HEARTLAND
FINANCIAL USA, INC.
2005
LONG-TERM INCENTIVE PLAN
Article
1
GENERAL
Section
1.1
Purpose,
Effective Date and Term
.
The purpose of this
HEARTLAND
FINANCIAL USA, INC. 2005 LONG-TERM INCENTIVE PLAN
(the
“Plan”) is to promote the long-term financial success of
HEARTLAND
FINANCIAL USA, INC.
,
a
Delaware corporation (the “
Company
”) and
its subsidiaries by providing a means to attract, retain and reward individuals
who can and do contribute to such success and to further align their interests
with those of the Company’s stockholders. The “
Effective
Date
” of the
Plan is February 10, 2005, subject to approval of the Plan by the Company’s
stockholders. The Plan shall be unlimited in duration and, in the event of Plan
termination, shall remain in effect as long as any awards under it are
outstanding;
provided,
however,
that no
awards may be granted under the Plan after the ten-year anniversary of the most
recent approval of the Plan by the Company’s stockholders.
Section
1.2
Administration
.
The authority to control and manage the operation of the Plan shall be vested in
a committee of the Company’s Board of Directors (the “
Committee
”) in
accordance with
Section
5.1
.
Section
1.3
Participation
.
Each employee or director of, or service provider to, the Company or any
Subsidiary of the Company who is granted an award in accordance with the terms
of the Plan shall be a “
Participant
” in the
Plan. Awards under the Plan shall be limited to employees and directors of, and
service providers to, the Company;
provided,
however,
that an
award (other than an award of an ISO) may be granted to an individual prior to
the date on which he or she first performs services as an employee or a
director, provided that such award does not become vested prior to the date such
individual commences such services.
Section
1.4
Definitions
.
Capitalized terms in the Plan shall be defined as set forth in the Plan
(including the definition provisions of
Article 8
.
Article
2
AWARDS
Section
2.1
General
.
Any award under the Plan may be granted singularly, in combination with another
award (or awards), or in tandem whereby the exercise or vesting of one award
held by a Participant cancels another award held by the Participant. Each award
under the Plan shall be subject to the terms and conditions of the Plan and such
additional terms, conditions, limitations and restrictions as the Committee
shall provide with respect to such award. Subject to
Section
2.3
, an
award may be granted as an alternative to or replacement of an existing award
under the Plan or any other plan of the Company or any Subsidiary or as the form
of payment for grants or rights earned or due under any other compensation plan
or arrangement of the Company or its subsidiaries, including without limitation
the plan of any entity acquired by the Company or any Subsidiary. The types of
awards that may be granted under the Plan include:
(a)
Stock
Options
. A
stock option represents the right to purchase shares of Stock at an Exercise
Price established by the Committee. Any option may be either an incentive stock
option (an “
ISO
”) that
is intended to satisfy the requirements applicable to an “incentive stock
option” described in Code Section 422(b) or a non-qualified option that is not
intended to be an ISO,
provided
, that no
ISOs may be: (i) granted after the ten-year anniversary of the earlier of the
date of adoption or stockholder approval of the Plan; or (ii) granted to a
non-employee. Unless otherwise specifically provided by its terms, any option
granted under the Plan shall be a non-qualified option.
(b)
Stock
Appreciation Rights.
A
stock appreciation right (a “
SAR
”) is a
right to receive, in cash or Stock, an amount equal to or based upon the excess
of: (a) the Fair Market Value of a share of Stock at the time of exercise;
over (b) an Exercise Price established by the Committee.
(c)
Stock
Awards.
A
stock award is a grant of shares of Stock or a right to receive shares of Stock
(or their cash equivalent or a combination of both) in the future. Such awards
may include, but shall not be limited to, bonus shares, stock units, performance
shares, performance units, restricted stock or restricted stock
units.
(d)
Cash
Incentive Awards
. A
cash incentive award is the grant of a right to receive a payment of cash,
determined on an individual basis or as an allocation of an incentive pool (or
Stock having a value equivalent to the cash otherwise payable) that is
contingent on the achievement of performance objectives established by the
Committee.
