PATRIOT BANK CORP.
EMPLOYEE STOCK PURCHASE PLAN
(Effective January 1, 1998)
PAGE 1
ARTICLE I
PURPOSE AND SCOPE OF THE PLAN
Section 1.1 PURPOSE.
The Patriot Bank Corp. Employee Stock Purchase Plan is
intended to encourage employee participation in the ownership and
economic progress of the Company.
Section 1.2 DEFINITIONS.
Unless the context clearly indicates otherwise, the
following terms have the meaning set forth below:
"Bank" means Patriot Bank, a wholly-owned subsidiary of
the Company.
"Board of Directors" means the Board of Directors of
the Company.
"Code" means the Internal Revenue Code of 1986, as
amended, and as the same may be further amended from time to
time, and the Treasury Regulations promulgated thereunder.
"Committee" means the Bank's Personnel Compensation/
Benefits Committee which shall administer the Plan as provided in
Section 1.3.
"Common Stock" means the common stock of the Company.
"Company" means Patriot Bank Corp.
"Compensation" means an Employee's total salary or
hourly pay, as the case may be, including bonuses, commissions
and any other payment in excess of normal salary or hourly pay.
"Continuous Service" means the period of time,
uninterrupted by a termination of employment, that an Employee
has been employed by the Company or a Subsidiary, or both,
immediately preceding an Offering Date. Such period of time
shall include any leave of absence permitted or required to be
taken into account by applicable Treasury Regulations.
"Effective Date" means the date specified in
Section 1.4 on which the provisions of the plan become effective.
"Employee" means any common law employee of the Company
or a Subsidiary.
"Exercise Date" means March 31, June 30, September 30
and December 31 of each Plan Year.
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"Fair Market Value" of a share of Common Stock on any
given date means the closing sale price for such shares on that
date as reported by the National Association of Securities
Dealers Automated Quotations or the Bloomberg Financial Markets
System. If a closing sale price for the Common Stock for the
given date is not reported, or if there is none, the Fair Market
Value will be equal to the closing sale price on the nearest
trading day preceding such date. Notwithstanding the foregoing,
if, in the Board of Directors' judgment, there are unusual
circumstances or occurrences under which the otherwise determined
Fair Market Value of the Common Stock does not represent the
actual fair value thereof, then the Fair Market Value of such
Common Stock shall be determined by the Board of Directors on the
basis of such prices or market quotations as it shall deem
appropriate and fairly reflective of the then fair value of such
Common Stock.
"Leave of Absence" means, for purposes of participation
in the Plan, a person who is on leave of absence who shall be
deemed to be an employee for the first ninety (90) days of such
leave of absence and such Employee's employment shall be deemed
to have terminated at the close of business on the ninetieth
(90th) day of such leave of absence unless such Employee shall
have returned to regular employment prior to the close of
business on such ninetieth (90th) day. Termination by the
Company of any Employee's leave of absence, other than
termination of such leave of absence on return to employment,
shall terminate an Employee's employment for all purposes under
the Plan and shall terminate such Employee's participation in the
Plan and the right to purchase Common Stock hereunder.
"Offering Date" means January 1, April 1, July 1 and
October 1 of each Plan Year.
"Option Period" or "period" means the period beginning
on an Offering Date and ending on the next succeeding Exercise
Date.
"Option Price" means the purchase price of a share of
Common Stock hereunder as provided in Section 3.1.
"Participant" means any Employee who (i) is eligible to
participate in the Plan under Section 2.1, and (ii) elects to
participate.
"Plan" means the Patriot Bank Corp. Employee Stock
Purchase Plan, as the same may be amended from time to time.
"Plan Year" means the 12-consecutive-month period
beginning on January 1 and ending on the following December 31.
"Stock Purchase Account" or "Account" means an account
established and maintained in the name of each Participant to
record the dollar amounts and shares of Common Stock accumulated
on his behalf from time to time. <PAGE 3>
"Stock Purchase Agreement" means the form prescribed by
the Committee which must be executed by an Employee who elects to
participate in the Plan. The proper execution and filing of such
form shall constitute the grant of an option from time to time to
the Employee in accordance with the terms of this Plan document
and the terms of such form.
"Subsidiary" means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the
Company if, at the beginning of an Option Period, each of the
corporations other than the last corporation in the unbroken
chain owns stock possessing 50 percent or more of the total
combined voting power of all classes of stock in one of the other
corporations in such chain.
Section 1.3 ADMINISTRATION OF PLAN.
The Plan shall be administered by the Committee.
