EXHIBIT 10.1
HAMILTON BANCORP INC.
STOCK OPTION PLAN FOR KEY EMPLOYEES AND DIRECTORS
(Adopted by the Shareholders on December 3, 1993
and as in effect with amendments on March 14, 1997)
1. PURPOSE. The purpose of this Plan is to advance the interests of
Hamilton Bancorp Inc. (the "Company") by providing an additional incentive to
attract and retain qualified and competent persons who are key employees or
directors of the Company or its subsidiaries or affiliated entities, and upon
whose efforts and judgment the success of the Company is largely dependent.
2. DEFINITIONS. As used herein, the following terms shall have the
meaning indicated:
(a) "Affiliate" shall mean any corporation other than the Company that is
a member of an affiliated group of corporations, as defined in Section 1504
(determined without regard to Section 1504(b)) of the Internal Revenue Code, of
which the Company is a member.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Committee" shall mean the compensation committee appointed by the
Board (as described in Section 13 hereof) or, if such a committee does not
exist, the Board.
(d) "Common Stock" shall mean the 1 cent par value Common Stock of the
Company.
(e) "Covered Employee" shall mean any individual who, on the last day of
the taxable year of the Company, is (i) the Chief Executive Officer of the
Company or is acting in such capacity (the "CEO"), (ii) among the four highest
compensated officers of the Company and its Affiliates (other than the CEO), or
(iii) otherwise considered to be a "Covered Employee" within the meaning of
Section 162(m) of the Internal Revenue Code and the regulations promulgated
thereunder.
(f) "Director" shall mean a member of the Board.
(g) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(h) "Fair Market Value" of a Share on any date of reference shall be the
"Closing Price" (as defined below) of the Common Stock on the business day
immediately preceding such date, unless the Committee in its sole discretion
shall determine otherwise in a fair and uniform manner. For the purpose of
determining Fair Market Value, the "Closing Price" of the Common Stock on any
business day shall be (i) if the Common Stock is listed or admitted for trading
on any United States national securities exchange, or if actual transactions are
otherwise reported on a consolidated transaction reporting system,
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the last reported sale price of Common Stock on such exchange or reporting
system, as reported in any newspaper of general circulation, (ii) if the Common
Stock is quoted on the National Association of Securities Dealers Automated
Quotations System ("Nasdaq"), or any similar system of automated dissemination
of quotations of securities prices in common use, the last reported sale price
of Common Stock for such day on such system, or (ii) if neither clause (i) or
(ii) is applicable, the mean between the high bid and low asked quotations for
the Common Stock as reported by the National Quotation Bureau, Incorporated if
at least two securities dealers have inserted both bid and asked quotations for
Common Stock on at least five of the ten preceding days. If neither (i), (ii),
or (iii) above is applicable, then Fair Market Value shall be determined in good
faith by the Committee in a fair and uniform manner.
(i) "Incentive Stock Option" shall mean an incentive stock option as
defined in Section 422 of the Internal Revenue Code.
(j) "Internal Revenue Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time.
(k) "Non-Employee Director" shall refer to a Director who is not an
employee of the Company or any Subsidiary.
(l) "Non-Qualified Stock Option" shall mean an Option which is not an
Incentive Stock Option.
(m) "Officer" shall mean the Company's president, principal financial
officer, principal accounting officer and any other person who the Company
identifies as an executive officer.
(n) "Option" shall mean any option granted under this Plan.
(o) "Optionee" shall mean a person to whom an Option is granted under this
Plan or any person who succeeds to the rights of such person under this Plan by
reason of the death of such person;
(p) "Outside Director" shall mean a member of the Board who (i) is not a
current employee of the Company or any Affiliate; (ii) is not a former employee
of the Company or any Affiliate who receives compensation for prior services
(other than benefits under a tax-qualified retirement plan) during the taxable
year; (iii) has not been an officer of the Company or any Affiliate; (iv) does
not receive remuneration either directly or indirectly, in any capacity other
than as a director; and (v) satisfies any other conditions that shall from time
to time be required to qualify as an "outside director" under Section 162(m) of
the Internal Revenue Code and the regulations thereunder and as a "Non-Employee
Director" under Rule 16b-3 promulgated under the Exchange Act. For this
purpose,
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"Remuneration" shall have the meaning afforded that term pursuant to Treasury
Regulations issued under Section 162(m) of the Internal Revenue Code, and shall
exclude any de minimis remuneration excluded under those Treasury Regulations.
