EXHIBIT 4.2
EXHIBIT 4.2
THE WAYNE SAVINGS AND LOAN COMPANY
1993 STOCK OPTION PLAN FOR OUTSIDE DIRECTORS
1. PURPOSE
The purpose of The Wayne Savings and Loan Company 1993 Stock Option Plan
for Outside Directors (the "Directors' Option Plan") is to promote the growth
and profitability of Wayne Savings and Loan Company (the "Association"), and to
provide outside directors of the Association with an incentive to achieve long-
term objectives of the Association, attract and retain non-employee directors of
outstanding competence and to provide such outside directors with an opportunity
to acquire an equity interest in the Association.
2. ADMINISTRATION
(a) The Directors' Option Plan shall be administered by a committee (the
"Committee") of the Board of Directors of the Association. The Committee is
authorized, subject to the provisions of the Plan, to establish such rules and
regulations as it deems necessary for the proper administration of the
Directors' Option Plan and to make whatever determinations and interpretations
in connection with the Directors' Option Plan it deems necessary or advisable.
All determinations and interpretations made by the Committee shall be binding
and conclusive on all participants in the Directors' Option Plan, and on their
legal representatives and beneficiaries.
(b) The Directors' Option Plan is intended to comply with Rule 16b-3 under
the Securities Exchange Act of 1934. Notwithstanding any term to the contrary
appearing herein, unless permitted by Rule 16b-3(c)(2)(ii), subsequent to the
establishment of the Directors' Option Plan neither the Committee nor the Board
of Directors shall have the authority to determine the amount and price of
securities to be awarded and/or timing of awards to designated directors or
categories of directors, which terms shall be set forth herein. To the extent
any provisions of the Plan or action by Plan administrators fails to comply with
this subsection 2(b), such provision or action shall be deemed null and void to
the extent permitted by law and deemed advisable by the Board of Directors.
3. GRANT OF OPTIONS
(a) Initial Grant. Each outside director (for purposes of this Directors'
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Option Plan, the term "Outside Director" shall mean a member of the Board of
Directors of the Association not also serving as an employee of the Association)
who is serving in such capacity on the date of the Association's initial public
offering and at the effective date of this Directors' Option Plan, shall be
granted a single non-qualified stock option to purchase shares of the Common
Stock of the
Association ("Common Stock") subject to adjustment pursuant to Section 5 in the
following amounts: options to purchase 3,133 shares will be granted to each
outside director with more than 15 years of service; options to purchase 2,733
shares will be granted to each outside director with 5 to 15 years of service;
options to purchase 2,668 shares will be granted to outside directors with less
than 5 years of service; and options to purchase an additional 467 shares will
be granted to the Chairman of the Board. The purchase price per share of the
Common Stock deliverable upon the exercise of each non-qualified stock option
shall be the initial public offering price of the Common Stock of the
Association in connection with the reorganization of Wayne Savings and Loan
Company as a mutual holding company to be named Wayne Savings Bankshares, MHC
(the "Company") and the establishment of the Association as its majority-owned
subsidiary (the "Reorganization").
(b) Subsequent Grants. Each person who becomes an Outside Director
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following the closing of the Association's initial public offering shall be
granted a single non-qualified stock option to purchase 100 shares of Common
Stock, subject to adjustment pursuant to Section 5, to the extent shares remain
available under the Directors' Option Plan.
(c) Fair Market Value. For purposes of the Directors' Option Plan, when
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used in connection with Common Stock on a certain date, "Fair Market Value"
means the reported closing price of the Common Stock as reported by the National
Association of Securities Dealers Automated Quotation ("NASDAQ") System (as
published by the Wall Street Journal, if published) on the day prior to 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; provided, however, that if the
Common Stock is not reported on the NASDAQ System, Fair Market Value shall mean
the average sale price of all shares of Common Stock sold during the 30-day
period immediately preceding the date on which such stock option was granted,
and if no shares of stock have been sold within such 30-day period, the average
sale price of the last three sales of Common Stock sold during the 90-day period
immediately preceding the date on which such stock option was granted. In the
event Fair Market Value cannot be determined in the manner described above, then
Fair Market Value shall be determined by the Committee. The Committee shall be
authorized to obtain an independent appraisal to determine the Fair Market Value
of the Common Stock. For purposes of the grant of options in the
Reorganization, Fair Market Value shall mean the initial public offering price
of the Common Stock.
