EXHIBIT 4.1
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JSB Financial, Inc. 1996 Stock Option Plan
JSB FINANCIAL, INC. 1996 STOCK OPTION PLAN
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EFFECTIVE AS OF JANUARY 1, 1996
INCORPORATING AMENDMENTS THROUGH NOVEMBER 12, 1997
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TABLE OF CONTENTS
ARTICLE I
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PURPOSE
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Section 1.1 General Purpose of the Plan............................. 1
ARTICLE II
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DEFINITIONS
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Section 2.1 Administrator........................................... 1
Section 2.2 Appreciation Right...................................... 1
Section 2.3 Bank.................................................... 1
Section 2.4 Beneficiary............................................. 1
Section 2.5 Board................................................... 1
Section 2.6 Change of Control....................................... 2
Section 2.7 Code.................................................... 2
Section 2.8 Committee............................................... 2
Section 2.9 Corporation............................................. 3
Section 2.10 Disability.............................................. 3
Section 2.11 Disinterested Board Member.............................. 3
Section 2.12 Dividend Equivalent Right............................... 3
Section 2.13 Effective Date.......................................... 3
Section 2.14 Eligible Director....................................... 3
Section 2.15 Eligible Director Emeritus.............................. 3
Section 2.16 Eligible Individual..................................... 3
Section 2.17 Eligible Outside Director............................... 3
Section 2.18 Exercise Price.......................................... 3
Section 2.19 Fair Market Value....................................... 3
Section 2.20 Incentive Stock Option.................................. 3
Section 2.21 JSBF.................................................... 4
Section 2.22 Non-Qualified Stock Option.............................. 4
Section 2.23 Option.................................................. 4
Section 2.24 Option Agreement........................................ 4
Section 2.25 Option Holder........................................... 4
Section 2.26 Option Period........................................... 4
Section 2.27 Person.................................................. 4
Section 2.28 Plan.................................................... 4
Section 2.29 Preliminary Purchase Event.............................. 4
Section 2.30 Retirement.............................................. 5
Section 2.31 Share................................................... 5
Section 2.32 Termination for Cause................................... 5
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ARTICLE III
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ADMINISTRATION
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Section 3.1 Committee............................................... 5
Section 3.2 Committee Action........................................ 6
Section 3.3 Committee Responsibilities.............................. 6
ARTICLE IV
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STOCK OPTIONS
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Section 4.1 Option Agreements....................................... 7
Section 4.2 Available Shares........................................ 8
Section 4.3 Options Granted to Eligible Individuals................. 8
Section 4.4 Options Granted to Eligible Directors................... 9
Section 4.5 Method of Exercise...................................... 11
Section 4.6 Limitations on Options.................................. 12
Section 4.7 Additional Limitations on Incentive Stock Options....... 12
Section 4.8 Grants in the Event of a Preliminary Purchase Event..... 13
ARTICLE V
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APPRECIATION RIGHTS
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Section 5.1 In General.............................................. 13
Section 5.2 Exercise of Appreciation Rights......................... 14
Section 5.3 Effect of Exercise...................................... 14
ARTICLE VI
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DIVIDEND EQUIVALENT RIGHTS
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Section 6.1 In General.............................................. 14
Section 6.2 Value of Dividend Equivalent Rights..................... 15
Section 6.3 Exercise Prior to Credit Date........................... 16
ARTICLE VII
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AMENDMENT AND TERMINATION
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Section 7.1 Termination............................................. 16
Section 7.2 Amendment............................................... 16
Section 7.3 Adjustments for Business Reorganization, Stock Split or
Stock Dividend.......................................... 17
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PAGE
ARTICLE VIII
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MISCELLANEOUS
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Section 8.1 Status as an Employee Benefit Plan....................... 18
Section 8.2 No Right to Continued Employment......................... 18
Section 8.3 Construction of Language................................. 18
Section 8.4 Governing Law............................................ 18
Section 8.5 Headings................................................. 18
Section 8.6 Non-Alienation of Benefits............................... 19
Section 8.7 Taxes.................................................... 19
Section 8.8 Approval of Stockholders................................. 19
Section 8.9 Notices.................................................. 19
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JSB FINANCIAL, INC. 1996 STOCK OPTION PLAN
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ARTICLE I
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PURPOSE
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Section 1.1 GENERAL PURPOSE OF THE PLAN.
The purpose of the Plan is to advance the interests of JSB
Financial, Inc. and its shareholders by providing certain directors and officers
of JSB Financial, Inc., and its affiliates, with an incentive to achieve
corporate objectives, to attract and retain directors and officers of
outstanding competence and to provide such directors and officers with an equity
interest in JSB Financial, Inc.
ARTICLE II
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DEFINITIONS
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The following definitions shall apply for the purposes of this
Plan, unless a different meaning is plainly indicated by the context.
Section 2.1 ADMINISTRATOR means the person or persons
designated by the Committee pursuant to Section 3.3 to assist the Committee in
the administration of the Plan.
Section 2.2 APPRECIATION RIGHT means a right granted pursuant
to Section 5.1 which shall entitle the holder thereof to receive in accordance
with the terms of such Appreciation Right an amount of cash equal to the
difference between the Fair Market Value of the Shares subject to the
Appreciation Right and the Exercise Price applicable to such Appreciation Right.
For purposes of this Section 2.2, the Fair Market Value of a Share shall be
determined on the date the Appreciation Right is exercised.
Section 2.3 BANK means Jamaica Savings Bank FSB, a federally
chartered stock savings bank and any successor thereto.
Section 2.4 BENEFICIARY means the person or persons designated
by an Eligible Individual, Eligible Outside Director or Eligible Director
Emeritus, in such form and manner as may be required by the Committee, to
receive his or her Options in the event such Options remain unexercised upon his
or her death or, if no such Beneficiary has been designated, the legal
representative of the Eligible Individual, Eligible Outside Director or Eligible
Director Emeritus.
