Exhibit 10.1
ATLANTIC LIBERTY FINANCIAL CORP.
2003 INCENTIVE STOCK BENEFIT PLAN
1. PURPOSE. The purpose of the Atlantic Liberty Financial Corp.
2003 Incentive Stock Benefit Plan (the "Plan") is to (i) provide employees,
officers and directors of Atlantic Liberty Financial Corp. (the "Company"),
Atlantic Liberty Savings, F. A. (the "Association") and any Affiliates of the
Company (as defined below), with additional incentives to improve the growth and
performance of the Company, and (ii) to attract and retain qualified and
experienced personnel to the Company and its Affiliates.
2. TERM. The Plan shall be effective as of the date of
stockholder approval (the "Effective Date"), and shall remain in effect for ten
years thereafter, unless sooner terminated by the Company's Board of Directors
(the "Board"). After termination of the Plan, no additional awards may be
granted, but previously granted awards shall remain outstanding in accordance
with their applicable terms and conditions and the terms and conditions of the
Plan.
3. PLAN ADMINISTRATION.
(a) Role of the Committee. The Plan shall be administered by the
Committee. The Committee shall consist of either (i) at least two
"Non-Employee Directors" of the Company, or (ii) the entire Board of
the Company. A "Non-Employee Director" means, for purposes of the Plan,
a director who: (a) is not employed by the Company or an Affiliate; (b)
does not receive compensation directly or indirectly from the Company
as a consultant (or in any capacity other than as a director) greater
than $60,000; (c) does not have an interest in a transaction requiring
disclosure under Item 404(a) of Regulation S-K; or (d) is not engaged
in a business relationship for which disclosure would be required
pursuant to Item 404(b) of Regulation S-K. The interpretation and
construction by the Committee of any provisions of the Plan or of any
Award granted hereunder shall be final and binding, except as set forth
herein below. The Committee shall act by vote or written consent of a
majority of its members. Subject to the express provisions and
limitations of the Plan, the Committee may adopt such rules and
procedures as it deems appropriate for the conduct of its affairs. The
Committee shall have the power to interpret and implement the Plan and
any rules, regulations, guidelines or agreements adopted hereunder, and
to adopt such rules, regulations and guidelines for carrying out the
Plan as it may deem necessary or proper. These powers shall include,
but not be limited to: (i) determination of the type or types of awards
to be granted under the Plan; (ii) determination of the terms and
conditions of any awards under the Plan; (iii) determination of
whether, to what extent and under what circumstances awards may be
settled, paid or exercised in cash, shares, other securities, other
awards, other property, or accelerated, canceled, extended, forfeited
or suspended; (iv) adoption of modifications, amendments, procedures,
and subplans as may be necessary; (v) subject to the rights of
participants, modification, amendment or cancellation of any award to
correct an administrative error; and (vi) taking any other action the
Committee deems necessary or desirable for the administration of the
Plan. The Committee shall report its actions and decisions with respect
to the Plan to the Board at appropriate times, but in no event less
than one time per calendar year.
(b) Role of the Board. The members of the Committee shall be
appointed or approved by, and will serve at the pleasure of, the Board
of Directors of the Company. The Board may in its discretion from time
to time remove members from, or add members to, the Committee, subject
to the requirements set forth in subsection (a) above. The Board shall
have all of the powers allocated to it in the Plan, may take any action
under or with respect to the Plan that the Committee is authorized to
take, and may reverse or override any action taken or decision made by
the Committee under or with respect to the Plan;provided, however, that
the Board may not revoke any Award except in the event of revocation
for Cause or with respect to unearned Awards in the event the Recipient
of an Award voluntarily terminates employment with the Company or its
Affiliates prior to Normal Retirement.
(c) Plan Administration Restrictions. All transactions involving a
grant, award or other acquisitions from the Company shall:
(i) be approved by the Company's full Board or by the
Committee;
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(ii) be approved, or ratified, in compliance with Section
14 of the Exchange Act, by either: the affirmative
vote of the holders of a majority of the shares
present, or represented and entitled to vote at a
meeting duly held in accordance with the laws under
which the Company is incorporated; or the written
consent of the holders of a majority of the
securities of the issuer entitled to vote, provided
that such ratification occurs no later than the date
of the next annual meeting of stockholders; or
(iii) result in the acquisition of an Option or Limited
Right that is held by the Recipient for a period of
six months following the date of such acquisition.
