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Exhibit 4.1
FLAGSTAR BANCORP, INC.
1997 EMPLOYEES AND DIRECTORS STOCK OPTION PLAN
AS AMENDED (1)
1. PURPOSE OF THE PLAN.
The purpose of this Flagstar Bancorp, Inc. (the "Company") 1997
Employees
and Directors Stock Option Plan, as amended, is to advance the
interests of the
Company through providing select key Employees and Directors of
the Company and
its Affiliates with the opportunity to acquire Shares. By
encouraging such stock
ownership, the Company seeks to attract, retain and motivate the
best available
personnel for positions of substantial responsibility and to
provide additional
incentive to Directors and key Employees of the Company, the
Bank or any
Affiliate to promote the success of the business.
2. DEFINITIONS.
As used herein, the following definitions shall apply.
(a) "Affiliate" shall mean any "parent corporation" or
"subsidiary
corporation" of the Bank or the Company, as such terms are
defined in Section
424(e) and (f), respectively, of the Code.
(b) "Agreement" shall mean a written agreement entered into in
accordance
with Paragraph 5(c).
(c) "Awards" shall mean Options unless the context clearly
indicates a
different meaning.
(d) "Bank" shall mean Flagstar Bank, FSB.
(e) "Board" shall mean the Board of Directors of the
Company.
(f) "Change in Control" shall mean any one of the following
events:
(1) the change in ownership, holding or power to vote more than
25%
of the Company's or the Bank's voting stock;
(2) the acquisition of control of the election of a majority of
the
Company's or the Bank's Directors;
(3) the exercise of a controlling influence over the management
or
policies of the Company or the Bank by any person or by persons
acting as
a group within the meaning of Section 13(d) of the Securities
Exchange Act
of 1934; or
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(1) Includes the 1999, 2002 and 2005 Amendments.
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(4) during any period of two consecutive years, individuals who
at
the beginning of such period constitute the Board cease for any
reason to
constitute at least two-thirds thereof, provided that any
individual whose
election or nomination for election as a member of the Board was
approved
by a vote of at least two-thirds of the continuing Directors
then in
office shall be considered a continuing Director.
For purposes of this subparagraph only, the term "person" refers
to an
individual or a corporation, partnership, trust, association,
joint venture,
pool, syndicate, sole proprietorship, unincorporated
organization or any other
form of entity not specifically listed herein. The decision of
the Committee as
to whether a change in control has occurred shall be conclusive
and binding.
(g) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(h) "Committee" shall mean the Stock Option Committee appointed
by the
Board in accordance with Paragraph 5(a) hereof.
(i) "Common Stock" shall mean the common stock, par value $.01
per share,
of the Company.
(j) "Continuous Service" shall mean the absence of any
interruption or
termination of service as an Employee or Director of the Company
or the Bank or
an Affiliate. Continuous Service shall not be considered
interrupted in the case
of sick leave, military leave or any other leave of absence, in
the case of
transfers between payroll locations of the Bank or between the
Bank, an
Affiliate or a successor, or in the case of a Director's
performance of services
in an emeritus or advisory capacity.
(k) "Director" shall mean any member of the Board, and any
member of the
board of directors of any Affiliate that the Board has by
resolution designated
as being eligible for participation in this Plan.
(l) "Disability" shall mean a physical or mental condition,
which in the
sole and absolute discretion of the Committee, is reasonably
expected to be of
indefinite duration and to prevent substantially a Participant
from fulfilling
his or her duties or responsibilities to the Bank or an
Affiliate.
(m) "Effective Date" shall mean the date specified in Paragraph
13 hereof.
(n) "Employee" shall mean any person employed by the Company or
an
Affiliate.
(o) "Exercise Price" shall mean the price per Optioned Share at
which an
Option may be exercised.
(p) "ISO" shall mean an option to purchase Common Stock which
meets the
requirements set forth in the Plan and which is intended to be
and is identified
as an "incentive stock option" within the meaning of Section 422
of the Code.
ISOs shall only be granted to Employees of the Company.
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(q) "Market Value" shall mean the fair market value of the
Common Stock,
as determined under Paragraph 7(b) hereof.
(r) "Non-Employee Director" shall mean any member of the Board
who is a
Non-Employee Director within the meaning of Rule 16b-3.
(s) "Non-ISO" shall mean an option to purchase Common Stock
which meets
the requirements set forth in the Plan but which is not intended
to be and is
not identified as an ISO.
(t) "Option" shall mean an ISO and a Non-ISO.
(u) "Optioned Shares" shall mean Shares subject to an Award
granted
pursuant to this Plan.
(v) "Participant" shall mean any person who receives an Award
pursuant to
the Plan.
(w) "Plan" shall mean this Flagstar Bancorp, Inc. 1997 Employees
and
Directors Stock Option Plan.
(x) "Rule 16b-3" shall mean Rule 16b-3 of the General Rules
and
Regulations under the Securities Exchange Act of 1934, as
amended.
(y) "Share" shall mean one share of Common Stock.
(z) "Year of Service" shall mean a full 12-month period of
Continuous
Service, measured from the date of an Award and each annual
anniversary of that
date, during which a Participant has been an Employee or
Director.
3. TERM OF THE PLAN AND AWARDS.
(a) Term of the Plan. The Plan shall continue in effect for a
term of 10
years from the Effective Date, unless sooner terminated pursuant
to Paragraph 15
hereof. No Award shall be granted under the Plan after 10 years
from the
Effective Date.
