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SUFFOLK BANCORP
EXHIBIT 99.B
1999 STOCK OPTION
PLAN
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SUFFOLK BANCORP 1999
STOCK OPTION PLAN
Adopted January 22, 1999
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SUFFOLK BANCORP 1999
STOCK OPTION PLAN
Table of Contents
Page
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1. Purpose.............................................................................................. 1
2. Shares Subject to the Plan........................................................................... 1
3. Administration of the Plan........................................................................... 2
4. Eligibility and Grant of Options Under the Plan...................................................... 2
5. Terms and Conditions of Options Granted Under the Plan............................................... 2
(a) Option Period................................................................................. 2
(b) Exercise of Option............................................................................ 3
(i) By an Optionee During Continuous Employment........................................... 3
(ii) Exercise in the Event of Death or Termination of Employment........................... 3
(c) Option Price.................................................................................. 4
(d) Payment of Purchase Price upon Exercise....................................................... 4
(e) Nontransferability............................................................................ 4
[(f) Additional Rules for Incentive Stock Options.................................................. 4
6. Stock Appreciation Right............................................................................. 5
7. Fair Market Value.................................................................................... 5
8. Change in Control Provisions......................................................................... 5
(a) Impact of Event................................................................................. 5
(b) Definition of Change in Control................................................................. 5
9. Amendment and Discontinuance......................................................................... 7
10. Effective Date....................................................................................... 7
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Page
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11. General Provisions................................................................................... 7
(a) Investment Representation; Compliance with Other Laws and Regulations......................... 8
(b) No Rights as a Shareholder.................................................................... 8
(c) No Rights to Continued Employment............................................................. 8
(d) Effect of the Plan on Other Stock Plans....................................................... 8
(e) Unfunded Status of Plan....................................................................... 8
(f) Withholding................................................................................... 8
(g) Governing Law................................................................................. 8
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SUFFOLK BANCORP 1999
STOCK OPTION PLAN
1. Purpose.
The purpose of the Suffolk Bancorp 1999 Stock Option Plan (the
"Plan") is to provide a means by which Suffolk Bancorp (the "Corporation"),
through the grant of stock options to eligible employees, may attract and retain
persons of ability as employees and motivate such employees to exert their best
efforts on behalf of the Corporation and any subsidiary corporation of the
Corporation. For the purposes of the Plan, the term "Subsidiary Corporation"
means a subsidiary corporation as defined by Section 424(f) of the Internal
Revenue Code of 1986, as amended (the "Code").
2. Shares Subject to the Plan.
The maximum number of shares of common stock, par value $2.50
per share, of the Corporation ("Common Stock") that may be delivered to
participants and their beneficiaries under the Plan shall be 600,000, which
number includes the 578,706 shares of Common Stock remaining available for
awards as of the effective date of this Plan under the Corporation's 1989
Incentive Stock Option Plan and 1989 Non-Qualified Stock Option Plan. No
participant may be granted options covering in excess of 50,000 shares of Common
Stock in any calendar year. The reserved shares may be authorized and unissued
shares or treasury shares of the Corporation or any combination of both as
determined by the Board of Directors of the Corporation (the "Board"). If an
option granted under the Plan ceases to be exercisable or is forfeited or
canceled, in whole or in part, the shares of Common Stock representing such
option shall no longer be available for issuance in connection with awards under
the Plan. If any option (and related stock appreciation right, if any)
terminates, expires or lapses without being exercised, shares of Common Stock
subject to such option shall again be available for distribution in connection
with awards under the Plan.
In the event of any change in corporate capitalization
(including, but not limited to, a change in the number of shares of Common Stock
outstanding), such as a stock split or a corporate transaction, such as any
merger, consolidation, separation, including a spin-off, or other distribution
of stock or property of the Corporation, any reorganization (whether or not such
reorganization comes within the definition of such term in Section 368 of the
Code), any partial or complete liquidation of the Corporation, the Committee or
Board may make such substitution or adjustments in the aggregate number and kind
of shares reserved for issuance under the Plan, and the maximum limitation upon
options to be granted to any participant, in the number, kind and option price
of shares subject to outstanding options and/or such other equitable
substitution or adjustments as it may determine to be appropriate in its sole
discretion [to prevent substantial dilution or enlargement of the rights granted
to, or available for, an optionee under the Plan]; provided, however, that the
number of shares of Common Stock subject to any option shall always be a whole
number.
