Document:

exv10w8

 

Exhibit 10.8

PENNFIRST BANCORP, INC.

AMENDED AND RESTATED 1997 STOCK OPTION PLAN

ARTICLE I

ESTABLISHMENT OF THE PLAN

     ESB Financial Corporation (the “Corporation”) hereby amends and restates the PennFirst
Bancorp, Inc. 1997 Stock Option Plan (as amended and restated, the “Plan”) upon the terms and
conditions hereinafter stated, with the amendment and restatement effective as of November 21,
2006.

ARTICLE II

PURPOSE OF THE PLAN

     The purpose of this Plan is to improve the growth and profitability of the Corporation and its
Subsidiary Companies by providing Employees and Non-Employee Directors with a proprietary interest
in the Corporation as an incentive to contribute to the success of the Corporation and its
Subsidiary Companies, and rewarding those Employees for outstanding performance and the attainment
of targeted goals. All Incentive Stock Options issued under this Plan are intended to comply with
the requirements of Section 422 of the Code, and the regulations thereunder, and all provisions
hereunder shall be read, interpreted and applied with that purpose in mind.

ARTICLE III

DEFINITIONS

     3.01 “Award” means an Option or Stock Appreciation Right granted pursuant to the terms of this
Plan.

     3.02 “Bank” means ESB Bank, the wholly-owned subsidiary of the Corporation.

     3.03 “Board” means the Board of Directors of the Corporation.

     3.04 “Change in Control” shall mean a change in the ownership of the Corporation or the Bank,
a change in the effective control of the Corporation or the Bank or a change in the ownership of a
substantial portion of the assets of the Corporation or the Bank, in each case as provided under
Section 409A of the Code and the regulations thereunder.

     3.05 “Code” means the Internal Revenue Code of 1986, as amended.

 

 

     3.06 “Committee” means a committee of two or more directors appointed by the Board pursuant to
Article IV hereof, each of whom shall be a Non-Employee Director.

     3.07 “Common Stock” means shares of the common stock, $0.01 par value per share, of the
Corporation.

     3.08 “Disability” means that the Optionee: (i) is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period of not less than 12
months, or (ii) is, by reason of any medically determinable physical or mental impairment which can
be expected to result in death or can be expected to last for a continuous period of not less than
12 months, receiving income replacement benefits for a period of not less than three months under
an accident and health plan covering employees of the Corporation or the Bank (or would have
received such benefits for at least three months if he had been eligible to participate in such
plan).

     3.09 “Effective Date” means the day upon which the Board originally adopted this Plan.

     3.10 “Employee” means any person who is employed by the Corporation or a Subsidiary Company,
or is an Officer of the Corporation or a Subsidiary Company, but not including directors who are
not also Officers of or otherwise employed by the Corporation or a Subsidiary Company.

     3.11 “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     3.12 “Fair Market Value” shall be equal to the fair market value per share of the
Corporation’s Common Stock on the date an Award is granted. For purposes hereof, the Fair Market
Value of a share of Common Stock shall be the closing sale price of a share of Common Stock on the
date in question (or, if such day is not a trading day in the U.S. markets, on the nearest
preceding trading day), as reported with respect to the principal market (or the composite of the
markets, if more than one) or national quotation system in which such shares are then traded, or if
no such closing prices are reported, the mean between the high bid and low asked prices that day on
the principal market or national quotation system then in use, or if no such quotations are
available, the price furnished by a professional securities dealer making a market in such shares
selected by the Committee.

     3.13 “Incentive Stock Option” means any Option granted under this Plan which the Board intends
(at the time it is granted) to be an incentive stock option within the meaning of Section 422 of
the Code or any successor thereto.

     3.14 “Non-Employee Director” means a member of the Board who is not an Officer or Employee of
the Corporation or any Subsidiary Company.

     3.15 “Non-Qualified Option” means any Option granted under this Plan which is not an Incentive
Stock Option.

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     3.16 “Officer” means an Employee whose position in the Corporation or Subsidiary Company is
that of a corporate officer, as determined by the Board.

     3.17 “Option” means a right granted under this Plan to purchase Common Stock.