(d) Limitation on Liability. No member of the Board or the
Committee shall be liable for any determination made in good faith with
respect to the Plan or any Awards granted under it. If a member of the
Board or the Committee 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 reason of
anything done or not done by him in such capacity under or with respect
to the Plan, the Company or its Affiliates shall indemnify such member
against all expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in the best
interests of the Company and its Affiliates and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful.
4. ELIGIBILITY TO PARTICIPATE. Officers and employees of the
Company and its Affiliates shall be eligible to receive Incentive Stock Options,
Non-Statutory Stock Options, Stock Awards, Limited Rights, Reload Options and
/or Dividend Equivalent Rights under the Plan (collectively, "awards"). Outside
directors shall be eligible to receive Non-Statutory Stock Options, Reload
Options, Dividend Equivalent Rights and Stock Awards under the Plan. The term
"Company" includes any entity that is directly or indirectly controlled by the
Company or any entity in which the Company has a significant equity interest, as
determined by the Committee. The term "Affiliate" means any "parent corporation"
or "subsidiary corporation" of the Company within the meaning of Sections 424(e)
and (f) of the Internal Revenue Code ("Code"), respectively. An "outside
director" means a director of the Company or an Affiliate who is not an employee
of the Company or an Affiliate.
5. SHARES OF STOCK SUBJECT TO THE PLAN. 256,648 shares of common
stock of the Company ("Common Stock") in the aggregate are reserved for issuance
under the Plan, which shares shall be available for issuance (subject to
adjustment as provided in Section 6) pursuant to the exercise of Stock Options,
granted under Sections 7(a) and 7(c) of the Plan, or Stock Awards, under Section
7(d) of the Plan. The maximum number of Stock Options that may be granted to any
one employee of the Company is 60,000.
Any shares that are issued by the Company, and any awards that are
granted by, or become obligations of, the Company, through the assumption by the
Company or an Affiliate thereof, or in substitution for, outstanding awards
previously granted by an acquired company, shall not be counted against the
shares available for issuance under the Plan. In addition, any shares that are
used for the full or partial payment of the exercise price of any option or in
full or partial payment of a tax-withholding obligation under the Plan will not
be counted as issued under the Plan and will be available for future grants
under the Plan.
Any shares issued under the Plan may consist, in whole or in part, of
authorized and unissued shares, treasury shares or shares purchased by the Plan.
No fractional shares shall be issued under the Plan. Cash may be paid in lieu of
any fractional shares in settlement of awards under the Plan.
6. ADJUSTMENTS.
If the number of outstanding shares of Common Stock is increased or
decreased or the shares of Common Stock are changed into or exchanged for a
different number or kind of shares or other securities of the Company on account
of any recapitalization, reclassification, stock split, reverse split,
combination of shares, exchange of shares, stock dividend or other distribution
payable in capital stock, or other increase or decrease in such shares effected
without receipt of consideration by the Company occurring after the Effective
Date, the number and kinds of shares for which grants of awards may be made
under the Plan shall be adjusted proportionately and accordingly by the Company.
In addition, the number and kind of shares for which grants are outstanding
shall be adjusted proportionately and accordingly so that the proportionate
interest of the grantee immediately following such event shall, to the extent
practicable, be the same as immediately before such event. Any such adjustment
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in outstanding Stock Options shall not change the aggregate Stock Option
purchase price payable with respect to shares that are subject to the
unexercised portion of the Stock Option outstanding but shall include a
corresponding proportionate adjustment in the Stock Option purchase price per
share.
Adjustments under this Section 6 relating to shares of Common Stock or
securities of the Company shall be made by the Committee, whose determination in
that respect shall be final, binding and conclusive. No fractional shares or
other securities shall be issued pursuant to any such adjustment, and any
fractions resulting from any such adjustment shall be eliminated in each case by
rounding downward to the nearest whole share. The granting of awards pursuant to
the Plan shall not affect or limit in any way the right or power of the Company
to make adjustments, reclassifications, reorganizations, or changes of its
capital or business structure or to merge, consolidate, dissolve, or liquidate,
or to sell or transfer all or any part of its business or assets.
