EXHIBIT 10.3
HARLEYSVILLE SAVINGS FINANCIAL CORPORATION
AMENDED AND RESTATED 2005 STOCK OPTION PLAN
ARTICLE I
ESTABLISHMENT OF THE PLAN
Harleysville Savings Financial Corporation (the "Corporation")
hereby
amends and restates
its 2005 Stock Option
Plan (as amended and
restated, the
"Plan") upon the terms and conditions hereinafter stated, with the
amendment and
restatement effective as of November 19, 2008.
ARTICLE II
PURPOSE OF THE PLAN
The purpose of this Plan is to improve the growth and profitability of
the Corporation
and its Subsidiary Companies by providing Employees and
Non-Employee Directors
with a proprietary
interest in the
Corporation
as an
incentive to contribute to the success of the Corporation and its Subsidiary
Companies, and
rewarding Employees for outstanding performance and the
attainment of targeted goals. All Incentive Stock Options issued
under this Plan
are intended to comply with the requirements of Section 422 of the
Code and the
regulations thereunder, and all provisions hereunder shall
be read, interpreted
and applied with that purpose in mind.
ARTICLE III
DEFINITIONS
3.01 "Award"
means an Option
granted pursuant to the terms of this
Plan.
3.02 "Bank"
means Harleysville Savings Bank, the wholly owned
subsidiary of the Corporation.
3.03 "Board" means the Board of Directors of the Corporation.
3.04 "Change in
Control" shall mean a
change in the
ownership of the
Corporation or the Bank, a change in the effective control of the
Corporation or
the Bank or a change in the ownership of a substantial portion of the assets of
the Corporation or the
Bank, in each case as provided under Section 409A of the
Code and the regulations thereunder.
3.05 "Code" means the Internal Revenue Code of 1986, as
amended.
3.06 "Committee" means
a committee of two or more directors appointed
by the Board pursuant to Article IV hereof, each of whom shall be a
Non-Employee
Director as defined in
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Rule 16b-3(b)(3)(i) of
the Exchange Act or any successor thereto and an outside
director within the
meaning of Section
162(m) of the Code and the regulations
promulgated thereunder.
3.07 "Common Stock"
means shares of the common stock, $.10 par value
per share, of the Corporation.
3.08 "Disability"
shall mean that the holder of an Award (i) is unable
to engage in any
substantial
gainful activity by reason of any medically
determinable physical
or mental impairment
which can be expected
to result in
death or can be
expected to last for a
continuous
period of not less
than 12
months, or (ii) is, by reason of any medically determinable physical or mental
impairment which can
be expected to result
in death or can be expected to last
for a continuous period of not less than 12 months, receiving
income replacement
benefits for a period of not less than three months under an
accident and health
plan covering
employees of the
Corporation or the Bank (or would have received
such benefits for at least three months if he had been eligible to participate
in such plan).
3.09 "Effective
Date" means the day upon which the Board
originally
adopted this Plan.
3.10 "Employee" means
any person who is employed by the Corporation or
a Subsidiary
Company, or is an Officer of the Corporation or a Subsidiary
Company, but not
including directors
who are not also Officers of or otherwise
employed by the Corporation or a Subsidiary Company.
3.11 "Exchange
Act" means the
Securities
Exchange Act of 1934, as
amended.
3.12 "Fair Market
Value" shall be equal to the fair market
value per
share of the
Corporation's Common
Stock on the date an
Award is granted.
For
purposes hereof,
the Fair Market Value
of a share of Common Stock shall be the
closing sale price of
a share of Common
Stock on the date in question (or, if
such day is not a trading day in the U.S. markets, on the nearest preceding
trading day), as reported with respect to the principal market (or
the composite
of the markets,
if more than one) or
national quotation
system in which
such
shares are then traded, or if no such closing prices are reported, the mean
between the high bid and low asked prices that day on the
principal market or
national quotation
system then in use.
Notwithstanding the
foregoing, if the
Common Stock is not readily tradable on an established securities market for
purposes of
Section 409A of the Code, then the Fair Market Value shall be
determined by
means of a reasonable valuation method that takes into
consideration all available information material to the value of
the Corporation
and that otherwise
satisfies the requirements applicable under Section 409A
of
the Code and the regulations thereunder.
3.13 "Incentive Stock
Option" means any Option granted under this Plan
which the Board
intends (at the time it is granted) to be an incentive stock
option within the meaning of Section 422 of the Code or any
successor thereto.
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3.14 "Non-Employee
Director" means a member of the Board of the
Corporation or Board
of Directors of the Bank who is not an Officer or Employee
of the Corporation or any Subsidiary Company.
3.15 "Non-Qualified
Option" means any
Option granted under
this Plan
which is not an Incentive Stock Option.
3.16 "Officer" means
an Employee whose position in the Corporation or
Subsidiary Company is that of a corporate officer, as determined by
the Board.
3.17 "Option" means a right granted under this Plan to purchase
Common
Stock.
3.18 "Optionee" means
an Employee or
Non-Employee Director
or former
Employee or Non-Employee Director to whom an Option is granted
under the Plan.
3.19
"Retirement"
means (a) a termination of employment which
constitutes a retirement under the qualified retirement plan maintained by
the
Corporation or a
Subsidiary
Corporation,
or, if no such plan is
applicable,
which would constitute
retirement under the Corporation's qualified retirement
plan, if such
individual were a
participant in that plan, provided, however,
that the provisions of this subsection (a) will not apply as long
as an Optionee
continues to
serve as a Non-Employee Director, and (b) with respect to
Non-Employee
Directors, a
separation from service on the Board of Directors of
the Corporation and any applicable Subsidiary Company or any
successors thereto
(including
service as
a director emeritus or advisory director to the
Corporation or any
Subsidiary Company)
after reaching age 65 and having served
as a member of the Board of Directors of the Corporation and/or the Bank for a
period of 5 years or more.