Section 2.5 BOARD means the board of directors of JSBF.
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Section 2.6 CHANGE OF CONTROL means an event of the nature
that: (a) would be required to be reported by JSBF in response to Item 1 of the
current report on Form 8-K, as in effect on the date hereof, pursuant to
Sections 13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange
Act"); or (b) results in a Change of Control of the Bank or JSBF within the
meaning of the Change in Bank Control Act and the rules and regulations
promulgated thereunder by the appropriate federal banking agency, as in effect
on the date hereof; or (c) results in a transaction requiring prior Federal
Reserve Board ("FRB") approval under the Bank Holding Company Act of 1956 and
the regulations promulgated thereunder by the FRB, as in effect on the date
hereof; or (d) results in a transaction requiring prior Office of Thrift
Supervision ("OTS") approval under the Home Owners' Loan Act and the regulations
promulgated thereunder by the OTS, as in effect on the date hereof. Without
limiting the foregoing, a Change of Control shall be deemed to have occurred at
such time as: (i) any "person" (as the term is used in Section 13(d) and 14(d)
of the Exchange Act) is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of the Bank
or JSBF representing 20% or more of the Bank's or JSBF's outstanding securities,
except for any securities of the Bank purchased by JSBF in connection with the
conversion of the Bank to the stock form and any securities purchased by
employee benefit plans maintained by the Bank or JSBF, or such plans' related
trusts; (ii) individuals who constitute the Board of Directors of JSBF or the
Board of Directors of the Bank on the date hereof (the "Incumbent Board") cease
for any reason to constitute at least a majority thereof, provided that any
individual becoming a director subsequent to the date hereof whose election was
approved by a vote of at least three-quarters of the directors comprising the
Incumbent Board, or whose nomination for election by JSBF's stockholders was
approved by the same Nominating Committee serving under an Incumbent Board,
shall be, for purposes of this clause (ii), considered as though he were a
member of the Incumbent Board, but only if such individual's election or
nomination did not result from an actual or threatened election contest (within
the meaning of Rule 14a-11 of Regulation 14A promulgated under the Exchange Act)
or other actual or threatened solicitation of proxies or consents (within the
meaning of Rule 14a-11 of Regulation 14A promulgated under the Exchange Act)
other than by or on behalf of the Board of JSBF; (iii) a plan of reorganization,
merger, consolidation, sale of all or substantially all the assets of the Bank
or JSBF becomes effective or a similar transaction occurs in which the Bank or
JSBF is not the resulting entity; (iv) a plan of reorganization, merger,
consolidation, sale of all or substantially all of the assets of the Bank or
JSBF or a similar transaction, which will result in the outstanding shares of
the class of securities then subject to such plan or transaction being exchanged
for or converted into cash or property or securities not issued by the Bank or
JSBF, is approved by the stockholders of JSBF in response to a proxy statement
that was distributed, soliciting proxies from stockholders of JSBF, by someone
other than the current management of JSBF, or (v) 20% or more of the voting
securities of the Bank or JSBF then outstanding are tendered and accepted by an
offeror as of the closing of a tender offer for such securities.
Section 2.7 CODE means the Internal Revenue Code of 1986
(including the corresponding provisions of any succeeding law).
Section 2.8 COMMITTEE means the Committee described in Section
3.1.
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Section 2.9 CORPORATION means JSBF, the Bank and any successor
or successors thereto, and subject to the approval of, and such terms and
conditions as may be imposed by, the Board, such other savings bank, savings and
loan association, bank, corporation, financial institution or other business
organization or institution as may be or become an affiliate of JSBF.
Section 2.10 DISABILITY means a condition of total incapacity,
mental or physical, for further performance of duty with the Corporation, which
the Committee shall have determined, on the basis of competent medical evidence,
is likely to be permanent.
Section 2.11 DISINTERESTED BOARD MEMBER means a member of the
Board who is not currently and has not at any time during the immediately
preceding one-year period been an Eligible Individual.
Section 2.12 DIVIDEND EQUIVALENT RIGHT means a right described
in Article VI.
Section 2.13 EFFECTIVE DATE means January 1, 1996.
Section 2.14 ELIGIBLE DIRECTOR means an Eligible Outside
Director or Eligible Director Emeritus.
Section 2.15 ELIGIBLE DIRECTOR EMERITUS means a former member
of the Board or former member of the board of directors of the Bank who has been
declared by the Board or the board of directors of the Bank to have the status
of "director emeritus".
Section 2.16 ELIGIBLE INDIVIDUAL means any employee of the
Corporation whom the Committee may select to receive a grant of an Option or
Appreciation Right pursuant to the Plan, provided, however, that no Eligible
Director shall be identified as an Eligible Individual.
Section 2.17 ELIGIBLE OUTSIDE DIRECTOR means a member of the
Board or a member of the board of directors of the Bank who is not an employee
or an officer of the Corporation.
Section 2.18 EXERCISE PRICE means the price per Share at which
Shares subject to an Option may be purchased upon exercise of the Option,
determined in accordance with Section 4.3, Section 4.4 or Section 4.8.
Section 2.19 FAIR MARKET VALUE means, when used in connection
with Shares on a certain date, the reported closing price of the Shares as
reported by the National Association of Securities Dealers Automated Quotation
System (as published by the Wall Street Journal, if published) on the day prior
to such date or if the Shares were not traded on such date, on the next
preceding day on which the Shares were traded thereon.
Section 2.20 INCENTIVE STOCK OPTION means a right to purchase
Shares that is granted pursuant to Section 4.3, that is designated by the
Committee to be an Incentive Stock Option and that satisfies the requirements of
Section 422 of the Code.
