PROVIDENT BANCORP, INC.
AMENDED AND RESTATED
1988
Stock Option Plan
As Amended Through December 19, 2002
ARTICLE 1
OBJECTIVES
Provident Bancorp, Inc. ("Provident") has established this Stock Option Plan effective June 1, 1988, as an
incentive to the attraction and retention of dedicated and loyal employees of outstanding ability, to stimulate the efforts
of such persons in meeting Provident's objectives and to encourage ownership of Provident Common Stock by employees. This
Stock Option Plan was amended and restated on November 30, 1995.
ARTICLE 2
DEFINITIONS
2.1 For purposes of the Plan the following terms shall have the definition which is attributed to them, unless
another definition is clearly indicated by a particular usage and context.
A. "Code" means the Internal Revenue Code of 1986.
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B. The "Company" means Provident and any subsidiary of Provident, as the term "subsidiary" is
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defined in Section 424(f) of the Code.
C. "Date of Exercise" means the date on which the Company has received a written notice of exercise
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of an Option, in such form as is acceptable to the Committee, and full payment of the purchase price or a copy of
irrevocable directions to a broker-dealer to deliver the Option Price to Provident pursuant to Section 7.2 hereof.
D. "Date of Grant" means the date on which the Committee makes an award of an Option.
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E. "Eligible Employee" means any individual who performs services for the Company and is treated as
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an Employee for federal income tax purposes. A Director of the Company who is not an Eligible Employee described in the
previous sentence is an Eligible Employee with respect to the grant of a Nonqualified Stock Option.
F. "Effective Date" means June 1, 1988.
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G. "Fair Market Value" means the average of the closing bid and asked prices for a Share reported on
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any stock exchange or over-the-counter trading system on which Shares are trading on the last trading date prior to a
specified date.
H. "Incentive Stock Option" shall have the same meaning as given to that term by Section 422 of the
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Code.
I. "Nonqualified Stock Option" means any Option granted under the Plan which is not considered an
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Incentive Stock Option.
J. "Option" means the right to purchase a stated number of Shares at a specified price. The option
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may be granted to an Eligible Employee subject to the terms of this Plan, and such other conditions and restrictions as the
Committee deems appropriate. Each Option shall be designated by the Committee to be either an Incentive Stock Option or a
Nonqualified Stock Option.
K. "Option Price" means the purchase price per Share subject to an Option and shall be fixed by the
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Committee, but shall not be less than 95% of the Fair Market Value of a Share on the Date of Grant in the case of a
Nonqualified Stock Option or less than 100% of the Fair Market Value of a Share on the Date of Grant in the case of an
Incentive Stock Option.
L. "Permanent and Total Disability" shall mean any medically determinable physical or mental
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impairment rendering an individual unable to engage in any substantial gainful activity, which disability can be expected
to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months.
M. "Plan" means this 1988 Amended and Restated Stock Option Plan as it may be amended from time to
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time.
N. "Share" means one share of the no par value Common Stock of the Company.
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ARTICLE 3
ADMINISTRATION
3.1 The Plan shall be administered by a committee (the "Committee") designated by the Board of Directors of
the Company. The Committee shall be comprised solely of three or more directors each of whom shall be (i) a "disinterested
person" as defined under Rule 16b-3 of the Securities and Exchange Act of 1934 (the "Act") and (ii) an "outside director"
to the extent required by Section 162(m) of the Internal Revenue Code ("Section 162(m)"). Notwithstanding the foregoing,
to the extent relevant state law now or hereafter permits, the Committee may be comprised solely of two or more such
directors.
Actions shall be taken by a majority of the Committee.
3.2 Except as specifically limited by the provisions of the Plan, the Committee in its discretion shall have
the authority to:
A. Determine which Eligible Employees shall be granted Options;
B. Determine the number of Shares which may be subject to each Option;
C. Determine the Option Price;
D. Determine the term of each Option;
E. Determine whether each Option is an Incentive Stock Option or Nonqualified Stock Option;
F. Interpret the provisions of the Plan and decide all questions of fact arising in its application;
and
G. Prescribe such rules and procedures for Plan administration as from time to time it may deem
advisable.
