EXHIBIT 4(a)
THE POTTERS SAVINGS AND LOAN COMPANY
STOCK OPTION PLAN
SECTION l. Purpose. The purposes of The Potters Savings and Loan Company
Stock Option Plan are to promote the interests of The Potters Savings and Loan
Company and its stockholders by (i) attracting and retaining exceptional
executive personnel and other key employees of and directors of the Company;
(ii) motivating such employees and Eligible Directors by means of performance
related incentives to achieve longer-range performance goals; and (iii)
enabling such employees and Eligible Directors to participate in the long-term
growth and financial success of the Company.
SECTION 2. Definitions. As used in the Plan, the following terms shall
have the meanings set forth below:
"Award" shall mean any Option, but shall not include any Director Option.
"Award Agreement" shall mean any written agreement, contract, or other
instrument or document evidencing any Award, which may, but need not, be
executed or acknowledged by a Participant.
"Board" shall mean the Board of Directors of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
"Committee" shall mean a committee of the Board designated by the Board
to administer the Plan and composed of not less than the minimum number of
persons from time to time required by Rule 16b-3, each of whom, to the extent
necessary to comply with Rule 16b-3 only, is a "disinterested person" within
the meaning of Rule l6b-3.
"Company" shall mean The Potters Savings and Loan Company, together with
any successor thereto.
"Conversion" shall mean the conversion of the Company from mutual to
stock form.
"Director Option" shall mean a Non-Qualified Stock Option granted to each
Eligible Director pursuant to Section 6(e) without any action by the Board or
the Committee.
"Eligible Director" shall mean, on any date, a person who is serving as a
member of the Board but shall not include a person who is an Employee of the
Company.
"Employee" shall mean an employee of the Company.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Fair Market Value" shall be determined as follows:
(a) If the Shares are traded on a national securities exchange at the
time of grant of the Award or Director Option, then the Fair Market
Value shall be the average of the highest and lowest selling price
on such exchange on the date such Award or Director Option is
granted or, if there were no sales on such date, then on the next
prior business day on which there was a sale.
(b) If the Shares are not listed on a national securities exchange at
the time of the grant of the Award or Director Option, then the Fair
Market Value shall be the mean between the closing high bid and low
asked quotation with respect to a Share on such date on the Nasdaq
Stock Market.
(c) If the Shares are not traded on a national securities exchange or
quoted on the Nasdaq Stock Market at the time of the grant of the
Award or Director Option, then the Fair Market Value shall be the
average bid price per Share as reported by any two brokerage
companies, as designated by the Board of Directors prior to
obtaining any bid prices per Share, for the last five business days
immediately preceding the date of grant.
(d) If the Shares are not traded on a national securities exchange or
quoted on the Nasdaq Stock Market, and there are not at least two
brokerage companies reporting a bid price per Share on the date of
grant of the Award or Director Option, then the Fair Market Value
shall be that value per Share determined by a third-party appraiser,
independent of the Company and the Participant or the Eligible
Director, as the case may be, and qualified to determine such value.
(e) Subsections (c) and (d) of this Section 2 notwithstanding, the Fair
Market Value for any Award or Director Option granted on the
effective date of the Conversion shall be the price at which each
Share is sold in the Conversion.
"Incentive Stock Option" shall mean a right to purchase Shares from the
Company that is granted under Section 6 of the Plan and that is intended to
meet the requirements of Section 422 of the Code or any successor provision
thereto.
"Non-Qualified Stock Option" shall mean a right to purchase Shares from
the Company that is granted under Section 6 of the Plan and that is not
intended to be an Incentive Stock Option.
"Option" shall mean an Incentive Stock Option or a Non-Qualified Stock
Option but shall not include a Director Option.
"Participant" shall mean any Employee selected by the Committee to
receive an Award under the Plan.
"Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization,
government or political subdivision thereof or other entity.
