EXHIBIT 10.29
VIRGINIA BEACH FEDERAL FINANCIAL CORPORATION
1998 STOCK OPTION PLAN
1. Purpose of the Plan. The Plan shall be known as the Virginia Beach Federal
Financial Corporation ("Company") 1998 Stock Option Plan (the "Plan"). The
purpose of the Plan is to attract and retain qualified personnel for
positions of substantial responsibility and to provide additional incentive
to officers, directors, key employees and other persons providing services
to the Company, or any present or future parent or subsidiary of the
Company to promote the success of the business. The Plan is intended to
provide for the grant of "Incentive Stock Options,"within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code")
and Non-Incentive Stock Options, options that do not so qualify. The
provisions of the Plan relating to Incentive Stock Options shall be
interpreted to conform to the requirements of Section 422 of the Code.
2. Definitions. The following words and phrases when used in this Plan with an
initial capital letter, unless the context clearly indicates otherwise,
shall have the meaning as set forth below. Wherever appropriate, the
masculine pronoun shall include the feminine pronoun and the singular shall
include the plural.
(a) "Award" means the grant by the Committee of an Incentive Stock Option
or a Non-Incentive Stock Option, or any combination thereof, as
provided in the Plan.
(b) "Board" shall mean the Board of Directors of the Company, or any
successor or parent corporation thereto.
(c) "Change in Control" shall mean: (i) the sale of all, or a material
portion, of the assets of the Company; (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 Securities Exchange Act of
1934 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 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.ss.574.3 (c) (1) (vi) 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. The decision of the Committee as to whether a Change in Control
has occurred shall be conclusive and binding.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended, and
regulations promulgated thereunder.
(e) "Committee" shall mean the Board or the Stock Option Committee
appointed by the Board in accordance with Section 5 (a) of the Plan.
(f) "Common Stock" shall mean the common stock of the Company, or any
successor or parent corporation thereto.
(g) "Company" shall mean the Virginia Beach Federal Financial Corporation,
the parent corporation of the Savings Bank, or any successor or Parent
thereof.
(h) "Continuous Employment" or "Continuous Status as an Employee" shall
mean the absence of any interruption or termination of employment with
the Company or any present or future Parent or Subsidiary of the
Company. Employment shall not be considered interrupted in the case of
sick leave, military leave or any other leave of absence approved by
the Company or in the case of transfers between payroll locations, of
the Company or between the Company, its Parent, its Subsidiaries or a
successor.
(i) "Director shall mean a member of the Board of the Company, or any
successor or parent corporation thereto.
(j) "Director Emeritus" shall mean 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 Savings Bank or the
Company from time to time.
(k) "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
Non-Incentive Stock Options, any physical or mental impairment which
renders the Participant incapable of continuing in the employment or
service of the Savings Bank or the Parent in his then current capacity
as determined by the Committee.
(l) "Dividend Equivalent Rights" shall mean the rights to receive a cash
payment in accordance with Section 12 of the Plan.
(m) "Effective Date" shall mean the date specified in Section 15 hereof.
(n) "Employee" shall mean any person employed by the Company or any present
or future Parent or Subsidiary of the Company.
(o) "Fair Market Value" shall mean: (i) if the Common Stock is traded
otherwise than on a national securities exchange, then the Fair Market
Value per Share shall be equal to the mean between the last bid and ask
price of such Common Stock on such date or, if there is no bid and ask
price on said date, then on the immediately prior business day on which
there was a bid and ask price. If no such bid and ask price is
available, then the Fair Market Value shall be determined by the
Committee in good faith; or (ii) if the Common Stock is listed on a
national securities exchange (including the NASDAQ National Market),
then the Fair Market Value per Share shall be not less than the average
of the highest and lowest selling price of such Common Stock on such
exchange on such date, or if there were no sales on said date, then the
Fair Market Value shall be not less than the mean between the last bid
and ask price on such date.
(p) "Incentive Stock Option" or "ISO" shall mean an option to purchase
Shares granted by the Committee pursuant to Section 8 hereof which is
subject to the limitations and restrictions of Section 8 hereof and is
intended to qualify as an incentive stock option under Section 422 of
the Code.