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3. Administration of the Plan.
The Plan shall be administered by the Personnel Committee of
the Board (the "Committee"), which Committee shall consist of not less than
three directors of the Corporation. Members of the Committee shall be appointed
by and shall serve at the pleasure of the Board. Any vacancies in the membership
of the Committee shall be filled by an appointment by the Board.
The Committee shall keep minutes of its meetings. All actions
of the Committee shall be taken by a majority of its members. Any act approved
in writing by a majority of the Committee members shall be fully effective as if
it had been taken by a vote of a majority of the members at a meeting duly
called and held.
Subject to and not inconsistent with the provisions of the
Plan, the Committee shall have complete authority in its discretion to interpret
all provisions of the Plan consistently with the law, to determine the number of
shares of Common Stock to be covered by each option granted hereunder, to
determine the terms and conditions of any option granted hereunder, to prescribe
the form of the instrument evidencing any option granted hereunder, to adopt,
amend and rescind general and special rules and regulations for the
administration of the Plan and to make all other determinations necessary or
advisable for the administration of the Plan.
4. Eligibility and Grant of Options Under the Plan.
Options may be granted to such employees, including officers
and directors who are also employees, of the Corporation or of a Subsidiary
Corporation that the Committee deems to be key employees who in the judgment of
the Committee are considered important to the future of the Corporation or a
Subsidiary Corporation. Options may be granted at such times, in such amounts,
and to the extent not inconsistent with the Plan, on such terms as the Committee
shall determine. Options may be granted alone or with a related stock
appreciation right and may be of two types: (a) an incentive stock option which
is an option designated as, and qualified as, an "incentive stock option" within
the meaning of Section 422 of the Code, and (b) a non-qualified stock option
which is an option that is not an incentive stock option. To the extent that any
option is not designated as an incentive stock option or even if so designated
does not qualify as an incentive stock option on or subsequent to its grant
date, it shall constitute a non-qualified stock option.
5. Terms and Conditions of Options Granted Under the Plan.
Each option granted under the Plan shall be evidenced by an
agreement in a form determined by the Committee. Such agreement shall be subject
to the following terms and conditions, and such other terms and conditions as
the Committee may deem appropriate.
(a) Option Period. Each option agreement shall specify the
period for which the option thereunder is granted and shall provide that the
option shall expire at the end of such period, provided that in no event shall
an incentive stock option be exercisable more than 10 years from the date of
grant of such option.
(b) Exercise of Option.
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(i) By an Optionee During Continuous Employment.
Except as otherwise provided herein, options shall be
exercisable at such time or times and subject to such terms and
conditions as shall be determined by the Committee. If the Committee
provides that any option is exercisable only in installments, the
Committee may at any time waive such installment exercise provisions,
in whole or in part, based on such factors as the Committee may
determine. In addition, the Committee may at any time accelerate the
exercisability of any option.
(ii) Exercise in the Event of Death or Termination of
Employment.
A. If an optionee shall die (1) while an employee of
the Corporation or a Subsidiary Corporation or (2) within three months
after termination of such optionee's employment with the Corporation or
a Subsidiary Corporation because of disability, his or her options may
be exercised, to the extent that the optionee shall have been entitled
to do so on the date of death or such termination of employment, by the
person or persons to whom the optionee's right under the option pass by
will or applicable law, or, if no such person has such right, by his or
her executors or administrators, at any time or from time to time, but
not later than the expiration date specified in Section 5(a) or two
years after the optionee's death, whichever date is earlier.
B. If an optionee's employment by the Corporation or a
Subsidiary Corporation shall terminate because of disability and such
optionee has not died within the following three months, such optionee
may exercise his or her options, to the extent that such optionee shall
have been entitled to do so at the date of termination of his or her
employment, at any time or from time to time, but not later than the
expiration date specified in Section 5(a) or one year after termination
of employment, whichever date is earlier.
