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EXHIBIT 4.0 LENOX BANCORP, INC. 1997 INCENTIVE PLAN
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LENOX BANCORP, INC.
1997 INCENTIVE PLAN
1. DEFINITIONS.
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(a) "Affiliate" means (i) a member of a controlled group of corporations
of which the Holding Company is a member or (ii) an unincorporated trade or
business which is under common control with the Holding Company as determined in
accordance with Section 414(c) of the Code and the regulations issued
thereunder. For purposes hereof, a "controlled group of corporations" shall mean
a controlled group of corporations as defined in Section 1563(a) of the Code
determined without regard to Section 1563(a)(4) and (e)(3)(C).
(b) "Alternate Option Payment Mechanism" refers to one of several methods
available to a Participant to fund the exercise of a stock option set out in
Section 11 hereof. These mechanisms include: broker assisted cashless exercise
and stock for stock exchange.
(c) "Award" means a grant of one or some combination of one or more
Non-statutory Stock Options, Incentive Stock Options and Stock Awards under the
provisions of this Plan.
(d) "Bank" means Lenox Savings Bank.
(e) "Board of Directors" or "Board" means the board of directors of the
Holding Company or the Bank and Directors Emeritus of the Holding Company or the
Bank.
(f) "Change in Control" means a change in control of the Bank or Holding
Company of a nature that; (i) would be required to be reported in response to
Item 1 of the current report on Form 8-K, as in effect on the date hereof,
pursuant to Section 13 or 15(d) of the Exchange Act; or (ii) results in a Change
in Control within the meaning of the Home Owners' Loan Act of 1933, as amended
("HOLA") and the Rules and Regulations promulgated by the Office of Thrift
Supervision ("OTS") (or its predecessor agency), as in effect on the date hereof
(provided, that in applying the definition of change in control as set forth
under such rules and regulations the Board shall substitute its judgment for
that of the OTS); or (iii) without limitation such a Change in Control shall be
deemed to have occurred at such time as (A) any "person" (as the term is used in
Sections 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 the Holding Company representing 20% or
more of the Bank's or the Holding Company's outstanding securities except for
any securities of the Bank purchased by the Holding Company and any securities
purchased by any tax qualified employee benefit plan of the Bank; or (B)
individuals who constitute the Board of Directors of the Holding Company on the
date hereof (the "Incumbent Board") cease for any reason to constitute at least
a majority thereof, provided that any person 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 the Holding Company's stockholders was approved by a Nominating
Committee serving under an Incumbent Board, shall be, for purposes of this
clause (B), considered as though he were a member of the Incumbent Board;
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or (C) a plan of reorganization, merger, consolidation, sale of all or
substantially all the assets of the Bank or the Holding Company or similar
transaction occurs in which the Bank or Holding Company is not the resulting
entity; or (D) after a solicitation of shareholders of the Holding Company, by
someone other than current management of the Holding Company, stockholders
approve a plan of reorganization, merger or consolidation of the Holding Company
or Bank or similar transaction with one or more corporations, as a result of
which the outstanding shares of the class of securities then subject to the plan
would be exchanged for or converted into cash or property or securities not
issued by the Bank or the Holding Company; or (E) a tender offer is made for 20%
or more of the voting securities of the Bank or the Holding Company.
(g) "Code" means the Internal Revenue Code of 1986, as amended.
(h) "Committee" means a committee consisting of the entire Board of
Directors or consisting solely of two or more members of the Board of Directors
who are defined as Non-Employee Directors as such term is defined under Rule
16b-3(b)(3)(i) under the Exchange Act as promulgated by the Securities and
Exchange Commission.
(i) "Common Stock" means the Common Stock of the Holding Company, par
value, $.01 per share or any stock exchanged for shares of Common Stock pursuant
to Section 15 hereof.
(j) "Date of Grant" means the effective date of an Award.
(k) "Disability" means the permanent and total inability by reason of
mental or physical infirmity, or both, of a Participant to perform the work
customarily assigned to him or , in the case of a Director, to serve on the
Board. Additionally, a medical doctor selected or approved by the Board of
Directors must advise the Committee that it is either not possible to determine
when such Disability will terminate or that it appears probable that such
Disability will be permanent during the remainder of said Participant's
lifetime.
(l) "Effective Date" means July 21, 1997, the effective date of the Plan.
(m) "Employee" means any person who is currently employed by the Holding
Company or an Affiliate, including officers, but such term shall not include
Outside Directors.
