Exhibit 10.1
S.Y. BANCORP, INC.
2005 STOCK INCENTIVE PLAN
ARTICLE 1 -- INTRODUCTION
ARTICLE 2
2.1 Purpose. The name of this plan is the S.Y. Bancorp, Inc. 2005 Stock
Incentive Plan (the "Plan"). The purpose of the Plan is to further the best
interests of S.Y. Bancorp, Inc. (the "Company") by (a) assisting the Company and
its Affiliates (as hereinafter defined) in attracting and retaining highly
qualified key employees and directors and (b) providing such persons with an
additional incentive to work to increase the value of the Company's stock by
granting them a stake in the future of the Company which corresponds to the
stake of each of the Company's shareholders. The Company believes that an equity
stake through equity compensation programs effectively aligns employee, director
and stockholder interest by motivating and rewarding long-term performance that
will enhance stockholder value.
2.2 Effectiveness and Term. This Plan shall become effective as of April 27,
2005, subject to its approval by the holders of at least a majority of the
shares of Common Stock present or represented and entitled to vote at the 2005
annual meeting of the stockholders of the Company duly held in accordance with
applicable law. Unless terminated sooner by action of the Board pursuant to the
provisions of Section 11.1, this Plan shall terminate on April 26, 2015.
ARTICLE 3--DEFINITIONS
As used in this Plan, the following terms shall have the meanings set forth
below:
3.1 "Affiliate" means a "parent corporation" or a "subsidiary corporation"
of the Company, as those terms are defined in sections 424(e) and (f) of the
Code, respectively. "Subsidiary corporation" includes any entity which becomes a
Subsidiary corporation after the date of adoption of this Plan.
3.2 "Award" means an award granted to a Participant in the form of Options,
SARs or Restricted Stock, whether granted singly or in combination.
3.3 "Award Agreement" shall mean a certificate of grant or, if there are
promises required of the recipient of an Award, a written agreement, in such
form as the Committee prescribes from time to time, setting forth the terms and
conditions of an Award.
3.4 "Board" means the Board of Directors of the Company.
3.5 A "Change of Control" shall be deemed to have taken place for purposes
of the Plan if
(i) any Person (as defined in this Section 2.5) is or becomes the
Beneficial Owner (as defined in this Section 2.5) of securities of the
Company representing 20% or more of the combined voting power of the
Company's then outstanding securities (unless (A) such Person is the
1
Beneficial Owner of 20% or more of such securities as of April 27, 2005 or
(B) the event causing the 20% threshold to be crossed is an acquisition of
securities directly from the Company);
(ii) during any period of two consecutive years beginning after April
27, 2005, individuals who at the beginning of such period constitute the
Board and any new director (other than a director designated by a person
who has entered into an agreement with the Company to effect a transaction
described in clause (i) (iii) or (iv) of this Change in Control definition)
whose election or nomination for election was approved by a vote of at
least two-thirds of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination
for election was previously so approved cease for any reason to constitute
a majority of the Board;
(iii) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation (other than a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the entity surviving such merger or consolidation), in
combination with voting securities of the Company or such surviving entity
held by a trustee or other fiduciary pursuant to any employee benefit plan
of the Company or such surviving entity or of any Subsidiary of the Company
or such surviving entity, at least 80% of the combined voting power of the
securities of the Company or such surviving entity outstanding immediately
after such merger or consolidation); or
(iv) the shareholders of the Company approve a plan of complete
liquidation or dissolution of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's
assets. For purposes of the definition of Change in Control, "Person" shall
have the meaning ascribed to such tern) in Section 3 (a) (9) of the
Exchange Act as supplemented by Section 13(d)(3) of the Exchange Act;
provided, however, that Person shall not include (i) the Company, any
Subsidiary or any other Person controlled by the Company, (ii) any trustee
or other fiduciary holding securities under any employee benefit plan of
the Company or of any Subsidiary, or (iii) a corporation owned, directly or
indirectly, by the shareholders of the Company in substantially the same
proportions as their ownership of securities of the Company.
For purposes of the definition of Change of Control, a Person shall be
deemed the "Beneficial Owner" of any securities which such Person, directly
or indirectly, has the right to vote or dispose of or has "beneficial
ownership" (within the meaning of Rule 13d-3 under the Exchange Act) of,
including pursuant to any agreement, arrangement or understanding (whether
or not in writing); provided, however, that: (i) a Person shall not be
deemed the Beneficial Owner of any security as a result of an agreement,
arrangement or understanding to vote such security (x) arising solely from
a revocable proxy or consent given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the Exchange Act and
the applicable rules and regulations thereunder or (y) made in connection
with, or to otherwise participate in, a proxy or consent solicitation made,
or to be made, pursuant to, and in accordance with, the applicable
provisions of the Exchange Act and the applicable rules and regulations
thereunder; in either case described in clause (x) or clause (y) above,
2
whether or not such agreement, arrangement or understanding is also then
reportable by such Person on Schedule 13D under the Exchange Act (or any
comparable or successor report); and (ii) a Person engaged in business as
an underwriter of securities shall not be deemed to be the Beneficial Owner
of any securities acquired through such Person's participation in good
faith in a firm commitment underwriting until the expiration of forty days
after the date of such acquisition.
3.6 "Code" means the Internal Revenue Code of 1986, as amended from time to
time, including regulations thereunder and successor provisions and regulations.
3.7 "Committee" means the Compensation Committee of the Board or such other
committee of the Board as may be designated by the Board to administer the Plan,
which committee shall consist of three or more members of the Board, each of
whom is both a "non-employee director" within the meaning of Rule 16b-3
promulgated under the Exchange Act and an "outside director" within the meaning
of such term as contained in applicable regulations interpreting section 162(m)
of the Code; provided, however, that with respect to the application of the Plan
to Awards made to Directors, "Committee" means the Board. To the extent that no
Committee exists that has the authority to administer the Plan, the functions of
the Committee shall be exercised by the Board. If for any reason the appointed
Committee does not meet the requirements of Rule 16b-3 or section 162(m) of the
Code, such noncompliance with such requirements shall not affect the validity of
Awards, grants, interpretations or other actions of the Committee.
