INCENTIVE
STOCK OPTION AND LIMITED RIGHTS AGREEMENT
UNDER THE
XXXXXX SAVINGS BANK
1994 INCENTIVE STOCK OPTION PLAN
INCENTIVE STOCK OPTION AND LIMITED RIGHTS AGREEMENT made on
-------------, 1994, between Xxxxxx Savings Bank (the "Bank"),
and ---------------- (the "Participant"). For purposes of this
Agreement, the defined terms contained herein shall have the same
meanings as those contained in the Xxxxxx Savings Bank 1994
Incentive Stock Option Plan (the "Plan").
Whereas, the purpose of the Plan is to advance the interests
of the Bank by providing incentives to key employees of the Bank
and its Affiliates, including Xxxxxx Financial, MHC (the
"Company"), the Bank's parent holding company, in the form of
opportunities for stock ownership in the Bank; and
Whereas, in connection with the reorganization of the Bank
into a mutual holding company, and the initial public issuance by
the Bank of its common stock ("Common Stock") in connection
therewith, the Board of Directors determined to grant the
Participant an option to purchase shares of Common Stock of the
Bank ("Option"), together with Limited Rights attached thereto,
which option is intended to be an Incentive Stock Option.
THEREFORE, to evidence the grant of the Option and Limited
Rights, and subject to the terms and conditions as provided in
the Plan, the Bank and the Participant hereby agree as follows:
1. Grant of Option. The Bank hereby evidences and confirms
its grant to the Participant, effective on January 25, 1994, of
an Option to purchase -------------- shares of Common Stock, with
Limited Rights attached to all such shares, at an exercise price
of $10.00 per share (the "Exercise Price"), which was the Fair
Market Value of the underlying shares of Common Stock on the Date
of Grant. The Option and Limited Rights shall be subject to the
provisions of the Plan and this Agreement.
2. Term and Exercise of Option. The term of the Option shall
not exceed a period of 10 years, beginning on January 25, 1994,
and ending on January 25, 2004. The Participant may exercise
Limited Rights with respect to options which have vested during
the term of the Option pursuant to Section 9 of the Plan. Options
shall vest and become exercisable on a cumulative basis in equal
installments at a rate of % per year commencing one year from the
date of the grant. All Options shall vest and become exercisable
immediately in the event the Participant terminates employment
due to death, Disability, Normal Retirement or in the event of a
Change in Control of the Bank or the Bank. Except as provided in
Sections 7, 8 and 9 hereof, the Option is non-transferrable and
may be exercised by the Participant only while employed by the
Bank or its Affiliates. The grant of the Option shall impose no
obligation upon the Participant to exercise the Option.
3. Manner of Exercise. The Option may be exercised by
written notice delivered to the Bank signed by the Participant or
the person or persons eligible to exercise the Option under
Section 18. Such notice shall state the number of shares of
Common Stock with respect to which the Option is being exercised,
the Exercise Price as to such shares and shall include such
written covenants, agreements and representations as the
Committee administering the Plan may from time to time deem
necessary or desirable in order to ensure compliance with
applicable laws, regulations of governmental authority and
requirements of any stock market or exchange upon which the
Common Stock is traded. Such notice shall be accompanied by
payment of the full Exercise Price. As soon as practicable after
such notice and payment shall have been received, the Bank shall
deliver a certificate or certificates representing the number of
shares of Common Stock with respect to which the Option was
exercised in the name of the person or persons exercising the
Option.
Payment of the Exercise Price shall be made in cash or by
check, or, in whole or in part, through the surrender of shares
of Common Stock which will be valued at their Fair Market Value
on the date of exercise of the Option in accordance with Section
2(j) of the Plan.
The Participant shall not be entitled to any rights as a
stockholder with respect to such shares of Common Stock being
acquired pursuant to the exercise of the Option unless and until
certificates evidencing such Common Stock are issued. No
adjustments shall be made for dividends or distributions or other
rights for which the record date is prior to the date such
certificates are issued except as provided in Section 12.
In the event the Option shall be exercised by any person
other than by the Participant pursuant to Section 8, 9 or 10
hereof, the notice of exercise of the Option shall be accompanied
by proof satisfactory to the Committee administering the Plan of
the right of such person to exercise the Option.
All shares of Common Stock that shall be purchased upon the
exercise of the Option as provided herein shall be fully paid and
nonassessable.