"Plan" shall mean The Potters Savings and Loan Company Stock Option Plan.
"Rule l6b-3" shall mean Rule 16b-3 as promulgated and interpreted by the
SEC under the Exchange Act, or any successor rule or regulation thereto as in
effect from time to time.
"SEC" shall mean the Securities and Exchange Commission or any successor
thereto and shall include the staff thereof.
"Shares" shall mean common shares of the Company, or such other
securities of the Company as may be designated by the Committee from time to
time.
"Ten Percent Stockholder" shall mean any stockholder who, at the time an
Incentive Stock Option is granted to such stockholder, owns (within the
meaning of Section 425(d) of the Code) more than ten percent of the voting
power of all classes of stock of the Company.
SECTION 3. Administration. (a) The Plan shall be administered by the
Committee. Subject to the terms of the Plan and applicable law, and in
addition to other express powers and authorizations conferred on the Committee
by the Plan, the Committee shall have full power and authority to: (i)
designate Participants; (ii) determine the type or types of Awards to be
granted to an eligible Employee; (iii) determine the number of Shares to be
covered by, or with respect to which payments, rights, or other matters are to
be calculated in connection with, Awards; (iv) determine the terms and
conditions of any Award; (v) determine whether, to what extent, and under what
circumstances Awards may be settled or exercised in cash, Shares, other
securities, other Awards or other property, or cancelled, forfeited, or
suspended; (vi) determine whether, to what extent, and under what
circumstances cash, Shares, other securities, other Awards, other property,
and other amounts payable with respect to an Award shall be deferred either
automatically or at the election of the holder thereof or of the Committee;
(vii) interpret and administer the Plan and any instrument or agreement
relating to, or Award made under, the Plan; (viii) establish, amend, suspend,
-2-
or waive such rules and regulations and appoint such agents as it shall deem
appropriate for the proper administration of the Plan; and (ix) make any other
determination and take any other action that the Committee deems necessary or
desirable for the administration of the Plan. Notwithstanding anything else
contained in the Plan to the contrary, neither the Committee nor the Board
shall have any discretion regarding whether an Eligible Director shall receive
a Director Option pursuant to Section 6(e) or regarding the terms of any
Director Option, including without limitation, the number of Shares subject to
such Director Option, the timing of the grant or the exercisability of such
Director Option or the exercise price per Share of such Director Option.
(b) Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations, and other decisions under or with respect to
the Plan or any Award shall be within the sole discretion of the Committee,
may be made at any time and shall be final, conclusive, and binding upon all
Persons, including the Company, any Participant, any holder or beneficiary of
any Award, any shareholder and any Employee.
SECTION 4. Shares Available for Awards.
(a) SHARES AVAILABLE. Subject to adjustment as provided in Section 4(b),
the number of Shares with respect to which Awards and Director Options may be
granted under the Plan shall be 52,900. If, after the effective date of the
Plan, any Shares covered by an Award or Director Option granted under the
Plan, or to which such an Award or Director Option relates, are forfeited, or
if an Award or Director Option otherwise terminates or is cancelled without
the delivery of Shares, then the Shares covered by such Award or Director
Option, or to which such Award or Director Option relates, or the number of
Shares otherwise counted against the aggregate number of Shares with respect
to which Awards and Director Options may be granted, to the extent of any such
settlement, forfeiture, termination or cancellation, shall again be, or shall
become, Shares with respect to which Awards and Director Options may be
granted, to the extent permissible under Rule l6b-3. In the event that any
Option or Director Option is exercised through the delivery of Shares, the
number of Shares available for Awards under the Plan shall be increased by the
number of Shares surrendered, to the extent permissible under Rule l6b-3.