3.8 "Common Stock" means the common stock of the Company, no par value per
share, or any stock or other securities of the Company hereafter issued or
issuable in substitution or exchange for the Common Stock.
3.9 "Company" means S.Y. Bancorp, Inc.
3.10 "Director" shall mean a member of the Board of Directors of the Company
or of any Affiliate.
3.11 "Effective Date" means the date this Plan becomes effective as provided
in Section 1.2.
3.12 "Employee" means an employee of the Company or an Affiliate; provided,
however, that the term "Employee" does not include a nonemployee director or an
individual performing services for the Company or an Affiliate who is treated
for tax purposes as an independent contractor at the time of performance of the
services.
3.13 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
3.14 "Fair Market Value" means (a) if the Common Stock is listed on a
national securities exchange or market, the closing price per share on a given
date; (b) if the Common Stock is traded on an exchange or market in which prices
are reported in terms of bid and asked prices, the average of the closing bid
and asked prices for a share on a given date; and (c) if the Common Stock is not
publicly traded at the time a determination of fair market value is required to
be made hereunder, the determination of fair market value shall be made in good
faith by the Committee.
3
3.15 "Grant Date" means the date an Award is determined to be effective by
the Committee upon the grant of such Award, which shall in no event be earlier
than the date the Committee acts to make the grant.
3.16 "Incentive Stock Option" means an Option that is intended to meet the
requirements of section 422(b) of the Code.
3.17 "Named Executive" means any individual who, on the last day of the
Company's fiscal year, is the chief executive officer of the Company (or is
acting in such capacity) or among the four most highly compensated officers of
the Company (other than the chief executive officer). Such officer status shall
be determined pursuant to the executive compensation disclosure rules under the
Exchange Act.
3.18 "Nonqualified Stock Option" means an Option that is not an Incentive
Stock Option.
3.19 "Option" means an option to purchase shares of Common Stock granted to a
Participant pursuant to Article 7. An Option may be either an Incentive Stock
Option or a Nonqualified Stock Option, as determined by the Committee.
3.20 "Participant" means an Employee or Director who has been granted an
Award.
3.21 "Permitted Transferee" shall have the meaning given such term in Section
12.4.
3.22 "Plan" means this S.Y. Bancorp, Inc. 2005 Stock Incentive Plan, as in
effect from time to time.
3.23 "Restricted Period" means the period established by the Committee with
respect to an Award of Restricted Stock during which the Award remains subject
to forfeiture.
3.24 "Restricted Stock" means a share of Common Stock granted to a
Participant pursuant to Article 9 that is subject to such terms, conditions, and
restrictions as may be determined by the Committee.
3.25 "Rule 16b-3" means Rule 16b-3 promulgated by the SEC under the Exchange
Act, or any successor rule or regulation that may be in effect from time to
time.
3.26 "Stock Appreciation Right" or "SAR" means a right granted to a
Participant pursuant to Article 8 with respect to a share of Common Stock to
receive upon exercise Common Stock equal to the appreciation in value of a share
of Common Stock.
3.27 "Termination of Employment" or "Service" shall be deemed to have
occurred at the close of business on the last day on which an Employee is
carried as an active employee on the records of the Company or an Affiliate.
With respect to a Director, it shall be deemed to occur on a Director's
cessation of service on the board of directors of both the Company and all
Affiliates. The Committee shall determine whether an authorized leave of
absence, or other absence on military or government service, constitutes
severance of the employment relationship between the Company or Affiliate and
the Employee. No termination shall be deemed to occur if (i) the Participant is
a Director who becomes an Employee, or (ii) the Participant is an Employee who
4
becomes a Director, except in the latter case Incentive Stock Options shall
become Nonqualified Stock Options if not exercised within the time period
following employment termination provided for in Section 7.3.
ARTICLE 4--ADMINISTRATION
4.1 Plan Administrator and Discretionary Authority. The Plan shall be
administered by the Committee. The Committee shall have total and exclusive
responsibility to control, operate, manage and administer the Plan in accordance
with its terms. The Committee shall have all the authority that may be necessary
or helpful to enable it to discharge its responsibilities with respect to the
Plan. Without limiting the generality of the preceding sentence, the Committee
shall have the exclusive right to: (i) interpret the Plan and the Award
Agreements executed hereunder; (ii) decide all questions concerning eligibility
for, and the amount of, Awards granted under the Plan; (iii) construe any
ambiguous provision of the Plan or any Award Agreement; (iv) prescribe the form
of Award Agreements; (v) correct any defect, supply any omission or reconcile
any inconsistency in the Plan or any Award Agreement; (vi) issue administrative
guidelines as an aid to administering the Plan and make changes in such
guidelines as the Committee from time to time deems proper; (vii) make
regulations for carrying out the Plan and make changes in such regulations as
the Committee from time to time deems proper; (viii) determine whether Awards
should be granted singly or in combination; (ix) to the extent permitted under
the Plan, grant waivers of Plan terms, conditions, restrictions and limitations;
(x) accelerate the exercise, vesting or payment of an Award when such action or
actions would be in the best interests of the Company; (xi) require Participants
to hold a stated number or percentage of shares of Common Stock acquired
pursuant to an Award for a stated period; and (xii) take any and all other
actions the Committee deems necessary or advisable for the proper operation or
administration of the Plan. The Committee shall have authority in its sole
discretion with respect to all matters related to the discharge of its
responsibilities and the exercise of its authority under the Plan, including
without limitation its construction of the terms of the Plan and its
determination of eligibility for participation in, and the terms of Awards
granted under, the Plan. The decisions of the Committee and its actions with
respect to the Plan shall be final, conclusive and binding on all persons having
or claiming to have any right or interest in or under the Plan, including
without limitation Participants and their respective Permitted Transferees,
estates, beneficiaries and legal representatives. In the case of an Award
intended to be eligible for the performance-based compensation exemption under
section 162(m) of the Code, the Committee shall exercise its discretion
consistent with qualifying the Award for such exemption.
