exv4w3





Exhibit 4.3




1999 MANAGEMENT STOCK OPTION PLAN

OF

MONROE BANCORP




ARTICLE I



Introduction



     1.1. Purpose. The 1999 Management Stock Option Plan of Monroe Bancorp (the “Plan”) is
designed to promote the interests of the Company and its Subsidiaries by encouraging their officers
and key employees, upon whose judgment, initiative and industry the Company and its Subsidiaries
are largely dependent for the successful conduct and growth of their businesses, to continue their
association with the Company and its Subsidiaries by providing additional incentive and opportunity
for unusual industry and efficiency through stock ownership, and by increasing their proprietary
interest in the Company and their personal interest in its continued success and progress. The
Plan provides for the granting of (i) incentive stock options (“ISO’s”) and (ii) nonqualified stock
options (“NSO’s”).



     1.2. Effective Date and Duration. The Effective Date of the Plan is January 1, 1999.
Options may be granted under the Plan for a period of ten (10) years commencing January 1, 1999;
however, no options may be exercised until the Plan has been approved by a majority of the shares
of the Company represented at the shareholders’ meeting at which approval of the Plan is
considered. No options shall be granted after December 31, 2009. Upon that date, the Plan shall
expire except as to outstanding options, which options shall remain in effect until they have been
exercised or terminated or have expired. ISO’s must be granted within ten (10) years of the date
the Plan is adopted by the Board of Directors or approved by the shareholders of the Company,
whichever is earlier.



     1.3. Administration. The Plan shall be administered by the Committee. The Committee,
from time to time, may adopt any rule or procedure it deems necessary or desirable for the proper
and efficient administration of the Plan provided it is consistent with the terms of the Plan. The
decision of a majority of the Committee members shall constitute the decision of the Committee.
Subject to the provisions of the Plan, the Committee is authorized (a) to grant ISO’s and NSO’s;
(b) to determine the officers and employees to be granted ISO’s and NSO’s; (c) to determine the
option period, the option price and, subject to the limitations of Section 3.1, the number of
shares subject to each option; (d) to determine the time or times at which options will be granted;
(e) to determine the time or times at which each option becomes exercisable and the duration of the
exercise period; (f) to permit, in its discretion, the limited transferability of NSOs granted to
an optionee; (g) to determine other conditions and limitations, if any, applicable to the exercise
of each option; and (h) to determine the nature and duration of the restrictions, if any, to be
imposed upon the sale or other disposition of shares acquired by any optionee upon exercise of an
option, and the nature of the events, if any, and the duration of the period, in or with respect to
which any optionee’s rights to shares acquired upon exercise of an option may be



 









 




forfeited. Each
option granted under the Plan shall be evidenced by a written stock option agreement containing
terms and conditions established by the Committee consistent with the
provisions of the Plan, including such terms as the Committee shall deem advisable in order
that each ISO shall constitute an “incentive stock option” within the meaning of Section 422 of the
Code. The Committee’s determinations and interpretations with respect to the Plan shall be final
and binding on all interested parties. Any notice or document required to be given to or filed
with the Committee will be properly given or filed if delivered or mailed by certified mail,
postage prepaid, to the Committee at 210 East Kirkwood Avenue, Bloomington, Indiana 47408. In the
event a Committee member is eligible to receive grants of ISOs and NSOs under the Plan, he or she
shall refrain from taking any action or exercising any discretion with respect to establishing the
terms and conditions of such option.




     1.4. Definitions. For purposes of the Plan, unless a different meaning is clearly
required by the context:



          (a) “Board of Directors” means the board of directors of the Company.