(q) "Non-Incentive Stock Option" or "Non-ISO" shall mean an option to
purchase Shares granted pursuant to Section 9 hereof, which option is
not intended to qualify under Section 422 of the Code.
(r) "Option" shall mean an Incentive Stock Option or Non-Incentive Stock
Option granted pursuant to this Plan providing the holder of such
Option with the right to purchase Common Stock.
(s) "Optioned Stock" shall mean stock subject to an Option granted pursuant
to the Plan.
(t) "Optionee" shall mean any person who received an Option or Award
pursuant to the Plan.
(u) "Parent" shall mean any present or future corporation which would be a
"parent corporation" as defined in Sections 424 (e) and (g) of the
Code.
(v) "Participant" means any director, officer or key employee of the
Company or any Parent or Subsidiary of the Company or any other person
providing a service to the Company who is selected by the Committee to
receive an Award, or who by the express terms of the Plan is granted an
Award.
(w) "Plan" shall mean the Virginia Beach Federal Financial Corporation 1998
Stock Option Plan.
(x) "Retirement" shall mean termination of service in all capacities as an
Employee, Director and Director Emeritus following attainment of not
less than age 55 and completion of not less than ten years of service
to the Company or the Savings Bank. Service to the Company or the
Savings Bank rendered prior to the Effective Date shall be recognized
in determining eligibility to meet the requirements of Retirement under
the Plan.
(y) "Savings Bank" shall mean First Coastal Bank, Virginia Beach, Virginia,
or any successor corporation thereto.
(z) "Share" shall mean one share of the Common Stock.
(aa)"Subsidiary" shall mean any present or future corporation which
constitutes a "subsidiary corporation" as defined in Sections 424 (f)
and (g) of the Code.
3. Shares Subject to the Plan. Except as otherwise required by the
provisions of Section 13 hereof, the aggregate number of Shares with
respect to which Awards may be made pursuant to the Plan shall not
exceed *490,500 Shares. Such Shares may either be from authorized but
unissued shares or shares purchased in the market for Plan purposes. If
an Award shall expire, become unexercisable, or be forfeited for any
reason prior to its exercise, new Awards may be granted under the Plan
with respect to the number of Shares as to which such expiration has
occurred.
4. Six Month Holding Period.
Subject to vesting requirements, if applicable, except in the event of
death or Disability of the Optionee or a Change in Control of the
Company, a 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.
5. Administration of the Plan.
(a) Composition of the Committee. The Plan shall be administered by
the Board of Directors of the Company or a Committee which shall
consist of not less than two Directors of the Company appointed by
the Board and serving at the pleasure of the Board. All persons
designated as members of the Committee shall meet the requirements
of a "Non-Employee Director" within the meaning of Rule 16b-3
under the Securities Exchange Act of 1934, as amended, as found at
17 CFR ss.240.16b-3.
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*Approximately 10% of shares outstanding as of date of Board adoption.
(b) Powers of the Committee. The Committee is authorized (but only to
the extent not contrary to the express provisions of the Plan or
to resolutions adopted by the Board) to interpret the Plan, to
prescribe, amend and rescind rules and regulations relating to the
Plan, to determine the form and content of Awards to be issued
under the Plan and to make other determinations necessary or
advisable for the administration of the Plan, and shall have and
may exercise such other power and authority as may be delegated to
it by the Board from time to time. 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.
The President of the Company and such other officers as shall be
designated by the Committee are hereby authorized to execute written
agreements evidencing Awards on behalf of the Company and to cause them
to be delivered to the Participants. Such agreements shall set forth
the Option exercise price, the number of shares of Common Stock subject
to such Option, the expiration date of such Options, and such other
terms and restrictions applicable to such Award as are determined in
accordance with the Plan or the actions of the Committee.
(c) Effect of Committee's Decision. All decisions, determinations and
interpretations of the Committee shall be final and conclusive on
all persons affected thereby.