(q) "Plan" shall mean this Stock Option Plan.
(r) "Share" shall mean a share of the Common Stock.
(s) "Subsidiary" shall mean any corporation (other than the Company) in
any unbroken chain of corporations beginning with the Company if, at the time of
the granting of the Option, each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 50 percent or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain.
3. SHARES AND OPTIONS. The Company may grant to Optionees from time to
time Options to purchase an aggregate of up to Eight Hundred Seventy Seven
Thousand Five Hundred (877,500) Shares from Shares held in the Company's
treasury or from authorized and unissued Shares. If any Option granted under
the Plan shall terminate, expire, or be canceled or surrendered as to any
Shares, new Options may thereafter be granted covering such Shares. An Option
granted hereunder shall be either an Incentive Stock Option or a Non-Qualified
Stock Option as determined by the Committee at the time of grant of such Option,
and shall clearly state, whether it is an Incentive Stock Option or Non-
Qualified Stock Option. All Options shall be granted within 10 years from the
effective date of this Plan.
4. DOLLAR LIMITATION. Options otherwise qualifying as Incentive Stock
Options hereunder will not be treated as Incentive Stock Options to the extent
that the aggregate fair market value (determined at the time the Option is
granted) of the Shares, with respect to which Options meeting the requirements
of Internal Revenue Code Section 422(b) are exercisable for the first time by
any individual during any calendar year (under all plans of the Company),
exceeds $100,000.
5. CONDITIONS FOR GRANT OF OPTIONS
(a) Each Option shall be evidenced by an option agreement that may contain
any term deemed necessary or desirable by the Committee, provided such terms are
not inconsistent with this Plan or any applicable law. Optionees shall be those
persons selected by the Committee in its sole discretion. Any person who files
with the Committee, in a form satisfactory to the Committee, a written waiver of
eligibility to receive any Option under this Plan shall not be eligible to
receive any Option under this Plan for the duration of such waiver.
(b) In granting Options, the Committee may take into consideration the
contribution the person has made to the success of the Company and its
subsidiaries and such other
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factors as the Committee shall determine. The Committee shall also have the
authority to consult with and receive recommendations from Officers and other
personnel of the Company with regard to these matters. The Committee may from
time in granting Options under the Plan prescribe such other terms and
conditions concerning such Options as it deems appropriate, including, without
limitation, (i) prescribing the date or dates on which the Option becomes
exercisable, (ii) providing that the Option rights accrue or become exercisable
in installments over a period of years, or upon the attainment of stated goals
or both, or (iii) if applicable, relating an Option to the continued employment
of the Optionee for a specified period of time, provided that such terms and
conditions are not more favorable to an Optionee than those expressly permitted
herein.
(c) If applicable, the Options granted to employees under this Plan shall
be in addition to regular salaries, pension, life insurance or other benefits
related to their employment or other relationship with the Company. Neither the
Plan nor any Option granted under the Plan shall confer upon any person any
right to employment or continuance of employment by the Company.
(d) Notwithstanding any other provision of this Plan, and in addition to
any other requirements of this Plan, the aggregate number of Shares with respect
to which Options may be granted to any one Optionee may not exceed 50% of the
total of all Options issued and issuable under the Plan, subject to adjustment
as provided in Section 10(a) hereof.
(e) Notwithstanding any other provision of this Plan, and in addition to
any other requirements of this plan, Options may not be granted to a Covered
Employee unless the grant of such Option is authorized by, and all of the terms
of such Options are determined by, a Committee that is appointed in accordance
with Section 13 of this Plan and all of whose members are Outside Directors.
(f) Incentive Stock Options may not be granted to any Non-Employee
Directors.
6. EXERCISE PRICE. The exercise price per Share of any Option shall be
any price determined by the Committee but shall not be less than the par value
per Share; provided, however, that in no event shall the exercise price per
Share of any Incentive Stock Option be less than the Fair Market Value of the
Shares underlying such Option on the date such Option is granted.
7. EXERCISE OF OPTIONS.
(a) An Option shall be deemed exercised when (i) the Company has received
written notice of such exercise in accordance with the terms of the Option (ii)
full payment of the aggregate exercise price of the Shares as to which the
Option is exercised has been made
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and (iii) arrangements that are satisfactory to the Committee, in its sole
discretion, have been made for the Optionee's payment to the Company of the
amount that is necessary for the Company employing the Optionee to withhold in
accordance with applicable Federal or state tax withholding requirements.