     3.18 “Optionee” means an Employee or Non-Employee Director to whom an Option is granted under
the Plan.

     3.19 “OTS” means the Office of Thrift Supervision.

     3.20 “Retirement” means a termination of employment upon or after attainment of age sixty-five
(65) or such earlier age as may be specified in any applicable qualified pension benefit plan
maintained by the Corporation or a Subsidiary Company.

     3.21 “Stock Appreciation Right” means a right to surrender an Option in consideration for a
payment by the Corporation in cash and/or Common Stock, as provided in the discretion of the
Committee in accordance with Section 8.11.

     3.22 “Subsidiary Companies” means those subsidiaries of the Corporation, including the Bank,
which meet the definition of “subsidiary corporations” set forth in Section 425(f) of the Code, at
the time of granting of the Award in question.

ARTICLE IV

ADMINISTRATION OF THE PLAN

     4.01 Duties of the Committee. The Plan shall be administered and interpreted by the
Committee, as appointed from time to time by the Board pursuant to Section 4.02. The Committee
shall have the authority (subject to compliance with applicable OTS regulations) to adopt, amend
and rescind such rules, regulations and procedures as, in its opinion, may be advisable in the
administration of the Plan, including, without limitation, rules, regulations and procedures which
(i) deal with satisfaction of an Optionee’s tax withholding obligation pursuant to Section 12.02
hereof, (ii) include arrangements to facilitate the Optionee’s ability to borrow funds for payment
of the exercise or purchase price of an Award, if applicable, from securities brokers and dealers,
and (iii) include arrangements which provide for the payment of some or all of such exercise or
purchase price by delivery of previously-owned shares of Common Stock or other property and/or by
withholding some of the shares of Common Stock which are being acquired. The interpretation and
construction by the Committee of any provisions of the Plan, any rule, regulation or procedure
adopted by it pursuant thereto or of any Award shall be final and binding in the absence of action
by the Board of Directors.

     4.02 Appointment and Operation of the Committee. The members of the Committee shall be
appointed by, and will serve at the pleasure of, the Board. The Board from time to time may remove
members from, or add members to, the Committee, provided the Committee shall continue to consist of
two or more members of the Board, each of whom shall

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be a Non-Employee Director. The Committee shall act by vote or written consent of a majority of
its members. Subject to the express provisions and limitations of the Plan, the Committee may
adopt such rules, regulations and procedures as it deems appropriate for the conduct of its
affairs. It may appoint one of its members to be chairman and any person, whether or not a member,
to be its secretary or agent. The Committee shall report its actions and decisions to the Board at
appropriate times but in no event less than one time per calendar year.

     4.03 Revocation for Misconduct. The Board of Directors or the Committee may by resolution
immediately revoke, rescind and terminate any Option, or portion thereof, to the extent not yet
vested, or any Stock Appreciation Right, to the extent not yet exercised, previously granted or
awarded under this Plan to an Employee who is discharged from the employ of the Corporation or a
Subsidiary Company for cause, which, for purposes hereof, shall mean termination because of the
Employee’s personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty
involving personal profit, intentional failure to perform stated duties, willful violation of any
law, rule, or regulation (other than traffic violations or similar offenses) or final
cease-and-desist order. Options granted to a Non-Employee Director who is removed for cause
pursuant to the Corporation’s Articles of Incorporation shall terminate as of the effective date of
such removal.

     4.04 Limitation on Liability. Neither the members of the Board of Directors nor any member of
the Committee shall be liable for any action or determination made in good faith with respect to
the Plan, any rule, regulation or procedure adopted pursuant thereto or any Awards granted under
it. If any members of the Board of Directors or a member of the Committee is a party or is
threatened to be made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of anything done or not done by
him in such capacity under or with respect to the Plan, the Corporation shall, subject to the
requirements of applicable laws and regulations, indemnify such member against all liabilities and
expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in the best interests of the Corporation and its
Subsidiary Companies and, with respect to any criminal action or proceeding, had no reasonable
cause to believe his conduct was unlawful.