7. AWARDS. The Committee shall determine the type or types of
award(s) to be made to each participant under the Plan and shall approve the
terms and conditions governing these awards in accordance with Section 11.
Awards may be granted singly, in combination or in tandem so that the settlement
or payment of one automatically reduces or cancels the other. The types of
awards that may be made under the Plan are set forth below.
(a) "Stock Option" - means a grant of a right to purchase a
specified number of shares of Common Stock under the Plan during a
specified period. A Stock Option may be in the form of an "Incentive
Stock Option", which means a Stock Option granted by the Committee that
complies with Section 422 of the Code, as amended, and the regulations
thereunder at the time of grant, or of a Non-Statutory Stock Option, as
defined in this paragraph. A "Non-Statutory Stock Option" means a Stock
Option granted by the Committee to (i) an outside director or (ii) to
any other participant, and such option is either (A) not designated by
the Committee as an Incentive Stock Option, or (B) fails to satisfy the
requirements of an Incentive Stock Option as set forth in Section 422
of the Code and the regulations thereunder. The exercise price of each
Stock Option shall be the per share Fair Market Value of Common Stock
on the date the award is granted. However, if a key employee owns stock
possessing more than 10% of the total combined voting power of all
classes of stock of the Company or its Affiliates (or under Section
424(d) of the Code, is deemed to own stock representing more than 10%
of the total combined voting power of all classes of stock of the
Company or its Affiliates by reason of the ownership of such classes of
stock, directly or indirectly, by or for any brother, sister, spouse,
ancestor or lineal descendent of such key employee, or by or for any
corporation, partnership, estate or trust of which such key employee is
a shareholder, partner or beneficiary), the purchase price per share of
Common Stock deliverable upon the exercise of each Incentive Stock
Option shall not be less than 110% of the Fair Market Value of the
Company's Common Stock on the date the Incentive Stock Option is
granted. A Stock Option may be exercised in whole or in installments,
which may be cumulative. The price at which shares of Common Stock may
be purchased under a Stock Option shall be paid in full at the time of
the exercise, in either cash or such other methods as provided by the
Committee at the time of grant or as provided in the form of agreement
approved in accordance herewith, including tendering (either actually
or by attestation) Common Stock at Fair Market Value on the date of
surrender, or any combination thereof.
(b) "Limited Right" - means the right to receive an amount of cash
based upon the terms set forth in Section 12.
(c) "Reload Option" - means an additional Stock Option granted
pursuant to Section 13.
(d) "Dividend Equivalent Right" means the right to receive an
amount of cash based upon the terms set forth in Section 14 hereof.
(e) "Stock Award" - means an award under the Plan, made in stock
or denominated in units of stock. All or part of any Stock Award may be
subject to conditions established by the Committee, and set forth in
the award agreement, which may include, but are not limited to,
continuous service with the Company, achievement of specific business
objectives, and other measurements of individual, business unit or
Company performance.
8. DEFERRALS AND SETTLEMENTS. Payment of awards may be in the
form of Common Stock or other awards, or in the case of Limited Rights, cash, or
in combinations thereof as the Committee determines at the time of grant, and
with such restrictions as it may impose. No Stock Option is to be considered
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exercised until payment in full is accepted by the Committee. The means by which
a recipient of an award may make payment is set forth below.
(a) Cash Payment. The exercise price may be paid in cash or by
certified check. To the extent permitted by law, the Committee may
permit all or a portion of the exercise price of a Stock Option to be
paid from borrowed funds.
(b) Cashless Exercise. Subject to vesting requirements, if
applicable, a participant may engage in a "cashless exercise" of the
Stock Option. Upon a cashless exercise, the participant shall give the
Company written notice of the exercise of the Stock Option together
with an order to a registered broker-dealer or equivalent third party,
to sell part or all of the Common Stock subject to the Stock Option and
to deliver enough of the proceeds to the Company to pay the Stock
Option exercise price and any applicable withholding taxes. If the
participant does not sell the Common Stock subject to the Stock Option
through a registered broker-dealer or equivalent third party, the
participant may give the Company written notice of the exercise of the
Stock Option and the third-party purchaser of the Common Stock subject
to the Stock Option shall pay the Stock Option exercise price plus
applicable withholding taxes to the Company.