(b) Unless further limited by the Committee in any Option, the option
price of any Shares purchased shall be paid (i) in cash, (ii) by certified or
official bank check, (iii) by money order, (iv) with Shares owned by the
Optionee that have been owned by the Optionee for more than 6 months on the date
of surrender or such other period as may be required to avoid a charge to the
Company's earnings for financial accounting purposes, (v) by authorization for
the Company to withhold Shares issuable upon exercise of the Option, (vi) by
arrangement with a broker that is acceptable to the Committee where payment of
the Option price is made pursuant to an irrevocable direction to the broker to
deliver all or part of the proceeds from the sale of the Option Shares to the
Company in payment of the Option price, or (vii) any combination of the
foregoing. The Committee in its sole discretion may accept a personal check in
full or partial payment of any Shares. If the Exercise price is paid in whole
or in part with Shares, the value of the Shares surrendered shall be their Fair
Market Value on the date the Option is exercised. The Company in its sole
discretion may, on an individual basis or pursuant to a general program
established in connection with this Plan, and subject to applicable law, lend
money to an Optionee, guarantee a loan to an Optionee, or otherwise assist an
Optionee to obtain the cash necessary to exercise all or a portion of an Option
granted hereunder or to pay any tax liability of the Optionee attributable to
such exercise. If the exercise price is paid in whole or part with Optionee's
promissory note, such note shall (i) provide for full recourse to the maker,
(ii) be collateralized by the pledge of the Shares that the Optionee purchases
upon exercise of such Option, (iii) bear interest at a rate no less than the
prime rate of the Company's principal bank subsidiary and (iv) contain such
other terms as the Board in its sole discretion shall reasonably require.
(c) No Optionee shall be deemed to be a holder of any Shares subject to an
Option unless and until a stock certificate or certificates for such Shares are
issued to such person(s) under the terms of this Plan. No adjustment shall be
made for dividends (ordinary or extraordinary, whether in cash, securities or
other property) or distributions or other rights for which the record date is
prior to the date such stock certificate is issued, except as expressly provided
in Section 10 hereof.
8. EXERCISABILITV OF OPTIONS. Any Option shall become exercisable in
such amounts, at such intervals and upon such terms as the Committee shall
provide in such Option, except as otherwise provided in this Section 8.
(a) The expiration date of an Option shall be determined by the Committee
at the time of grant, but in no event shall an Option be exercisable after the
expiration of 10 years from the date of grant of the Option.
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(b) Unless otherwise provided in any Option, each outstanding Option shall
become immediately fully exercisable:
(i) if there occurs any transaction (which shall include a series of
transactions occurring, within 60 days or occurring pursuant to a plan),
that has the result that stockholders of the Company immediately before
such transaction cease to own at least fifty percent (50%) of the voting
stock of the Company or of any entity that results from the participation
of the Company in a reorganization, consolidation, merger, liquidation or
any other form of corporate transaction;
(ii) if the stockholders of the Company shall approve a plan of merger,
consolidation, reorganization, liquidation or dissolution in which the
Company does not survive (unless the approved merger, consolidation,
reorganization, liquidation or dissolution is subsequently abandoned); or
(iii) if the stockholders of the Company shall approve a plan for the
sale, lease, exchange or other disposition of all or substantially all the
property and assets of the Company (unless such plan is subsequently
abandoned).
(c) The Committee may in its sole discretion accelerate the date on
which any Option may be exercised and may accelerate the vesting of any Shares
subject to any Option or previously acquired by the exercise of any Option.
9. TERMINATION OF OPTION PERIOD.
(a) The unexercised portion of any Option granted to an Optionee shall
automatically and without notice terminate and become null and void at the time
of the earliest to occur of the following:
(i) three months after the date on which the Optionee's employment with
the Company or any Subsidiary, or service as a Director or as a director of
any Subsidiary, is terminated or, in the case of a Non-Qualified Stock
Option and unless the Committee shall otherwise determine in writing in its
sole discretion, the date on which the Optionee's employment with the
Company or any Subsidiary, or service as a Director or as a director of any
Subsidiary, is terminated, in either case for any reason other than by
reason of (a) Cause, which shall mean "Cause" under such Optionee's
employment agreement, if any, and which, solely for purposes of this Plan,
also shall mean the termination of the Optionee's employment or the removal
of the Optionee as a Director or as a director of any Subsidiary by reason
of the Optionee's willful misconduct or gross negligence, (b) the
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Optionee's mental or physical disability (within the meaning of Internal
Revenue Code Section 22(e)) as determined by a medical doctor satisfactory
to the Committee or (c) the Optionee's death;
(ii) immediately upon the termination of the Optionee's employment with
the Company or any Subsidiary, or service as a Director or as a director of
any Subsidiary, for Cause;
(iii) twelve months after the date on which the Optionee's employment
with the Company or any Subsidiary, or service as a Director or as a
director of any Subsidiary is terminated by reason of mental or physical
disability (within the meaning of Internal Revenue Code Section 22(e)) as
determined by a medical doctor satisfactory to the Committee, or
(iv) (a) twelve months after the date of the Optionee's death or (b)
three months after the date of the Optionee's death if such death shall
occur during the twelve month period specified in Subsection 9(a)(iii)
hereof.