(b) ADJUSTMENTS. In the event that any dividend or other distribution
(whether in the form of cash, Shares, other securities, or other property),
recapitalization, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase, or exchange of
Shares or other securities of the Company, issuance of warrants or other
rights to purchase Shares or other securities of the Company, or other similar
corporate transaction or event affects the Shares such that an adjustment is
necessary in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the
Committee shall proportionately adjust any or all (as necessary) of (i) the
number of Shares or other securities of the Company (or number and kind of
other securities or property) with respect to which Awards may be granted,
(ii) the number of Shares or other securities of the Company (or number and
kind of other securities or property) subject to outstanding Awards, and (iii)
the grant or exercise price with respect to any Award; provided, in each case,
that with respect to Awards of Incentive Stock Options no such adjustment
shall be authorized to the extent that such authority would cause the Plan to
violate Section 422(b)(l) of the Code, as from time to time amended. If,
pursuant to the preceding sentence, an adjustment is made to outstanding
Options held by Participants, a corresponding adjustment shall be made to
outstanding Director Options and if, pursuant to the preceding sentence, an
adjustment is made to the number of Shares authorized for issuance under the
Plan, a corresponding adjustment shall be made to the number of Shares subject
to each Director Option thereafter granted pursuant to Section 6(e).
(c) SOURCES OF SHARES. Any Shares delivered pursuant to an Award or
Director Option may consist, in whole or in part, of authorized and unissued
Shares or of treasury Shares.
SECTION 5. Eligibility. Any Employee, including any officer or
employee-director of the Company, who is not a member of the Committee, shall
be eligible to be designated a Participant. Each Eligible Director shall
receive nondiscretionary Director Options in accordance with, and only in
accordance with, Section 6(e) hereof.
SECTION 6. Options and Director Options.
(a) GRANT. Subject to the provisions of the Plan, the Committee shall
have sole and complete authority to determine the Employees to whom Options
-3-
shall be granted, the number of Shares to be covered by each Option, the
option price therefor and the conditions and limitations applicable to the
exercise of the Option. The Committee shall have the authority to grant
Incentive Stock Options, or to grant Non-Qualified Stock Options, or to grant
both types of options. In the case of Incentive Stock Options, the terms and
conditions of such grants shall be subject to and comply with such rules as
may be prescribed by Section 422 of the Code, as from time to time amended,
and any regulations implementing such statute, including, without limitation,
the requirements of Code Section 422(d) which limit the aggregate fair market
value of Shares for which Incentive Stock Options are exercisable for the
first time to $ 100,000 per calendar year. Each provision of the Plan and of
each written option agreement relating to an Option designated as an Incentive
Stock Option shall be construed so that such Option qualifies as an Incentive
Stock Option, and any provision that cannot be so construed shall be
disregarded.
(b) EXERCISE PRICE. The Committee shall establish the exercise price at
the time each Option is granted, which price shall not be less than 100% of
the per Share Fair Market Value on the date of grant. Notwithstanding any
provision contained herein, in the case of an Incentive Stock Option, the
exercise price at the time such Incentive Stock Option is granted to any
Employee who, at the time of such grant, is a Ten Percent Stockholder, shall
not be less than 110% of the per Share Fair Market Value on the date of grant.
(c) EXERCISE. Each Option shall be exercisable at such times and subject
to such terms and conditions as the Committee may, in its sole discretion,
specify in the applicable Award Agreement or thereafter; provided, in the case
of an Incentive Stock Option, a Participant may not exercise such Incentive
Stock Option after (i) the date which is ten years (five years in the case of
a Participant who is a Ten Percent Stockholder) after the date on which such
Incentive Stock Option is granted, or (ii) the date which is three months
(twelve months in the case of a Participant who becomes disabled, as defined
in Section 22(e)(3) of the Code, or who dies) after the date on which he
ceases to be an employee of the Company or a Subsidiary. The Committee may
impose such conditions with respect to the exercise of Options, including
without limitation, any relating to the application of federal or state
securities laws, as it may deem necessary or advisable. The Committee shall
have the right to accelerate the exercisability of any Option or outstanding
Option in its discretion.