          (b) The term “Change in Control of the Company” means (i) any merger or consolidation of the
Company or any Subsidiary irrespective of which party is the surviving entity; (ii) any sale,
lease, exchange, transfer or other disposition of all or any substantial part of the assets of the
Company or any Subsidiary; (iii) any tender offer, exchange offer or other purchase offer and/or
agreement to purchase as much as (or more than) twenty percent (20%) of the outstanding common
stock of the Company or any Subsidiary; (iv) during any period of two (2) consecutive years during
the term of the Plan specified in Section 2, individuals who at the date of the adoption of the
Plan constitute the Board of Directors of the Company cease for any reason to constitute at least a
majority thereof, unless the election of each Director at the beginning of such period has been
approved by Directors representing at least a majority of the Directors then in office who were
Directors on the date of the adoption of the Plan; or (v) a majority of the Board of Directors or a
majority of the shareholders of the Company approve, adopt, agree to recommend, or accept any
agreement, contract, offer or other arrangement providing for, or any series of transactions
resulting in, any of the transactions described above. Notwithstanding the foregoing, a Change in
Control of the Company (A) shall not occur as a result of the issuance of stock by the Company in
connection with any public offering of its stock, or (B) be deemed to have occurred with respect to
any transaction unless such transaction has been approved or tendered by a majority of the
shareholders who are not Section 16 grantees. For this purpose, a Section 16 grantee is a person
subject to potential liability under Section 16(b) of the Securities Exchange Act of 1934, as
amended with respect to transactions involving equity securities of the Company.




          (c) “Code” means the Internal Revenue Code of 1986, as amended.




          (d) “Committee” means the Executive Committee of the Board of Directors of the Company.




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          (e) “Company” means Monroe Bancorp.



          (f) “Effective Date” means January 1, 1999.



          (g) “Exchange Act” means the Securities Exchange Act of 1934, as amended.



          (h) “Fair Market Value” means the per share closing price for the Company’s common stock on
the last trading day prior to the date on which the option is granted upon the principal securities
exchange on which such shares are traded or, if such shares are not then traded on any exchange, at
the average of the low bid and high asked price of such securities on such trading day in the
over-the-counter market. If the Company’s stock is not traded in the over-the-counter market, Fair
Market Value shall mean the amount determined by the Committee in its discretion and in good faith
taking into account such factors as the Committee deems relevant.



          (i) “For Cause” means (i) the willful and continued failure of an optionee to perform his
required duties as an officer or employee of the Company or any Subsidiary, (ii) any action by an
optionee which involves willful misfeasance or gross negligence, (iii) the requirement of or
direction by a federal or state regulatory agency which has jurisdiction over the Company or any
Subsidiary to terminate the employment of an optionee, (iv) the conviction of an optionee of the
commission of any criminal offense which involves dishonesty or breach of trust, or (v) any
intentional breach by an optionee of a material term, condition or covenant of any agreement
between the optionee and the Company or any Subsidiary.



          (j) “Permanent and Total Disability” or “Permanently and Totally Disabled” means any
disability that would qualify as a disability under Code Section 22(c)(3).



          (k) “Plan” means the stock option plan embodied herein, as amended from time to time, known as
the 1999 Management Stock Option Plan of Monroe Bancorp.



          (l) “Section 16 Grantee” means a person subject to potential liability under Section 16(b) of
the Exchange Act with respect to transactions involving equity securities of the Company.



          (m) “Subsidiary” or “Subsidiaries” means any banking institution or other corporation more
than fifty percent (50%) of whose total combined voting stock of all classes is held by the Company
or by another corporation qualifying as a Subsidiary within this definition.



ARTICLE II




Eligibility and Participation



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     Officers and senior management employees of the Company or of any of its Subsidiaries, as
selected by the Committee, shall be eligible to receive grants of ISO’s and NSO’s under the Plan.



ARTICLE III




Benefits



     3.1. Shares Covered by the Plan. The stock to be subject to options under the Plan
shall be shares of authorized common stock of the Company and may be unissued shares or reacquired
shares (including shares purchased in the open market), or a combination of the two, as the
Committee may from time to time determine. Subject to the provisions of Section 4.2, the maximum
number of shares to be delivered upon exercise of all options granted under the Plan shall not
exceed Four Hundred Twenty-Seven Thousand (427,000) shares. If the exercise price of any stock
option granted under the Plan is satisfied by tendering shares to the Company (by either actual
delivery or by attestation), only the number of shares issued net of the shares tendered shall be
deemed delivered for purposes of determining the maximum number of shares available for delivery
under the Plan. Shares covered by an option that are forfeited due to termination of service or
that remain unpurchased or undistributed upon expiration of the option may be made subject to
further options.