Subject to direction by the Board of Directors and the express
provisions of this Plan document, the Committee shall be
authorized to prescribe, amend and rescind rules and regulations
relating to the Plan and the Committee's administration thereof;
to interpret the Plan; to fix the terms of an offering under the
Plan; to fix the rate of interest to be paid on balances in Stock
Purchase Accounts, if applicable; to prescribe the maximum
percentage of payroll deductions permitted for an Option Period;
to restrict participation in the Plan consistent with any
requirement of law or regulation; and to make all other
determinations necessary to the administration of the Plan,
including appointment of individuals to facilitate the day-to-day
operation thereof. The Committee's determinations as to the
interpretation and operation of the Plan shall be final and
conclusive.
Section 1.4 EFFECTIVE DATE OF PLAN.
The Effective Date of the Plan is January 1, 1998.
Section 1.5 TERMINATION OF PLAN.
The Board of Directors shall have the right to
terminate the Plan at any time. Upon any such termination, the
dollar amount and shares of Common Stock, if any, in each
Participant's Account shall be distributed.
ARTICLE II
PARTICIPATION
Section 2.1 ELIGIBILITY.
Each Employee, who on an Offering Date (i) will have at
least three (3) months of continuous service with the Company
and/or a Subsidiary, and (ii) will be an Employee whose customary
employment is more than five (5) months in a calendar year, may
become a Participant by executing and filing with the Committee a
<PAGE 4> Stock Purchase Agreement prior to the earlier of such
Offering Date or five business days prior to the first pay day in
the applicable Option Period. An election to participate shall
continue in effect until termination of participation occurs in
accordance with Article V.
Section 2.2 PAYROLL DEDUCTIONS.
Payment for shares of Common Stock purchased under the
Plan shall be made solely by authorized payroll deduction from
each payment of Compensation in accordance with instructions
received from a Participant. Deductions from payroll shall be
expressed as a whole percentage of Compensation (determined on
the first day of each Option Period) no greater than the
percentage set by the Committee, or as a fixed dollar amount (as
determined by the Committee), but shall not be less than $10.00
per pay period. The Committee may fix a maximum percentage. A
Participant may not increase or decrease the percentage or dollar
amount of deduction during an Option Period. However, a
Participant may change the percentage or dollar amount of
deduction for any subsequent Option Period by filing notice
thereof with the Committee prior to the date described in
Section 2.1 for filing a Stock Purchase Agreement. Amounts
deducted from a Participant's Compensation pursuant to this
section shall be credited to such Participant's Account.
Section 2.3 TRANSFER OF PAYROLL DEDUCTIONS.
All payroll deductions withheld by a Subsidiary under
the Plan shall be immediately transferred to the Company.
Section 2.4 LEAVE OF ABSENCE.
If a Participant goes on a Leave of Absence, such
Participant shall have the right to elect (i) to withdraw the
balance in his Stock Purchase Account, (ii) discontinue
contributions to the Plan but remain a Participant in the Plan,
or (iii) remain a Participant in the Plan during such Leave of
Absence, authorizing deductions to be made from payments by the
Company to the Participant during such Leave of Absence and
undertaking to make cash payments to the Plan at the end of each
Payroll Period to the extent that amounts payable by the Company
to such Participant are insufficient to meet such Participant's
authorized Plan deductions.
ARTICLE III
PURCHASE OF SHARES
Section 3.1 OPTION PRICE.
The Option Price per share of the Common Stock sold to
Participants hereunder shall be set by the Committee prior to the
Offering Date. Under the Code, the Option Price shall not be
less than 85%, nor more than 100%, of the Fair Market Value of
such share on each Exercise Date of an Option Period. The Option
<PAGE 5> Price on the Effective Date is 90% of the Fair Market
Value of the Common Stock on an Exercise Date.
Section 3.2 PURCHASE OF SHARES.
On each Exercise Date, the amount in a Participant's
Account shall be charged with the aggregate Option Price of the
number of whole and fractional (to four decimal places) shares of
Common Stock which can be purchased with such amount.
Section 3.3 LIMITATIONS ON PURCHASE AND GRANT.
No Participant shall purchase Common Stock hereunder in
any calendar year having a Fair Market Value of more than
$25,000, provided that any such purchase shall not exceed the
limitations imposed by Code Section 423(b)(8). Further, no
Participant shall be granted the right to purchase Common Stock
hereunder if, by reason of such grant, such Participant would be
deemed to possess five percent (5%) or more of the total combined
voting power or value of all classes of stock of the Company or a
Subsidiary. For purposes of the preceding sentence, the rules of
Code Section 424(d) shall apply and Common Stock which a
Participant may purchase under outstanding options shall be
treated as stock owned by the Participant.