(c) Exchange of Common Stock. The Committee may permit payment of
the Stock Option exercise price by the tendering of previously acquired
shares of Common Stock. All shares of Common Stock tendered in payment
of the exercise price of a Stock Option shall be valued at the Fair
Market Value of the Common Stock. No tendered shares of Common Stock
which were acquired by the participant upon the prior exercise of a
Stock Option or as awards under this or any other stock award plan
sponsored by the Company shall be accepted for exchange unless the
participant has held such shares (without restrictions imposed by said
plan or award) for at least six months prior to the exchange.
9. FAIR MARKET VALUE. "Fair Market Value" for all purposes under
the Plan shall mean the reported closing price of Common Stock as reported by
the Nasdaq stock market on such date (as reported in The Wall Street Journal, if
published), or if the Common Stock was not traded on such date, on the next
preceding day on which Common Stock was traded thereon. If the Common Stock is
not reported on the Nasdaq stock market, Fair Market Value shall mean the
average sale price of all shares of Common Stock sold during the 30-day period
immediately preceding the date on which such stock option was granted, and if no
shares of stock have been sold within such 30-day period, the average sale price
of the last three sales of Common Stock sold during the 90-day period
immediately preceding the date on which such stock option was granted. In the
event Fair Market Value cannot be determined in the manner described above, then
Fair Market Value shall be determined by the Committee. The Committee is
authorized, but is not required, to obtain an independent appraisal to determine
the Fair Market Value of the Common Stock.
Under no circumstances shall Fair Market Value be less than the par
value of the Common Stock.
10. TRANSFERABILITY AND EXERCISABILITY. All awards under the Plan,
other than Non-Statutory Stock Options, will be nontransferable and shall not be
assignable, alienable, saleable or otherwise transferable by the participant
other than by will or the laws of descent and distribution, except pursuant to a
domestic relations order entered by a court of competent jurisdiction or as
otherwise determined by the Committee.
If so permitted by the Committee, a participant may designate a
beneficiary or beneficiaries to exercise his rights under any Stock Option,
Reload Option, Limited Right or Dividend Equivalent Right who would be entitled
to and receive any distributions under the Plan upon the participant's death.
However, in the case of participants who are subject to Section 16 of the
Securities Exchange Act 1934 (the "1934 Act"), any contrary requirements of Rule
16b-3 under the 1934 Act, or any successor rule, shall prevail over the
provisions of this Section.
Awards granted pursuant to the Plan may be exercisable pursuant to a
vesting schedule as determined by the Committee. The Committee may, in its sole
discretion, accelerate or extend the time during which any Stock Option may be
exercised, or any Stock Award may vest, in whole or in part, provided, however,
that with respect to an Incentive Stock Option, it must be consistent with the
terms of Section 422 of the Code in order to continue to qualify as an Incentive
Stock Option. Notwithstanding the above, in the event of Retirement (as defined
in Section 26 hereof), death or Disability (as defined in Section 26 hereof),
all awards shall immediately vest.
11. AWARD AGREEMENTS. Each award of Stock Options, Reload Options,
Limited Rights, Dividend Equivalent Rights and Stock Award under the Plan shall
be evidenced by an agreement that is approved by the Committee. The agreement
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must set forth the terms, conditions and limitations to an award and the
provisions applicable in the event the participant's employment terminates,
provided, however, in no event shall the term of any Incentive Stock Option
exceed a period of ten years from the date of its grant. If any key employee, at
the time an Incentive Stock Option is granted to him, owns stock representing
more than 10% of the total combined voting power of all classes of stock of the
Company or its Affiliate (or, under Section 424(d) of the Code, is deemed to own
stock representing more than 10% of the total combined voting power of all
classes of stock, by reason of the ownership of such classes of stock, directly
or indirectly, by or for any brother, sister, spouse, ancestor or lineal
descendent of such key employee, or by or for any corporation, partnership,
estate or trust of which such key employee is a shareholder, partner or
beneficiary), the Incentive Stock Option granted to him shall not be exercisable
after the expiration of five years from the date of grant.
