Exhibit 10.1
Poughkeepsie Savings Bank, FSB
1985 Stock Option Plan, as amended
POUGHKEEPSIE SAVINGS BANK, F.S.B.
1985 STOCK OPTION PLAN
Effective October 9, 1985
1. PURPOSE:
This Stock Option Plan (the "Plan") is intended as an employment incentive and
to encourage capital accumulation and stock ownership by certain key employees
and directors of Poughkeepsie Savings Bank, F.S.B. (the "Bank") and of its
Subsidiaries (as hereinafter defined) in order to increase their proprietary
interest in the Bank's success.
2. ADMINISTRATION:
The Plan shall be administered by the Board of Directors (the "Board"). The
Board may establish a Stock Option Committee (the "Committee") which may make
recommendations and provide such other services to the Board as the Board shall
designate, and may, as directed by the Board, carry out the Board's decisions
with respect to the Plan, but shall not independently implement any decision
with respect to the Plan or the administration thereof. The Committee shall
consist of not less than three members of the Board of Directors (the "Board")
who are not officers or employees of the Bank or of a Subsidiary of the Bank,
and who are not, and were not within one year prior to their appointment or
election to the Committee, eligible to participate in the Plan or any other
stock plan of the Bank or of one of its Subsidiaries. No member of the
Committee shall be entitled to participate in the Plan. An award of
nondiscretionary options to a director under Paragraph 8 hereof shall be deemed
not to constitute participation in the Plan.
Each interpretation and construction by the Board of any provisions of the Plan,
or any stock option agreements entered into under it, shall be final and
conclusive. No member of the Board shall be liable for any action or
determination made in good faith, and the members shall be entitled to
indemnification and reimbursement in the manner provided in the Bank's Federal
Stock Charter, and under any directors' and officers' liability insurance
coverage which may be in affect from time to time.
3. ELIGIBILITY:
The individuals who shall be eligible to participate in the Plan shall be such
key employees of the Bank or of a Subsidiary (as
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herein defined) as may from time to time be designated by the Board
(including officers and directors who are employees), except as provided in
Paragraph 8 below with respect to nondiscretionary options. For purposes of
the Plan, a "Subsidiary" means any corporation (other than the Bank) in an
unbroken chain of corporations beginning with the Bank if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
4. AWARD OF OPTIONS:
Options shall be granted under the Plan at such times and for such number of
shares as the Board of Directors shall designate. Options granted under the
Plan may be (i) options which are intended to qualify under particular
provisions of the Internal Revenue Code ("Code"), as in effect from time to
time, (ii) options which are not intended so to qualify under the Code, or (iii)
a combination of the foregoing.
The aggregate fair market value (determined as of the time any option under the
Plan is granted) of the shares for which any optionee may be granted options
designated in the option agreement as "incentive stock options" under the Plan
and any other stock option plans of the Bank or any subsidiary or parent
corporation shall not exceed in the aggregate $100,000 plus any "unused limit
carryover" to such year as provided in Section 422A of the Internal Revenue
Code.
5. AWARD OF STOCK APPRECIATION RIGHTS AND OTHER CASH PAYMENTS:
The Board at any time and from time to time may authorize the granting of stock
appreciation rights to an optionee who has been granted options under the Plan.
Each stock appreciation right shall relate to a specific option granted under
the Plan and may be granted concurrently with the option to which it relates or
at any time prior to the exercise, termination or expiration of such option.
The term "stock appreciation right" shall mean the to receive from the Bank,
upon surrender of the option or portion thereof but without payment to the Bank,
a cash amount equal to the fair market value on the exercise date of the total
number of ordinary Shares, or the value (based on Book Value Per Share) on the
exercise date of the total number of Book Value Shares, as the case may be, for
which the stock appreciation right is exercised, less the exercise price which
the optionee would have otherwise been required to pay upon purchase of the
relevant shares. The amount payable by the Bank upon exercise of a stock
appreciation right may be paid in cash, in Ordinary Shares, in Book Value
Shares, or in any combination thereof, as the Board shall determine (regardless
of whether the right is exercised solely with respect to appreciation in
ordinary Shares or in Book Value Shares). No fractional shares shall be issued
under this section and the
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optionee shall instead be entitled to receive a cash adjustment equal to the
same fraction of the fair market value per share (in the case of Ordinary
Shares) or the Book Value Per Stare (in the case of Book Value Shares) as of
the exercise date or the most recent Fiscal Quarter Date, as the case may be.