3.20 "Subsidiary
Companies"
means
those subsidiaries of the
Corporation, including
the Bank, which meet the definition of "subsidiary
corporations" set
forth in Section
424(f) of the Code, at the time of granting
of the Option in question.
ARTICLE IV
ADMINISTRATION OF THE
PLAN
4.01 Duties
of the Committee. The Plan shall be administered and
interpreted by the
Committee,
as appointed from time to time by the Board
pursuant to Section 4.02. The Committee shall have the authority to
adopt, amend
and rescind such rules, regulations and procedures as, in its opinion,
may be
advisable in the
administration of the
Plan, including,
without limitation,
rules, regulations
and procedures which (i) deal with satisfaction of an
Optionee's tax
withholding obligation
pursuant to Section
12.02 hereof, (ii)
include arrangements
to facilitate the
Optionee's ability to
borrow funds for
payment of the
exercise or purchase
price of an Award,
if applicable, from
securities brokers and dealers, and (iii) include arrangements
which provide for
the payment of some or all of such exercise or purchase price by delivery of
previously-owned
shares of Common Stock or other property and/or by withholding
some of the shares of Common Stock which are being acquired.
The interpretation
and
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construction by
the Committee of any provisions of the Plan, any rule,
regulation or procedure adopted by it pursuant thereto or
of any Award shall be
final and binding in the absence of action by the Board.
4.02 Appointment
and Operation of the
Committee.
The members of the
Committee shall be
appointed by, and will
serve at the pleasure of, the Board.
The Board from time to time may remove members from, or add members to, the
Committee, provided
the Committee shall continue to consist of two or more
members of the Board, each of whom shall be a Non-Employee
Director, as
defined
in Rule 16b-3(b)(3)(i) of the Exchange Act or any successor thereto. In
addition, each member of the Committee shall be an "outside
director" within the
meaning of Section 162(m) of the Code and regulations thereunder at such times
as is required
under such regulations. 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,
regulations and
procedures as it deems
appropriate
for the conduct of its affairs. It may
appoint one of its
members to be
chairman and any person, whether or not a
member, to be its secretary or agent. The Committee shall report
its actions and
decisions to the Board at appropriate times but in no event less than
one time
per calendar year.
4.03 Revocation
for Misconduct. The Board or the Committee may by
resolution immediately
revoke, rescind and terminate any Option, or portion
thereof, to the extent
not yet exercised,
previously granted or
awarded under
this Plan to an Employee who is discharged from the employ of the
Corporation or
a Subsidiary
Company for cause, which, for purposes hereof, shall mean
termination because of the Employee's personal dishonesty,
incompetence, willful
misconduct, breach of
fiduciary duty
involving personal
profit, intentional
failure to perform
stated duties, willful violation of any law, rule, or
regulation (other
than traffic violations or similar offenses) or final
cease-and-desist
order. Options
granted to a Non-Employee Director who is
removed for cause pursuant to the Corporation's Articles of Incorporation
and
Bylaws or the Bank's Charter and Bylaws shall terminate as of the
effective date
of such removal.
4.04 Limitation on Liability. Neither the members of the Board
nor any
member of the Committee shall be liable for any action or
determination made
in
good faith with respect to the Plan, any rule, regulation or procedure
adopted
by it pursuant thereto
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
Corporation
shall, subject to the requirements of applicable laws and
regulations, indemnify
such member against all liabilities and 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
Corporation and its
Subsidiary
Companies and, with respect to any criminal
action or proceeding,
had no reasonable cause to believe his conduct was
unlawful.
4.05 Compliance with Laws and Regulations. All Awards granted
hereunder
shall be subject to all applicable federal and state laws, rules
and regulations
and to such approvals by any government or regulatory agency as may
be required.
The Corporation shall
not be required
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to issue or deliver
any certificates
for shares of Common
Stock prior to the
completion of any
registration or
qualification of or obtaining of consents or
approvals with respect to such shares under any federal or state
law or any rule
or regulation of any government body, which the Corporation shall, in its sole
discretion, determine
to be necessary or advisable. Moreover, no Option may be
exercised if such exercise would be contrary to applicable laws and
regulations.
4.06
Restrictions on Transfer. The Corporation may place a legend
upon
any certificate
representing
shares acquired pursuant to an Award granted
hereunder noting
that the transfer of such shares may be restricted by
applicable laws and regulations.
4.07 No Deferral of
Compensation Under
Section 409A of the Code. All
Awards granted
under the Plan are
designed to not constitute a deferral of
compensation for purposes of Section 409A of the Code.
Notwithstanding any other
provision in this Plan to the contrary, all of the terms and conditions of any
Option granted
under this Plan shall
be designed to satisfy the exemption for
stock options set
forth in the
regulations issued
under Section 409A of the
Code. Both this Plan
and the terms of all Options granted hereunder shall be
interpreted in a manner that requires compliance with all of the
requirements of
the exemption
for stock options set forth in the regulations issued under
Section 409A
of the Code. No Optionee shall be permitted to defer the
recognition of income
beyond the exercise
date of a Non-Qualified Option or
beyond the date that the Common Stock received upon the exercise of
an Incentive
Stock Option is sold.
ARTICLE V
ELIGIBILITY
Awards may be granted to such Employees and Non-Employee Directors of
the Corporation and
its Subsidiary
Companies as may be desig