In addition, to the extent required by Section 422 of the Code, the
aggregate Fair Market Value (determined at the time the option is granted) of
the Common Stock for which Incentive Stock Options are exercisable for the first
time by a participant during any calendar year (under all plans of the Company
and its Affiliates) shall not exceed $100,000. In the event the amount
exercisable shall exceed $100,000, the first $100,000 of Incentive Stock Options
(determined as of the date of grant) shall be exercisable as Incentive Stock
Options and any excess shall be exercisable as Non-Statutory Stock Options.
12. LIMITED RIGHTS. The Committee may grant a Limited Right
simultaneously with the grant of any Stock Option, with respect to all or some
of the shares covered by such option. Limited Rights granted under the Plan are
subject to the following terms and conditions:
(a) Terms of Limited Rights. A Limited Right shall not be
exercisable in whole or in part before the expiration of six months
from the date of grant of the Limited Right. A Limited Right may be
exercised only in the event of a Change in Control of the Company or
the Association.
The Limited Right may be exercised only when the underlying Stock
Option is eligible to be exercised; provided that the Fair Market Value
of the underlying shares on the day of exercise is greater than the
exercise price of the related Stock Option.
Upon exercise of a Limited Right, the related Stock Option shall cease
to be exercisable. Upon exercise or termination of a Stock Option, any
related Limited Rights shall terminate. The Limited Right may be for no
more than 100% of the difference between the exercise price and the
Fair Market Value of the Common Stock subject to the underlying Stock
Option. The Limited Right is transferable only when the underlying
Stock Option is transferable and under the same conditions.
(b) Payment. Upon exercise of a Limited Right, the holder shall
promptly receive from the Company an amount of cash equal to the
positive difference between the Fair Market Value on the date of grant
of the related Stock Option and the Fair Market Value of the underlying
shares on the date the Limited Right is exercised, multiplied by the
number of shares with respect to which such Limited Right is being
exercised. In the event of a merger transaction, the Limited Right
shall be exercisable solely for shares of the acquiring corporation or
its parent, as applicable. The number of shares to be received on the
exercise of such Limited Right shall be determined by dividing the
amount of cash that would have been available under the first sentence
above by the Fair Market Value at the time of exercise of the shares
underlying the option subject to the Limited Right.
13. RELOAD OPTION. Simultaneously with the grant of any Stock
Option to a participant, the Committee may grant a Reload Option with respect to
all or some of the shares covered by such Stock Option. A Reload Option may be
granted to a participant who satisfies all or part of the exercise price of the
Stock Option with shares of Common Stock. The Reload Option represents an
additional Stock Option to acquire the same number of shares of Common Stock
used by the participant to pay for the original Stock Option. Reload Options may
also be granted to replace Common Stock withheld by the Company for payment of a
participant's withholding tax under Section 16. A Reload Option is subject to
all of the same terms and conditions as the original Stock Option, including the
remaining option exercise term, except that (i) the exercise price of the shares
of Common Stock subject to the Reload Option will be determined at the time the
original Stock Option is exercised, and (ii) such Reload Option will conform to
all provisions of the Plan at the time the original option is exercised.
14. DIVIDEND EQUIVALENT RIGHTS. Simultaneously with the grant of
any Stock Option to a participant, the Committee may grant a Dividend Equivalent
Right with respect to all or some of the shares covered by such Stock Option.
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Dividend Equivalent Rights granted under this Plan are subject to the following
terms and conditions:
(a) Terms of Rights. The Dividend Equivalent Right provides the
participant with a cash benefit per share for each share underlying the
unexercised portion of the related Stock Option equal to the amount of
any extraordinary dividend (as defined in Section 14 (c)) per share of
Common Stock declared by the Company. The terms and conditions of any
Dividend Equivalent Right shall be evidenced in the option agreement
entered into with the participant and shall be subject to the terms and
conditions of the Plan. The Dividend Equivalent Right is transferable
only when the related option is transferable and under the same
conditions.
