MSB FINANCIAL CORP.
2008 STOCK COMPENSATION AND INCENTIVE PLAN
1. PURPOSE OF PLAN.
The purpose of this 2008 Stock Compensation and Incentive Plan is to
provide incentives and rewards to officers, employees and directors that
contribute to the success and growth of MSB Financial Corp., and its Affiliates,
and to assist these entities in attracting and retaining directors, officers and
other key employees with necessary experience and ability required to aid the
Company in increasing the long-term value of the Company for the benefit of its
shareholders.
2. DEFINITIONS.
"Affiliate" means any "parent corporation" or "subsidiary corporation"
of the Company, as such terms are defined in Sections 424(e) and 424(f) of the
Code. The term Affiliate shall include the Bank..
"Award" means Restricted Stock Awards and/or Stock Options, as set
forth in Section 6 of the Plan.
"Bank" means Millington Savings Bank, and any successors thereto.
"Beneficiary" means the person or persons designated by the Participant
to receive any benefits payable under the Plan in the event of such
Participant's death. Such person or persons shall be designated in writing by
the Participant and addressed to the Company or the Committee on forms provided
for this purpose by the Committee, and delivered to the Company or the
Committee. Such Beneficiary designation may be changed from time to time by
similar written notice to the Committee. A Participant's last will and testament
or any codicil thereto shall not constitute written designation of a
Beneficiary. In the absence of such written designation, the Beneficiary shall
be the Participant's surviving spouse, if any, or if none, the Participant's
estate.
"Board of Directors" means the board of directors of the Company.
"Cause" means the personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profits, intentional
failure to perform stated duties, willful violation of a material provision of
any law, rule or regulation (other than traffic violations and similar offense),
or a material violation of a final cease-and-desist order or any other action
which results in a substantial financial loss to the Company or its Affiliates.
"Change in Control" shall mean: (i) the sale of all, or a material
portion, of the assets of the Company or its Affiliates; (ii) the merger or
recapitalization of the Company whereby the Company is not the surviving entity;
(iii) a change in control of the Company, as otherwise defined or determined by
the Office of Thrift Supervision or regulations promulgated by it; or (iv) the
acquisition, directly or indirectly, of the beneficial ownership (within the
meaning of that term as it is used in Section 13(d) of the Exchange Act and the
rules and regulations promulgated thereunder) of twenty-five percent (25%) or
more of the outstanding voting securities of the Company by any person, trust,
entity or group. This limitation shall not apply to the purchase of shares by
underwriters in connection with a public offering of Company stock, or
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the purchase of shares of up to 25% of any class of securities of the Company by
a tax-qualified employee stock benefit plan which is exempt from the approval
requirements, set forth under 12 C.F.R. Section 574.3(c)(1)(vii) as now in
effect or as may hereafter be amended. The term "person" refers to an individual
or a corporation, partnership, trust, association, joint venture, pool,
syndicate, sole proprietorship, unincorporated organization or any other form of
entity not specifically listed herein. A Change in Control shall not include a
transaction whereby the MHC shall merge into the Company or the Bank and a new
Parent of the Company or the Bank is formed.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the Board of Directors of the Company or the
administrative committee designated, pursuant to Section 3 of the Plan, to
administer the Plan.
"Common Stock" or "Shares" means shares of common stock of the Company.
"Company" means MSB Financial Corp., and any successor entity or any
future parent corporation of the Bank.
"Director" means a person serving as a member of the Board of Directors
of the Company from time to time.
"Director Emeritus" means a person serving as a director emeritus,
advisory director, consulting director or other similar position as may be
appointed by the Board of Directors of the Company or the Bank from time to
time.
"Disability" means (a) with respect to Incentive Stock Options, the
"permanent and total disability" of the Employee as such term is defined at
Section 22(e)(3) of the Code; and (b) with respect to other Awards, a condition
of incapacity of a Participant which renders that person unable to engage in the
performance of his or her duties by reason of any medically determinable
physical or mental impairment which can be expected to result in death or which
has lasted or can be expected to last for a continuous period of not less than
twelve (12) months.
"Effective Date" shall mean the date of stockholder approval of the
Plan by the stockholders of the Company.
"Eligible Participant" means an Employee or Outside Director who may
receive an Award under the Plan.
"Employee" means any person employed by the Company or an Affiliate.
Directors who are also employed by the Company or an Affiliate shall be
considered Employees under the Plan.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exercise Price" means the price at which an individual may purchase a
share of Common Stock pursuant to an Option.
"Fair Market Value" means a) for a security traded on a national
securities exchange, including the Nasdaq Global market, the last reported sales
price reported on such date or, if the Common Stock was not
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traded on such date, on the immediately preceding day on which the Common Stock
was traded thereon or the last previous date on which a sale is reported; b) if
the Shares are not traded on a national securities exchange, but are traded on
the over-the-counter market, if sales prices are not regularly reported for the
Shares for the trading day referred to in clause (a), and if bid and asked
prices for the Shares are regularly reported, the mean between the bid and the
asked price for the Shares at the close of trading in the over-the-counter
market on the applicable date, or if the applicable date is not a trading day,
on the trading day immediately preceding the applicable date; and (c) in the
absence of such markets for the Shares, the Fair Market Value shall be
determined in good faith by the Committee.
"Incentive Stock Option" means a Stock Option granted under the Plan,
that is intended to meet the requirements of Section 422 of the Code.
"MHC" means MSB Financial, MHC, the mutual holding company of the Bank.
"Non-Statutory Stock Option" means a Stock Option granted to an
individual under the Plan that is not intended to be and is not identified as an
Incentive Stock Option, or an Option granted under the Plan that is intended to
be and is identified as an Incentive Stock Option, but that does not meet the
requirements of Section 422 of the Code.
"Option" or "Stock Option" means an Incentive Stock Option or a
Non-Statutory Stock Option, as applicable.
"Outside Director" means a member of the Board of Directors of the
Company who is not also an Employee.
"Parent" means any present or future corporation which would be a
"parent corporation" of the Bank or the Company as defined in Sections 424(e)
and (g) of the Code.