(d) PAYMENT. No Shares shall be delivered pursuant to any exercise of an
Option until payment in full of the option price therefor is received by the
Company. Such payment may be made in cash or its equivalent, or, if and to the
extent permitted by the Committee, by exchanging Shares owned by the optionee
(which are not the subject of any pledge or other security interest), or by a
combination of the foregoing, provided that the combined value of all cash and
cash equivalents and the Fair Market Value of any such Shares so tendered to
the Company as of the date of such tender is at least equal to such option
price.
(e) DIRECTOR OPTIONS. Notwithstanding anything else contained herein to
the contrary, each Eligible Director shall receive, on the effective date of
the Conversion or, for each Eligible Director who first becomes a member of
the Board after the effective date of the Conversion, the date that the
Eligible Director first becomes a member of the Board, a grant of a Director
Option to purchase 4,496 Shares at an exercise price per Share equal to the
Fair Market Value on the date of grant. A Director Option shall be exercisable
until the earlier to occur of the following two dates (i) the tenth
anniversary of the date of grant of such Director Option or (ii) three months
(twelve months in the case of an Eligible Director who becomes disabled, as
defined in Section 22(e)(3) of the Code, or who dies) after the date the
Eligible Director ceases to be a member of the Board, except that if the
Eligible Director ceases to be a member of the Board after having been
convicted of, or pled guilty or nolo contendere to, a felony, his Director
Option shall be cancelled on the date he ceases to be a member of the Board.
An Eligible Director may pay the exercise price of a Director Option in the
manner described in Section 6(d).
SECTION 7. Amendment and Termination,
(a) AMENDMENTS TO THE PLAN. The Board may amend, alter, suspend,
discontinue, or terminate the Plan or any portion thereof at any time;
provided that no such amendment, alteration, suspension, discontinuation or
termination shall be made without shareholder approval if such approval is
necessary to comply with any tax or regulatory requirement, including for
these purposes any approval requirement which is a prerequisite for exemptive
relief from Section 16(b) of the Exchange Act for which or with which the
Board deems it necessary or desirable to qualify or comply; and, provided
further that no amendment may be made to Section 6(e) or any other provision
of the Plan relating to Director Options within six months of the last date on
which any such provision was amended, other than to comport with changes in
the Code, the Employee Retirement Income Security Act, or the rules
thereunder. Notwithstanding anything to the contrary herein, the Committee may
-4-
amend the Plan, subject to any stockholder approval required under Rule 16b-3,
in such manner as may be necessary so as to have the Plan conform with local
rules and regulations in any jurisdiction outside the United States.
(b) AMENDMENTS TO AWARDS. The Committee may waive any conditions or
rights under, amend any terms of, or alter, suspend, discontinue, cancel or
terminate, any Award theretofore granted, prospectively or retroactively;
provided that any such waiver, amendment, alteration, suspension,
discontinuance, cancellation or termination that would impair the rights of
any Participant or any holder or beneficiary of any Award theretofore granted
shall not to that extent be effective without the consent of the affected
Participant, holder or beneficiary.
(c) CANCELLATION. Any provision of this Plan or any Award Agreement to
the contrary notwithstanding, the Committee may cause any Award granted
hereunder to be cancelled in consideration of the granting to the holder of an
alternative Award having a Fair Market Value equal to the Fair Market Value of
such cancelled Award.
SECTION 8. General Provisions.
(a) NONTRANSFERABILITY.
(i) Each Award and each Director Option, and each right under any
Award or any Director Option, shall be exercisable only by the
Participant or the Eligible Director during the Participant's or the
Eligible Director's lifetime, or, if permissible under applicable law, by
the Participant's or the Eligible Director's guardian or legal
representative or a transferee receiving such Award pursuant to a
qualified domestic relations order ("QDRO"), as determined by the
Committee.