4. Holding Period. Notwithstanding anything herein to the
contrary, the Bank shall not be obligated to cause to be issued
or delivered any certificate evidencing shares of Common Stock
purchased pursuant to the exercise of the Option, unless and
until the Bank is advised by its counsel that the issuance and
delivery of such certificates is in compliance with all
applicable laws, regulations and governmental authority and
requirements of any exchange or stock market upon which the
Common Stock is traded or listed. The Bank shall in no event be
obligated to register any securities or to take any other
affirmative action in order to cause the issuance and delivery of
such certificates to comply with any such law, regulation or
requirement.
Under current law, the grant of the option and sale of the
underlying shares may be deemed to be a purchase and sale,
respectively, under Section 16 of the Securities Exchange Act of
1934, as amended, ("Exchange Act") and therefore may incur short
swing profit recovery under this Act and the regulations
promulgated thereunder. To avoid liability under Section 16 of
the Exchange
Act a period of six months must elapse between the date of grant
and the sale of Common Stock received upon the exercise of an
option.
5. Exercise of Limited Rights. In no event shall Limited
Rights be exercisable, in whole or in part, before the expiration
of six months from the Date of Grant of the Option, as specified
in Section 1. In the event of a Change in Control, as defined in
the Plan, the Participant shall have the right, in lieu of
purchasing shares of Common Stock covered by the Option, during
the term the underlying Option is exercisable, to relinquish the
Option with respect to any or all of such shares and to receive
from the Bank an amount of cash equal to the difference between
the Exercise Price of the Option and the Fair Market Value of the
underlying shares of the Common Stock on the date the Limited
Rights are exercised, multiplied by the number of shares with
respect to which such Limited Rights are being exercised.
Limited Rights with respect to the Option may be exercised
by written notice delivered to the Bank signed by the
Participant. Such notice shall state the number of shares of
Common Stock in respect to which Limited Rights are being
exercised, the date of exercise and the Fair Market Value of the
Common Stock on such date. Within fourteen days following
delivery of such written notice to the Bank, the Bank shall
deliver to the Participant cash or such other form of payment
acceptable to the Participant in the amount as determined above
with respect to the Limited Rights being exercised.
Upon any exercise of a Limited Right, the related Option or
portion thereof shall cease to be exercisable. Upon exercise or
termination of the Option. any related Limited Rights shall
terminate.
6. Non-transferability. The Option and the Limited Rights
may be exercised during the Participant's lifetime only by the
Participant (and, upon death, by the Participant's beneficiary as
defined in Section 18). The Option, the Limited Rights and this
Agreement shall not be assignable or transferable by the
Participant, other than by will or the laws of descent and
distribution. No such transfer of the Option, the Limited Rights,
or this Agreement by the Participant by will or the laws of
descent and distribution shall be effective to bind the Bank
unless the Bank shall have been furnished with written notice
thereof and such other evidence as the Committee may deem
necessary or desirable to establish the validity of the transfer
and the agreement by the transferee or transferees to be bound by
the terms and conditions of this Agreement and the Plan. The
exercise price, upon the election of the Participant, may be paid
by such Participant's broker-dealer if such broker-dealer is to
be repaid with the proceeds of the sale of a portion of the
shares of Common Stock underlying the exercised options as
permitted under Rule 16b-6(b) of the Exchange Act ("Cashless
Exercise"). Except as provided above, the Option, the Limited
Rights and this Agreement shall not be pledged, hypothecated,
sold, assigned, transferred or otherwise encumbered or disposed
of. Any purported pledge, hypothecation, sale, assignment,
transfer or other encumbrance or disposition of the Option, the
Limited Rights or this Agreement contrary to the provisions
hereof shall be null and void and without effect. The levy of any
execution, attachment, or similar process upon the Option, the
Limited Rights or this Agreement shall be null and void and
without effect.
7. Rights in Event of Termination of Employment. Subject to
the condition that the Option shall not be exercisable for more
than ten years from the date of grant, the Participant may
exercise the Option and Limited Rights while in the continuous
employ or service of the Bank or its Affiliates or within three
months after the last day on which the Participant is employed by
or in service with the Bank or its Affiliates (unless the
Participant is Discharged for Cause or on account of death,
Disability or Normal Retirement as provided in Sections 8 and 9).
If the Participant is Discharged for Cause, all rights under this
Agreement shall expire upon the date of termination.
8. Rights in Event of Death. Subject to the condition that
the Option shall not be exercisable for more than ten years from
the Date of Grant, if the Participant shall die while employed by
the Bank or its Affiliates, the beneficiary of the Participant
may exercise all of the shares covered by the Option and the
Limited Rights held by the Participant, whether or not otherwise
exercisable at such time, within one year from the date of the
Participant's death.
