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EXHIBIT 10.7
SOUTHERN MICHIGAN BANCORP, INC.
2000 STOCK OPTION PLAN
1.
Purpose . The purpose of the Southern Michigan
Bancorp, Inc. 2000 Stock Option Plan (this "Plan") is to advance
the interests of Southern Michigan Bancorp, Inc., a Michigan
corporation (the "Corporation"), and its subsidiaries by providing
a larger personal and financial interest in the success of the
Corporation and its subsidiaries to employees and directors upon
whose judgment, interest and special efforts the Corporation and
its subsidiaries are dependent for the successful conduct of its
and their operations and to enable the Corporation and its
subsidiaries to attract and retain key employees and directors.
2.
Participants . Options may be granted under this Plan
to any employee or director of the Corporation and its
subsidiaries. The employees and directors of the Corporation and
its subsidiaries to whom options are granted and the terms of such
options shall be determined by the Board of Directors. A grantee
may hold more than one option. Nothing contained in this Plan, nor
in any option granted pursuant to this Plan, shall confer upon any
employee or director any right to the continuation of his or her
employment or directorship nor limit in any way the right of the
Corporation or its subsidiaries to terminate such employment or
directorship at any time. As used herein, the term "subsidiary"
shall mean any present or future entity that is controlled by the
Corporation, directly or through one or more intermediaries.
3.
Effectiveness and Termination of Plan . This Plan
shall become effective upon approval thereof by the shareholders of
the Corporation at a meeting held, among other things, for such
purpose. The adoption date of this Plan shall be March 20, 2000,
the date of its adoption by the Board of Directors of the
Corporation. This Plan shall terminate on the earliest of: (i) ten
(10) years from its adoption date; (ii) when all shares of Common
Stock (as defined in Section 4 hereof) that may be issued under
this Plan shall have been issued through exercise of options
granted under this Plan; or (iii) at any earlier time that the
Board of Directors may determine. Any option outstanding under this
Plan at the time of its termination shall remain in effect in
accordance with its terms and conditions and those of this
Plan.
4.
Common Stock . The aggregate number of shares of
common stock, $2.50 par value per share, of the Corporation (the
"Common Stock") that may be issued under this Plan shall consist of
110,000 shares, subject to further adjustment as provided in
Section 7 hereof. Such number of shares may be set aside out of the
authorized but unissued shares of Common Stock of the Corporation
not reserved for any other purpose or out of shares of Common Stock
acquired by the Corporation. All or any shares of Common Stock
subjected under this Plan to an option that, for any reason, is
canceled, terminates, lapses or expires unexercised as to such
shares may again be subjected to an option under this Plan.
5.
Types of Options and Terms and Conditions .
(a) Options granted under
this Plan shall be in the form of: (i) incentive stock options
("Incentive Stock Options") as defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"); or (ii)
options not qualifying under Section 422 of the Code ("Nonstatutory
Stock Options"), all in such amounts as determined by the Board of
Directors.
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(b) Options may be granted
at any time and from time to time prior to the termination of this
Plan. Except as hereinafter provided, all options granted pursuant
to this Plan shall be subject to the following terms and
conditions:
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(i)
Price . The purchase price of the shares of
Common Stock issuable upon exercise of options granted under this
Plan shall be not less than 100% of the fair market value of the
Common Stock on the date of the grant of the option. For purposes
of this Plan, "fair market value" of the Common Stock shall mean:
(A) the mean between the closing high bid and low asked prices as
reported by the National Association of Securities Dealers
Automated Quotation System (or, if not so reported, by the system
then regarded as the most reliable source of such quotation); or
(B) if the Common Stock is quoted in the domestic over-the-counter
market, but there are not reported quotations on the given date,
the value determined pursuant to (A) above using the reported
quotations on the last previous date on which so reported; or (C)
if neither of the foregoing clauses apply, the price determined in
good faith by the Board of Directors.
The purchase price shall be paid in full at the time of such
purchase, in: (A) cash; (B) shares of Common Stock of the
Corporation valued at the fair market value of the Common Stock on
the date of purchase; or (C) any combination of cash and Common
Stock. Notwithstanding the foregoing, the Board of Directors may,
in order to prevent any possible violation of law, require the
purchase price to be paid in cash and further provide that the
right to deliver Common Stock in payment of the purchase price may
be limited or denied in any Option Agreements (as defined in
Section 11 hereof). The purchase price shall be subject to
adjustment, but only as provided in Section 7 hereof.
(ii)
Duration and Exercise of Options . Options may
be granted for terms of up to but not exceeding ten (10) years from
the date the particular option is granted. Options shall be
exercisable as provided by the Board of Directors at the time of
grant thereof.
(iii)
Termination of Employment or Service as a
Director . Upon the termination of the grantee's employment or
service as a director, his or her rights to exercise an option
shall be only as follows:
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(1)
Death, Disability or Retirement . If the
grantee's employment or service as a director is terminated by
reason of death or disability (as described in Section 22(e)(3) of
the Code), the grantee or the grantee's estate may, within one (1)
year following such termination, exercise the option with respect
to only such number of shares of Common Stock as to which the right
of exercise had accrued on or before the last day on which the
grantee was either an employee or director of the Corporation or
any subsidiary. If the grantee's employment or service as a
director is terminated by reason of retirement, the grantee or the
grantee's estate (in the event of the grantee's death after such
termination) may, within three (3) months following such
termination, exercise the option with respect to only such number
of shares of Common Stock as to which the right of exercise had
accrued on or before the last day on which the grantee was either
an employee or director of the Corporation or any subsidiary. For
purposes of this Plan, "retirement" shall mean termination of
employment or service as a director with the Corporation and/or its
subsidiaries on or after the grantee's 65th birthday or the
grantee's 60th
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birthday if the grantee has completed ten (10) years of service
with the Corporation and/or its subsidiaries.
(2)
Other Reasons . If the grantee ceases to be an
employee or director for any reason other than those provided above
under "Death, Disability or Retirement," the grantee or the
grantee's estate (in the event of the grantee's death after such
termination) may, within the one (1) month period following such
termination, exercise the option with respect to only such number
of shares of Common Stock as to which the right of exercise had
accrued on or before the last day on which the grantee was either
an employee or director of the Corporation or any subsidiary.
(3)
General . Notwithstanding the foregoing, no
option shall be exercisable in whole or in part: (A) after the
termination date provided in the option; or (B) except as provided
in the second paragraph of Section 10, for one (1) year following
the date the option was granted. A grantee's "estate" shall mean
the grantee
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