UNION ACCEPTANCE CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
The Union Acceptance Corporation Employee Stock Purchase Plan (the
"Plan") has been adopted by Union Acceptance Corporation (the "Corporation") to
facilitate the acquisition of shares of the Corporation's Class A Common Stock,
without par value (the "Shares"), by the employees of the Corporation and its
subsidiaries (the Corporation and its subsidiaries are collectively referred to
as the "Employers" and individually as an "Employer"). The terms of the Plan are
set forth below:
ARTICLE I
Participation
Section 1.1 Eligibility to Participate. All full-time employees of the
Employers who have attained the age of 18 and who have completed six (6) months
of continuous service with an Employer are eligible to participate in the Plan.
For this purpose, continuous service means service uninterrupted except for
military duty, authorized leaves of absence, or temporary absence on account of
illness. However, participation in the Plan is entirely voluntary.
Section 1.2 Election to Participate. Each eligible employee may elect
to participate in this Plan in writing at any time, and the election will be
effective as soon as practicable after it is received by his Employer. Election
forms for this purpose will be available at the human resources office of the
Corporation. In making the election, the eligible employee (the "Investor") will
authorize his Employer to make regular periodic payroll deductions from the
compensation he otherwise receives from that Employer. The payroll deductions
shall not be less than Ten Dollars ($10.00) per pay period nor more than ten
percent (10%) of the employee's compensation in the pay period. Payroll
deduction is the only method for participating in the Plan.
Section 1.3 Change in Election. Upon proper written notice to his
Employer, an Investor may change or terminate his election. To be effective,
notice must be written and must be received by the Employer no later than 5:00
P.M. on Thursday of the week prior to the first day of the pay period the
employee desires the change or termination of the deduction to become effective.
However, when an Investor changes the amount of his payroll deduction, he may
not change the amount of such deductions for a period of three (3) months
thereafter, except in case of hardship or emergency.
Section 1.4 Administration. The Board of Directors of the Corporation
or its Compensation Committee shall have power to interpret this plan and to
make rules and decisions respecting the administration of the plan. The Board of
Directors or the Compensation Committee shall select an agent and its successors
from time to time (the "Agent") to perform the responsibilities of the Agent
under this plan. The Corporation or an affiliate of the Corporation may perform
the record-keeping
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functions prescribed to the Agent under the plan, but all purchases made
pursuant to the plan must be conducted by an agent independent of the
Corporation as determined by the Board of Directors of the Corporation or the
Compensation Committee from time to time. Neither the Corporation nor any
affiliate of the Corporation shall exercise any direct or indirect control or
influence over the prices or amounts of shares to be purchased, the timing of,
or the manner in which, the shares are to be purchased, or the selection of a
broker or dealer through which purchases may be executed. From time to time, the
Board of Directors or its Compensation Committee may designate one or more
individuals to maintain records as to the eligibility of employees to
participate in the Plan and to preserve and act upon forms affecting payroll
deductions filed by employees under the Plan. No such person shall have any
discretion concerning decisions regarding the Plan.
ARTICLE II
Employer Subsidy
Section 2.1 Employer Subsidy. Each Employer shall make a contribution
to the account of each Investor it employs in an amount equal to such percentage
of the Investor's payroll deduction as the Corporation determines from time to
time (the "Employer Subsidy"). Until otherwise determined by the Corporation,
the initial Employer Subsidy shall be 10%. Such percentage may be changed from
time to time as determined by the Corporation in its sole discretion, subject to
the notice provisions in Section 2.2 below. Each Employer shall transfer to the
Agent the Employer Subsidy allocable to each Investor's Account no later than
the end of the month following the fiscal quarter (ending on the last day of
September, December, March and June) in which the Investor's payroll deductions
were made.
Section 2.2 Notice of Change in Employer Subsidy. The Employers shall
notify all employees eligible to participate in this Plan in writing on or
before the last working day of the second pay period prior to the pay period for
which any change in the percentage of the Employer Subsidy is to become
effective. Upon proper written notice to his Employer, an Investor may change or
terminate his payroll deduction, subject to the provisions of Section 1.3 above.
ARTICLE III
Accounting
Section 3.1 Establishment of Accounts. The Employers shall make such
payroll deductions as are authorized by each Investor and transfer to the Agent
the total of such deductions and the Employer Subsidy, along with an itemized
statement showing the deductions and the Employer Subsidy; provided, however,
that such transfer shall not be made until the end of the month following the
fiscal quarter in which such deductions were made. The Agent shall provide an
Investor the option that all deductions and Employer Subsidy be held by the
Agent in either an individual account, a joint account with the Investor's
spouse, or a custodian account for a minor
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(collectively referred to hereinafter as the "Investor's Account"). The Agent
shall maintain a record for such Investor that reflects:
(a) the amount of payroll deductions and the amount of the Employer
Subsidy received from the Employers applicable to the Investor;
(b) the number of Shares, whole and fractional, credited to the
Investor's Account, as a result of purchases made with payroll deductions
and cash dividends, or as a result of stock splits, stock dividends or
other credits;
(c) the amount of cash dividends received or other amounts received on
Shares credited to the Investor's Account;
(d) the amount used to purchase, or the cash proceeds realized from
the sale of, fractional Shares, credited to the Investor's Account by
reason of purchases through the use of commingled funds, stock dividends,
or otherwise; and
(e) the balance of cash, if any, held in his Investor's Account.