"Participant" means an individual who is granted an Award pursuant to
the terms of the Plan; provide, however, upon the death of a Participant, the
term "Participant" shall also refer to a Beneficiary designated in accordance
with the Plan.
"Plan" means this MSB Financial Corp. 2008 Stock Compensation and
Incentive Plan.
"Restricted Stock Award" means an Award of shares of restricted stock
granted to a Participant pursuant to Section 6.1(b) of the Plan.
"Trust" shall mean any grantor trust established by the Company for
purposes of administration of the Plan.
"Trustee" or "Trustee Committee" means that person(s) or entity
appointed by the Committee to hold legal title to the Plan assets under any
Trust for the purposes set forth herein.
3. ADMINISTRATION.
(a) Committee. The Committee shall administer the Plan. The Committee
shall consist of two or more disinterested directors of the
Company, who shall be appointed by the Board of Directors. A
member of the Board of Directors shall be deemed to be
disinterested only if
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he or she satisfies: (i) such requirements as the Securities and
Exchange Commission may establish for non-employee directors
administering plans intended to qualify for exemption under Rule
16b-3 (or its successor) of the Exchange Act and (ii) and to the
extent deemed appropriate by the Board of Directors, such
requirements as the Internal Revenue Service may establish for
outside directors acting under plans intended to qualify for
exemption under Section 162(m)(4)(C) of the Code; provided,
however, a failure to comply with the requirements of
subparagraphs (i) and (ii) shall not disqualify any actions taken
by the Committee. A majority of the entire Committee shall
constitute a quorum and the action of a majority of the members
present at any meeting at which a quorum is present shall be
deemed the action of the Committee. In no event may the Committee
revoke outstanding Awards without the consent of the Participant.
All decisions, determinations and interpretations of the
Committee shall be final and conclusive on all persons affected
thereby.
(b) Authority of Committee. Subject to paragraph (a) of this Section
3, the Committee shall:
(i) select the individuals who are to receive grants of Awards
under the Plan;
(ii) determine the type, number, vesting requirements,
acceleration of vesting and other features and conditions of
Awards made under the Plan;
(iii) interpret the Plan and Award Agreements (as defined below);
and
(iv) make all other decisions and determinations that may be
required or as the Committee deems necessary or advisable
related to the operation of the Plan.
(c) Awards. Each Award granted under the Plan shall be evidenced by a
written agreement (i.e., an "Award Agreement"). Each Award
Agreement shall constitute a binding contract between the Company
or an Affiliate and the Participant, and every Participant, upon
acceptance of an Award Agreement, shall be bound by the terms and
restrictions of the Plan and the Award Agreement. The terms of
each Award Agreement shall be set in accordance with the Plan,
but each Award Agreement may also include any additional
provisions and restrictions determined by the Committee. In
particular, and at a minimum, the Committee shall set forth in
each Award Agreement:
(i) the type of Award granted;
(ii) the Exercise Price for any Option;
(iii) the number of shares or rights subject to the Award;
(iv) the expiration date of the Award;
(v) the manner, time and rate (cumulative or otherwise) of
exercise or vesting of the Award; and
(vi) the restrictions, if any, placed on the Award, or upon
shares which may be issued upon the exercise or vesting of
the Award.
The Chairman of the Committee and/or the President of the Company
are hereby authorized to execute Award Agreements on behalf of
the Company or an Affiliate and to cause them to be delivered to
the Participants granted Awards under the Plan.
(d) Six-Month Holding Period. Subject to vesting requirements,
if applicable, except in the event of death or Disability of
the Participant or a Change in Control of the Company, a
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minimum of six months must elapse between the date of the
grant of an Option and the date of the sale of the Common
Stock received through the exercise of such Option.
4. ELIGIBILITY.
Subject to the terms of the Plan, Employees and Outside Directors, as
the Committee shall determine from time to time, shall be eligible to receive
Awards in accordance with the Plan.
5. SHARES OF COMMON STOCK SUBJECT TO THE PLAN; SHARE LIMITS.
5.1 Shares Available. Subject to the provisions of Section 7, the
Common Stock that may be delivered under this Plan shall be shares of the
Company's authorized but unissued Common Stock, shares of Common Stock purchased
in the open-market by the Company or any Trust established for purposes of
administration of the Plan and any shares of Common Stock held as treasury
shares.
5.2 Share Limits. The maximum number of shares of Common Stock that may
be delivered pursuant to Awards granted under this Plan (the "Share Limit")
equals 385,574 shares. The following limits also apply with respect to Awards
granted under this Plan:
(a) The maximum number of shares of Common Stock that may be
delivered pursuant to the exercise of Stock Options granted
under this Plan is 275,410 shares.
(b) The maximum number of shares of Common Stock that may be
delivered pursuant to Restricted Stock Awards granted under
this Plan is 110,164 shares.
5.3 Awards Settled in Cash, Reissue of Awards and Shares. To the extent
that an Award is settled in cash or a form other than shares of Common Stock, or
if shares of Common Stock are withheld from an Award for tax purposes, then the
shares that would have been delivered had there been no such cash or other
settlement shall be counted against the shares available for issuance under this
Plan. Shares that are subject to or underlie Awards which expire or for any
reason are cancelled or terminated, are forfeited, fail to vest, or for any
other reason are not paid or delivered under this Plan shall again be available
for subsequent Awards under this Plan.
5.4 Reservation of Shares; No Fractional Shares; Minimum Issue. The
Company shall at all times reserve a number of shares of Common Stock sufficient
to cover the Company's obligations and contingent obligations to deliver shares
with respect to Awards then outstanding under this Plan. No fractional shares
shall be delivered under this Plan. The Committee may pay cash in lieu of any
fractional shares in settlements of Awards under this Plan. No fewer than 100
shares may be purchased on exercise of any Stock Option unless the total number
purchased or exercised is the total number at the time available for purchase or
exercise by the Participant.
6. AWARDS.
6.1 Except as otherwise detailed herein, the Committee shall determine
the type or types of Award(s) to be made to each Eligible Participant or Outside
Director. Awards may be granted singularly, in combination or in tandem. Awards
also may be made in combination or in tandem with, in replacement of, as
alternatives to, or as the payment form for grants or rights under any other
employee or compensation plan
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of the Company. The types of Awards that may be granted under this Plan are
Stock Options and Restricted Stock Awards, as follows:
(a) Stock Options.