(n) "Employee Participant" means an Employee who holds an outstanding
Award under the terms of the Plan.
(o) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(p) "Exercise Price" means the purchase price per share of Common Stock
deliverable upon the exercise of each Option in order for the option to be
exchanged for shares of Common Stock.
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(q) "Fair Market Value" means, when used in connection with the Common
Stock on a certain date, the average of the high and low sales prices of the
Common Stock as reported by a national securities exchange which is the primary
trading market for such Common Stock or the average of the high and low bid
prices of the Common Stock as reported by Nasdaq Stock Market ("NASDAQ") if the
NASDAQ serves as the primary trading market for the Common Stock, each as
published in the Wall Street Journal, if published, on such date or, if the
Common Stock was not traded on such date, on the next preceding day on which the
Common Stock was traded thereon or the last previous date on which a sale was
reported. If the Common Stock is not traded on a national securities exchange or
the NASDAQ or the NYSE, the Fair Market Value of the Common Stock is the value
so determined by the Board in good faith, based upon the most recently available
pricing information the Board has regarding the recent closing price per share
of the Common Stock, as reported over-the counter through the National Daily
Quotation Service "Pink Sheet."
(r) "Holding Company" means Lenox Bancorp, Inc.
(s) "Incentive Stock Option" means an Option granted by the Committee to a
Participant, which Option is designated by the Committee as an Incentive Stock
Option pursuant to Section 7 hereof and is intended to be such under Section 422
of the Code.
(t) "Limited Right" means the right to receive an amount of cash based
upon the terms set forth in Section 8 hereof.
(u) "Non-statutory Stock Option" means an Option to a Participant pursuant
to Section 6 hereof, which is not designated by the Committee as an Incentive
Stock Option or which is redesignated by the Committee as a Non-statutory Stock
Option or which is designated an Incentive Stock Option under Section 7 hereof,
but does not meet the requirements of such under Section 422 of the Code.
(v) "Option" means the right to buy a fixed amount of Common Stock at the
Exercise Price within a limited period of time designated as the term of the
option as granted under Section 6 or 7 hereof.
(w) "Outside Director" means a member of the Board of Directors or a
Director Emeritus of the Holding Company or its Affiliates, who is not also an
Employee.
(x) "Outside Director Participant" means an Outside Director who holds an
outstanding Award under the terms of the Plan.
(y) "Participant(s)" means collectively an Employee Participant and/or an
Outside Director Participant who hold(s) outstanding Awards under the terms of
the Plan.
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(z) "Retirement" with respect to an Employee Participant means termination
of employment which constitutes retirement under any tax qualified plan
maintained by the Bank. However, "Retirement" will not be deemed to have
occurred for purposes of this Plan if a Participant continues to serve as a
consultant to or on the Board of Directors of the Holding Company or its
Affiliates even if such Participant is receiving retirement benefits under any
retirement plan of the Holding Company or its Affiliates. With respect to an
Outside Director Participant, "Retirement" means the termination of service from
the Board of Directors of the Holding Company or its Affiliates following
written notice to the Board as a whole of such Outside Director's intention to
retire, except that an Outside Director Participant shall not be deemed to have
"retired" for purposes of the Plan in the event he continues to serve as a
consultant to the Board or as an advisory director or director emeritus,
including pursuant to any retirement plan of the Holding Company or the Bank.
(aa) "Stock Awards" are Awards of Common Stock which may vest immediately
or over a period of time. Vesting of Stock Awards under Section 9 hereof may be
contingent upon the occurrence of specified events or the attainment of
specified performance goals as determined by the Committee.
(bb) "Termination for Cause" shall mean, in the case of a Director,
removal from the Board of Directors, or, in the case of an Employee, termination
of employment, in both such cases as determined by the Board of Directors,
because of Participant's personal dishonesty, incompetence, willful misconduct,
any 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).
(cc) "Trust" means a trust established by the Board in connection with
this Plan to hold Plan assets for the purposes set forth herein.
(dd) "Trustee" means that person or persons and entity or entities
approved by the Board to hold legal title to any of the Trust assets for the
purposes set forth herein.
2. ADMINISTRATION.
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(a) The Plan shall be administered by the Committee. The Committee is
authorized, subject to the provisions of the Plan, to grant awards to Employees
and establish such rules and regulations as it deems necessary for the proper
administration of the Plan and to make whatever determinations and
interpretations in connection with the Plan it deems necessary or advisable. All
determinations and interpretations made by the Committee shall be binding and
conclusive on all Employee Participants and Outside Director Participants in the
Plan and on their legal representatives and beneficiaries.