Section
2.2
Exercise
of Options and SARs
.
An
option or SAR shall be exercisable in accordance with such terms and conditions
and during such periods as may be established by the Committee. In no event,
however, shall an option or SAR expire later than ten years after the date of
its grant (five years in the case of a 10% Stockholder with respect to an ISO).
The “
Exercise
Price
” of each
option and SAR shall not be less than 100% of the Fair Market Value of a share
of Stock on the date of grant (or, if greater, the par value of a share of
Stock);
provided,
however,
that the
Exercise Price of an ISO shall not be less than 110% of Fair Market Value of a
share of Stock on the date of grant in the case of a 10% Stockholder. The
payment of the Exercise Price of an option shall be by cash or, subject to
limitations imposed by applicable law, by such other means as the Committee may
from time to time permit, including: (a) by promissory note; (b) by
tendering, either actually or by attestation, shares of Stock acceptable to the
Committee, and valued at Fair Market Value as of the day of exercise;
(c) by irrevocably authorizing a third party, acceptable to the Committee,
to sell shares of Stock (or a sufficient portion of the shares) acquired upon
exercise of the option and to remit to the Company a sufficient portion of the
sale proceeds to pay the entire Exercise Price and any tax withholding resulting
from such exercise; or (d) by any combination thereof.
Section
2.3
Repricing
is Subject to Stockholder Approval
.
Except for adjustments pursuant to
Section
3.4
(relating to the adjustment of shares), and reductions of the Exercise Price
approved by the Company’s stockholders, the Exercise Price for any outstanding
option may not be decreased after the date of grant nor may an outstanding
option granted under the Plan be surrendered to the Company as consideration for
the grant of a replacement option with a lower exercise price.
Section
2.4
Performance-Based
Compensation
.
Any
award under the Plan which is intended to be “performance-based compensation”
within the meaning of Code Section 162(m) shall be conditioned on the
achievement of one or more objective performance measures, to the extent
required by Code Section 162(m) as may be determined by the
Committee.
(a)
Performance
Measures.
Such performance measures may be based on any one or more of the following:
earnings (
e.g.,
earnings
before interest and taxes; earnings before interest, taxes, depreciation and
amortization; or earnings per share); financial return ratios (
e.g.,
return on
investment, return on invested capital, return on equity or return on assets);
increase in revenue, operating or net cash flows; cash flow return on
investment; total stockholder return; market share; net operating income,
operating income or net income; debt load reduction; expense management;
economic value added; stock price; assets, asset quality level, charge offs,
loan reserves, non-performing assets, loans, deposits, growth of loans, deposits
or assets; interest sensitivity gap levels, regulatory compliance, improvement
of financial rating, achievement of balance sheet or income statement
objectives, and strategic business objectives, consisting of one or more
objectives based on meeting specific cost targets, business expansion goals and
goals relating to acquisitions or divestitures. Performance measures may be
based on the performance of the Company as a whole or of any one or more
Subsidiaries or business units of the Company or a Subsidiary and may be
measured relative to a peer group, an index or a business plan.
(b)
Partial
Achievement.
The terms of any award may provide that partial achievement of the performance
measures may result in a payment or vesting based upon the degree of
achievement.
(c)
Extraordinary
Items.
In
establishing any performance measures, the Committee may provide for the
exclusion of the effects of the following items, to the extent identified in the
audited financial statements of the Company, including footnotes, or in the
Management Discussion and Analysis section of the Company’s annual report:
(i) extraordinary, nusual, and/or nonrecurring items of gain or loss; (ii)
gains or losses on the disposition of a business; (iii) changes in tax or
accounting principles, regulations or laws; or (iv) mergers or acquisitions. To
the extent not specifically excluded, such effects shall be included in any
applicable performance measure.
Section
2.5
Dividends
and Dividend Equivalents
.
Any award under the Plan, including any option or SAR, may provide the
Participant with the right to receive dividend payments or dividend equivalent
payments with respect to Stock subject to the award, which payments may be
either made currently or credited to an account for the Participant, and may be
settled in cash or Stock.
Section
2.6
Deferral
of Payment
.
