appropriate questions.
SHAREHOLDER PROPOSALS
If any shareholder desires to submit a proposal for inclusion in the
proxy statement to be used in connection with the Annual Meeting to be
held in 2000, the proposal must be in proper form and received by the
Company no later than November 25, 2000.
OTHER MATTERS
At this date, there are no other matters management intends to
present or has reason to believe others will present to the Annual
Meeting. If other matters now unknown to the management come before the
meeting, the members of the Proxy Committee of the Board of Directors
will vote in accordance with their judgment.
<PAGE>
CORPORATE SUMMARY ANNUAL REPORT
The 1999 Summary Annual Report, which includes condensed consolidated
financial statements for the years ended December 31, 1999, 1998 and
1997, has been mailed concurrently with this proxy statement to
shareholders as of the Record Date. The 1999 Summary Annual Report and
the 1999 Form 10-K Annual Report do not constitute a part of this proxy
statement.
March 25, 2000 BY ORDER OF THE BOARD
OF DIRECTORS
WILLIAM A. WEILAND
William A. Weiland
Secretary/Treasurer
PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY.
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Mid-Wisconsin Financial Services, Inc.
____________________________
NOTICE OF 2000 ANNUAL MEETING OF SHAREHOLDERS
PROXY STATEMENT
1999 FORM 10-K ANNUAL REPORT
MID-WISCONSIN FINANCIAL SERVICES, INC.
<PAGE>
PROXY SOLICITED BY DIRECTORS FOR ANNUAL MEETING
APRIL 25, 2000
The undersigned hereby appoint(s) James N. Dougherty and James R.
Peterson, and each of them, with full power of substitution, proxies of
the undersigned to vote all shares of common stock of Mid-Wisconsin
Financial Services, Inc. that the undersigned is entitled to vote at the
annual meeting of shareholders to be held on April 25, 2000 and at any
adjournments thereof (the "Annual Meeting"). The proxies have the
authority to vote such stock as directed below with respect to the
proposals set forth in the proxy statement with the same effect as though
the undersigned were present in person and voting such shares. The
undersigned hereby revokes all proxies previously given to vote at the
Annual Meeting.
THE DIRECTORS RECOMMEND A VOTE FOR THE ELECTION OF EACH NOMINEE, THE
APPROVAL OF EACH OF THE PLANS, AND THE APPROVAL OF AUDITORS.
1. Election of Class I director: JAMES P. HAGER
FOR WITHHOLD AUTHORITY
2. Election of Class II directors: KATHRYN M. HEMER, GENE C. KNOLL,
KURT D. MERTENS, AND FRED J. SCHROEDER
FOR each nominee listed above WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees listed
above
(Instruction: To withhold authority to vote for any individual
nominee(s), print the name of the nominee on the space provided:
__________________________________________________________________
3. To consider and act upon a proposal to approve the 1999 Stock Option
Plan as described in the proxy statement.
FOR AGAINST ABSTAIN
4. TO CONSIDER AND ACT UPON A PROPOSAL TO APPROVE THE EMPLOYEE STOCK
PURCHASE PLAN AS DESCRIBED IN THE PROXY STATEMENT.
FOR AGAINST ABSTAIN
5. TO APPROVE THE APPOINTMENT OF WIPFLI ULLRICH BERTELSON LLP AS
INDEPENDENT AUDITORS FOR THE YEAR ENDING DECEMBER 31, 2000.
FOR AGAINST ABSTAIN
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED, THE PROXIES SHALL
VOTE AT THE ANNUAL MEETING FOR THE ELECTION OF EACH OF THE NOMINEES
LISTED ABOVE, THE APPROVAL OF EACH OF THE PLANS, AND THE APPROVAL OF THE
APPOINTMENT OF AUDITORS.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
(CONTINUED FROM OTHER SIDE)
<PAGE>
Please sign exactly as name appears below.
When shares are held by joint tenants, both
should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give
full title. If a corporation, please sign in
full corporate name by president or other
authorized officer. If a partnership, please
sign in partnership name by authorized person.
______________________________________________
Signature
_______________________________________________
Signature if held jointly
Dated _____________________________________, 2000
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
MID-WISCONSIN FINANCIAL SERVICES, INC.
1999 STOCK OPTION PLAN
MID-WISCONSIN FINANCIAL SERVICES, INC.
1999 STOCK OPTION PLAN
Section 1. PURPOSE. The Plan has been adopted to (a) enable the
Company to attract and retain superior employees by providing incentive
opportunities with respect to future services that are competitive with
those of other similar companies, (b) further identify the interests of
participating employees with those of the Company's other shareholders
through compensation based on the performance of the Company's common
stock, (c) attract and retain qualified employees, and (d) promote the
long-term financial interests of the Company and its shareholders.
Section 2. CERTAIN DEFINITIONS. As used in this Plan, and in
addition to any terms elsewhere defined in this Plan, the following
terms, when capitalized, shall have the meanings set forth in this
Section 2.
Section 2.1. "BOARD" means the Board of Directors of the Company.
Section 2.2. "CAUSE" means any one or more of the following on the
part of the participant: (a) the commission of an act which results in a
payment of a claim filed by the Company or a Subsidiary under a blanket
banker fidelity bond policy as from time to time and at any time
maintained; (b) an intentional failure to perform assigned duties; (c)
willful misconduct in the course of the participant's employment; (d)
breach of a fiduciary duty involving personal profit or acts or
omissions of personal dishonesty, including, but not limited to,
commission of any crime of theft, embezzlement, misapplication of funds,
unauthorized issuance of obligations, or false entries; (e) any
intentional, reckless, or negligent act or omission to act which results
in the violation by the participant of any policy established by the
Company or a Subsidiary which is designed to insure compliance with
applicable banking, securities, employment discrimination or other laws
or which causes or results in the Company's or a Subsidiary's violation
of such laws, except any act done by the participant in good faith, as
determined in the reasonable discretion of the Board, or which results in
a violation of such policies or law which is, in the reasonable sole
discretion of such Board, immaterial; or (f) any of the foregoing which
results in material loss to the Company or any of its Subsidiaries.
Except to the extent of the discretion granted to the Board in clause
<PAGE>
(e), the Committee shall have the sole discretion to determine whether
"Cause" exists, and the Committee's determination shall be final.
Section 2.3. "CHANGE IN CONTROL" has the meaning set forth in
Section 9.2.
Section 2.4. "CODE" means the Internal Revenue Code of 1986, as
amended. The reference to any specific section of the Code shall include
any successor section or sections.
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Section 2.5. "COMMITTEE" means, subject to the provisions of Section
4, the Stock Option Committee of the Board.
Section 2.6. "COMMON STOCK" means the common stock, $.10 par value
per share, of the Company.
Section 2.7. "COMPANY" means Mid-Wisconsin Financial Services, Inc.,
a Wisconsin corporation.
Section 2.8. "DISABILITY" means (a) a physical or mental condition
which qualifies as a total and permanent disability under the terms of
any plan or policy maintained by the Company or a Subsidiary and for
which the Optionee is eligible to receive benefits under such plan or
policy, or (b) if the Optionee does not participate in a disability plan,
or is not covered by a disability policy, of the Company or a Subsidiary,
"Disability" means the permanent and total inability of a participant by
reason of mental or physical infirmity, or both, to perform the work
customarily assigned to him or her, if a medical doctor selected or
approved by the Board, and knowledgeable in the field of such infirmity,
advises the Committee either that it is not possible to determine when
such Disability will terminate or that it appears probable that such
Disability will be permanent during the remainder of said participant's
lifetime.
Section 2.9. "EFFECTIVE DATE" means December 31, 1999.
Section 2.10. "EMPLOYED," and any variation thereof such as
"employment," means, as appropriate, employed by or employment with any
of the Company or any present or future Subsidiary.
Section 2.11. "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.
Section 2.12. "FAIR MARKET VALUE" of a share of the Common Stock as
of any date means the price per Share on the immediately preceding date
as determined in accordance with the following:
(a) EXCHANGE. If the principal market for the Common Stock is
a national securities exchange, "Fair Market Value" means the average
of the highest and lowest reported sale prices of the Common Stock on
the New York Stock Exchange composite transaction tape if the Common
Stock is then listed for trading on such exchange, otherwise, the
average of the highest and lowest reported sales prices of the Common
Stock in any transaction reported on the principal exchange on which
the Common Stock is then listed for trading.
-2-
<PAGE>
(b) OVER-THE-COUNTER. If the principal market for the Common
Stock is an over-the-counter market, "Fair Market Value" means the
average of the highest bid and lowest ask prices of the Common Stock
reported in The Nasdaq National Market, or The Nasdaq Small Cap
Market, or if the Common Stock is not then listed for trading in
either of such markets, the average of the highest bid and lowest ask
prices of the Common Stock reported on the OTC Bulletin Board, or, if
prices for the Common Stock are not quoted on the OTC Bulletin Board,
the average of the highest bid and lowest ask prices reported on any
other bona fide over-the-counter stock market selected in good faith
by the Committee.
(c) OTHER DETERMINATION. If subparagraphs (a) and (b) are not
applicable, "Fair Market Value" shall mean such amount as may be
determined by the Committee by whatever means or method as the
Committee, in the good faith exercise of its discretion, shall at such
time deem appropriate.
