THE SANDWICH CO-OPERATIVE BANK
1994 STOCK OPTION AND INCENTIVE PLAN
1. Purpose of the Plan.
The purpose of this The Sandwich Co-operative Bank 1994
Stock Option and Incentive Plan (the "Plan") is to advance the
interests of the Bank through providing select key Employees of
the Bank and its Affiliates with the opportunity to acquire
Shares. By encouraging such stock ownership, the Bank seeks to
attract, retain and motivate the best available personnel for
positions of substantial responsibility and to provide
additional incentive to key Employees of the Bank or any
Affiliate to promote the success of the business.
2. Definitions.
As used herein, the following definitions shall apply.
(a) "Affiliate" shall mean any "parent corporation" or
"subsidiary corporation" of the Bank, as such terms are defined
in Section 424(e) and (f), respectively, of the Code.
(b) "Agreement" shall mean a written agreement entered
into in accordance with Paragraph 5(c).
(c) "Awards" shall mean, collectively, Options and SARs,
unless the context clearly indicates a different meaning.
(d) "Bank" shall mean The Sandwich Co-operative Bank.
(e) "Board" shall mean the Board of Directors of the
Bank.
(f) "Change in Control" shall refer to the acquisition
of the beneficial ownership (as that term is defined in Rule
13d-3 of the General Rules and Regulations under the Securities
Exchange Act of 1934) of 25% or more of the Bank's voting
securities by any person or by persons acting as a "group"
(within the meaning of Section 13(d) of the Securities Exchange
Act of 1934). For purposes of this subparagraph only, the term
"person" refers to an individual or a corporation, partnership,
trust, association, joint venture, pool, syndicate, sole
proprietorship, unincorporated organization or any other form of
entity not specifically listed herein. The decision of the
Committee as to whether a change in control has occurred shall
be conclusive and binding.
(g) "Code" shall mean the Internal Revenue Code of 1986,
as amended.
(h) "Committee" shall mean the Stock Option Committee
appointed by the Board in accordance with Paragraph 5(a) hereof.
(i) "Common Stock" shall mean the common stock, par
value $1.00 per share, of the Bank.
(j) "Continuous Service" shall mean the absence of any
interruption or termination of service as an Employee of the
Bank or an Affiliate. Continuous Service shall not be
considered interrupted in the case of sick leave, military leave
or any other leave of absence approved by the Bank or in the
case of transfers between payroll locations of the Bank or
between the Bank, an Affiliate or a successor.
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(k) "Disinterested Person" shall mean any member of the
Board who, at the time discretion under the Plan is exercised,
is a "disinterested person" within the meaning of Rule 16b-3.
(l) "Effective Date" shall mean the date specified in
Paragraph 14 hereof.
(m) "Employee" shall mean any person employed by the
Bank or an Affiliate.
(n) "Exercise Price" shall mean the price per Optioned
Share at which an Option or SAR may be exercised.
(o) "ISO" means an option to purchase Common Stock which
meets the requirements set forth in the Plan, and which is
intended to be and is identified as an "incentive stock option"
within the meaning of Section 422 of the Code.
(p) "Market Value" shall mean the fair market value of
the Common Stock, as determined under Paragraph 7(b) hereof.
(q) "Non-ISO" means an option to purchase Common Stock
which meets the requirements set forth in the Plan but which is
not intended to be and is not identified as an ISO.
(r) "Option" means an ISO and/or a Non-ISO.
(s) "Optioned Shares" shall mean Shares subject to an
Option granted pursuant to this Plan.
(t) "Participant" shall mean any person who receives an
Award pursuant to the Plan.
(u) "Plan" shall mean The Sandwich Co-operative Bank
1994 Stock Option and Incentive Plan.
(v) "Rule 16b-3" shall mean Rule 16b-3 of the General
Rules and Regulations under the Securities Exchange Act of 1934,
as amended.
(w) "Share" shall mean one share of Common Stock.