(b) Payment. Upon the payment of an extraordinary dividend, the
participant holding a Dividend Equivalent Right with respect to Stock
Options or portions thereof which have vested shall promptly receive
from the Company or its Affiliate, as applicable, the amount of cash
equal to the difference between the amount of the extraordinary
dividend per share of Common Stock and the average dividend per share
of Common Stock based on the current and preceding three quarters
(assuming dividends were paid in each quarter, and if not then based on
the average of the quarters in the last four quarters in which
dividends were paid), multiplied by the number of shares of Common
Stock underlying the unexercised portion of the related Stock Option.
With respect to Stock Options or portions thereof which have not
vested, the amount that would have been received pursuant to the
Dividend Equivalent Right with respect to the shares underlying such
unvested Stock Option or portion thereof shall be paid to the
participant holding such Dividend Equivalent Right together with
earnings thereon, on such date as the Stock Option or portion thereof
becomes vested. Payment of an extraordinary dividend will be decreased
by the amount of any applicable tax withholding prior to distribution
to the participant as set forth in Section 16.
(c) Extraordinary Dividend. For purposes of this Section 14, an
extraordinary dividend is any cash dividend paid on shares of Common
Stock where (i) the dividend rate exceeds 200% of the Association's
weighted average cost of funds on interest-bearing liabilities for the
current quarter and preceding three quarters, and (ii) the annualized
aggregate dollar amount of the dividend exceeds the Association's net
income after taxes for the current quarter and preceding three
quarters. For purposes of this Section 14, the dividend rate equals the
quotient, expressed as a percentage, of (i) the annualized dollar
amount of the dividend, and (ii) the last trade price of the Company's
Common Stock on the day immediately before the dividend is declared.
15. PLAN AMENDMENT. The Board or the Committee may modify or amend
the Plan as it deems necessary or appropriate or modify or amend an award
received by key employees and/or outside directors. No such amendment shall
adversely affect any outstanding awards under the Plan without the consent of
the holders thereof.
16. TAX WITHHOLDING. The Company may deduct from any settlement of
an award made under the Plan, including the delivery or vesting of shares, an
amount sufficient to cover the minimum withholding required by law for any
federal, state or local taxes or to take such other action as may be necessary
to satisfy any such withholding obligations. The Committee may permit shares to
be used to satisfy the minimum required tax withholding and such shares shall be
valued at the Fair Market Value as of the settlement date of the applicable
award.
17. OTHER COMPANY BENEFIT AND COMPENSATION PROGRAMS. Settlements
of awards received by participants under the Plan shall not be deemed a part of
a participant's regular, recurring compensation for purposes of calculating
payments or benefits from any Company benefit plan, severance program or
severance pay law of any country, unless otherwise determined by the Committee,
or unless the contrary is specifically provided in a Company benefit plan that
is exempt from tax under Section 401(a) of the Code.
18. UNFUNDED PLAN. Unless otherwise determined by the Committee,
the Plan is an unfunded plan. The Plan shall not create (or be construed to
create) a trust or a separate fund or funds. The Plan shall not establish any
fiduciary relationship between the Company and any participant or other person.
To the extent any person holds any rights by virtue of a grant awarded under the
Plan, such right (unless otherwise determined by the Committee) shall be no
greater than the right of an unsecured general creditor of the Company.
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19. FUTURE RIGHTS. No person shall have any claim or right to be
granted an award under the Plan, and no participant shall have any rights by
reason of the grant of any award under the Plan to continued employment by the
Company or any subsidiary of the Company.
20. GENERAL RESTRICTION. Each award shall be subject to the
requirement that, if at any time the Committee shall determine, in its sole
discretion, that the listing, registration or qualification of any award under
the Plan upon any securities exchange or under any state or federal law, or the
consent or approval of any government regulatory body, is necessary or desirable
as a condition of, or in connection with, the granting of such award or the
grant or settlement thereof, such award may not be exercised or settled in whole
or in part unless such listing, registration, qualification, consent or approval
shall have been effected or obtained free of any conditions not acceptable to
the Committee.
21. GOVERNING LAW. The validity, construction and effect of the
Plan and any actions taken or relating to the Plan shall be determined in
accordance with the laws of the State of Delaware.