Section 3.4 MAXIMUM NUMBER OF SHARES PURCHASABLE PER OPTION
PERIOD.
In addition to all other restrictions set forth herein,
the maximum number of shares of Common Stock that an Employee may
purchase pursuant to the Plan during each Option Period shall be
equal to the total amount of contributions that the Employee is
scheduled to make to the Plan during such Option Period (in
accordance with the terms of his effective Stock Purchase
Agreement), divided by 50% of the per share Fair Market Value
determined on the first day of such Option Period.
Section 3.5 RESTRICTION ON TRANSFERABILITY.
Rights to purchase shares hereunder shall be
exercisable only by the Participant. Such rights shall not be
transferable and shall expire upon a Participant's death.
Section 3.6 DIVIDEND REINVESTMENT.
The Committee may, in its discretion, provide
Participants with the opportunity to have dividends on shares
held in their Accounts reinvested through (i) any dividend
reinvestment plan that the Company may maintain from time to
time, or (ii) any other program or arrangement (including the
treatment of dividends as additional Participant contributions)
that is permissible under applicable law.
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ARTICLE IV
PROVISIONS RELATING TO COMMON STOCK
Section 4.1 COMMON STOCK RESERVED.
Except as provided in Section 4.2, no more than 250,000
shares of the Company's Common Stock may be sold pursuant to
options granted under the Plan. The Common Stock to be issued
under the Plan shall be made available at the discretion of the
Board of Directors, either from authorized but unissued Common
Stock or from Common Stock acquired by the Company, including
shares purchased in the open market.
Section 4.2 ADJUSTMENT FOR CHANGES IN COMMON STOCK.
(i) In the event that the shares of Common Stock of
the Company as presently constituted, shall be changed into or
exchanged for a different number or kind of shares of stock or
other securities of the Company or of another corporation
(whether by reason of merger, consolidation, recapitalization,
reclassification, split-up, combination of shares or otherwise)
or if the number of such shares of stock shall be increased
through the payment of a stock dividend, then subject to the
provisions of subsection (iii) below, a majority of the
disinterested members of the Board of Directors may substitute
for or add to each share of stock of the Company which was
theretofore appropriated, or which thereafter may become subject
to an offering under the Plan, the number and kind of shares of
stock or other securities into which each outstanding share of
the stock of the Company shall be so changed or for which each
such share shall be exchanged or to which such share shall be
entitled, as the case may be. Outstanding Stock Purchase
Agreements shall also be deemed appropriately amended as to price
and other terms, as may be necessary to reflect the foregoing
events.
(ii) If there shall be any other change in the number
or kind of the outstanding shares of Common Stock of the Company,
or of any stock or other securities in which such stock shall
have been changed or for which it shall have been exchanged, and
if a majority of the disinterested members of the Board of
Directors shall, in its sole discretion, determine that such
change equitably requires an adjustment in any offering which was
theretofore made or which may thereafter be made under the Plan,
that such adjustment shall be made in accordance with such
determination.
(iii) An offering pursuant to the Plan shall not
affect in any way the right or power of the Company to make
adjustments or reclassifications, reorganizations or changes in
its capital or business structure, to merge, to consolidate, to
dissolve, to liquidate or to sell or transfer all or any part of
its business or assets.
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Section 4.3 INSUFFICIENT SHARES.
If the aggregate funds available for the purchase of
Common Stock on any Exercise Date would cause an issuance of
shares in excess of the number provided for in Section 4.1 (as
the same may be adjusted as provided in Section 4.2), (i) the
Committee shall proportionately reduce the number of shares which
would otherwise be purchased by each Participant in order to
eliminate such excess, and (ii) the Plan shall automatically
terminate immediately after such Exercise Date.
Section 4.4 CONFIRMATION OF PURCHASES; REGISTRATION OF SHARES.
Purchases of Common Stock hereunder shall be confirmed
in writing to Plan Participants. All shares purchased shall be
credited to his Account, but shall initially be registered in the
name of the Company's nominee or the nominee name of Registrar
and Transfer Company as recordkeeper for the Plan, or any
successor appointed by the Company, as agent for Plan
Participants. Such nominee will hold a Participant's share
certificates until such time as his participation in the Plan
terminates or he files a written request with the Committee to
have a certificate or certificates issued in his name. Except in
the case of death, any certificate issued to a Participant must
initially be issued in his name alone. Registration of any
shares following the death of a Participant will be subject to
the same rules as are then applicable to decedent shareholders
generally.