(x) "SAR" (or "Stock Appreciation Right") means a right
to receive the appreciation in value, or a portion of the
appreciation in value, of a specified number of shares of Common
Stock.
3. Term of the Plan and Awards.
(a) Term of the Plan. The Plan shall continue in effect
for a term of five years from the Effective Date, unless sooner
terminated pursuant to Paragraph 17 hereof. No Award shall be
granted under the Plan after ten years from the Effective Date.
(b) Term of Awards. The term of each Award granted
under the Plan shall be established by the Committee, but shall
not exceed 10 years; provided, however, that in the case of an
Employee who owns Shares representing more than 10% of the
outstanding Common Stock at the time an ISO is granted, the term
of such ISO shall not exceed five years.
4. Shares Subject to the Plan.
(a) General Rule. Except as otherwise required by the
provisions of Paragraph 11 hereof, the aggregate number of
Shares deliverable pursuant to Awards shall not exceed 90,000
Shares. Such Shares may either be
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authorized but unissued Shares or Shares held in treasury. If
Awards should expire, become unexercisable or be forfeited for
any reason without having been exercised or become vested in
full, the Optioned Shares shall, unless the Plan shall have been
terminated, be available for the grant of additional Awards
under the Plan.
(b) Special Rule for SARs. The number of Shares with
respect to which an SAR is granted shall be charged against the
aggregate number of Shares remaining available under the Plan;
provided, however, that in the case of an SAR granted in
conjunction with an Option, under circumstances in which the
exercise of the SAR results in termination of the Option and
vice versa, only the number of Shares subject to the Option
shall be charged against the aggregate number of Shares
remaining available under the Plan. The Shares involved in an
Option as to which option rights have terminated by reason of
the exercise of a related SAR, as provided in Paragraph 10
hereof, shall not be available for the grant of further Options
under the Plan.
5. Administration of the Plan.
(a) Composition of the Committee. The Plan shall be
administered by the Committee, which shall consist of not less
than three (3) members of the Board who are Disinterested
Persons. Members of the Committee shall serve at the pleasure
of the Board. In the absence at any time of a duly appointed
Committee, the Plan shall be administered by those members of
the Board who are Disinterested Persons.
(b) Powers of the Committee. Except as limited by the
express provisions of the Plan or by resolutions adopted by the
Board, the Committee shall have sole and complete authority and
discretion (i) to select Participants and grant Awards, (ii) to
determine the form and content of Awards to be issued in the
form of Agreements under the Plan, (iii) to interpret the Plan,
(iv) to prescribe, amend and rescind rules and regulations
relating to the Plan, and (v) to make other determinations
necessary or advisable for the administration of the Plan. The
Committee shall have and may exercise such other power and
authority as may be delegated to it by the Board from time to
time. A majority of the entire Committee shall constitute a
quorum and the action of a majority of the members present at
any meeting at which a quorum is present, or acts approved in
writing by a majority of the Committee without a meeting, shall
be deemed the action of the Committee.
(c) Agreement. Each Award shall be evidenced by a
written agreement containing such provisions as may be approved
by the Committee. Each such Agreement shall constitute a
binding contract between the Bank and the Participant, and every
Participant, upon acceptance of such Agreement, shall be bound
by the terms and restrictions of the Plan and of such Agreement.
The terms of each such Agreement shall be in accordance with
the Plan, but each Agreement may include such additional
provisions and restrictions determined by the Committee, in its
discretion, provided that such additional provisions and
restrictions are not inconsistent with the terms of the Plan.
In particular, the Committee shall set forth in each Agreement
(i) the Exercise Price of an Option or SAR, (ii) the number of
Shares subject to, and the expiration date of, the Award, (iii)
the manner, time and rate (cumulative or otherwise) of exercise
or vesting of such Award, and (iv) the restrictions, if any, to
be placed upon such Award, or upon Shares which may be issued
upon exercise of such Award.
The Chairman of the Committee and such other officers as
shall be designated by the Committee are hereby authorized to
execute Agreements on behalf of the Bank and to cause them to be
delivered to the recipients of Awards.