This plan and grants made under it shall at all times be construed to avoid
awards constituting "deferred compensation" within the meaning of Internal
Revenue Code Section 409A, or, if an award is intended to come within the
meaning of that phrase, the terms of its grant shall be construed to include all
design restrictions in that Code section required so that the award recipient
shall not be treated as income-taxable on a value for the award before property
or cash related to it is delivered to the award recipient.
4.2 Liability; Indemnification. No member of the Committee, nor any person
to whom it has delegated authority, shall be personally liable for any action,
interpretation or determination made in good faith with respect to the Plan or
5
Awards granted hereunder, and each member of the Committee (or delegatee of the
Committee) shall be fully indemnified and protected by the Company with respect
to any liability he may incur with respect to any such action, interpretation or
determination, to the maximum extent permitted by applicable law.
4.3 Administration With Respect To Named Executives. The per-share exercise
price of an Option granted to a Named Executive shall, like all other Options
hereunder, be no less than 100% of the Fair Market Value per share on the Grant
Date and such Option shall thereby qualify as performance-based compensation
under Code Section 162(m). With respect to Restricted Stock Awards granted to
Named Executives, the Plan may (but need not) be administered so as to permit
such Awards to qualify as performance-based compensation under Code Section
162(m).
ARTICLE 5--SHARES SUBJECT TO THE PLAN
5.1 Available Shares
Subject to adjustment as provided in Section 4.2, the maximum number of shares
of Common Stock that shall be available for grant of Awards under the Plan shall
be 700,000 shares of Common Stock.
The maximum number of shares of Common Stock that may be subject to all Awards
granted under the Plan to any one Participant during a calendar year is 40,000.
The maximum number of shares of Common Stock that may be subject to Restricted
Stock Awards to any one Participant during a calendar year is 20,000.
The maximum number of shares of Common Stock that may be issued in the form of
Incentive Stock Options shall be 700,000.
Shares of Common Stock issued pursuant to the Plan may be original issue or from
shares of Stock which have been reacquired by the Company, or a combination of
the foregoing, as the Committee, in its sole discretion, shall from time to time
determine.
5.2 Adjustments for Recapitalizations and Reorganizations.
The shares with respect to which Awards may be granted under the Plan are shares
of Common Stock as presently constituted, but if, and whenever, prior to the
expiration or satisfaction of an Award theretofore granted, the Company shall
effect a split, subdivision or consolidation of shares of Common Stock or the
payment of a stock dividend on Common Stock in the form of Common Stock without
receipt of consideration by the Company, the number of shares of Common Stock
with respect to which such Award may thereafter be exercised or satisfied, as
applicable, (i) in the event of an increase in the number of outstanding shares,
shall be proportionately increased, and the exercise price per share shall be
proportionately reduced, and (ii) in the event of a reduction in the number of
outstanding shares, shall be proportionately reduced, and the exercise price per
share shall be proportionately increased.
If the Company recapitalizes or otherwise changes its capital structure,
thereafter upon any exercise or satisfaction, as applicable, of an Award
theretofore granted the Participant shall be entitled to receive (or to
6
purchase, if applicable) under such Award, in lieu of the number of shares of
Common Stock then covered by such Award, the number and class of shares of stock
or other securities to which the Participant would have been entitled pursuant
to the terms of the recapitalization if, immediately prior to the
recapitalization, the Participant had been the holder of record of the number of
shares of Common Stock then covered by such Award.
In the event of changes in the outstanding Common Stock by reason of a
reorganization, merger, consolidation, combination, separation (including a
spin-off or other distribution of stock or property), exchange, or other
relevant change in capitalization occurring after the date of grant of any Award
and not otherwise provided for by this Section 4.2, any outstanding Awards and
any Award Agreements evidencing such Awards shall be subject to (i) adjustment
by the Committee in its sole discretion as to the number, price and kind of
shares or other consideration subject to, and other terms of, such Awards to
reflect such changes in the outstanding Common Stock, or (ii) in the case of a
Change of Control transaction, if approved by the Committee in its sole
discretion, replacement with a comparable Award pursuant to Article 10.
In the event of any changes in the outstanding Common Stock provided for in this
Section 4.2, the aggregate number of shares available for grant of Awards under
the Plan shall be equitably adjusted by the Committee, whose determination shall
be conclusive.
Any adjustment of an Incentive Stock Option under this Section shall be made in
such a manner so as not to constitute a "modification" within the meaning of
Code Section 424(h), and adjustments on other Awards shall be made in a manner
consistent with that Section, as if it applied to non-Incentive Stock Option
Awards as well.
5.3 Adjustments for Awards. The Committee shall have sole discretion to
determine the manner in which shares of Common Stock available for grant of
Awards under the Plan are counted. Without limiting the discretion of the
Committee under this Section 4.3, unless otherwise determined by the Committee,
the following rules shall apply for the purpose of determining the number of
shares of Common Stock available for grant of Awards under the Plan:
(i) Options and Restricted Stock. The grant of Options or Restricted
Stock shall reduce the number of shares of Common Stock available for grant
of Awards under the Plan by the number of shares of Common Stock subject to
such an Award.
(ii) SARs. The grant of SARs that may be paid or settled only in Common
Stock shall reduce the number of shares available for grant of Awards under
the Plan by the number of shares subject to such an Award; provided,
however, that upon the exercise of SARs, the excess of the number of shares
of Common Stock with respect to which the Award is exercised over the
number of shares of Common Stock issued upon exercise of the Award shall
again be available for grant of Awards under the Plan.
(iii) Cancellation, Forfeiture and Termination. If any Award referred to
in Sections 4.3(i) or (ii), is canceled or forfeited, or terminates,
expires or lapses, for any reason, the shares then subject to such Award
shall again be available for grant of Awards under the Plan.
7
(iv) Payment of Exercise Price and Withholding Taxes. If previously
acquired shares of Common Stock are used to pay the exercise price of an
Award, the number of shares available for grant of Awards under the Plan
shall be increased by the number of shares delivered as payment of such
exercise price. If previously acquired shares of Common Stock are used to
pay withholding taxes payable upon exercise, vesting or payment of an
Award, or shares of Common Stock that would be acquired upon exercise,
vesting or payment of an Award are withheld to pay withholding taxes
payable upon exercise, vesting or payment of such Award, the number of
shares available for grant of Awards under the Plan shall be increased by
the number of shares delivered or withheld as payment of such withholding
taxes.