Section 4.5 RIGHTS AS SHAREHOLDERS.
The shares of Common Stock purchased by a Participant
on an Exercise Date shall, for all purposes, be deemed to have
been issued and sold at the close of business on such Exercise
Date. Participants for whom shares have been purchased shall be
entitled to all rights of a shareholder with respect to such
shares, including the right to receive dividends and the right to
vote. The Company will take such steps as may be necessary to
ensure that such rights are enjoyed by each Participant whose
shares are held in nominee name.
Section 4.6 CORPORATE REORGANIZATIONS, LIQUIDATIONS, ETC.
In the event of any corporate merger, consolidation,
acquisition of property or stock, separation, reorganization or
liquidation, provision may be made for the substitution of a new
option for an old option, or an assumption of an old option, by
an employer corporation or a corporation related to such
corporation. Any provision for such substitution or assumption
shall be subject to the limitations and provisions of Code
Section 424.
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ARTICLE V
TERMINATION OF PARTICIPATION
Section 5.1 VOLUNTARY WITHDRAWAL.
A Participant may withdraw from the Plan at any time by
filing notice of withdrawal with the Committee prior to an
Exercise Date. Upon withdrawal, the dollar amount and shares, if
any, credited to his Stock Purchase Account shall be distributed
to him and no shares will be purchased on his behalf for the
applicable Option Period. Any Participant who withdraws from the
Plan may again become a Participant in accordance with
Section 2.1.
Section 5.2 TERMINATION OF ELIGIBILITY.
If a Participant ceases to be employed by the Company
or a Subsidiary during an Option Period, his participation in the
Plan shall thereupon terminate. In such event, the dollar amount
and shares, if any, in his Stock Purchase Account shall be
distributed to him (or in the case of death, to his designated
beneficiary(ies)) and no further shares will be purchased on his
behalf. For purposes of this section, an Employee's
participation in the Plan will not automatically terminate if he
becomes an individual on a leave of absence permitted or required
to be taken into account by applicable Treasury Regulations.
Section 5.3 NO INTEREST ON ACCOUNT BALANCES.
Unless otherwise provided by the Company's Board of
Directors, no interest shall be paid on the cash balance in a
Participant's Stock Purchase Account pending its investment.
ARTICLE VI
GENERAL PROVISIONS
Section 6.1 TAX WITHHOLDING; INFORMATION RETURNS.
Each Employee who elects to participate in the Plan
shall be deemed to have consented to any income tax withholding
that may hereafter be required by reason of his participation in
the Plan or the disposition of, or payment of any dividends on,
shares acquired by him under the Plan. The proper officers of
the Company and each Subsidiary shall prepare (or cause to be
prepared) and, where required, timely file (or cause to be filed)
such tax information returns and other notices as may be required
by law from time to time.
Section 6.2 NOTICES.
Any notice which a Participant files pursuant to the
Plan shall be made on forms prescribed by the Committee and shall
be effective when received by the Committee.
<PAGE 9>
Section 6.3 CONDITION OF EMPLOYMENT.
Neither the creation of the Plan, nor participation
therein, shall be deemed to create any right of continued
employment or in any way affect the right of the Company or a
Subsidiary to terminate an Employee.
Section 6.4 AMENDMENT OF THE PLAN.
The Board of Directors may at any time, and from time
to time, amend the Plan in any respect, except, that without
approval of the Company's shareholders, no amendment may
(i) increase the aggregate number of shares permitted to be
reserved by the Board of Directors under the Plan other than as
provided in Section 4.2, (ii) materially change the Plan benefits
provided for herein, (iii) change the definition of a Subsidiary,
or (iv) materially change the eligibility requirements for
Employees. Any amendment of the Plan must be made in accordance
with applicable provisions of the Code.
Section 6.5 APPLICATION OF FUNDS.
All funds received by the Company by reason of a
purchase of shares hereunder may be used for any corporate
purpose.
Section 6.6 LEGAL RESTRICTIONS.
The Company shall not be obligated to sell shares of
Common Stock hereunder if counsel to the Company determines that
such sale would violate any applicable law or regulation.
Section 6.7 GENDER.
Whenever used herein, use of any gender shall be
applicable to all genders.
Section 6.8 NUMBER.
Whenever used herein, singular words shall include the
plural, and vice versa, as the context requires.
Section 6.9 GOVERNING LAW.
Except to the extent preempted by Federal law, the Plan
and all rights and obligations thereunder shall be construed and
enforced in accordance with the domestic internal law of the
Commonwealth of Pennsylvania.
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