(b) Awards to Outside Directors of the Holding Company or its Affiliates
shall be granted by the Board of Directors or the Committee, pursuant to the
terms of this Plan.
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(c) Actual transference of the Award requires no, nor allows any,
discretion by the Trustee.
3. TYPES OF AWARDS AND RELATED RIGHTS.
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The following Awards and related rights as described below in Paragraphs 6
through 9 hereof may be granted under the Plan:
(a) Non-statutory Stock Options
(b) Incentive Stock Options
(c) Limited Right
(d) Stock Awards
4. STOCK SUBJECT TO THE PLAN.
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Subject to adjustment as provided in Section 15 hereof, the maximum number
of shares of Common Stock reserved for Awards under the Plan is 59,594 shares
which number may not be in excess of 14% of the outstanding shares of the Common
Stock determined immediately as of the Effective Date. Subject to adjustment as
provided in Section 15 hereof, the maximum number of shares of Common Stock
reserved hereby for purchase pursuant to the exercise of Options and
Option-related Awards granted under the Plan is 42,567 shares, which number may
not be in excess of 10% of the outstanding shares of Common Stock as of the
Effective Date. 26,500 options will qualify as Incentive Stock Options. The
maximum number of the shares of Common Stock reserved for award as Stock Awards
is 17,027 shares, which number may not be in excess of 4% of the outstanding
shares of Common Stock as of the Effective Date. These shares of Common Stock
may be either authorized but unissued shares or authorized shares previously
issued and reacquired by the Holding Company or acquired by the Trustee. To the
extent that Options and Stock Awards are granted under the Plan, the shares
underlying such Awards will be unavailable for any other use including future
grants under the Plan except that, to the extent that Stock Awards or Options
terminate, expire, or are forfeited without having been exercised (or in cases
where a Limited Right has been granted in connection with an option, the amount
of such Limited Right received in lieu of the exercise of such option), new
Awards may be made with respect to those shares underlying such terminated,
expired or forfeited Options or Stock Awards.
5. ELIGIBILITY.
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Subject to the terms herein, all Employees and Outside Directors shall be
eligible to receive Awards under the Plan.
6. NON-STATUTORY STOCK OPTIONS.
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The Committee may, subject to the limitations of the Plan and the
availability of shares reserved but unawarded under the Plan, from time to time,
grant Non-statutory Stock Options to Employees and Outside Directors, upon such
terms and conditions as the Committee may determine
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and grant Non-statutory Stock Options in exchange for and upon surrender of
previously granted Awards under this Plan under such terms and conditions as the
Committee may determine. Non-statutory Stock Options granted under this Plan are
subject to the following terms and conditions:
(a) Exercise Price. The Exercise Price of each Non-statutory Stock Option
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shall be determined by the Committee. Such Exercise Price shall not be less than
100% of the Fair Market Value of the Holding Company's Common Stock on the Date
of Grant. Shares of Common Stock underlying a Non-statutory Stock Option may be
purchased only upon full payment of the Exercise Price or upon operation of an
Alternate Option Payment Mechanism set out in Section 11 hereof.
(b) Terms of Non-statutory Stock Options. The term during which each
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Non-statutory Stock Option may be exercised shall be determined by the
Committee, but in no event shall a Non-statutory Stock Option be exercisable in
whole or in part more than 10 years from the Date of Grant. The Committee shall
determine the date on which each Non-statutory Stock Option shall become
exercisable. The Committee may also determine as of the Date of Grant any other
specific conditions or specific performance goals which must be satisfied prior
to the Non-statutory Stock Option becoming exercisable. The shares of Common
Stock underlying each Non-statutory Stock Option installment may be purchased in
whole or in part by the Participant at any time during the term of such
Non-statutory Stock Option after such installment becomes exercisable. The
Committee may, in its sole discretion, accelerate the time at which any
Non-statutory Stock Option may be exercised in whole or in part, subject to
applicable rules and regulations. The acceleration of any Non-statutory Stock
Option under the authority of this paragraph shall create no right, expectation
or reliance on the part of any other Participant or that certain Participant
regarding any other unaccelerated Non-statutory Stock Options. Unless determined
otherwise by the Committee and except in the event of the Participant's death or
pursuant to a domestic relations order, a Non-statutory Stock Option is not
transferable and may be exercisable in his lifetime only by the Participant to
whom it is granted. Upon the death of a Participant, a Non-statutory Stock
Option is transferable by will or the laws of descent and distribution.