C. If an optionee's employment shall terminate by
reason of retirement in accordance with the terms of the Corporation's
tax-qualified retirement plans or with the consent of the Committee or
involuntarily other than for cause (as defined herein), such optionee
may exercise his or her options, to the extent that the optionee shall
have been entitled to do so on the date of termination of employment,
at any time or from time to time, but not later than the expiration
date specified in Section 5(a) or three months after termination of
employment, whichever date is earlier.
D. If an optionee's employment shall terminate
voluntarily or involuntarily for any reason other than death,
disability, or retirement, the right to exercise all options, whether
vested or unvested, shall terminate at the date of such termination of
employment. For purposes of the Plan, termination for "cause" shall
mean termination of employment by reason of the optionee's commission
of a felony, fraud, or willful misconduct which has resulted, or is
likely to result, in substantial and material damage to the Corporation
or a Subsidiary Corporation, all as the Committee in its sole
discretion, may determine.
E. [Notwithstanding any other provision of this Plan
to the contrary, in the event an optionee incurs a termination of
employment other than for cause during the 24-month
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period following a Change in Control, any option held by such optionee
may thereafter be exercised by the optionee, to the extent it was
exercisable at the time of such termination, or on such accelerated
basis, for (x) the longer of (i) [one] year from such date of
termination or (ii) such other period as may be provided in the Plan
for such termination of employment or as the Committee may provide in
the option agreement, or (y) until expiration of the stated term of
such option, whichever period is the shorter.]
F. If an option intended to qualify as an incentive
stock option is exercised after the expiration of the post-termination
exercise periods that apply for purposes of Section 422 of the Code,
such option will thereafter be treated as a non-qualified stock option.
(c) Option Price. The option price per share of Common Stock
purchasable under an option shall be determined by the Committee and set forth
in the option agreement, and shall not be less than 100% of the Fair Market
Value (as that term is defined in Section 7) of the Common Stock subject to such
option on the date of grant.
(d) Payment of Purchase Price upon Exercise. Each option shall
provide that the purchase price of shares of Common Stock for which an option
may be exercised shall be paid to the Corporation at the time of exercise in
cash or by certified or bank check or such other instrument as the Corporation
may accept. If approved by the Committee, payment, in full or in part, may also
be made in the form of unrestricted Common Stock (by delivery of such shares or
by attestation) already owned by the optionee of the same class as the Common
Stock subject to the option (based on the Fair Market Value of the Common Stock
on the date the option is exercised); provided, however, that, in the case of an
incentive stock option, the right to make a payment in the form of already owned
shares of Common Stock of the same class as the Common Stock subject to the
option may be authorized only at the time the option is granted and; provided,
further, that such already owned shares have been held by the optionee for at
least six months at the time of exercise or had been purchased on the open
market.
(e) Nontransferability. No option granted under the Plan shall
be transferable other than by a will of an optionee or by the laws of descent
and distribution. During an optionee's lifetime, an option shall be exercisable
only by the optionee or by the optionee's attorney-in-fact or conservator,
unless such exercise by the attorney-in-fact or conservator, would disqualify
the option as an incentive stock option.
(f) Additional Rules for Incentive Stock Options.
Notwithstanding anything contained herein to the contrary, no option which is
intended to qualify as an incentive stock option may be granted to any eligible
employee who at the time of such grant owns stock possessing more than 10% of
the total combined voting power of all classes of stock of the Corporation or of
any Subsidiary Corporation, unless at the time such option is granted the option
price is at least 110% of the Fair Market Value of a share of Common Stock and
such option by its terms is not exercisable after the expiration of five years
from the date such option is granted. In addition, the aggregate Fair Market
Value of the Common Stock (determined at the time an option for the Common Stock
is granted) for which incentive stock options are exercisable for the first time
by an optionee during any calendar year, under all of the incentive stock option
plans of the Corporation and of any Subsidiary Corporation, may not exceed
$100,000.
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6. Stock Appreciation Right.
