Exhibit 10.1


 


THE WASHINGTON SAVINGS BANK, F.S.B.


NON-EMPLOYEE DIRECTORS’ STOCK OPTION PLAN


 


The Washington Savings Bank, F.S.B., hereby adopts the following stock
option plan for its Non-Employee Directors (the “Plan”) as of August 16, 1995.


 


ARTICLE I


INTRODUCTION


 


1.1                                 Name
of Plan. The name of the Plan is “The Washington Savings Bank Non-Employee
Directors’ Stock Option Plan.”


 


1.2                                 Purpose
of Plan. The Plan is intended to attract, retain, and compensate for
service highly qualified individuals, who are not current employees of WSB or
any of its subsidiaries, as members of the Board of Directors of WSB, and to
enable said individuals to increase their ownership in WSB’s Common Stock. The
Plan will be beneficial to WSB and its shareholders since it will allow these
directors to have a greater proprietary interest in WSB’s success.


 


1.3                                 Effective
Date. The effective date of the Plan is August 16, 1995, subject to
shareholder approval. If shareholders fail to approve the Plan within six
months of the Effective Date, the Plan and any options issued thereunder shall
be deemed canceled.


 


ARTICLE II


DEFINITIONS


 


The following terms, when used in the Plan in initially capitalized
form, shall have the following meanings, unless the context clearly indicates
otherwise:


 


Committee. “Committee”
means the directors of WSB who are Non-Employee Directors.


 


Fair Market Value. “Fair
Market Value” means the closing price of the Common Stock of WSB on the date in
question, as reported by the American Stock Exchange, or a subsequent stock
exchange on which the Common Stock of WSB may be listed.


 


NQSO. “NQSO” means a
nonqualified stock option.


 


Non-Employee Directors. “Non-Employee
Directors” means members of the Board of Directors of WSB who are not employees
of WSB or any of its subsidiaries.


 


Option Period. “Option
Period” means the period beginning on the date of grant of an NQSO and ending
on the tenth anniversary of the date of grant.


 


Board Approved:  August 16, 1995


Stockholders Approved:  November 16, 1995


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Plan. “Plan” means
The Washington Savings Bank Non-Employee Directors’ Stock Option Plan, as
amended from time to time.


 


WSB. “WSB” means The
Washington Savings Bank, F.S.B.


 


ARTICLE III


ELIGIBILITY


 


3.1                                 Condition.
An individual who is a Non-Employee Director on or after August 16, 1995,
shall participate in the Plan.


 


ARTICLE IV


NATURE OF OPTIONS


 


4.1                                 NQSOs.
Only NQSOs may be granted under the Plan.


 


ARTICLE V


SHARES AVAILABLE


 


5.1                                 Numbers
of Shares Available. The Plan provides for the issuance of an aggregate of
40,000 shares of Common Stock of WSB, par value $1.00 per share, which may be
authorized but unissued shares, and shares of Common Stock held as Treasury
Shares, or shares purchased on the open market. In the event that any
outstanding NQSO is forfeited, as provided in Article IX hereof, the shares of
Common Stock allocable to the unexercised portion of such NQSO grant may again
be subjected to NQSO grants under the Plan.


 


5.2                                 Adjustments.
The number of shares of Common Stock of WSB reserved for awards under the
Plan, the number and type of securities subject to NQSOs to be granted pursuant
to Section 6.1 hereof, and the exercise price, number, and type of securities
issuable under any outstanding NQSOs shall be adjusted appropriately by the
Board of Directors only as necessary to reflect any stock split, stock
dividend, recapitalization, merger, consolidation, reorganization, combination,
or exchange of shares or other similar event. In addition, if, at the time of automatic
grant as provided for under Article VI hereof, there are an insufficient number
shares remaining for awards under the Plan to grant each Non-Employee Director
the number of shares as therein provided, the shares remaining shall be divided
equally among the Non-Employee Directors. Fractional shares resulting from any
adjustments shall be eliminated. All determinations made by the Board of
Directors with respect to adjustments under this Section 5.2 shall be
conclusive and binding for all purposes of the Plan.


 


ARTICLE VI


GRANTS OF NQSOs


 


6.1                                 Grants.
On December 20, 1995, and annually thereafter, each individual Non-Employee
Director shall automatically receive an NQSO grant exercisable for 2,000 shares
of Common Stock of WSB. If the Common Stock of WSB is not traded on the
American Stock Exchange or on any other public exchange on which WSB’s stock is
listed on any date a grant would otherwise be made, then the grant shall be
made as of the next day thereafter on which Common Stock of WSB is so traded.


 


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6.2                                 Option
Price. The exercise price of the NQSO shall be the Fair Market Value on the
date of grant.


 


ARTICLE VII


OPTION PERIOD


 


7.1                                 Duration.
An NQSO granted under the Plan shall expire ten years after the date of
grant, and, unless otherwise provided for in Section 7.2 hereof, shall become
exercisable as follows:  25% one year
after the date of grant; an additional 25% two years after the date of grant;
and 100% exercisable three years after the date of grant.