(ii) No Award or Director Option may be assigned, alienated,
pledged, attached, sold or otherwise transferred or encumbered by a
Participant or Eligible Director otherwise than by will or by the laws of
descent and distribution or pursuant to a QDRO, and any such purported
assignment, alienation, pledge, attachment, sale, transfer or encumbrance
shall be void and unenforceable against the Company; provided that the
designation of a beneficiary shall not constitute an assignment,
alienation, pledge, attachment, sale, transfer or encumbrance.
(b) NO RIGHTS TO AWARDS . No Employee, Participant or other Person shall
have any claim to be granted any Award, and there is no obligation for
uniformity of treatment of Employees, Participants, or holders or
beneficiaries of Awards. The terms and conditions of Awards need not be the
same with respect to each recipient.
(c) SHARE CERTIFICATES. All Shares or other securities of the Company
delivered under the Plan pursuant to any Award or the exercise thereof shall
be subject to such stop transfer orders and other restrictions as the
Committee may deem advisable under the Plan or the rules, regulations, and
other requirements of the SEC, any stock exchange or national securities
association upon which such Shares or other securities are then listed, and
any applicable Federal or state laws, and the Committee may cause a legend or
legends to be put on any certificates representing such Shares or other
securities to make appropriate reference to such restrictions.
(d) DELEGATION. Subject to the terms of the Plan and applicable law, the
Committee may delegate to one or more officers or managers of the Company, or
to a committee of such officers or managers, the authority, subject to such
terms and limitations as the Committee shall determine, to grant Awards to, or
to cancel, modify or waive rights with respect to, or to alter, discontinue,
suspend, or terminate Awards held by, Employees who are not officers or
directors of the Company for purposes of Section 16 of the Exchange Act, or
any successor section thereto, or who are otherwise not subject to such
Section.
(e) WITHHOLDING. A Participant or Eligible Director may be required to
pay to the Company and the Company shall have the right and is hereby
authorized to withhold from any Award or Director Option, from any payment due
or transfer made under any Award or any Director Option or under the Plan or
from any compensation or other amount owing to a Participant or Eligible
Director the amount of any applicable withholding taxes in respect of an Award
or a Director Option, its exercise, or any payment or transfer under an Award,
under a Director Option or under the Plan and to take such other action as may
be necessary in the opinion of the Company to satisfy all obligations for the
payment of such taxes. With respect to Participants who are not subject to
-5-
Section 16 of the Exchange Act, the withholding may be in the form of cash,
Shares, other securities, other Awards or other property as the Committee may
allow. With respect to Participants and Eligible Directors who are subject to
Section 16 of the Exchange Act, the withholding shall be in cash or in any
other property permitted by Rule l6b-3 as the Committee may allow. The
Committee may provide for additional cash payments to holders of Awards to
defray or offset any tax arising from the grant, vesting, exercise or payments
of any Award.
(f) AWARD AGREEMENTS. Each Award hereunder shall be evidenced by an Award
Agreement which shall be delivered to the Participant and shall specify the
terms and conditions of the Award and any rules applicable thereto.
(g) NO LIMIT ON OTHER COMPENSATION ARRANGEMENTS. Nothing contained in the
Plan shall prevent the Company or any Subsidiary from adopting or continuing
in effect other compensation arrangements, which may, but need not, provide
for the grant of options, restricted stock, Shares and other types of Awards
provided for hereunder (subject to shareholder approval if such approval is
required), and such arrangements may be either generally applicable or
applicable only in specific cases.
(h) NO RIGHT TO EMPLOYMENT. The grant of an Award shall not be construed
as giving a Participant the right to be retained in the employ of the Company.
Further, the Company may at any time dismiss a Participant from employment,
free from any liability or any claim under the Plan, unless otherwise
expressly provided in the Plan or in any Award Agreement.
(i) RIGHTS AS STOCKHOLDER. Subject to the provisions of the applicable
Award, no Participant or holder or beneficiary of any Award shall have any
rights as a stockholder with respect to any Shares to be distributed under the
Plan until he or she has become the holder of such Shares.
