EXHIBIT 10.1
THE FIDELITY DEPOSIT AND DISCOUNT BANK
1998 INDEPENDENT DIRECTORS STOCK OPTION PLAN
THE FIDELITY DEPOSIT AND DISCOUNT BANK
1998 INDEPENDENT DIRECTORS STOCK OPTION PLAN
1. Purpose. The 1998 Independent Directors Stock Option Plan (the "Plan")
is established to advance the development, growth and financial condition of The
Fidelity Deposit and Discount Bank (the "Bank") and its subsidiaries, by
providing an incentive, through participation in the appreciation of the capital
stock of the Bank, and thereby securing, retaining and motivating members of the
Bank's Board of Directors who are not officers or employees of the Bank or any
subsidiary thereof ( the "Outside Directors").
2. Term. The Plan shall become effective as of the date the Bank's
shareholders duly approve the Plan (the "Effective Date"). If the Plan is so
approved, it shall continue in effect until any stock options granted under the
Plan have either lapsed or been exercised, satisfied or canceled according to
their terms. Unless previously terminated by the Board, the Plan shall terminate
on, and no options shall be granted after the tenth anniversary of the Effective
Date of the Plan, however, the Plan and all Awards made under the Plan prior to
such date shall remain in effect until such Awards have been satisfied or
terminated in accordance with the Plan and the terms of such Awards.
3. Stock. The shares of the Bank's common stock, par value $1.5625 per
share (the "Common Stock") issuable under the Plan shall not exceed 25,000
shares. The amount of Common Stock issuable under the Plan may be adjusted
pursuant to Section 10 hereof. The Common Stock issuable hereunder may be either
authorized and unissued shares of Common Stock, or authorized shares of Common
Stock issued by the Bank and subsequently reacquired by it as treasury stock, or
shares purchased in open market transactions. Except as may be otherwise
provided in the Plan, any Stock subject to an Award that, for any reason, lapses
or terminates prior to exercise, shall again become available for grant under
the Plan. Under no circumstances shall fractional shares be issued under the
Plan. The Bank's failure to obtain any governmental authority deemed necessary
by the Bank's legal counsel for the proper grant of the stock options under this
Plan and/or the issuance of Common Stock under the Plan shall relieve the Bank
of any duty or liability for the failure to grant stock options under the Plan
and/or issue Common Stock under the Plan as to which such authority has not been
obtained.
4. Stock Options. Provided that the Board of Directors does not vote to
deny the annual grants contemplated under the Plan, stock options shall be
granted under the Plan to each Outside Director of the Bank, annually, on the
first business day of January (the "Grant Date"), with the first award of
options to be made hereunder on January 2, 1999. Each Outside Director who is a
member of the Bank's Board of Directors on the Grant Date shall be awarded stock
options to purchase 250 shares of Common Stock (the "Stock Options") under the
following terms and conditions:
(a) The time period during which any Stock Option is exercisable
shall be ten (10) years after the date of grant, but not prior to six (6)
months from the date of grant.
1
(b) If a director, who has received an award pursuant to the Plan,
ceases to be a member of the Board of Directors for any reason, the
director may exercise the Stock Option not more than twelve (12) months
after such cessation. If a director, who has received an award pursuant to
the Plan dies, the director's qualified personal representative, or any
person who acquires a Stock Option pursuant to the director's Will or the
laws of descent and distribution, may exercise such Stock Option during
its remaining term for a period of not more than twelve (12) months after
the director's death to the extent that the Stock Option would then be and
remains exercisable.
(c) The purchase price of a share of Common Stock subject to a Stock
Option shall be the fair market value of the Common Stock on the date of
grant, as determined under Section 6 hereof.
(d) The Stock Option shall be made by a written agreement in the
form, attached hereto as Exhibit "A," with such changes therein as may be
determined by the Committee ( as such term is defined in Section 12
hereof) (the "Stock Option Agreement").
Subject to the terms of the Plan, in the event that the Board of Directors, for
any reason, decides to deny the granting of the annual awards contemplated by
the Plan, no awards shall be granted under this Plan the January immediately
following such a vote. However, the decision to deny grants in the current year
will have no effect on awards scheduled in future years. Awards denied by such a
vote of the Board of Directors will not accumulate.
5. Exercise. Except as otherwise provided in the Plan, a Stock Option may
be exercised in whole or in part by giving written notice thereof to the
Secretary of the Bank, or his designee, identifying the Stock Option being
exercised, the number of shares of Common Stock with respect thereto, and other
information pertinent to the exercise of the Stock Option. The purchase price of
the shares of Common Stock with respect to which a Stock Option is exercised
shall be paid with the written notice of exercise, either in cash or in Common
Stock, which has been held by the director for at least six (6) months, at its
then current fair market value, or any combination of cash or Common Stock.
Funds received by the Bank from the exercise of any Stock Option shall be used
for its general corporate purposes. The number of shares of Common Stock subject
to a Stock Option shall be reduced by the number of shares of Common Stock with
respect to which the director has exercised rights under the related Stock
Option Agreement.