Subject to
Section
2.7
(Code
Section 409A), to the extent permitted by the Committee or the terms of any
award under the Plan, a Participant may defer receipt of the cash or Stock
otherwise payable under the award and be credited with interest or dividend
equivalents with respect thereto;
provided,
however,
that any
award otherwise payable in stock shall continue to be payable only in
stock.
Section
2.7
Code
Section 409A
.
Any
stock option, SAR, stock award or cash incentive award, and any deferrals of
such awards under
Section 2.6
, which
constitutes “deferred compensation” under Code Section 409A (“
409A
Award
”), and
any rules and regulations promulgated thereunder, shall be subject to the
following:
(a)
All 409A
Award documents and agreements, or rules and regulations created by the
Committee pertaining to 409A Awards, shall provide for the required procedures
under Code Section 409A, including the timing of deferral elections and the
timing and method of payment distributions.
(b)
With
respect to all 409A Awards, the Committee and its delegates shall operate the
Plan at all times in conformity with the known rules, regulations and guidance
promulgated under Code Section 409A, and the Committee shall reserve the right
(including the right to delegate such right) to unilaterally amend any 409A
Award granted under the Plan, without the consent of the Participant, to
maintain compliance with Code Section 409A. A Participant’s acceptance of any
award under the Plan constitutes acknowledgement and consent to such rights of
the Committee.
Article
3
SHARES
SUBJECT TO PLAN
Section
3.1
Available
Shares
.
The shares of Stock with respect to which awards may be made under the Plan
shall be shares currently authorized but unissued or currently held or, to the
extent permitted by applicable law, subsequently acquired by the Company as
treasury shares, including shares purchased in the open market or in private
transactions.
Section
3.2
Share
Limitations
.
(a)
Share
Reserve
. Subject
to the following provisions of this
Section
3.2
, the
maximum number of shares of Stock that may be delivered to Participants and
their beneficiaries under the Plan shall be equal to One Million (1,000,000)
shares of Stock (all of which may be granted as ISOs) and any shares of Stock
that are represented by awards under the Heartland Financial USA, Inc. 2003
Stock Option Plan (the “Prior Plan”) that are forfeited, expire or are cancelled
after the Effective Date with delivery of shares of Stock or which result in the
forfeiture of shares of Stock back to the Company to the extent that such shares
would have been added back to the reserve under the terms of the Prior Plan. The
maximum number of shares of Stock that may be issued in conjunction with awards
other than options and SARs shall be 30% of that number of shares in the
immediately preceding sentence.
As of
the date of stockholder approval of the Plan, no additional awards shall be
granted under the Prior Plan.
(b)
Reuse
of Shares.
To the
extent any shares of Stock covered by an award, under the Plan or the Prior
Plan, are forfeited or are not delivered to a Participant or beneficiary for any
reason, including because the award is forfeited or canceled, such shares shall
not be deemed to have been delivered for purposes of determining the maximum
number of shares of Stock available for delivery under the Plan.
Section
3.3
Limitations
on Grants to Individuals
.
(a)
Options
and SARs.
The
maximum number of shares of Stock that may be subject to options or SARs granted
to any one Participant during any calendar year shall be One Hundred Thousand
(100,000).
(b)
Stock
Awards.
The
maximum number of shares of Stock that may be subject to stock awards described
under
Section
2.1(c)
which
are granted to any one Participant during any calendar year and are intended to
be “performance-based compensation” (as that term is used for purposes of Code
Section 162(m)), shall be One Hundred Thousand (100,000).
(c)
Cash
Incentive Awards.
The
maximum dollar amount that may be payable to a Participant pursuant to cash
incentive awards described under
Section
2.1(d)
which
are granted to any one Participant during any calendar year and are intended to
be “performance-based compensation” (as that term is used for purposes of Code
Section 162(m)), shall be One Million Dollars ($1,000,000).
(d)
Director
Fees.