6. Eligibility for Awards and Limitations.
(a) The Committee shall from time to time determine the officers,
Directors, key employees and other persons who shall be granted
Awards under the Plan, the number of Awards to be granted to each
such persons, and whether Awards granted to each such Participant
under the Plan shall be Incentive and/or Non-Incentive Stock
Options. In selecting Participants and in determining the number
of Shares of Common Stock to be granted to each such Participant,
the Committee may consider the nature of the prior and anticipated
future services rendered by each such Participant, each such
Participant's current and potential contribution to the Company
and such other factors as the Committee may, in its sole
discretion, deem relevant. Participants who have been granted an
Award may, if otherwise eligible, be granted additional Awards.
(b) The aggregate Fair Market Value (determined as of the date the
Option is granted) of the Shares with respect to which Incentive
Stock Options are exercisable for the first time by each Employee
during any calendar year (under all Incentive Stock Option plans,
as defined in Section 422 of the Code, of the Company or any
present or future Parent or Subsidiary of the Company) shall not
exceed $100,000. Notwithstanding the prior provisions of this
Section 6, the Committee may grant Options in excess of the
foregoing limitations, provided said Options shall be clearly and
specifically designated as not being Incentive Stock Options.
(c) In no event shall Shares subject to Options granted to any
individual Participant exceed more than 50% of the total number of
Shares authorized for delivery under the Plan.
7. Term of the Plan. The Plan shall continue in effect for a term of ten (10)
years from the Effective Date, unless sooner terminated pursuant to Section 18
hereof. No Option shall be granted under the Plan after ten (10) years from the
Effective Date.
8 Terms and Conditions of Incentive Stock Options. Incentive Stock Options may
be granted only to Participants who are Employees. Each Incentive Stock Option
granted pursuant to the Plan shall be evidenced by an instrument in such form as
the Committee shall from time to time approve. Each Incentive Stock Option
granted pursuant to the Plan shall comply with, and be subject to, the following
terms and conditions:
(a) Option Price.
(i) The price per Share at which each Incentive Stock Option granted
by the Committee under the Plan may be exercised shall not, as to
any particular Incentive Stock Option, be less than the Fair
Market Value of the Common Stock on the date that such Incentive
Stock Option is granted.
(ii) In the case of an Employee who owns Common Stock representing more
than ten percent (10%) of the outstanding Common Stock at the time
the Incentive Stock Option is granted, the Incentive Stock Option
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
that the Incentive Stock Option is granted.
(b) Payment. Full payment for each Share of Common Stock purchased upon the
exercise of any Incentive Stock Option granted under the Plan shall be
made at the time of exercise of each such Incentive Stock Option and
shall be paid in cash (in United States Dollars), Common Stock or a
combination of cash and Common Stock. Common Stock utilized in full or
partial payment of the exercise price shall be valued at the Fair
Market Value at the date of exercise. The Company shall accept full or
partial payment in Common Stock only to the extent permitted by
applicable law. No Shares of Common Stock shall be issued until full
payment has been received by the Company, and no Optionee shall have
any of the rights of a stockholder of the Company until Shares of
Common Stock are issued to the Optionee.
(c) Term of Incentive Stock Option. The term of exercisability of each
Incentive Stock Option granted pursuant to the Plan shall be not more
than ten (10) years from the date each such Incentive Stock Option is
granted, provided that in the case of an Employee who owns stock
representing more than ten percent (10%) of the Common Stock
outstanding at the time the Incentive Stock Option is granted, the term
of exercisability of the Incentive Stock Option shall not exceed five
(5) years.
(d) Exercise Generally. Except as otherwise provided in Section 10 hereof,
no Incentive Stock Option may be exercised unless the Optionee shall
have been in the employ of the Company at all times during the period
beginning with the date of grant of any such Incentive Stock Option and
ending on the date three (3) months prior to the date of exercise of
any such Incentive Stock Option. The Committee may impose additional
conditions upon the right of an Optionee to exercise any Incentive
Stock Option granted hereunder which are not inconsistent with the
terms of the Plan or the requirements for qualification as an Incentive
Stock Option. Except as otherwise provided by the terms of the Plan or
by action of the Committee at the time of the grant of the Options, all
Options granted will be first exercisable as of the date of grant.