     3.2. Grant of Options. The Committee shall be responsible for granting all options
under the Plan. The Committee shall also determine, in its sole discretion, with respect to each
optionee, whether the options granted shall be ISO’s or NSO’s, or a combination of the two; and
whether any employee shall be given discretion to determine whether any options granted to him
shall be ISO’s or NSO’s or a combination of the two.



     3.3. Option Price.



          (a) ISO Option Price. The option price per share of stock under each ISO shall be not
less than one hundred percent (100%) of the Fair Market Value of the share on the date on which the
option is granted; provided, however, as to officers and key employees who, at the time an ISO is
granted, own, within the meaning of Code Section 425(d), more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or any Subsidiary (referred to as
“Shareholder-Employees”), the purchase price per share of stock under each ISO shall be not less
than one hundred ten percent (110%) of the Fair Market Value of the stock on the date on which the
option is granted.



          (b) NSO Option Price. The option price per share of stock under each NSO shall be
determined by the Committee in its discretion; provided, however, the option price per share shall
not be less than one hundred percent (100%) of the Fair Market Value of the share on the date on
which the option is granted.



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     3.4. Option Period. No option period shall exceed ten (10) years; provided, however,
the option period with respect to ISO’s granted to Shareholder-Employees shall not exceed five (5)
years.



     3.5. Special Calendar Year Limitation on Shares Subject to ISO’s. The aggregate Fair
Market Value (determined at the time of the grant of the ISO’s) of the stock with respect to
which ISO’s are exercisable for the first time by an eligible employee during any calendar
year (under all plans providing for the grant of incentive stock options of the Company or any of
its Subsidiaries) shall not exceed One Hundred Thousand Dollars ($100,000.00).




     3.6. Sequence of Exercising Incentive Stock Options. Any ISO granted to an employee
pursuant to the Plan shall be exercisable even if there are outstanding previously granted but
unexercised ISO’s with respect to such employee.



     3.7 Vesting of Options. All options granted under the Plan shall vest, and thereby
become exercisable, at such time or times as shall be determined by the Committee in its sole
discretion. The stock option agreement between the Company and the optionee shall include the
schedule under which the option shall vest. The Committee may, in its sole discretion, amend such
schedule in a manner which causes options previously granted under the Plan to vest under a more
rapid schedule. The Committee shall not amend such schedule to provide for the slower vesting of
any options previously granted under the Plan.



     3.8 Vesting on Change in Control or Death, Retirement or Disability of Optionee.
Notwithstanding the provisions of Section 3.7, in the event of a Change in Control of the Company
or upon the death, Permanent and Total Disability or retirement on or after attaining age
sixty-five (65) of the optionee, any options granted under the Plan may be exercised in full
without regard to any restrictions on the vesting of the options contained in the option agreement
between the Company and the optionee.



     3.9. Early Termination of Option.



          (a) Termination of Employment. Subject to the other provisions of this Section 3.9,
all rights to exercise an option shall terminate thirty (30) days after the effective date of the
optionee’s termination of employment with the Company and its Subsidiaries, but not later than the
date the option expires pursuant to its terms, unless such termination is For Cause or is on
account of the Permanent and Total Disability, death or retirement (as described in subsection
(c)), of the optionee or a Change in Control of the Company. Transfer of employment from the
Company to a Subsidiary, or vice versa, or from one Subsidiary to another, shall not be deemed a
termination of employment. The Committee shall have the authority to determine in each case
whether a leave of absence on military or government service shall be deemed a termination of
employment for purposes of this subsection (a).



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          (b) For Cause Termination. Unless the Committee determines otherwise in its sole
discretion, if an optionee’s employment with the Company and its Subsidiaries is terminated For
Cause, no previously unexercised option granted hereunder may be exercised. Rather, all
unexercised options shall terminate effective on the date the Company notifies the optionee of his
termination For Cause.