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Section 2.21 JSBF means JSB Financial, Inc., a corporation
organized and existing under the laws of the State of Delaware, and any
successor thereto.
Section 2.22 NON-QUALIFIED STOCK OPTION means a right to
purchase Shares that is (a) granted pursuant to Section 4.3, designated by the
Committee to be a Non-Qualified Stock Option and not intended to satisfy the
requirements of Section 422 of the Code, or (b) granted pursuant to Section 4.4
or Section 4.8.
Section 2.23 OPTION means either an Incentive Stock Option or
a Non-Qualified Stock Option granted under this Plan.
Section 2.24 OPTION AGREEMENT means the written agreement
evidencing an Option, and the Appreciation Rights and Dividend Equivalent Rights
which relate to such Option, in accordance with the requirements of Sections
4.1, 5.1 and 6.1.
Section 2.25 OPTION HOLDER means an Eligible Individual,
Eligible Outside Director or Eligible Director Emeritus who has been granted an
Option under the Plan, or the Beneficiary of such an Eligible Individual,
Eligible Outside Director or Eligible Director Emeritus.
Section 2.26 OPTION PERIOD means the period during which an
Option or an Appreciation Right may be exercised, determined in accordance with
Section 4.3, Section 4.4 or Section 4.8.
Section 2.27 PERSON means an individual, a corporation, a
bank, a savings bank, a savings and loan association, a financial institution, a
partnership, an association, a joint-stock company, a trust, an estate, an
unincorporated organization and any other business organization or institution.
Section 2.28 PLAN means the JSB Financial, Inc. 1996 Stock
Option Plan, as amended from time to time.
Section 2.29 PRELIMINARY PURCHASE EVENT means any of the
following events or transactions occurring after the Effective Date:
(a) JSBF or the Bank shall have entered into an agreement to
engage in an Acquisition Transaction (as defined below) with any person (the
term "person" for purposes of this Plan having the meaning assigned thereto in
Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and the rules and regulations thereunder, except that the
term "person" shall not include any employee benefit plan maintained by JSBF or
the Bank, or such plan's related trust) or the Board of Directors of JSBF shall
have recommended that the shareholders of JSBF approve or accept any Acquisition
Transaction with any person. For purposes of this Plan, "Acquisition
Transaction" shall mean (i) a merger or a purchase, lease or other acquisition
of all or substantially all of the assets of JSBF or the Bank or (ii) a purchase
or other acquisition (including by way of merger, consolidation, share exchange
or otherwise) of securities representing 10% or more of the voting power of JSBF
or
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the Bank; provided that the term "Acquisition Transaction" does not include any
internal merger or consolidation involving only JSBF and/or any of its
subsidiaries.
(b) Any person shall have acquired beneficial ownership or the
right to acquire beneficial ownership of 10% or more of the outstanding Shares
(the term "beneficial ownership" for purposes of this Plan having the meaning
assigned thereto in Section 13(d) of the Exchange Act, and the rules and
regulations thereunder);
(c) Any person shall have made a bona fide proposal to JSBF or
its shareholders, by public announcement or written communication that is or
becomes the subject of public disclosure, to engage in an Acquisition
Transaction (including, without limitation, any situation in which any person
(i) shall have commenced (as such term is defined in Rule 14d-2 under the
Exchange Act) or (ii) shall have filed a registration statement under the
Securities Act of 1933, as amended, with respect to, a tender offer or exchange
offer to purchase any Shares such that, upon consummation of such offer, such
person would own or control 10% or more of the then outstanding Shares; or
(d) Any person shall have filed an application or notice with
the Office of Thrift Supervision, Board of Governors of the Federal Reserve
System (the "Federal Reserve Board") or any other governmental authority or
regulatory or administrative agency or commission for approval to engage in an
Acquisition Transaction.
Section 2.30 RETIREMENT means the termination of an Eligible
Individual's employment with the Corporation at a time when he or she is
eligible to begin receiving an immediate retirement allowance under the
Retirement Plan of the Bank.
Section 2.31 SHARE means a share of common stock of JSBF.
Section 2.32 TERMINATION FOR CAUSE means an individual's
termination of service or employment with the Corporation because of the
individual's personal dishonesty, willful misconduct, any breach of fiduciary
duty involving personal profit, intentional failure to perform stated duties,
conviction of a felony with respect to the Corporation or for reasons defined in
the individual's employment agreement with the Corporation.
ARTICLE III
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ADMINISTRATION
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Section 3.1 COMMITTEE.
The Plan shall be administered by the Employee Benefits
Committee of the Bank (or any successor committee), or such other committee as
shall be designated by or on behalf of the Board to perform the duties as set
forth in this Article III; provided, however, that all
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members of such Committee must be Disinterested Board Members. If fewer than 3
members of the Employee Benefits Committee are Disinterested Board Members, then
the Board shall appoint to the Committee such additional Disinterested Board
Members as shall be necessary to provide for a Committee consisting of at least
three Disinterested Board Members.
Section 3.2 COMMITTEE ACTION.
The Committee shall hold meetings, at least annually, and may
make such administrative rules and regulations as it may deem proper. A majority
of the members of the Committee shall constitute a quorum, and the action of a
majority of the members of the Committee present at a meeting at which a quorum
is present, as well as actions taken pursuant to the unanimous written consent
of all of the members of the Committee without holding a meeting, shall be
deemed to be actions of the Committee. All actions of the Committee shall be
final and conclusive and shall be binding upon the Corporation and all other
interested parties.
Section 3.3 COMMITTEE RESPONSIBILITIES.