In addition, the Board may impose in advance of the date of grant a total
prohibition on the exercise of such rights for such period or periods as it,
in its sole discretion, deems to be in the best interest of the Bank. The
shares involved in an option as to which a stock appreciation right is
related shall be used not more than once to calculate the amounts to be
received pursuant to an exercise of such right. The right of an optionee to
exercise an option shall be canceled if and to the extent that shares covered
by such option are used to . calculate amounts received upon exercise of a
related stock appreciation right.
The Board may also at any time and from time to time authorize a cash payment in
connection with the grant or vesting under the Plan of an option which does not
qualify as an incentive stock option under Section 422A of the Code for the
purpose of partially or fully compensating the optionee for any federal and
state income tax incurred in connection with such grant or vesting.
6. STOCK:
The stock subject to the options, stock appreciation rights, and other
provisions of the Plan shall be shares of the Bank's authorized but unissued
Common Stock and shares of Common Stock held as treasury stock. As used in this
Plan, the term "Common Stock" shall mean such shares, which may be either
ordinary Shares or Book Value Shares (as such terms are defined hereinafter).
Subject to adjustment in accordance with the provisions of Paragraph 7(g)
hereof, the total number of shares of Common Stock of the Bank on which options
or stock appreciation rights may be granted under the Plan shall not exceed the
following:
(a) a number of ordinary Shares that equals 10% of the number of shares of
Common Stock issued by the Bank in connection with its conversion to stock form,
or
(b) a number of Book Value Shares that equals 10% of the number of shares of
Common Stock issued by the Bank in connection with its conversion to stock form.
The grant of an option or stock appreciation right relating to ordinary Shares
will reduce proportionately the amount of Book Value Shares, if any, available
for grant under the Plan, and vice versa.
In the event that any outstanding option or stock appreciation right under the
Plan for any reason expires or is terminated prior
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to the end of the period during which options or stock appreciation rights may
be granted, the shares of Common Stock allocable to the unexercised portion of
such option or stock appreciation right may again be subjected to options or
stock appreciation rights under the Plan.
For purposes of calculating the proportionate number of Book Value Shares which
may be subject to a particular option or right granted hereunder, such
proportionate number of Book Value Shares shall be determined on the date the
said option is granted.
For purposes of this Plan and the stock option agreements described hereunder,
the terms "Ordinary Shares" and "Book Value Shares" shall have the following
meanings: "Ordinary Shares" means shares of the Bank's Common Stock for which
there is a generally recognized trading market and which are freely
transferable. The term "Book Value Shares" means shares of the Bank's Common
Stock which shall be authorized for issuance and which shall have the same
voting, dividend and liquidation rights as ordinary Shares, except that they
shall not be transferable except to the Bank and except that they shall be
subject to the repurchase provisions set forth in the stock option agreement.
7. TERMS AND CONDITIONS OF STOCK OPTION AGREEMENTS:
Stock options and stock appreciation rights granted pursuant to the Plan shall
be evidenced by agreements in such form as the Board shall, from time to time,
approve. Stock appreciation rights shall be evidenced by an agreement
supplementing the stock option agreement to which such rights relate. Such
agreements shall comply with and be subject to the following terms and
conditions:
(a) Medium of Payment:
Upon exercise of the option, the option price shall be payable in the sole
discretion of the Board (i) in cash or by certified check, bank draft or money
order payable to the order of the Bank, (ii) by the transfer to the Bank of
Ordinary Shares or Book Value Shares of Common Stock having a value at the time
of exercise of the option equal to the total option price of the shares which re
the subject of such exercise, (iii) by the delivery of a property executed
exercise notice together with irrevocable instructions to a broker to promptly
deliver to the Bank the amount of sale or loan proceeds to pay the exercise
price and, if applicable, any federal, state or local taxes required to be
collected or withheld by the Bank in connection with the exercise of the option,
or (iv) by a combination of such methods of payment."