(d) Effect of the Committee's Decisions. All decisions,
determinations and interpretations of the Committee shall be
final and conclusive on all persons affected thereby.
(e) Indemnification. In addition to such other rights
of indemnification as they may have, the members of the
Committee shall be indemnified by the Bank in connection with
any claim, action, suit or proceeding relating to any action
taken or failure to act under or in connection with the Plan or
any Award, granted hereunder to the full extent provided for
under the Bank's Charter or Bylaws with respect to the
indemnification of Directors.
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6. Grant of Options.
(a) General Rule. In its sole discretion, the Committee
may grant Options to Employees of the Bank or its Affiliates.
(b) Special Rules for ISOs. The aggregate Market Value,
as of the date the Option is granted, of the Shares with respect
to which ISOs are exercisable for the first time by an Employee
during any calendar year (under all incentive stock option
plans, as defined in Section 422 of the Code, of the Bank or any
present or future Parent or Subsidiary of the Bank) shall not
exceed $100,000. Notwithstanding the prior provisions of this
paragraph, the Committee may grant Options in excess of the
foregoing limitations, in which case such Options granted in
excess of such limitation shall be Options which are Non-ISOs.
7. Exercise Price for Options.
(a) Limits on Committee Discretion. The Exercise Price
as to any particular Option granted under the Plan shall not be
less than the Market Value of the Optioned Shares on the date of
grant. In the case of an Employee who owns Shares representing
more than 10% of the Bank's outstanding Shares of Common Stock
at the time an ISO is granted, the Exercise Price shall not be
less than 110% of the Market Value of the Optioned Shares at the
time the ISO is granted.
(b) Standards for Determining Exercise Price. If the
Common Stock is listed on a national securities exchange
(including the NASDAQ National Market System) on the date in
question, then the Market Value per Share shall be not less than
the average of the highest and lowest selling price on such
exchange on such date, or if there were no sales on such date,
then the Exercise Price shall be not less than the mean between
the bid and asked price on such date. If the Common Stock is
traded otherwise than on a national securities exchange on the
date in question, then the Market Value per Share shall be not
less than the mean between the bid and asked price on such date,
or, if there is no bid and asked price on such date, then on the
next prior business day on which there was a bid and asked
price. If no such bid and asked price is available, then the
Market Value per Share shall be its fair market value as
determined by the Committee, in its sole and absolute
discretion.
8. Exercise of Options.
(a) Generally. Any Option granted hereunder shall be
exercisable at such times and under such conditions as shall be
permissible under the terms of the Plan and of the Agreement
granted to a Participant. An Option may not be exercised for a
fractional Share.
(b) Procedure for Exercise. A Participant may exercise
Options, subject to provisions relative to its termination and
limitations on its exercise, only by (1) written notice of
intent to exercise the Option with respect to a specified number
of Shares, and (2) payment to the Bank (contemporaneously with
delivery of such notice) in cash, in Common Stock, or a
combination of cash and Common Stock, of the amount of the
Exercise Price for the number of Shares with respect to which
the Option is then being exercised. Each such notice (and
payment where required) shall be delivered, or mailed by prepaid
registered or certified mail, addressed to the Treasurer of the
Bank at the Bank's executive offices. Common Stock utilized in
full or partial payment of the Exercise Price for Options shall
be valued at its Market Value at the date of exercise.