     4.05 Compliance with Law and Regulations. All Awards granted hereunder shall be subject to
all applicable federal and state laws, rules and regulations and to such approvals by any
government or regulatory agency as may be required. The Corporation shall not be required to issue
or deliver any certificates for shares of Common Stock prior to the completion of any registration
or qualification of or obtaining of consents or approvals with respect to such shares under any
Federal or state law or any rule or regulation of any government body, which the Corporation shall,
in its sole discretion, determine to be necessary or advisable. Moreover, no Option or Stock
Appreciation Right may be exercised if such exercise would be contrary to applicable laws and
regulations.

     4.06 Restrictions on Transfer. The Corporation may place a legend upon any certificate
representing shares acquired pursuant to an Award granted hereunder noting that the transfer of
such shares may be restricted by applicable laws and regulations.

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     4.07 No Deferral of Compensation Under Section 409A of the Code. All Awards granted under the
Plan are designed to not constitute a deferral of compensation for purposes of Section 409A of the
Code. Notwithstanding any other provision in this Plan to the contrary, all of the terms and
conditions of any Options granted under this Plan shall be designed to satisfy the exemption for
stock options set forth in the regulations issued under Section 409A of the Code. Both this Plan
and the terms of all Options granted hereunder shall be interpreted in a manner that requires
compliance with all of the requirements of the exemption for stock options set forth in the
regulations issued under Section 409A of the Code. No Optionee shall be permitted to defer the
recognition of income beyond the exercise date of a Non-Qualified Option or beyond the date that
the Common Stock received upon the exercise of an Incentive Stock Option is sold.

ARTICLE V

ELIGIBILITY

     Awards may be granted to such Employees of the Corporation and its Subsidiary Companies as may
be designated from time to time by the Board of Directors or the Committee. Awards may not be
granted to individuals who are not Employees or Non-Employee Directors of either the Corporation or
its Subsidiary Companies. Non-Employee Directors shall be eligible to receive only Non-Qualified
Options.

ARTICLE VI

COMMON STOCK COVERED BY THE PLAN

     6.01 Option Shares. The aggregate number of shares of Common Stock which may be issued
pursuant to this Plan, subject to adjustment as provided in Article IX, shall be 195,000 shares.
None of such shares shall be the subject of more than one Award at any time, but if an Award as to
any shares is surrendered before exercise, or expires or terminates for any reason without having
been exercised in full, or for any other reason ceases to be exercisable, the number of shares
covered thereby shall again become available for grant under the Plan as if no Awards had been
previously granted with respect to such shares. Notwithstanding the foregoing, if an Option is
surrendered in connection with the exercise of a Stock Appreciation Right, or vice versa, the
number of shares covered thereby shall not be available for grant under the Plan.

     6.02 Source of Shares. The shares of Common Stock issued under the Plan may be authorized but
unissued shares, treasury shares, shares purchased by the Corporation on the open market or from
private sources for use under the Plan or, if applicable, shares held in a grantor trust created by
the Corporation.

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ARTICLE VII

DETERMINATION OF

AWARDS, NUMBER OF SHARES, ETC.

     The Board of Directors or the Committee shall, in its discretion, determine from time to time
which Employees and Non-Employee Directors will be granted Awards under the Plan, the number of
shares of Common Stock subject to each Award, and whether each Option will be an Incentive Stock
Option or a Non-Qualified Stock Option. In making determinations with respect to Employees, there
shall be taken into account the duties, responsibilities and performance of each respective
Employee, his present and potential contributions to the growth and success of the Corporation, his
salary and such other factors as the Board of Directors or the Committee shall deem relevant to
accomplishing the purposes of the Plan.

ARTICLE VIII

OPTIONS AND STOCK APPRECIATION RIGHTS

     Each Option granted hereunder shall be on the following terms and conditions:

     8.01 Stock Option Agreement. The proper Officers on behalf of the Corporation and each
Optionee shall execute a Stock Option Agreement which shall set forth the total number of shares of
Common Stock to which it pertains, the exercise price, whether it is a Non-Qualified Option or an
Incentive Stock Option, and such other terms, conditions, restrictions and privileges as the Board
of Directors or the Committee in each instance shall deem appropriate, provided they are not
inconsistent with the terms, conditions and provisions of this Plan. Each Optionee shall receive a
copy of his executed Stock Option Agreement.