(b) Number and Kind of Shares:
The agreement shall state the total number of shares and the type of shares to
which it pertains. The agreement shall provide that Book Value Shares shall be
subject to repurchase by the Bank as described in such agreement, and that such
shares shall not be assignable or transferable.
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(c) Option Price:
The option price for Ordinary Shares shall be not less than the fair market
value of such shares on the date such option is granted, as determined by the
Board.
The option price for any Book Value Share shall be not less than the greater
of: (i) fair market value, as determined under paragraph 6, of an Ordinary
Share on the date of the granting of the option, or (ii) the "Book Value Per
Share" on the "Fiscal Quarter Date" coincident with or immediately preceding
the date of the granting of the option. The term "Book Value Per Share" as
of any given date means the common shareholders' equity, as stated in the
consolidated financial statements of the Bank as of the Fiscal Quarter Date
coincident with or immediately preceding such given date, divided by the
number of shares of the Bank's Common Stock outstanding as of such Fiscal
Quarter Date (which calculation shall be made before giving effect to the
sale or repurchase of Book Value Shares on such Fiscal Quarter Date);
provided, however, that the Book Value Per Share, for the purpose of
calculating the repurchase price per share only, may be adjusted to such an
extent as may be determined by the Board as necessary to preserve the benefit
of the arrangement for the participants and the Bank, if in the opinion of
the Board, after consultation with the Bank's independent accountants,
changes in the Bank's accounting policies, acquisitions or other unusual or
extraordinary items have disproportionately and materially affected the
number of shares of the Bank's Common Stock outstanding or the Bank's common
shareholders' equity. The term "Fiscal Quarter Date" means March 31, June
30, September 30 or December 31 of any year or such other dates as the Bank
may, from time to time, elect as the end dates of the fiscal quarters of the
Bank.
(d) Term of Options and Stock Appreciation Rights:
The Board, in its discretion, shall provide a maximum term from the date an
option is granted for expiration of such option and related stock
appreciation right granted under the Plan, provided that a stock appreciation
right shall not be exercisable prior to or later than the time the related
option could be exercised. Such maximum term shall not exceed ten years.
The Board in its discretion may specify events upon the occurrence of which
an option and related stock appreciation right shall terminate prior to
expiration of such maximum term.
(e) Date of Exercise; Vesting:
The Board may, in its discretion, provide that an option or stock
appreciation right is not vested or is not otherwise exercisable in whole or
in part during any period or periods of time specified on or before the date
of grant by the Board. Except as may be so provided, any option or stock
appreciation right may be exercised
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in whole at any time or in part from time to time during its term.
(f) Acceleration:
In the case of an option or stock appreciation right not immediately exercisable
in full, the Board may in its discretion accelerate the time at which an option
or stock appreciation right granted hereunder may be exercised or provide for
such acceleration upon the occurrence of specified events.
(g) Adjustments:
The Board may make or provide for such adjustments in the option price and in
the number or kind of shares of Common Stock or other securities covered by
outstanding options or stock appreciation rights as the Board in its sole
discretion, exercised in good faith, may determine is equitably required to
prevent dilution or enlargement of the rights of optionees that would otherwise
result from (a) any stock dividend, stock split, combination of shares, issuance
of rights or warrants to purchase stock, recapitalization or other change in the
capital structure of the Bank or (b) any merger, consolidation, separation,
reorganization or partial or complete liquidation, or (c) any other corporate
transaction or event having an effect similar to any of the foregoing. The
Board may also make or provide for such adjustments in the number or kind of
shares of said Common Stock or other securities which may be sold under the Plan
as the Board in its sole discretion, exercised in good faith, may determine is
appropriate to reflect any event of the type described in clause (a) of the
preceding sentence.