Section 3.2 Periodic Account Statement. On at least a quarterly basis
and upon the distribution of Shares to an Investor, the Agent shall furnish the
Investor statements reflecting the payroll deductions received on such
Investor's behalf, the aggregate amount of the Employer Subsidy received on such
Investor's behalf, the number of Shares purchased on such Investor's behalf, the
cost of the Shares, and all other charges or credits to the Investor's Account.
ARTICLE IV
Investment and Voting of Shares
Section 4.1 Share Purchases. Except as may be necessary to comply with
applicable federal securities laws, the Agent shall purchase Shares promptly
upon the receipt of funds, and, in any event, within thirty (30) business days
of the receipt of any funds of an Investor, at prevailing market prices on the
open market. The Agent may, but shall not be obligated to, select a broker
through which purchases may be executed. In making purchases for the Investor's
Accounts, the Agent may commingle each Investor's funds with those of other
Investors participating in the Plan. The Agent shall purchase as many whole
Shares of stock as the total amount of funds in the Agent's possession at the
time of purchase shall permit. The Employers shall not exercise any direct or
indirect control or influence over the times when, or the prices at which, the
Agent may purchase the Shares, the number of Shares to be purchased, the manner
in which the Shares are to be purchased, or the broker (if any) through whom the
purchases may be executed. Any fractional Shares shall be allocated and computed
to the ten-thousandth of a Share.
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Section 4.2 Investment of Dividends. Cash dividends, interest and any
cash or other contributions received on the Shares purchased and held by the
Agent shall be reinvested in Shares. The number of Shares purchased with cash
dividends, or the number of Shares acquired in the event of a stock dividend
paid by the Corporation or a stock split of the Corporation shall be credited to
the appropriate Investors' Accounts in proportion to the number of Shares
credited to each such Investor's Account on the record date for (or in the
absence of a record date, the payment date for) the dividend or stock split with
respect to the Shares.
Section 4.3 Sale of Shares. Except as otherwise provided below, an
Investor may instruct the Agent to sell any or all of the full Shares and any
fractional interest in a Share held in his Investor's Account; provided, that if
the Investor is an officer or director subject to Section 16 of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), such instruction must be in
writing stating that such investor has not made a purchase of Shares or engaged
in any transaction which could be deemed a purchase pursuant to Section 16 of
the 1934 Act within the prior six (6) months and other evidence as the Agent may
request to assure that such sale occurs in conformity with Rule 144 under the
Securities Act of 1933, as amended, or successor provision. As soon as possible
after receipt of instructions to sell Shares from an Investor's Account, the
Agent will transfer the Investor's specified number of Shares into an account in
the individual Investor's name. Further disposition of the Shares transferred to
the account in the individual Investor's name will be between the Investor and
the Agent and will be outside of the Plan.
Section 4.4 Registration and Voting of Shares. The Agent is authorized
to, and shall, register such Shares in its own name or the name of its nominees;
provided, however, that each Investor shall be entitled to vote the number of
whole Shares credited to his Investor's Account. The Agent shall provide each
Investor with written notice of any meeting of Shareholders of the Corporation,
and shall provide each Investor with all proxy materials furnished by the
Corporation in connection with any such meeting. The Agent shall vote the Shares
in accordance with the instructions obtained from the Investors. Shares for
which no voting instructions have been received shall be voted by the Agent in
accordance with the recommendation, if any, of the Corporation's Board of
Directors on the matter in question and, in the absence of such a
recommendation, shall not be voted by the Agent.
Section 4.5 Tender Offer. Each Investor shall have the right to direct
the Agent as to whether the Shares allocated to his Investor's Account are to be
tendered pursuant to any tender offer made for the Shares of the Corporation.
The Agent shall as soon as practical (and in no event later than five (5)
calendar days) after its receipt of the tender offer documents cause to be
prepared and delivered to each Investor who has an Investor's Account as of the
date of the tender offer a copy of all relevant information as to the tender
offer and a written election form which will direct the Agent as to whether it
should tender the Shares held in such Investor's Account. The Shares for which
no direction is received from the Investor shall be tendered or not tendered in
accordance with the recommendation, if any, of the Corporation's Board of
Directors on the matter in question and, in the absence of such a
recommendation, shall not be tendered by the Agent.
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ARTICLE V
Distributions
Section 5.1 Partial Distributions. Whole Shares may be withdrawn upon
the written request of an Investor to the Agent at any time to the extent
accumulated at the time of the request for an Investor's Account, and stock
certificates for such number of Shares shall be issued and distributed as
required by the form of Investor's Account promptly after receipt of such
request; provided, however, that, except in the case of an Investor who
withdraws from the Plan, an Investor may not withdraw fewer than twenty (20)
Shares. The value of any fractional Shares or uninvested cash shall be refunded
only upon withdrawal from the Plan as provided in Section 5.2.