22. SUCCESSORS AND ASSIGNS. The Plan shall be binding on all
successors and permitted assigns of a participant, including, without
limitation, the guardian or estate of such participant and the executor,
administrator or trustee of such estate, or any receiver or trustee in
bankruptcy or representative of the participant's creditors.
23. RIGHTS AS A SHAREHOLDER. A participant shall have no rights as
a shareholder with respect to awards under the Plan until he or she becomes the
holder of record of shares granted under the Plan.
24. CHANGE IN CONTROL. Notwithstanding anything to the contrary in
the Plan, the following shall apply to all outstanding awards granted under the
Plan in the event of a Change in Control:
(a) Definition. A "Change in Control" of the Association or the
Company means a change in control of a nature that: (i) would be
required to be reported in response to Item 1(a) of the current report
on Form 8-K, as in effect on the date hereof, pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 (the "Exchange Act"); or
(ii) results in a Change in Control of the Association or the Company
within the meaning of the Home Owners' Loan Act, as amended ("HOLA"),
and applicable rules and regulations promulgated thereunder, as in
effect at the time of the Change in Control; or (iii) without
limitation such a Change in Control shall be deemed to have occurred at
such time as (a) any "person" (as the term is used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Company representing 25% or more of the combined
voting power of Company's outstanding securities except for any
securities purchased by the Association's employee stock ownership plan
or trust; or (b) individuals who constitute the Board on the date
hereof (the "Incumbent Board") cease for any reason to constitute at
least a majority thereof, provided that any person becoming a director
subsequent to the date hereof whose election was approved by a vote of
at least three-quarters of the directors comprising the Incumbent
Board, or whose nomination for election by the Company's stockholders
was approved by the same Nominating Committee serving under an
Incumbent Board, shall be, for purposes of this clause (b), considered
as though he were a member of the Incumbent Board; or (c) a plan of
reorganization, merger, consolidation, sale of all or substantially all
the assets of the Association or the Company or similar transaction in
which the Association or Company is not the surviving corporation
occurs; or (d) a proxy statement soliciting proxies from stockholders
of the Company, by someone other than the current Board of Directors of
the Company, seeking stockholder approval of a plan of reorganization,
merger or consolidation of the Company or similar transaction with one
or more corporations as a result of which the outstanding shares of the
common stock of the Company are exchanged for or converted into cash or
property or securities not issued by the Company; or (e) a tender offer
is made for 25% or more of the voting securities of the Company and the
shareholders owning beneficially or of record 25% or more of the
outstanding securities of the Company have tendered or offered to sell
their shares pursuant to such tender offer and such tendered shares
have been accepted by the tender offeror.
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(b) Acceleration of Vesting and Payment of Limited Rights.
(1) Upon the occurrence of an event constituting a Change
in Control, all Limited Rights, Stock Options, Stock
Awards or any other award granted pursuant to this
Plan outstanding on such date shall become 100%
vested.
(2) Upon the occurrence of an event constituting a Change
in Control involving an exchange of stock, all Stock
Options shall become options to purchase the
exchanged stock at the applicable exchange ratio
(with no change in the aggregate exercise price).
(c) Effect of a Change in Control on Stock Option Awards. In the
event of 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:
(1) provide that such Stock Options shall be assumed, or
equivalent stock 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 be 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 the alternative, if the
securities issuable upon the exercise of such
Substitute Options shall not constitute Registered
Securities, then the participant will receive upon
consummation of the Change in Control a cash payment
for each Stock 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 times the number of
shares of Common Stock subject to such surrendered
Stock Options, and (2) the aggregate exercise price
of all such surrendered Stock Options; or
(2) in the event of a Change in Control transaction
whereby the holders of Common Stock will receive a
cash payment (the "Merger Price") for each share of
Common Stock exchanged in the Change in Control
transaction, make or provide for a cash payment to
the participants equal to the difference between (1)
the Merger Price times the number of shares of Common
Stock subject to such Stock Options held by each
participant (to the extent then exercisable at prices
not in excess of the Merger Price), and (2) the
aggregate exercise price of all such surrendered
Stock Options.