          (c) Permanent and Total Disability, Death or Retirement of Optionee. If an optionee’s
employment with the Company and its Subsidiaries terminates due to Permanent and Total Disability,
death or retirement on or after attaining age sixty-five (65), his option shall
terminate ninety (90) days after termination of his employment due to his Permanent and Total
Disability, death or retirement (but not later than the date the option expires pursuant to its
terms). During such period, subject to the limitations of the Plan and the option agreement
between the Company and the optionee, the optionee, his guardian, attorney-in-fact or personal
representative, as the case may be, may exercise the option in full.




          (d) Change in Control of the Company. If an optionee’s employment with the Company
and its Subsidiaries terminates within one (1) year after a Change in Control of the Company, in
the case of NSOs, or within thirty (30) days of a Change in Control of the Company, in the case of
ISOs, his option shall terminate within such respective one (1) year or thirty (30) day period, as
the case may be, but not later than the date the option expires pursuant to its terms.



     3.10. Payment for Stock. Full payment for shares purchased hereunder shall be made at
the time the option is exercised. Payment may be made by delivering to the Company (a) cash; (b)
at the discretion of the Committee, whole shares of common stock of the Company (“Delivered Stock”)
which (i) has been owned by the optionee for more than six (6) months and has been paid for, within
the meaning of Securities Exchange Commission Rule 144 (and, if such stock was purchased from the
Company by use of a promissory note, such note has been fully paid with respect to such stock), or
(ii) was obtained by the optionee in the public market or otherwise than through the exercise of an
option under this Plan or under any other stock option plan involving Company stock; (c) at the
discretion of the Committee, a combination of cash and Delivered Stock; or (d) provided that a
public market for the Company’s common stock exists, (i) through a “same day sale” commitment from
the optionee and a broker-dealer that is a member of the National Association of Securities Dealers
(“NASD Dealer”) whereby the optionee irrevocably elects to exercise the option and to sell a
portion of the common stock so purchased in order to pay the option price, and whereby the NASD
Dealer irrevocably commits upon receipt of such stock to forward the option price directly to the
Company; or (ii) through a “margin” commitment from the optionee and an NASD Dealer whereby the
optionee irrevocably elects to exercise the option and to pledge the stock so purchased to the NASD
Dealer in a margin account as security for a loan from the NASD Dealer in the amount of the option
price and whereby the NASD Dealer irrevocably commits upon receipt of such stock to forward the
option price directly to the Company. Delivered Stock shall be valued by the Committee at its Fair
Market Value determined as of the date of the exercise of the option. No shares shall be issued
until full payment for them has been made, and an optionee shall have none of the rights



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of a
shareholder with respect to any shares until they are issued to him. Upon payment of the full
purchase price, and any required withholding taxes, the Company shall issue a certificate or
certificates to the optionee evidencing ownership of the shares purchased pursuant to the exercise
of the option which contain(s) such terms, conditions and provisions as may be required and as are
consistent with the terms, conditions and provisions of the Plan and the stock option agreement
between the Company and the optionee. For purposes of this Section 3.10, payment for shares
purchased hereunder may be delivered to the Company through such attestation or certification
procedures as may be established by the Committee from time to time in its sole discretion.



     3.11. Income and Employment Tax Withholding.



          (a) Payment by Optionee. The optionee shall be solely responsible for paying to the
Company all required federal, state, city and local taxes applicable to his (i) exercise of an NSO
under the Plan and (ii) disposition of shares acquired pursuant to the exercise of an ISO in a
disqualifying disposition of the shares under Code Section 422(a)(1).



          (b) NSO Withholding With Company Stock. Notwithstanding the provisions of subsection
(a), with respect to stock to be issued pursuant to the exercise of an NSO, the Committee, in its
discretion and subject to such rules as it may adopt, may permit the optionee to satisfy, in whole
or in part, any withholding tax obligation which may arise in connection with the exercise of the
NSO by having the Company retain shares of stock which would otherwise be issued in connection with
the exercise of the NSO or accept delivery from the optionee of shares of Company stock which have
a Fair Market Value, determined as of the date of the delivery of such shares, equal to the amount
of the withholding tax to be satisfied by that retention or delivery.



