Dated: April 13, 1999
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SLADE'S FERRY BANCORP
STOCK OPTION PLAN
(as amended to date)
1. Purpose of the plan. This Stock Option Plan (the "Plan"), is intended
to encourage ownership of shares of Slade's Ferry Bancorp (the "Corporation")
by key employees (including officers) and non-employee Directors of the
Corporation and its subsidiaries and to provide additional incentive for them
to promote the success of the business.
2. Shares subject to plan. There will be reserved for use upon the
exercise of options to be granted from time to time under the Plan
("Options"), an aggregate of 250,000 Common Shares, of the par value of $.01
per share (the "Common Shares"), of the Corporation, which shares may be in
whole or in part, as the Board of Directors of the Corporation (the "Board of
Directors") shall from time to time determine, authorized but unissued Common
Shares or issued Common Shares which shall have been reacquired by the
Corporation. For purposes of the Plan, the "Plan Year" shall be the 12-month
period ending on each February 28. Options shall not be granted in any Plan
Year for in excess of an aggregate of 50,000 Common Shares under both the
Discretionary Grant and the Automatic Grant Programs hereunder; provided,
however, that, if an Option shall expire or terminate for any reason without
having been exercised in full, the unpurchased shares covered thereby shall
(unless the Plan shall have been terminated) be added to the shares otherwise
available for Options which may be granted in accordance with the terms of the
Plan.
3. Administration of the plan. The Board of Directors shall appoint a
Stock Option Plan Committee (the "Committee"), which shall consist of not less
than three members of the Board of Directors. Subject to the provisions of
the Plan, the Committee shall have plenary authority in its discretion to
administer the Discretionary Grant Program, including to determine the
employees (including officers) of the Corporation and its subsidiaries to whom
Options shall be granted, the number of shares to be covered by each of the
Options, the time or times at which Options shall be granted, the date or
dates on which the Option is to become exercisable and the remaining
provisions of the option grant. The committee shall also have the authority
to interpret the Plan and to prescribe, amend, and rescind rules and
regulations relating to it.
The Automatic Grant Program shall be administered by the Committee but
all grants under that program will be made in strict compliance with the
express provisions of that program and no administrative discretion will be
exercised by the Committee with respect to grants made under that program.
The Board of Directors may from time to time appoint members of the
Committee in substitution for or in addition to members previously appointed
and may fill vacancies, however caused, in the Committee. The Committee shall
select one of its members as its chairman and shall hold its meetings at such
times and places as it shall deem advisable. A majority of its members shall
constitute a quorum. Any action may be taken by a written instrument signed
by a majority of the members and action so taken shall be fully as effective
as if it had been taken by a vote of a majority of the members at a meeting
duly called and held. The Committee shall make such rules and regulations for
the conduct of its business as it shall deem advisable. No Board member may
serve on the Committee if he or she has received an option grant or stock
award under the Option Plan other than pursuant to the Automatic Grant
Program, or under any other stock plan of the Corporation or its parent or
subsidiary within the twelve months preceding his/her appointment to the
Committee.
4. Discretionary Grant Program.
(a) Subject to the overall limitations on the number of shares for which
options may be granted set forth in paragraph 2, options under this
program may be granted in each Plan Year to such eligible person
for such number of shares as the Committee in its discretion
determines appropriate. All options granted hereunder must be
granted and exercised within ten years from the date the Plan is
adopted by the Corporation or approved by the stockholders,
whichever is earlier, and the option price may not be less than the
fair market value of the stock at the time the option is granted.
Options granted under this program will be incentive stock options
designed to meet the requirements of Section 422 of the Internal
Revenue Code.
(b) Key employees (including officers) of the Corporation or its
subsidiaries (whether now existing or subsequently established) are
eligible to receive option grants under the Discretionary Option
Grant Program. Only employee Board members (other than Board members
serving on the Committee are eligible to participate in the
Discretionary Option Grant Program. In making any determination as
to persons to whom Options shall be granted and as to the number of
shares to be covered by such Options, the Committee shall take into
account the duties of the respective person, their present and
potential contributions to the success of the Corporation, and such
other factors as the Committee shall deem relevant in connection with
accomplishing the purpose of the Plan.