(c) NSO Agreement. The terms and conditions of any Non-statutory Stock
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Option granted shall be evidenced by an agreement (the "NSO Agreement") which
shall be subject to the terms and conditions of the Plan.
(d) Termination of Employment or Service. Unless otherwise determined by
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the Committee, upon the termination of a Participant's employment or service for
any reason other than Disability, death or Termination for Cause, the
Participant's Non-statutory Stock Options shall be exercisable only as to those
shares that were immediately exercisable by the Participant at the date of
termination and only for a period of three months following termination;
provided that in the event of termination of a Participant's employment or
service due to Retirement, the Participant shall have up to one year following
the Participant's cessation of employment or service to exercise the
Participant's immediately exercisable Non-statutory Options. Notwithstanding any
provisions set
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forth herein or contained in any NSO Agreement relating to an award of a
Non-statutory Stock Option, in the event of termination of the Participant's
employment or service for Disability or death, all Non-statutory Stock Options
held by such Participant shall immediately vest and be exercisable for one year
after such termination of service, and, in the event of a Termination for Cause,
all rights under the Participant's Non-statutory Stock Options shall expire
immediately upon such Termination for Cause. Notwithstanding the above, in no
event shall any Non-statutory Stock Options be exercisable beyond the expiration
of the Non-Statutory Stock Option term.
7. INCENTIVE STOCK OPTIONS.
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The Committee may, subject to the limitations of the Plan and the
availability of shares reserved but unawarded under the Plan, from time to time,
grant Incentive Stock Options to Employees upon such terms and conditions as the
Committee may determine. Incentive Stock Options granted pursuant to the Plan
shall be subject to the following terms and conditions:
(a) Exercise Price. The Exercise Price of each Incentive Stock Option
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shall be not less than 100% of the Fair Market Value of the Common Stock on the
Date of Grant. However, if at the time an Incentive Stock Option is granted to
an Employee Participant, such Employee Participant owns Common Stock
representing more than 10% of the total combined voting securities of the
Holding Company (or, under Section 424(d) of the Code, is deemed to own Common
Stock representing more than 10% of the total combined voting power of all
classes of stock of the Holding Company, by reason of the ownership of such
classes of stock, directly or indirectly, by or for any brother, sister, spouse,
ancestor or lineal descendent of such Employee Participant, or by or for any
corporation, partnership, estate or trust of which such Employee Participant is
a shareholder, partner or beneficiary), ("10% Owner"), the Exercise Price per
share of Common Stock deliverable upon the exercise of each Incentive Stock
Option shall not be less than 110% of the Fair Market Value of the Common Stock
on the Date of Grant. Shares may be purchased only upon payment of the full
Exercise Price or upon operation of an Alternate Option Payment Mechanism set
out in Section 11 hereof.
(b) Amounts of Incentive Stock Options. Incentive Stock Options may be
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granted to any Employee in such amounts as determined by the Committee; provided
that the amount granted is consistent with the terms of Section 422 of the Code.
In the case of an Option intended to qualify as an Incentive Stock Option, the
aggregate Fair Market Value (determined as of the time the Option is granted) of
the Common Stock with respect to which Incentive Stock Options granted are
exercisable for the first time by the Employee Participant during any calendar
year (under all plans of the Employee Participant's employer corporation and its
parent and subsidiary corporations) shall not exceed $100,000. The provisions of
this Section 7(b) shall be construed and applied in accordance with Section
422(d) of the Code and the regulations, if any, promulgated thereunder. To the
extent an Award of an Incentive Stock Option under this Section 7 exceeds this
$100,000 limit, the portion of the Award in excess of such limit shall be deemed
a Non-statutory Stock Option. The Committee shall have discretion to redesignate
Options granted as Incentive Stock Options as
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Non-Statutory Stock Options. Such Non-statutory Stock Options shall be subject
to Section 6 hereof.
(c) Terms of Incentive Stock Options. The term during which each Incentive
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Stock Option may be exercised shall be determined by the Committee, but in no
event shall an Incentive Stock Option be exercisable in whole or in part more
than 10 years from the Date of Grant. If at the time an Incentive Stock Option
is granted to an Employee Participant who is a 10% Owner, the Incentive Stock
Option granted to such Employee Participant shall not be exercisable after the
expiration of five years from the Date of Grant. No Incentive Stock Option is
transferable except by will or the laws of descent and distribution and is
exercisable in his lifetime only by the Employee Participant to whom it is
granted. The designation of a beneficiary does not constitute a transfer.