The Committee may, subject to the limitations of this Plan and
the availability of shares of Common Stock reserved but not
previously awarded under the Plan, grant Stock Options to
Employees and Outside Directors, subject to terms and conditions
as it may determine, to the extent that such terms and conditions
are consistent with the following provisions:
(i) Exercise Price. The Exercise Price of Stock Options shall
not be less than one hundred percent (100%) of the Fair
Market Value of the Common Stock on the date of grant. The
Exercise Price of any Options awarded during calendar year
2008 or 2009 shall not be less than $10.00 per share,
subject to adjustment in accordance with Sections 8.1 and
8.3 herein.
(ii) Terms of Options. In no event may an individual exercise an
Option, in whole or in part, more than ten (10) years from
the date of grant.
(iii) Non-Transferability. Unless otherwise determined by the
Committee, an individual may not transfer, assign,
hypothecate, or dispose of an Option in any manner, other
than by will or the laws of intestate succession. The
Committee may, however, in its sole discretion, permit the
transfer or assignment of a Non-Statutory Stock Option, if
it determines that the transfer or assignment is for valid
estate planning purposes and is permitted under the Code and
Rule 16b-3 of the Exchange Act. For purposes of this Section
6.1(a), a transfer for valid estate planning purposes
includes, but is not limited to, transfers:
(1) to a revocable inter vivos trust, as to which an
individual is both settlor and trustee;
(2) for no consideration to: (a) any member of the
individual's Immediate Family; (b) a trust solely for
the benefit of members of the individual's Immediate
Family; (c) any partnership whose only partners are
members of the individual's Immediate Family; or (d)
any limited liability corporation or other corporate
entity whose only members or equity owners are members
of the individual's Immediate Family.
For purposes of this Section 6.1, "Immediate Family"
includes, but is not necessarily limited to, a
Participant's parents, grandparents, spouse, children,
grandchildren, siblings (including half brothers and
sisters), and individuals who are family members by
adoption. Nothing contained in this Section 6.1 shall
be construed to require the Committee to give its
approval to any transfer or assignment of any
Non-Statutory Stock Option or portion thereof, and
approval to transfer or assign any Non-Statutory Stock
Option or portion thereof does not mean that such
approval will be given with respect to any other
Non-Statutory Stock Option or portion thereof. The
transferee or assignee of any Non-Statutory Stock
Option shall be subject
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to all of the terms and conditions applicable to such
Non-Statutory Stock Option immediately prior to the
transfer or assignment and shall be subject to any
other conditions prescribed by the Committee with
respect to such Non-Statutory Stock Option.
(iv) Special Rules for Incentive Stock Options. Notwithstanding
the foregoing provisions, the following rules shall further
apply to grants of Incentive Stock Options:
(1) If an Employee owns or is treated as owning, for
purposes of Section 422 of the Code, Common Stock
representing more than ten percent (10%) of the total
combined voting securities of the Company at the time
the Committee grants the Incentive Stock Option (a "10%
Owner"), the Exercise Price shall not be less than one
hundred and ten percent (110%) of the Fair Market Value
of the Common Stock on the date of grant.
(2) An Incentive Stock Option granted to a 10% Owner shall
not be exercisable more than five (5) years from the
date of grant.
(3) To the extent the aggregate Fair Market Value of shares
of Common Stock with respect to which Incentive Stock
Options are exercisable for the first time by an
Employee during any calendar year, under the Plan or
any other stock option plan of the Company, exceeds
$100,000, or such higher value as may be permitted
under Section 422 of the Code, Incentive Stock Options
in excess of the $100,000 limit shall be treated as
Non-Statutory Stock Options. Fair Market Value shall be
determined as of the date of grant for each Incentive
Stock Option.
(4) Each Award Agreement for an Incentive Stock Option
shall require the individual to notify the Committee
within ten (10) days of any disposition of shares of
Common Stock under the circumstances described in
Section 421(b) of the Code (relating to certain
disqualifying dispositions).
(5) Incentive Stock Options may only be awarded to an
Employee of the Company or its Affiliates.
(v) Option Awards to Outside Directors. Subject to the
limitations of Section 6.4(a), the Committee may award
Non-Statutory Stock Options to purchase shares of Common
Stock to each Outside Director of the Company at an Exercise
Price equal to the Fair Market Value of the Common Stock on
such date of grant. The Options will be first exercisable at
the rate of 20% on the one year anniversary of the date of
grant of such Award and 20% annually thereafter during
periods of continuing service as a Director or Director
Emeritus. Upon the death or Disability of the Director or
Director Emeritus, such Option shall be deemed immediately
100% exercisable. Such Options shall continue to be
exercisable for a period of ten years following the date of
grant without regard to the continued services of such
Director as a Director or Director Emeritus. In the event of
the Director's death, such Options may be exercised by the
Beneficiary or the personal representative of his
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estate or person or persons to whom his rights under such
Option shall have passed by will or by the laws of descent
and distribution. Options may be granted to newly appointed
or elected Outside Directors within the sole discretion of
the Committee. The Exercise Price per share of such Options
granted shall be equal to the Fair Market Value of the
Common Stock at the time such Options are granted. All
outstanding Awards shall become immediately exercisable in
the event of a Change in Control of the Bank or the Company.
Unless otherwise inapplicable, or inconsistent with the
provisions of this paragraph, the Options to be granted to
Outside Directors hereunder shall be subject to all other
provisions of this Plan.
(b) Restricted Stock Awards.
The Committee may make grants of Restricted Stock Awards, which
shall consist of the grant of some number of shares of Common
Stock to an individual upon such terms and conditions as it may
determine, to the extent such terms and conditions are consistent
with the following provisions:
(i) Grants of Stock. Restricted Stock Awards may only be granted
in whole shares of Common Stock.
(ii) Non-Transferability. Except to the extent permitted by the
Code, the rules promulgated under Section 16(b) of the
Exchange Act or any successor statutes or rules:
(1) The recipient of a Restricted Stock Award grant shall
not sell, transfer, assign, pledge, or otherwise
encumber shares subject to the grant until full vesting
of such shares has occurred. For purposes of this
Section 6.1, the separation of beneficial ownership and
legal title through the use of any "swap" transaction
is deemed to be a prohibited encumbrance.