3.3 Any action, decision, interpretation or determination by the Committee with respect to the application or
administration of this Plan shall be final and binding upon all persons, and need not be uniform with respect to its
determination of recipients, amount, timing, form, terms or provisions of Options.
3.4 No member of the Committee shall be liable for any action or determination taken or made in good faith
with respect to the Plan or any Option granted hereunder, and to the extent permitted by law, all members shall be
indemnified by the Company for any liability and expenses which may occur through any claim or cause of action.
ARTICLE 4
SHARES SUBJECT TO PLAN
4.1 The Shares that may be made subject to Options granted under the Plan shall not exceed 1,737,500 Shares in
the aggregate. Except as provided in Section 4.2, upon lapse or termination of any Option for any reason without being
completely exercised, the Shares which were subject to such Option may again be subject to other Options.
4.2 The maximum number of Shares with respect to which options may be granted to any employee during each
fiscal year of the Company is 100,000. If an Option is cancelled, it continues to be counted against the maximum number of
Shares for which Options may be granted to an employee. If an Option is repriced, the transaction is treated as a
cancellation of the Option and a grant of new Option.
ARTICLE 5
GRANTING OF OPTIONS
Subject to the terms and conditions of the Plan, the Committee may, from time to time, prior to June 1, 1998,
grant Options to Eligible Employees on such terms and conditions as the Committee may determine. More than one Option may
be granted to the same Eligible Employee.
ARTICLE 6
TERMS OF OPTIONS
6.1 Subject to specific provisions relating to Incentive Stock Options set forth in Article 9, each Option
shall be for a term of from one to ten years from the Date of Grant and may not be exercised during the first twelve months
of the term of said Option. Commencing on the first anniversary of the Date of Grant of an Option, the Option may be
exercised for 25% of the total Shares covered by the Option with an additional 25% of the total Shares covered by the
Option becoming exercisable on each succeeding anniversary until the Option is exercisable to its full extent. This right
of exercise shall be cumulative and shall be exercisable in whole or in part. The Committee in its sole discretion may
permit particular holders of Options to exercise an Option to a greater extent than provided herein. The Committee may
establish a different exercise schedule and impose other conditions upon exercise for any particular Option or groups of
Options.
6.2 The holder of an Option must remain continuously in the service of the Company as an employee for a
period of at least twelve months. Nothing contained in this Plan or in any Option granted pursuant to it shall confer upon
any employee any right to continue in the employ of the Company or to interfere in any way with the right of the Company to
terminate employment at any time. So long as a holder of an Option shall continue to be an employee of the Company, the
Option shall not be affected by any change of the employee's duties or position.
ARTICLE 7
EXERCISE OF OPTIONS
7.1 Any person entitled to exercise an Option in whole or in part, may do so by delivering a written notice of
exercise to the Company, attention Corporate Secretary, at its principal office. The written notice shall specify the
number of Shares for which an Option is being exercised and the grant date of the option being exercised and shall be
accompanied by full payment of the Option Price for the Shares being purchased.
7.2 Alternatively to exercise pursuant to paragraph 7.1, persons exercising options may deliver a written
notice of exercise to Provident, Attention corporate secretary, accompanied by irrevocable instructions to deliver shares
to a broker-dealer and a copy of irrevocable instructions to the broker-dealer to deliver the Option Price to Provident.
ARTICLE 8
PAYMENT OF OPTION PRICE
8.1 In the sole discretion of the Committee, Payment of the Option Price and any withholding taxes may be made
in cash, by the tender of Shares, or both. Shares tendered shall be valued at their Fair Market Value.
ARTICLE 9
INCENTIVE STOCK OPTIONS AND NONQUALIFIED STOCK OPTIONS
9.1 The Committee in its discretion may designate whether an Option is to be considered an Incentive Stock
Option or a Nonqualified Stock Option. The Committee may grant both an Incentive Stock Option and a Nonqualified Stock
Option to the same individual. However, where both an Incentive Stock Option and a Nonqualified Stock Option are awarded
at one time, such Options shall be deemed to have been awarded in separate grants, shall be clearly identified, and in no
event will the exercise of one such Option affect the right to exercise the other such Option.