(d) DATE. If the date on which "Fair Market Value" is to be
determined is not a business day, or, if there shall be no reported
transactions for such date, such determination shall be made on the
next preceding business day for which transactions were reported.
Section 2.13. "INCENTIVE STOCK OPTION" means an Option granted
pursuant to the terms of the Plan which is intended by the Committee
to meet the requirements of an "incentive stock option" within the
meaning of Section 422 of the Code, or any successor section or
sections; provided, however, that to the extent an Incentive Stock
Option is exercised after the expiration of any limitation on the time
of exercise applicable under Section 422 of the Code, or such Option
does not meet the qualifications of an "incentive stock option" within
the meaning of such Section 422, such Option shall thereafter be a
Non-Qualified Option.
Section 2.14. "NON-QUALIFIED OPTION" means an Option granted
pursuant to the terms of the Plan which the Committee intends shall not
meet the requirements of an "incentive stock option" within the meaning
of Section 422 of the Code, or any successor section or sections, and any
Option intended to be an Incentive Stock Option which does not satisfy
the terms, or is not exercised in accordance with the requirements of,
Section 422 of the Code.
Section 2.15. "OPTION" means an option to purchase Shares awarded
pursuant to the provisions of Section 6.
Section 2.16. "OPTION AGREEMENT" means the written document which
evidences an award of Options, whether or not such document requires the
signature of the Optionee.
Section 2.17. "OPTIONEE" means an eligible employee, as determined
in accordance with Section 5, who has been granted an Option.
-3-
Section 2.18. "OPTION PRICE" means, with respect to each Option, the
price per Share at which such Option may be exercised and the Shares
subject to such Option purchased.
<PAGE>
Section 2.19. "PLAN" means the Mid-Wisconsin Financial Services,
Inc. 1999 Stock Option Plan as set forth herein or as hereafter amended.
Section 2.20. "RETIREMENT DATE" means a participant's Termination
of Employment at or after the normal or early retirement date of such
participant under the terms of any retirement or pension plan sponsored
by the Company which is qualified under the provisions of the Code.
Section 2.21. "SHARE" means a share of Common Stock.
Section 2.22. "SUBSIDIARY" means any corporation, partnership, or
other entity in which the Company owns, directly or indirectly, at least
a 50% interest in the voting rights or profits.
Section 2.23. "TERMINATION OF EMPLOYMENT" means the termination of
the participant's employment with, or performance of services for, the
Company and any of its Subsidiaries. A participant employed by, or
performing services for, a Subsidiary shall also be deemed to incur a
Termination of Employment if the Subsidiary ceases to be such a
Subsidiary and the participant does not immediately thereafter become an
employee of the Company or another Subsidiary. Temporary absences from
employment because of illness, vacation, or leave of absence and
transfers among the Company and its Subsidiaries shall not be considered
Terminations of Employment. For purposes of the Plan, a participant's
employment shall be deemed to have terminated at the close of business on
the day preceding the first date on which he or she is no longer for any
reason whatsoever employed by the Company or any of its Subsidiaries.
Section 3. NUMBER OF SHARES AVAILABLE FOR OPTIONS.
Section 3.1 SHARES SUBJECT. The aggregate number of Shares which
may be delivered under Options awarded pursuant to the Plan shall be
equal to the sum of (a) 200,000 and (b) any Shares available for future
awards under all prior stock option plans of the Company (the "Prior
Plans") as of the Effective Date, including any Shares with respect to
which options awarded under any Prior Plans are hereafter forfeited,
expire, or are canceled without delivery of Shares.
Section 3.2 UNDELIVERED SHARES. To the extent any Shares subject to
an Option are not delivered to an Optionee (or the estate or other
transferee of such Optionee) because the Option is forfeited, expires, or
otherwise becomes unexercisable, or the Shares are not delivered because
the Shares are used to satisfy the applicable tax withholding obligation
-4-
of the Optionee, such Shares shall be deemed not to have been delivered
for purposes of determining the maximum number of Shares available for
delivery under the Plan.
Section 3.3 EXERCISE USING SHARES. If the Option Price of any
Option awarded under the Plan or any Prior Plan is satisfied by tendering
Shares to the Company (by actual delivery or attestation), only the
number of Shares issued to the Optionee (or the estate or other
transferee of such Optionee), net of the Shares tendered, shall be deemed
delivered for purposes of determining the maximum number of Shares
available for delivery under the Plan.
<PAGE>
Section 3.4 STOCK DIVIDENDS, ETC. If the Company shall, after the
Effective Date, change the Common Stock into a greater or lesser number
of Shares through a stock dividend, stock split-up or combination of
Shares, then (a) the number of Shares then subject to the Plan as
provided for in Section 3.1, but which are not then subject to any
outstanding Option, (b) the number of Shares subject to each then
outstanding Option (to the extent not previously exercised), and (c) the
price per Share payable upon exercise of each then outstanding Option,
shall all be proportionately increased or decreased as of the record date
for such stock dividend, stock split-up or combination of Shares in order
to give effect thereto. Notwithstanding any such proportionate increase
or decrease, no fraction of a Share shall be issued upon the exercise of
an Option and the Shares subject to an Option shall be rounded to the
nearest whole Share.
Section 3.5 OTHER CHANGES. If, after the Effective Date, there
shall be any change in the Common Stock or other change in the
capitalization of the Company other than through a stock dividend, stock
split-up or combination of Shares, including, but not limited to, a
change which results from a merger, consolidation, spin-off, or other
distribution of stock or property of the Company, any reorganization
(whether or not such reorganization is within the meaning of Section 368
of the Code), or any partial or complete liquidation of the Company, then
if, and only if, the Committee shall determine that such change equitably
requires an adjustment in (a) the number or kind of shares of stock then
reserved for issuance under Section 3.1, (b) the number or kind of shares
of stock then subject to an Option, (c) the Option Price with respect to
an Option, or (d) any other limitation on the Option which may be granted
to any participant, to the extent such adjustment does not cause any
Option to fail to satisfy the requirements for exemption from the
limitations on deductibility imposed by Section 162(m) of the Code that
is set forth in Section 162(m)(4)(c) of the Code if such Option would
have satisfied such requirements immediately prior to such adjustment and
if such Option, if then exercised, would, when added to the Optionee's
estimated compensation from the Company and all Subsidiaries for such
year, exceed the deductibility limits of Section 162(m) of the Code, such
adjustment as the Committee shall determine is equitable and as shall be
approved by the Board shall be made and shall be effective and binding
for all purposes of such Option and the Plan. If any member of the Board
shall, at the time
-5-
of such approval, be an Optionee, he shall not participate in action in
connection with such adjustment.
Section 4. ADMINISTRATION OF THE PLAN.
Section 4.1 COMMITTEE. The Plan shall be administered by the
Committee. The Committee shall, subject to the terms of the Plan, have
the authority to, in its sole discretion, (a) select eligible employees
to receive an award of one or more Options and to participate in the
Plan, (b) determine the number of Shares subject to each award and the
Option Price associated therewith, (c) establish terms and conditions
concerning the time of, and conditions precedent to, the exercisability
of each Option (including, without limitation, conditions with respect to
the passage of time, performance of the Company, or a Subsidiary, or the
Optionee, restrictions on competitive employment or satisfaction of
<PAGE>
Company policies, and any other conditions which the Committee deems
reasonably related to the satisfaction of the purposes of the Plan), (d)
determine the form of each Option Agreement and all terms and conditions
thereof with respect to each award, (e) interpret the Plan and the
application thereof and establish such rules and regulations as it deems
necessary or desirable for the administration of the Plan, (f) modify or
cancel any award or Option or take such action to cause the vesting or
exercisability of any or all outstanding Options to become exercisable in
part or in full for any reason at any time, subject to the limitation of
Section 9.1, and (g) exercise such other authority as is reasonably
related to the administration of and/or the fulfillment of the purpose of
the Plan. All actions, interpretations, rules, regulations and
conditions taken or established by the Committee shall be final, binding
and conclusive upon the Company, each Subsidiary, and all Optionees.
Section 4.2 MEMBERSHIP OF THE COMMITTEE.
(a) MEMBERSHIP QUALIFICATIONS. Except as provided in this
Section 4.2, at all times the Committee shall consist of not less than
three members designated by the Board from among those of its members
who are not officers or employees of the Company or a Subsidiary and
each of whom is (a) a "non-employee director" within the meaning of
Rule 16b-3 under the Exchange Act (a "Non-Employee Director") and (b)
an "outside director" within the meaning of Section 162(m) of the Code
(an "Outside Director"); provided, however, that in addition to the
Board's general authority to amend the Plan as provided for in Section
10.1, the Board shall have the specific authority to modify or
eliminate the foregoing qualifications or adopt such other
qualifications as are reasonably intended to result in (x) the award
of Options, and transactions with respect to the award or exercise of
such Options, satisfying an exemption from Section 16(b) of the
Exchange Act, or any successor thereto, and (y) compensation
recognized by Optionees qualifying as a deductible expense of the
Company under the "performance-based compensation" exception to
-6-
compensation deduction limits which would otherwise be imposed on the
Company under Section 162(m) of the Code.
(b) APPOINTMENT OF OTHER MEMBERS. In the event that one or
more members of the Committee shall fail to meet the qualifications
set forth in Section 4.2(a), the Board shall remove such member or
members and appoint a successor or successors who satisfy such
qualifications. The Board shall act in a reasonably prompt manner to
fill any vacancy on the Committee from among such of its members who
are both Non-Employee Directors and Outside Directors.
