exv10w2



 





Exhibit 10.2




STURGIS FEDERAL SAVINGS BANK

EMPLOYEE STOCK OPTION PLAN





	1.	 	Purpose.





     The purpose of the Employee Stock Option Plan (the “Plan”) is to give
officers and executive personnel (“key employees”) of STURGIS FEDERAL SAVINGS
BANK, a Federal Chartered stock savings bank (the “Bank”), an opportunity to
acquire shares of the common stock of the Bank (“Common Stock”), in order to
provide an incentive for key employees to continue to promote the best
interests of the Bank and enhance its long-term performance, and to provide an
incentive for key employees to join or remain with the Bank.




	2.	 	Administration.





     (a) Board of Directors. The Plan shall be administered by the Board of
Directors
of the Bank (the “Board”), which, to the extent it shall determine, may
delegate its powers with
respect to the administration of the Plan (except its powers under Section
11(c)) to a committee
(the “Committee”) appointed by the Board and composed of not less than
three members of the
Board. If the Board chooses to appoint the Committee, reference
hereinafter to the Board (except
in Section 10(c)) shall be deemed to refer to the Committee.
Notwithstanding the preceding
provisions of the Section, no member of the Board may exercise discretion
with respect to or
participate in, the administration of the Plan if, at any time within one
year prior to such exercise
or participation, he or she has been eligible for selection as a person to
whom stock may be
allocated or to whom stock options may be granted pursuant to the Plan or
any other plan of the
Bank entitling the participants therein to acquire stock or stock options
of the Bank, except solely
under a director stock option plan which does not give directors any
discretion in the grant of
options thereunder.



     (b) Powers. Within the limits of the express provisions of the Plan, the
Board shall
determine: (i) the key employees to whom awards hereunder shall be
granted, (ii) the time or
times at which such awards shall be granted, (iii) the form and amount of
the awards, and (iv) the
limitations, restrictions and conditions applicable to any such award. In
making such
determinations, the Board may take into account the nature of the services
rendered by such
employees, or classes of employees, their present and potential
contributions to the Bank’s success
and such other factors as the Board in its discretion shall deem relevant.



     (c) Interpretations. Subject to the express provisions of the Plan, the
Board may
interpret the Plan, prescribe, amend and rescind rules and regulations
relating to it, determine the
terms and provisions of the respective awards and make all other
determinations it deems
necessary or advisable for the administration of the Plan.



     (d) Determinations. The determinations of the Board on all matters
regarding the Plan
shall be conclusive. A member of the Board shall only be liable for any
action taken or
determination made in bad faith.



 









 





     (e) Nonuniform Determinations. The Board’s determinations under the Plan,
including without limitation, determinations as to the persons to receive
awards, the terms and provisions of such awards and the agreements evidencing
the same, need not be uniform and may be made by it selectively among persons
who receive or are eligible to receive awards under the Plan, whether or not
such persons are similarly suited.




	3.	 	Awards Under the Plan.





     (a) Form. Awards under the Plan may be granted in the form of Nonstatutory
Stock
Options, as described in Section 4. Nonstatutory Stock Options shall be
referred to herein as
“Stock Options.”



     (b) Maximum Limitations. The aggregate number of shares of Common Stock
available for issuance under the Plan after April 29, 1996 is 21,916,
subject to adjustment
pursuant to Section 7. Shares of Common Stock issued pursuant to the Plan
may be either
authorized but unissued shares or shares hereafter held in the treasury of
the Bank. In the event
that, prior to the end of the period during which Stock Options may be
granted under the Plan,
any Stock Option under the Plan expires unexercised or is terminated,
surrendered or cancelled
without being exercised, in whole or in part, for any reason, the number
of shares theretofore
subject to such Stock Option or the unexercised, terminated, forfeited or
unearned portion thereof,
shall be added to the remaining number of shares of Common Stock available
for grant as a Stock
Option under the Plan, including a grant to a former holder of such Stock
Option, upon such terms
and conditions as the Board shall determine, which terms may be more or
less favorable than those
applicable to such former Stock Option.




	4.	 	Stock Options.





     Stock Options may be granted under the Plan for the purchase of shares of
Common Stock. Stock Options shall be in such form and upon such terms and
conditions as the Board shall from time to time determine, subject to the
following:



     (a) Option Price. The option price of each Stock Option to purchase Common
Stock
shall be determined by the Board, but shall not be less than 100% of the
fair market value of the
Common Stock subject to such Stock Option on the date of grant.



     (b) Terms of Options. No Stock Option shall be exercisable after the date
ten years
and one day from the date such Stock Option is granted.



     (c) Conditions of Grant. The Board, in its discretion, may, as a condition
to the grant
of a Stock Option, require a key employee who is the recipient of such
Stock Option to enter into
one or more of the following agreements with the Bank on or prior to the
date of grant of such
Option:



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     (i) A covenant not to compete with the Bank which shall become
effective on the date of termination of employment of the key employee
with the Bank and which shall contain such terms and conditions as shall
be specified by the Board;




     (ii) An agreement to cancel any employment agreement, fringe
benefit or compensation arrangement in effect between the Bank and the
key employee.