(c) Period of Exercisability. Except to the extent
otherwise provided in the terms of an Agreement, an Option may
be exercised by a Participant only while he is an Employee and
has maintained Continuous Service from the date of the grant of
the Option, or within three months after termination of such
Continuous Service (but not later than the date on which the
Option would otherwise expire), except if the Employee's
Continuous Service terminates by reason of --
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(1) "Just Cause" which for purposes hereof shall have
the meaning set forth in any unexpired employment or
severance agreement between the Participant and the Bank
(and, in the absence of any such agreement, shall mean
termination because of the Employee's personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty
involving personal profit, intentional failure to perform
stated duties, willful violation of any law, rule or
regulation (other than traffic violations or similar
offenses) or final cease-and-desist order), then the
Participant's rights to exercise such Option shall expire
on the date of such termination;
(2) death, then to the extent that the Participant would
have been entitled to exercise the Option immediately
prior to his death, such Option of the deceased
Participant may be exercised within two years from the
date of his death (but not later than the date on which
the Option would otherwise expire) by the personal
representatives of his estate or person or persons to whom
his rights under such Option shall have passed by will or
by laws of descent and distribution;
(3) Permanent and Total Disability (as such term is
defined in Section 22(e)(3) of the Code), then to the
extent that the Participant would have been entitled to
exercise the Option immediately prior to his Permanent
and Total Disability, such Option may be exercised within
one year from the date of such Permanent and Total
Disability, but not later than the date on which the
Option would otherwise expire.
Notwithstanding the provisions of any Option which provides for
its exercise in installments as designated by the Committee,
such Option shall become immediately exercisable upon the
Participant's death or Permanent and Total Disability.
(d) Effect of the Committee's Decisions. The
Committee's determination whether a Participant's Continuous
Service has ceased, and the effective date thereof shall be
final and conclusive on all persons affected thereby.
9. SARs (Stock Appreciation Rights)
(a) Granting of SARs. In its sole discretion, the
Committee may from time to time grant SARs to Employees either
in conjunction with, or independently of, any Options granted
under the Plan. An SAR granted in conjunction with an Option
may be an alternative right wherein the exercise of the Option
terminates the SAR to the extent of the number of shares
purchased upon exercise of the Option and, correspondingly, the
exercise of the SAR terminates the Option to the extent of the
number of Shares with respect to which the SAR is exercised.
Alternatively, an SAR granted in conjunction with an Option may
be an additional right wherein both the SAR and the Option may
be exercised. An SAR may not be granted in conjunction with an
ISO under circumstances in which the exercise of the SAR affects
the right to exercise the ISO or vice versa, unless the SAR, by
its terms, meets all of the following requirements:
(1) The SAR will expire no later than the ISO;
(2) The SAR may be for no more than the difference
between the Exercise Price of the ISO and the Market Value
of the Shares subject to the ISO at the time the SAR is
exercised;
(3) The SAR is transferable only when the ISO is
transferable, and under the same conditions;
(4) The SAR may be exercised only when the ISO may be
exercised; and
(5) The SAR may be exercised only when the Market Value
of the Shares subject to the ISO exceeds the Exercise
Price of the ISO.
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(b) Exercise Price. The Exercise Price as to any
particular SAR shall not be less than the Market Value of the
Optioned Shares on the date of grant.
(c) Timing of Exercise. Any election by a Participant
to exercise SARs shall be made during the period beginning on
the 3rd business day following the release for publication of
quarterly or annual financial information and ending on the 12th
business day following such date. This condition shall be
deemed to be satisfied when the specified financial data is
first made publicly available. In no event, however, may an SAR
be exercised within the six-month period following the date of
its grant.
The provisions of Paragraph 8(c) regarding the period of
exercisability of Options is incorporated by reference herein,
and shall determine the period of exercisability of SARs.
(d) Exercise of SARs. An SAR granted hereunder shall be
exercisable at such times and under such conditions as shall be
permissible under the terms of the Plan and of the Agreement
granted to a Participant, provided that an SAR may not be
exercised for a fractional Share. Upon exercise of an SAR, the
Participant shall be entitled to receive, without payment to the
Bank except for applicable withholding taxes, an amount equal to
the excess of (or, in the discretion of the Committee if
provided in the Agreement, a portion of) the excess of the then
aggregate Market Value of the number of Optioned Shares with
respect to which the Participant exercises the SAR, over the
aggregate Exercise Price of such number of Optioned Shares.
This amount shall be payable by the Bank in cash.