(2) Unless otherwise determined by the Committee, and
except in the event of the Participant's death or
pursuant to a qualified domestic relations order, a
Restricted Stock Award grant is not transferable and
may be earned only by the individual to whom it is
granted during his or her lifetime. Upon the death of a
Participant, a Restricted Stock Award shall be
transferred to the Beneficiary. The designation of a
Beneficiary shall not constitute a transfer.
(3) If the recipient of a Restricted Stock Award is subject
to the provisions of Section 16 of the Exchange Act,
shares of Common Stock subject to the grant may not,
without the written consent of the Committee (which
consent may be given in the Award Agreement), be sold
or otherwise disposed of within six (6) months
following the date of grant.
(iii) Issuance of Certificates. The Committee shall take
such action as is reasonably necessary for the prompt
issuance of shares of Common Stock to be issued
pursuant to a Restricted Stock Award prior to the time
that such Award shall be deemed earned and
non-forfeitable, with such stock certificate evidencing
such shares registered in the name of the Participant
to whom the Restricted Stock Award was
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granted; provided, however, that the Company may not
cause a stock certificate to be issued unless it has
received a stock power duly endorsed in blank with
respect to such shares. Further, each such stock
certificate shall bear the following legend:
THE TRANSFERABILITY OF THIS CERTIFICATE AND
THE SHARES OF STOCK REPRESENTED HEREBY ARE
SUBJECT TO THE RESTRICTIONS, TERMS AND
CONDITIONS (INCLUDING FORFEITURE PROVISIONS
AND RESTRICTIONS AGAINST TRANSFER) CONTAINED
IN THE MSB FINANCIAL CORP. 2008 STOCK
COMPENSATION AND INCENTIVE PLAN AND THE
RELATED AWARD AGREEMENT ENTERED INTO BETWEEN
THE REGISTERED OWNER OF SUCH SHARES AND THE
MSB FINANCIAL CORP. THE PLAN AND AWARD
AGREEMENT IS ON FILE IN THE OFFICE OF THE
CORPORATE SECRETARY OF MSB FINANCIAL CORP.
This legend shall not be removed until the individual
becomes vested in such Restricted Stock Award pursuant
to the terms of the Plan and respective Award
Agreement. Each certificate issued pursuant to this
Section 6.1(b) shall be held by the Company or its
Affiliates, unless the Committee determines otherwise.
(iv) Treatment of Dividends. Participants are entitled to
all dividends and other distributions declared and paid
on all shares of Common Stock subject to a Restricted
Stock Award from and after the date of grant of such
Restricted Stock Award. Such dividends and other
distributions shall be distributed to the holder of
such Restricted Stock Award within 30 days of the
payment date applicable to such distributions declared
and paid with respect to the Common Stock; provided
that in the event of the forfeiture of such Restricted
Stock Award, all future dividend rights shall cease.
(v) Voting Rights Associated with of Restricted Stock
Awards. Voting rights associated with any Restricted
Stock Award shall not be exercised by the Participant
until certificates of Common Stock representing such
Award have been issued to such Participant and the
Restricted Stock Award shall be deemed earned and
non-forfeitable. Any shares of Common Stock held by the
Trust prior to such time shall be voted by the Trustee
of such Trust as directed by the Committee; Any shares
of Common Stock held by Company prior to such time
shall be voted by the Committee in accordance with the
stock power held by the Company applicable to such
Awards.
(vi) Restricted Stock Awards to Outside Directors.
Notwithstanding anything herein to the contrary, the
Committee may grant a Restricted Stock Award consisting
of shares of Common Stock to each Outside Director of
the Company. Such Award shall be earned and
non-forfeitable at the rate of one-fifth as of the
one-year anniversary of such date of grant and an
additional one-fifth following each of the next four
successive years during
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such periods of service as a Director or Director
Emeritus. Such Award shall be immediately 100% earned
and non-forfeitable in the event of the death or
Disability of such Director. Such Award shall be
immediately 100% earned and non-forfeitable upon a
Change in Control of the Company or the Bank.
Restricted Stock Awards may be granted to newly elected
or appointed Outside Directors within the discretion of
the Committee, provided that total Restricted Stock
Awards granted to Outside Directors shall not exceed
the limitations set forth at Section 6.4(b) herein.
6.2 Award Payouts. Awards may be paid out in the form of cash, Common
Stock, or combinations thereof as the Committee shall determine in its sole
discretion, and with such restrictions as it may impose.
6.3 Consideration for Stock Options. The Exercise Price for any Stock
Option granted under this Plan may be paid by means of any lawful consideration
as determined by the Committee, including, without limitation, one or a
combination of the following methods:
(a) cash, check payable to the order of the Company, or
electronic funds transfer;
(b) the delivery of previously owned shares of Common
Stock; or
(c) subject to such procedures as the Committee may
adopt, pursuant to a "cashless exercise" with a third
party who provides financing for the purposes of (or
who otherwise facilitates) the purchase or exercise
of such Stock Option.
In no event shall any shares newly-issued by the Company be issued for less than
the minimum lawful consideration for such shares or for consideration other than
consideration permitted by applicable state law. In the event that the Committee
allows a Participant to exercise an Option by delivering shares of Common Stock
previously owned by such Participant, any such shares delivered which were
initially acquired by the Participant from the Company (upon exercise of a stock
option or otherwise) must have been owned by the Participant for at least six
months prior to such date of delivery. Shares of Common Stock used to satisfy
the Exercise Price of an Option shall be valued at their Fair Market Value on
the date of exercise. The Company will not be obligated to deliver any shares
unless and until it receives full payment of the Exercise Price and any related
withholding obligations under Section 9.5 have been satisfied, or until any
other conditions applicable to exercise or purchase have been satisfied. No
Shares of Common Stock shall be issued until full payment has been received by
the Company, and no Participant shall have any of the rights of a stockholder of
the Company until shares of Common Stock are issued upon the exercise of such
Stock Options. Unless expressly provided otherwise in the applicable Award
Agreement, the Committee may at any time within its sole discretion eliminate or
limit a Participant's ability to pay the purchase or Exercise Price of any Award
by any method other than a cash payment to the Company.