(c) VALIDITY OF GRANTS. Notwithstanding the qualifications for
members of the Committee established in Section 4.2(a), any award of
Options made by the Committee in good faith and without the knowledge
that one or more of its members did not satisfy such qualifications,
shall be valid and enforceable by the Optionee even though the members
of the Committee did not, at the time of such award, satisfy such
qualifications.
Section 4.3 ACTIONS BY THE COMMITTEE. A majority of the members of
the Committee shall constitute a quorum. In the absence of specific
<PAGE>
rules to the contrary, action by the Committee shall require the consent
of a majority of the members of the Committee, expressed either orally at
a meeting of the Committee or in writing in the absence of a meeting.
Section 4.4 ACTIONS BY THE BOARD. Any authority granted to the
Committee may also be exercised by the full Board, except to the extent
that the grant or exercise of such authority would cause any Option or
transaction to become subject to (or lose an exemption under) the short-
swing profit recovery provisions of Section 16 of the Exchange Act or
cause an Option not to qualify for, or to cease to qualify for, the
exemption as "performance-based compensation" under Section 162 of the
Code, and the regulations promulgated thereunder. To the extent that any
permitted action taken by the Board conflicts with action taken by the
Committee, the Board action shall control.
Section 4.5 LIMITATION ON LIABILITY AND INDEMNIFICATION OF BOARD.
No member of the Board, no executive officer or other employee of the
Company, and no other agent or representative of the Company shall be
liable for any act, omission, interpretation, construction, or
determination made in connection with the Plan in good faith, and all
such persons shall be entitled to indemnification and reimbursement by
the Company in respect of any claim, loss, damage, or expense (including
attorneys fees) arising therefrom to the full extent permitted by law,
except as otherwise may be provided in the Company's articles of
incorporation and/or by-laws, and under any directors' and officers'
liability insurance that may be in effect from time to time.
-7-
Section 5. PERSONS ELIGIBLE TO BECOME OPTIONEES. Persons who are
(a) employees of the Company and any Subsidiary, (b) prospective
employees who have accepted offers of employment from the Company or a
Subsidiary, or (c) directors of the Company and its Subsidiaries shall be
eligible to be selected, in the sole discretion of the Committee, to
participate in, and receive an award of one or more Options pursuant to,
the Plan.
Section 6. AWARDING OF OPTIONS.
Section 6.1 OPTIONEES. Subject to the limitations of Section 5,
Options shall be awarded to such eligible employees and directors of the
Company and its Subsidiaries as the Committee may, from time to time and
at any time, select. Membership of an employee or a director in a class
shall not, without specific Committee action, entitle such employee or
director to receive an Option award.
Section 6.2 OPTION AGREEMENT. Each Option shall be evidenced by an
Option Agreement, the terms of which may differ from other Option
Agreements. Each Option Agreement shall be signed on behalf of the
Company and, if so provided by the Committee, the Optionee, and shall set
forth with respect to the Option or Options awarded therein, the name of
the Optionee, the date awarded, the Option Price, whether the Option is
an Incentive Stock Option or a Non-Qualified Stock Option, the number of
Shares subject to the Option, and such other terms and conditions
consistent with the Plan as determined by the Committee. The Committee
may at the time of award or at any time thereafter impose such additional
terms and conditions on the exercise of such Option as it deems necessary
or desirable for such Option, or the exercise thereof, to be exempt under
<PAGE>
Section 16(b) of the Exchange Act, and the regulations promulgated
thereunder, and to qualify as "performance-based compensation" under
Section 162 of the Code, and the regulations promulgated thereunder.
Each Option Agreement shall incorporate by reference all terms,
conditions and limitations set forth in the Plan.
Section 6.3 TERMS AND CONDITIONS OF THE OPTIONS. In addition to any
other terms, conditions, and limitations specified in the Plan, each
Option awarded hereunder shall, as to each Optionee, satisfy the
following requirements:
(a) DATE OF AWARD. Options must be awarded on or before
December 14, 2009.
(b) EXPIRATION. No Incentive Stock Option shall be exercisable
after the expiration of ten years from the date such Option is
awarded. No Non-Qualified Stock Option shall be exercisable after the
expiration of twenty years from the date such Option is awarded.
-8-
(c) PRICE. The Option Price as to any Share subject to an
Option may not be less than the Fair Market Value of the Share on the
date the Option is awarded.
(d) LIMITATIONS ON TRANSFERABILITY. No Incentive Stock Option
shall be transferable by the Optionee other than by will or the laws
of descent and distribution, nor can it be exercised by anyone other
than the Optionee during the Optionee's lifetime. Except as otherwise
provided in an Option Agreement or other action taken by the
Committee, each of which conform to the provisions of Section 6.4, no
Non-Qualified Option shall be transferable by the Optionee other than
by will or the laws of descent and distribution, nor can it be
exercised by anyone other than the Optionee during the Optionee's
lifetime. Except as provided in Section 6.4, no Option may be sold,
transferred, assigned, pledged, hypothecated, encumbered, or otherwise
disposed of (whether by operation of law or otherwise), or be subject
to execution, attachment, or similar process. Upon any attempt to so
sell, transfer (other than in accordance with Section 6.4), assign,
pledge, hypothecate, encumber, or otherwise dispose of any such award,
such award and all rights thereunder shall immediately become null and
void.
(e) EXERCISE. Except as otherwise permitted by the Committee,
or as provided in Section 6.5, Options must be exercised in accordance
with the following time limitations:
(i) TERMINATION BY DEATH. If an Optionee incurs a
Termination of Employment by reason of death, any Option held by
such Optionee may thereafter be exercised, to the extent then
exercisable, for a period of one year from the date of such death or
until the expiration of the stated term of such Option, whichever
period is shorter.
(ii) TERMINATION BY REASON OF DISABILITY. If an Optionee
incurs a Termination of Employment by reason of Disability, any
Option held by such Optionee may thereafter be exercised by the
Optionee (or the estate of the Optionee in the event of death), to
<PAGE>
the extent it was exercisable at the time of such Termination of
Employment, for a period of one year.
(iii) TERMINATION BY REASON OF RETIREMENT. If an Optionee
incurs a Termination of Employment by reason of Retirement, any
Option held by such Optionee may thereafter be exercised by the
Optionee (or the estate of the Optionee in the event of death), to
the extent it was exercisable at the time of such Termination of
Employment by reason of Retirement, for a period of two years.
-9-
(iv) OTHER TERMINATION. If an Optionee incurs a
Termination of Employment for any reason other than death,
Disability, or Retirement, any Option held by such Optionee shall
terminate.
(v) Notwithstanding any other provision of this Plan to
the contrary, in the event an Optionee incurs a Termination of
Employment other than for Cause during the 24-month period following
a Change in Control, any Option held by such Optionee may thereafter
be exercised by the Optionee, to the extent it was exercisable at
the time of termination, for (x) the longer of (i) one year from
such date of termination or (ii) such other period as may be
provided in the Plan for such Termination of Employment, or (y)
until expiration of the stated term of such Stock Option, whichever
period is shorter. If an Incentive Stock Option is exercised after
the expiration of the post-termination exercise periods that apply
for purposes of Section 422 of the Code, such Stock Option will
thereafter be treated as a Non-Qualified Stock Option.
If an Incentive Stock Option is exercised after the expiration of the
exercise periods that apply for purposes of Section 422 of the Code, such
Option will thereafter be treated as a Non-Qualified Stock Option.
(f) MINIMUM HOLDING PERIOD. No Option may be exercised before
the date which is six months after the later of (i) the date on which
the Plan is approved by the shareholders of the Company, or (ii) the
date on which such Option was awarded.
(g) ADDITIONAL RESTRICTIONS RELATING TO INCENTIVE STOCK
OPTIONS. To the extent that the aggregate Fair Market Value
(determined as of the time the Option is awarded) of the Shares
for which Incentive Stock Options are exercisable for the first time
by an individual during any calendar year (under the Plan, any Prior
Plans, or any other plan of the Company or a Subsidiary) exceeds
$100,000 (or such other individual limit as may be in effect under
the Code on the date of award), such Options shall not be Incentive
Stock Options. No Incentive Stock Option shall be awarded to an
employee who, at the time such Option is awarded, owns stock
possessing more than 10% of the total combined voting power of all
classes of stock of the Company or any Subsidiary within the meaning
of Section 422(b)(6) of the Code unless (i) at the time the Option is
awarded, the Option Price is at least 110% of the Fair Market Value
of the Shares subject to the Option, and (ii) such Option by its
terms is not exercisable after the expiration of five years from the
date such Option is awarded.
<PAGE>
(h) LIMITATION ON OPTION AWARDS. No Optionee may be awarded
Options under the Plan in any calendar year with respect to more than
5,000 Shares.