If the key employee shall fail to enter into any such agreement at the request
of the Board, then no Stock Options shall be granted hereunder to such key
employee and the number of shares of Common Stock which would have been
subject to such Option shall be added to the remaining number of shares of
Common Stock available for grant as a Stock Option under the Plan.




	5.	 	Provisions Applicable to Stock Options.





     (a) Exercise. Stock Options shall be subject to such terms and conditions,
shall be
exercisable at such time or times, and shall be evidenced by such form of
written option agreement
between the optionee and the Bank, as the Board shall determine; provided,
that such
determinations are not inconsistent with the other provisions of the Plan.



     (b) Manner of Exercise of Options and Payment for Common Stock. Stock
Options
may be exercised by an optionee by giving written notice to the Secretary
of the Bank stating the
number of shares of Common Stock with respect to which the Stock Option is
being exercised and
tendering payment therefor. At the time that a Stock Option granted under
the Plan, or any part
thereof, is exercised, payment for the Common Stock issuable thereupon
shall be made in full in
cash or by certified check or, if the Board in its discretion agrees to
accept, in shares of Common
Stock of the Bank (the number of such shares paid for each share subject
to the Stock Option, or
part thereof, being exercised shall be determined by dividing the option
price by the fair market
value per share of the Common Stock on the date of exercise). As soon as
reasonably possible
following such exercise, a certificate representing shares of Common Stock
purchased, registered
in the name of the optionee, shall be delivered to the optionee.




	6.	 	Transferability.





     No Stock Option may be transferred, assigned, pledged or hypothecated
(whether by operation of law or otherwise), except as provided by will or the
applicable laws of descent or distribution, and no Stock Option shall be
subject to execution, attachment or similar process. Any attempted assignment,
transfer, pledge, hypothecation or other disposition of a Stock Option or levy
of attachment or similar process upon the Stock Option not specifically
permitted herein shall be null and void and without effect. A Stock Option may
be exercised only by a key employee during his or her lifetime, or pursuant to
Section 9(c), by his or her estate or the person who acquires the right to
exercise such Stock Option upon his or her death by bequest or inheritance.




	7.	 	Adjustment Provisions.




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     The aggregate number of shares of Common Stock with respect to which
Stock Options may be granted, the aggregate number of shares of Common Stock
subject to each outstanding Stock Option, and the option price per share of
each such Stock Option, may all be appropriately adjusted as the Board may
determine for any increase or decrease in the number of shares of issued
Common Stock resulting from a subdivision or consolidation of shares, whether
through reorganization, recapitalization, stock split-up, stock distribution
or combination of shares, or the payment of a share dividend or other increase
or decrease in the number of such shares outstanding effected without receipt
of consideration by the Bank. Adjustments under this Section 7 shall be made
according to the sole discretion of the Board, and its decisions shall be
binding and conclusive.




	8.	 	Effective Date and Conditions Subsequent to Effective Date.





     The Plan shall become effective on the date of the approval of the Plan
by the holders of a majority of the shares of Common Stock of the Bank, and
the Plan shall be null and void and of no effect if such condition is not
fulfilled, and in such event each Stock Option granted hereunder shall,
notwithstanding any of the preceding provisions of the Plan, be null and void
and of no effect.



     No grant or award shall be made under the Plan more than nine years from
the earlier of the date of adoption of the Plan by the Board or shareholder
approval hereof; provided, however, that the Plan and all Stock Options
granted under the Plan prior to such date shall remain in effect and subject
to adjustment and amendment as herein provided until they have been satisfied
or terminated in accordance with the terms of the respective grants or awards
and the related agreements.




	9.	 	Termination of Employment.





     (a) Each Stock Option shall, unless sooner expired pursuant to Section
9(b) or (c) below,
expire on the first to occur of the date one day after the tenth
anniversary of the date of grant
thereof or the expiration date set forth in the applicable option
agreement.



     (b) A Stock Option shall expire on the first to occur of the applicable
date set forth in
paragraph (a) next above or the date that the employment of the key
employee with the Bank
terminates for any reason other than death or disability. Notwithstanding
the preceding provisions
of this paragraph, the Board, in its sole discretion, may, by written
notice given to an ex-employee, permit the ex-employee to exercise Stock Options during a period
following his or her
termination of employment, which period shall not exceed 30 days. In no
event, however, may
the Board permit an ex-employee to exercise a Stock Option after the
expiration date contained
in the agreement evidencing such Stock Option. Notwithstanding the
preceding provisions of this
paragraph, if the Board permits an ex-employee to exercise Stock Options
during a period
following his or her termination of employment pursuant to such preceding
provisions, such Stock
Options shall, to the extent unexercised, expire on the date that such
ex-employee violates (as



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determined by the Board) any covenant not to compete in effect between the
Bank and the ex-employee.