     8.02 Awards to Employees and Non-Employee Directors. Specific Awards to Employees and
Non-Employee Directors shall be made to such persons and in such amounts as are determined by the
Board of Directors or the Committee.

     8.03 Option Exercise Price.

          (a) Incentive Stock Options. The per share price at which the subject Common Stock may be
purchased upon exercise of an Incentive Stock Option shall be no less than one hundred percent
(100%) of the Fair Market Value of a share of Common Stock at the time such Incentive Stock Option
is granted, except as provided in Section 8.10(b), and subject to any applicable adjustment
pursuant to Article IX hereof.

          (b) Non-Qualified Options. The per share price at which the subject Common Stock may be
purchased upon exercise of a Non-Qualified Option shall be no less than one hundred percent (100%)
of the Fair Market Value of a share of Common Stock at the time such Non-Qualified Option is
granted, and subject to any applicable adjustment pursuant to Article IX hereof.

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     8.04 Vesting and Exercise of Options.

          (a) General Rules. Incentive Stock Options and Non-Qualified Options granted hereunder shall
become vested and exercisable at the rate, to the extent and subject to such limitations as may be
specified by the Board of Directors or the Committee. Notwithstanding the foregoing, no vesting
shall occur on or after an Optionee’s employment with or service to the Corporation and all
Subsidiary Companies is terminated for any reason other than his death or Disability. In
determining the number of shares of Common Stock with respect to which Options are vested and/or
exercisable, fractional shares will be rounded up to the nearest whole number if the fraction is
0.5 or higher, and down if it is less.

          (b) Accelerated Vesting. Unless the Board of Directors or the Committee shall specifically
state otherwise at the time an Option is granted, all Options granted hereunder shall become vested
and exercisable in full on the date an Optionee terminates his employment with or service to the
Corporation or a Subsidiary Company because of his death or Disability. In addition, all options
hereunder shall become immediately vested and exercisable in full on the date an Optionee
terminates his employment or service to the Corporation or a Subsidiary Company as the result of a
Change in Control.

     8.05 Duration of Options.

          (a) Employee Grants. Except as provided in Sections 8.05(c) and 8.10, each Option or portion
thereof shall be exercisable at any time on or after the date it vests and becomes exercisable
until the earlier of (i) ten (10) years after its date of grant or (ii) three (3) months after the
date on which the Optionee ceases to be employed by the Corporation and all Subsidiary Companies,
unless the Board of Directors or the Committee in its discretion decides at the time of grant to
extend such period of exercise upon termination of employment from three (3) months to a period not
exceeding five (5) years.

          (b) Non-Employee Director Grants. Except as provided in Section 8.05(c), each Option or
portion thereof shall be exercisable at any time on or after the date it vests and becomes
exercisable until the earlier of (i) ten (10) years after its date of grant or (ii) the third
annual anniversary of the date on which the Optionee ceases to be a Non-Employee Director.

          (c) Exception for Termination Due to Death or Disability. If an Employee dies while in the
employ of the Corporation or a Subsidiary Company or terminates employment with the Corporation or
a Subsidiary Company as a result of Disability without having fully exercised his Options, the
Optionee or the executors, administrators, legatees or distributee of his estate shall have the
right, during the twelve-month period following the earlier of his death or Disability, to exercise
such Options to the extent vested on the date of such death or Disability. If a Non-Employee
Director dies while serving as a Non-Employee Director without having fully exercised his Options,
the Non-Employee Director’s executors, administrators, legatees or distributee of his estate shall
have the right, during the twelve-month period following such death, to exercise such Options. In
no event, however, shall any Option be exercisable more than ten (10) years from the date it was
granted.

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     8.06 Nonassignability. Options shall not be transferable by an Optionee except by will or the
laws of descent or distribution, and during an Optionee’s lifetime shall be exercisable only by
such Optionee or the Optionee’s guardian or legal representative. Notwithstanding the foregoing,
or any other provision of this Plan, an Optionee who holds Non-Qualified Options may transfer such
Options to his or her spouse, lineal ascendants, lineal descendants, or to a duly established trust
for the benefit of one or more of these individuals. Options so transferred may thereafter be
transferred only to the Optionee who originally received the grant or to an individual or trust to
whom the Optionee could have initially transferred the Option pursuant to this Section 8.06.
Options which are transferred pursuant to this Section 8.06 shall be exercisable by the transferee
according to the same terms and conditions as applied to the Optionee.