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Section 6.4 TRANSFERABILITY OF NON-QUALIFIED OPTIONS. The Committee
may, in its discretion, under the terms of the Option Agreement with
respect to, or at any time on or after the date of the initial award of,
a Non-Qualified Option, permit transfer of such Non-Qualified Option by
the Optionee to (a) the spouse, children or grandchildren of the Optionee
("Immediate Family"), (b) a trust for the exclusive benefit of the
Optionee or the Optionee's Immediate Family, (c) a partnership in which
the Optionee or the Optionee's Immediate Family are the only partners, or
(d) to a former spouse of the Optionee pursuant to a domestic relations
order within the meaning of Rule 16a-12, as promulgated under Section 16
of the Exchange Act; provided, however, that (x) there may be no
consideration for any such transfer unless the payment of such
consideration to the Optionee is specifically authorized by the
Committee, (y) the Option Agreement, or any amendment thereof approved by
the Committee, must expressly provide for transferability of the Option
evidenced in such agreement in a manner consistent with this Section 6.4,
and (z) once transferred pursuant to the preceding provisions of this
Section 6.4, no subsequent transfer of such Options shall be permitted
except a transfer by will or the laws of descent and distribution. In
authorizing all or any portion of an Option to be transferred, the
Committee may impose any conditions on exercise, prescribe a holding
period for the Shares acquired upon such exercise, and/or impose any
other conditions or limitations it deems desirable or necessary in order
to carry out the purposes and requirements of the Plan. Following
transfer, the terms and conditions of the Plan and the Option Agreement
relating to such Option shall continue to be applicable in all respects
to the Optionee who made such transfer and each transferred Option shall
continue to be subject to the same terms and conditions as were
applicable immediately prior to transfer as if such Option had not been
transferred, including, but not limited to, the terms and conditions with
respect to the lapse and termination of such Option. For purposes of
Section 7, the transferee of an Option, where applicable, shall be deemed
an "Optionee." None of the Company, the Committee, or any Optionee shall
have any obligation to inform any transferee of the termination or lapse
of any Option for any reason. Notwithstanding any other provision of the
Plan, following the termination of Employment of an Optionee, a
transferred Non-Qualified Option shall be exercisable by the transferee
only to the extent, and for the periods specified in Section 6.3(e) as if
such Option had not been transferred.
Section 6.5 TERMINATION OR LAPSE OF OPTIONS. Each Option shall
terminate or lapse upon the first to occur of (a) the expiration date or
any date as of which the Option is deemed to be forfeited as set forth in
the applicable Option Agreement, (b) the applicable date set forth in
Section 6.3(b), or (c) the date which is the day next following the last
day such Option could be exercised under Section 6.3(e).
Section 7. EXERCISE AND PAYMENT OF OPTION PRICE.
Section 7.1 EXERCISE OF OPTIONS. Options shall be exercised as to
all or a portion of the Shares subject to the Option by written notice to
the Company setting forth the exact number of Shares as to which the
<PAGE>
Option is being exercised and including with such notice payment of the
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Option Price (plus the minimum required tax withholding). The date of
exercise shall be the date such written notice and payment have been
delivered (in cash or in such other manner as provided in Section 7.2) to
the Secretary of the Company either in person or by depositing said
notice and payment in the United States mail, postage pre-paid and
addressed to such officer at the Company's home office. Notwithstanding
the fact that an Option has been transferred pursuant to Section 6.4, the
Optionee with respect to such transferred Option shall remain liable for
any required tax withholding.
Section 7.2 PAYMENT FOR SHARES. Payment of the Option Price (plus
required tax withholding) may be made (a) by tendering cash (in the form
of a check or otherwise) in such amount; (b) with the consent of the
Committee, and if authorized in the Option Agreement, by tendering, by
either actual delivery of Shares owned by the Optionee or by attestation,
Shares with a Fair Market Value on the date of exercise equal to such
amount; (c) with the consent of the Committee, by instructing the
Committee to withhold a number of Shares having a Fair Market Value on
the date of exercise equal to the aggregate exercise price of such
Option; (d) by delivering a properly executed exercise notice together
with irrevocable instructions to a broker to promptly deliver to the
Company the sale or loan proceeds equal to such amount; or (e) any
combination of (a), (b), (c) and (d); provided, however, that any Shares
delivered in payment of the Option Price pursuant to (b) shall have been
purchased on the open market and held by the Optionee for at least six
months at the time of exercise of the Option. Notwithstanding the fact
that an Option has been transferred pursuant to Section 6.4, the Optionee
with respect to such transferred Option shall remain liable for any
required tax withholding.
Section 7.3 TAX WITHHOLDING. The delivery of Shares under the Plan
is subject to withholding of all applicable taxes, and the Committee may
condition the delivery of any Shares or other benefits on satisfaction of
applicable withholding obligations. The Committee, in its discretion,
and subject to such requirements as the Committee may impose prior to the
occurrence of such withholding, may permit withholding obligations to be
satisfied through cash payment by the Optionee or other person exercising
an Option, through the surrender of Shares which the Optionee or other
person already owns, or through the surrender of Shares to which the
Optionee or other person is otherwise entitled under the Plan.
Section 7.4 ISSUANCE OF SHARES. No Shares shall be issued until
full payment therefor has been made. An Optionee shall have all of the
rights of a shareholder of the Company holding the Common Stock that is
subject to such Option (including, if applicable, the right to vote the
Shares and the right to receive dividends), when the Optionee has given
written notice of exercise, has paid in full for such Shares and, if
requested, has given the representation described in Section 12.
-12-
Section 8. DIRECTOR STOCK OPTIONS. In addition to any Options which
may be granted to a director pursuant to the provisions of Section 6.1
the Committee may also grant Options to directors of the Company and/or
its Subsidiaries which satisfy the following requirements:
<PAGE>
(a) AUTOMATIC GRANTS. Each such director who is not otherwise
an employee of the Company or any of its Subsidiaries, shall, on the
first day after his or her first election as a director, and
thereafter on the day after each annual meeting of shareholders of the
Company during such director's term, automatically be granted
Non-Qualified Options in an amount specified by the Committee to
purchase Common Stock having an exercise price of 100% of the Fair
Market Value of the Common Stock on the date of grant of such
Non-Qualified Stock Option.
(b) LIMITATIONS ON AUTOMATIC GRANTS. An automatic director
Option shall be granted hereunder only if as of each date of grant the
director (i) is not otherwise an employee of the Company or any of its
Subsidiaries, (ii) has not been an employee of the Company or any of
its Subsidiaries for any part of the preceding fiscal year, and (iii)
has served on the Board continuously since the commencement of his
term.
(c) RIGHTS OF OPTIONEE. Each holder of a Stock Option granted
pursuant to this Section 8 shall also have the rights specified in
Section 9.
(d) INSUFFICIENT SHARES. In the event that the number of
shares of Common Stock available for future grant under the Plan is
insufficient to make all automatic grants required to be made on such
date, then all non-employee directors entitled to a grant on such date
shall share ratably in the number of Options on shares available for
grant under the Plan.
(e) TERMS AND CONDITIONS OF DIRECTOR OF OPTIONS. Except as
expressly provided in this 8, any Non-Qualified Option granted
hereunder shall be subject to the terms and conditions of the Plan as
if the grant were made pursuant to Section 6 hereof.
Section 9. CHANGE IN CONTROL.
Section 9.1 ADJUSTMENT OF OPTIONS.
(a) VESTING AND CASH PAYMENT. In the event of a Change of
Control,
(i) all Options outstanding on the date on which such
Change in Control has occurred (the "Change in Control Date") shall,
to the extent not then exercisable or vested, immediately become
exercisable in full, and
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(ii) each Optionee may elect (the Optionee's "Election
Right") with respect to each Option held by such Optionee on the
Change in Control Date to surrender such Option for an immediate lump
sum cash payment in an amount equal to the product of (A) the number
of Shares then subject to the Option as to which the election is being
exercised multiplied by (B) the excess, if any, of (1) the greater of
(a) the Change in Control Price or (b) the highest Fair Market Value
of a Share on any day in the 60-day period ending on the Change in
Control Date, over (2) the Option Price of such Option. For purposes
of this Section 9.1(a), the "Change in Control Price" shall mean, if
<PAGE>
the Change in Control is the result of a tender or exchange offer or
a Corporate Transaction (as defined in Section 9.2(c)), the highest
price per Share paid in such tender or exchange offer or Corporate
Transaction, and, to the extent that the consideration paid in any
such transaction consists all or in part of securities or other
noncash consideration, the value of such securities or other noncash
consideration shall be determined in the sole discretion of the
Committee.
(b) ELECTION. The exercise of an Election Right must be in
writing, specify the Option or Options and the number of Shares as to
which the election is being exercised, and be delivered to the
Secretary of the Company either in person or by depositing said notice
and payment in the United States mail, postage pre-paid and addressed
to such officer at the Company's home office on or before the 60th day
following the Change in Control Date.
(c) PAYMENT DATE. All payments due an Optionee pursuant to the
provisions of this Section 9.1 shall be made by the Company on or
before the 5th business day following the date on which the Optionee's
election has been delivered to the Company pursuant to Section 9.1(b).
(d) POOLING CONSIDERATIONS. Notwithstanding any other
provision of this Section 9.1, if the grant or the exercise of an
Optionee's Election Right or payment of cash provided for in this
Section 9.1 would make a Change in Control transaction ineligible for
pooling-of-interests accounting treatment under APB No. 16, that, but
for the nature of such grant or exercise of Election Rights or payment
of cash, would otherwise be eligible for such pooling-of-interests
accounting treatment, the Committee shall have the right and authority
to substitute for the cash payments to be made to the Optionee
pursuant to Section 9.1(a), Common Stock with a Fair Market Value,
determined as of the date of delivery of such Shares, equal to the
cash that would otherwise be payable to such Optionee in connection
with the exercise of an Optionee's Election Right hereunder or, to the
extent necessary to preserve such pooling-of-interests accounting
treatment, to otherwise modify, eliminate, or terminate such Election
Right.