The Committee shall determine the date on which each Incentive Stock
Option shall become exercisable. The Committee may also determine as of the Date
of Grant any other specific conditions or specific performance goals which must
be satisfied prior to the Incentive Stock Option becoming exercisable. The
shares comprising each installment may be purchased in whole or in part at any
time during the term of such Incentive Stock Option after such installment
becomes exercisable. The Committee may, in its sole discretion, accelerate the
time at which any Incentive Stock Option may be exercised in whole or in part,
subject to applicable rules and regulations. The acceleration of any Incentive
Stock Option under the authority of this paragraph shall not create a right,
expectation or reliance on the part of any other Participant or that certain
Participant regarding any other unaccelerated Incentive Stock Options.
(d) ISO Agreement. The terms and conditions of any Incentive Stock Option
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granted shall be evidenced by an agreement (the "ISO Agreement") which shall be
subject to the terms and conditions of the Plan.
(e) Termination of Employment. Unless otherwise determined by the
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Committee, upon the termination of an Employee Participant's employment for any
reason other than Disability, death or Termination for Cause, the Employee
Participant's Incentive Stock Options shall be exercisable only as to those
shares that were immediately exercisable by the Participant at the date of
termination and only for a period of three months following termination, except
that in the event of the termination of an Employee Participant's employment due
to Retirement, the Participant shall have up to one year following the
Participant's cessation of employment to exercise any Incentive Stock Options
exercisable on that date. Notwithstanding any provision set forth herein or
contained in any ISO Agreement relating to an award of an Incentive Stock
Option, in the event of termination of the Employee Participant's employment for
Disability or death, all Incentive Stock Options held by such Employee
Participant shall immediately vest and be exercisable for one year after such
termination, and, in the event of Termination for Cause, all rights under the
Employee Participant's Incentive Stock Options shall expire immediately upon
termination. Notwithstanding anything contained herein to the contrary, no
Incentive Stock Option shall be eligible for treatment as an Incentive Stock
Option in the event such Incentive Stock Option is exercised more than three
months following the
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date of a Participant's cessation of employment. In no event shall an Incentive
Stock Option be exercisable beyond the expiration of the Incentive Stock Option
term.
(f) Compliance with Code. The Incentive Stock Options granted under this
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Section 7 are intended to qualify as "incentive stock options" within the
meaning of Section 422 of the Code, but the Holding Company makes no warranty as
to the qualification of any Option as an incentive stock option within the
meaning of Section 422 of the Code. All Options that do not so qualify shall be
treated as Non-statutory Stock Options.
8. LIMITED RIGHT.
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Simultaneously with the grant of any Option to a Participant, the
Committee may grant a Limited Right with respect to all or some of the shares
covered by such Option. Limited Rights granted under this Plan are subject to
the following terms and conditions:
(a) Terms of Rights. In no event shall a Limited Right be exercisable in
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whole or in part before the expiration of six months from the Date of Grant of
the Limited Right. A Limited Right may be exercised only in the event of a
Change in Control.
The Limited Right may be exercised only when the underlying Option is
eligible to be exercised, and only when the Fair Market Value of the underlying
shares on the day of exercise is greater than the Exercise Price of the
underlying Option.
Upon exercise of a Limited Right, the underlying Option shall cease to be
exercisable. Upon exercise or termination of an Option, any related Limited
Rights shall terminate. The Limited Rights may be for no more than 100% of the
difference between the purchase price and the Fair Market Value of the Common
Stock subject to the underlying option. The Limited Right is transferable only
when the underlying option is transferable and under the same conditions.
(b) Payment. Upon exercise of a Limited Right, the holder shall promptly
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receive from the Holding Company an amount of cash equal to the difference
between the Exercise Price of the underlying option and the Fair Market Value of
the Common Stock subject to the underlying Option on the date the Limited Right
is exercised, multiplied by the number of shares with respect to which such
Limited Right is exercised. Payments shall be less any applicable tax
withholding as set forth in Section 16 hereof.
9. STOCK AWARD.
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The Committee (or in the case of an Outside Director Participant, the
Board of Directors) may, subject to the limitations of the Plan, from time to
time, make an Award of shares of Common Stock to Employees and Outside Directors
("Stock Awards"). The Stock Awards shall be made subject to the following terms
and conditions:
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(a) Payment of the Stock Award. The Stock Award may only be made in whole
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shares of Common Stock. Stock Awards may only be granted from shares reserved
under the Plan but unawarded at the time the new Stock Award is made.