If the Bank or its shareholders execute an agreement to dispose of all or
substantially all of the Bank's assets or capital stock by means of sale,
merger, consolidation, reorganization, liquidation or otherwise, as a result of
which the Bank's shareholders as of immediately before such transaction will not
own at least fifty percent (50%) of the total combined voting power of all
classes of voting capital stock of the surviving entity (be it the Bank or
otherwise) immediately after the execution of such transaction, thereupon any
and all outstanding Stock Options shall immediately become exercisable until the
consummation of such transaction, or if not consummated, until the agreement
therefor expires or is terminated, in which case thereafter all Stock Options
shall be treated as if the agreement never had been executed. If during any
period of two (2) consecutive years, the
2
individuals, who at the beginning of such period, constituted the Board of
Directors, cease for any reason to constitute at least a majority of the Board
of Directors (unless the election of each director of the Board of Directors,
who was not a director of the Board of Directors at the beginning of such
period, was approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of such period) thereupon
any and all outstanding Stock Options shall immediately become exercisable. If
there is an actual, attempted or threatened change in the ownership of at least
twenty-five percent (25%) of any class of voting stock of the Bank through the
acquisition of, or an offer to acquire, such percentage of the Bank's voting
stock by any person or entity, or persons or entities acting in concert or as a
group, and such acquisition or offer has not been duly approved by the Board of
Directors, thereupon any and all outstanding Stock Options shall immediately
become exercisable.
6. Value. Where used in the Plan, the "Fair Market Value" of Common Stock
shall mean and be determined as follows: (i) in the event that the Common Stock
is listed on an established exchange, the closing price of the Common Stock on
the Stock Option's Grant Date or, if no trade occurred on that day, on the next
preceding day on which a trade occurred; or (ii) in the event that the Common
Stock is not listed on an established exchange, but is then quoted on the
National Association of Securities Dealers Automated Quotation System
("NASDAQ"), the average of the average of the closing bid and asked quotations
of the Common Stock for the five (5) trading days immediately preceding the
Grant Date. In either case, in the event that no closing bid or asked quotation
is available on one (1) or more of such trading days, the fair market value
shall be determined by reference to the five (5) trading days immediately
preceding the Grant Date on which closing bid and asked quotations are
available.
7. Continued Relationship. Nothing in the Plan or in any Stock Option
shall confer upon any director any right to continue his/her relationship with
the Bank as a director, or limit or affect any rights, powers or privileges that
the Bank or its affiliates may have to supervise, discipline and terminate such
director, and the relationships thereof.
8. General Restrictions. The Board of Directors may require, in its
discretion, (a) the listing, registration or qualification of the Common Stock
issuable pursuant to the Plan on any securities exchange or under any federal or
state securities or other laws, (b) the approval of any governmental authority,
or (c) an execution of an agreement by any director with respect to disposition
of any Common Stock (including, without limitation, that at the time of the
director's exercise of the Stock Option, any Common Stock thereby acquired is
being and will be acquired solely for investment purposes and without any
intention to sell, transfer or distribute the Common Stock). If the Board of
Directors so requires, then Stock Options shall not be exercised, in whole or in
part, unless such listing, registration, qualification, approval or agreement
has been appropriately effected or obtained to the satisfaction of the Board of
Directors and legal counsel for the Bank. Notwithstanding anything to the
contrary herein, a director shall not sell, transfer or otherwise dispose of any
shares of Common Stock acquired pursuant to a Stock Option unless at least six
(6) months have elapsed from the date the Stock Option was granted and, in any
event, the transfer or disposition is made in accordance with Section 16 of the
Securities Exchange Act of 1934, as amended, and as the same may be amended from
time to time.
3
9. Rights. Except as otherwise provided in the Plan, a director shall have
no rights as a holder of the Common Stock subject to a Stock Option unless and
until one or more certificates for the shares of Common Stock are issued and
delivered to the director. No Stock Option, or the grant thereof, shall limit or
affect the right or power of the Bank or its affiliates to adjust, reclassify,
recapitalize, reorganize or otherwise change its or their capital or business
structure, or to merge, consolidate, dissolve, liquidate or sell any or all of
its or their business, property or assets.
10. Adjustments. In the event that the shares of Common Stock of the Bank,
as presently constituted, shall be changed into or exchanged for a different
number or kind of shares of Common Stock or other securities of the Bank or of
other securities of the Bank or of another corporation or entity (whether by
reason of merger, consolidation, recapitalization, reclassification, split-up,
combination of shares or otherwise) or if the number of such shares of Common
Stock shall be increased through the payment of a stock dividend, stock split or
similar transaction, then, there shall be substituted for or added to each share
of Common Stock of the Bank that was theretofore appropriated, or that
thereafter may become subject to a Stock Option under the Plan, the number and
kind of shares of Common Stock or other securities into which each outstanding
share of the Common Stock of the Bank shall be so changed or for which each such
share shall be exchanged or to which each share shall be entitled, as the case
may be. Each outstanding Stock Option shall be appropriately amended as to price
and other terms, as may be necessary to reflect the foregoing events.