The
maximum number of shares of stock that may be covered by awards granted to any
one individual non-employee director pursuant to
Section
2.1(a)
and
Section
2.1(b)
(relating to options and SARs) shall be Ten Thousand (10,000) shares during any
calendar year and the maximum number of shares that may be covered by awards
granted to any one individual non-employee director pursuant to
Section
2.1(c)
(Stock
Awards) shall be Five Thousand (5,000) shares during any calendar year. The
foregoing limitations shall not apply to cash-based director fees that the
non-employee Director elects to receive in the form of Stock or Stock units
equal in value to the cash-based director fee, so long as such Stock or Stock
units are purchased from the open market or paid from treasury shares held by
the Company.
(e)
Dividend,
Dividend Equivalents and Earnings.
For
purposes of determining whether an award is intended to be qualified as
performance-based compensation under the foregoing limitations of this
Section
3.3
, (i) the
right to receive dividends and dividend equivalents with respect to any award
which is not yet vested shall be treated as a separate award; and (ii) if the
delivery of any shares or cash under an award is deferred, any earnings,
including dividends and dividend equivalents, shall be disregarded.
Section
3.4
Corporate
Transactions
.
In
the event of a corporate transaction involving the Company or the shares of
Stock of the Company (including any stock dividend, stock split, extraordinary
cash dividend, recapitalization, reorganization, merger, consolidation,
split-up, spin-off, combination or exchange of shares), all outstanding awards
under the Plan, the number of shares reserved for issuance under the Plan under
Section
3.2
and each
of the specified share limitations set forth in
Section
3.3
shall
automatically be adjusted to reflect such transaction;
provided,
however,
the
Committee may otherwise adjust awards (or prevent such automatic adjustment) as
it deems necessary, in its sole discretion, to preserve the benefits or
potential benefits of the awards and the Plan. Action by the Committee may
include: (i) adjustment of the number and kind of shares which may be delivered
under the Plan; (ii) adjustment of the number and kind of shares subject to
outstanding awards; (iii) adjustment of the Exercise Price of outstanding
options and SARs; and (iv) any other adjustments that the Committee determines
to be equitable (which may include, (A) replacement of awards with other
awards which the Committee determines have comparable value and which are based
on stock of a company resulting from the transaction, and (B) cancellation
of the award in return for cash payment of the current value of the award,
determined as though the award were fully vested at the time of payment,
provided that in the case of an option or SAR, the amount of such payment shall
be no less than the excess of the value of the Stock subject to the option or
SAR at the time of the transaction over the Exercise Price).
Section
3.5
Delivery
of Shares
.
Delivery of shares of Stock or other amounts under the Plan shall be subject to
the following:
(a)
Compliance
with Applicable Laws.
Notwithstanding
any other provision of the Plan, the Company shall have no obligation to deliver
any shares of Stock or make any other distribution of benefits under the Plan
unless such delivery or distribution complies with all applicable laws
(including, the requirements of the Securities Act of 1933), and the applicable
requirements of any securities exchange or similar entity.
(b)
Certificates.
To the
extent that the Plan provides for the issuance of shares of Stock, the issuance
may be affected on a non-certificated basis, to the extent not prohibited by
applicable law or the applicable rules of any stock exchange.
Article
4
CHANGE
IN CONTROL
Section
4.1
Subject
to the provisions of
Section
3.4
(relating to the adjustment of shares), and except as otherwise provided in the
Plan or the in terms of any Award Agreement:
(a)
If a
Participant who is an employee or a Director of, or a service provider to, the
Company or a Subsidiary at the time of a Change in Control then holds one or
more outstanding options or SARs, all such options and SARs then held by the
Participant shall become fully exercisable immediately prior to the Change in
Control (subject to the expiration provisions otherwise applicable to the option
or SAR).
(b)
If a
Participant who is an employee or a Director of, or a service provider to, the
Company or a Subsidiary at the time of a Change in Control then holds one or
more stock awards described in
Section
2.1(c)
or cash
incentive awards described in
Section
2.1(d)
, such
awards shall be fully earned and vested.