(h) Assignability:
No option or related stock appreciation right shall be assignable or
transferable except by will or by the laws of descent and distribution. During
the lifetime of an optionee, the option or related stock appreciation right
shall be exercisable only by such optionee.
(i) Rights as a Shareholder:
An optionee shall have no rights as a shareholder with respect to shares covered
by the optionee's option or stock appreciation right until the date of the
issuance of the shares to the optionee and only after such shares are fully
paid. No adjustment will be made for dividends or other rights for which the
record date is prior to the date of such issuance.
(j) Other Provisions:
The stock option agreements authorized under this Plan may contain such other
provisions not contrary to the Plan as the Board shall deem advisable. In the
case of options designated under the option
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agreement as "Incentive Stock Options", the agreement shall in all respects
conform to the requirements of Section 422A of the Internal Revenue Code (or
successor provision) as in effect at the time of execution of such agreement.
8. NONDISCRETIONARY OPTIONS TO CERTAIN DIRECTORS:
There are hereby granted to each person who is, as of the effective date of
conversion of the Bank from mutual to stock form, a director but not an
employee of the Bank, options in the alternative to acquire 5,000 ordinary
Shares of the Bank at the fair market value of such Ordinary Shares as of
such effective date or to acquire 5,000 Book Value Shares of the Bank at the
greater of (i) the fair market value of an Ordinary Share as of such
effective date, or (ii) the Book Value Per Share on the Fiscal Quarter Date
coincident with or immediately preceding such effective date, together with
stock appreciation rights relating thereto, exercisable for a term of ten
years from such date. Each non-employee who, subsequent to such effective
date, shall first become a director of the Bank shall, as of the date of
assuming office, be granted options in the alternative to acquire 5,000
ordinary Shares of the Bank at the fair market value of such Ordinary Shares
as of the date of such assumption of office or to acquire 5,000 Book Value
Shares of the Bank at the greater of (i) the fair market value of an Ordinary
Share as of the date of such assumption of office, or (ii) the Book Value Per
Share on the Fiscal Quarter Date coincident with or immediately preceding the
date of such assumption of office, together with stock appreciation rights
relating thereto, exercisable for a term of ten years from the date of such
assumption. All options granted under this paragraph shall be in the form
of, and subject to the terms and conditions of, the form of agreement
appended hereto as Exhibit 4, notwithstanding any other provision hereof and
all stock appreciation rights shall be in the form of, and subject to the
terms and conditions of, the form of notice appended hereto as Exhibit 6,
notwithstanding any other provision hereof.
9. CANCELLATION AND REGRANT OF OPTIONS:
The Board may, with the concurrence of the affected optionee, cancel any option
granted under the Plan other than pursuant to Paragraph 8. In the event of such
cancellation, the Board may authorize the granting of new options (which may or
may not cover the same number of shares which had been the subject of any prior
option) in such manner, at such option price, and subject to the same terms,
conditions, and discretions as, under the Plan, would have been applicable had
the canceled options not been granted.
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10. AMENDMENTS:
The Board may from time to time alter, amend, suspend, or discontinue the
Plan or alter or amend any and all option agreements granted thereunder other
than pursuant to Paragraph 8; provided, however, that no such action of the
Board may, without the approval of the shareholders, alter the provisions of
the Plan so as to (a) increase the maximum number of shares as to which
options or stock appreciation rights may be granted under this Plan, (b)
change the class of employees eligible to receive options or stock
appreciation rights under this Plan, (c) decrease the minimum option price,
(d) extend beyond ten years the maximum terms of options or related stock
appreciation rights or (e) materially increase benefits to optionees in a
manner so as to render inapplicable to the Plan the exemptions provided by
Rule 16b-3 of the Securities and Exchange Commission or any successor rule to
the same effect.
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