(b) Terms of the Stock Awards. The Committee shall determine the dates on
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which Stock Awards granted to a Participant shall vest and any specific
conditions or performance goals which must be satisfied prior to the vesting of
any installment or portion of the Stock Award. Notwithstanding other paragraphs
in this Section 9, the Committee may, in its sole discretion, accelerate the
vesting of any Stock Award. The acceleration of any Stock Award under the
authority of this paragraph shall create no right, expectation or reliance on
the part of any other Participant or that certain Participant regarding any
other unaccelerated Stock Awards.
(c) Stock Award Agreement. The terms and conditions of any Stock Award
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shall be evidenced by an agreement (the "Stock Award Agreement") which such
Stock Award Agreement will be subject to the terms and conditions of the Plan.
Each Stock Award Agreement shall set forth:
(i) the period over which the Stock Award will vest;
(ii)the performance goals, if any, which must be satisfied prior to
the vesting of any installment or portion of the Stock Award. The
performance goals may be set by the Committee on an individual
level, for all Participants, for all Awards made during a given
period of time, or for all Awards for indefinite periods;
(d) Certification of Attainment of the Performance Goal. No Stock Award or
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portion thereof that is subject to a performance goal is to be distributed to
the Participant until the Committee certifies that the underlying performance
goal has been achieved.
(e) Termination of Employment or Service. Unless otherwise determined by
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the Committee, upon the termination of a Participant's employment or service for
any reason other than Disability, death or Termination for Cause, the
Participant's unvested Stock Awards as of the date of termination shall be
forfeited and any rights the Participant had to such unvested Stock Awards shall
become null and void. Notwithstanding any provisions set forth herein or
contained in any Agreement relating to an award of a Stock Option or Stock
Award, in the event of termination of the Participant's service due to
Disability or death, all unvested Stock Awards held by such Participant shall
immediately vest and, in the event of the Participant's Termination for Cause,
the Participant's unvested Stock Awards as of the date of such termination shall
be forfeited and any rights the Participant had to such unvested Stock Awards
shall become null and void.
(f) Non-Transferability. Except to the extent permitted by the Code, the
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rules promulgated under Section 16(b) of the Exchange Act or any successor
statutes or rules:
(i) The recipient of a Stock Award shall not sell, transfer,
assign, pledge, or otherwise encumber shares subject to the
Stock Award until full vesting of such shares has occurred. For
purposes of this Section, the separation of beneficial
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ownership and legal title through the use of any "swap"
transaction is deemed to be a prohibited encumbrance.
(ii) Unless determined otherwise by the Committee and except in the
event of the Participant's death or pursuant to a domestic
relations order, a Stock Award is not transferable and may be
earned in his lifetime only by the Participant to whom it is
granted. Upon the death of a Participant, a Stock Award is
transferable by will or the laws of descent and distribution.
The designation of a beneficiary does not constitute a
transfer.
(iii) If a recipient of a Stock Award is subject to the provisions
of Section 16 of the Exchange Act, shares of Common Stock
subject to such Stock Award may not, without the written
consent of the Committee (which consent may be given in the
Stock Award Agreement), be sold or otherwise disposed of within
six months following the date of grant of the Stock Award.
(g) Accrual of Dividends. Whenever shares of Common Stock underlying a
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Stock Award are distributed to a Participant or beneficiary thereof under the
Plan, such Participant or beneficiary shall also be entitled to receive, with
respect to each such share distributed, a payment equal to any cash dividends or
distributions (other than distributions in shares of Common Stock) and the
number of shares of Common Stock equal to any stock dividends, declared and paid
with respect to a share of the Common Stock if the record date for determining
shareholders entitled to receive such dividends falls between the date the
relevant Stock Award was granted and the date the relevant Stock Award or
installment thereof is issued. There shall also be distributed an appropriate
amount of net earnings, if any, of the Trust with respect to any dividends paid
out.
(h) Voting of Stock Awards. After a Stock Award has been granted but for
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which the shares covered by such Stock Award have not yet been earned and
distributed to the Participant pursuant to the Plan, the Participant shall be
entitled to direct the Trustee as to the voting of such shares of Common Stock
which the Stock Award covers subject to the rules and procedures adopted by the
Committee for this purpose. All shares of Common Stock held by the Trust as to
which Participants are not entitled to direct, or have not directed, the voting,
shall be voted by the Trustee in the same proportion as the Common Stock covered
by Stock Awards which have been awarded is voted.