ARTICLE 6--ELIGIBILITY
The Committee shall select Participants from those Employees and
directors that, in the opinion of the Committee, are in a position to make a
significant contribution to the success of the Company. Once a Participant has
been selected for an Award by the Committee, the Committee shall determine the
type and size of Award to be granted to the Participant and shall establish in
the related Award Agreement the terms, conditions, restrictions and limitations
applicable to the Award, in addition to those set forth in the Plan and the
administrative guidelines and regulations, if any, established by the Committee.
ARTICLE 7--FORM OF AWARDS
7.1 Form of Awards. Awards may be granted under the Plan, in the Committee's
sole discretion, in the form of Options pursuant to Article 7, SARs pursuant to
Article 8, Restricted Stock pursuant to Article 9, or a combination thereof. All
Awards shall be subject to the terms, conditions, restrictions and limitations
of the Plan. The Committee may, in its sole discretion, subject any Award to
such other terms, conditions, restrictions and/or limitations (including without
limitation the time and conditions of exercise, vesting or payment of an Award
and restrictions on transferability of any shares of Common Stock issued or
delivered pursuant to an Award), provided they are not inconsistent with the
terms of the Plan. The Committee may, but is not required to, subject an Award
to such conditions as it determines are necessary or appropriate to ensure than
an Award constitutes "qualified performance based compensation" within the
meaning of section 162(m) of the Code and the regulations thereunder. Awards
under a particular Article of the Plan need not be uniform, and Awards under
more than one Article of the Plan may be combined in a single Award Agreement.
Any combination of Awards may be granted at one time and on more than one
occasion to the same Participant. An Award Agreement must provide that a
Participant may not elect to defer receipt of income attributable to the
exercise or vesting of an Award, and unless and until the Committee concludes
that making the receipt of Restricted Stock contingent on the exercise of an
Option or SAR is not creating deferred compensation within the meaning of Code
Section 409A, no such combination shall be granted.
8
7.2 No Repricing. Except for adjustments made pursuant to Section 4.2, the
exercise price for any outstanding Option or SAR shall not be decreased after
the Grant Date, nor may any outstanding Option or SAR be surrendered to the
Company as consideration for the grant of a new Option or SAR with a lower
exercise price.
7.3 No Reload Rights. Options shall not contain any provision entitling the
Participant to an automatic grant of additional Options in connection with any
exercise of the original Option.
ARTICLE 8--OPTIONS
8.1 General. Awards may be granted in the form of Options that may be
Incentive Stock Options or Nonqualified Stock Options, or a combination of both;
provided, however, that Incentive Stock Options may be granted only to
Employees.
8.2 Terms and Conditions of Options. An Option shall be exercisable in whole
or in such installments and at such times as may be determined by the Committee.
The price at which a share of Common Stock may be purchased upon exercise of an
Option shall be determined by the Committee, but such exercise price shall not
be less than 100% of the Fair Market Value per share of Common Stock on the
Grant Date. Except as otherwise provided in Section 7.3, the term of each Option
shall be as specified by the Committee; provided, however, that no Options shall
be exercisable later than ten years after the Grant Date. Options may be granted
with respect to Restricted Stock or shares of Common Stock that are not
Restricted Stock, as determined by the Committee in its sole discretion,
provided that an option providing for the receipt of Restricted Stock upon
exercise may not be transferable during life of the Participant to Permitted
Transferee .
8.3 Restrictions Relating to Incentive Stock Options. Options granted in the
form of Incentive Stock Options shall, in addition to being subject to the terms
and conditions of Section 7.2, comply with section 422(b) of the Code.
Accordingly, no Incentive Stock Options shall be
(i) be granted later than ten years after the date of adoption of the
Plan by the Board; or
(ii) be exercisable for the first time during any calendar year (after
aggregating all Incentive Stock Options granted under this and all other
stock option plans of the Company or an Affiliate) if the aggregate Fair
Market Value (determined as of the time the Option is granted) of the Stock
with respect to which an Participant's Incentive Stock Options shall exceed
$100,000. If Options or portions of Options become exercisable for the
first time as a result of acceleration under Article 10 and cause this
$100,000 limit to be exceeded, Options in excess of the limit shall be
treated as a Nonqualified Stock Option for tax purposes, in accordance with
the first-grant ordering rules of Treas. Reg. ss. 1.422-4; or
(iii) have an exercise price any less than 100% of the Fair Market Value
of a share of Common Stock on the Grant Date, or such higher price as is
determined by the Committee. No Incentive Stock Option shall be granted to
an Employee under the Plan if, at the time such Option is granted, such
Employee owns stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company or an Affiliate, within the
9
meaning of section 422(b)(6) of the Code, unless (a) on the Grant Date of
such Option, the exercise price of such Option is at least 110% of the Fair
Market Value of the Common Stock subject to the Option and (b) such Option
by its terms is not exercisable after the expiration of five years from the
Grant Date of the Option; or
(iv) be transferable, by the Participant otherwise than by will or by
the laws of descent and distribution, and such option shall be exercisable,
during the Participant's lifetime, only by the Participant; or
(v) be exercisable after Termination of Employment later than (i) at
the expiration of one year in the event of Termination of Employment due to
Disability; (ii) at the expiration of one year after the Participant's
death, if the Termination of Employment occurs by reason of death; or (iii)
three months following Termination of Employment for any other reason,
unless the award by its terms provides that, the Option is exercisable
longer in certain events and acknowledges that if so exercised later, will
be then converted into a Nonqualified Stock Option.