Subject to the terms and conditions of the Plan and such
limitations as may be imposed from time to time by the Board, the Committee
shall be responsible for the overall management and administration of the Plan
and shall have such authority as shall be necessary or appropriate in order to
carry out its responsibilities, including, without limitation, the authority:
(a) to interpret and construe the Plan, and to determine all
questions that may arise under the Plan as to eligibility for participation in
the Plan, the number of Shares subject to the Options and Appreciation Rights,
if any, to be granted, and the terms and conditions thereof;
(b) to adopt rules and regulations and to prescribe forms for
the operation and administration of the Plan;
(c) to appoint an officer or officers of JSBF or the Bank, who
shall not be members of the Committee, and who shall, subject to the
responsibilities of the Committee and the Board, serve as the Administrator for
the Plan and shall have the responsibility for the day-to-day control,
management, operation and administration of the Plan. Such Administrator may, in
the Committee's discretion, have the following responsibilities:
(i) to maintain records necessary or appropriate for the
administration of the Plan;
(ii) to give and receive such instructions, notices and
information as may be necessary or appropriate in the
administration of the Plan;
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(iii) to prescribe forms consistent with the terms of the
Plan and with the interpretations and other actions
of the Committee;
(iv) to determine any question arising in connection with
the Plan, and such officer's decision or action in
respect thereof shall be final and conclusive and
binding upon JSBF, the Option Holders, Beneficiaries
and any other person having an interest under the
Plan; provided, however, that any question relating
to inconsistency or omission in the Plan, or
interpretation of the provisions of the Plan, shall
be referred to the Committee by such officer, and the
decision of the Committee in respect thereof shall be
final; and
(v) to discharge such other responsibilities or follow
such directions as may be assigned or given by the
Committee or the Board; and
any Option Holder dealing with the Administrator shall be fully protected in
relying upon any written notice, instruction, direction or other communication
signed by the Administrator; and
(d) to take any other action not inconsistent with the
provisions of the Plan that it may deem necessary or appropriate.
ARTICLE IV
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STOCK OPTIONS
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Section 4.1 OPTION AGREEMENTS.
Any Option granted pursuant to the Plan shall be evidenced by
a written agreement which shall:
(a) designate the Option as either an Incentive Stock Option
or a Non-Qualified Stock Option;
(b) specify the number of Shares covered by the Option;
(c) specify the Exercise Price, determined in accordance with
Section 4.3, Section 4.4 or Section 4.8, for the Shares subject to the Option;
(d) specify the Option Period determined in accordance with
Section 4.3, Section 4.4 or Section 4.8;
(e) set forth specifically, or incorporate by reference, the
applicable provisions of the Plan; and
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(f) contain such other terms and conditions not inconsistent
with the Plan as the Committee may, in its discretion, prescribe with respect to
an Option granted to an Eligible Individual.
Section 4.2 AVAILABLE SHARES.
Subject to Section 7.3, the maximum aggregate number of Shares
with respect to which Options may be granted at any time pursuant to this Plan
shall be equal to the excess of:
(a) 800,000 Shares; over
(b) the sum of:
(i) the number of Shares with respect to which Options
previously granted under this Plan may then or may in
the future be exercised; plus
(ii) the number of Shares with respect to which Options
previously granted under this Plan have been
exercised.
Such Shares may be either authorized but unissued Shares, or Shares previously
issued and reacquired by JSBF to be held as issued but not outstanding Shares.
Solely, for purposes of this Section 4.2, an Option shall not be considered as
having been exercised to the extent that such Option terminates by reason other
than the purchase of the related Shares, and the exercise of an Appreciation
Right shall not be treated as an exercise of the related Option.
Section 4.3 OPTIONS GRANTED TO ELIGIBLE INDIVIDUALS.
(a) Subject to the limitations of the Plan, the Committee may,
in its discretion, grant to an Eligible Individual an Option to purchase Shares.
(b) Subject to Section 4.2 and such limitations as the Board
may from time to time impose, the number of Shares as to which an Eligible
Individual may be granted Options shall be determined by the Committee, in its
discretion.
(c) The Exercise Price of an Option granted to an Eligible
Individual shall be determined by the Committee, in its discretion; provided,
however, that the Exercise Price established for any Incentive Stock Option
shall be determined in accordance with Section 4.7; and provided, further, that
the Exercise Price established for any Option shall not be less than the par
value of a Share on the date on which the Option is granted.
(d) The Option Period during which an Option granted to an
Eligible Individual may be exercised shall commence on the date that is the
latter of six months after the date the Option is granted or six months after
the Plan is approved by the Company's stockholders, and shall expire on the
earliest of:
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(i) the date specified by the Committee in the Option
Agreement;
(ii) the last day of the three-month period commencing on
the date of the Eligible Individual's termination of
employment with the Corporation, other than on
account of death or Disability, Retirement or a
Termination for Cause;
(iii) the last day of the one-year period commencing on the
date of the Eligible Individual's termination of
employment due to death, Disability or Retirement;
(iv) the date the Eligible Individual ceases to be an
employee of the Corporation due to a Termination for
Cause; and
(v) the last day of the ten-year period commencing on the
date on which the Option was granted;
provided, however, that in the event of a Change of Control while there is
outstanding any Option for which the Option Period has not commenced, such
Option Period shall automatically commence on the earliest date on which the
Change of Control is deemed to have occurred; and provided, further, that in the
event an Eligible Individual who ceases to be an employee of the Corporation due
to Retirement has not exercised his or her Incentive Stock Options, if any,
within the three-month period commencing on the date of such Retirement, all
such Options shall be deemed Non-Qualified Stock Options thereafter.
(e) The Committee may, in its discretion, establish a specific
date or dates on and after which all or a specified portion of the Shares
subject to an Option granted to an Eligible Individual pursuant to this Section
4.3 shall be available for purchase during the Option Period, which date or
dates shall be specified in the Option Agreement.