(c) An employee granted an option under this program (a "Grantee") must
remain an employee of the Corporation or its subsidiaries from the
time the option is granted until three months before the option is
exercised. Once a Grantee's employment is terminated, other than by
death or disability, the Grantee must exercise any option he has a
right to exercise within three months of the date of his termination
of employment or the option will automatically expire. If a
Grantee's employment is terminated as a result of his permanent and
total disability, such Grantee shall have one year from the date of
termination to exercise any option he has a right to exercise or it
will automatically expire. If a Grantee's employment is terminated
by the Grantee's death, the option may be exercised according to its
terms by the personal representative of the Grantee's estate or the
person to whom the option is transferred by the Grantee's will or the
laws of inheritance. Under no circumstances can an option be
exercised after the specified expiration of the option term.
(d) Stock that has been purchased by exercise of an option granted under
the Discretionary Option Program can not be sold, exchanged or
disposed of by gift for at least two years from the date the option
was granted and one year from the date the option was exercised and
the stock was transferred to him.
(e) The shares of Common Stock acquired upon the exercise of one or more
options may be subject to repurchase by the Company at the original
exercise price paid per share upon the Grantee's cessation of service
prior to vesting in such shares. The Committee has complete
discretion in establishing the vesting schedule to be in effect for
any such unvested shares and may cancel the Company's outstanding
repurchase rights with respect to those shares at any time, thereby
accelerating the vesting of the shares subject to the canceled
rights.
(f) Subject to the general conditions stated below and the express
provisions of the Plan, the Committee has full authority to determine
the eligible individuals who are to receive grants under
Discretionary Option Grant Program, the number of shares to be
covered by each granted option, the date or dates on which the option
is to become exercisable, the maximum term for which the option is to
remain outstanding and the remaining provisions of the option grant.
5. Automatic Grant Program.
(a) An option for 2,000 shares of Common Stock shall be granted each Plan
Year on the day after the Annual Shareholders' Meeting, or any
Special Meeting in lieu thereof, to each eligible non-employee
director of the Company or its subsidiaries (the "Grantee"). All
grants under this program will be non-statutory options which are not
intended to satisfy the requirements of Section 422 of the Internal
Revenue Code.
(b) Eligibility for participation under this program is limited to non-
employee directors of the Company or its subsidiaries. Any employee
director of the Company or its subsidiaries who ceases to be an
employee but remains a director shall be eligible under this program,
provided he otherwise qualifies, in the first Plan year commencing
after the termination date of his employment with the Company or its
subsidiaries.
In no event shall an Option be granted to a person who, immediately
after such Option is granted, owns (as defined in Sections 422 and
424 of the Internal Revenue Code of 1986) shares possessing more than
10 percent of the total combined voting power or value of all classes
of shares of the Corporation or of its parent or any subsidiary
corporation.
(c) Each option granted under the Automatic Grant Program will be subject
to the following terms and conditions:
(i) The exercise price per share will be equal to 100% of the fair
market value per share of Common Stock on the automatic grant
date.
(ii) Each option will have a maximum term of five (5) years measured
from the grant date.
(iii)Each option will be immediately exercisable for all the option
shares.
(iv) The option will remain exercisable for a six-month period
following the Grantee's cessation of Board service for any
reason other than death, permanent disability or retirement
Should the Grantee die within such six-month period, then each
such option will remain exercisable for a twelve-month period
following such Grantee's death and may be exercised by the
personal representative of the Grantee's estate or the person to
whom the option is transferred by the Grantee's will or the laws
of inheritance. In no event, however, may the option be
exercised after the expiration date of the option term.
(v) Should the Grantee die or become permanently disabled while
serving as a Board member, then the shares of Common Stock
subject to each automatic option grant held by that individual
Grantee may be purchased at any time within the twelve-month
period following the date of the Grantee's cessation of Board
service.