8.4 Additional Terms and Conditions. The Committee shall determine the time
or times at which an Option will vest and become exercisable. At the time of an
Award of an Option, the Committee may, in its sole discretion, prescribe
additional terms, conditions, restrictions and limitations applicable to the
Option, including without limitation rules pertaining to earlier or later (in
the case on Nonqualified Stock Options) lapse upon Termination Of Employment Or
Service (by reason of death, permanent and total disability, or otherwise) of a
Participant prior to exercise of the Option, as it determines are necessary or
appropriate, provided they are not inconsistent with the Plan; provided, that if
the Nonqualified Stock Option does not specifically state when it may be
exercised after Termination of Employment or Service, the Option shall be
governed by the provisions stated above for Incentive Stock Options. In no event
shall an Option be issued or changed hereunder to allow its net value to be
settled in cash rather than in Stock, or for an exercise price that is or may
become less than the Fair Market Value of the Stock on the Grant Date.
8.5 Exercise of Options.
Subject to the terms and conditions of the Plan, Options shall be exercised by
the delivery to the Company's principal executive office of a written notice of
exercise, setting forth the number of whole shares of Common Stock with respect
to which the Option is to be exercised, accompanied by full payment for such
shares.
Upon exercise of an Option, the exercise price of the Option shall be payable to
the Company in full either: (i) in cash or an equivalent acceptable to the
Committee, or (ii) in the sole discretion of the Committee and in accordance
with any applicable administrative guidelines established by the Committee, by
tendering one or more previously acquired nonforfeitable, unrestricted shares of
Common Stock that have been held by the Participant for at least six months [one
year in the case of stock acquired by Incentive Stock Option Exercise] having an
aggregate Fair Market Value at the time of exercise equal to the total exercise
price, or (iii) in a combination of the forms of payment specified in clauses
(i) and (ii) above. Notwithstanding the preceding sentence, any such right to
exercise by delivery of already-owned stock shall be ineffective and void from
its inception if such a right is deemed to be a feature allowing deferral of
10
compensation within the meaning of Code Section 409A that would eliminate the
Option's status as exempt from the deferred compensation rules of that Code
Section. An Option may not be exercised for a fraction of a share of Stock. Any
surrender by a person subject to the reporting requirements of Section 16b of
the Exchange Act of previously owned shares of Stock to satisfy tax withholding
obligations arising upon exercise of this Option must comply with the applicable
provisions of Rule 16b-3 under the Exchange Act.
As soon as reasonably practicable after receipt of written notification of
exercise of an Option and full payment of the exercise price and any required
withholding taxes, the Company shall (i) deliver to the Participant, in the
Participant's name or the name of the Participant's designee, a stock
certificate or certificates in an appropriate aggregate amount based upon the
number of shares of Common Stock purchased under the Option, or (ii) cause to be
issued in the Participant's name or the name of the Participant's designee, in
book-entry form, an appropriate number of shares of Common Stock based upon the
number of shares purchased under the Option.
The Company or Affiliate shall reflect the exercise of any Incentive Stock
Option on an informational report as required by Code Section 6039 no later than
January 31 of the year following exercise. The compensation resulting from
exercise of a Nonqualified Stock Option or a Restricted Stock Award by an
Employee or former Employee, and related income and employment tax withholding
related thereto, shall be reported on that Employee's W-2 Form for the year of
exercise or vesting (as the case may be) as required by the Code.
ARTICLE 9--STOCK APPRECIATION RIGHTS
9.1 General. The Committee may grant Awards in the form of SARs in such
numbers and at such times as it shall determine. SARs shall vest and be
exercisable in whole or in such installments and at such times as may be
determined by the Committee. The price at which SARs may be exercised shall be
determined by the Committee but shall not be less than 100% of the Fair Market
Value per share of Common Stock on the Grant Date The term of each SAR shall be
as specified by the Committee; provided, however, that no SARs shall be
exercisable later than ten years after the Grant Date. At the time of an Award
of SARs, the Committee may, in its sole discretion, prescribe additional terms,
conditions, restrictions and limitations applicable to the SARs, including
without limitation rules pertaining to the Termination Of Employment Or Service
(by reason of death, permanent and total disability, or otherwise) of a
Participant prior to exercise of the SARs, as it determines are necessary or
appropriate, provided they are not inconsistent with the Plan.
9.2 Exercise of SARs. SARs shall be exercised by the delivery of a written
notice of exercise to the Company, setting forth the number of whole shares of
Common Stock with respect to which the Award is being exercised. Upon the
exercise of SARs, the Participant shall be entitled to receive an amount equal
to the excess of the aggregate Fair Market Value of the shares of Common Stock
with respect to which the Award is exercised (determined as of the date of such
exercise) over the aggregate exercise price of such shares. Such amount shall be
payable to the Participant in shares of Common Stock, as provided in the Award
Agreement.
11
ARTICLE 10--RESTRICTED STOCK
10.1 General. Awards may be granted in the form of Restricted Stock in such
numbers and at such times as the Committee shall determine. The Committee shall
impose such terms, conditions and restrictions on Restricted Stock as it may
deem advisable, including without limitation providing for vesting upon the
achievement of specified performance goals and restrictions under applicable
Federal or state securities laws.
10.2 Restricted Period. At the time an Award of Restricted Stock is granted,
the Committee shall establish a Restricted Period applicable to such Restricted
Stock. Each Award of Restricted Stock may have a different Restricted Period in
the sole discretion of the Committee. The Committee may not retain the
discretion to lengthen the Restricted Period, if such change in the Restricted
Period would have the effect of delaying the date on which the Award ceases
being subject to a "substantial risk of forfeiture" within the meaning of
Sections 83(b) and 409A of the Code and therefore subject to Federal income tax.
However, that the Committee may provide in the Award Agreement that restrictions
on forfeiture will be waived in whole or in part in the event of Termination of
Employment or Service on account of death or Disability, and, unless provided to
the contrary in the Award Agreement, shall be waived upon a Change in Control.