(e) Cashless Exercise. Subject to vesting requirements, if applicable, an
Optionee who has held an Incentive Stock Option for at least six months
may engage in the "cashless exercise" of the Option. Upon a cashless
exercise, an Optionee shall give the Company written notice of the
exercise of the Option together with an order to a registered
broker-dealer or equivalent third party, to sell part or all of the
Optioned Stock and to deliver enough of the proceeds to the Company to
pay the Option exercise price and any applicable withholding taxes. If
the Optionee does not sell the Optioned Stock through a registered
broker-dealer or equivalent third party, the Optionee can give the
Company written notice of the exercise of the Option and the third
party purchaser of the Optioned Stock shall pay the Option exercise
price plus any applicable withholding taxes to the Company.
(f) Transferability. An Incentive Stock Option granted pursuant to the Plan
shall be exercised during an Optionee's lifetime only by the Optionee
to whom it was granted and shall not be assignable or transferable
otherwise than by will or by the laws of descent and distribution.
9. Terms and Conditions of Non-Incentive Stock Options. Each Non-Incentive
Stock Option granted pursuant to the Plan shall be evidenced by an
instrument in such form as the Committee shall from time to time
approve. Each Non-Incentive Stock Option granted pursuant to the Plan
shall comply with and be subject to the following terms and conditions.
(a) Option Price. The exercise price per Share of Common Stock for
each Non-Incentive Stock Option granted pursuant to the Plan shall
be at such price as the Committee may determine in its sole
discretion, but in no event less than the Fair Market Value of
such Common Stock on the date of grant as determined by the
Committee in good faith.
(b) Payment. Full payment for each Share of Common Stock purchased
upon the exercise of any Non-Incentive Stock Option granted under
the Plan shall be made at the time of exercise of each such
Non-incentive Stock Option and shall be paid in cash (in United
States Dollars), Common Stock or a combination of cash and Common
Stock. Common Stock utilized in full or partial payment of the
exercise price shall be valued at its Fair Market Value at the
date of exercise. The Company shall accept full or partial payment
in Common Stock only to the extent permitted by applicable law. No
Shares of Common Stock shall be issued until full payment has been
received by the Company and no Optionee shall have any of the
rights of a stockholder of the Company until the Shares of Common
Stock are issued to the Optionee.
(c) Term. The term of exercisability of each Non-Incentive Stock
Option granted pursuant to the Plan shall be not more than ten
(10) years from the date each such Non-Incentive Stock Option is
granted.
(d) Exercise Generally. The Committee may impose additional conditions
upon the right of any Participant to exercise any Non-Incentive
Stock Option granted hereunder which is not inconsistent with the
terms of the Plan. Except as otherwise provided by the terms of
the Plan or by action of the Committee at the time of the grant of
the Options, the Options will be first exercisable as of the date
of grant.
(e) Cashless Exercise. Subject to vesting requirements, if applicable,
an Optionee who has held a Non-Incentive Stock Option for at least
six months may engage in the "cashless exercise" of the Option.
Upon a cashless exercise, an Optionee shall give the Company
written notice of the exercise of the Option together with an
order to a registered broker-dealer or equivalent third party, to
sell part or all of the Optioned Stock and to deliver enough of
the proceeds to the Company to pay the Option exercise price and
any applicable withholding taxes. If the Optionee does not sell
the Optioned Stock through a registered broker-dealer or
equivalent third party, the Optionee can give the Company written
notice of the exercise of the Option and the third party purchaser
of the Optioned Stock shall pay the Option exercise price plus any
applicable withholding taxes to the Company.
(f) Transferability. Any Non-Incentive Stock Option granted pursuant
to the Plan shall be exercised during an Optionee's lifetime only
by the Optionee to whom it was granted and shall not be assignable
or transferable otherwise than by will or by the laws of descent
and distribution.