(b) Term of Awards. The term of each Award granted under the
Plan shall be
established by the Committee, but shall not exceed 10 years;
provided, however,
that in the case of an Employee who owns Shares representing
more than 10% of
the outstanding Common Stock at the time an ISO is granted, the
term of such ISO
shall not exceed five years.
4. SHARES SUBJECT TO THE PLAN.
(a) General Rule. The aggregate number of Shares deliverable
pursuant to
Awards shall not exceed 1,367,000 Shares, as such number may be
adjusted on and
after the Effective Date pursuant to Paragraph 10 hereof. Such
Shares may either
be authorized but unissued Shares, Shares held in treasury, or
Shares held in a
grantor trust created by the Company. If any Awards should
expire, become
unexercisable, or be forfeited for any reason without having
been exercised, the
Optioned Shares shall, unless the Plan shall have been
terminated, be available
for the grant of additional
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Awards under the Plan. Effective on the date of adoption of the
1999 Amendment
to the Plan, an additional 683,500 Shares shall be deliverable
pursuant to
Options. Effective on the date of adoption of the 2002 Amendment
to the Plan, an
additional 1,000,000 Shares shall be deliverable pursuant to
Options. Effective
on the date of adoption of the 2005 Amendment to the Plan, an
additional
1,500,000 Shares shall be deliverable pursuant to Options, for a
total of
13,727,250 (adjusted to reflect the 3-for-2 stock split on July
13, 2001, the
3-for-2 stock split on May 31, 2002, and the 2-for-1 stock split
on May 15,
2003) issued or issuable under the Option Plan.
(b) Maximum Number of ISOs. Of the 1,500,000 Shares authorized
under the
2005 Amendment, no more than 1,000,000 may be issued as
ISOs.
5. ADMINISTRATION OF THE PLAN.
(a) Composition of the Committee. The Plan shall be administered
by the
Stock Option Committee, which shall consist of not less than two
members of the
Board, all of whom shall be Non-Employee Directors. Members of
the Committee
shall serve at the pleasure of the Board. In the absence of a
duly appointed
Committee, the Plan shall be administered by those members of
the Board who are
Non-Employee Directors. Notwithstanding the foregoing, the Board
may, at any
time, act in lieu of the Committee.
(b) Powers of the Committee. Except as limited by the express
provisions
of the Plan or by resolutions adopted by the Board, the
Committee shall have
sole and complete authority and discretion (i) to select
Participants and grant
Awards, (ii) to determine the form and content of Awards to be
issued in the
form of Agreements under the Plan, (iii) to interpret the Plan,
(iv) to
prescribe, amend and rescind rules and regulations relating to
the Plan, and (v)
to make other determinations necessary or advisable for the
administration of
the Plan. The Committee shall have and may exercise such other
power and
authority as may be delegated to it by the Board from time to
time. A majority
of the entire Committee shall constitute a quorum and the action
of a majority
of the members present at any meeting at which a quorum is
present, or acts
approved in writing by all members of the Committee without a
meeting, shall be
deemed the action of the Committee.
(c) Agreement. Each Award shall be evidenced by a written
Agreement
containing such provisions as may be approved by the Committee.
Each such
Agreement shall constitute a binding contract between the
Company and the
Participant and every Participant, upon acceptance of such
Agreement, shall be
bound by the terms and restrictions of the Plan and of such
Agreement. The terms
of each such Agreement shall be in accordance with the Plan, but
each Agreement
may include such additional provisions and restrictions
determined by the
Committee, in its discretion, provided that such additional
provisions and
restrictions are not inconsistent with the terms of the Plan. In
particular, the
Committee shall set forth in each Agreement (i) the Exercise
Price of an Option,
(ii) the number of Shares subject to, and the expiration date
of, the Award,
(iii) the manner, time and rate (cumulative or otherwise) of
exercise or vesting
of such Award, and (iv) the restrictions, if any, to be placed
upon such Award
or upon Shares which may be issued upon exercise of such
Award.
The chairman of the Committee and such other Directors and
officers as
shall be designated by the Committee are hereby authorized to
execute Agreements
on behalf of the Company and to cause them to be delivered to
the recipients of
Awards.
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(d) Effect of the Committee's Decisions. All decisions,
determinations and
interpretations of the Committee shall be final and conclusive
on all persons
affected thereby.
(e) Indemnification. In addition to such other rights of
indemnification
as they may have, the members of the Committee shall be
indemnified by the
Company in connection with any claim, action, suit or proceeding
relating to any
action taken or failure to act under or in connection with the
Plan or any
Award, to the full extent provided for under the Company's
governing instruments
with respect to the indemnification of Directors.
6. GRANT OF OPTIONS.
(a) General Rule. In its sole discretion, the Committee may
grant Awards
to select key Employees. In selecting those Employees to whom
Awards will be
granted and the number of shares covered by such Awards, the
Committee shall
consider their respective positions, duties and
responsibilities, the value of
their services to the Company and its Affiliates, and any other
factors the
Committee may deem relevant. Notwithstanding the foregoing, the
Committee shall
automatically make the Awards specified in Paragraphs 6(b) and
6(d) hereof.
(b) Automatic Grants to Employees. On the Effective Date, each
of the
following Employees shall receive an Option (in the form of an
ISO, to the
extent permissible under the Code) to purchase the number of
Shares listed
below, at an Exercise Price per Share equal to the Market Value
of a Share on
the Effective Date; provided that such grant shall not be made
to an Employee
whose Continuous Service terminates on or before the Effective
Date:
Employee Shares
Thomas J. Hammond 400,000
Mark T. Hammond 250,000
Michael W. Carrie 45,000 + 20,000
Joan H. Anderson 45,000
Mary Kay McGuir
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