SIS BANCORP,
INC.
STOCK OPTION
PLAN
(Amended and restated as of
March 1, 1998)
ARTICLE
I. Purpose
The purpose of the SIS Bancorp, Inc. Stock
Option Plan (the “Plan”) is to attract directors and
key employees of SIS Bancorp, Inc. (the “Company”) and
its Subsidiaries (as hereinafter defined) and to encourage them to
continue their association with the Company, by providing favorable
opportunities for them to participate in the ownership of the
Company and in its future growth through the granting of stock
options with respect to the Company’s stock. The term
“Subsidiary” as used in the Plan means a corporation,
including, without limitation, any banking or thrift institution,
of which the Company owns, directly or indirectly through an
unbroken chain of ownership, fifty percent (50%) or more of the
total combined voting power of all classes of stock. The term
“Optionee,” as used in the Plan, refers to any
individual to whom an Option has been granted.
ARTICLE
II. Administration of the Plan
The Plan shall be administered by a Committee
(the “Committee”) composed of two or more members of
the Board of Directors of the Company (the “Board”),
and may include those members serving at any time and from time to
time as the Compensation Committee of the Board. For so long as
Section 16 of the Securities Exchange Act of 1934, as amended from
time to time (the “Exchange Act”), is applicable to the
Company, each member of the Committee shall be a
“non-employee director” or the equivalent within the
meaning of Rule 16b-3 under the Exchange Act, and, for so long as
Section 162(m) of the Code is applicable to the Company, an
“outside director” within the meaning of Section 162 of
the Code and the regulations thereunder. With respect to persons
subject to Section 16 of the Exchange Act (“Insiders”),
transactions under the Plan are intended to comply with all
applicable conditions of Rule 16b-3 or its successor under the
Exchange Act. In the event that a vacancy occurs on account of the
resignation of a member or the removal of a member by vote of the
Board, a successor member shall be appointed by vote of the
Board.
The Committee shall from time to time determine
to whom options shall be granted under the Plan, whether options
granted shall be incentive stock option (“ISOs”) or
non-qualified stock options (“NSOs”), the terms of the
options and the number of shares which may be granted under
options. The Committee shall report to the Board the names of
individuals to whom such options are to be granted, the number of
shares covered and the terms and conditions of each
grant.
The Committee shall select one of its members as
Chairman and shall hold meetings at such times and places as it may
determine. A majority of the Committee shall constitute a quorum,
and acts of the Committee at which a quorum is present, or acts
reduced to or approved in writing by all the members of the
Committee, shall be the valid acts of the Committee. The Committee
shall have the authority to adopt, amend and rescind such rules and
regulations as, in its opinion, may be advisable in the
administration of the Plan. All questions of interpretation and
application of such rules and regulations, of the Plan and of
options granted thereunder (the “Options”), shall be
subject to the determination of the Committee, which shall be final
and binding.
The Plan shall be administered in such a manner
as to permit those Options granted thereunder and specially
designated under Section 5 to qualify as incentive stock options as
described in Section 422 of the Internal Revenue Code of 1986, as
amended (the “Code”).
ARTICLE
III. Stock Subject to the Plan
The total number of shares of stock which may be
subject to Options under the Plan shall be 1,146,250 shares of the
Company’s Common Stock, provided that the number of shares
stated in this sentence shall be subject to adjustment in
accordance with the provisions of Section 9. Shares of Common Stock
subject to an Option under the Plan that is not fully exercised
shall again become available for grant under the terms of the Plan.
The shares of Common Stock which may be subject to Options granted
under the Plan may be authorized but unissued shares or treasury
shares. The maximum number of shares of Stock subject to Options
that may be granted to any Optionee in the aggregate in any
calendar year shall not exceed 600,000 shares.
ARTICLE
IV. Eligibility for Awards; Terms and Conditions of
Options
The individuals who shall be eligible for
discretionary grants of Options under the Plan shall be key
employees of the Company or a Subsidiary and members of the Board
of Directors of the Company or a Subsidiary. Incentive Stock
Options (“ISO”) shall not be granted to any individual
who is not an employee of the Company or a Subsidiary.