10. Effect of Termination of Employment, Disability, Death and Retirement
on Incentive Stock Options.
(a) Termination of Employment. In the event that any Optionee's
employment with the Company shall terminate for any reason, other
than Disability or death, all of any such Optionee's Incentive
Stock Options, and all of any such Optionee'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 Optionee's continuing status as a Director or
Director Emeritus of the Savings Bank or the Company, but only if,
and to the extent that, the Optionee 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-Incentive Stock Option. In the event that a Subsidiary
ceases to be a Subsidiary of the Company, the employment of all of
its employees who are not immediately thereafter employees of the
Company shall be deemed to terminate upon the date such Subsidiary
so ceases to be a Subsidiary of the Company.
(b) Disability. In the event that any Optionee's employment with the
Company shall terminate as the result of the Disability of such
Optionee, such Optionee may exercise any Incentive Stock options
granted to the Optionee 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 Optionee was 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 an Optionee, any Incentive
Stock Options granted to such Optionee may be exercised by the
person or persons to whom the Optionee's rights under any such
Incentive Stock Options pass by will or by the laws of descent and
distribution (including the Optionee'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 Optionee but only if, and to the extent that, the Optionee
was entitled to exercise any such Incentive Stock Options at the
date of death. For purposes of this Section 10(c), any Incentive
Stock Option held by an Optionee 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
Optionee may receive Shares or cash or a combination thereof. If
cash shall be paid in lieu of Shares, 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.
(d) Incentive Stock Options Deemed Exercisable. For purposes of
Sections 10(a), 10(b) and 10(c) above, any Incentive Stock Option
held by any Optionee shall be considered exercisable at the date
of termination of employment if any such Incentive Stock Option
would have been exercisable at such date of termination of
employment without regard to the Disability or death of the
Participant.
(e) Termination of Incentive Stock Options; Vesting Upon Retirement.
Except as may be specified by the Committee at the time of grant
of an Option, to the extent that any Incentive Stock Option
granted under the Plan to any Optionee whose employment with the
Company terminates shall not have been exercised within the
applicable period set forth in this Section 10, any such Incentive
Stock Option, and all rights to purchase or receive Shares of
Common Stock pursuant thereto, as the case may be, shall terminate
on the last day of the applicable period. Notwithstanding the
foregoing, the Committee may authorize at the time of the grant of
an Option that such Award shall be immediately 100% exercisable
upon the Retirement of the Optionee.
11. Effect of Termination of Employment, Disability, Death or Retirement on
Non-Incentive Stock Options. The terms and conditions of Non-Incentive
Stock Options relating to the effect of the Retirement or other
termination of an Optionee's employment or service, Disability of an
Optionee or his death shall be such terms and conditions as the
Committee shall, in its sole discretion, determine at the time of
termination of service, unless specifically provided for by the terms
of the Agreement at the time of grant of the Award.
12. Dividend Equivalent Rights. The committee, in its sole discretion, may
include as a term of any Option, the right of the Optionee to receive
Dividend Equivalent Rights. Such rights shall provide that upon the
payment of a cash dividend on the Common Stock, the holder of such
Options shall receive payment of compensation in an amount equivalent
to the dividend payable as if such Options had been exercised and such
Common Stock held as of the dividend record date. Such rights shall
expire upon the expiration or exercise of such underlying Options. Such
rights are non-transferable and shall attach to Options whether or not
such Options are immediately exercisable. The dividend equivalent
payments associated with Options shall be paid to the Option holder
within 30 days of the dividend payment date of the Common Stock.
13. Recapitalization, Merger, Consolidation, Change in Control and Other
Transactions.
(a) Adjustment. Subject to any required action by the stockholders of
the Company, within the sole discretion of the Committee, the
aggregate number of Shares of Common Stock for which Options may
be granted hereunder, the number of Shares of Common Stock covered
by each outstanding Option, and the exercise price per Share of
Common Stock of each such Option, shall all be proportionately
adjusted for any increase or decrease in the number of issued and
outstanding Shares of Common Stock resulting from a subdivision or
consolidation of Shares (whether by reason of merger,
consolidation, recapitalization, reclassification, split-up,
combination of shares, or otherwise) or the payment of a stock
dividend (but only on the Common Stock) or any other increase or
decrease in the number of such Shares of Common Stock effected
without the receipt or payment of consideration by the Company
(other than Shares held by dissenting stockholders).