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Section 9.2 DEFINITION OF "CHANGE OF CONTROL." For purposes of the
Plan, a "Change of Control" means the happening of any of the following
events:
(a) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a
"Person") of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 25% or more of either (i) the then
outstanding shares of common stock of the Company (the "Outstanding
Company Common Stock") or (ii) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally
in the election of directors (the "Outstanding Company Voting
Securities"); provided, however, that for purposes of this paragraph (a),
the following acquisitions shall not constitute a Change in Control: (A)
any acquisition directly from the Company other than an acquisition by
virtue of the exercise of a conversion privilege unless the security
being so converted was itself acquired directly from the Company, (B) any
<PAGE>
acquisition by the Company, (C) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any
entity controlled by the Company, and (D) any acquisition pursuant to a
transaction which complies with clauses (i), (ii), and (iii) of paragraph
(c) of this Section 9.2; or
(b) A change in the composition of the Board such that the
individuals who, as of the Effective Date, constitute the Board (such
Board shall be hereinafter referred to as the "Incumbent Board") cease
for any reason to constitute at least a majority of the Board;
provided, however, for purposes of the Plan, that any individual who
becomes a member of the Board subsequent to the Effective Date whose
election, or nomination for election by the Company's shareholders,
was approved by a vote of at least a majority of those individuals who
are members of the Board and who were also members of the Incumbent
Board (or deemed to be such pursuant to this proviso) shall be deemed
to be and shall be considered as though such individual were a member
of the Incumbent Board, but provided, further, that any such
individual whose initial assumption of office occurs as a result of
either an actual or threatened election contest (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act) or other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board shall not be so
deemed or considered as a member of the Incumbent Board; or
(c) Consummation of a reorganization, merger or consolidation,
or sale or other disposition of all or substantially all of the assets
of the Company or the acquisition of the assets or securities of any
other entity (a "Corporate Transaction"); excluding, however, such a
Corporate Transaction pursuant to which (i) all or substantially all
of the individuals and entities who are the beneficial owners,
respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such Corporate
Transaction will
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beneficially own, directly or indirectly, more than 60% of,
respectively, the outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to
vote generally in the election of directors, as the case may be, of
the corporation resulting from such Corporate Transaction (including,
without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the
Company's assets either directly or through one or more subsidiaries)
(the "Resulting Company") in substantially the same proportions as
their ownership, immediately prior to such Corporate Transaction, of
the Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (ii) no Person (other than the
Company, any employee benefit plan (or related trust) of the Company)
will beneficially own, directly or indirectly, 25% or more of,
respectively, the outstanding shares of common stock of the Resulting
Company or the combined voting power of the then outstanding voting
securities of such Resulting Company entitled to vote generally in the
election of directors except to the extent that such ownership existed
with respect to the Company prior to the Corporate Transaction, and
(iii) individuals who were members of the Incumbent Board will
constitute at least a majority of the members of the board of
directors of the Resulting Company; or
<PAGE>
(d) The approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
Section 10. AMENDMENT AND TERMINATION OF PLAN.
Section 10.1 AMENDMENT OF PLAN. The Board may amend the Plan from
time to time and at any time; provided, however, that (a) except as
specifically provide herein, no amendment shall, in the absence of
written consent to the change by an affected Optionee, adversely affect
such Optionee's rights under any Option which has been awarded prior to
the amendment except to the extent such amendment is, in the sole opinion
of the Committee, required to comply with any stock exchange rules,
accounting rules, or laws applicable to the Company or the Plan, (b) no
amendment with respect to the maximum number of Shares which may be
issued pursuant to Options under the Plan or to any individual in any
calendar year made be made unless approved by a majority of the Shares
entitled to vote at a meeting of the shareholders if such amendment
would, in the absence of such approval and in the sole opinion of the
Committee, have an adverse effect on the Company under applicable tax or
securities laws or accounting rules, and (c) no amendment shall be made
without the approval of the Company's shareholders to the extent such
approval is required by applicable law or stock exchange rules.
Section 10.2 TERMINATION OF PLAN. The Plan shall terminate on the
first to occur of (a) December 31, 2009 or (b) the date specified by the
Board as the effective date of Plan termination; provided, however, that
the termination of the Plan shall not limit or otherwise affect any
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Options outstanding on the date of termination.
Section 11. EFFECTIVE DATE. Notwithstanding any provision of this
Plan to the contrary, the Plan shall not be effective, and any Options
awarded under the Plan shall be null and void, unless the adoption of the
Plan is approved at the annual meeting of the Company's shareholders next
following the Effective Date by the majority of the shares entitled to
vote at such meeting.
Section 12. INVESTMENT INTENT. The Committee may require each
person purchasing or receiving Shares pursuant to an Option to represent
to and agree with the Company in writing that such person is acquiring
the Shares without a view to the distribution thereof. The certificates
for such Shares may include any legend which the Committee deems
appropriate to reflect any restrictions on transfer.
Section 13. AVAILABILITY OF INFORMATION. If the Shares subject to
an Optionee's Option are not registered or to be registered under the
Securities Act of 1933 as amended, the Company shall furnish each
Optionee with (a) a copy of the Plan and the Company's most recent annual
report to its shareholders at the time the Option Agreement is delivered
to the Optionee and (b) a copy of each subsequent annual report and proxy
statement, on or about the same date as such report shall be made
available to shareholders of the Company. The Company will furnish, upon
written request addressed to the Secretary of the Company, but at no
charge to the Optionee or any duly authorized representative of the
Optionee, copies of all reports filed by the Company with the Securities
and Exchange Commission, including, but not limited to, the Company's
<PAGE>
annual reports on Form 10-K, its quarterly reports on Form 10-Q, and its
proxy statements. Notwithstanding the foregoing provisions of this
Section 13, the Company shall not be required to furnish any such report
or statement if a copy of such report is otherwise provided to the
Optionee in connection with another plan maintained by the Company or
such Optionee's status as a shareholder of the Company.
Section 14. LIMITATION OF RIGHTS.
(a) CONDITIONS OF EMPLOYMENT. The Plan shall not constitute a
contract of employment, and participation in or eligibility for
participation in the Plan shall not confer upon any employee the right to
be continued as an employee of the Company or any present or future
Subsidiary and the Company and each Subsidiary, hereby expressly reserves
the right to terminate the employment of any employee, with or without
cause, as if the Plan and any Options awarded pursuant to it were not in
effect.
(b) COMPANY ASSETS. Neither an Optionee nor any other person
shall, by reason of receiving an award of an Option under the Plan
acquire any right, title, or interest in any assets of the Company or any
Subsidiary by reason of such Option or the Plan. To the extent an
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Optionee or any other person shall acquire a right to receive payments
from the Company pursuant to an Option Agreement or the Plan, such right
shall be no greater than the right of any unsecured general creditor of
the Company.
(c) ISSUANCE OF SHARES. Notwithstanding any other provision of
the Plan or agreements made pursuant thereto, the Company shall not be
required to issue or deliver any certificate or certificates for Shares
under the Plan prior to fulfillment of all of the following conditions:
(i) Listing or approval for listing upon notice of
issuance, of such Shares on the exchange or over-the-counter market as
may at the time be the principal market for the Common Stock;
(ii) Any registration or other qualification of the Shares
under any state or federal law or regulation, or the maintaining in
effect of any such registration or other qualification which the
Committee shall, in its absolute discretion upon the advice of
counsel, deem necessary or advisable; and
(iii) Obtaining any other consent, approval, or permit
from any state or federal governmental agency which the Committee
shall, in its absolute discretion after receiving the advice of
counsel, determine to be necessary or advisable.
Section 15. COMPLIANCE WITH APPLICABLE LAWS. If at any time the
Company shall be advised by its counsel that the exercise of any Option
or the delivery of Shares upon the exercise of an Option is required to
be approved, listed, registered or qualified under any securities law,
that certain actions must be taken under the rules of any stock exchange
or over-the-counter market, that such exercise or delivery must be
accompanied or preceded by a prospectus or similar circular meeting the
requirements of any applicable law, or that some other action is required
<PAGE>
to be taken by the Company in compliance with applicable law, the Company
will use reasonable efforts to take all actions required within a
reasonable time, but exercise of the Options or delivery by the Company
of certificates for Shares may be deferred until the Company shall be in
compliance with all such requirements.
Section 16. GOVERNING LAW. The Plan, each Option awarded hereunder
and the related Option Agreement, and all determinations made and actions
taken pursuant thereto, to the extent not otherwise governed by the Code
or the laws of the United States, shall be governed by the internal laws
of the State of Wisconsin and construed in accordance therewith without
giving effect to the principles of conflicts of laws applied by any
state.
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IN WITNESS WHEREOF, the Company has caused the Plan to be executed by
its duly authorized officers as of December 31, 1999.
MID-WISCONSIN FINANCIAL SERVICES, INC.
By: GENE C. KNOLL
Gene C. Knoll
President
ATTEST:
By: WILLIAM A. WEILAND
William A. Weiland
Secretary
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MID-WISCONSIN FINANCIAL SERVICES, INC.
