Exhibit 10.3
PSB HOLDINGS, INC.
2001 STOCK OPTION PLAN
As amended March 15, 2005
PSB HOLDINGS, INC.
2001 STOCK OPTION PLAN
SECTION 1.
PURPOSE. The Plan has been adopted to (a)
enable the Company
to attract and retain superior employees by
providing incentive opportunities
with respect to future services that are
competitive with those of other
similar companies, (b) further identify the
interests of participating
employees with those of the Company's other
shareholders through compensation
based on the performance of the Company's
common stock and (c) promote the
long-term financial interests of the
Company and its shareholders.
SECTION 2.
CERTAIN DEFINITIONS.
As used in this Plan,
and in addition
to any terms elsewhere defined in this
Plan, the following terms, when
capitalized, shall have the meanings set
forth in this Section 2.
Section
2.1. "Board" means the
Board of Directors of the Company.
Section
2.2. "Cause" means any
one or more of the following on the part
of the participant: (a) the commission of
an act which results in a payment of
a claim filed by the Company or a
Subsidiary under a blanket banker fidelity
bond or similar policy as from time to time
and at any time maintained; (b) an
intentional failure to perform assigned
duties; (c) willful
misconduct in the
course of the participant's employment; (d)
breach of a fiduciary duty
involving personal profit or acts or
omissions of personal dishonesty,
including, but not limited to, commission
of any crime of theft, embezzlement,
misapplication of funds, unauthorized
issuance of obligations, or false
entries; (e) any intentional, reckless, or
negligent act or omission to act
which results in the violation by the
participant of any policy established by
the Company or a Subsidiary which is
designed to insure compliance with
applicable banking, securities, employment
discrimination or other laws or
which causes or results in the Company's or
a Subsidiary's violation of such
laws, except any act done by the
participant in good faith, as determined in
the reasonable discretion of the Board, or
which results in a violation of such
policies or law which is, in the reasonable
sole discretion of such Board,
immaterial; or (f) any of the foregoing
which results in material loss to the
Company or any of its Subsidiaries.
Except to the extent
of the discretion
granted to the Board in clause (e), the
Committee shall have the sole
discretion to determine whether "Cause"
exists, and the Committee's
determination shall be final.
Section
2.3. "Change in
Control" has the meaning set forth in Section
8.2.
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Section
2.4. "Code" means the
Internal Revenue Code of 1986, as amended.
The reference to any specific section of
the Code shall include any successor
section or sections.
Section
2.5. "Committee"
means, subject to the provisions of Section 4,
the Option Committee of the Board.
Section
2.6. "Common Stock"
means the common stock of the Company.
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Section
2.7. "Company" means
PSB Holdings, Inc., a Wisconsin
corporation.
Section
2.8. "Disability"
means (a) a physical or mental condition which
qualifies as a total and permanent
disability under the terms of any plan or
policy maintained by the Company or a
Subsidiary and for which the Optionee is
eligible to receive benefits under such
plan or policy, or (b) if the Optionee
does not participate in a disability plan,
or is not covered by a disability
policy, of the Company or a Subsidiary,
"Disability" means the permanent and
total inability of a participant by reason
of mental or physical infirmity, or
both, to perform the work customarily
assigned to him or her, if a medical
doctor selected or approved by the Board,
and knowledgeable in the field of
such infirmity, advises the Committee
either that it is not possible to
determine when such Disability will
terminate or that it appears probable that
such Disability will be permanent during
the remainder of said participant's
lifetime.
Section
2.9. "Effective Date"
means February 20, 2001.
Section
2.10. "Employed," and
any variation thereof such as
"employment," means, as appropriate,
employed by or employment with any of the
Company or any present or future
Subsidiary.
Section
2.11. "Exchange Act"
means the Securities Exchange Act of 1934,
as amended.
Section
2.12. "Fair Market
Value" of a share of the Common Stock as of
any date means an amount equal to:
(a) the average of the
highest bid and lowest ask prices of the
Common
Stock reported on the OTC Bulletin Board, or, if prices for the
Common
Stock are not quoted on the OTC Bulletin Board, the average of
the
highest
bid and lowest ask prices reported on any other bona fide over-
the-counter stock market selected in good faith by the
Committee;
provided,
however, if the date on which "Fair Market Value" is to be
determined
is not a business day, or, if there shall be no reported
transactions for such date, such determination shall be made on the
next
preceding
business day for which transactions were reported, or
(b) if the Committee
determines that the amount determined
pursuant
to (a) is not indicative of the market value of the Common
Stock
because of
limited or sporadic trading of the Common Stock and the lack
of recent
quotations for the Common Stock on the OTC Bulletin Board, then
such
amount as may be determined by the Committee by whatever means
or
method as
the Committee, in the good faith exercise of its discretion,
shall at
such time deem appropriate and representative of the fair
market
value of
the Common Stock.
