Life Savings Bank 1997 Incentive Stock Option Plan


 Exhibit 4.2 
  

LIFE SAVINGS BANK 
  
 1997 INCENTIVE STOCK OPTION PLAN 
  
 1.     Purpose of the Plan 
  
 This incentive stock option plan (hereinafter called the “Plan”) for Life Savings Bank (hereinafter called the “Bank”) is intended to
advance the interests of the Bank by providing officers and other key employees who have substantial responsibility for the direction and management of the Bank with additional incentive for them to promote the success of the business, to increase
their proprietary interest in the success of the Bank, and to encourage them to remain in its employ. The above aims will be effectuated through the granting of stock options. It is intended that options issued under the Plan will qualify as
incentive stock options (hereinafter called “ISOs”) under Section 422 of the Internal Revenue Code of 1986, as amended and the terms of the Plan shall be interpreted with this intention. 
  
 2.     Administration of the Plan 
  
 Subject to the provisions of the Plan, the Board of Directors (the
“Board”) shall have plenary authority, in its discretion: (a) to determine the employees of the Bank and its subsidiaries (from among the class of employees eligible under Section 3 to receive options under the Plan) to whom options
shall be granted; (b) to determine the time or times at which options shall be granted; (c) to determine the option price of the shares subject to each option, which price shall not be less than the minimum specified in Section 5; (d) to determine
the time or times when each option shall become exercisable and the duration of the exercise period; and (e) to interpret the Plan and to prescribe, amend, and rescind rules and regulations relating to it. The interpretation and construction of any
provision of the Plan by the Board shall be final and conclusive. The Board shall consult with counsel, who may be counsel to the Bank, and shall not incur any liability for any action taken in good faith and reliance upon the advice of counsel. Any
action may be taken by written instrument signed by all the members of the Board. An action so taken shall be fully as effective as if it had been taken by unanimous vote of the Board at a meeting duly called and held. 
  
 3.     Eligibility and Limitations on Options Granted
Under the Plan 
  
 Options will be granted only to persons who
are key employees of the Bank or a subsidiary corporation of the Bank who perform services of major importance in the management, operation and development of the business of the Bank or of any subsidiary of the Bank. The term “key
employees” shall include officers, executives, and supervisory personnel, as well as other employees of the Bank or a subsidiary corporation of the Bank. The term “subsidiary corporation” shall, for the purpose of this Plan be defined
in the same manner as such term is defined in Section 425(f) of the Internal Revenue Code. The Bank shall effect the grant of options under the Plan in accordance with the determinations made by the Board pursuant to provisions of the Plan by
execution and delivery of written instruments in a form approved by the Board. 






 4.     Shares of Stock Subject to the Plan 
  
 There will be reserved for use upon the exercise of options to be granted
from time to time under the Plan (subject to the provisions of Section 11) an aggregate of 396,000 shares of the Common Stock of the Bank, $10.00 par value per share, which shares shall be authorized but unissued shares of the Common Stock. Any
shares subject to an option under the Plan, which option for any reason expires or is terminated unexercised as to such shares, may again be subjected to an option under the Plan. 
  
 5.     Option Price 
  
 The purchase price under each option issue shall be determined by the Board at the time the option is granted, but in no
event shall such purchase price be less than 100% of the fair market value of the Bank’s Common Stock on the date of grant, said fair market value to be determined in good faith by the Board. 
  
 6.     Dilution or Other Agreement

  
 In the event that additional shares of Common Stock are issued
pursuant to a stock split or a stock dividend, the number of shares of Common Stock then covered by each outstanding option granted hereunder shall be increased proportionately with no increase in the total purchase price of the shares then so
covered, and the number of shares of Common Stock reserved for the purpose of the Plan shall be increased by the same proportion. In the event that the shares of Common Stock of the Bank from time to time issued and outstanding are reduced by a
combination of shares, the number of shares of Common Stock then covered by each outstanding option granted hereunder shall be reduced proportionately with no reduction in the total price of the shares then so covered, and the number of shares of
Common Stock reserved for the purposes of the Plan shall be reduced by the same proportion. All such adjustments shall be made by the Board whose determination upon the same shall be final and binding upon the optionees. No fractional shares shall
be issued, and any fractional shares resulting from the computations pursuant to this Section 6 shall be eliminated from the respective options. No adjustments shall be made for cash dividends or the issuance to stockholders of rights to subscribe
for additional Common Stock or other securities. 
  
 7.     Period of Option and Certain Limitations on Right to Exercise 
  
 All options issued under the Plan shall be for such a period as the Board shall determine, but for not more than ten (10) years from the date of grant
hereof. The period of the option, once it is granted, may be reduced only as provided for in Section 9 in connection with the termination of employment or death of the optionee. No option may be exercised unless the optionee is, at the time of such
exercise, in the employ of the Bank or a subsidiary corporation of the Bank and shall have been continuously so employed since the grant of his option. Absence or leave approved by the management of the Bank shall not be considered an interruption
of employment for any purpose of the Plan. The exercise of any option shall be contingent upon receipt by the Bank of cash or certified bank check to its order in an amount equal to the full option price of the shares being purchased. In order to
facilitate the accumulation of finds to enable employees to exercise their option, they will have the right, if they so elect, to direct the Bank or a subsidiary 
  