(b) Change in Control. All outstanding Awards shall become immediately
exercisable in the event of a Change in Control of the Company. In
the event of such a Change in Control, the Committee and the Board
of Directors will take one or more of the following actions to be
effective as of the date of such Change in Control:
(i) provide that such Options shall be assumed, or equivalent
options shall be substituted, ("Substitute Options") by the
acquiring or succeeding corporation (or an affiliate
thereof), provided that: (A) any such Substitute Options
exchanged for Incentive Stock Options shall meet the
requirements of Section 424(a) of the Code, and (B) the
shares of
stock issuable upon the exercise of such Substitute Options
shall constitute securities registered in accordance with the
Securities Act of 1933, as amended, ("1933 Act") or such
securities shall be exempt from such registration in
accordance with Sections 3(a) (2) or 3(a) (5) of the 1933
Act, (collectively, "Registered Securities"), or in
alternative, if the securities issuable upon the exercise of
such Substitute Options shall not constitute Registered
Securities, then the Optionee will receive upon consummation
of the Change in Control transaction a cash payment for each
Option surrendered equal to the difference between (1) the
Fair Market Value of the consideration to be received for
each share of Common Stock in the Change in Control
transaction times the number of shares of Common Stock
subject to such surrendered Options, and (2) the aggregate
exercise price of all such surrendered Options, or
(ii) in the event of a transaction under the terms of which the
holders of the Common Stock of the Company will receive upon
consummation thereof a cash payment (the "Merger Price") for
each share of Common Stock exchanged in the Change in Control
transaction, to make or to provide for a cash payment to the
Optionees equal to the difference between (A) the Merger
Price times the number of shares of Common Stock subject to
such Options held by each Optionee (to the extent then
exercisable at prices not in excess of the Merger Price and
(B) the aggregate exercise price of all such surrendered
Options in exchange for such surrendered Options.
(c) Extraordinary Corporate Action. Notwithstanding any provisions of
the Plan to the contrary, subject to any required action by the
stockholders of the Company, in the event of any Change in
Control, recapitalization, merger, consolidation, exchange of
Shares, spin-off, reorganization, tender offer, partial or
complete liquidation or other extraordinary corporate action or
event, the Committee, in its sole discretion, shall have the
power, prior or subsequent to such action or event to:
(i) appropriately adjust the number of Shares of Common Stock
subject to each Option, the Option exercise price per Share
of Common Stock, and the consideration to be given or
received by the Company upon the exercise of any outstanding
Option;
(ii) cancel any or all previously granted Options, provided that
appropriate consideration is paid to the Optionee in
connection therewith; and/or
(iii) make such other adjustments in connection with the Plan as
the Committee, in its sole discretion, deems necessary,
desirable, appropriate or advisable; provided, however, that
no action shall be taken by the Committee which would cause
Incentive Stock Otpions granted pursuant to the Plan to fail
to meet the requirements of Section 422 of the Code without
the consent of the Optionee.
(d) Acceleration. The Committee shall at all times have the power to
accelerate the exercise date of Options previously granted under
the Plan.
Except as expressly provided in Sections 13(a) or 13(b) hereof, no
Optionee shall have any rights by reason of the occurrence of any of the events
described in this Section 13.
14. Time of Granting Options. The date of grant of an Option under the Plan
shall, for all purposes, be the date on which the Committee makes the
determination of granting such Option. Notice of the grant of an Option
shall be given to each individual to whom an Option is so granted
within a reasonable time after the date of such grant in a form
determined by the Committee.
15. Effective Date. The Plan shall become effective upon the date of
approval of the Plan by the stockholders of the Company. The Committee
may make a determination related to Awards prior to the Effective Date
with such Awards to be effective upon the date of stockholder approval
of the Plan.