EMPLOYEE STOCK PURCHASE PLAN
MID-WISCONSIN FINANCIAL SERVICES, INC.
EMPLOYEE STOCK PURCHASE PLAN
1. ESTABLISHMENT OF PLAN.
Mid-Wisconsin Financial Services, Inc., a Wisconsin corporation (the
"Company"), proposes to grant options ("Options") for purchase of the
Company's common stock, $0.10 par value ("Common Stock"), to eligible
employees of the Company and its Designated Subsidiaries (as hereinafter
defined in Section 5) pursuant to the Employee Stock Purchase Plan (the
"Plan"). The Company intends the Plan to qualify as an "employee stock
purchase plan" within the meaning of Section 423 of the Internal Revenue
Code of 1986, as amended (the "Code"), and the Plan shall be so
construed. Any term not expressly defined in the Plan but defined in
Section 423 of the Code shall have the meaning provided in Section 423 of
the Code.
2. STOCK SUBJECT TO PLAN.
A total of 50,000 shares of Common Stock will be available for
issuance under the Plan, subject to adjustments effected in accordance
with Section 16. Any shares of Common Stock that have been made subject
to an Option that cease to be subject to the Option (other than by means
of exercise of the Option), including, without limitation, in connection
with the cancellation or termination of an Option, shall again be
available for issuance in connection with future grants of Options under
the Plan.
3. PURPOSE.
The purpose of the Plan is to encourage employees of the Company and
its Designated Subsidiaries to own Common Stock, by permitting them to
acquire Common Stock at a discount through payroll deductions, and
thereby enhance their sense of participation in the affairs of the
Company and Subsidiaries and to provide an incentive for continued
employment.
4. ADMINISTRATION.
(a) The Plan shall be administered by the Stock Option Committee or
such other committee of the Company's Board of Directors (the "Board") as
the Board may from time to time designate as the administrator of the
Company's 1999 Employee Stock Option Plan. Subject to the provisions of
-1-
the Plan and the limitations of Section 423 of the Code or any successor
provision in the Code, the Committee shall have exclusive authority, in
its discretion, to determine all matters relating to Options granted
under the Plan, including all terms, conditions, restrictions, and
<PAGE>
limitations of Options, and to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it
shall from time to time deem advisable, to interpret the terms and
provisions of the Plan and any Option issued under the Plan, and to
otherwise supervise the administration of the Plan; provided, however,
that all participants granted Options under an offering pursuant to the
Plan shall have the same rights and privileges within the meaning of
Section 423(b)(5) of the Code except as required by applicable law. The
Committee's exercise of discretion and interpretation of the Plan, its
rules and regulations, and all actions taken and determinations made by
the Committee pursuant to the Plan shall be conclusive and binding on all
parties involved or affected. The Committee may delegate administrative
duties to any person or persons selected by it, as it deems advisable.
All expenses incurred in connection with the administration of the Plan
shall be paid by the Company and the Designated Subsidiaries; provided,
however, that the Committee may require a participant to pay any costs or
fees in connection with the sale by the participant of shares of Common
Stock acquired under the Plan or in connection with the participant's
request for the issuance of a certificate for shares of Common Stock held
in the participant's account under the Plan.
(b) A majority of the members of the Committee shall constitute a
quorum. In the absence of specific rules to the contrary, action by the
Committee shall require the consent of a majority of the members of the
Committee, expressed either orally at a meeting of the Committee or in
writing in the absence of a meeting.
(c) No member of the Board, no executive officer or other employee
of the Company, and no other agent or representative of the Company shall
be liable for any act, omission, interpretation, construction, or
determination made in connection with the Plan in good faith, and all
such persons shall be entitled to indemnification and reimbursement by
the Company in respect of any claim, loss, damage, or expense (including
attorneys fees) arising therefrom to the full extent permitted by law,
except as otherwise may be provided in the Company's articles of
incorporation and/or by-laws, and under any directors' and officers'
liability insurance that may be in effect from time to time.
5. ELIGIBILITY.
(a) Each employee of the Company or the Designated Subsidiaries is
eligible to participate in the Plan for any Offering Period (as
hereinafter defined) under the Plan except:
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(i) if so determined by the Committee or the Board, employees
who are customarily employed for less than 20 hours per week;
(ii) if so determined by the Committee or the Board, employees
who are customarily employed for not more than five months in a calendar
year; and
(iii) employees who, together with any other person whose stock
would be attributed to such employee pursuant to Section 424(d) of the
Code, own stock or hold options to purchase stock possessing 5% or more
of the total combined voting power or value of all classes of stock of
the Company or any of its Subsidiaries or who, as a result of being
<PAGE>
granted Options under the Plan, would own stock or hold options to
purchase stock possessing 5% or more of the total combined voting power
or value of all classes of stock of the Company or any of its
Subsidiaries.
(b) For all purposes of the Plan, (i) the term "Subsidiary" shall
mean any "subsidiary corporation" as that term is defined in Section
424(f) of the Code and (ii) the term "Designated Subsidiaries" shall mean
Mid-Wisconsin Bank and each subsidiary thereof and each other Subsidiary
which may hereafter be determined by the Committee or the Board to be a
"Designated Subsidiaries." A Designated Subsidiary will cease to be a
Designated Subsidiary on the earlier of (i) the date the Committee or the
Board determines that such Subsidiary is no longer a Designated
Subsidiary or (ii) such Designated Subsidiary ceases for any reason to be
a Subsidiary.
6. OFFERING PERIODS.
The offering periods of the Plan (individually, an "Offering Period")
shall be of periods not to exceed the maximum period permitted by Section
423 of the Code. Until determined otherwise by the Committee or the
Board, Offering Periods shall commence on the first business day of each
calendar year and shall terminate on the last business day of such year;
provided, however, that the first Offering Period shall commence on the
later of (i) July 1, 2000 or (ii) the effective date of the Company's
Registration Statement on Form S-8 relating to the Plan and filed under
the Securities Act of 1933, as amended, and shall end on the last
business day of 2000. The first day of each Offering Period is referred
to as the "Offering Date." The last day of each Offering Period is
referred to as the "Purchase Date." Subject to the requirements of
Section 423 of the Code, the Committee or the Board shall have the power
to change the duration of Offering Periods with respect to future
offerings if such change is announced at least 30 days prior to the
Offering Date of the first Offering Period to be affected by such change.
-3-
7. PARTICIPATION IN THE PLAN.
An eligible employee may become a participant in the Plan on the
first Offering Date after he or she satisfies the eligibility
requirements, by delivering a properly completed enrollment form (on such
form as the Committee may prescribe) to the Committee not later than the
15th day of the month (or if such day is not a business day for the
Company or the applicable Subsidiary, on the immediately preceding
business day) before such Offering Date, unless a later time for filing
the enrollment form authorizing payroll deductions is set by the
Committee for all eligible employees with respect to a given Offering
Period. Once an employee becomes a participant in the Plan with respect
to an Offering Period, such employee will automatically participate in
the Offering Period commencing immediately following the last day of the
prior Offering Period unless the employee withdraws from the Plan or
terminates further participation in the Offering Period as set forth in
Sections 13 and 14. No additional enrollment form shall be required for
such continued participation in the Plan.
8. GRANT OF OPTION ON ENROLLMENT.
Enrollment by an eligible employee in the Plan with respect to an
<PAGE>
Offering Period will constitute the grant by the Company to such employee
of an Option to purchase on the relevant Purchase Date up to that number
of shares of Common Stock of the Company, and any fraction of a share, as
is determined by dividing (a) the amount accumulated in such employee's
payroll deduction account during the Offering Period ending on such
Purchase Date, by (b) the Purchase Price as that term is defined in
Section 9; provided, however, that the number of shares which may be
purchased pursuant to an Option may in no event exceed the number of
shares determined in the manner set forth in Section 11(b).
9. PURCHASE PRICE.
(a) Subject to Section 9(b), the purchase price per share (the
"Purchase Price") pursuant to any Option shall be the lower of (i) 95% of
the fair market value of such share on the Offering Date for such Option
or (ii) 95% of the fair market value of such share on the Purchase Date
for such Option; provided, however, that in no event may the purchase
price per share of Common Stock be below the par value of a share of
Common Stock.
(b) For purposes of the Plan, the term "fair market value" of the
Common Stock means, as of any given date, the price per share as
determined in accordance with the following:
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(i) EXCHANGE. If the principal market for the Common Stock is
a national securities exchange, "fair market value" means the average
of the highest and lowest reported sale prices of the Common Stock on
the New York Stock Exchange composite transaction tape if the Common
Stock is then listed for trading on such exchange, otherwise, the
average of the highest and lowest reported sales prices of the Common
Stock in any transaction reported on the principal exchange on which
the Common Stock is then listed for trading.
(ii) OVER-THE-COUNTER. If the principal market for the Common
Stock is an over-the-counter market, "fair market value" means the
average of the highest bid and lowest ask prices of the Common Stock
reported in The Nasdaq National Market or The Nasdaq Small Cap
Market, or if the Common Stock is not then listed for trading in
either of such markets, the average of the highest bid and lowest ask
prices of the Common Stock reported on the OTC Electronic Bulletin
Board, or, if prices for the Common Stock are not quoted on such OTC
market, the average of the highest bid and lowest ask prices reported
on any other bona fide over-the-counter stock market selected in good
faith by the Committee.