An option agreement may provide that the optionee may from
time to time elect to cancel all or any portion of an option then subject to
exercise, in which event the Corporation's obligation in respect of such option
may be discharged by the issuance or transfer to the optionee of shares of
Common Stock with a Fair Market Value at such time equal to the excess, if any,
of the Fair Market Value of the shares of Common Stock subject to the option at
the time of the cancellation or the portion thereof so cancelled, over the
aggregate option price for such shares of Common Stock as set forth in the
option agreement. In the event of such a cancellation, the number of shares of
Common Stock as to which such option was cancelled shall no longer be available
for use under the Plan. Any such stock appreciation right will expire no later
than the expiration of the related options. Any such stock appreciation right
shall be transferrable only by will or by the laws of descent and distribution
and can only be transferred with the underlying option. During the lifetime of
the optionee, a stock appreciation right shall be exercisable only by such
optionee.
7. Fair Market Value.
For purposes of the Plan, "Fair Market Value", as of any given
date with respect to a share of Common Stock, means:
(a) the average of the high and low quoted sales prices on the
date of grant (or if there is no reported sale on such date, on the last
preceding date on which any reported sale occurred) on the principal United
States securities exchange on which the Common Stock is listed or admitted to
trading; or
(b) if the Common Stock is not listed or admitted to trading
on any such exchange, the closing bid quotation with respect to a share of
Common Stock on such date on the National Association of Securities Dealers,
Inc. Automated Quotation System, or if no such quotation is provided, on another
similar system, selected by the Committee, then in use; or
(c) if paragraphs (a) and (b) are not applicable, the fair
market value of a share of Common Stock on the date of grant as the Committee
may determine.
8. Change in Control Provisions.
(a) Impact of Event. Notwithstanding any other provision of
the Plan to the contrary, in the event of a Change in Control, any options
outstanding as of the date such Change in Control is determined to have
occurred, and which are not then exercisable and vested, shall become fully
exercisable and vested to the full extent of the original grant. The Committee
may also make additional adjustments and/or settlements of outstanding awards as
it deems appropriate and consistent with the Plan's purposes.
(b) Definition of Change in Control. For purposes of the Plan,
a "Change in Control" shall mean the happening of any of the following events:
(i) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the
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"Exchange Act")) (a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or
more of either (A) the then outstanding shares of common stock of the
Corporation (the "Outstanding Corporation Common Stock") or (B) the
combined voting power of the then outstanding voting securities of the
Corporation entitled to vote generally in the election of directors
(the "Outstanding Corporation Voting Securities"); provided, however,
that for purposes of this subsection (i), the following acquisitions
shall not constitute a Change of Control: (1) any acquisition directly
from the Corporation, (2) any acquisition by the Corporation, (3) any
acquisition by any employee benefit plan (or related trust) sponsored
or maintained by the Corporation or any corporation controlled by the
Corporation or (4) any acquisition by any corporation pursuant to a
transaction which complies with clauses (A), (B) and (C) of subsection
(iii) of this Section 8(b); or
(ii) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming
a director subsequent to the date hereof whose election, or nomination
for election by the Corporation's shareholders, was approved by a vote
of at least a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board;
or
(iii) Consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of
the Corporation (a "Business Combination"), in each case, unless,
following such Business Combination, (A) all or substantially all of
the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Corporation Common Stock and
Outstanding Corporation Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more
than 50% of, respectively, the then outstanding shares of common stock
and the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of such
transaction owns the Corporation or all or substantially all of the
Corporation's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding
Corporation Common Stock and Outstanding Corporation Voting Securities,
as the case may be, (B) no Person (excluding any corporation resulting
from such Business Combination or any employee benefit plan (or related
trust) of the Corporation or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly, 20% or
more of, respectively, the then outstanding shares of common stock of
the corporation resulting from such Business Combination or the
combined voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to
the Business Combination and (C) at least a majority of the members of
the board of directors of the corporation resulting from such Business
Com-
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bination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or
(iv) Approval by the shareholders of the Corporation of a complete
liquidation or dissolution of the Corporation.
9. Amendment and Discontinuance.
The Board may amend, alter, or discontinue the Plan, but no
amendment, alteration or discontinuation shall be made which would impair the
rights of an optionee under an option theretofore granted without the optionee's
consent, except such an amendment made to comply with applicable law, stock
exchange rules or accounting rules. In addition, no such amendment shall be made
without the approval of the Corporation's stockholders to the extent such
approval is required by applicable law or stock exchange rules. The Committee
may amend the terms of any option, prospectively or retroactively, but no such
amendment shall impair the rights of any holder without the holder's consent
except such an amendment made to cause the Plan or option to comply with
applicable law, stock exchange rules or accounting rules.