4. TERMS AND CONDITIONS
(a) Option Agreement. Each option shall be evidenced by a written option
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agreement between the Association and the outside director specifying the number
of shares of Common Stock that may be acquired through its exercise and
containing such other terms and conditions that are not inconsistent with the
terms of this grant.
(b) Termination of Option. Each option shall expire upon the earlier of
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(i) one hundred and twenty (120) months following the date of grant, or (ii) one
(1) year following the date on
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which the outside director ceases to serve in such capacity for any reason other
than Cause. "Cause" is defined as personal dishonesty, willful misconduct, any
breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties, or the willful violation of any law, rule or regulation
(other than traffic violations or similar offenses) that results in a material
loss to the Association or an affiliate of the Association, or a final cease-
and-desist order. If the Outside Director dies before fully exercising any
portion of an option then exercisable, such option may be exercised by such
Outside Director's personal representative(s), heir(s) or devisee(s) at any time
within the one (1) year period following his or her death; provided, however,
that in no event shall the option be exercisable more than one hundred and
twenty (120) months after the date of its grant. If the Outside Director is
terminated for Cause all options awarded to him or her shall expire upon such
termination.
(c) Manner of Exercise. The option may be exercised from time to time, in
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whole or in part, by delivering a written notice of exercise to the Chief
Executive Officer of the Association. Such notice is irrevocable and must be
accompanied by full payment of the purchase price in cash or shares of
previously acquired Common Stock of the Association at the Fair Market Value of
such shares determined on the exercise date by the manner described in Section
3(b) hereof. If previously acquired shares of Common Stock are tendered in
payment of all or part of the exercise price, the value of such shares shall be
determined as of the date of such exercise.
(d) Surrender Option. In the event of an Outside Director's termination of
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employment as a result of death, Disability or retirement, the Outside Director
(or his or her personal representative(s), heir(s), or devisee(s)) may, in a
form acceptable to the Committee, make application to surrender all or part of
options held by such Outside Director in exchange for a cash payment from the
Association of an amount equal to the difference between the Fair Market Value
of the Common Stock on the date of termination of employment and the exercise
price per share of the option on the Date of Grant. Whether the Association
accepts such application or determines to make payment, in whole or part, is
within its absolute and sole discretion, it being expressly understood that the
Association is under no obligation to any Outside Director whatsoever to make
such payments. In the event that the Association accepts such application and
determines to make payment, such payment shall be in lieu of the exercise of the
underlying option and such option shall cease to be exercisable. As used
herein, "Disability" shall mean the permanent and total inability by reason of
mental or physical infirmity, or both, of an Outside Director to perform the
duties customarily performed by him or her. Additionally, a medical doctor
selected or approved by the Board of Directors of the Association must determine
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 such
Outside Director's lifetime.
(e) Transferability. Each option granted hereby may be exercised only by
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the Outside Director to whom it is issued or in the event of the Outside
Director's death, his or her personal representative(s), heir(s) or devisee(s)
pursuant to the terms of Section 4(b) hereof.
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(f) Limitations Upon Exercise of Options. Notwithstanding any other
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provision of this Director's Option Plan, so long as the Company remains in the
mutual form of organization, an option granted under this Plan may not be
exercised if the exercise of such an option would result in the Company owning
less than a majority of the Common Stock of the Association. Nothing herein
shall preclude the Association from issuing additional authorized but unissued
shares of Common Stock to the Company to allow for the exercise of options which
would otherwise have resulted in the Company owning less than a majority of the
Common Stock of the Association.
5. COMMON STOCK SUBJECT TO THE PLAN
The shares that shall be issued and delivered upon exercise of options
granted under the Directors' Option Plan may be either authorized and unissued
shares of Common Stock or authorized and issued shares of Common Stock held by
the Association as treasury stock. The number of shares of Common Stock
reserved for issuance under the Directors' Option Plan shall not exceed 3% of
the Common Stock of the Association, issued in connection with the
Reorganization, subject to adjustments pursuant to this Section 5. Any shares
of Common Stock subject to an option that for any reason either terminates
unexercised or expires, shall again be available for issuance under the
Directors' Option Plan.