(j) GOVERNING LAW. The validity, construction, and effect of the Plan and
any rules and regulations relating to the Plan and any Award Agreement shall
be determined in accordance with the laws of the State of Delaware.
(k) SEVERABILITY. If any provision of the Plan or any Award is or becomes
or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or
as to any Person or Award, or would disqualify the Plan or any Award under any
law deemed applicable by the Committee, such provision shall be construed or
deemed amended to conform to the applicable laws, or if it cannot be construed
or deemed amended without, in the determination of the Committee, materially
altering the intent of the Plan or the Award, such provision shall be stricken
as to such jurisdiction, Person or Award and the remainder of the Plan and any
such Award shall remain in full force and effect.
(l) OTHER LAWS. The Committee may refuse to issue or transfer any Shares
or other consideration under an Award if, acting in its sole discretion, it
determines that the issuance or transfer of such Shares or such other
consideration might violate any applicable law or regulation or entitle the
Company to recovery under Section 16(b) of the Exchange Act, and any payment
tendered to the Company by a Participant, other holder or beneficiary in
connection with the exercise of such Award shall be promptly refunded to the
relevant Participant, holder or beneficiary. Without limiting the generality
of the foregoing, no Award granted hereunder shall be construed as an offer to
sell securities of the Company, and no such offer shall be outstanding, unless
and until the Committee in its sole discretion has determined that any such
offer, if made, would be in compliance with all applicable requirements of the
U.S. federal securities laws.
(m) NO TRUST OR FUND CREATED. Neither the Plan nor any Award shall create
or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company and a Participant or any other Person. To the
extent that any Person acquires a right to receive payments from the Company
pursuant to an Award, such rights shall be no greater than the right of any
unsecured general creditor of the Company.
(n) RULE 16B-3 COMPLIANCE. With respect to persons subject to Section l6
of the Exchange Act, transactions under this Plan are intended to comply with
all applicable terms and conditions of Rule l 6b-3 and any successor
provisions. To the extent that any provision of the Plan or action by the
Committee fails to so comply, it shall be deemed null and void, to the extent
permitted by law and deemed advisable by the Committee.
-6-
(o) HEADINGS. Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not
be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
(p) NO IMPACT ON BENEFITS. Plan Awards shall not be treated as
compensation for purposes of calculating an Employee's rights under any
employee benefit plan.
(q) INDEMNIFICATION. Each person who is or shall have been a member of
the Committee or of the Board shall be indemnified and held harmless by the
Company against and from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by him in connection with or resulting
from any claim, action, suit, or proceeding to which he may be made a party or
in which he may be involved by reason of any action taken or failure to act
under the Plan and against and from any and all amounts paid by him in
settlement thereof, with the Company's approval, or paid by him in
satisfaction of any judgment in any such action, suit, or proceeding against
him, provided he shall give the Company an opportunity, at its own expense, to
handle and defend the same before he undertakes to handle and defend it on his
own behalf. The foregoing right of indemnification shall not be exclusive and
shall be independent of any other rights of indemnification to which such
persons may be entitled under the Company's Articles of Incorporation or Code
of Regulations, by contract, as a matter of law, or otherwise.
SECTION 9. Term of the Plan.
(a) EFFECTIVE DATE. The Plan shall be effective on the effective date of
the Conversion.
(b) EXPIRATION DATE. The Plan shall terminate on and no Award shall be
granted under the Plan after the tenth anniversary of the effective date of
the Conversion. Unless otherwise expressly provided in the Plan or in an
applicable Award Agreement, any Award granted hereunder may, and the authority
of the Board or the Committee to amend, alter, adjust, suspend, discontinue,
or terminate any such Award or to waive any conditions or rights under any
such Award shall, continue after the tenth anniversary of the effective date
of the Conversion.
-7-