Subject to the above provisions, the Board shall have
authority to amend the Plan to take into account changes in law and tax and
accounting rules as well as other developments, and to grant options which
qualify for beneficial treatment under such rules without stockholder approval.
10. Effective Date.
The effective date of the Plan shall be January [22], 1999,
subject to the approval by stockholders of the Corporation holding not less than
a majority of the shares present and voting at its 1999 Annual Meeting.
11. General Provisions.
(a) Investment Representation; Compliance with Other Laws and
Regulations. The Committee may require each person purchasing or receiving share
of Common Stocks pursuant to an award to represent to and agree with the
Corporation in writing that such person is acquiring the shares without a view
to the distribution thereof. The certificates for such shares may include any
legend which the Committee deems appropriate to reflect any restrictions on
transfer. The Plan, the grant and exercise of options under the Plan, and the
obligation of the Corporation to sell and deliver shares under such options
shall be subject to all applicable federal and state laws, rules and
regulations. Notwithstanding any other provision of the Plan or agreements made
pursuant thereto, the Corporation shall not be required to issue or deliver any
certificate or certificates for shares of Common Stock under the Plan prior to
fulfillment of all of the following conditions:
1. Listing or approval for listing upon notice of issuance,
of such shares on the New York Stock Exchange, Inc., or
such other securities exchange as may at the time be the
principal market for the Common Stock;
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2. Any registration or other qualification of such shares of
the Corporation under any state or federal law or
regulation, or the maintaining in effect of any such
registration or other qualification which the Committee
shall, in its absolute discretion upon the advice of
counsel, deem necessary or advisable; and
3. Obtaining any other consent, approval, or permit from any
state or federal governmental agency which the Committee
shall, in its absolute discretion after receiving the
advice of counsel, determine to be necessary or advisable.
(b) No Rights as a Shareholder. No optionee shall have any
rights as a shareholder with respect to any shares of Common Stock subject to an
option prior to the date of issuance of a certificate or certificates for such
shares.
(c) No Rights to Continued Employment. The Plan and any option
granted under the Plan shall neither confer upon any optionee any right with
respect to continuance of employment by the Corporation or by any subsidiary of
the Corporation, nor shall it interfere in any way with the right of an employer
to terminate the optionee's employment at any time.
(d) Effect of the Plan on Other Stock Plans. The adoption of
the Plan shall have no effect on awards made or to be made pursuant to other
stock plans covering employees of the Corporation, a Subsidiary Corporation, a
parent corporation or any predecessors or successors thereto.
(e) Unfunded Status of Plan. It is presently intended that the
Plan constitute an "unfunded" plan for incentive and deferred compensation. The
Committee may authorize the creation of trusts or other arrangements to meet the
obligations created under the Plan to deliver Common Stock; provided, however,
that unless the Committee otherwise determines, the existence of such trusts or
other arrangements is consistent with the "unfunded" status of the Plan.
(f) Withholding. No later than the date as of which an amount
first becomes includible in the gross income of the participant for federal
income tax purposes with respect to any award under the Plan, the participant
shall pay to the Corporation, or make arrangements satisfactory to the
Corporation regarding the payment of, any federal, state, local or foreign taxes
of any kind required by law to be withheld with respect to such amount. [Unless
otherwise determined by the Corporation, withholding obligations may be settled
with Common Stock, including Common Stock that is part of the award that gives
rise to the withholding requirement.] The obligations of the Corporation under
the Plan shall be conditional on such payment or arrangements, and the
Corporation and its Subsidiary Corporations shall, to the extent permitted by
law, have the right to deduct any such taxes from any payment otherwise due to
the participant. [The Committee may establish such procedures as it deems
appropriate, including making irrevocable elections, for the settlement of
withholding obligations with Common Stock.]
(g) Governing Law. The Plan and all awards made and actions
taken thereunder shall be governed by and construed in accordance with the laws
of the State of New York, without reference to principles of conflict of laws.
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