          (c) ISO Disqualifying Disposition; Withholding With Company Stock. Notwithstanding
the provisions of subsection (a), with respect to shares of stock to be issued pursuant to the
exercise of any ISO, the Committee, in its discretion and subject to such rules as it may adopt,
may permit the optionee to satisfy, in whole or in part, any withholding tax obligation which may
arise in connection with the disqualifying disposition of the shares under Code Section 422(a)(1)
by having the Company accept delivery from the optionee of shares of stock having a Fair Market
Value, determined as of the date of the delivery of such shares, equal to the amount of the
withholding tax to be satisfied by that delivery.



     3.12. Notice of Disqualifying Disposition. Any ISO granted hereunder shall require
the optionee to notify the Committee of any disposition of any stock issued pursuant to the
exercise of the ISO under the circumstances described in Section 421(b) of the Code (relating to
certain disqualifying dispositions), within ten (10) days of such disposition.



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ARTICLE IV




Amendment, Termination and Interpretation



     4.1. Amendment and Termination. The Board of Directors or the Committee may, at any
time, without the approval of the stockholders of the Company (except as otherwise required by
applicable law, rule or regulations, or listing requirements of any National Securities Exchange on
which are listed any of the Company’s equity securities, including without limitation any
shareholder approval requirement of Rule 16b-3 or any successor safe harbor rule promulgated under
the Exchange Act ), alter, amend, modify, suspend or discontinue the Plan, but may not, without the
consent of the holder of an option, make any alteration which would adversely affect an option
previously granted under the Plan or, without the approval of the stockholders of the Company, make
any alteration which would: (a) increase the aggregate number of shares subject to options under
the Plan, except as provided in Section 4.2; (b) decrease the minimum option price, except as
provided in Section 4.2; (c) extend the term of the Plan or the term during which any option may be
exercised; (d) change the restrictions on the transferability of options; (e) change the manner of
determining the option price; (f) change the class of individuals eligible for options; or (g)
withdraw administration of the Plan from the Committee or the Board of Directors.



     4.2. Changes in Stock.



          (a) Substitution of Stock and Assumption of Plan. In the event of any change in the
common stock of the Company through stock dividends, split-ups, recapitalizations,
reclassifications, conversions, or otherwise, or in the event that other stock shall be converted
into or substituted for the present common stock of the Company as the result of any merger,
consolidation, reorganization or similar transaction which results in a Change in Control of the
Company, then the Committee may make appropriate adjustment or substitution in the aggregate
number, price and kind of shares available under the Plan and in the number, price and kind of
shares covered under any options granted or to be granted under the Plan. The Committee’s
determination in this respect shall be final and conclusive. Provided, however, that the Company
shall not, and shall not permit its Subsidiaries to, recommend, facilitate or agree or consent to a
transaction or series of transactions which would result in a Change of Control of the Company
unless and until the person or persons or the entity or entities acquiring or succeeding to the
assets or capital stock of the Company or any of its Subsidiaries as a result of such transaction
or transactions agrees to be bound by the terms of the Plan so far as it pertains to options
theretofore granted but unexercised and agrees to assume and perform the obligations of the Company
hereunder. Notwithstanding the foregoing provisions of this subsection (a), no adjustment shall be
made which would operate to reduce the option price of any ISO below the Fair Market Value of the
stock (determined on the date the option was granted) which is subject to an ISO.



          (b) Conversion of Stock. In the event of a Change in Control of the Company pursuant
to which another person or entity acquires control of the Company (such other person or entity
being the “Successor”), the kind of shares of common stock which shall be subject to



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 the Plan and
to each outstanding option, shall, automatically by virtue of such Change in Control
of the Company, be converted into and replaced by shares of common stock, or such other class
of securities having rights and preferences no less favorable than common stock of the Successor,
and the number of shares subject to the option and the purchase price per share upon exercise of
the option shall be correspondingly adjusted, so that, by virtue of such Change in Control of the
Company, each optionee shall have the right to purchase (i) that number of shares of common stock
of the Successor which have a Fair Market Value equal, as of the date of such Change in Control of
the Company, to the Fair Market Value, as of the date of such Change in Control, of the shares of
common stock of the Company theretofore subject to his option, and (ii) for a purchase price per
share which, when multiplied by the number of shares of common stock of the Successor subject to
the option, shall equal the aggregate exercise price at which the optionee could have acquired all
of the shares of common stock of the Company previously optioned to the optionee.