6.4 Limitations on Awards.
(a) Stock Option Award Limitations. In no event shall Shares subject
to Options granted to Outside Directors in the aggregate under
this Plan exceed more than 35% of the total number of shares
authorized for delivery under this Plan with respect to Stock
Options or exceed more than 7% of such shares to any individual
Outside Director pursuant to Section 5.2(a) herein. In no event
shall Shares subject to
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Options granted to any single Employee exceed more than 25% of
the total number of shares authorized for delivery under the Plan
pursuant to Section 5.2(a) herein.
(b) Restricted Stock Award Limitations. In no event shall shares
subject to Restricted Stock Awards granted to Outside Directors
in the aggregate under this Plan exceed more than 35%of the total
number of shares authorized for delivery under this Plan with
respect to Restricted Stock Awards or exceed more than 7% to any
individual Outside Director pursuant to Section 5.2(b) herein. In
no event shall shares subject to Restricted Stock Awards granted
to any single Employee exceed more than 25% of the total number
of shares authorized for delivery under the Plan pursuant to
Section 5.2(b) herein.
(c) Vesting of Awards. Except as otherwise provided by the terms of
the Plan or by action of the Committee at the time of the grant
of an Award, Stock Options will be first exercisable and
Restricted Stock Awards will be earned and non-forfeitable at the
rate of 20% of such Award on the one year anniversary of the date
of grant and 20% annually thereafter during such periods of
service as an Employee, Director or Director Emeritus.
7. EFFECT OF TERMINATION OF SERVICE ON AWARDS.
7.1 General. The Committee shall establish the effect of a termination
of employment or service on the continuation of rights and benefits available
under an Award, and, in so doing, may make distinctions based upon, inter alia,
the recipient of such Award, the cause of termination and the type of the Award.
Notwithstanding the foregoing, the terms of Awards shall be consistent with the
following, as applicable:
(a) Termination of Employment. In the event that any Participant's
employment with the Company shall terminate for any reason, other
than Disability or death, all of any such Participant's Incentive
Stock Options, and all of any such Participant's rights to
purchase or receive shares of Common Stock pursuant thereto,
shall automatically terminate on (A) the earlier of (i) or (ii):
(i) the respective expiration dates of any such Incentive Stock
Options, or (ii) the expiration of not more than three (3) months
after the date of such termination of employment; or (B) at such
later date as is determined by the Committee at the time of the
grant of such Award based upon the Participant's continuing
status as a Director or Director Emeritus of the Bank or the
Company, but only if, and to the extent that, the Participant was
entitled to exercise any such Incentive Stock Options at the date
of such termination of employment, and further that such Award
shall thereafter be deemed a Non-Statutory Stock Option.
(b) Disability. In the event that any Participant's employment with
the Company shall terminate as the result of the Disability of
such Participant, such Participant may exercise any Incentive
Stock Options granted to the Participant pursuant to the Plan at
any time prior to the earlier of (i) the respective expiration
dates of any such Incentive Stock Options or (ii) the date which
is one (1) year after the date of such termination of employment,
but only if, and to the extent that, the Participant was
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entitled to exercise any such Incentive Stock Options at the date
of such termination of employment.
(c) Death. In the event of the death of a Participant, any Incentive
Stock Options granted to such Participant may be exercised by the
Participant's Beneficiary or the person or persons to whom the
Participant's rights under any such Incentive Stock Options pass
by will or by the laws of descent and distribution (including the
Participant's estate during the period of administration) at any
time prior to the earlier of (i) the respective expiration dates
of any such Incentive Stock Options or (ii) the date which is two
(2) years after the date of death of such Participant, but only
if, and to the extent that, the Participant was entitled to
exercise any such Incentive Stock Options at the date of death.
For purposes of this Section 7.1(c), any Incentive Stock Option
held by an Participant shall be considered exercisable at the
date of his death if the only unsatisfied condition precedent to
the exercisability of such Incentive Stock Option at the date of
death is the passage of a specified period of time. At the
discretion of the Committee, upon exercise of such Options, the
Beneficiary may receive Shares or cash or a combination thereof.
If cash shall be paid in lieu of shares of Common Stock, such
cash shall be equal to the difference between the Fair Market
Value of such Shares and the exercise price of such Options on
the exercise date.
7.2 Events Not Deemed Terminations of Employment or Service. Unless
Company policy or the Committee provides otherwise, the employment relationship
shall not be considered terminated in the case of (a) sick leave, (b) military
leave, or (c) any other leave of absence authorized by the Company or the
Committee; provided that, unless reemployment upon the expiration of such leave
is guaranteed by contract or law, such leave is for a period of not more than 90
days. In the case of any Employee on an approved leave of absence, continued
vesting of the Award while on leave may be suspended until the Employee returns
to service, unless the Committee otherwise provides or applicable law otherwise
requires. In no event shall an Award be exercised after the expiration of the
term set forth in the Award Agreement.
7.3 Effect of Change of Affiliate Status. For purposes of this Plan and
any Award, if an entity ceases to be an Affiliate of the Company, a termination
of employment or service shall be deemed to have occurred with respect to each
individual who does not continue as an Employee or Outside Director with another
entity within the Company after giving effect to the Affiliate's change in
status.
8. ADJUSTMENTS IN CAPITAL STRUCTURE; ACCELERATION UPON A CHANGE IN CONTROL.
8.1 Adjustments in Capital Structure. Upon any reclassification,
recapitalization, stock split (including a stock split in the form of a stock
dividend) or reverse stock split ("stock split"); any merger, combination,
consolidation, or other reorganization; any spin-off, split-up, or similar
extraordinary dividend distribution with respect to the Common Stock (whether in
the form of securities or property); any exchange of Common Stock or other
securities of the Company, or any similar, unusual or extraordinary corporate
transaction affecting the Common Stock; or a sale of all or substantially all
the business or assets of the Company in its entirety; then the Committee shall
proportionately adjust the Plan and the Awards thereunder in such manner, to
such extent and at such times, as is necessary to preserve the benefits or
potential benefits of such Awards, including:
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(a) proportionately adjust any or all of: (1) the number and type of
shares of Common Stock (or other securities) that thereafter may
be made the subject of Awards (including the specific Share
Limits, maximums and numbers of shares set forth elsewhere in
this Plan); (2) the number, amount and type of shares of Common
Stock (or other securities or property) subject to any or all
outstanding Awards; (3) the grant, purchase, or Exercise Price of
any or all outstanding Awards; (4) the securities, cash or other
property deliverable upon exercise or payment of any outstanding
Awards; or (5) the performance standards applicable to any
outstanding Awards; or
(b) make provision for a cash payment or for the assumption,
substitution or exchange of any or all outstanding Awards, based
upon the distribution or consideration payable to holders of the
Common Stock.