If there shall be any other change in the number or kind of the
outstanding shares of Common Stock of the Bank, or of any Common Stock or other
securities into which such Common Stock shall have been changed, or for which it
shall have been exchanged, and if a majority of the members of the Board of
Directors shall, in their sole discretion, determine that the change equitably
requires an adjustment in any Stock Option that was theretofore granted or that
may thereafter be granted under the Plan, then such adjustment shall be made in
accordance with the determination.
The grant of a Stock Option pursuant to the Plan shall not affect, in any
way, the right or power of the Bank to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure, to merge, to
consolidate, to dissolve, to liquidate or to sell or transfer all or any part of
its business or assets. Fractional shares resulting from any adjustment in a
Stock Option pursuant to this Section 10 may be settled as a majority of the
members of the Board of Directors shall determine. To the extent that the
foregoing adjustments relate to Common Stock or securities of the Bank, such
adjustments shall be made by a majority of the members of the Board of
Directors, whose determination in that respect shall be final, binding and
conclusive. Notice of any adjustment shall be given by the Bank to each holder
of a Stock Option that is so adjusted.
11. Forfeiture. Notwithstanding anything to the contrary in this Plan, if
an option holder is engaged in fraud, embezzlement, theft, commission of a
felony, or dishonesty in the course of his relationship with the Bank or its
affiliates, or has disclosed trade secrets of the Bank or its affiliates, the
option holder shall forfeit all rights under and to all unexercised Stock
Options, and all exercised Stock Options for which the Bank has not yet
delivered certificates for shares of Common Stock, and all rights to receive
Stock Options shall be automatically canceled.
4
12. Administration. The ability to control and manage the operation and
administration of the Plan shall be vested in the Board of Directors or in a
committee of three (3) or more members of the Board of Directors, selected by
the Board of Directors (the "Committee"). The Committee shall have the authority
and discretion to interpret the Plan, to establish, amend and rescind any rules
and regulations relating to the Plan, to determine the terms and provisions of
any agreements made pursuant to the Plan, and to make any and all determinations
that may be necessary or advisable for the administration of the Plan. Any
interpretation of the Plan by the Committee and any decision made by it under
the Plan is final and binding.
13. Miscellaneous. Any reference contained in this Plan to a particular
section or provision of law, rule or regulation shall include any subsequently
enacted or promulgated section or provision of law, rule or regulation, as the
case may be. With respect to persons subject to Section 16 of the Securities
Exchange Act of 1934, as amended, transactions under this Plan are intended to
comply with all applicable conditions of the rules and the regulations
promulgated thereunder or any successor rules that may be promulgated by the
Securities and Exchange Commission. To the extent any provision of this Plan
fails to so comply, it shall be deemed null and void, to the extent permitted by
applicable law, subject to the provisions of Section 15, below. Where used in
this Plan, the plural shall include the singular, and, unless the context
otherwise clearly requires, the singular shall include the plural and the
masculine shall include the feminine. The captions of the numbered Sections
contained in this Plan are for convenience only, and shall not limit or affect
the meaning, interpretation or construction of any of the provisions of the
Plan.
14. Transferability. Except as otherwise provided by the Board of
Directors, Stock Options granted under the Plan are not transferable except as
designated by the participant by will and the laws of descent and distribution.
15. Amendment. The Plan may be amended, suspended or terminated, without
notice, by a majority vote of the Board of Directors of the Bank.
Notwithstanding the foregoing, no amendment of the Plan shall, without the
consent of the effected participant, alter or impair any rights or obligations
enjoyed by such participant under any unexercised Stock Option.
16. Taxes. The issuance of shares of Common Stock under the Plan shall be
subject to any applicable taxes or other laws or regulations of the United
States of America and any state or local authority having jurisdiction there
over.
17. Indemnification. In and with respect to the administration of the
Plan, the Bank shall indemnify each member of the Committee and/or of the Board,
each of whom shall be entitled, without further action on his or her part, to
indemnification from the Bank for all damages, losses, judgments, settlement
amounts, punitive damages, excise taxes, fines, penalties, costs and expenses
(including without limitation attorneys' fees and disbursements) incurred by the
member in connection with any threatened, pending or completed action, suit or
other proceedings of any nature, whether civil, administrative, investigative or
criminal, whether formal or informal, and whether by or in the right or name of
the Bank, any class of its security holders, or otherwise, in which the
5
member may be or may have been involved, as a party or otherwise, by reason of
his or her being or having been a member of the Committee and/or of the Board,
whether or not he or she continues to be a member of the Committee or of the
Board. The provisions, protection and benefits of this Section 17 shall apply
and exist to the fullest extent permitted by applicable law to and for the
benefit of all present and future members of the Committee and/or of the Board
and their respective heirs, personal and legal representatives, successors and
assigns, in addition to all other rights that they may have as a matter of law,
by contract, or otherwise, except (a) to the extent there is entitlement to
insurance proceeds under insurance coverages provided by the Bank on account of
the same matter or proceeding for which indemnification hereunder is claimed, or
(b) to the extent there is entitlement to indemnification from the Bank, other
than under this Section 17, on account of the same matter or proceeding for
which indemnification hereunder is claimed.
6