(iii) DATE. If the date on which "fair market value" is to be
determined is not a business day, or, if there shall be no reported
transactions for such date, such determination shall be made on the
next preceding business day for which transactions were reported.
(iv) OTHER DETERMINATION. If subparagraphs (i) and (ii) are
not applicable, or if the Committee in its sole discretion does not
believe that the procedure set forth in subparagraphs (i) and (ii) is
an accurate measurement of the market value of the Common Stock
because of the limited trading market of the Common Stock, "fair
market value" shall mean such amount as may be determined by the
<PAGE>
Committee by whatever means or method as the Committee, in the good
faith exercise of its discretion, shall at such time deem
appropriate.
The Committee may change the manner in which the Purchase Price is
determined, so long as (x) such determination does not have the effect of
lowering the Purchase Price to an amount less than that set forth in
Section 9(a) and (y) such changed manner of computation is announced to
eligible employees at least 30 days prior to the Offering Date of the
first Offering Period to be affected by such change.
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10. PURCHASE OF SHARES; CHANGES IN PAYROLL DEDUCTIONS; ISSUANCE OF
SHARES.
(a) Funds contributed by each participant for the purchase of shares
under the Plan shall be accumulated by regular payroll deductions made
during each Offering Period. The deductions shall be made in such whole
dollar amounts per payroll period as the participant shall elect,
provided, however, that no such amount may exceed 5% of the participant's
Compensation with respect to such payroll period; and, provided further,
that the Committee may, from time to time, and at any time, specify a
minimum dollar amount per payroll period. As used herein, "Compensation"
shall mean all base salary, wages, bonuses, commissions, and overtime pay
with respect to such payroll period; provided, however, that for purposes
of determining a participant's Compensation, any election by such
participant to reduce his or her regular cash remuneration under Sections
125 or 401(k) of the Code shall be treated as if the participant did not
make such election. "Compensation" does not include severance pay,
hiring and relocation allowances, pay in lieu of vacation, automobile
allowances, imputed income arising under any Company group insurance or
other benefit program, income received in connection with stock options,
or any other special items of remuneration. Payroll deductions shall
commence on the first payday following the Offering Date and shall
continue through the last payday of the Offering Period unless sooner
altered or terminated as provided in the Plan.
(b) A participant may decrease (but not increase) the rate of
payroll deductions during an Offering Period by filing with the Committee
a new authorization for payroll deductions, in which case the new rate
shall become effective for the next payroll period commencing more than
15 days after the Committee's receipt of the authorization and shall
continue for the remainder of the Offering Period unless changed as
described below. Such a decrease in the rate of payroll deductions may
be made at any time during an Offering Period, but not more than one
change may be made effective during any Offering Period. Notwithstanding
the foregoing, a participant may decrease the rate of payroll deductions
to zero for the remainder of the Offering Period. A participant may
increase or decrease the rate of payroll deductions for any subsequent
Offering Period by filing with the Committee a new authorization for
payroll deductions not later than the 15th day of the month (or if such
date is not a business day, the immediately preceding business day)
before the beginning of such Offering Period. A participant who has
decreased the rate of withholding to zero will be deemed to continue as a
participant in the Plan until the participant withdraws from the Plan in
accordance with the provisions of Section 13 or his or her participation
is terminated in accordance with the provisions of Section 14. A
<PAGE>
participant shall have the right to withdraw from the Plan in the manner
set forth in Section 13 regardless of whether the participant has
exercised his or her right to decrease the rate at which payroll
deductions are made during the applicable Offering Period.
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(c) All payroll deductions made for a participant will be credited
to his or her account under the Plan and deposited with the general funds
of the Company. No interest will accrue on payroll deductions. All
payroll deductions received or held by the Company may be used by the
Company for any corporate purpose, and the Company shall not be obligated
to segregate such payroll deductions.
(d) On each Purchase Date, provided that the participant has not
terminated employment in accordance with Section 14 and has not submitted
to the Committee a signed and completed withdrawal form, in each case on
or before the 15th day (or if such date is not a business day, on the
immediately preceding business day) of the last month of the Offering
Period in accordance with Section 10(b) or Section 13, then, subject to
the limitations set forth in Section 11, the Company shall apply the
funds then in the participant's account to the purchase at the Purchase
Price of whole and any fractional shares (rounded to the nearest
hundredth) of Common Stock issuable under the Option granted to such
participant with respect to the Offering Period.
(e) During a participant's lifetime, such participant's Option to
purchase shares hereunder is exercisable only by him or her or, in the
event of the participant's Disability, the participant's legal
representatives. The participant shall have no interest or voting right
in shares covered by his or her Option until such Option has been
exercised. For purposes of the Plan, "Disability" means (i) a physical
or mental condition which qualifies as a total and permanent disability
under the terms of any plan or policy maintained by the Company or a
Subsidiary and for which the participant is eligible to receive benefits
under such plan or policy, or (ii) if the participant does not
participate in a disability plan, or is not covered by a disability
policy, of the Company or a Subsidiary, "Disability" means the permanent
and total inability of a participant by reason of mental or physical
infirmity, or both, to perform the work customarily assigned to him or
her, if a medical doctor selected or approved by the Committee, and
knowledgeable in the field of such infirmity, advises the Committee
either that it is not possible to determine when such Disability will
terminate or that it appears probable that such Disability will be
permanent during the remainder of said participant's lifetime.
11. LIMITATIONS ON RIGHTS TO PURCHASE.
(a) No employee shall be granted an Option to purchase Common Stock
under the Plan at a rate which, when aggregated with his or her rights to
purchase stock under all other employee stock purchase plans of the
Company or any Subsidiary which is intended to meet the requirements of
Code Section 423, exceeds $25,000 in fair market value, determined as of
the applicable date of the grant of the Option, for each calendar year in
which the employee participates in the Plan (or any other employee stock
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purchase plan described in this Section 11(a)).
<PAGE>
(b) The number of shares which may be purchased by any employee on
the first Purchase Date to occur in any calendar year may not exceed the
number of shares determined by dividing $25,000 by the fair market value
(as defined in Section 9) of a share of Common Stock on the Offering Date
of the Offering Period in which such Purchase Date occurs. The number of
shares which may be purchased by any employee on any subsequent Purchase
Date which occurs in the same calendar year as that referred to in the
preceding sentence shall not exceed the number of shares determined by
performing the calculation described below, with all computations to be
made to the nearest one hundredth of a whole share of Common Stock or one
cent, as the case may be.
(i) STEP ONE: The number of shares purchased by the employee during
any previous Offering Period which occurred in the same
calendar year shall be multiplied by the fair market
value (as defined in Section 9) of a share of Common
Stock on the first day of such previous Offering
Period in which such shares were purchased.
(ii) STEP TWO: The amount determined in Step One shall be subtracted
from $25,000.
(iii) STEP THREE: The amount determined in Step Two shall be divided
by the fair market value (as defined in Section 9) of
a share of Common Stock on the Offering Date of the
Offering Period in which the subsequent Purchase Date
for which the maximum number of shares which may be
purchased is being determined by this calculation
occurs. The quotient so obtained shall be the maximum
number of shares which may be purchased by any
employee on such subsequent Purchase Date.
Subject to the limitations of Section 423 of the Code, and
notwithstanding the foregoing, the Committee may from time to time
determine that a different maximum number of shares may be purchased on
any given Purchase Date in lieu of the maximum amounts described above in
this Section 11(b), in which case the number of shares which may be
purchased by any employee on such Purchase Date may not exceed such
different limitation; provided, that any change made by the Committee
pursuant to this sentence shall only be effective for Offering Periods
that begin at least 30 days after the change is announced to eligible
employees.
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(c) If the number of shares to be purchased on a Purchase Date by
all employees participating in the Plan exceeds the number of shares then
available for issuance under the Plan, then the Committee shall make a
pro rata allocation of the remaining shares in as uniform a manner as
shall be reasonably practicable and as the Committee shall determine to
be equitable. In such event, the Company shall give written notice of
such reduction of the number of shares to be purchased under a
participant's Option to each participant affected thereby.
(d) Any payroll deductions accumulated in a participant's account
which are not used to purchase stock due to the limitations in this
Section 11 shall be returned to the participant as soon as practicable
after the end of the applicable Offering Period without interest.
<PAGE>
12. EVIDENCE OF STOCK OWNERSHIP.
As soon as practicable following each Purchase Date, the number of
full shares of Common Stock purchased by each participant shall be
evidenced in such manner as the Committee may deem appropriate, including
book-entry registration or issuance of one or more stock certificates
which shall be deposited into an account established in the participant's
name at a stock brokerage or other financial services firm designated or
approved by the Committee. A participant may request, no more than once
during any 12-month period and/or within 30 days following such
participant's Termination of Employment for any reason, that a stock
certificate for full (but not fractional) shares be issued and delivered
to him or her. Such request shall be made by filing notice with the
Company, and the Company shall cause such shares to be delivered promptly
following receipt of such notice. Cash shall be paid in lieu of
fractional shares based on the Fair Market Value of the Common Stock on
the date such notice is received by the Company. In the event a
participant or former participant shall have an account balance of less
than one full share with the Company as of the Offering Date of any
Offering Period for which such participant has elected not to participate
in the Plan, the Company shall cause such fractional share to be sold as
promptly as possible and the cash proceeds from such sale to be paid to
the account holder.