     8.07 Manner of Exercise. Options may be exercised in part or in whole and at one time or from
time to time. The procedures for exercise shall be set forth in the written Stock Option Agreement
provided for in Section 8.01 above.

     8.08 Payment for Shares. Payment in full of the purchase price for shares of Common Stock
purchased pursuant to the exercise of any Option shall be made to the Corporation upon exercise of
the Option. All shares sold under the Plan shall be fully paid and nonassessable. Payment for
shares may be made by the Optionee in cash or, at the discretion of the Board of Directors or the
Committee, by delivering shares of Common Stock (including shares acquired pursuant to the exercise
of an Option) or other property equal in Fair Market Value to the purchase price of the shares to
be acquired pursuant to the Option, by withholding some of the shares of Common Stock which are
being purchased upon exercise of an Option, or any combination of the foregoing.

     8.09 Voting and Dividend Rights. No Optionee shall have any voting or dividend rights or
other rights of a stockholder in respect of any shares of Common Stock covered by an Option prior
to the time that his name is recorded on the Corporation’s stockholder ledger as the holder of
record of such shares acquired pursuant to an exercise of an Option.

     8.10 Additional Terms Applicable to Incentive Stock Options. All Options issued under the
Plan as Incentive Stock Options will be subject, in addition to the terms detailed in Sections 8.01
to 8.09 above, to those contained in this Section 8.10.

          (a) Notwithstanding any contrary provisions contained elsewhere in this Plan and as long as
required by Section 422 of the Code, the aggregate Fair Market Value, determined as of the time an
Incentive Stock Option is granted, of the Common Stock with respect to which Incentive Stock
Options are exercisable for the first time by an Optionee during any calendar year under this Plan
and stock options that satisfy the requirements of Section 422 of the Code under any other stock
option plan or plans maintained by the Corporation (or any parent or Subsidiary Company), shall not
exceed $100,000.

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          (b) Limitation on Ten Percent Stockholders. The price at which shares of Common Stock may be
purchased upon exercise of an Incentive Stock Option granted to an individual who, at the time such
Incentive Stock Option is granted, owns, directly or indirectly, more than ten percent (10%) of the
total combined voting power of all classes of stock issued to stockholders of the Corporation or
any Subsidiary Company, shall be no less than one hundred and ten percent (110%) of the Fair Market
Value of a share of the Common Stock of the Corporation at the time of grant, and such Incentive
Stock Option shall by its terms not be exercisable after the earlier of the date determined under
Section 8.04 or the expiration of five (5) years from the date such Incentive Stock Option is
granted.

          (c) Notice of Disposition; Withholding; Escrow. An Optionee shall immediately notify the
Corporation in writing of any sale, transfer, assignment or other disposition (or action
constituting a disqualifying disposition within the meaning of Section 421 of the Code) of any
shares of Common Stock acquired through exercise of an Incentive Stock Option, within two (2) years
after the grant of such Incentive Stock Option or within one (1) year after the acquisition of such
shares, setting forth the date and manner of disposition, the number of shares disposed of and the
price at which such shares were disposed of. The Corporation shall be entitled to withhold from
any compensation or other payments then or thereafter due to the Optionee such amounts as may be
necessary to satisfy any withholding requirements of Federal or state law or regulation and,
further, to collect from the Optionee any additional amounts which may be required for such
purpose. The Committee may, in its discretion, require shares of Common Stock acquired by an
Optionee upon exercise of an Incentive Stock Option to be held in an escrow arrangement for the
purpose of enabling compliance with the provisions of this Section 8.10(c).