9.2 Any option designated by the Committee as an Incentive Stock Option will be subject to the general
provisions applicable to all Options granted under the Plan. In addition, the Incentive Stock Option shall be subject to
the following specific provisions:
A. At the time the Incentive Stock Option is granted, if the Eligible Employee owns, directly or
indirectly, stock representing more than 10% of (i) the total combined voting power of all classes of stock of the Company,
or (ii) a corporation that owns 50% or more of the total combined voting power of all classes of stock of the Company, then:
(i) The Option Price must equal at least 110% of the Fair Market Value on the Date of Grant;
and
(ii) The term of the Option shall not be greater than five years of the Date of Grant.
B. The aggregate Fair Market Value of Shares (determined at the Date of Grant) with respect to which
Incentive Stock Options are exercisable by an Eligible Employee for the first time during any calendar year under this Plan
or any other plan maintained by the Company shall not exceed $100,000.
9.3 If any Option is not granted, exercised, or held pursuant to the provisions noted immediately above, it
will be considered to be a Nonqualified Stock Option to the extent that the grant is in conflict with these restrictions.
ARTICLE 10
TRANSFERABILITY OF OPTIONS
During the lifetime of an Eligible Employee to whom an Option has been granted, such Option is not transferable
voluntarily or by operation of law and may be exercised only by such individual. Upon the death of an Eligible Employee to
whom an Option has been granted, the Option may be transferred to the beneficiaries or heirs of the holder of the Option by
will or by the laws of descent and distribution. Notwithstanding the above, the Committee may, with respect to particular
Options, establish or modify the terms of the Option to allow the Option to be transferred at the request of the holder of
the Option to trusts established by the holder or as to which the holder is a grantor or to family members of the holder or
otherwise for personal and tax planning purposes of the holder. In the event the Committee allows such transfer, such
Options shall not be exercisable for a period of six months following the action of the Committee.
ARTICLE 11
TERMINATION OF OPTIONS
11.1 An Option will terminate as follows:
A. Upon exercise or expiration by its terms.
B. Upon termination of employment, the then-exercisable portion of any Option will terminate on the
90th day after the date of termination. The portion not exercisable will terminate on the date of termination of
employment. For purposes of the Plan, a leave of absence approved by the Company shall not be deemed to be termination of
employment.
C. If an Eligible Employee holding an Option dies or becomes subject to a Permanent and Total
Disability while employed by the Company, or within 90 days after termination of employment, such Option may be exercised,
to the extent exercisable on the earlier of the date of termination of employment or date of the occurrence of the event
which triggers the operation of this paragraph, at any time within one year after the date of such death or occurrence of
Permanent and Total Disability by the estate or guardian of such person or by those persons to whom the Option may have
been transferred by will or by the laws of descent and distribution.
11.2 Except as provided in Article 12 hereof, in no event will the continuation of the term of an Option beyond
the date of termination of employment allow the Eligible Employee, or his beneficiaries or heirs, to accrue additional
rights under the Plan, or to purchase more Shares through the exercise of an Option than could have been purchased on the
day that employment was terminated. In addition, notwithstanding anything contained herein, no option may be exercised in
any event after the expiration of ten years from the date of grant of such option.
ARTICLE 12
ADJUSTMENTS TO SHARES AND OPTION PRICE
12.1 In the event of changes in the outstanding Common Stock of the Company as a result of stock dividends,
stock splits, reclassifications, reorganizations, redesignations, mergers, consolidations, recapitalizations, combinations
or exchanges of Shares, or other such changes, the number and class of Shares for all purposes covered by the Plan and
number and class of Shares and price per Share for each outstanding Option covered by the Plan shall be appropriately
adjusted by the Committee.
12.2 The Committee shall make appropriate adjustments in the Option Price to reflect any spin-off of assets,
extraordinary dividends or other distributions to shareholders.
