FOUNDATION BANCORP, INC.
1997 STOCK OPTION AND INCENTIVE PLAN
1. PURPOSE. The purpose of the Foundation Bancorp, Inc. 1997 Stock
Option and Incentive Plan (this "Plan") is to promote and advance the interests
of Foundation Bancorp, Inc. (the "Company") and its shareholders by enabling the
Company to attract, retain and reward directors, managerial and other key
employees of the Company and any Subsidiary (hereinafter defined), and to
strengthen the mutuality of interests between such directors and employees and
the Company's shareholders by providing such persons with a proprietary interest
in pursuing the long-term growth, profitability and financial success of the
Company.
2. DEFINITIONS. For purposes of this Plan, the following terms shall
have the meanings set forth below:
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended, or
any successor thereto, together with the rules, regulations and
interpretations promulgated thereunder.
(c) "Committee" means the Committee of the Board constituted as
provided in Section 3 of this Plan.
(d) "Common Shares" means the common shares, without par value, of
the Company or any security of the Company issued in substitution, in
exchange or in lieu thereof.
(e) "Company" means Foundation Bancorp, Inc., an Ohio corporation, or
any successor corporation.
(f) "Employment" means regular employment with the Company or a
Subsidiary and does not include service as a director only.
(g) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute.
(h) "Fair Market Value" shall be determined as follows:
(i) If the Common Shares are traded on a national
securities exchange at the time of grant of the Stock Option, then the
Fair Market Value shall be the average of the highest and the lowest
selling price on such exchange on the date such Stock Option is
granted or, if there were no sales on such date, then on the next
prior business day on which there was a sale.
(ii) If the Common Shares are quoted on The Nasdaq SmallCap
Market at the time of the grant of the Stock Option, then the Fair
Market Value shall be the mean between the closing high bid and low
asked quotation with respect to a Common Share on such date on The
Nasdaq SmallCap Market.
(iii) If the Common Shares are not traded on a national
securities exchange or quoted on The Nasdaq SmallCap Market, then the
Fair Market Value shall be as determined by the Committee.
(i) "Incentive Stock Option" means any Stock Option granted pursuant
to the provisions of Section 6 of this Plan that is intended to be and is
specifically designated as an "incentive stock option" within the meaning
of Section 422 of the Code.
(j) "Non-Qualified Stock Option" means any Stock Option granted
pursuant to the provisions of Section 6 of this Plan that is not an
Incentive Stock Option.
(k) "OTS" means the Office of Thrift Supervision, Department of the
Treasury.
(l) "Participant" means an employee or director of the Company or a
Subsidiary who is granted an Award under this Plan. Notwithstanding the
foregoing, for the purposes of the granting of any Incentive Stock Option
under this Plan, the term "Participant" shall include only employees of the
Company or a Subsidiary.
(m) "Plan" means the Foundation Bancorp, Inc. 1997 Stock Option and
Incentive Plan, as set forth herein and as it may be hereafter amended from
time to time.
(n) "Stock Option" means an award to purchase Common Shares granted
pursuant to the provisions of Section 6 of this Plan.
(o) "Subsidiary" means any corporation or entity in which the Company
directly or indirectly controls 50% or more of the total voting power of
all classes of its stock having voting power and includes, without
limitation, Foundation Savings Bank.
(p) "Terminated for Cause" means any removal of a director or
discharge of an employee for the personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of a material provision
of any law, rule or regulation (other than traffic violations or similar
offenses), a material violation of a final cease-and-desist order or any
other action of a director or employee which results in a substantial
financial loss to the Company or a Subsidiary.
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3. ADMINISTRATION.
(a) This Plan shall be administered by the Committee to be comprised
of not less than three of the members of the Board who are not employees of
the Company. The members of the Committee shall be appointed from time to
time by the Board. Members of the Committee shall serve at the pleasure of
the Board and the Board may from time to time remove members from, or add
members to, the Committee. A majority of the members of the Committee
shall constitute a quorum for the transaction of business. An action
approved in writing by a majority of the members of the Committee then
serving shall be fully as effective as if the action had been taken by
unanimous vote at a meeting duly called and held.
(b) The Committee is authorized to construe and interpret this Plan
and to make all other determinations necessary or advisable for the
administration of this Plan. The Committee may designate persons other
than members of the Committee to carry out its responsibilities under such
conditions and limitations as it may prescribe. Any determination,
decision or action of the Committee in connection with the construction,
interpretation, administration, or application of this Plan shall be final,
conclusive and binding upon all persons participating in this Plan and any
person validly claiming under or through persons participating in this
Plan. The Company shall effect the granting of Stock Options under this
Plan in accordance with the determinations made by the Committee, by
execution of instruments in writing in such form as approved by the
Committee.