9. Rights in the Event of Termination of Employment for
Reason of Disability or Normal Retirement. Subject to the
condition that the Option shall not be exercisable for more than
ten years from the Date of Grant, if the Participant's employment
is terminated by reason of Disability, the Participant shall have
the right to exercise all of the shares covered by the Option and
Limited Rights for a period of one year from the last day on
which the Participant is employed by the Bank or its Affiliates.
Upon termination of the Participant's service due to Normal
Retirement, the Participant shall have the right to exercise all
of the shares covered by the Option and Limited Rights, for a
period of one year following the date of the Participant's Normal
Retirement, provided however, that such Option shall not be
eligible for treatment as an Incentive Stock Option in the event
such Option is exercised more than three months following the
date of termination of the Participant's employment as an
employee.
10. Limitations upon Exercise of Options. Notwithstanding
any other provision of the Plan, so long as the Company remains
in the mutual form of organization, an option under the Plan may
not be exercised if the exercise of such an option would result
in the Company owning less than 50.1 percent of the Common Stock
of the Bank.
11. Surrender Option. In the event of a termination of
employment or service due to a Participant's death, Disability or
Normal Retirement, the Participant (or the Participant's personal
representative(s), heir(s) or devisee(s)) may make application to
the Committee, in a form acceptable to the Committee, to
surrender all or a part of any options held by such Participant
in exchange for a cash payment from the Bank of an amount equal
to the difference between the Fair Market Value of the Common
Stock on the date of the participant's termination of employment
and the exercise price of the option.
The Participant acknowledges that whether the Bank accepts
such application or determines to make payment, in whole or in
part, is within the absolute and sole discretion of the Bank. It
is expressly understood that the Bank is under no obligation to
make any such payments. In the event that the Bank accepts a
surrender application from the Participant, such payment shall be
in lieu of the exercise of the underlying option and such option
shall cease to be exercisable.
12. Employment. Nothing in this Agreement shall confer upon
the Participant any right to continue in the employ of the Bank
or its Affiliates or shall impose upon the Bank or its Affiliates
any obligation to employ or retain the Participant in its employ
for any period.
13. Dilution and Other Adjustments. In the event of any
change in the outstanding shares of Common Stock by reason of any
stock dividend or split, recapitalization, merger, consolidation,
spin-off, reorganization, combination or exchange of shares, or
other similar corporate change, the Committee, pursuant to
Section 14 of the Plan, shall make such proportionate and
equitable adjustments to the number of shares of Common Stock
covered by the Option and to the exercise price per share covered
by the Option to prevent dilution or enlargement of the rights of
the Participant under this Agreement.
14. Notice. Any notice required or permitted under this
Agreement shall be deemed given when delivered in person or when
mailed by registered mail with return receipt requested, to the
Bank addressed to Second and Xxxx Xxxxxxx, Xxxxxxxxxx, XX 00000,
ATTN: Chief Executive Officer, and to the Participant or
beneficiary at their last known addresses in the records of the
Bank.
15. Modification and Waiver. Neither this Option and Limited
Rights Agreement nor any provision hereof can be changed,
modified, amended, discharged, terminated or waived orally or by
any course of dealing or purported course of dealing, except by
an agreement in writing signed by the Participant or the
Participant's legal representative and the Bank. The waiver of or
failure to enforce any breach of this Agreement shall not be
deemed to be a waiver or acquiescence in any other breach
thereof.
16. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of
Pennsylvania, to the extent not pre-empted by federal law.
17. Withholding. There shall be deducted from each
distribution of cash and/or stock under the Plan an amount of
cash or stock relating to withholding taxes.
18. Holding Period. The Participant hereby acknowledges that
in order to have the tax treatment provided for Incentive Stock
Options under Section 422 of the Internal Revenue Code apply, the
Participant may not dispose of shares acquired under this Option
(i) for two (2) years from the Date of Grant of the Option and
(ii) for one (1) year after the date the shares of Common Stock
are transferred to the Participant.
19. Designation Beneficiary. The Participant may designate
a person or persons to receive, in the event of death, any rights
that may be available to the Participant pursuant to the Plan
under the Option and this Option Agreement. Such designation will
be made upon forms supplied by and delivered to the Bank and may
be revoked in writing. If the Participant fails effectively to
designate a beneficiary, then the Participant's estate will be
deemed to be the beneficiary. The
Participant may designate a beneficiary or beneficiaries in this
agreement or otherwise in writing to the person designated in
Section 13.
20. Participant Acknowledgment. The Participant hereby
acknowledges that all decisions, determinations and
interpretations of the Board of Directors of the Bank, or a
designated committee thereof, in respect of the Plan and this
Option and Limited Rights Agreement shall be final and
conclusive.