 


7.2                                 Acceleration.
In the event that a “change in control,” shall occur, all NQSOs previously
granted shall thereupon become exercisable. For the purpose of this Section
7.2, “change in control” shall mean any of the following transactions:  (i) any consolidation, merger, or other
corporate reorganization of WSB with or into any other corporate organization,
if as a result of the transaction, the stockholders of WSB immediately before
the transaction, would not be able to elect a majority of the members of the
Board of Directors of WSB or would not be the beneficial owners, directly or
indirectly, of 51% or more of the combined voting power of the resulting
corporation’s then outstanding voting securities; (ii) any acquisition (by
purchase, lease or otherwise) of all or substantially all of the assets of WSB
by any person, firm or corporation or group thereof acting jointly; or (iii)
any purchase by any person, firm, or corporation or group thereof acting
jointly (who was not a controlling stockholder of WSB on August 16, 1995), of
25% or more of the combined voting power of WSB.


 


ARTICLE VIII


EXERCISE


 


8.1                                 Exercise
Price. The exercise price of an NQSO shall be paid in United States dollars
in the form of cash, or by certified check, bank draft, or money order payable
to the order of WSB on the date of exercise.


 


8.2                                 Number
of Shares Exercised. Shares may be exercised in whole or in part, from time
to time, as they become exercisable; however, if exercised in part, a minimum
number of 100 shares must be exercised.


 


ARTICLE IX


CESSATION OF SERVICE, RETIREMENT, DEATH


 


9.1                                 Cessation
of Service. Upon cessation of service as a Non-Employee Director (other
than for reasons of death), NQSOs exercisable on the date of cessation of
service shall continue to be exercisable by the grantee for a period of thirty
days following cessation of service, but in no event after the expiration of
the Option Period.


 


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9.2                                 Death.
Upon the death of a grantee, NQSOs exercisable on the date of death shall
be exercisable by the grantee’s legal representatives or heirs for a period of
six months from the date of death, but in no event after the expiration of the
Option Period.


 


9.3                                 Forfeiture.
If an NQSO is not exercisable on the date on which the grantee ceases to
serve as a Non-Employee Director, or if an NQSO is not exercised in full before
it ceases to be exercisable in accordance with Article VII hereof and the
preceding provisions of this Article IX, the NQSO shall, to the extent not
previously exercised, thereupon be forfeited.


 


ARTICLE
X


ADMINISTRATION, AMENDMENT, AND TERMINATION OF
THE PLAN


 


10.1                           Administration.
The Plan shall be administered by the Committee. NQSOs granted pursuant to
the Plan shall be evidenced by agreements in such form and with such provisions
as the Committee shall, from time to time, approve. The interpretation and
construction by the Committee of any provisions of the Plan or any agreements
issued under it and any determination by the Committee pursuant to any
provision of the Plan or any such agreement shall be final and conclusive. No
member of the Committee shall be liable for any action or determination made in
good faith, and the members shall be entitled to indemnification and
reimbursement in the manner provided in WSB’s charter or by-laws, and under any
directors and officers liability insurance coverage which may be in effect from
time to time. Notwithstanding anything in the Plan to the contrary, the
Committee shall have no discretion regarding the amount or price of any NQSOs
or Common Stock granted under the Plan or the eligibility of any non-employee
director to receive any NQSO or Common Stock under the Plan.


 


10.2                           Amendment
and Termination. The Plan may be terminated or amended by the Board of
Directors as it deems advisable. No amendment may revoke or alter in a manner
unfavorable to the grantees any NQSOs then outstanding, nor may the Board of
Directors amend the Plan without stockholder approval where the absence of such
approval would cause the Plan to fail to comply with any requirement of any
applicable law or regulation. To the extent required in order to qualify as a
formula plan under SEC Rule 16(b-c), the provisions of the Plan that state the
amount and price of securities to be awarded and the individuals eligible for
awards shall not be amended more than once every six months.


 


10.3                           Expiration
of the Plan. An NQSO may not be granted under the Plan after August 15,
2005, but NQSOs granted prior to that date shall continue to become exercisable
and may be exercised according to the terms of the Plan.


 


ARTICLE XI


ASSIGNABILITY


 


11.1                           Options
Not Transferable. No NQSO granted under the Plan is assignable or
transferable, other than by will or the laws of descent and distribution. During
the grantee’s lifetime, an NQSO may only be exercised by the grantee or the
grantee’s guardian or legal representative.


 


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ARTICLE XII


RIGHTS OF DIRECTORS


 


12.1                           Rights
to NQSOs. Except as provided in the Plan, no Non-Employee Director shall
have any claim or right to be granted an NQSO under the Plan. Neither the Plan
nor any action thereunder shall be construed as giving any director any right
to be retained in the services of WSB.


 


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