(vi) Upon the successful completion of a hostile tender offer for
securities possessing more than 50% of the Company's outstanding
voting stock, each automatic option grant which has been
outstanding for at least six months may be surrendered to the
Company for a cash distribution per surrendered option share in
an amount equal to the excess of (i) the highest price per share
of Common Stock paid in such hostile tender offer over (ii) the
exercise price payable for such share.
The remaining terms and conditions of the option will in general conform
to the general terms and conditions set forth in paragraph 8 and will be
incorporated into the option agreement evidencing the automatic grant.
6. Stock Appreciation Rights. Two types of stock appreciation rights are
authorized for issuance under the Discretionary Grant Program: (i) tandem
rights, which require the option holder to elect between the exercise of the
underlying option for shares of Common Stock and the surrender of such option
for appreciation distribution and (ii) limited rights, which are automatically
exercised upon the occurrence of a hostile takeover.
The appreciation distribution payable by the Corporation upon the
exercise of a tandem stock appreciation right will be equal in amount to the
excess of (i) the fair market value (on the exercise date) of the shares of
Common Stock in which the optionee is at the time vested under the surrendered
option over (ii) the aggregate exercise price payable for such shares. Such
appreciation distribution may, at the Committee's discretion, be made in
shares of Common Stock valued at fair market value on the exercise date, in
cash or in a combination of cash and Common Stock.
One or more officers or directors of the Company subject to the short-
swing profit restrictions of the Federal securities laws may, at the
discretion of the Committee, be granted limited stock appreciation rights in
connection with their option grants under the Discretionary Grant Program.
Any option with such a limited stock appreciation right in effect for at least
six (6) months will automatically be canceled, to the extent exercisable for
one or more vested option shares, upon the successful completion of a hostile
tender offer for more than 50% of the Company's outstanding voting stock. In
return, the officer will be entitled to a cash distribution from the Company
in an amount per canceled option share equal to the excess of (i) the highest
price per share of Common Stock paid in the tender offer over (ii) the option
exercise price.
7. Acceleration of Options/Termination of Repurchase Rights. Upon the
occurrence of any of the following transactions (a "Corporate Transaction"):
(i) A merger or consolidation in which the Corporation is not the
surviving entity, except for a transaction the principal purpose of
which is to change the state of the Corporation's incorporation'
(ii) the sale, transfer, or other disposition of all, or substantially
all, of the Corporation's assets; or
(iii) any reverse merger in which the Corporation is the surviving
entity, but in which fifty percent (50%) or more of the
Corporation's outstanding voting stock is transferred to holders
different from those who held the stock immediately prior to such
merger;
each outstanding option under the Discretionary Option Grant Program will,
immediately prior to the effective date of the Corporate Transaction, become
fully exercisable for all of the shares at the time subject to such option.
No such acceleration will occur, however, if (i) the option is either to be
assumed by the successor corporation or replaced by a comparable option to
purchase shares of the capital stock of the successor corporation or (ii) the
acceleration of the option is subject to other limitations imposed by the
Committee at the time of grant. Immediately following the consummation of the
Corporate Transaction, all outstanding options will terminate and cease to be
exercisable, except to the extent assumed by the successor corporation.
The Corporation's outstanding repurchase rights under the Discretionary
Option Grant Program will also terminate and all shares subject to such
repurchase rights will immediately vest, upon the occurrence of any such
Corporate Transaction, except to the extent (i) the repurchase rights are
expressly assigned to the successor corporation or (ii) such accelerated
vesting is subject to other limitations imposed by the Committee at the time
the underlying options were granted.
8. General Terms and Conditions.
(a) All options are non-transferable and are exercisable only by the
individual to whom it was granted except upon the individual's death
when the option may be exercised by the personal representative of
that individual's estate or the person to whom the option is
transferred as established by will or under law at the individual's
death.