(c)
Notwithstanding
the forgoing, if the vesting of an outstanding award is conditioned upon the
achievement of performance measures, then the award shall be subject to the
following:
(i)
If, at
the time of the Change in Control, the established performance measures are less
than fifty percent (50%) attained (as determined in the sole discretion of the
Committee, based upon a pro rata determination through the date of the Change in
Control), then such award shall become vested and exercisable on a fractional
basis with the numerator being equal to the percentage of attainment and the
denominator being fifty percent (50%).
(ii)
If at the
time of the Change in Control, the established performance measures are at least
fifty percent (50%) attained (as determined in the sole discretion of the
Committee, based upon a pro rata determination through the date of the Change in
Control), then such award shall become fully vested and exercisable.
Section
4.2
Change
in Control
.
For
purposes of the Plan, unless otherwise provided in an Award Agreement, the term
“
Change
in Control
” shall
be deemed to have occurred on the earliest of the following dates:
(a)
the
consummation of the acquisition by any person (as such term is defined in
Section 13(d) or 14(d) of the Exchange Act) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of fifty-one percent
(51%) or more of the combined voting power of the then outstanding Voting
Securities of the Company; or
(b)
the
individuals who, as of the date hereof, are members of the Board cease for any
reason to constitute a majority of the Board, unless the election or nomination
for election by the stockholders of any new director was approved by a vote of a
majority of the Board, in which case such new director shall for purposes of
this Plan be considered as a member of the Board; or
(c)
the
consummation by the Company of: (i) a merger or consolidation if the
Company’s stockholders, immediately before such merger or consolidation, do not,
as a result of such merger or consolidation, own, directly or indirectly, more
than fifty-one percent (51%) of the combined voting power of the then
outstanding Voting Securities of the entity resulting from such merger or
consolidation in substantially the same proportion as their ownership of the
combined voting power of the Voting Securities of the Company outstanding
immediately before such merger or consolidation; or (ii) a complete
liquidation or dissolution or an agreement for the sale or other disposition of
all or substantially all of the assets of the Company.
Notwithstanding
the foregoing, a Change in Control shall not be deemed to occur solely because
fifty-one percent (51%) or more of the combined voting power of the then
outstanding securities of the Company are acquired by: (x) a trustee or other
fiduciary holding securities under one or more employee benefit plans maintained
for employees of the entity; or (y) any corporation which, immediately
prior to such acquisition, is owned directly or indirectly by the stockholders
in the same proportion as their ownership of stock immediately prior to such
acquisition.
Article
5
COMMITTEE
Section
5.1
Administration
.
The authority to control and manage the operation and administration of the Plan
shall be vested in the Committee in accordance with this
Section
5
. The
Committee shall be selected by the Board and may be comprised of two (2) or more
members of the Board, each of whom are both a “non-employee director” (within
the meaning of Rule 16b-3 promulgated under the Exchange Act) and an “outside
director” (within the meaning of Code Section 162(m)). Subject to applicable
stock exchange rules, if the Committee does not exist, or for any other reason
determined by the Board, the Board may take any action under the Plan that would
otherwise be the responsibility of the Committee. Notwithstanding the foregoing,
with respect to any action, determination, interpretation or modification with
respect to a specific award granted to a non-employee Director, other than
ministerial actions, the Committee shall be comprised of the Board.
Section
5.2
Powers
of Committee
.
The Committee’s administration of the Plan shall be subject to the
following:
(a)
Subject
to the provisions of the Plan, the Committee will have the authority and
discretion to select from among the Company’s employees, directors and service
providers those persons who shall receive awards, to determine the time or times
of receipt, to determine the types of awards and the number of shares covered by
the awards, to establish the terms, conditions, performance criteria,
restrictions, and other provisions of such awards, and (subject to the
restrictions imposed by
Article
6
) to
cancel or suspend awards.
(b)
The
Committee will have the authority and discretion to interpret the Plan, to
establish, amend and rescind any rules and regulations relating to the Plan, and
to make all other determinations that may be necessary or advisable for the
administration of the Plan.
(c)
Any
interpretation of the Plan by the Committee and any decision made by it under
the Plan is final and binding on all persons.
(d)
In
controlling and managing the operation and administration of the Plan, the
Committee shall take action in a manner that conforms to the articles and bylaws
of the Company and applicable state corporate law.