(b) The Committee in its sole discretion may by giving written notice
("cancellation notice") cancel, effective upon the date of the consummation of
any corporate transaction described in Subsections 8(b)(ii) or (iii) hereof, any
Option that remains unexercised on such date. Such cancellation notice shall be
given a reasonable period of time prior to the proposed date of such
cancellation and may be given either before or after approval of such corporate
transaction.
10. ADJUSTMENT OF SHARES.
(a) If at any time while the Plan is in effect or unexercised Options are
outstanding, there shall be any increase or decrease in the number of issued and
outstanding Shares through the declaration of a stock dividend or through any
recapitalization resulting in a stock split-up, combination or exchange of
Shares, then and in such event:
(i) appropriate adjustment shall be made in the maximum number of shares
available for grant under the Plan, so that the same percentage of the
Company's issued and outstanding Shares shall continue to be subject to
being so optioned; and
(ii) appropriate adjustment shall be made in the number of Shares and the
exercise price per Share thereof then subject to any outstanding Option, so
that the same percentage of the Company's issued and outstanding Shares
shall remain subject to purchase at the same aggregate exercise price.
(b) Subject to the specific terms of any Option, the Committee may change
the terms
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of Options outstanding under this Plan, with respect to the option price or the
number of Shares subject to the Options, or both, when, in the Committee's sole
discretion, such adjustments become appropriate by reason of a corporate
transaction described in Subsections 8(b)(ii) or (iii) hereof.
(c) Except as otherwise expressly provided herein, the issuance by the
Company of shares of its capital stock of any class, or securities convertible
into shares of capital stock of any class, either in connection with direct sale
or upon the exercise of rights or warrants to subscribe thereof, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to the number of or exercise price of Shares then subject
to outstanding Options granted under the Plan.
(d) Without limiting the generality of the foregoing, the existence of
outstanding Options granted under the Plan shall not affect in any manner the
right or power of the Company to make, authorize or consummate (i) any or all
adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business; (ii) any merger or consolidation of
the Company; (iii) any issue by the Company of debt securities, or preferred or
preference stock that would rank above the Shares subject to outstanding
Options; (iv) the dissolution or liquidation of the Company; (v) any sale,
transfer or assignment of all or any part of the assets or business of the
Company; or (vi) any other corporate act or proceeding, whether of a similar
character or otherwise.
11. TRANSFERABILITY OF OPTIONS AND SHARES..
(a) No Incentive Stock Option, and unless the Committee's prior written
consent is obtained (which consent may be obtained at the time an Option is
granted) and the transaction does not violate the requirements of Rule 16b-3
promulgated under the Exchange Act no Non-Qualified Stock Option, shall be
subject to alienation, assignment, pledge, charge or other transfer other than
by the Optionee by will or the laws of descent and distribution, and any attempt
to make any such prohibited transfer shall be void. Each Option shall be
exercisable during the Optionee's lifetime only by the Optionee, or in the case
of a Non-Qualified Stock Option that has been assigned or otherwise transferred
with the Committee's prior written consent, only by the assignee consented to by
the Committee.
(b) Unless the Committee's prior written consent is obtained (which
consent may be obtained at the time an Option is granted) and the transaction
does not violate the requirements of Rule 16b-3 promulgated under the Exchange
Act, no Shares acquired by an Officer, as that term is defined under Rule 16b-3,
of the Company or Director or a director of any Subsidiary pursuant to the
exercise of an Option may be sold, assigned, pledged or otherwise transferred
prior to the expiration of the six-month period following the date on which the
Option was granted.