In the event of any change or changes in the outstanding Common Stock of
the Association by reason of any stock dividend or split, recapitalization,
reorganization, merger, consolidation, split-off, combination or any similar
corporate change, or other increase or decrease in such shares effected without
receipt or payment of consideration by the Association, the number of shares of
Common Stock that may be issued under this Directors' Option Plan, the number of
shares of Common Stock subject to options granted under the Directors' Option
Plan, and the option price of such options, shall be automatically adjusted to
prevent dilution or enlargement of the rights granted to an Outside Director
under the Directors' Option Plan.
6. TREATMENT OF OPTIONS IN THE EVENT OF A CONVERSION TRANSACTION
In the event that the Company converts (a "Conversion Transaction") from
the mutual to stock form of organization ("Stock Holding Company") either on a
stand-alone basis or in the context of a merger conversion, any options
outstanding shall, at the option of the holder, (i) be convertible into options
for Common Stock of the Stock Holding Company, or (ii) be exercised by the
holder prior to the effective date of the Conversion Transaction and the holder
shall be entitled to exchange, in the same manner as other minority stockholders
of the Association, the shares of Common Stock of the Stock Holding Company.
Provided, however, that if for any reason such options are not to be converted
or such shares are not exchanged, the holders of options under this plan shall
receive cash payment for the shares of stock represented by the options in an
amount equal to the initial offering price of the Common Stock of the Stock
Holding Company at the closing of the Conversion Transaction, less the original
exercise price of such options and, with respect to options that have been
exercised, the Stock Holding Company shall redeem such shares for cash in the
same manner as such redemption would occur for other
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minority stockholders of the Association. Any exchange, conversion of options,
or cash payment for shares shall be subject to applicable federal and state
regulations and, if necessary, subject to the approval of the appropriate
Regulatory Authorities.
7. EFFECTIVE DATE OF THE PLAN; SHAREHOLDER RATIFICATION
The Directors' Option Plan has been adopted by the Board of Directors of
the Association and shall become effective upon the Reorganization. Following
the Reorganization, the Directors' Option Plan shall be presented to
shareholders of the Association for ratification for purposes of (i) obtaining
favorable treatment under Section 16(b) of the Securities Exchange Act of 1934;
(ii) maintaining listing on the NASDAQ System; and (iii) enabling the issuance
by the Association of the underlying shares to qualify for exemption from OTS
offering circular requirements. Failure to obtain shareholder ratification will
not affect the validity of the Directors' Option Plan and the options granted
thereunder.
8. TERMINATION OF THE PLAN
The right to grant options under the Directors' Option Plan will terminate
upon the earlier of ten years after the Effective Date or the issuance of the
Common Stock or exercise of options equal to the maximum number of shares of
Common Stock reserved for issuance under the Directors' Option Plan. A majority
of the shareholders of the Association represented in person or proxy at a
meeting of the shareholders may terminate the Directors' Option Plan; provided,
however, no such termination shall, without the consent of the affected
individual, affect such individual's rights under a previously granted option.
9. COMPLIANCE WITH RULE 16B-3 UNDER THE SECURITIES EXCHANGE ACT OF 1934.
(a) Notwithstanding any contrary provisions herein, unless permitted by
Rule 16b-3(c)(2)(ii)(B) terms stating the amount and price of securities to be
awarded and/or timing of awards to designated directors or categories of
directors shall not be amended more than once every six months other than to
comport with changes in the Internal Revenue Code, the Employee Retirement
Income Security Act, or rules thereunder.
(b) Transactions under this Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the 1934 Act, and the Plan is
intended to be administered in the manner specified in Rule 16b-3(c)(2)(ii). To
the extent any provision of this Plan or actions by the plan administrators
fails to so comply, it shall be deemed null and void to the extent permitted by
law and deemed advisable by the plan administrators.
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10. APPLICABLE LAW
The Plan will be administered in accordance with the laws of the State of
Ohio.
Adopted June 23, 1993
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