10.3 Other Terms and Conditions. Restricted Stock shall constitute issued and
outstanding shares of Common Stock for all corporate purposes. Restricted Stock
awarded to a Participant under the Plan shall be registered in the name of the
Participant or, at the option of the Company, in the name of a nominee of the
Company, and shall be issued in book-entry form or represented by a stock
certificate. Subject to the terms and conditions of the Award Agreement, a
Participant to whom Restricted Stock has been awarded shall have the right to
receive dividends thereon during the Restricted Period, to vote the Restricted
Stock and to enjoy all other stockholder rights with respect thereto, except
that (i) the Company shall retain custody of any certificates evidencing the
Restricted Stock during the Restricted Period, and (ii) the Participant may not
sell, transfer, pledge, exchange, hypothecate or otherwise dispose of the
Restricted Stock during the Restricted Period. A breach of the terms and
conditions established by the Committee pursuant to the Award of the Restricted
Stock may result in a forfeiture of the Restricted Stock. At the time of an
Award of Restricted Stock, the Committee may, in its sole discretion, prescribe
additional terms, conditions, restrictions and limitations applicable to the
Restricted Stock, including without limitation rules pertaining to the
Termination Of Employment Or Service (by reason of death, permanent and total
disability, or otherwise) of a Participant prior to expiration of the Restricted
Period.
10.4 Miscellaneous. Nothing in this Article shall prohibit the exchange of
shares of Restricted Stock pursuant to a plan of merger or reorganization for
stock or other securities of the Company or another corporation that is a party
to the reorganization, provided that the stock or securities so received in
exchange for shares of Restricted Stock shall, except as provided in Article 10,
become subject to the restrictions applicable to such Restricted Stock. Any
shares of Common Stock received as a result of a stock split or stock dividend
with respect to shares of Restricted Stock shall also become subject to the
restrictions applicable to such Restricted Stock.
12
10.5 Code Section 162(m) Provisions. Notwithstanding any other provision of
the Plan, if the Committee determines, at the time a Restricted Stock Award is
granted to a Participant who is, or is likely to be as of the end of the tax
year in which the Company would claim a tax deduction in connection with such
Award, a Named Executive, then the Committee may provide that this Section 9.5
is applicable to such Award.
(i) Performance Criteria. If a Stock Award is subject to this Section
9.5, then the lapsing of restrictions thereon and the distribution of Stock
pursuant thereto, shall be subject to the achievement of one or more
objective performance goals established by the Committee, which shall be
based on the attainment of specified levels of one of or any combination of
the following "performance criteria" for the Company as a whole or any
business unit of the Company, as reported or calculated by the Company:
(i) earnings or earnings per share (whether on a pre-tax,
after-tax, operational or other basis);
(ii) return on equity;
(iii) return on assets;
(iv) revenues;
(v) expenses or expense levels;
(vi) one or more operating ratios;
(vii) stock price;
(viii) stockholder return;
(ix) the accomplishment of mergers, acquisitions, dispositions,
public offerings or similar extraordinary business transactions;
(x) economic value added (together, the "Performance Criteria").
Such performance goals also may be based on the achievement of specified levels
of Company performance (or performance of an applicable affiliate, division or
business unit of the Company) under one or more of the Performance Criteria
described above relative to the performance of other corporations. Such
performance goals shall be set by the Committee over a specified performance
period that shall not be shorter than one year and otherwise within the time
period prescribed by, and shall otherwise comply with the requirements of, Code
Section 162(m), or any successor provision thereto, and the regulations
thereunder. Requirements shall be established in writing by the Committee based
on one or more performance goals as set forth in this Section 9.5 not later than
90 days after commencement of the performance period with respect to such Award,
provided that the outcome of the performance in respect of the goals remains
substantially uncertain as of such time.
(ii) Adjustment Of Restricted Stock Awards. Notwithstanding any
provision of the Plan to the contrary, with respect to any Restricted Stock
Award that is subject to this Section 9.5, the Committee may adjust
downwards, but not upwards, the amount payable pursuant to such Award, and
the Committee may not waive the achievement of the applicable performance
goals except in the case of the death or Disability of the Named Executive
or upon a Change in Control.
13
ARTICLE 11--CHANGE OF CONTROL
11.1 General Rule-Rights Accelerate. Except as provided otherwise in Section
10.2 or in an Award Agreement at the time an Award is granted, notwithstanding
anything to the contrary in this Plan, upon any Change of Control, any time
periods, conditions or contingencies relating to the exercise or realization of,
or lapse of restrictions under, any Award shall be automatically accelerated or
waived so that:
(i) if no exercise of the Award is required (i.e. with respect to
Restricted Stock), the Award will be nonforfeitable in full at the time of
the occurrence of the Change of Control (the "Change Effective Time"), or
(ii) if exercise of the Award is required, the Award may be exercised
at the Change Effective Time, provided, however, that in the case of the
events described in clauses (iii) and (iv) of the definition of a Change of
Control in this Plan, each Award requiring exercise that is not exercised
at the Change Effective Time shall lapse and all rights thereunder shall be
forfeited immediately after the Change Effective Time if the Participant
holding such Award has received written notice at least 15 days prior to
the Change Effective Time of his right to exercise the Award at the Change
Effective Time.
11.2 Award Substitution Avoids Lapse of Awards. In the event outstanding
Awards are replaced as of the Change Effective Time by comparable types of
awards of substantially equivalent value, and such replacement meets the
conditions of a modification that would be permitted under Code Section 424 with
respect to an Incentive Stock Option (and similar principles for other Awards to
avoid them becoming deferred compensation within the meaning of Code Section
409A), Section 10.1(ii) shall not apply.
ARTICLE 12--AMENDMENT AND TERMINATION
12.1 Plan Amendment and Termination by Board. The Board may at any time
suspend, terminate, amend or modify the Plan, in whole or in part; except that,
(i) no suspension, termination, amendment or modification of the Plan
shall adversely affect in any material way any Award previously granted
under the Plan, without the consent of the Participant (or the Permitted
Transferee) holding such Award;
(ii) the Board may not decrease the price of any Option to less than
the option price on the date the Option was granted; or
(iii) the Board may not extend the exercise period of an Option beyond
that originally stated at grant, unless and until the Committee determines
that such extension does not constitute a deferral of compensation feature
within the meaning of Code Section 409A.
Upon termination of the Plan, the terms and provisions of the Plan shall,
notwithstanding such termination, continue to apply to Awards granted prior to
such termination.