13. WITHDRAWAL.
Each participant may withdraw from an Offering Period under the Plan
by signing and delivering to the Committee a written notice to that
effect on a form provided for such purpose. Such withdrawal may be
elected at any time on or prior to the 15th day of the last month (or if
such date is not a business day, the immediately preceding business day)
of an Offering Period (each such date, the "Withdrawal Deadline").
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14. TERMINATION OF EMPLOYMENT; LEAVE OF ABSENCE.
Termination of Employment for any reason, including, without
limitation, the failure of a participant to remain an eligible employee,
immediately terminates his or her participation in the Plan. For
purposes of the Plan, "Termination of Employment" means the termination
of the participant's employment with, or performance of services for, the
Company and any of its Subsidiaries. A participant employed by, or
performing services for, a Subsidiary shall also be deemed to incur a
Termination of Employment if the Subsidiary ceases to be such a
Subsidiary and the participant does not immediately thereafter become
an employee of the Company or another Subsidiary. Temporary absences
from employment not exceeding the maximum amount then permitted under
the Company's policies or plans because of illness, vacation, or leave of
absence, and transfers among the Company and its Subsidiaries shall not
be considered Terminations of Employment. For purposes of the Plan, a
participant's employment shall be deemed to have terminated at the close
of business on the day preceding the first date on which he or she is no
longer for any reason whatsoever employed by the Company or any of its
Subsidiaries.
15. RETURN OF PAYROLL DEDUCTIONS.
<PAGE>
In the event a participant's participation in the Plan is terminated
by withdrawal, Termination of Employment, or otherwise, the Company shall
promptly deliver to the participant all accumulated payroll deductions of
the participant to the Plan which have not yet been applied to the
purchase of Common Stock as soon as practicable after the end of the
applicable Offering Period, unless such termination of participation
occurs later than the Withdrawal Deadline for the Offering Period, in
which event such accumulated payroll deductions will be utilized to
purchase Common Stock for the participant. No interest shall accrue on
the payroll deductions of a participant in the Plan.
16. CAPITAL CHANGES.
(a) If the Company shall, after the effective date of the Plan,
change the Common Stock into a greater or lesser number of shares through
a stock dividend, stock split-up or combination of shares, then the
number of shares then subject to the Plan as provided for in Section 2
and the Purchase Price of all Options then outstanding shall all be
proportionately increased or decreased as of the record date for such
stock dividend, stock split-up or combination of Shares in order to give
effect thereto. Notwithstanding any such proportionate increase or
decrease, no fraction of a Share shall be issued upon the exercise of an
Option and the Shares subject to an Option shall be rounded to the
nearest whole Share.
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(b) If, after the effective date of the Plan, there shall be any
change in the Common Stock or other change in the capitalization of the
Company other than through a stock dividend, stock split-up or
combination of shares, including, but not limited to, a change which
results from a merger, consolidation, spin-off, or other distribution of
stock or property of the Company, any reorganization (whether or not such
reorganization is within the meaning of Section 368 of the Code), or any
partial or complete liquidation of the Company, then if, and only if, the
Committee shall determine that such change equitably requires an
adjustment in (i) the number or kind of shares of stock then reserved for
issuance under Section 2, (ii) the number or kind of shares of stock then
subject to outstanding Options, or (iii) the Purchase Price with respect
to any Option, such adjustment as the Committee shall determine is
equitable and as shall be approved by the Board shall be made and shall
be effective and binding for all purposes of such Options and the Plan.
If any member of the Board shall, at the time of such approval, be an
Optionee, he shall not participate in action in connection with such
adjustment.
17. NONASSIGNABILITY.
Neither payroll deductions credited to a participant's account nor
any rights with regard to the exercise of an Option or to receive shares
under the Plan may be assigned, transferred, pledged, or otherwise
disposed of in any way (other than by will, the laws of descent and
distribution, or as provided in Section 24 hereof) by the participant.
Any such attempt at assignment, transfer, pledge, or other disposition
shall be void and without effect.
18. REPORTS AND STATUS OF ACCOUNTS.
<PAGE>
Individual accounts will be maintained by the Company for each
participant in the Plan. The participant shall have all ownership rights
with respect to shares of Common Stock held in his or her account(s) by
the Company, including the right to vote such shares and to receive any
dividends or distributions which may be declared thereon by the Board.
The Committee shall send to each participant promptly after the end of
each Offering Period a report of his or her account(s) setting forth with
respect to such Offering Period the total payroll deductions accumulated,
the number of whole and any fractional share purchased, and the per share
price thereof, and also setting forth the total number of shares
(including any fractional share) then held in his or her account(s).
Neither the Company nor any Designated Subsidiary shall have any
liability for any error or discrepancy in any such report.
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19. NO RIGHTS TO CONTINUED EMPLOYMENT; NO IMPLIED RIGHTS.
Neither the Plan nor the grant of any Option hereunder shall
constitute a contract of employment with any participant nor shall confer
any right on any employee to remain in the employ of the Company or any
Subsidiary or restrict the right of the Company or any Subsidiary to
terminate such employee's employment. The grant of any Option hereunder
during any Offering Period shall not give a participant any right to
similar grants thereafter.
20. EQUAL RIGHTS AND PRIVILEGES.
All eligible employees shall have equal rights and privileges with
respect to the Plan except as required by applicable law so that the Plan
qualifies as an "employee stock purchase plan" within the meaning of
Section 423 or any successor provision of the Code and the related
regulations. Any provision of the Plan which is inconsistent with
Section 423 or any successor provision of the Code shall, without further
act or amendment by the Company, the Board, or the Committee, be reformed
to comply with the requirements of Section 423. This Section 20 shall
take precedence over all other provisions in the Plan.
21. NOTICES.
All notices or other communications by a participant to the Committee
or Company under or in connection with the Plan shall be deemed to have
been duly given when received in the form specified by the Company at the
location, or by the person, designated by the Committee or the Company,
as the case may be, for the receipt thereof.
22. AMENDMENT OF PLAN.
The Board may amend the Plan in such respects as it shall deem
advisable; provided, however, that shareholder approval will be required
for any amendment that will increase the total number of shares as to
which Options may be granted under the Plan or, but for such shareholder
approval, cause the Plan to fail to continue to qualify as an "employee
stock purchase plan" under Section 423 of the Code.
23. TERMINATION OF THE PLAN.
The Board may suspend or terminate the Plan at any time. Upon a
<PAGE>
suspension or termination of the Plan while an Offering Period is in
progress, the Committee shall either shorten such Offering Period by
setting a new Purchase Date before the date of such suspension or
termination of the Plan or shall return the accumulated payroll
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deductions of all participants as if they had all withdrawn before the
Withdrawal Deadline for such Offering Period, as set forth in Section
15. Unless the Plan shall have been previously terminated by the Board,
the Plan shall terminate on, and no Options shall be granted after,
December 31, 2009. No Options shall be granted during any period of
suspension of the Plan.
24. DESIGNATION OF BENEFICIARY.
(a) A participant may file a written designation of a beneficiary
who is to receive any shares of Common Stock and cash, if any, from the
participant's account under the Plan, in the event of such participant's
death prior to delivery to him or her (or to the Plan Financial Agent, if
any, on his or her behalf) of such shares and cash.
(b) Such designation of beneficiary may be changed by the
participant at any time by written notice. In the event of the death of
a participant and in the absence of a beneficiary validly designated
under the Plan who is living at the time of such participant's death, the
Company shall deliver such shares or cash to the executor or
administrator of the estate of the participant, or if no such executor or
administrator has been appointed (to the knowledge of the Company), the
Company, in its discretion, may deliver such shares or cash to the spouse
or to any one or more dependents or relatives of the participant or, if
no spouse, dependent, or relative is known to the Company, to such other
person as the Company may in good faith determine to be the appropriate
designee.
25. CONDITIONS UPON ISSUANCE OF SHARES; LIMITATION ON SALE OF SHARES.
Shares of Common Stock shall not be issued with respect to an Option
unless the exercise of such Option and the issuance and delivery of such
shares pursuant thereto shall comply with all applicable provisions of
law, domestic or foreign, including, without limitation, the Securities
Act of 1933, as amended, the Securities Exchange Act of 1934, as amended,
the rules and regulations promulgated thereunder, and the requirements of
any stock exchange or automated quotation system upon which the shares
may then be listed, and shall be further subject to the approval of
counsel for the Company with respect to such compliance.
26. APPOINTMENT OF PLAN AGENT.
The Committee may appoint a stock brokerage or financial services
firm to act as Plan Agent and to perform such duties with respect to
maintaining participants' accounts, holding certificates of Common Stock
on behalf of participants, and such other record keeping, administrative,
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or ministerial duties of either the Committee or the Company as the
Committee shall, from time to time, deem appropriate.
27. EFFECTIVE DATE.
<PAGE>
The Plan shall be effective as of July 1, 2000, subject to the
approval of the Company's stockholders; provided, however, that the Plan
shall terminate without action by the Board if it is not approved by the
shareholders of the Company within 12 months of the date it is adopted by
the Board.
28. GOVERNING LAW.
Except to the extent that provisions of the Plan are governed by
applicable provisions of the Code or any other substantive provision of
federal law, the Plan and actions taken under the Plan shall be governed
by and construed in accordance with the laws of the State of Wisconsin
without reference to principles of conflict of laws.
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