10. PAYOUT ALTERNATIVES
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Payments due to a Participant upon the exercise or redemption of an Award,
may be made subject to the following terms and conditions:
(a) Discretion of the Committee. The Committee has the sole discretion to
determine what form of payment (whether monetary, Common Stock, a combination of
payout alternatives or otherwise) it shall use in making distributions of
payments for all Awards. If the Committee
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requests any or all Participants to make an election as to form of distribution
or payment, it shall not be considered bound by the election.
(b) Payment in the form of Common Stock. Any shares of Common Stock
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tendered in satisfaction of an obligation arising under this Plan shall be
valued at the Fair Market Value of the Common Stock on the day preceding the
date of the issuance of such stock to the Participant.
11. ALTERNATE OPTION PAYMENT MECHANISM
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The Committee has sole discretion to determine what form of payment it
will accept for the exercise of an Option. The Committee may indicate acceptable
forms in the ISO or NSO Agreement covering such Options or may reserve its
decision to the time of exercise. No Option is to be considered exercised until
payment in full is accepted by the Committee or its agent.
(a) Cash Payment. The exercise price may be paid in cash or by certified
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check.
(b) Borrowed Funds. To the extent permitted by law, the Committee may
---------------
permit all or a portion of the exercise price of an Option to be paid through
borrowed funds.
(c) Exchange of Common Stock.
------------------------
(i) The Committee may permit payment by the tendering of previously
acquired shares of Common Stock. This includes the use of
"pyramiding transactions" whereby some number of Options are
exercised; then the shares gained through the exercise are
tendered back to the Holding Company as payment for a greater
number of Options. This transaction may be repeated as needed to
exercise all of the Options available.
(ii) Any shares of Common Stock tendered in payment of the exercise
price of an Option shall be valued at the Fair Market Value of
the Common Stock on the date prior to the date of exercise.
12. RIGHTS OF A SHAREHOLDER: NONTRANSFERABILITY.
-------------------------------------------
No Participant shall have any rights as a shareholder with respect to any
shares of Common Stock covered by an Option until the date of issuance of a
stock certificate for such shares. Nothing in this Plan or in any Award granted
confers on any person any right to continue in the employ or service of the
Holding Company or its Affiliates or interferes in any way with the right of the
Holding Company or its Affiliates to terminate a Participant's services as an
officer or other employee at any time.
Except as permitted under the Code (with respect to Incentive Stock
Options) and the rules promulgated pursuant to Section 16(b) of the Exchange Act
or any successor statutes or rules, no
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Award under the Plan shall be transferable by the Participant other than by will
or the laws of intestate succession or pursuant to a domestic relations order or
unless determined otherwise by the Committee.
13. AGREEMENT WITH GRANTEES.
-----------------------
Each Award will be evidenced by a written agreement(s) (whether
constituting an NSO Agreement, ISO Agreement, Stock Award Agreement or any
combination thereof), executed by the Participant and the Holding Company or its
Affiliates that describes the conditions for receiving the Awards including the
date of Award, the Exercise Price if any, the terms or other applicable periods,
and other terms and conditions as may be required or imposed by the Plan, the
Committee, or the Board of Directors, and may describe or specify tax law
considerations or applicable securities law considerations.
14. DESIGNATION OF BENEFICIARY.
--------------------------
A Participant may, with the consent of the Committee, designate a person
or persons to receive, in the event of death, any Award to which the Participant
would then be entitled. Such designation will be made upon forms supplied by and
delivered to the Holding Company and may be revoked in writing. If a Participant
fails effectively to designate a beneficiary, then the Participant's estate will
be deemed to be the beneficiary.
15. DILUTION AND OTHER ADJUSTMENTS.
------------------------------
In the event of any change in the outstanding shares of Common Stock by
reason of any stock dividend or split, recapitalization, merger, consolidation,
spin-off, reorganization, combination or exchange of shares, or other similar
corporate change, or other increase or decrease in such shares without receipt
or payment of consideration by the Holding Company, or in the event a capital
distribution is made the Committee will make such adjustments to Awards to
prevent dilution, diminution or enlargement of the rights of the Participant, as
the Committee deems appropriate, including any or all of the following:
(a) adjustments in the aggregate number or kind of shares of Common Stock
or other securities that may underlie future Awards under the Plan;
(b) adjustments in the aggregate number or kind of shares of Common Stock
or other securities underlying Awards already made under the Plan;
(c) adjustments in the exercise price of outstanding Incentive and/or
Non-statutory Stock Options, or any Limited Rights attached to such Options.