Section
5.3
Delegation
by Committee
.
Except to the extent prohibited by applicable law, the applicable rules of a
stock exchange or the Plan, or as necessary to comply with the exemptive
provisions of Rule 16b-3 under the Exchange Act, the Committee may allocate all
or any portion of its responsibilities and powers to any one or more of its
members and may delegate all or any part of its responsibilities and powers to
any person or persons selected by it, including: (a) delegating to a
committee of one or more members of the Board who are not “independent
directors” within the meaning of Code Section 162(m), the authority to grant
awards under the Plan to eligible persons who are either: (i) not then “covered
employees,” within the meaning of Code Section 162(m) and are not expected to be
“covered employees” at the time of recognition of income resulting from such
award; or (ii) not persons with respect to whom the Company wishes to
comply with Code Section 162(m); and/or (b) delegating to a committee of one or
more members of the Board who are not “non-employee directors,” within the
meaning of Rule 16b-3, the authority to grant awards under the Plan to eligible
persons who are not then subject to Section 16 of the Exchange Act. Any such
allocation or delegation may be revoked by the Committee at any time. To the
extent permitted by applicable law and resolution of the Board, the Committee
may delegate all or any part of its responsibilities to any officer of the
Company.
Section
5.4
Information
to be Furnished to Committee
.
As
may be permitted by applicable law, the Company and its Subsidiaries shall
furnish the Committee with such data and information as it determines may be
required for it to discharge its duties. The records of the Company and its
Subsidiaries as to an employee’s or Participant’s employment, termination of
employment, leave of absence, reemployment and compensation shall be conclusive
on all persons unless determined by the Committee to be manifestly incorrect.
Subject to applicable law, Participants and other persons entitled to benefits
under the Plan must furnish the Committee such evidence, data or information as
the Committee considers desirable to carry out the terms of the
Plan.
Article
6
AMENDMENT
AND TERMINATION
The Board
may, as permitted by law, at any time, amend or terminate the Plan, and may
amend any Award Agreement, provided that no amendment or termination (except as
provided in
Section
2.7
) may, in
the absence of written consent to the change by the affected Participant (or, if
the Participant is not then living, the affected beneficiary), adversely affect
the rights of any Participant or beneficiary under any award granted which was
granted under the Plan prior to the date such amendment is adopted by the Board;
provided, however, that, adjustments pursuant to
Section
3.4
shall
not be subject to the foregoing limitations of this
Article
6
; and
further
provided
, that,
no amendment may (i) remove the provisions of
Section
2.3
(Option
Repricing); (ii) materially increase the benefits accruing to Participants
under the Plan; (iii) materially increase the aggregate number of
securities which may be issued under the Plan, other than pursuant to
Section
3.4
, or
(iv) materially modify the requirements for participation in the Plan,
unless the amendment is approved by the Company’s stockholders.
Article
7
GENERAL
TERMS
Section
7.1
No
Implied Rights
(a)
No
Rights to Specific Assets.
Neither a
Participant nor any other person shall by reason of participation in the Plan
acquire any right in or title to any assets, funds or property of the Company or
any Subsidiary whatsoever, including any specific funds, assets, or other
property which the Company or any Subsidiary, in its sole discretion, may set
aside in anticipation of a liability under the Plan. A Participant shall have
only a contractual right to the Stock or amounts, if any, payable or
distributable under the Plan, unsecured by any assets of the Company or any
Subsidiary, and nothing contained in the Plan shall constitute a guarantee that
the assets of the Company or any Subsidiary shall be sufficient to pay any
benefits to any person.
(b)
No
Contractual Right to Employment or Future Awards.
The Plan
does not constitute a contract of employment, and selection as a Participant
will not give any participating employee the right to be retained in the employ
of the Company or any Subsidiary or any right or claim to any benefit under the
Plan, unless such right or claim has specifically accrued under the terms of the
Plan. Except as otherwise provided in the Plan, no award under the Plan shall
confer upon the holder thereof any rights as a stockholder of the Company prior
to the date on which the individual fulfills all conditions for receipt of such
rights.
Section
7.2
Transferability
.