8.2 The Committee may adopt such valuation methodologies for
outstanding Awards as it deems reasonable in the event of a cash or property
settlement and, in the case of Options, may base such settlement solely upon the
excess, if any, of the per share amount payable upon or in respect of such event
over the Exercise Price or base price of the Award. With respect to any Award of
an Incentive Stock Option, the Committee may make an adjustment that causes the
Option to cease to qualify as an Incentive Stock Option without the consent of
the affected Participant.
8.3 Upon any of the events set forth in Section 8.1, the Committee may
take such action prior to such event to the extent that the Committee deems the
action necessary to permit the Participant to realize the benefits intended to
be conveyed with respect to the Awards in the same manner as is or will be
available to stockholders of the Company generally. In the case of any stock
dividend, stock split or reverse stock split, if no action is taken by the
Committee, the proportionate adjustments contemplated by Section 8.1(a) above
shall nevertheless be made.
8.4 Automatic Acceleration of Awards. Unless otherwise determined by
the Committee, upon the death or Disability of an Award recipient or upon a
Change in Control of the Company or the Bank, each Stock Option then outstanding
shall become fully vested and exercisable and remain exercisable for its
remaining term and all Restricted Stock Awards then outstanding shall be fully
vested, be deemed earned and non-forfeitable and be free of restrictions.
8.5 Acceleration of Vesting. The Committee shall at all times have the
power to accelerate the exercise date of Options and the date that Restricted
Stock Awards shall be earned and non-forfeitable with respect to previously
granted Awards; provided that such action is not contrary to regulations of the
Office of Thrift Supervision or other appropriate banking regulatory agency then
in effect.
9. MISCELLANEOUS PROVISIONS.
9.1 Compliance with Laws. This Plan, the granting and vesting of Awards
under this Plan, the offer, issuance and delivery of shares of Common Stock, the
acceptance of payment of money under this Plan or under Awards are subject to
compliance with all applicable federal and state laws, rules and regulations
(including, but not limited to, state and federal securities laws) and to such
approvals by any listing, regulatory or governmental authority as may, in the
opinion of counsel for the Company, be necessary or advisable in connection
therewith. The person acquiring
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any securities under this Plan will, if requested by the Company, provide such
assurances and representations to the Company as may be deemed necessary or
desirable to assure compliance with all applicable legal and accounting
requirements.
9.2 Claims. No person shall have any claim or rights to an Award (or
additional Awards, as the case may be) under this Plan, subject to any express
contractual rights to the contrary (set forth in a document other than this
Plan).
9.3 No Employment/Service Contract. Nothing contained in this Plan (or
in any other documents under this Plan or in any Award Agreement) shall confer
upon any Participant any right to continue in the employ or other service of the
Company, constitute any contract or agreement of employment or other service or
affect an Employee's status as an employee-at-will, nor interfere in any way
with the right of the Company to change a Participant's compensation or other
benefits, or terminate his or her employment or other service, with or without
cause. Nothing in this Section 9.3, however, is intended to adversely affect any
express independent right of such Participant under a separate employment or
service contract other than an Award Agreement.
9.4 Plan Not Funded. Awards payable under this Plan shall be payable in
shares of Common Stock or from the general assets of the Company. No
Participant, beneficiary or other person shall have any right, title or interest
in any fund or in any specific asset (including shares of Common Stock, except
as expressly provided otherwise) of the Company by reason of any Award
hereunder. Neither the provisions of this Plan (or of any related documents),
nor the creation or adoption of this Plan, nor any action taken pursuant to the
provisions of this Plan shall create, or be construed to create, a trust of any
kind or a fiduciary relationship between the Company and any Participant,
Beneficiary or other person. Notwithstanding the foregoing, the Company may
establish a Trust in accordance with Section 10 with respect to Awards made in
accordance with Section 6.1(b) herein. To the extent that a Participant,
Beneficiary or other person acquires a right to receive payment pursuant to any
Award hereunder, such right shall be no greater than the right of any unsecured
general creditor of the Company.
9.5 Tax Matters; Tax Withholding.
(a) Tax Withholding. Upon any exercise, vesting, or payment of any
Award, the Company shall have the right, within its sole
discretion, to:
(i) require the Participant (or the Participant's personal
representative or Beneficiary, as the case may be) to pay or
provide for payment of at least the minimum amount of any
taxes which the Company may be required to withhold with
respect to such Award or payment; or
(ii) deduct from any amount otherwise payable in cash to the
Participant (or the Participant's personal representative or
Beneficiary, as the case may be) the minimum amount of any
taxes which the Company may be required to withhold with
respect to such cash payment, or
(iii) in any case where tax withholding is required in connection
with the delivery of shares of Common Stock under this Plan,
the Committee may, in its sole discretion, pursuant to such
rules and subject to such conditions as the Committee may
establish, reduce the number of shares to be delivered to
the Participant by the appropriate number of shares, valued
in a consistent manner at their Fair Market Value as
necessary to satisfy the
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minimum applicable withholding obligation. In no event shall
the shares withheld exceed the minimum whole number of
shares required for tax withholding under applicable law.
(b) Required Notification of Section 83(b) Election. In the event a
Participant makes an election under Section 83(b) of the Code in
connection with an Award, the Participant shall notify the
Company of such election within ten days of filing notice of the
election with the Internal Revenue Service or other governmental
authority, in addition to any filing and notification required
pursuant to regulations issued under Section 83(b) of the Code or
other applicable provision.