(e) Procedure for Exercising SARs. To the extent not
inconsistent herewith, the provisions of Paragraph 8(b) as to
the procedure for exercising Options are incorporated by
reference, and shall determine the procedure for exercising
SARs.
10. Change in Control
(a) General Rule. Notwithstanding the provisions of any
Award which provides for its exercise or vesting in
installments, upon the date of a Change in Control or an offer
to effect a Change in Control, (i) all Options and SARs shall
become immediately exercisable and fully vested, and (ii) the
Participant shall, at the discretion of the Committee, be
entitled to receive cash in an amount equal to the excess of the
Market Value of the Common Stock subject to such Option over the
Exercise Price of such Shares, in exchange for the cancellation
of such Options by the Participant.
(b) Exception to General Rule. Notwithstanding
subparagraph (a) of this Paragraph, in no event may an SAR be
exercised, or an Option be canceled in exchange for cash,
within the six-month period following the date of its grant.
11. Effect of Changes in Common Stock Subject to the Plan.
(a) Recapitalizations; Stock Splits, Etc. The number
and kind of shares reserved for issuance under the Plan, and the
number and kind of shares subject to outstanding Awards (and the
Exercise Price thereof in the case of Options and SARs), shall
be proportionately adjusted for any increase, decrease, change
or exchange of Shares for a different number or kind of shares
or other securities of the Bank which results from a merger,
consolidation, recapitalization, reorganization,
reclassification, stock dividend, split-up, combination of
shares, or similar event in which the number or kind of shares
is changed without the receipt or payment of consideration by
the Bank.
(b) Transactions in which the Bank is Not the Surviving
Entity. Subject to Paragraph 10 hereof, in the event of (i) the
liquidation or dissolution of the Bank, (ii) a merger or
consolidation in which the Bank is not the surviving entity, or
(iii) the sale or disposition of all or substantially all of the
Bank's assets (any of the foregoing to be referred to herein as
a "Transaction"), all outstanding Awards shall be surrendered.
With respect to each Award
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so surrendered, the Committee shall in its sole and absolute
discretion determine whether the holder of the surrendered Award
shall receive --
(1) for each Share then subject to an outstanding Award
the number and kind of shares into which each outstanding
Share (other than Shares held by dissenting stockholders)
is changed or exchanged, together with an appropriate
adjustment to the Exercise Price; or
(2) a cash payment (from the Bank or the successor
corporation) in an amount equal to the Market Value of the
Shares subject to the Award on the date of the
Transaction, less the Exercise Price of the Award.
(c) Special Rule for ISOs. Any adjustment made pursuant
to subparagraphs (a) or (b)(1) hereof shall be made in such a
manner as not to constitute a modification, within the meaning
of Section 424(h) of the Code, of outstanding ISOs.
(d) Conditions and Restrictions on New, Additional, or
Different Shares or Securities. If, by reason of any adjustment
made pursuant to this Paragraph, a Participant becomes entitled
to new, additional, or different shares of stock or securities,
such new, additional, or different shares of stock or securities
shall thereupon be subject to all of the conditions and
restrictions which were applicable to the Shares pursuant to the
Award before the adjustment was made.
(e) Other Issuances. Except as expressly provided in
this Paragraph, the issuance by the Bank or an Affiliate of
shares of stock of any class, or of securities convertible into
Shares or stock of another class, for cash or property or for
labor or services either upon direct sale or upon the exercise
of rights or warrants to subscribe therefor, shall not affect,
and no adjustment shall be made with respect to, the number,
class, or Exercise Price of Shares then subject to Awards or
reserved for issuance under the Plan.
12. Non-Transferability of Awards.
Awards may not be sold, pledged, assigned, hypothecated,
transferred or disposed of in any manner other than by will or
by the laws of descent and distribution, or pursuant to the
terms of a "qualified domestic relations order" (within the
meaning of Section 414(p) of the Code and the regulations and
rulings thereunder).
13. Time of Granting Awards.
The date of grant of an Award shall, for all purposes, be
the date on which the Committee makes the determination of
granting such Award. Notice of the determination shall be given
to each Participant to whom an Award is so granted within a
reasonable time after the date of such grant.