(b) No option may be granted to any person who at the time of the option
grant owns stock with more than ten percent of the total combined
voting power of all classes of stock of the Corporation or any
parent subsidiary. No person eligible to participate herein shall
be granted options to purchase Common Shares which are exercisable
during any one calendar year, to the extent that the fair market
value of such shares (determined at the time of the grant of the
Option) exceeds $100,000 in any calendar year, except and to the
extent that the Options shall have accumulated over a period in
excess of one year.
(c) The option price of all options shall be not less than the fair
market value of the stock at the time the option is granted. The
fair market value shall be determined to be the average of the
closing bid and ask prices for the stock as quoted by A.G. Edwards &
Sons, Inc., the market maker for the Corporation's common stock.
(d) Should an option expire or terminate for any reason prior to
exercise in full, the shares subject to the portion of the option no
so exercised will be available for subsequent options grants under
the Option Plan. Shares subject to any options surrendered or
canceled in accordance with the stock appreciation right provisions
of the Option Plan will not be available for subsequent grants.
(e) No Grantee shall have any shareholder rights with respect to any
option shares until the Grantee has exercised the option and paid
the purchase price.
(f) The exercise price of an option may be paid in whole or in part with
shares of Slade's Ferry Bancorp Common Stock owned by the Grantee.
9. Changes in Capitalization. In the event any change is made to the
Common Stock issuable under the Plan by reason of any stock split, stock
dividend, combination of shares, exchange of shares, corporate transaction, or
other change affecting the outstanding Common Stock as a class without the
Corporation's receipt of consideration, appropriate adjustments will be made
to (i) the maximum number and/or class of securities issuable under the Option
Plan, (ii) the maximum number and/or class of securities for which any one
individual may be granted stock options and separately exercisable stock
appreciation rights under the Option Plan, (iii) the number and/or class of
securities for which option grants will subsequently be made under the
Automatic Option Grant Program to each non-employee Board member, and (iv) the
class and/or number of securities and exercise price per share in effect under
each outstanding option.
Each outstanding option which is assumed in connection with a Corporate
Transaction will be appropriately adjusted to apply and pertain to the number
and class of securities which would otherwise have been issued in consummation
of such Corporate Transaction, to the option holder had the option been
exercised immediately prior to the Corporate transaction. Appropriate
adjustments will also be made to the option price payable per share and to the
class and number of securities available for future issuance under the Option
Plan on both an aggregate and a per-participant basis.
10. Option Plan Amendments. The Board may amend or modify the Option Plan
in any or all respects, except that the Board may not, without the approval of
the Company's shareholders, (i) materially increase the maximum number of
shares issuable under the Option Plan (except in connection with certain
changes in capitalization), (ii) materially modify the eligibility
requirements for option grants, or (iii) otherwise materially increase the
benefits accruing to participants under the Option Plan.
Unless sooner terminated by the Board, the Option Plan will in all
events terminate on March 11, 2006. Any options outstanding at the time of
such termination will remain in force in accordance with the provisions of the
instruments evidencing such grants.
11. Effectiveness of plan. The Plan shall become effective on such date as
the Board of Directors shall determine, but only after: (a) the shareholders
of the Corporation shall, by the affirmative vote of a majority in interest of
the Common shares, have approved the Plan; (b) any amendment to the
Corporation's Articles of Organization necessary to increase the number of
authorized Common Shares to accommodate shares set aside under the plan has
been filed with the Massachusetts Secretary of State's Office; (c) the Common
Shares reserved for the purposes of the Plan shall have been registered under
the Securities Act of 1993 as amended; and (d) the Board of Directors shall
have been advised by counsel that all applicable legal requirements have been
complied with.
12. Time of granting options. Nothing contained in the Plan or in any
resolution adopted or to be adopted by the Board of Directors or the
stockholders of the Corporation nor any action taken by the Committee shall
constitute the granting of any option. The granting of an Option shall take
place only when a written option agreement shall have been duly executed and
delivered by or on behalf of the Corporation and by the Grantee to whom such
Option shall be granted.
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