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Section
2.13. "Option" means
an option to purchase Shares awarded
pursuant to the provisions of Section 6 and
which is intended to meet the
requirements of an "incentive stock option"
within the meaning of Section 422
of the Code.
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Section
2.14. "Option
Agreement" means the written document which
evidences an award of Options, whether or
not such document requires the
signature of the Optionee.
Section
2.15. "Optionee" means
an eligible employee, as determined in
accordance with Section 5, who has been
granted an Option.
Section
2.16. "Option Price"
means, with respect to each Option, the
price per Share at which such Option may be
exercised and the Shares subject to
such Option purchased.
Section
2.17. "Plan" means the
PSB Holdings, Inc. 2001 Stock Option Plan
as set forth herein or as hereafter
amended.
Section
2.18. "Share" means a
share of Common Stock.
Section
2.19. "Subsidiary"
means any corporation, partnership, or other
entity in which the Company owns, directly
or indirectly, at least a 50%
interest in the voting rights or profits.
Section
2.20. "Termination of
Employment" means the termination of an
Optionee's employment with, or performance
of services for, the Company and any
of its Subsidiaries. An Optionee employed by, or
performing services for, a
Subsidiary shall also be deemed to incur a
Termination of Employment if the
Subsidiary ceases to be such a Subsidiary
and the Optionee does not immediately
thereafter become an employee of the
Company or another Subsidiary. Temporary
absences from employment because of
illness, vacation, or leave of absence and
transfers among the Company and its
Subsidiaries shall not be considered
Terminations of Employment. For purposes of the Plan, an
Optionee's employment
shall be deemed to have terminated at the
close of business on the day
preceding the first date on which he or she
is no longer for any reason
whatsoever employed by the Company or any
of its Subsidiaries.
SECTION 3.
NUMBER OF SHARES
AVAILABLE FOR OPTIONS.
Section
3.1 Shares Subject.
The aggregate number
of Shares which may be
delivered under Options awarded pursuant to
the Plan shall be 15,000.
Section
3.2 Undelivered
Shares. To the extent
any Shares subject to an
Option are not delivered to an Optionee (or
the estate or other transferee of
such Optionee) because the Option is
forfeited, expires, or otherwise becomes
unexercisable such Shares shall be deemed
not to have been delivered for
purposes of determining the maximum number
of Shares available for delivery
under the Plan.
Section
3.3 Exercise Using
Shares. If the Option
Price of any Option
awarded under the Plan is satisfied by
tendering Shares to the Company only the
number of Shares issued to the Optionee (or
the estate or other transferee of
such Optionee), net of the Shares tendered,
shall be deemed delivered for
purposes of determining the maximum number
of Shares available for delivery
under the Plan.
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Section
3.4 Stock Dividends,
etc. If the Company
shall, after the
Effective Date, change the Common Stock
into a greater or lesser number of
Shares through a stock dividend, stock
split-up or combination of Shares, then
(a) the number of Shares then subject to
the Plan as provided for in Section
3.1, but which are not then subject to any
outstanding Option, (b) the number
of Shares subject to each then outstanding
Option (to the extent not previously
exercised), and (c) the price per Share
payable upon exercise of each then
outstanding Option, shall all be
proportionately increased or decreased as of
the record date for such stock dividend,
stock split-up or combination of
Shares in order to give effect thereto.
Notwithstanding any
such proportionate
increase or decrease, no fraction of a
Share shall be issued upon the exercise
of an Option and the Shares subject to an
Option shall be rounded to the
nearest whole Share.
Section
3.5 Other Changes.
If, after the
Effective Date, there shall be
any change in the Common Stock or other
change in the capitalization of the
Company other than through a stock
dividend, stock split-up or combination of
Shares, including, but not limited to, a
change which results from a merger,
consolidation, spin-off, or other
distribution of stock or property of the
Company, any reorganization (whether or not
such reorganization is within the
meaning of Section 368 of the Code), or any
partial or complete liquidation of
the Company, then if, and only if, the
Committee shall determine that such
change equitably requires an adjustment in
(a) the number or kind of shares of
stock then reserved for issuance under
Section 3.1, (b) the number or kind of
shares of stock then subject to an Option,
(c) the Option Price with respect to
an Option, or (d) any other limitation on
the Option which may be granted to
any participant, to the extent such
adjustment does not cause any Option to
fail to satisfy the requirements for
exemption from the limitations on
deductibility imposed by Section 162(m) of
the Code that is set forth in
Section 162(m)(4)(c) of the Code if such
Option would have satisfied such
requirements immediately prior to such
adjustment and if such Option, if then
exercised, would, when added to the
Optionee's estimated compensation from the
Company and all Subsidiaries for such year,
exceed the deductibility limits of
Section 162(m) of the Code, such adjustment
as the Committee shall determine is
equitable and as shall be approved by the
Board shall be made and shall be
effective and binding for all purposes of
such Option and the Plan. If any
member of the Committee shall, at the time
of such approval, be an Optionee, he
shall not participate in action in
connection with such adjustment.