Section 4.4 OPTIONS GRANTED TO ELIGIBLE DIRECTORS.
(a) Subject to Sections 4.2 and 4.4(c), effective on the first
business day of each calendar year during which the Plan is in effect, each
Eligible Outside Director who is an Eligible Outside Director on such date shall
be granted a Non-Qualified Stock Option to purchase 4,000 Shares.
Notwithstanding the foregoing, in order to attract qualified individuals to
serve as Eligible Outside Directors, an individual who first becomes an Eligible
Outside Director on or after the Effective Date of the Plan shall be granted,
effective on the date he or she becomes an Eligible Outside Director, a
Non-Qualified Stock Option to purchase the sum of (i) 5,000 Shares, plus (ii) if
such individual becomes an Eligible Outside Director subsequent to the first
business day of a calendar year, the number of Shares determined according to
the following schedule:
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EFFECTIVE DATE OF BOARD MEMBERSHIP SHARES
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Before April 1st 4,000
After March 31st and before July 1st 3,000
After June 30th and before October 1st 2,000
After September 30th 1,000
(b) Subject to Sections 4.2 and 4.4(c), on the first business
day of each calendar year during which the Plan is in effect, each Eligible
Director Emeritus shall be granted a Non-Qualified Stock Option to purchase
2,000 Shares; provided, however, that no individual shall receive a grant under
both Sections 4.4(a) and (b).
(c) Notwithstanding Sections 4.4(a) and (b), in the event
that, as of the first business day of a calendar year, the number of available
Shares determined under Section 4.2 is less than the total number of Shares with
respect to which Non-Qualified Stock Options would be granted under Sections
4.4(a) and (b), each Eligible Director shall be granted a Non-Qualified Stock
Option for the number of Shares determined by multiplying (i) the number of
Shares with respect to which the Eligible Director would have been granted a
Non-Qualified Stock Option on such date by (ii) a fraction, the numerator of
which is the number of Shares that are available under Section 4.2 and the
denominator of which is the total number of Shares that would have to have been
available under Section 4.2 in order to grant all of the Non-Qualified Stock
Options that would otherwise have been granted under Sections 4.4(a) and (b),
absent this Section 4.4(c).
(d) The Exercise Price of an Option granted to an Eligible
Director shall be the Fair Market Value of a Share on the date on which the
Option is granted.
(e) The Option Period during which an Option granted to an
Eligible Director may be exercised shall commence on the date that is the latter
of six months after the date the Option was granted or six months after the Plan
is approved by the Company's stockholders, and shall expire on the earliest of:
(i) the last day of the one-year period commencing on the
date the Eligible Director ceases to be an Eligible
Director other than due to a Termination for Cause;
(ii) the date the Eligible Director ceases to be an
Eligible Director due to a Termination for Cause; and
(iii) the last day of the ten-year period commencing on the
date on which the Option was granted;
provided, however, that in the event of a Change of Control while there is
outstanding any Option for which the Option Period has not commenced, such
Option Period shall automatically commence on the earliest date on which the
Change of Control is deemed to have occurred.
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(f) All Shares subject to an Option granted to an Eligible
Director pursuant to this Section 4.4 shall be available for purchase at any
time during the Option Period.
Section 4.5 METHOD OF EXERCISE.
(a) Subject to the limitations of the Plan and the Option
Agreement, an Option Holder may, at any time during the Option Period, exercise
his or her right to purchase all or any part of the Shares to which the Option
relates; provided, however, that the minimum number of Shares which may be
purchased shall be 100, or, if less, the total number of Shares relating to the
Option which remain unpurchased. An Option Holder shall exercise an Option to
purchase Shares by:
(i) giving written notice to the Committee or
Administrator in such form and manner as the
Committee may prescribe, of his or her intent to
exercise the Option;
(ii) delivering to the Committee or Administrator full
payment for the Shares as to which the Option is to
be exercised; and
(iii) satisfying such other conditions as may be prescribed
in the Option Agreement.
Payment shall be made (A) in United States dollars by certified check, money
order or bank draft drawn payable to the order of JSBF, (B) in Shares duly
endorsed for transfer and with all necessary stock transfer tax stamps attached,
already owned by the Option Holder and having a fair market value equal to the
Exercise Price, such fair market value to be determined in such manner as may be
provided by the Committee or Administrator or as may be required in order to
comply with or conform to the requirements of any applicable laws or regulations
or (C) a combination of (A) or (B). Notwithstanding the provisions of Section
8.9, the date of exercise shall be the earliest date practicable following the
date on which the notice referred to in this Section 4.5(a) is received by the
Committee or Administrator, but in no event more than three days after such
notice is received.
(b) When the requirements of Section 4.5(a) have been
satisfied, the Committee or Administrator shall take such action as is necessary
to cause the issuance, in the name of the Option Holder, of a stock certificate
evidencing the ownership of such Shares. Except as may be provided under Article
VI with respect to Dividend Equivalent Rights, an Option Holder shall have no
right to vote or to receive dividends, nor have any other rights with respect to
the Shares, prior to the date as of which such Shares are transferred to the
Option Holder on the stock transfer records of JSBF, and no adjustments shall be
made for any dividends or other rights for which the record date is prior to the
date as of which such transfer is effected, except as may be required under
Section 7.3.
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Section 4.6 LIMITATIONS ON OPTIONS.
(a) No Eligible Individual shall be granted an Option unless
at the time the Option is granted, each member of the Committee is a
Disinterested Board Member.
(b) An Option by its terms shall not be transferable by the
Option Holder other than by will or by the laws of descent and distribution, and
shall be exercisable, during the lifetime of an Option Holder only by such
Option Holder.