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Alternatively, the Committee could provide the participant with a cash
benefit for shares underlying vested, but unexercised options, in order to
achieve the aforementioned effect. All Awards under this Plan shall be binding
upon any successors or assigns of the Holding Company.
16. TAX WITHHOLDING.
---------------
Awards under this Plan shall be subject to tax withholding to the extent
required by any governmental authority. Any withholding shall comply with Rule
16b-3 or any amendment or successive rule. Shares of Common Stock withheld to
pay for tax withholding amounts shall be valued at their Fair Market Value on
the date the Award is deemed taxable to the Participant.
17. AMENDMENT OF THE PLAN.
---------------------
The Board of Directors may at any time, and from time to time, subject to
applicable rules and regulations, modify or amend the Plan or any Award granted
under the Plan, in any respect, prospectively or retroactively; provided
however, that provisions governing grants of Incentive Stock Options, unless
permitted by the rules and regulations or staff pronouncements promulgated under
the Code shall be submitted for shareholder approval to the extent required by
such law, regulation or interpretation.
Failure to ratify or approve amendments or modifications by shareholders
shall be effective only as to the specific amendment or modification requiring
such ratification. Other provisions, sections, and subsections of this Plan will
remain in full force and effect.
No such termination, modification or amendment may adversely affect the
rights of a Participant under an outstanding Award without the written
permission of such Participant.
18. EFFECTIVE DATE OF PLAN.
----------------------
The Plan shall become effective upon being presented to shareholders for
ratification for the purpose of obtaining preferential tax treatment for
Incentive Stock Options. The failure to obtain shareholder ratification for such
purpose will not effect the validity of the Plan and the Options thereunder,
provided, however, that if the Plan is not ratified, the Plan shall remain in
full force and effect, and any Incentive Stock Options granted under the Plan
shall be deemed to be Non-statutory Stock Options.
19. TERMINATION OF THE PLAN.
-----------------------
The right to grant Awards under the Plan will terminate upon the earlier
of: (i) ten (10) years after the Effective Date; (ii) the issuance of a number
of shares of Common Stock pursuant to the exercise of Options or the
distribution of Stock Awards which together with the exercise of Limited Rights
is equivalent to the maximum number of shares reserved under the Plan as set
forth in Section 4. The Board of Directors has the right to suspend or terminate
the Plan at any time, provided that no such action will, without the consent of
a Participant, adversely affect a Participant's vested rights under a previously
granted Award.
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20. APPLICABLE LAW.
--------------
The Plan will be administered in accordance with the laws of the State of
Ohio and applicable federal law.
21. COMPLIANCE WITH FDIC CONVERSION REGULATIONS
-------------------------------------------
Notwithstanding any other provision contained in this Plan:
(a) unless the Plan is approved by a majority vote of the Holding
Company's stockholders at a duly called meeting of stockholders to consider the
Plan, as required by 12 CFR ss.333.4(f)(2), the Plan shall not become effective
or implemented prior to one year from the date of the Bank's mutual to stock
conversion;
(b) no Award granted prior to one year from the date of the Bank's mutual
to stock conversion shall become vested or exercisable at a rate in excess of
20% of the total number of Stock Awards or Options (whichever may be the case)
granted to such Participant, provided, that Awards shall become fully vested or
immediately exercisable in the event of a Participant's termination of service
due to death or Disability;
(c) no Award granted to any individual employee prior to one year from the
date of the Bank's mutual to stock conversion may exceed 25% of the total amount
of Awards which may be granted under the Plan;
(d) no Award granted to any individual Outside Director prior to one year
from the date of the Bank's mutual to stock conversion may exceed 5% of the
total amount of Awards which may be granted under the Plan; and
(e) the aggregate amount of Awards granted to all Outside Directors prior
to one year from the date of the Bank's mutual to stock conversion may not
exceed 30% of the total amount of Awards which may be granted under the Plan.
22. DELEGATION OF AUTHORITY
-----------------------
The Committee may delegate all authority for: the determination of forms
of payment to be made by or received by the Plan; the execution of Award
agreements; the determination of Fair Market Value; the determination of all
other aspects of administration of the plan to the executive officer(s) of the
Holding Company or the Bank. The Committee may rely on the descriptions,
representations, reports and estimate provided to it by the management of the
Holding Company or the Bank for determinations to be made pursuant to the Plan,
including the attainment of performance goals. However, only the Committee or a
portion of the Committee may certify the attainment of a performance goal.
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