The
Committee may provide at the time it makes an award under the Plan or at any
time thereafter that such award may be transferable by the Participant, subject
to such limitations as the Committee may impose. Except as otherwise so provided
by the Committee, awards under the Plan are not transferable except as
designated by the Participant by will or by the laws of descent and
distribution.
Section
7.3
Award
Agreement
.
Each
award granted under the Plan shall be evidenced by an Award Agreement. A copy of
the Award Agreement shall be provided to the Participant, and the Committee may
but need not require that the Participant sign a copy of the Award
Agreement.
Section
7.4
Form
and Time of Elections
.
Unless otherwise specified herein, each election required or permitted to be
made by any Participant or other person entitled to benefits under the Plan, and
any permitted modification, or revocation thereof, shall be filed with the
Company at such times, in such form, and subject to such restrictions and
limitations, not inconsistent with the terms of the Plan, as the Committee shall
require.
Section
7.5
Evidence
.
Evidence required of anyone under the Plan may be by certificate, affidavit,
document or other information which the person acting on it considers pertinent
and reliable, and signed, made or presented by the proper party or
parties.
Section
7.6
Tax
Withholding
.
All distributions under the Plan are subject to withholding of all applicable
taxes and the Committee may condition the delivery of any shares or other
benefits under the Plan on satisfaction of the applicable withholding
obligations. Except as otherwise provided by the Committee, such withholding
obligations may be satisfied: (a) through cash payment by the Participant;
(b) through the surrender of shares of Stock which the Participant already
owns; or (c) through the surrender of shares of Stock to which the
Participant is otherwise entitled under the Plan;
provided,
however,
that
except as otherwise specifically provided by the Committee, such shares under
clause (c) may not be used to satisfy more than the Company’s minimum statutory
withholding obligation.
Section
7.7
Action
by Company or Subsidiary
.
Any action required or permitted to be taken by the Company or any Subsidiary
shall be by resolution of its board of directors, or by action of one or more
members of the board (including a committee of the board) who are duly
authorized to act for the board, or (except to the extent prohibited by
applicable law or applicable rules of any stock exchange) by a duly authorized
officer of the Company or such Subsidiary.
Section
7.8
Successors
.
All obligations of the Company under this Plan shall be binding upon and inure
to the benefit of any successor to the Company, whether the existence of such
successor is the result of a direct or indirect purchase, merger, consolidation
or otherwise, of all or substantially all of the business, stock, and/or assets
of the Company.
Section
7.9
Indemnification
.
The
Company shall indemnify members of the Committee and any agent of the Committee
who is an employee of the Company, against any and all liabilities or expenses
to which they may be subjected by reason of any act or failure to act with
respect to their duties on behalf of the Plan, except in circumstances involving
such person’s bad faith, gross negligence or willful misconduct.
Section
7.10
No
Fractional Shares
.
Unless
otherwise permitted by the Committee, no fractional shares of Stock shall be
issued or delivered pursuant to the Plan or any award. The Committee shall
determine whether cash, Stock or other property shall be issued or paid in lieu
of fractional shares or whether such fractional shares or any rights thereto
shall be forfeited or otherwise eliminated.
Section
7.11
Governing
Law
.
The
Plan, all awards granted hereunder, and all actions taken in connection herewith
shall be governed by and construed in accordance with the laws of the State of
Delaware without reference to principles of conflict of laws, except as
superseded by applicable federal law.
Section
7.12
Notice
.
Unless
otherwise provided in an Award Agreement, all written notices and all other
written communications to the Company provided for in the Plan, any Award
Agreement, shall be delivered personally or sent by registered or certified
mail, return receipt requested, postage prepaid
(provided that international mail shall be sent via overnight or two-day
delivery)
, or sent
by facsimile or prepaid overnight courier to the Company at the address set
forth below. Such notices, demands, claims and other communications shall be
deemed given:
(a)
in the
case of delivery by overnight service with guaranteed next day delivery, the
next day or the day designated for delivery;
(b)
in the
case of certified or registered U.S. mail, five days after deposit in the U.S.
mail; or
(c)
in the
case of facsimile, the date upon which the transmitting party received
confirmation of receipt by facsimile, telephone or otherwise;
provided,
however,
that in
no event shall any such communications be deemed to be given later than the date
they are actually received; provided they are actually received. In the event a
communication is not received, it shall only be deemed received upon the showing
of an original of the applicable receipt, registration or confirmation from the
applicable delivery service provider. Communications that are to be delivered by
the U.S. mail or by overnight service to the Company shall be directed to the
attention of the Company’s senior human resource officer and Corporate
Secretary.