(c) The obligation of JSBF to deliver Shares with respect to
an Option shall, if the Committee or Administrator so requests, be conditioned
upon the receipt of a representation as to the investment intention of the
Option Holder to whom such Shares are to be delivered, in such form as the
Committee or Administrator shall determine to be necessary or advisable to
comply with the provisions of applicable federal, state or local law. It may be
provided that any such representation shall become inoperative upon a
registration of the Shares or upon the occurrence of any other event eliminating
the necessity of such representation. JSBF shall not be required to deliver any
Shares under the Plan prior to (i) the admission of such Shares to listing on
any stock exchange on which Shares may then be listed, or (ii) the completion of
such registration or other qualification under any state or federal law, rule or
regulation as the Committee or Administrator shall determine to be necessary or
advisable.
Section 4.7 ADDITIONAL LIMITATIONS ON INCENTIVE STOCK OPTIONS.
In addition to the limitations of Section 4.6, an Option
designated by the Committee to be an Incentive Stock Option shall be subject to
the following limitations:
(a) if, for any calendar year, the sum of (i) plus (ii)
exceeds $100,000, where (i) equals the Fair Market Value (determined as of the
date of the grant) of Shares subject to an Option intended to be an Incentive
Stock Option which first become available for purchase during such calendar
year, and (ii) equals the Fair Market Value (determined as of the date of grant)
of Shares subject to any other Options intended to be Incentive Stock Options
and previously granted to the same Eligible Individual which first become
exercisable in such calendar year, than that portion of the Shares granted
pursuant to such Options which cause the sum of (i) and (ii) to exceed $100,000
shall be deemed to be Shares granted pursuant to a NonQualified Stock Option or
Non-Qualified Stock Options, with the same terms as the Option or Options
intended to be an Incentive Stock Option;
(b) except as provided in Section 4.7(c), the Exercise Price
established for an Option intended to be an Incentive Stock Option shall not be
less than the reported closing price of a Share as reported by the National
Association of Securities Dealers Automated Quotation System for the date the
Option is granted; and
(c) the Exercise Price established for an Option intended to
be an Incentive Stock Option that is granted to an Eligible Individual who, at
the time the Option is granted, owns Shares comprising more than 10% of the
total combined voting power of all classes of
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stock of JSBF, shall not be less than 110% of the amount determined under
Section 4.7(b) without regard to this Section 4.7(c).
Section 4.8 GRANTS IN THE EVENT OF A PRELIMINARY PURCHASE
EVENT.
(a) In the event of a Preliminary Purchase Event,
Non-Qualified Stock Options for all of the Shares then available for grant under
this Plan pursuant to Section 4.2 shall be automatically granted among those
current Eligible Individuals and current Eligible Directors who have previously
been granted Options under this Plan, as of the date of such Preliminary
Purchase Event. The number of Shares subject to the Option to be granted to each
such individual under this Section 4.8(a) shall be determined by multiplying the
number of Shares then available for grant pursuant to Section 4.2 by a fraction,
the numerator of which is the number of Shares subject to Options previously
granted to that individual under this Plan, and the denominator of which is the
total number of Shares subject to Options previously granted to all current
Eligible Individuals and current Eligible Directors under this Plan; however,
both the numerator and the denominator will exclude the Options granted under
Section 4.4(a)(i).
(b) The Exercise Price for any Option granted pursuant to
Section 4.8(a) shall be the average of the Exercise Price for each Share subject
to an Option granted under this Plan to the respective Eligible Individual or
Eligible Director prior to the Preliminary Purchase Event, excluding the Options
granted under Section 4.4(a)(i).
(c) The Option Period during which an Option granted pursuant
to Section 4.8(a) may be exercised shall commence on the earliest to occur of
(i) the date which is six months after the date the Option is granted or (ii)
the date of a Change of Control and shall expire on the last day of the ten-year
period commencing on the date on which the Option is granted.
(d) All Shares subject to an Option granted pursuant to
Section 4.8(a) shall be available for purchase by the Option Holder immediately
upon the date the Option Period begins.
ARTICLE V
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APPRECIATION RIGHTS
-------------------
Section 5.1 IN GENERAL.
Each Eligible Individual or Eligible Director who has been
granted an Option pursuant to the Plan, shall, at the time the Option is
granted, also be granted an Appreciation Right relating to all of the Shares
subject to such Option, with an Exercise Price equal to the Exercise Price of
the related Option, and such Appreciation Right shall be exercisable only in the
event of a Change of Control. Such Appreciation Right shall be evidenced by
provisions
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included in the Option Agreement for the Option to which the Appreciation Right
relates. Except as provided otherwise in this Article V, Appreciation Rights
shall be exercisable in accordance with and subject to the terms and conditions
imposed under the Plan and the relevant Option Agreement.
Section 5.2 EXERCISE OF APPRECIATION RIGHTS.
An Option Holder in possession of an Appreciation Right who
desires to exercise such Appreciation Right shall do so by delivering to the
Committee or Administrator advance written notice, in the form and manner
prescribed by the Committee or Administrator, of his or her intent to exercise
the Appreciation Right and the number of Shares with respect to which the
Appreciation Right is to be exercised. On the date of exercise or as soon
thereafter as is practicable, JSBF shall pay to the Option Holder exercising the
Appreciation Right an amount equivalent to the excess of (a) the Fair Market
Value of the applicable Shares on the date of exercise, over (b) the Exercise
Price of such Shares. Payment of an Appreciation Right shall be made in cash.
Notwithstanding the provisions of Section 8.9, the date of exercise shall be the
earliest date practicable following the date on which the notice referred to in
this Section 5.2 is received by the Committee or Administrator, but in no event
more than three days after such notice is received.
Section 5.3 EFFECT OF EXERCISE.