14
12.2 Shareholder Approval Required for some changes. Notwithstanding Section
11.1, no amendment or modification of the Plan shall become effective without
the approval of such amendment or modification by a majority of the stockholders
of the Company
(i) if such amendment or modification increases the maximum number of
shares subject to the Plan (except as provided in Article 4) or changes the
designation or class of persons eligible to receive Awards under the Plan,
or
(ii) to make any grants of Awards after any change in the granting
corporation (for example, by assumption of the Plan by another corporation)
or in the definition of Common Stock; or
(iii) if counsel for the Company determines that such approval is
otherwise required by or necessary to comply with applicable law.
12.3 Award Amendment and Cancellation. The Committee may amend the terms of
any outstanding Award granted pursuant to the Plan, but no such amendment shall
adversely affect in any material way the Participant's (or a Permitted
Transferee's) rights under an outstanding Award without the consent of the
Participant (or the Permitted Transferee) holding such Award, and no amendment
may have the effect of deferring the taxation of amounts under the Awards beyond
the date taxation would have occurred absent that change.
12.4 Performance-Based Compensation. In the case of an outstanding Award
intended to be eligible for the performance-based compensation exemption under
section 162(m) of the Code, the Committee shall not, without the approval of a
majority of the stockholders of the Company, amend the Plan or the Award in a
manner that would adversely affect the Award's continued eligibility for the
performance-based compensation exemption under section 162(m) of the Code.
ARTICLE 13--MISCELLANEOUS
13.1 Award Agreements. After the Committee grants an Award under the Plan to
a Participant, the Company and the Participant shall enter into an Award
Agreement setting forth the terms, conditions, restrictions and limitations
applicable to the Award and such other matters as the Committee may determine to
be appropriate. The terms and provisions of the respective Award Agreements need
not be identical. All Award Agreements shall be subject to the provisions of the
Plan, and in the event of any conflict between an Award Agreement and the Plan,
the terms of the Plan shall govern.
13.2 Listing; Suspension.
As long as the Common Stock is listed on a national securities exchange or
system sponsored by a national securities association, the issuance of any
shares of Common Stock pursuant to an Award shall be conditioned upon such
shares being listed on such exchange or system. The Company shall have no
obligation to issue such shares unless and until such shares are so listed, and
the right to exercise any Option or other Award with respect to such shares
shall be suspended until such listing has been effected.
15
If at any time counsel to the Company or its Affiliates shall be of the opinion
that any sale or delivery of shares of Common Stock pursuant to an Award is or
may in the circumstances be unlawful or result in the imposition of excise taxes
on the Company or its Affiliates under the laws of any applicable jurisdiction,
the Company or its Affiliates shall have no obligation to make such sale or
delivery, or to make any application or to effect or to maintain any
qualification or registration under the Securities Act of 1933, as amended, or
otherwise, with respect to shares of Common Stock or Awards, and the right to
exercise any Option or other Award shall be suspended until, in the opinion of
such counsel, such sale or delivery shall be lawful or will not result in the
imposition of excise taxes on the Company or its Affiliates.
Upon termination of any period of suspension under this Section, any Award
affected by such suspension that shall not then have expired or terminated shall
be reinstated as to all shares available before such suspension and as to shares
that would otherwise have become available during the period of such suspension,
but no such suspension shall extend the term of any Award unless otherwise
determined by the Committee in its sole discretion.
13.3 Additional Conditions. Notwithstanding anything in the Plan to the
contrary: (i) the Committee may, if it shall determine it necessary or desirable
in its sole discretion, at the time of grant of any Award or the issuance of any
shares of Common Stock pursuant to any Award, require the recipient of the Award
or such shares of Common Stock, as a condition to the receipt thereof, to
deliver to the Company a written representation of present intention to acquire
the Award or such shares of Common Stock for his own account for investment and
not for distribution, (ii) the certificate for shares of Common Stock issued to
a Participant may include any legend that the Committee deems appropriate to
reflect any restrictions on transfer, and (iii) all certificates for shares of
Common Stock delivered under the Plan shall be subject to such stop transfer
orders and other restrictions as the Committee may deem advisable under the
rules, regulations and other requirements of the SEC, any stock exchange upon
which the Common Stock is then listed or quoted, any applicable federal or state
securities law, and any applicable corporate law, and the Committee may cause a
legend or legends to be placed on any such certificates to make appropriate
reference to such restrictions.
13.4 Transferability. No Award shall be subject to execution, attachment or
similar process. No Award of Incentive Stock Options or Restricted Stock during
its Restricted Period may be sold, transferred, pledged, exchanged, hypothecated
or otherwise disposed of, other than by will or pursuant to the applicable laws
of descent and distribution. If provided in the Award Agreement, all
Nonqualified Stock Options or SARs (other than those issues in tandem with
Incentive Stock Options) may be transferred by a Participant to a Permitted
Transferee. Any attempted sale, transfer, pledge, exchange, hypothecation or
other disposition of an Award not specifically permitted by the Plan or the
Award Agreement shall be null and void and without effect. All Awards granted to
a Participant shall be exercisable during his lifetime only by such Participant,
or if applicable, a Permitted Transferee; provided, however, that in the event
of a Participant's legal incapacity, an Award may be exercised by his guardian
or legal representative. For purposes of the Plan, "Permitted Transferee" means
(i) a member of a Participant's immediate family, (ii) any person sharing the
Participant's household (other than a tenant or employee of the Participant),
(iii) trusts in which a person listed in (i) or (ii) above has more than 50% of
the beneficial interest, (iv) a foundation in which the Participant or a person
listed in (i) or (ii) above controls the management of assets, (v) any other
16
entity in which the Participant or a person listed in (i) or (ii) above owns
more than 50% of the voting interests, provided that in the case of the
preceding clauses (i) through (v), no consideration is provided for the
transfer, and (vi) any transferee permitted under applicable securities and tax
laws as determined by counsel to the Company. In determining whether a person is
a "Permitted Transferee," immediate family members shall include a Participant's
child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former
spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law, including adoptive
relationships.