     (c) If the employment of a key employee with the Bank terminates by
reason of disability (as determined by the Board) or by reason of death, his
or her Stock Options, if any, shall expire on the first to occur of the date
set forth in paragraph (a) of this Section 9 or 90 days from the date of such
termination of employment.




	10.	 	Miscellaneous.





     (a) Legal and Other Requirements. The obligation of the Bank to sell and
deliver
Common Stock under the Plan shall be subject to all applicable laws,
regulations, rules and
approvals, including, but not by way of limitation, the effectiveness of a
registration statement
under the Securities Act of 1933 if deemed necessary or appropriate by the
Bank. Certificates for shares of Common Stock issued hereunder may be legended as the Board shall
deem appropriate.



     (b) No Obligation to Exercise Options. The granting of a Stock Option
shall impose no
obligation upon an optionee to exercise such Stock Option.



     (c) Termination or Amendment of the Plan. The Board, without further
action on the part
of the shareholders of the Bank, may from time to time alter, amend or
suspend the Plan or any
Stock Option granted hereunder or may at any time terminate the Plan,
except that, unless
approved by the shareholders in accordance with Section 8 hereof, it may
not (except to the extent
provided in Section 7 hereof): (i) change the total number of shares of
Common Stock available
for grant under the Plan; (ii) extend the duration of the Plan; (iii)
increase the maximum term of
Stock Options; or (iv) change the class of employees eligible to be
granted Stock Options under
the Plan. No action taken by the Board under this Section may materially
and adversely affect any
outstanding Stock Option without the consent of the holder thereof.



     (d) Application of Funds. The proceeds received by the Bank from the sale
of Common
Stock pursuant to Stock Options will be used for general corporate
purposes.



     (e) Withholding Taxes. Upon the exercise of any Stock Option, the Bank
shall have the
right to require the optionee to remit to the Bank an amount sufficient to
satisfy all federal, state
and local withholding tax requirements prior to the delivery of any
certificate or certificates for shares of Common Stock.



     (f) Right To Terminate Employment. Nothing in the Plan or any agreement
entered into
pursuant to the Plan shall confer upon any key employee or other optionee
the right to continue
in the employment of the Bank or affect any right which the Bank may have
to terminate the
employment of such key employee or other optionee.



     (g) Rights as a Shareholder. No optionee shall have any right or
privileges as a



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shareholder unless and until certificates for shares of Common Stock are
issuable to him or her.



     (h) Leaves of Absence and Disability. The Board shall be entitled to make
such rules, regulations and determinations as it deems appropriate under the
Plan in respect of any leave of absence taken by or disability of any key
employee. Without limiting the generality of the foregoing, the Board shall be
entitled to determine (i) whether or not any such leaves of absence shall
constitute a termination of employment within the meaning of the Plan, and
(ii) the impact, if any, of any such leave of absence on awards under the Plan
theretofore made to any key employee who takes such leave of absence.



     (i) Fair Market Value. Whenever the fair market value of Common Stock is
to be determined under the Plan as of a given date, such fair market value
shall be:




     (I) If the Common Stock is traded on the over-the-counter market,
the average of the mean between the bid and the asked price for the
Common Stock at the close of trading for the 10 consecutive trading days
immediately preceding such given date;




     (II) If the Common Stock is listed on a national securities
exchange, the average of the closing prices of the Common Stock on the
Composite Tape for the 10 consecutive trading days immediately preceding
such given date; and




     (III) If the Common Stock is neither traded on the over-the-counter
market nor listed on a national securities exchange, such value as the
Board, in good faith shall determine.



     (j) Notices. Every direction, revocation or notice authorized or required
by the Plan shall be deemed delivered to the Bank (a) on the date it is
personally delivered to the Secretary of the Bank at its principal executive
offices or (b) three business days after it is sent by registered or certified
mail, postage prepaid, addressed to the Secretary at such offices; and shall
be deemed delivered to an optionee (a) on the date it is personally delivered
to him or her, or (b) three business days after it is sent by registered or
certified mail, postage prepaid, addressed to him or her at the last address
shown for him or her on the records of the Bank.



     (k) Applicable Law. All questions pertaining to the validity,
construction and administration of the Plan and Stock Options granted
hereunder shall be determined in conformity with the laws of the United States
and the State of Michigan.



     (1) Elimination of Fractional Shares. If under any provision of the Plan
which requires a computation of the number of shares of Common Stock subject to
a Stock Option, the number so computed is not a whole number of shares of
Common Stock, such number of shares of Common Stock shall be rounded down to
the next whole number.



     (m) Exemption. It is intended that this Plan qualify under the exemptions
found in the Securities and Exchange Commission Rule 16b-3 promulgated under
the Securities Exchange Act of 1934. Any provision or interpretation of this
Plan that is in contravention of that Rule shall be




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