The exercise of an Appreciation Right shall, for all purposes
of the Plan other than determining the amount of Shares available for Options
pursuant to Section 4.2, be treated as an exercise of the related Option and a
subsequent resale of the Shares acquired thereby.
ARTICLE VI
----------
DIVIDEND EQUIVALENT RIGHTS
--------------------------
Section 6.1 IN GENERAL.
Each Eligible Individual and Eligible Director who has been
granted an Option under the Plan shall, at the time the Option is granted, also
be granted a Dividend Equivalent Right relating to each Share subject to such
Option. Upon the exercise of an Option, the Option Holder shall receive a
payment equal to the value of the Dividend Equivalent Rights relating to the
Shares being acquired pursuant to such Option exercise. Dividend Equivalent
Rights granted pursuant to this Article VI shall be evidenced by provisions
included in the Option Agreement for the Option to which the Dividend Equivalent
Rights relate and shall be valued and paid in accordance with and subject to the
terms and conditions imposed under the Plan and the relevant Option Agreement.
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Section 6.2 VALUE OF DIVIDEND EQUIVALENT RIGHTS.
(a) For purposes of this Section 6.2 only, the following
special definitions shall apply:
(i) CREDIT DATE means each anniversary of the
Effective Date of the Plan.
(ii) DER CREDIT means an amount relating to a
Share subject to an Option granted pursuant
to Section 4.3, 4.4 and 4.8 which amount
shall be credited to a memorandum account
established and maintained by JSBF for the
Option Holder.
(iii) DER YEAR means the most recent calendar year
ending prior to the applicable Credit Date.
(iv) EPS means earnings per share.
(v) JSBF DIV means the percentage of EPS paid as
cash dividends (including "regular",
"special" or "extraordinary" dividends) on
outstanding Shares of JSBF during the
applicable DER Year.
(vi) US DIV means the average percentage of EPS
paid as cash dividends (including "regular,"
"special" or "extraordinary dividends) on
the outstanding common stock of the 25
largest stock form thrift institutions in
the United States during the applicable DER
Year, as determined by JSBF on the basis of
such institutions' market capitalization at
the end of such DER Year.
(vii) WEIGHTED AVERAGE VALUE means the sum of the
DER Credits attributable to Shares subject
to Options granted to an Eligible Individual
or Eligible Director prior to a Preliminary
Purchase Event, divided by the total number
of Shares subject to such Options.
(b) For purposes of determining the value of Dividend
Equivalent Rights relating to Shares subject to Options granted pursuant to
Section 4.3 and 4.4, as of each Credit Date the Option Holder shall receive a
DER Credit for each such Share if JSBF DIV exceeded US DIV for the applicable
DER Year. The value of the DER Credit shall be equal to one percent (1%) of JSBF
EPS for the applicable DER Year for each whole percentage point that JSBF DIV
exceeded US DIV for such DER Year. The value of the Dividend Equivalent Rights
to be paid to the Option Holder upon the exercise of an Option granted pursuant
to Section 4.3 or 4.4 shall be equal to the sum of the DER Credits attributable
to the Shares acquired pursuant to the exercise of the Option.
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(c) The value of a Dividend Equivalent Right relating to a
Share subject to an Option granted pursuant to Section 4.8 shall be the Weighted
Average Value of all DER Credits attributable to Shares subject to Options
granted to the Option Holder prior to the Preliminary Purchase Event, excluding
Options granted pursuant to Section 4.4(a)(i).
Section 6.3 EXERCISE PRIOR TO CREDIT DATE.
In the event an Option Holder exercises an Option granted
pursuant to Section 4.3, 4.4 or 4.8 during the period beginning with a Credit
Date and ending on the date JSBF actually determines the value of the DER
Credit, if any, to be credited pursuant to Section 6.2(b) with respect to such
Credit Date, JSBF shall pay the Option Holder an amount equal to the value of
the DER Credit as soon as practicable following the determination of such value.
ARTICLE VII
-----------
AMENDMENT AND TERMINATION
-------------------------
Section 7.1 TERMINATION.
The Board may suspend or terminate the Plan in whole or in
part at any time prior to the tenth anniversary of the Effective Date by giving
written notice of such suspension or termination to the Committee. Unless sooner
terminated, the Plan shall terminate automatically on the day preceding the
tenth anniversary of the Effective Date. In the event of any suspension or
termination of the Plan, all Options, Appreciation Rights and Dividend
Equivalent Rights theretofore granted under the Plan that are effective on the
date of such suspension or termination of the Plan shall remain effective under
the terms of the Option Agreements granting such Options and corresponding
Appreciation Rights and Dividend Equivalent Rights.
Section 7.2 AMENDMENT.
The Board may amend or revise the Plan in whole or in part;
except that the provisions affecting director awards may not be amended more
than once every six months, other than pursuant to changes in the Code, or
ERISA, or the rules thereunder. In addition, if the amendment or revision:
(a) materially increases the benefits accruing under the Plan;
(b) materially increases the number of Shares which may be
issued under the Plan; or
(c) materially modifies the requirements as to eligibility for
Options, Appreciation Rights or Dividend Equivalent Rights under the Plan;
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such amendment or revision shall be subject to approval by the stockholders of
JSBF.
Section 7.3 ADJUSTMENTS FOR BUSINESS REORGANIZATION, STOCK
SPLIT OR STOCK DIVIDEND.