14. Effective Date.
The Plan shall become effective immediately upon its
approval by the Board. Awards may be made prior to approval of
the Plan by the stockholders of the Bank if the exercise of
Awards in the form of Options and/or SARs is subject to such
stockholder approval.
15. Approval by Stockholders.
The Plan shall be approved by stockholders of the Bank
within twelve (12) months before or after the Effective Date.
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16. Modification of Awards.
At any time, and from time to time, the Board may authorize
the Committee to direct execution of an instrument providing for
the modification of any outstanding Award, provided no such
modification shall confer on the holder of said Award any right
or benefit which could not be conferred on him by the grant of a
new Award at such time, or impair the Award without the consent
of the holder of the Award.
17. Amendment and Termination of the Plan.
The Board may from time to time amend the terms of the
Plan and, with respect to any Shares at the time not subject to
Awards, suspend or terminate the Plan, provided that any
amendment that is "material" within the meaning of Rule 16b-3
shall be subject to stockholder approval.
No amendment, suspension or termination of the Plan shall,
without the consent of any affected holders of an Award, alter
or impair any rights or obligations under any Award theretofore
granted.
18. Conditions Upon Issuance of Shares.
(a) Compliance with Securities Laws. Shares of Common
Stock shall not be issued with respect to any Award unless the
issuance and delivery of such Shares shall comply with all
relevant provisions of law, including, without limitation, the
Securities Act of 1933, as amended, the rules and regulations
promulgated thereunder, any applicable state securities law, and
the requirements of any stock exchange upon which the Shares may
then be listed. The Plan is intended to comply with Rule 16b-3,
and any provision of the Plan which the Committee determines in
its sole and absolute discretion to be inconsistent with said
Rule shall, to the extent of such inconsistency, be inoperative
and null and void, and shall not affect the validity of the
remaining provisions of the Plan.
(b) Special Circumstances. The inability of the Bank to
obtain approval from any regulatory body or authority deemed by
the Bank's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder shall relieve the Bank of any
liability in respect of the non-issuance or sale of such Shares.
As a condition to the exercise of an Option or SAR, the Bank may
require the person exercising the Option or SAR to make such
representations and warranties as may be necessary to assure the
availability of an exemption from the registration requirements
of federal or state securities law.
(c) Committee Discretion. The Committee shall have the
discretionary authority to impose in Agreements such
restrictions on Shares as it may deem appropriate or desirable,
including but not limited to the authority to impose a right of
first refusal or to establish repurchase rights or both of these
restrictions.
19. Reservation of Shares.
The Bank, during the term of the Plan, will reserve and
keep available a number of Shares sufficient to satisfy the
requirements of the Plan.
20. Withholding Tax.
The Bank's obligation to deliver Shares upon exercise of
Awards shall be subject to the Participant's satisfaction of all
applicable federal, state and local income and employment tax
withholding obligations. The Committee, in its discretion, may
permit the Participant to satisfy the obligation, in whole or in
part, by irrevocably electing to have the Bank withhold Shares,
or to deliver to the Bank Shares that he already owns, having a
value equal to the amount required to be withheld. The value of
Shares to be withheld, or delivered to the Bank, shall be based
on the Market Value of the Shares on the date the amount of tax
to be withheld is to be determined. As an alternative,
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the Bank may retain, or sell without notice, a number of such
Shares sufficient to cover the amount required to be withheld.
21. No Employment or Other Rights.
In no event shall an Employee's eligibility to participate
or participation in the Plan create or be deemed to create any
legal or equitable right of the Employee, or any other party to
continue service with the Bank or any Affiliate. No Employee
shall have a right to be granted an Award or, having received an
Award, the right to again be granted an Award. However, an
Employee who has been granted an Award may, if otherwise
eligible, be granted an additional Award or Awards.
22. Governing Law.
The Plan shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts, except to
the extent that federal law shall be deemed to apply.
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