Every Option under the Plan shall be evidenced
by a written Stock Option Agreement in such form as the Committee
shall approve from time to time, specifying the number of shares of
Common Stock that may be purchased pursuant to the Option, the time
or times at which the Option shall become exercisable in whole or
in part, whether the option is intended to be an ISO or a NSO, and
such other terms and conditions as the Committee shall approve, and
containing or incorporating by reference the following terms and
conditions:
a)
Duration
. The duration of each Option shall
be as specified by the Committee in its discretion; provided,
however, that no ISO shall expire later than ten (10) years from
its date of grant, and no ISO granted to an employee who owns
(directly or under the attribution rules of Section 424(d) of the
Code) stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or any
Subsidiary shall expire later than five (5) years from its date of
grant.
b)
Exercise Price
. The exercise price of each Option
shall be any lawful consideration, as specified by the Committee in
its discretion; provided, however, that the price with respect to
an ISO shall be at least one hundred percent (100%) of the fair
market value of the shares on the date on which the Committee
awards the Option, which shall be considered the date of grant of
the Option for purposes of fixing the price; and provided further
that the price with respect to an ISO granted to an employee who at
the time of grant owns (directly or under the attribution rules of
Section 424(d) of the Code) stock representing more than ten
percent (10%) of the voting power of all classes of stock of the
Company or of any Subsidiary shall be at least one hundred ten
percent (110%) of the fair market value of the shares on the date
of grant of the ISO. Except as may be otherwise explicitly provided
in the Plan or in any Stock Option Agreement or similar document,
the “fair market value” of a share of Common Stock at
any particular date shall be determined according to the following
rules: (i) if the Common Stock is at the time listed or admitted to
trading on any stock exchange or NASDAQ, then the fair market value
shall be the reported closing price of the Common Stock on such
date on the principal exchange or NASDAQ, as the case may be; or
(ii) if the Common Stock is not at the time listed or admitted to
trading on a stock exchange of NASDAQ, the fair market value shall
be the closing price of the Common Stock on the date in question in
the over-the-counter market, as such price is reported in a
publication of general circulation selected by the Board and
regularly reporting the price of the Common Stock in such market;
provided, however, that if the price of the Common Stock is not so
reported, that fair market value shall be determined in good faith
by the Board, which may take into consideration (1) the price paid
for the Common Stock in the most recent trade of a substantial
number of shares known to the Board to have occurred at arm’s
length between willing and knowledgeable investors, or (2) an
appraisal by an independent party, or (3) any other method of
valuation undertaken in good faith by the Board, or some or all of
the above as the Board shall in its discretion elect.
c)
Notice of ISO Stock
Disposition . The
Optionee must notify the Company promptly in the event that he or
she sells, transfers, exchanges or otherwise disposes of any shares
of Common Stock issued upon exercise of an ISO, before the later of
(i) the second anniversary of the date of grant of the ISO and (ii)
the first anniversary of the date the shares were issued upon his
or her exercise of the ISO.
d)
Effect of Cessation of
Employment . Subject to
the provisions of Section 9(d) hereof, the Committee shall
determine in its discretion and specify in each Stock Option
Agreement the effect, if any, of the termination of the
Optionee’s employment upon the exercisability of the
Option.
e)
Substituted Option
. With the consent of the Optionee,
the Committee shall have the authority at any time and from time to
time to terminate any outstanding Option and grant in substitution
for it a new Option covering the same number or a different number
of shares, provided that the option price under the new Option
shall be no less than the fair market value of the Common Stock on
the date of grant of the new Option.
ARTICLE
V. Method of Granting Options
The grant of Options shall be made by action of
the Board at a meeting at which a quorum of its members is present,
or by unanimous written consent of all its members; provided,
however, that if an individual to whom a grant has been made fails
to execute and deliver to the Committee a Stock Option Agreement
within ten (10 ) days after it is submitted to him, the Option
granted under the agreement shall be voidable by the Company at its
election, without further notice to the Optionee.
ARTICLE
VI. Method of Exercising Options
To the extent that it has become exercisable
under the terms of the Stock Option Agreement, an Option may be
exercised from time to time by written notice to the Secretary, or
Assistant Secretary or Chief Financial Officer of the Company
stating the number of shares with respect to which the Option is
being exercised and accompanied by payment of the exercise price in
cash or check payable to the Company.
Alternatively, payment of the exercise price may
be made, in whole or in part, in sh