(a) In the event of any merger, consolidation, or other
business reorganization in which JSBF is the surviving entity, and in the event
of any stock split, stock dividend or other event generally affecting the number
of Shares held by each Person who is then a holder of Shares on the record date
for such event, the number of Shares covered by each outstanding Option and the
number of Shares available under Section 4.2 shall be adjusted to account for
such event. The adjustment to be made pursuant to this Section 7.3 for
outstanding Options shall be effected by multiplying the number of Shares then
covered by each such outstanding Option by an amount ("Adjustment Amount") equal
to the number of Shares that would be owned after such event by a Person who,
immediately prior to such event, was the holder of record of one Share, and the
Exercise Price for such outstanding Option shall be adjusted by dividing the
Exercise Price by the Adjustment Amount; provided, however, that the Committee
may, in its discretion, establish another appropriate method of adjusting
outstanding Options. The adjustment to be made to the number of Shares available
under Section 4.2 shall be effected by multiplying the number of such Shares by
the Adjustment Amount.
(b) In the event of any merger, consolidation, or other
business reorganization in which JSBF is not the surviving entity:
(i) any Options granted under the Plan which remain
outstanding may be cancelled by the Committee as of
the effective date of such merger, consolidation,
business reorganization, liquidation or sale by the
Board upon 30 days' written notice to each Option
Holder in advance of the effective date of such event
and the Option Holder shall receive in consideration
of such cancellation an amount in cash equal to the
excess of (A) the value, as determined by the
Committee in its absolute discretion, of the property
(including cash) received by the holder of a Share as
a result of such event over (B) the Exercise Price of
such Option; and
(ii) any Option which is not cancelled pursuant to Section
7.3(b)(i) shall be exchanged or adjusted in such
manner as the Committee shall deem appropriate, in
its absolute discretion, to account for such merger,
consolidation or other business reorganization and,
if appropriate, the Committee may provide, in its
absolute discretion, that a cash payment will be made
to the Option Holder in connection with such exchange
or adjustment of the Option.
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ARTICLE VIII
------------
MISCELLANEOUS
-------------
Section 8.1 STATUS AS AN EMPLOYEE BENEFIT PLAN.
This Plan is not intended to satisfy the requirements for
qualification under Section 401(a) of the Code or to satisfy the definitional
requirements for an "employee benefit plan" under Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended. It is intended to be a
non-qualified incentive compensation program that is exempt from the regulatory
requirements of the Employee Retirement Income Security Act of 1974, as amended.
The Plan shall be construed and administered so as to effectuate this intent.
Section 8.2 NO RIGHT TO CONTINUED EMPLOYMENT.
Neither the establishment of the Plan nor any provisions of
the Plan nor any action of the Board or the Committee with respect to the Plan
shall be held or construed to confer upon any Eligible Individual any right to a
continuation of employment by the Corporation. The Corporation reserves the
right to dismiss any Eligible Individual or otherwise deal with any Eligible
Individual to the same extent as though the Plan had not been adopted.
Section 8.3 CONSTRUCTION OF LANGUAGE.
Whenever appropriate in the Plan, words used in the singular
may be read in the plural, words used in the plural may be read in the singular,
and words importing the masculine gender may be read as referring equally to the
feminine or the neuter. Any reference to an Article or Section number shall
refer to an Article or Section of this Plan unless otherwise indicated.
Section 8.4 GOVERNING LAW.
The Plan shall be construed, administered and enforced
according to the laws of the State of Delaware without giving effect to the
conflict of laws principles thereof, except to the extent that such laws are
preempted by federal law.
Section 8.5 HEADINGS.
The headings of Articles and Sections are included solely for
convenience of reference. If there is any conflict between such headings and the
text of the Plan, the text shall control.
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Section 8.6 NON-ALIENATION OF BENEFITS.
The right to receive a benefit under the Plan shall not be
subject in any manner to anticipation, alienation or assignment, nor shall such
right be liable for or subject to debts, contracts, liabilities, engagements or
torts.
Section 8.7 TAXES.
The Corporation shall have the right to deduct from all
amounts paid by the Corporation in cash with respect to an Option, Appreciation
Right or Dividend Equivalent Right under the Plan any taxes required by law to
be withheld with respect to such Option, Appreciation Right or Dividend
Equivalent Right. Where any Person is entitled to receive Shares pursuant to the
exercise of an Option, Appreciation Right or Dividend Equivalent Right, the
Corporation shall have the right to require such Person to pay the Corporation
the amount of any tax which the Corporation is required to withhold with respect
to such Shares, or, in lieu thereof, to retain, or to sell without notice, a
sufficient number of Shares to cover the amount required to be withheld. The
Corporation may consider, but is not required to grant, a request by the Person
entitled to receive Shares subject to withholding as to the manner in which such
withholding shall be made.
Section 8.8 APPROVAL OF STOCKHOLDERS.
All Options, Appreciation Rights and Dividend Equivalent
Rights granted pursuant to Articles IV, V and VI, respectively, of the Plan
shall be conditioned on the approval of the Plan by the stockholders of JSBF on
or prior to the date of the first annual meeting of such stockholders
immediately following the adoption of the Plan by JSBF. No Option, Appreciation
Right or Dividend Equivalent Right granted under the Plan shall be effective,
nor shall any such Option or Appreciation Right be exercised or any Shares
issued or purchased pursuant to the Plan, prior to such approval.
Section 8.9 NOTICES.
Any communication required or permitted to be given under the
Plan, including any notice, direction, designation, comment, instruction,
objection or waiver, shall be in writing and shall be deemed to have been given
at such time as it is delivered personally or five (5) days after mailing if
mailed, postage prepaid, by registered or certified mail, return receipt
requested, addressed to such party at the address listed below, or at such other
address as one such party may by written notice specify to the other party:
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(a) If to the Committee:
JSB Financial, Inc.
303 Merrick Road
Lynbrook, New York 11563-2574
Attention: ADMINISTRATOR OF THE JSB FINANCIAL, INC.
1996 STOCK OPTION PLAN
----------------------------------------
(b) If to an Option Holder, to the Option Holder's address as
shown in the Corporation's personnel records.