(c) Requirement of Notification Upon Disqualifying Disposition Under
Section 421(b) of the Code. If any Participant shall make any
disposition of shares of Stock delivered pursuant to the exercise
of Incentive Stock Options under the circumstances described in
Section 421(b) of the Code (relating to certain disqualifying
dispositions), such Participant shall notify the Company of such
disposition within ten days thereof.
9.6 Effective Date, Termination and Suspension, Amendments.
(a) Effective Date and Termination. This Plan is effective upon the
later of approval of the Plan by the Board of Directors of the
Company or the vote of approval by the stockholders of the
Company ("Approval Date"). Unless earlier terminated by the
Board, this Plan shall terminate at the close of business on the
day before the tenth anniversary of the Approval Date. After the
termination of this Plan either upon such stated expiration date
or its earlier termination by the Board, no additional Awards may
be granted under this Plan, but previously granted Awards (and
the authority of the Committee with respect thereto, including
the authority to amend such Awards) shall remain outstanding in
accordance with their applicable terms and conditions and the
terms and conditions of this Plan.
(b) Board Authorization. Subject to applicable laws and regulations,
the Board of Directors may, at any time, terminate or, from time
to time, amend, modify or suspend this Plan, in whole or in part;
provided, however, that no such amendment may have the effect of
repricing the Exercise Price of Options. No Awards may be granted
during any period that the Board of Directors suspends this Plan.
(c) Stockholder Approval. The Plan must be approved by a majority of
votes cast by stockholders of the Company (including votes cast
by MSB Financial, MHC under Nasdaq rules), by a majority of the
total votes of the Company eligible to be cast (including votes
eligible to be cast by MSB Financial, MHC) and by a majority of
votes cast by stockholders of the Company (excluding shares voted
by MSB Financial, MHC) or such other approval vote as may be
required by the Office of Thrift Supervision.
(d) Limitations on Amendments to Plan and Awards. No amendment,
suspension or termination of this Plan or change affecting any
outstanding Award shall, without the written consent of the
Participant, affect in any manner materially adverse to the
15
Participant any rights or benefits of the Participant or
obligations of the Company under any Award granted under this
Plan prior to the effective date of such change. Changes,
settlements and other actions contemplated by Section 8 shall not
be deemed to constitute changes or amendments for purposes of
this Section 9.6.
9.7 Governing Law; Compliance with Regulations; Construction;
Severability.
(a) Construction. This Plan, the Awards, all documents evidencing
Awards and all other related documents shall be governed by, and
construed in accordance with, the laws of the United States and
the laws of the State of New Jersey to the extent not preempted
by Federal law.
(b) Compliance with Regulations. This Plan will comply with the
requirements set forth in 12 C.F.R. Section 563b.500.
Notwithstanding any other provision in this Plan, no shares of
Common Stock shall be issued with respect to any Award to the
extent that such issuance would cause the MHC to fail to qualify
as a mutual holding company of the Bank under applicable federal
laws or regulations.
(c) Severability. If a court of competent jurisdiction holds any
provision invalid and unenforceable, the remaining provisions of
this Plan shall continue in effect.
(d) Section 16 of Exchange Act. It is the intent of the Company that
the Awards and transactions permitted by Awards be interpreted in
a manner that, in the case of Participants who are or may be
subject to Section 16 of the Exchange Act, qualify, to the
maximum extent compatible with the express terms of the Award,
for exemption from matching liability under Rule 16b-3
promulgated under the Exchange Act. Notwithstanding the
foregoing, the Company shall have no liability to any Participant
for Section 16 consequences of Awards or events affecting Awards
if an Award or event does not so qualify.
(e) Compliance with Law. Shares of Common Stock shall not be issued
with respect to any Award granted under the Plan unless the
issuance and delivery of such shares shall comply with all
relevant provisions of applicable law, including, without
limitation, the Securities Act of 1933, as amended, the rules and
regulations promulgated thereunder, any applicable state
securities laws and the requirements of any stock exchange upon
which the shares may then be listed.
(f) Necessary Approvals. The inability of the Company to obtain any
necessary authorizations, approvals or letters of non-objection
from any regulatory body or authority deemed by the Company's
counsel to be necessary to the lawful issuance and sale of any
shares of Common Stock issuable hereunder shall relieve the
Company of any liability with respect to the non-issuance or sale
of such shares.
(g) Representations and Warranties of Participants. As a condition to
the exercise of any Option or the delivery of shares in
accordance with an Award, the Company may require the person
exercising the Option or receiving delivery of the shares to make
such representations and warranties as may be necessary to assure
the availability of an exemption from the registration
requirements of federal or state securities law.
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(h) Termination for Cause. Notwithstanding anything herein to the
contrary, upon the termination of employment or service of a
Participant by the Company or an Affiliate for "cause" as defined
at 12 C.F.R. Section 563.39(b)(1) as determined by the Board of
Directors or the Committee, all Awards held by such Participant
which have not yet been delivered shall be forfeited by such
Participant as of the date of such termination of employment or
service.
(i) Cash Payment in Lieu of Delivery of Shares. Upon the exercise of
an Option, the Committee, in its sole and absolute discretion,
may make a cash payment to the Participant, in whole or in part,
in lieu of the delivery of shares of Common Stock. Such cash
payment to be paid in lieu of delivery of Common Stock shall be
equal to the difference between the Fair Market Value of the
Common Stock on the date of the Option exercise and the exercise
price per share of the Option. Such cash payment shall be in
exchange for the cancellation of such Option. Such cash payment
shall not be made in the event that such transaction would result
in liability to the Participant or the Company under Section
16(b) of the Exchange Act and regulations promulgated thereunder,
or subject the Participant to additional tax liabilities related
to such cash payments pursuant to Section 409A of the Code.
(j) Certain Regulatory Matters. In the event that the Bank shall be
deemed critically undercapitalized (as defined at 12 C.F.R.
Section 565.4), is subject to enforcement action by the Office of
Thrift Supervision, or receives a capital directive under 12
C.F.R. Section 565.7, then all Options awarded to executive
officers or Directors of the Company or its Affiliates must
exercise such Options or forfeit such Options.