16. Approval by Stockholders. The Plan shall be approved by stockholders of
the Company within twelve (12) months before or after the date the Plan
is approved by the Board.
17. Modification of Options. At any time and from time to time, the Board
may authorize the Committee to direct the execution of an instrument
providing for the modification of any outstanding Option, provided no
such modification, extension or renewal shall confer on the holder of
said Option any right or benefit which could not be conferred on the
Optionee by the grant of a new Option at such time, or shall not
materially decrease the Optionee's benefits under the Option without
the consent of the holder of the Option, except as otherwise permitted
under Section 18 hereof.
18. Amendment and Termination of the Plan.
(a) Action by the Board. The Board may alter, suspend or discontinue
the Plan, except that no action of the Board may increase (other
than as provided in Section 13 hereof) the maximum number of
Shares permitted to be optioned under the Plan, materially
increase the benefits accruing to Participants under the Plan or
materially modify the requirements for eligibility for
participation in the Plan unless such action of the Board shall be
subject to approval or ratification by the stockholders of the
Company.
(b) Change in Applicable Law. Notwithstanding any other provision
contained in the Plan, in the event of a change in any federal or
state law, rule or regulation which would make the exercise of all
or part of any previously granted Option unlawful or subject the
Company to any penalty, the Committee may restrict any such
exercise without the consent of the Optionee or other holder
thereof in order to comply with any such law, rule or regulation
or to avoid any such penalty.
19. Conditions Upon Issuance of Shares; Limitations on Option Exercise;
Cancellation of Option Rights.
(a) Shares shall not be issued with respect to any Option 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.
(b) 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 issuable
hereunder shall relieve the Company of any liability with respect
to the non-issuance or sale of such Shares.
(c) As a condition to the exercise of an Option, the Company may
require the person exercising the Option 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.
(d) Notwithstanding anything herein to the contrary, upon the
termination of employment or service of an Optionee by the Company
or its Subsidiaries for "cause" as defined at 12 C.F.F. 563.39(b)
(1) as determined by the Board of Directors, all Options held by
such Participant shall cease to be exercisable as of the date of
such termination of employment or service.
(e) Upon the exercise of an Option by an Optionee (or the Optionee's
personal representative), the Committee, in its sole and absolute
discretion, may make a cash payment to the Optionee, 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 Optionee or the Company under Section 16(b) of
the Securities Exchange Act of 1934, as amended, and regulations
promulgated thereunder.
20. Reservation of Shares. During the term of the Plan, the Company will
reserve and keep available a number of Shares sufficient to satisfy the
requirements of the Plan.
21. Unsecured Obligation. No Participant under the Plan shall have any
interest in any fund or special asset of the Company by reason of the
Plan or the grant of any Option under the Plan. No trust fund shall be
created in connection with the Plan or any grant of any Option
hereunder and there shall be no required funding of amounts which may
become payable to any Participant.
22. Withholding Tax. The Company shall have the right to deduct from all
amounts paid in cash with respect to the cashless exercise of Options
and Dividend Equivalent Rights under the Plan any taxes required by law
to be withheld with respect to such cash payments. Where a Participant
or other person is entitled to receive Shares pursuant to the exercise
of an Option, the Company shall have the right to require the
Participant or such other person to pay the Company the amount of any
taxes which the Company is required to withhold with respect to such
Shares, or, in lieu thereof, to retain, or to sell without notice, a
number of such Shares sufficient to cover the amount required to be
withheld.
23. No Employment Rights. No Director, Employee or other person shall have
a right to be selected as a Participant under the Plan. Neither the
Plan nor any action taken by the Committee in administration of the
Plan shall be construed as giving any person any rights of employment
or retention as an Employee, Director or in any other capacity with the
Company, the Savings Bank or other Subsidiaries.
24. Governing Law. The Plan shall be governed by and construed in
accordance with the laws of the Commonwealth of Virginia, except to the
extent that federal law shall be deemed to apply.