Section 5.2 Withdrawal from Plan.
a. Voluntary Withdrawal. Any Investor may voluntarily withdraw
from the Plan at any time by notifying the Agent of such intent in
writing. Any such withdrawal shall become effective immediately upon
receipt of such notice by the Agent; provided, however, that any
withdrawal shall not affect any purchase of Shares by the Agent, or any
orders given by the Agent to any broker, prior to the receipt of any
such notice of withdrawal. The Investor shall concurrently deliver to
his Employer a notice of termination of the payroll deduction
authorization, which termination shall become effective according to
the provisions of Section 1.3.
As soon as reasonably practicable after receipt of notice of
withdrawal, the Agent shall cause stock certificates to be issued and
distributed as required by the type of Investor's Account for the
number of Shares accumulated for the Investor's benefit, and shall pay
over any uninvested cash credited to the Investor's Account in like
manner. Fractional Shares credited to an Investor's Account shall be
handled as provided in Section 5.2(c) below. If requested by the
Investor, in lieu of issuing stock certificates, the Agent shall sell
the Investor's Shares and fractional Shares in accordance with Section
4.3 above.
Upon withdrawal of an employee from the Plan, the employee
shall not be allowed to participate in the Plan again until the
expiration of a six (6) month period commencing on the effective date
of the withdrawal.
b. Death or Termination. Withdrawal from the Plan shall be
immediately effective upon the death of an Investor or the
termination of employment of an Investor by the Employers;
provided, however, that any such withdrawal from the Plan shall
not affect any purchase of Shares by the Agent, or any orders
given by the Agent to any broker, prior to receipt of any notice
of such death or termination of employment. Death or termination
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of employment shall immediately terminate the payroll deduction
authorization of the Investor to his Employer.
Issuance and distribution of stock certificates and the
payment of any uninvested cash shall be made after notice of the death
or termination of employment in the manner provided for voluntary
withdrawal from the Plan.
c. Fractional Shares. If at the time of complete
distribution to an Investor there is a fractional Share credited
to his Investor's Account, the Agent is authorized to use such
cash from the Investor's Account as may be necessary to purchase
additional fractional Shares to equal a whole Share if such is
possible. If there is insufficient cash in the Investor's Account
to permit such purchase of a whole Share, the Agent is authorized
to sell any such fractional Share to another Investor's Account
based on the current market price for Shares on the date of sale
or to the special revolving plan account established by the
Corporation with the Agent for such purpose, and credit the
Investor's Account with the cash proceeds thereof.
ARTICLE VI
Miscellaneous
Section 6.1 Liability. The relationship between the Agent and the
Investor is the normal relationship between an agent and its client. The
Employers shall have no responsibility or liability for any act or thing done or
left undone including, but not limited to, any action taken with respect to the
price, time of, quantity, brokers chosen by the Agent, or other conditions or
circumstances relating to the purchase or sale of Shares under the terms of this
Plan.
Section 6.2 No Interest. All sums deducted from the Investor's payroll
and held by either the Employers or the Agent for and on behalf of such
Investor, shall be held interest free.
Section 6.3 Expenses. Administrative expenses and brokerage
commissions, if any, incurred on purchases of Shares in connection with this
Plan shall be paid by the Employer. Brokerage commissions and other charges in
connection with sales, if applicable, will be payable by the Investor who orders
the transactions for his Investor's Account.
Section 6.4 Amendments. Amendments to this Plan may be adopted, in
writing, by the Corporation with the approval of its Board of Directors;
provided that no amendment affecting the rights and duties of the Agent (other
than the Corporation) shall be effective without its prior written consent.
Section 6.5 Successors. In the event of either the resignation or
disqualification of the Agent, its successor shall be named by the Board of
Directors of the Corporation or the Compensation Committee.
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Section 6.6 Termination. Upon thirty (30) days prior written notice to
the Agent, the Corporation may terminate this Plan; provided, however, that the
prior notice requirement may be waived by the Agent. Upon thirty (30) days
written notice to the Corporation, the Agent may resign as Agent, in which event
the Corporation shall either promptly appoint a successor agent or elect to
terminate the Plan by written notice to the Agent (which need not be delivered
in advance). The rights and benefits of the Investors accrued at the time of
such termination shall not be affected. A final accounting, and delivery of all
Shares and funds, shall be made by the Agent to its successor, if any, or to the
Investors if no successor is appointed and the Plan is terminated, at the date
of termination of this Plan as to the Agent.
Section 6.7 Binding Effect. This Plan shall be binding upon the
Employers, the Agent and Investors and upon their successors, administrators,
executors and assigns.
Section 6.8 Non-Transferable. The rights granted under this Plan to an
eligible employee are not transferable by him other than by will or the laws of
descent and distribution or pursuant to a qualified domestic relations order as
defined by the Internal Revenue Code of 1986, as amended, or Title I of the
Employee Retirement Income Security Act, as amended, or the rules thereunder,
and are exercisable during his lifetime only by him or by his guardian or his
legal representative.