25. COMPLIANCE WITH SECTION 16. With respect to persons subject to
Section 16 of the 1934 Act, transactions under this Plan are intended to comply
with all applicable conditions of Rule 16b-3 or its successors under the 1934
Act. To the extent any provisions of the Plan or actions of the Committee fail
to so comply, it shall be deemed null and void, to the extent permitted by law
and deemed advisable by the Committee.
26. TERMINATION OF EMPLOYMENT. Upon the termination of an
employee's employment for any reason other than Disability, Retirement, Change
in Control, death or Termination for Cause, the employee's Stock Options shall
be exercisable, but only as to those shares that were immediately purchasable
by, or vested in, such employee at the date of termination, and such options may
be exercised only for a period of three (3) months following such termination.
Upon the termination of an employee's service because of Disability, Retirement,
Change in Control or death, the employee's Stock Options shall be exercisable as
to all shares whether or not then exercisable, and the employee's Stock Awards
shall vest as to all shares subject to an outstanding award, whether or not
otherwise immediately vested in such employee at the date of termination and
options may be exercised for a period of five (5) years following termination.
Notwithstanding anything to the contrary herein, in no event shall the exercise
period extend beyond the expiration of the Stock Option term. In the event of
termination of employment or service for Cause (as defined herein) all rights
and awards granted to an employee or director under the Plan not exercised or
vested shall expire upon termination.
No option shall be eligible for treatment as an Incentive Stock Option
in the event such option is exercised more than three (3) months following the
date of the employee's Retirement or termination of employment following a
Change in Control; and provided further, that no option shall be eligible for
treatment as an Incentive Stock Option in the event such option is exercised
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more than one year following termination of employment due to Disability, and
provided further, in order to obtain Incentive Stock Option treatment for
options exercised by heirs or devisees of an optionee, the optionee's death must
have occurred while employed or within three (3) months of termination of
employment.
"Disability" means, with respect to an employee, the permanent and
total inability by reason of mental or physical infirmity or both, of an
employee to perform the work customarily assigned to him. Additionally, a
medical doctor selected or approved by the Board of Directors must advise the
Committee that it is either not possible to determine when such Disability will
terminate or that it appears probable that such Disability will be permanent
during the remainder of the employee's lifetime.
"Retirement" means, with respect to an employee, retirement at the
normal or early retirement date set forth in the Association's employee stock
ownership plan, or as determined by the Board of Directors, or such other time
as determined by written resolution of the Committee.
Termination "for Cause" means the termination upon personal dishonesty,
willful misconduct, any breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, or the willful violation of any
law, rule or regulation (other than traffic violations or similar offenses) or a
final cease-and-desist order, any of which results in a material loss to the
Company or an Affiliate.
27. TERMINATION OF SERVICE AS A DIRECTOR. Upon the termination of
a director's service for any reason other than Disability, Retirement, Change in
Control, death or Termination for Cause, the director's Stock Options shall be
exercisable, but only as to those shares that were immediately purchasable by,
or vested in, such director at the date of termination, and options may be
exercised for a period of one (1) year following termination of service, and all
of the director's unvested Stock Awards shall be forfeited. In the event of
termination of service for Cause (as defined above) all rights granted to the
director under the Plan not exercised by or vested in such director shall expire
upon termination of service. Upon the termination of a director's service
because of Retirement, Disability, Change in Control or death, the director's
Stock Options shall be exercisable as to all shares, whether or not then
exercisable, and the director's Stock Awards shall vest as to all shares subject
to an outstanding award, whether or not otherwise immediately vested in such
director at the date of termination, and options may be exercised for a period
of five (5) years following such termination. In no event shall the exercise
period extend beyond the expiration of the Stock Option term.
"Disability" means, with respect to an outside director, the permanent
and total inability by reason of mental or physical infirmity or both, of a
director to carry out the responsibilities of a director of the Company or an
Affiliate, as required by applicable state and federal law.
"Retirement" means, with respect to a director, retirement on or after
attainment of age sixty-five (65) or seven (7) years of service at the Company
or an Affiliate, or such other time as determined by written resolution of the
Committee.
"Termination for Cause" has the same meaning as set forth under
Paragraph 26 above.
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