4. DURATION OF, AND COMMON SHARES SUBJECT TO, THIS PLAN.
(a) TERM. This Plan shall terminate on the date which is ten (10)
years from the date on which this Plan is adopted by the Board, except with
respect to Stock Options then outstanding. Notwithstanding the foregoing,
no Incentive Stock Option may be granted under this Plan after the date
which is ten (10) years from the date on which this Plan is adopted by the
Board or the date on which this Plan is approved by the shareholders of the
Company, whichever is earlier.
(b) COMMON SHARES SUBJECT TO PLAN. The maximum number of Common
Shares in respect of which Stock Options may be granted under this Plan,
subject to adjustment as provided in Section 9 of this Plan, shall be ten
percent of the total Common Shares sold in connection with the conversion
Foundation Savings Bank from mutual to stock form.
For the purpose of computing the total number of Common Shares available
for Stock Options under this Plan, there shall be counted against the foregoing
limitations the number of Common Shares subject to issuance upon the exercise or
settlement of Stock Options as of the dates on which such Stock Options are
granted. If any Stock Options are forfeited, terminated or exchanged for other
Stock Options, or expire unexercised, the Common Shares which were
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theretofore subject to such Stock Options shall again be available for Stock
Options under this Plan to the extent of such forfeiture, termination or
expiration of such Stock Options.
Common Shares which may be issued under this Plan may be either authorized
and unissued shares or issued shares which have been reacquired by the Company.
No fractional shares shall be issued under this Plan.
5. ELIGIBILITY AND GRANTS. Persons eligible for Stock Options under this
Plan shall consist of directors and managerial and other key employees of the
Company or a Subsidiary who hold positions with significant responsibilities or
whose performance or potential contribution, in the judgment of the Committee,
will benefit the future success of the Company or a Subsidiary. In selecting
the directors and employees to whom Stock Options will be awarded and the number
of shares subject to such Stock Options, the Committee shall consider the
position, duties and responsibilities of the eligible directors and employees,
the value of their services to the Company and the Subsidiaries and any other
factors the Committee may deem relevant.
6. STOCK OPTIONS. Stock Options granted under this Plan may be in the
form of Incentive Stock Options or Non-Qualified Stock Options, and such Stock
Options shall be subject to the following terms and conditions as the Committee
shall deem desirable:
(a) GRANT. Stock Options may be granted under this Plan on terms and
conditions not inconsistent with the provisions of this Plan and in such
form as the Committee may from time to time approve and shall contain such
additional terms and conditions, not inconsistent with the express
provisions of this Plan, as the Committee shall deem desirable; provided,
however, that no more than 25% of the shares subject to Stock Options may
be awarded to any individual who is an employee of the Company or a
Subsidiary, no more than 5% of such shares may be awarded to any director
who is not an employee of the Company or a Subsidiary and no more than 30%
of such shares may be awarded to non-employee directors in the aggregate.
(b) STOCK OPTION PRICE. The option exercise price per Common Share
purchasable under a Stock Option shall be determined by the Committee at
the time of grant; provided, however, that in no event shall the exercise
price of a Stock Option be less than 100% of the Fair Market Value of the
Common Shares on the date of the grant of such Stock Option.
Notwithstanding the foregoing, in the case of a Participant who owns Common
Shares representing more than 10% of the outstanding Common Shares at the
time an Incentive Stock Option is granted, the option exercise price shall
in no event be less than 110% of the Fair Market Value of the Common Shares
at the time an Incentive Stock Option is granted to such Participant.
(c) STOCK OPTION TERMS. Subject to the right of the Company to
provide for earlier termination in the event of any merger, acquisition or
consolidation involving the Company, the term of each Stock Option shall be
fixed by the Committee; except that the term of Incentive Stock Options
will not exceed ten years after the date the Incentive Stock Option is
granted; provided, however, that in the case of a Participant who owns a
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number of Common Shares representing more than 10% of the Common Shares
outstanding at the time an Incentive Stock Option is granted, the term of
the Incentive Stock Option granted to such Participant shall not exceed
five years.
(d) EXERCISABILITY. Except as set forth in Section 6(f) and Section
7 of this Plan, Stock Options awarded under this Plan shall become
exercisable at the rate of one-fifth per year commencing on the date that
is one year after the date of the grant of the Stock Option and shall be
subject to such other terms and conditions as shall be determined by the
Committee at the date of grant.