 2 







 corporation of the Bank to withhold from their compensation regular amounts to be applied to the exercise of the options.
Funds credited to the stock option accounts will be under the control of the Bank until applied to the payment of the option price at the direction of the employee or returned to the employee in the event the amount is not used for purchase of
shares under option, and all funds received or held by the Bank may be used for any corporate purpose, and no interest shall be payable to the participant on account of any amounts so held. Such amounts may be withdrawn by the employee at any time,
in whole or in part, and for any reason. No optionee or his legal representative, legatees, or distributees, as the case may be deemed to be, a holder of any share subject to an option unless and until certificates for such shares are issued to him
or them under the terms of the Plan. No adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued. In no event may an option be exercised after the expiration of its term.
The exercise of an option in any manner shall result in a decrease in the number of shares of Common Stock which thereafter may be available under the Plan by the number of shares as to which the option is exercised. If an optionee shall die while
employed by the Bank or within three (3) months after retirement, such option may be exercised (to the extent that the optionee would have been entitled to do so at the date of his death) by the legatees, personal representative or distributees of
the optionee during the balance of the term thereof or within one (1) year of the date of the optionee’s death, whichever is shorter. Options may be exercised in whole or in part, but only with respect to whole shares of stock. 
  
 8.     Assignability 
  
 Each option granted under this Plan shall be transferable only by will or the
laws of descent and distribution and shall be exercisable, during his lifetime, only by the employee for whom the option is granted. Except as permitted by the preceding sentence, no option granted under the Plan or any of the rights and privileges
thereby conferred shall be transferred, assigned, pledged, or hypothecated in any way (by operation of law or otherwise), and no such option, right, or privilege shall be subject to execution, attachment or similar process. Upon any attempt so to
transfer, assign, pledge, hypothecate, or otherwise dispose of the option, or of any right or privilege conferred thereby, contrary to the provisions hereof, or upon the levy of any attachment or similar process upon such option, right or privilege,
the option and such rights and privileges shall immediately become null and void. 
  
 9.     Effect of Termination of Employment, Death or Disability 
  
 (a) In the event of the termination of employment of an optionee (otherwise than by death or retirement of the optionee at his Retirement Date by the Bank
or by any subsidiary corporation of the Bank employing the optionee at such time) any option or options granted to him under the Plan to the extent not theretofore exercised shall be deemed canceled and terminated forthwith, except that, such
optionee may exercise any options theretofore granted to him, which have not then expired, and are otherwise exercisable within the provisions of the option, within three (3) months after such termination. If the employment of an optionee shall be
terminated by reason of the optionee’s retirement at his Retirement Date by the Bank or by any subsidiary corporation of the Bank employing the optionee at such time, the optionee shall have the right to exercise such option or options by him
to the extent that such options have not expired, and at any time within three (3) months after such retirement. The provisions of Section 
  

 3 







 7 to the contrary notwithstanding, upon retirement at his Retirement Date all options held by an optionee shall be
immediately exercisable in full. The transfer of an optionee from the employ of the Bank to a subsidiary corporation of the Bank or vice versa, or from one subsidiary corporation to another, shall not be deemed to constitute a termination of
employment for purposes of this Plan. 
  
 (b) In the event that an
optionee shall die while employed by the Bank or by any subsidiary corporation of the Bank or shall die within three (3) months after retirement at his Retirement Date (by the Bank or by any subsidiary corporation of the Bank), any option or options
granted to him under the Plan and not theretofore exercised by him or expired shall be exercisable by the estate of the optionee or by any person who acquired such option by bequest or inheritance from the optionee in full, at any time within one
(1) year after the death of the optionee. References hereinabove to the optionee shall be deemed to include any person entitled to exercise the option after the death of the optionee under the terms of this Section. 
  
 (c) In the event of the termination of employment of an optionee by reason of
the optionees disability, the optionee shall have the right to exercise all options held by him, to the extent that options have not previously expired or been exercised any time within one (1) year after such termination. The term
“disability” shall, for the purposes of this Plan, be defined in the same manner as such term is defined in Section 105(d)(4) of the Internal Revenue Code. 
  
 (d) For the purposes of this Plan, “Retirement Date” shall mean any date an employee is otherwise entitled to
retire under the Bank’s retirement plans and shall include normal retirement at age 65, early retirement at age 62, and retirement at age 60 after 30 years of service. 
  
 10.     Expiration and Termination of the Plan 
  
 Options may be granted under the Plan at any time or from time to time as
long as the total number of shares optioned or purchased under this Plan does not exceed 396,000 shares of Common Stock. The Plan may be abandoned at any time by the board of directors of the Bank except with respect to any optioned then outstanding
under the Plan. No option shall be granted pursuant to the Plan after ten (l0) years from the effective date of the Plan. 
  
 11.     Amendment of Plan 
  
 The Board may at any time and from time to time modify and amend the Plan (including such form of option agreement) in any respect; provided, that no such
amendment shall: 
  
 (a) increase (except in
accordance with Section 6) the maximum number of shares for which options may be granted under the Plan either in the aggregate or to any individual employee; or 
  
 (b) reduce (except in accordance with Section 6) the minimum option prices which may be established under
the Plan; or 
  
 (c) extend the period or periods
during which options may be granted or exercised; or 
  

 4 







 (d) change the provisions relating to the determination of employees to whom options
shall be granted and the number of shares to be covered by such options; or 
  
 (e) change the provisions relating to adjustments to be made upon changes in capitalization. The termination or any modification or amendment of the Plan shall not, without the consent of an employee, affect his
rights under an option theretofore granted to him. 
  
 12.     Effective Date of the Plan 
  
 This Plan shall become effective on the later of the date of its adoption by the Board or its approval by the vote of the holders of a majority of the outstanding shares of the Banks Common Stock. This Plan shall not
become effective until such shareholder approval shall be obtained within twelve (12) months before or after the adoption of the Plan by the Board. 
  

 5