     4.3. Information to be Furnished by Optionees. Optionees, or any other persons
entitled to benefits under the Plan, must furnish to the Committee such documents, evidence, data
or other information as the Committee considers necessary or desirable for the purpose of
administering the Plan. The benefits under the Plan for each optionee, and each other person who
is entitled to benefits hereunder, are to be provided on the condition that he furnish full, true
and complete data, evidence or other information, and that he will promptly sign any document
reasonably related to the administration of the Plan requested by the Committee.



     4.4. Employment Rights. Neither the Plan nor any stock option agreement executed
under the Plan shall constitute a contract of employment and participation in the Plan will not
give an optionee the right to be rehired or retained in the employ of the Company, nor will
participation in the Plan give any optionee any right or claim to any benefit under the Plan,
unless such right or claim has specifically accrued under the terms of the Plan.



     4.5. Evidence. Evidence required of anyone under the Plan may be by certificate,
affidavit, document or other information which the person relying thereon considers pertinent and
reliable, and signed, made or presented by the proper party or parties.



     4.6. Gender and Number. Where the context admits, words in the masculine gender shall
include the feminine gender, the plural shall include the singular and the singular shall include
the plural.



     4.7. Action by Company. Any action required of or permitted by the Company under the
Plan shall be by resolution of the Board of Directors or by a person or persons authorized by
resolution of the Board of Directors.



     4.8. Controlling Laws. Except to the extent superseded by laws of the United States,
the laws of Indiana, without reference to the choice of law principles thereof, shall be
controlling in all matters relating to the Plan.



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     4.9. Mistake of Fact. Any mistake of fact or misstatement of fact shall be corrected
when it becomes known and proper adjustment made by reason thereof.



     4.10. Severability. In the event any provisions of the Plan shall be held to be
illegal or invalid for any reason, such illegality or invalidity shall not affect the remaining
parts of the Plan, and the Plan shall be construed and enforced as if such illegal or invalid
provisions had never been contained in the Plan.



     4.11. Effect of Headings. The descriptive headings of the sections of this Plan are
inserted for convenience of reference and identification only and do not constitute a part of this
Plan for purposes of interpretation.



     4.12. Nontransferability. No option shall be transferable, except by the optionee’s
will or the laws of descent and distribution. During the optionee’s lifetime, his option shall be
exercisable (to the extent exercisable) only by him. The option and any rights and privileges
pertaining thereto shall not be transferred, assigned, pledged or hypothecated by him in any way,
whether by operation of law or otherwise and shall not be subject to execution, attachment or
similar process.



     4.13. Liability. No member of the Board of Directors or the Committee or any officer
or employee of the Company or its Subsidiaries shall be personally liable for any action, omission
or determination made in good faith in connection with the Plan. Each optionee, in the stock
option agreement between him and the Company, shall agree to release and hold harmless the Company,
the Board of Directors, the Committee and all officers and employees of the Company and its
Subsidiaries from and against any tax liability, including without limitation interest and
penalties, incurred by the optionee in connection with his participation in the Plan.



     4.14. Investment Representations. Unless the shares subject to an option are
registered under the Securities Act of 1933, each optionee, in the stock option agreement between
the Company and the optionee, shall agree for himself and his legal representatives that any and
all shares of common stock purchased upon the exercise of the option shall be acquired for
investment and not with a view to, or for sale in connection with, any distribution of those
shares. Any share issued pursuant to an exercise of an option subject to this investment
representation shall bear a legend evidencing this restriction.



     4.15. Use of Proceeds. The proceeds received by the Company from the sale of stock
pursuant to the Plan will be used for general corporate purposes.



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