(e) METHOD OF EXERCISE. A Stock Option may be exercised, in whole or
in part, by giving written notice of exercise to the Company specifying the
number of Common Shares to be purchased. Such notice shall be accompanied
by payment in full of the purchase price in cash or, if acceptable to the
Committee in its sole discretion, in Common Shares already owned by the
Participant, or by surrendering outstanding Stock Options. The Committee
may also permit Participants, either on a selective or aggregate basis, to
simultaneously exercise Options and sell Common Shares thereby acquired,
pursuant to a brokerage or similar arrangement, approved in advance by the
Committee, and use the proceeds from such sale as payment of the purchase
price of such shares.
(f) SPECIAL RULE FOR INCENTIVE STOCK OPTIONS. With respect to
Incentive Stock Options granted under this Plan, to the extent the
aggregate Fair Market Value (determined as of the date the Incentive Stock
Option is granted) of the number of shares with respect to which Incentive
Stock Options are exercisable under all plans of the Company or a
Subsidiary for the first time by a Participant during any calendar year
exceeds $100,000, or such other limit as may be required by the Code, such
Stock Options shall be Non-Qualified Stock Options to the extent of such
excess.
7. TERMINATION OF EMPLOYMENT OR DIRECTORSHIP.
(a) Except in the event of the death or disability of a Participant,
upon the resignation, removal or retirement from the board of directors of
any Participant who is a director of the Company or a Subsidiary or upon
the termination of Employment of a Participant who is not a director of the
Company or a Subsidiary, any Stock Option which has not yet become
exercisable shall thereupon terminate and be of no further force or effect
and, subject to extension by the Committee, any Stock Option which has
become exercisable shall terminate if it is not exercised within 12 months
of such resignation, removal or retirement.
(b) Unless the Committee shall specifically state otherwise at the
time an Option is granted, all Options granted under this Plan shall become
exercisable in full on the date of termination of a Participant's
employment or directorship with the Company or a Subsidiary because of his
death or disability, and, subject to extension by the Committee, all
Options shall terminate if not exercised within 12 months of the
Participant's death or disability.
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(c) In the event the Employment or the directorship of a Participant
is Terminated for Cause, any Option which has not been exercised shall
terminate as of the date of such termination for cause.
8. NON-TRANSFERABILITY OF STOCK OPTIONS. No Stock Option under this Plan
and no rights or interests therein shall be assignable or transferable by a
Participant except by will or pursuant to the laws of descent and distribution.
During the lifetime of a Participant, Stock Options are exercisable only by, and
payments in settlement of Stock Options will be payable only to, the Participant
or his or her legal representative.
9. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
(a) The existence of this Plan and the Stock Options granted
hereunder shall not affect or restrict in any way the right or power of the
Board or the shareholders of the Company to make or authorize the
following: any adjustment, recapitalization, reorganization or other
change in the Company's capital structure or its business; any merger,
acquisition or consolidation of the Company; any issuance of bonds,
debentures, preferred or prior preference stocks ahead of or affecting the
Company's capital stock or the rights thereof; the dissolution or
liquidation of the Company or any sale or transfer of all or any part of
its assets or business; or any other corporate act or proceeding, including
any merger or acquisition which would result in the exchange of cash, stock
of another company or options to purchase the stock of another company for
any Stock Option outstanding at the time of such corporate transaction or
which would involve the termination of all Stock Options outstanding at the
time of such corporate transaction.
(b) In the event of any change in capitalization affecting the Common
Shares of the Company, such as a stock dividend, stock split,
recapitalization, merger, consolidation, split-up, combination or exchange
of shares or other form of reorganization, or any other change affecting
the Common Shares, such proportionate adjustments, if any, as the Board in
its discretion may deem appropriate to reflect such change shall be made
with respect to the aggregate number of Common Shares for which Stock
Options in respect thereof may be granted under this Plan, the maximum
number of Common Shares which may be sold or awarded to any Participant,
the number of Common Shares covered by each outstanding Stock Option, and
the exercise price per share in respect of outstanding Stock Options.
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(c) The Committee may also make such adjustments in the number of
shares covered by, and the exercise price or other value of, any
outstanding Stock Options in the event of a spin-off or other distribution
(other than normal cash dividends) of Company assets to shareholders. In
the event that another corporation or business entity is being acquired by
the Company and the Company agrees to assume outstanding employee stock
options and/or the obligation to make future grants of options or rights to
employees of the acquired entity, the aggregate number of Common Shares
available for Stock Options under Section 4 of this Plan may be increased
accordingly.