12.3 In the event of the dissolution or liquidation of the Company or any merger (other than a merger for the
purpose of the redomestication of the Company not involving a change in control), consolidation, exchange or other
transaction in which the Company is not the surviving corporation or in which the outstanding Shares of the Company are
converted into cash, other securities or other property, each outstanding Option shall, without regard to any vesting
schedule or performance target and notwithstanding anything to the contrary set forth herein, automatically and immediately
become fully exercisable immediately prior to such event.
12.4 All outstanding Options shall become immediately exercisable in full if a change in control of the Company
occurs, notwithstanding anything to the contrary set forth herein. For purposes of this Agreement, a "change in control of
the Company" shall be deemed to have occurred if (a) any "person," as such term is used in Sections 13(d) and 14(d) of the
Act, other than (i) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or (ii)
Carl H. Lindner or any member of his family, becomes the "beneficial owner," as defined in Rule 13d-3 under the Act,
directly or indirectly, of securities of the Company representing 30% or more of the combined voting power of the Company's
then outstanding securities; or (b) during any period of one year (not including any period prior to the execution of this
Agreement), individuals who at the beginning of such period constitute the Board of Directors and any new director whose
election by the Board or nomination for election by the Company's shareholders was approved by a vote of at least
two-thirds (2/3) of the Directors then still in office who either were Directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof.
ARTICLE 13
OPTION AGREEMENTS
13.1 All Options granted under the Plan shall be evidenced by a written agreement in such form or forms as the
Committee in its sole discretion may determine.
13.2 Each optionee, by acceptance of an Option under this Plan, shall be deemed to have consented to be bound,
on the optionee's own behalf and on behalf of the optionee's heirs, assigns and legal representatives, by all terms and
conditions of this Plan.
ARTICLE 14
AMENDMENT OR TERMINATION OF PLAN
14.1 The Board of Directors of the Company may at any time amend, suspend, or terminate the Plan; provided,
however, that no amendments by the Board of Directors of the Company shall, without further approval of the shareholders of
the Company:
A. Change the definition of Eligible Employees;
B. Except as provided in Articles 4 and 12 hereof, increase the number of Shares which may be subject to
Options granted under the Plan.
C. Cause the Plan or any Option granted under the Plan to fail to (i) be excluded from the $1 million
deduction limitation imposed by Section 162 (m) of the Code, or (ii) qualify as an "Incentive Stock Option" as defined by
Section 422 of the Code.
D. Permit the granting of Options to the individuals who are then members of the Committee.
14.2 No amendment or termination of the Plan shall alter or impair any Option granted under the Plan without
the consent of the holder thereof.
14.3 This Plan shall continue in effect until the expiration of all Options granted under the Plan unless
terminated earlier in accordance with this Article 14; provided, however, that it shall otherwise terminate and no options
shall be granted ten years after the Effective Date.
ARTICLE 15
EFFECTIVE DATE
This Plan originally became effective as of June 1, 1988. This Amended and Restated 1988 Stock Option Plan shall
become effective as of November 30, 1995, having been adopted by the Board of Directors of the Company on such date.
ARTICLE 16
MISCELLANEOUS
16.1 Nothing contained in this Plan or in any action taken by the Board of Directors or shareholders of
Provident shall constitute the granting of an Option. An Option shall be granted only at such time as a written Option
shall have been executed and delivered to the respective employee and the employee shall have executed an agreement
respecting the Option in conformance with the provisions of the Plan.
16.2 Certificates for Shares purchased through exercise of Options will be issued in regular course after
exercise of the Option and payment therefor as called for by the terms of the Option but in no event shall the Company be
obligated to issue certificates more often than once each quarter of each fiscal year. No persons holding an Option or
entitled to exercise an Option granted under this Plan shall have any rights or privileges of a shareholder of the Company
with respect to any Shares issuable upon exercise of such Option until certificates representing such Shares shall have
been issued and delivered. No Shares shall be issued and delivered upon exercise of an Option unless and until the
Company, in the opinion of its counsel, has complied with all applicable registration requirements of the Securities Act of
1933 and any applicable state securities laws and with any applicable listing requirements of any national securities
exchange on which the Company securities may then be listed as well as any other requirements of law.