(k) Forfeiture of Awards in Certain Circumstances. In addition to any
forfeiture or reimbursement conditions the Committee may impose
upon an Award, a Participant may be required to forfeit an Award,
or reimburse the Company for the value of a prior Award, by
virtue of the requirement of Section 304 of the Sarbanes-Oxley
Act of 2002 (or by virtue of any other applicable statutory or
regulatory requirement), but only to the extent that such
forfeiture or reimbursement is required by such statutory or
regulatory provision. Unless otherwise determined by the
Committee, in the event of a forfeiture of an Award with respect
to which a Participant paid cash consideration, the Participant
shall be repaid the amount of such cash consideration.
9.8 Captions. Captions and headings are given to the sections and
subsections of this Plan solely as a convenience to facilitate reference. Such
headings shall not be deemed in any way material or relevant to the construction
or interpretation of this Plan or any provision thereof.
9.9 Non-Exclusivity of Plan. Nothing in this Plan shall limit or be
deemed to limit the authority of the Board of Directors or the Committee to
grant Awards or authorize any other compensation, with or without reference to
the Common Stock, under any other plan or authority.
9.10 Limitation on Liability. No Director, member of the Committee or
the Trustee shall be liable for any determination made in good faith with
respect to the Plan, the Trust or any Awards granted. If a Director, member of
the Committee or the Trustee is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by any reason of anything done or not
done by him in such capacity under or with respect to the Plan, the Company
shall indemnify such person against expenses (including attorney's fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him or her in connection with such action, suit or proceeding if he or she
acted in good faith and in a manner he or she reasonably believed to be in the
best interests of the
17
Company and its Affiliates and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
10. TRUST.
10.1 Activities of Trustee. The Trustee(s) shall receive, hold,
administer, invest and make distributions and disbursements from the Trust in
accordance with the provisions of the Plan and the applicable directions, rules,
regulations, procedures and policies established by the Committee pursuant to
the Plan.
10.2 Management of Trust. It is the intention of this Plan that the
Trustee shall have complete authority and discretion with respect to the
management, control and investment of the Trust, and that the Trustee shall
invest all assets of the Trust, except those attributable to cash dividends paid
with respect to unearned and unawarded Restricted Stock Awards, in Common Stock
to the fullest extent practicable, except to the extent that the Trustee
determines that the holding of monies in cash or cash equivalents is necessary
to meet the obligations of the Trust. In performing their duties, the Trustees
shall have the power to do all things and execute such instruments as may be
deemed necessary or proper, including the following powers:
(a) To invest up to one hundred percent (100%) of all Trust assets in
the Common Stock without regard to any law now or hereafter in
force limiting investments for Trustees or other fiduciaries. The
investment authorized herein may constitute the only investment
of the Trust, and in making such investment, the Trustee is
authorized to purchase Common Stock from the Parent or from any
other source, and such Common Stock so purchased may be
outstanding, newly issued, or treasury shares.
(b) To invest any Trust assets not otherwise invested in accordance
with (a) above in such deposit accounts, and certificates of
deposit (including those issued by the Bank), obligations of the
United States government or its agencies or such other
investments as shall be considered the equivalent of cash.
(c) To sell, exchange or otherwise dispose of any property at any
time held or acquired by the Trust.
(d) To cause stocks, bonds or other securities to be registered in
the name of a nominee, without the addition of words indicating
that such security is an asset of the Trust (but accurate records
shall be maintained showing that such security is an asset of the
Trust).
(e) To hold cash without interest in such amounts as may be in the
opinion of the Trustee reasonable for the proper operation of the
Plan and Trust. (f) To employ brokers, agents, custodians,
consultants and accountants.
(g) To hire counsel to render advice with respect to their rights,
duties and obligations hereunder, and such other legal services
or representation as they may deem desirable.
(h) To hold funds and securities representing the amounts to be
distributed to a Participant or his Beneficiary as a consequence
of a dispute as to the disposition thereof, whether in a
segregated account or held in common with other assets.
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(i) As may be directed by the Committee or the Board from time to
time, the Trustee shall pay to the Company any earnings of the
Trust attributable to unawarded or forfeited Restricted Stock
Awards.
Notwithstanding anything herein contained to the contrary, the Trustee
shall not be required to make any inventory, appraisal or settlement or report
to any court, or to secure any order of a court for the exercise of any power
herein contained, or to maintain bond.
10.3 Records and Accounts. The Trustee shall maintain accurate and
detailed records and accounts of all transactions of the Trust, which shall be
available at all reasonable times for inspection by any legally entitled person
or entity to the extent required by applicable law, or any other person
determined by the Committee.
10.4 Earnings. All earnings, gains and losses with respect to Trust
assets shall be allocated in accordance with a reasonable procedure adopted by
the Committee, to bookkeeping accounts for Participants or to the general
account of the Trust, depending on the nature and allocation of the assets
generating such earnings, gains and losses. In particular, any earnings on cash
dividends received with respect to Restricted Stock Awards shall be allocated to
accounts for Participants, except to the extent that such cash dividends are
distributed to Participants, if such shares are the subject of outstanding
Restricted Stock Awards, or, otherwise held by the Trust or returned to the
Company.
10.5 Expenses. All costs and expenses incurred in the operation and
administration of this Plan, including those incurred by the Trustee, shall be
paid by the Company or, if not so paid, then paid from the cash assets of the
Trust.
10.6 Indemnification. Subject to the requirements and limitations of
applicable laws and regulations, the Company shall indemnify, defend and hold
the Trustee harmless against all claims, expenses and liabilities arising out of
or related to the exercise of the Trustee's powers and the discharge of their
duties hereunder, unless the same shall be due to their gross negligence or
willful misconduct.
10.7 Term of Trust. The Trust, if established, shall remain in effect
until the earlier of (i) termination by the Committee, (ii) the distribution of
all assets of the Trust, or (iii) 21 years from the Effective Date. Termination
of the Trust shall not effect any Restricted Stock Award previously granted, and
such Restricted Stock Award shall remain valid and in effect until they have
been earned and paid, or by their terms expire or are forfeited.
10.8 Tax Status of Trust. It is intended that the Trust established
hereby shall be treated as a grantor trust of the Company under the provisions
of Section 671 et seq. of the Code.
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