10. AMENDMENT AND TERMINATION OF THIS PLAN. Without further approval of
the shareholders, the Board may at any time terminate this Plan or may amend it
from time to time in such respects as the Board may deem advisable, except that
the Board may not, without approval of the shareholders, make any amendment
which would (a) increase the aggregate number of Common Shares which may be
issued under this Plan (except for adjustments pursuant to Section 9 of this
Plan), (b) materially modify the requirements as to eligibility for
participation in this Plan, or (c) materially increase the benefits accruing to
Participants under this Plan. The above notwithstanding, the Board may amend
this Plan to take into account changes in applicable securities, federal income
tax and other applicable laws.
11. MODIFICATION OF OPTIONS. The Board may authorize the Committee to
direct the execution of an instrument providing for the modification of any
outstanding Stock Option which the Board believes to be in the best interests of
the Company; provided, however, that no such modification, extension or renewal
shall reduce the exercise price or confer on the holder of such Stock Option any
right or benefit which could not be conferred on him by the grant of a new Stock
Option at such time and shall not materially decrease the Participant's benefits
under the Stock Option without the consent of the holder of the Stock Option,
except as otherwise permitted under this Plan.
12. MISCELLANEOUS.
(a) TAX WITHHOLDING. The Company shall have the right to deduct from
any settlement made under this Plan, including the delivery or vesting of
Common Shares, any federal, state or local taxes of any kind required by
law to be withheld with respect to such payments or to take such other
action as may be necessary in the opinion of the Company to satisfy all
obligations for the payment of such taxes. If Common Shares are used to
satisfy tax withholding, such shares shall be valued based on the Fair
Market Value when the tax withholding is required to be made.
(b) NO RIGHT TO EMPLOYMENT. Neither the adoption of this Plan nor
the granting of any Stock Option shall confer upon any employee of the
Company or a Subsidiary any right to continued Employment with the Company
or a Subsidiary, as the case may be, nor shall it interfere in any way with
the right of the Company or a Subsidiary to terminate the Employment of any
of its employees at any time, with or without cause.
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(c) ANNULMENT OF STOCK OPTIONS. The grant of any Stock Option under
this Plan payable in cash is provisional until cash is paid in settlement
thereof. The grant of any Stock Option payable in Common Shares is
provisional until the Participant becomes entitled to the certificate in
settlement thereof. In the event the Employment or the directorship of a
Participant is Terminated for Cause, any Stock Option which is provisional
shall be annulled as of the date of such termination.
(d) OTHER COMPANY BENEFIT AND COMPENSATION PROGRAMS. Payments and
other benefits received by a Participant under a Stock Option made pursuant
to this Plan shall not be deemed a part of a Participant's regular,
recurring compensation for purposes of the termination indemnity or
severance pay law of any country and shall not be included in, nor have any
effect on, the determination of benefits under any other employee benefit
plan or similar arrangement provided by the Company or a Subsidiary unless
expressly so provided by such other plan or arrangement, or except where
the Committee expressly determines that a Stock Option or portion of a
Stock Option should be included to accurately reflect competitive
compensation practices or to recognize that a Stock Option has been made in
lieu of a portion of competitive annual cash compensation. Stock Options
under this Plan may be made in combination with or in tandem with, or as
alternatives to, grants, stock options or payments under any other plans of
the Company or a Subsidiary. This Plan notwithstanding, the Company or any
Subsidiary may adopt such other compensation programs and additional
compensation arrangements as it deems necessary to attract, retain and
reward directors and employees for their service with the Company and its
Subsidiaries.
(e) SECURITIES LAW RESTRICTIONS. No Common Shares shall be issued
under this Plan unless counsel for the Company shall be satisfied that such
issuance will be in compliance with applicable federal and state securities
laws. Certificates for Common Shares delivered under this Plan may be
subject to such stock-transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange
upon which the Common Shares are then listed, and any applicable federal or
state securities law. The Committee may cause a legend or legends to be
put on any such certificates to make appropriate reference to such
restrictions.
(f) STOCK OPTION AGREEMENT. Each Participant receiving a Stock
Option under this Plan shall enter into an agreement with the Company in a
form specified by the Committee agreeing to the terms and conditions of the
Stock Option and such related matters as the Committee shall, in its sole
discretion, determine.
(g) COST OF PLAN. The costs and expenses of administering this Plan
shall be borne by the Company.
(h) GOVERNING LAW. This Plan and all actions taken hereunder shall
be governed by and construed in accordance with the laws of the State of
Ohio, except to the extent that federal law shall be deemed applicable.
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(i) EFFECTIVE DATE. This Plan shall be effective upon the later of
adoption by the Board and approval by the Company's shareholders. This
Plan shall be submitted to the shareholders of the Company for approval at
an annual or special meeting of shareholders to be held no sooner than six
months after the effective date of the Conversion.
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