SECTION 4.
ADMINISTRATION OF THE
PLAN.
Section
4.1 Committee.
The Plan shall be
administered by the Committee.
The Committee shall, subject to the terms
of the Plan, have the authority to,
in its sole discretion, (a) select eligible
employees to receive an award of
one or more Options and to participate in
the Plan, (b) determine the number of
Shares subject to each award and the Option
Price associated therewith, (c)
establish terms and conditions concerning
the time of, and conditions precedent
to, the exercisability of each Option
(including, without limitation,
conditions with respect to the passage of
time, performance of the Company, or
a Subsidiary, or the Optionee, restrictions
on competitive employment or
satisfaction of Company policies, and any
other conditions which the Committee
deems reasonably related to the
satisfaction of the purposes of the Plan), (d)
determine the form of each Option Agreement
and all terms and conditions
thereof with respect
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to each award, (e) interpret the Plan and
the application thereof and establish
such rules and regulations as it deems
necessary or desirable for the
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administration of the Plan, (f) modify or
cancel any award or Option or take
such action to cause the vesting or
exercisability of any or all outstanding
Options to become exercisable in part or in
full for any reason at any time,
subject to the limitation of Section 8.1,
and (g) exercise such other authority
as is reasonably related to the
administration of and/or the fulfillment of the
purpose of the Plan. All actions, interpretations,
rules, regulations and
conditions taken or established by the
Committee shall be final, binding and
conclusive upon the Company, each
Subsidiary, and all Optionees.
Section
4.2 Membership of the
Committee.
(a) Membership
Qualifications. Except
as provided in this Section
4.2, at
all times the Committee shall consist of not less than three
members
designated by the Board from among those of its members who are
not
officers or employees of the Company or a Subsidiary and each of
whom
is (a) a
"non-employee director" within the meaning of Rule 16b-3 under
the
Exchange Act (a "Non-Employee Director") and (b) an "outside
director"
within the meaning of Section 162(m) of the Code (an "Outside
Director"); provided, however, that in addition to the Board's
general
authority
to amend the Plan as provided for in Section 9.1, the Board
shall have
the specific authority to modify or eliminate the foregoing
qualifications or adopt such other qualifications as are
reasonably
intended
to result in (x) the award of Options, and transactions with
respect to
the award or exercise of such Options, satisfying an exemption
from
Section 16(b) of the Exchange Act, or any successor thereto, and
(y)
compensation recognized by Optionees qualifying as a deductible
expense
of the
Company under the "performance-based compensation" exception to
compensation deduction limits which would otherwise be imposed on
the
Company
under Section 162(m) of the Code.
(b) Appointment of
Other Members. In the
event that one or more
members of
the Committee shall fail to meet the qualifications set forth
in Section
4.2(a), the Board shall remove such member or members and
appoint a
successor or successors who satisfy such qualifications.
The
Board
shall act in a reasonably prompt manner to fill any vacancy on
the
Committee
from among such of its members who are both Non-Employee
Directors
and Outside Directors.
(c) Validity of
Grants.
Notwithstanding the qualifications for
members of
the Committee established in Section 4.2(a), any award of
Options
made by the Committee in good faith and without the knowledge
that one
or more of its members did not satisfy such qualifications,
shall be
valid and enforceable by the Optionee even though the members
of
the
Committee did not, at the time of such award, satisfy such
qualifications.
Section
4.3 Actions by the
Committee. A majority
of the members of the
Committee shall constitute a quorum.
In the absence of
specific rules to the
contrary, action by the Committee shall
require the consent of a majority of
the members of the Committee, expressed
either orally at a meeting of the
Committee or in writing in the absence of a
meeting.
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Section
4.4 Actions by the
Board. Any authority
granted to the
Committee may also be exercised by the full
Board, except to the extent that
the grant or exercise of such authority
would cause any Option or transaction
to become subject to (or lose an exemption
under) the short-swing profit
recovery provisions of Section 16 of the
Exchange Act or cause an Option not to
<PAGE>
qualify for, or to cease to qualify for,
the exemption as "performance-based
compensation" under Section 162 of the
Code, and the regulations promulgated
thereunder. To the extent that any
permitted action taken by the Board
conflicts with action taken by the
Committee, the Board action shall control.
Section
4.5 Limitation on
Liability and Indemnification of Board. No
member of the Board, no executive officer
or other employee of the Company, and
no other agent or representative of the
Company shall be liable for any act,
omission, interpretation, construction, or
determination made in connection
with the Plan in good faith, and all such
persons shall be entitled to
indemnification and reimbursement by the
Company in respect of any claim, loss,
damage, or expense (including attorneys
fees) arising ther