13.5 Withholding Taxes. The Company shall be entitled to deduct from any
payment made under the Plan, regardless of the form of such payment, the amount
of all applicable income and employment taxes required by law to be withheld
with respect to such payment, may require the Participant to pay to the Company
such withholding taxes prior to and as a condition of the making of any payment
or the issuance or delivery of any shares of Common Stock under the Plan, and
shall be entitled to deduct from any other compensation payable to the
Participant any withholding obligations with respect to Awards. In accordance
with any applicable administrative guidelines it establishes, the Committee may
allow a Participant to pay the amount of taxes required by law to be withheld
from or with respect to an Award by (i) withholding shares of Common Stock from
any payment of Common Stock due as a result of such Award, or (ii) permitting
the Participant to deliver to the Company previously acquired shares of Common
Stock, in each case having an aggregate Fair Market Value equal to the amount of
such required withholding taxes; in each case subject to the Committee first
determining that such a feature would not bring the Award within the definition
of deferred compensation for purposes of Code Section 409A. No payment shall be
made and no shares of Common Stock shall be issued pursuant to any Award unless
and until the applicable tax withholding obligations have been satisfied.
13.6 No Fractional Shares. No fractional shares of Common Stock shall be
issued or delivered pursuant to the Plan or any Award granted hereunder, the
Committee shall round fractional shares down to the nearest whole share.
13.7 Notices. All notices required or permitted to be given or made under the
Plan or pursuant to any Award Agreement (unless provided otherwise in such Award
Agreement) shall be in writing and shall be deemed to have been duly given or
made if (i) delivered personally, (ii) transmitted by first class registered or
certified United States mail, postage prepaid, return receipt requested, (iii)
sent by prepaid overnight courier service, or (iv) sent by telecopy or facsimile
transmission, with confirmation receipt, to the person who is to receive it at
the address that such person has theretofore specified by written notice
delivered in accordance herewith. Such notices shall be effective (i) if
delivered personally or sent by courier service, upon actual receipt by the
intended recipient, (ii) if mailed, upon the earlier of five days after deposit
in the mail or the date of delivery as shown by the return receipt therefor, or
(iii) if sent by telecopy or facsimile transmission, when the answer back is
received. the Company or a Participant may change, at any time and from time to
time, by written notice to the other, the address that it or such Participant
had theretofore specified for receiving notices. Until such address is changed
in accordance herewith, notices hereunder or under an Award Agreement shall be
delivered or sent (i) to a Participant at his address as set forth in the
records of the Company or (ii) to the Company at the principal executive offices
of the Company clearly marked "Attention: General Counsel."
17
13.8 Binding Effect. The obligations of the Company under the Plan shall be
binding upon any successor corporation or organization resulting from the
merger, consolidation or other reorganization of the Company, or upon any
successor corporation or organization succeeding to all or substantially all of
the assets and business of the Company. The terms and conditions of the Plan
shall be binding upon each Participant and his Permitted Transferees, heirs,
legatees, distributees and legal representatives.
13.9 Severability. If any provision of the Plan or any Award Agreement is
held to be illegal or invalid for any reason, the illegality or invalidity shall
not affect the remaining provisions of the Plan or such agreement, as the case
may be, but such provision shall be fully severable and the Plan or such
agreement, as the case may be, shall be construed and enforced as if the illegal
or invalid provision had never been included herein or therein.
13.10 No Restriction of Corporate Action. Nothing contained in the Plan shall
be construed to prevent the Company or any Affiliate from taking any corporate
action (including any corporate action to suspend, terminate, amend or modify
the Plan) that is deemed by the Company or such Affiliate to be appropriate or
in its best interest, whether or not such action would have an adverse effect on
the Plan or any Awards made or to be made under the Plan. No Participant or
other person shall have any claim against the Company or any Affiliate as a
result of such action.
13.11 Governing Law. The Plan shall be governed by and construed in accordance
with the internal laws (and not the principles relating to conflicts of laws) of
the Commonwealth of Kentucky except as superseded by applicable federal law.
13.12 No Right, Title or Interest in Company Assets. No Participant shall have
any rights as a stockholder of the Company as a result of participation in the
Plan until the date of issuance of Common Stock in his name and, in the case of
Restricted Stock, unless and until such rights are granted to the Participant
pursuant to the Plan.
13.13 Risk of Participation. Nothing contained in the Plan shall be construed
either as a guarantee by the Company or the Affiliates, or their respective
stockholders, directors, officers or employees, of the value of any assets of
the Plan or as an agreement by the Company or the Affiliates, or their
respective stockholders, directors, officers or employees, to indemnify anyone
for any losses, damages, costs or expenses resulting from participation in the
Plan.
13.14 No Guarantee of Tax Consequences. No person connected with the Plan in
any capacity, including without limitation the Company and the Affiliates and
their respective directors, officers, agents and employees, makes any
representation, commitment or guarantee that any tax treatment, including
without limitation federal, state and local income, estate and gift tax
treatment, will be applicable with respect to any Awards or payments thereunder
made to or for the benefit of a Participant under the Plan or that such tax
treatment will apply to or be available to a Participant on account of
participation in the Plan.
13.15 Continued Employment or Service. Nothing contained in the Plan or in any
Award Agreement shall confer upon any Participant the right to continue in the
employ or service of the Company, or interfere in any way with the rights of the
18
Company to terminate a Participant's employment or service at any time, with or
without cause. The loss of existing or potential profit in Awards will not
constitute an element of damages in the event of termination of employment or
service for any reason, even if the termination is in violation of an obligation
of the Company or an Affiliate to the Participant.
13.16 Miscellaneous. Headings are given to the articles and sections of the
Plan solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction of the Plan or any
provisions hereof. The use of the masculine gender shall also include within its
meaning the feminine. Wherever the context of the Plan dictates, the use of the
singular shall also include within its meaning the plural, and vice versa.
IN WITNESS WHEREOF, this Plan has been executed as of the Effective Date.
S.Y. BANCORP, INC.
By: /s/ David P. Heintzman
---------------------------------
David P. Heintzman
Chairman, CEO and President
19