Article
8
DEFINED
TERMS; CONSTRUCTION
Section
8.1
In
addition to the other definitions contained herein, the following definitions
shall apply:
(a)
“
10%
Stockholder
” means
an individual who, at the time such option is granted, owns stock possessing
more than 10% of the total combined voting power of all classes of stock of the
Company.
(b)
“Award
Agreement”
means the
document (in whatever medium prescribed by the Committee) which evidences the
terms and conditions of an award under the Plan. Such document is referred to as
an agreement regardless of whether any Participant signature is
required.
(c)
“
Board
” means
the Board of Directors of the Company.
(d)
“
Change
in Control
” has the
meaning ascribed to it in
Section
4.2
.
(e)
“
Code
” means
the Internal Revenue Code of 1986, as amended. Regulations thereunder, as
modified from time to time.
(f)
“
Committee
” means
the Committee acting under
Article
5
.
(g)
“
Director
” means a
member of the Board.
(h)
“
Exchange
Act
” means
the Securities Exchange Act of 1934, as amended from time to
time.
(i)
“
Exercise
Price
” means
the price established with respect to an option or SAR pursuant to
Section
2.2
.
(j)
“
Fair
Market Value
” means,
as of any date, the fair market value of a share of Stock as determined in good
faith by the Committee.
(k)
“
ISO
” has the
meaning ascribed to it in
Section
2.1(a)
.
(l)
“
Participant
” means
any individual who has received an award under the Plan.
(m)
“
SAR
” has the
meaning ascribed to it in
Section
2.1(b)
.
(n)
“
Stock
” means
the common stock of the Company, $1.00 par value per share.
(o)
“
Subsidiary
” means
any corporation, bank or other entity which would be a subsidiary corporation
with respect to the Company as defined in Section 424(f) of the
Code.
(p)
“
Voting
Securities
” means
any securities which ordinarily possess the power to vote in the election of
directors without the happening of any pre-condition or
contingency.
Section
8.2
In this
Plan, unless otherwise stated or the context otherwise requires, the following
uses apply:
(a)
actions
permitted under this Plan may be taken at any time and from time to time in the
actor’s reasonable discretion;
(b)
references
to a statute shall refer to the statute and any successor statute, and to all
regulations promulgated under or implementing the statute or its successor, as
in effect at the relevant time;
(c)
in
computing periods from a specified date to a later specified date, the words
“from” and “commencing on” (and the like) mean “from and including,” and the
words “to,” “until” and “ending on” (and the like) mean “to, but
excluding”;
(d)
references
to a governmental or quasi-governmental agency, authority or instrumentality
shall also refer to a regulatory body that succeeds to the functions of the
agency, authority or instrumentality;
(e)
indications
of time of day mean Dubuque, Iowa time;
(f)
“including”
means “including, but not limited to”;
(g)
all
references to sections, schedules and exhibits are to sections, schedules and
exhibits in or to this Plan unless otherwise specified;
(h)
all words
used in this Plan will be construed to be of such gender or number as the
circumstances and context require;
(i)
the
captions and headings of articles, sections, schedules and exhibits appearing in
or attached to this Plan have been inserted solely for convenience of reference
and shall not be considered a part of this Plan nor shall any of them affect the
meaning or interpretation of this Plan or any of its provisions;
(j)
any
reference to a document or set of documents in this Plan, and the rights and
obligations of the parties under any such documents, shall mean such document or
documents as amended from time to time, and any and all modifications,
extensions, renewals, substitutions or replacements thereof;
and
(k)
all
accounting terms not specifically defined herein shall be construed in
accordance with GAAP.