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12. ISSUANCE OF SHARES. As a condition of any sale or issuance of Shares
upon exercise of any Option, the Committee may require such agreements or
undertakings, if any, as the Committee may deem necessary or advisable to assure
compliance with any such law or regulation including, but not limited to, the
following:
(i) a representation and warranty by the Optionee to the Company, at the
time any Option is exercised, that he is acquiring the Shares to be issued
to him for investment and not with a view to, or for sale in connection
with, the distribution of any such Shares; and
(ii) a representation, warranty and/or agreement to be bound by any legends
that are, in the opinion of the Committee, necessary or appropriate to
comply with the provisions of any securities law deemed by the Committee to
be applicable to the issuance of the Shares and are endorsed upon the Share
certificates.
13. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by the Committee, which shall consist
of not less than two Directors, each of whom shall be Outside Directors. The
Committee shall have all of the powers of the Board with respect to the Plan.
Any member of the Committee may be removed at any time, with or without cause,
by resolution of the Board and any vacancy occurring in the membership of the
Committee may be filled by appointment of the Board.
(b) The Committee, from time to time, may adopt rules and regulations for
carrying out the purposes of the Plan. The Committee's determinations and its
interpretation and construction of any provision of the Plan shall be final and
conclusive.
(c) Any and all decisions or determinations of the Committee shall be made
either (i) by a majority vote of the members of the Committee at a meeting or
(ii) without a meeting by the unanimous written approval of the members of the
Committee.
(d) The Board may reserve to itself the power to grant Options to
employees or Directors of the Company or any Subsidiary who are not Covered
Employees. If and to the extent that the Board reserves such powers, then all
references herein to the Committee shall refer to the Board with respect to the
Options granted by the Board.
14. INCENTIVE OPTIONS FOR 10% STOCKHOLDERS. Notwithstanding any other
provisions of the Plan to the contrary, an Incentive Stock Option shall not be
granted to any person owning directly or indirectly (through attribution under
Section 424(d) of the Internal Revenue Code) at the date of grant, stock
possessing more than 10% of the total combined voting power of all
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classes of stock of the Company (or of its subsidiary [as defined in Section 424
of the Internal Revenue Code] at the date of grant) unless the option price of
such Option is at least 110% of the Fair Market Value of the Shares subject to
such Option on the date the Option is granted, and such Option by its terms is
not exercisable after the expiration of five years from the date such Option is
granted.
15. INTERPRETATION
(a) The Plan shall be administered and interpreted so that all Incentive
Stock Options granted under the plan will qualified as Incentive Stock Options
under section 422 of the Internal Revenue Code. If any provision of the Plan
should be held invalid for the granting of Incentive Stock Options or illegal
for any reason, such determination shall not affect the remaining provisions
hereof, but instead the Plan shall be construed and enforced as if such
provision had never been included in the Plan.
(b) This Plan shall be governed by the laws of the State of Florida.
(c) Headings contained in this Plan are for convenience only and shall in
no manner be construed as part of the Plan.
(d) Any reference to the masculine, feminine, or neuter gender shall be a
reference to such other gender as is appropriate.
(e) As it is the intent of the Company that the Plan comply in all
respects with Rule 16b-3 promulgated under the Exchange Act ("Rule 16b-3"), any
ambiguities or inconsistencies in construction of the Plan shall be interpreted
to give effect to such intention, and if any provision of the Plan is found not
to be in compliance with Rule 16b-3, such provision shall be deemed null and
void to the extent required to permit the Plan to comply with Rule 16b-3. The
Board and the Committee each may from time to time adopt rules and regulations
under, and amend, the Plan in furtherance of the intent of the foregoing.
16. AMENDMENT AND DISCONTINUATION OF THE PLAN. Either the Board or the
Committee may from time to time amend the Plan or any Option; provided, however,
that, except to the extent provided in Section 10, no such amendment may,
without approval by the stockholders of the Company, (a) materially increase the
benefits accruing to participants under the Plan, (b) materially increase the
number of securities which may be issued under the Plan, or (c) materially
modify the requirements as to eligibility for participation in the Plan; and
provided further, that, except to the extent provided in Section 9, no amendment
or suspension of the Plan or any Option issued hereunder shall substantially
impair any Option previously granted to any Optionee without the consent of such
Optionee.
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17. EFFECTIVE DATE AND TERMINATION DATE. The effective date of the Plan
is the date on which the Board adopts this Plan, and the Plan shall terminate on
the 10th anniversary of the effective date.
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