     8.11 Stock Appreciation Rights.

          (a) General Terms and Conditions. The Board of Directors or the Committee may, but shall not
be obligated to, authorize the Corporation, on such terms and conditions as it deems appropriate in
each case, to grant rights to Optionees to surrender an exercisable Option, or any portion thereof,
in consideration for the payment by the Corporation of an amount equal to the excess of the Fair
Market Value of the shares of Common Stock subject to the Option, or portion thereof, surrendered
over the exercise price of the Option with respect to such shares (any such authorized surrender
and payment being hereinafter referred to as a “Stock Appreciation Right”). Such payment, at the
discretion of the Board of Directors or the Committee, may be made in shares of Common Stock valued
at the then Fair Market Value thereof, or in cash, or partly in cash and partly in shares of Common
Stock.

     The terms and conditions set with respect to a Stock Appreciation Right may include (without
limitation), subject to other provisions of this Section 8.11 and the Plan, the period during
which, date by which or event upon which the Stock Appreciation Right may be exercised (which shall
be on the same terms as the Option to which it relates pursuant to Section 8.04 hereunder); the
method for valuing shares of Common Stock for purposes of this Section 8.11; a ceiling on the
amount of consideration which the Corporation may pay in connection with exercise and cancellation
of the Stock Appreciation Right; and arrangements for income tax withholding. The Board of
Directors or the Committee shall have complete discretion to

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determine whether, when and to whom Stock Appreciation Rights may be granted. Notwithstanding the
foregoing, the Corporation may not permit the exercise of a Stock Appreciation Right issued
pursuant to this Plan until the Corporation has been subject to the reporting requirements of
Section 13 of the Exchange Act for a period of at least one year prior to the exercise of any such
Stock Appreciation Right.

          (b) Time Limitations. If a holder of a Stock Appreciation Right terminates service with the
Corporation, the Stock Appreciation Right may be exercised only within the period, if any, within
which the Option to which it relates may be exercised. Notwithstanding the foregoing, any election
by an Optionee to exercise the Stock Appreciation Rights provided in this Plan shall be made during
the period beginning on the third business day following the release for publication of quarterly
or annual financial information required to be prepared and disseminated by the Corporation
pursuant to the requirements of the Exchange Act and ending on the twelfth business day following
such date. The required release of information shall be deemed to have been satisfied when the
specified financial data appears on or in a wire service, financial news service or newspaper of
general circulation or is otherwise first made publicly available.

          (c) Effects of Exercise of Stock Appreciation Rights or Options. Upon the exercise of a Stock
Appreciation Right, the number of shares of Common Stock available under the Option to which it
relates shall decrease by a number equal to the number of shares for which the Stock Appreciation
Right was exercised. Upon the exercise of an Option, any related Stock Appreciation Right shall
terminate as to any number of shares of Common Stock subject to the Stock Appreciation Right that
exceeds the total number of shares for which the Option remains unexercised.

          (d) Time of Grant. A Stock Appreciation Right shall be granted concurrently with the Option
to which it relates.

          (e) Non-Transferable. The holder of a Stock Appreciation Right may not transfer or assign the
Stock Appreciation Right otherwise than by will or in accordance with the laws of descent and
distribution, and during a holder’s lifetime a Stock Appreciation Right may be exercisable only by
the holder.

ARTICLE IX

ADJUSTMENTS FOR CAPITAL CHANGES

     The aggregate number of shares of Common Stock available for issuance under this Plan, the
number of shares to which any Award relates and the exercise price per share of Common Stock under
any Award shall be proportionately adjusted for any increase or decrease in the total number of
outstanding shares of Common Stock issued subsequent to the effective date of this Plan resulting
from a split, subdivision or consolidation of shares or any other capital adjustment, the payment
of a stock dividend, or other increase or decrease in such shares effected without receipt or
payment of consideration by the Corporation. If, upon a merger, consolidation, reorganization,
liquidation, recapitalization or the like of the Corporation, the shares of the

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Corporation’s Common Stock shall be exchanged for other securities of the Corporation or of another
corporation, each recipient of an Award shall be entitled, subject to the conditions herein stated,
to purchase or acquire such number of shares of Common Stock or amount of other securities of the
Corporation or such other corporation as were exchangeable for the number of shares of Common Stock
of the Corporation which such Optionees would have been entitled to purchase or acquire except for
such action, and appropriate adjustments shall be made to the per share exercise price of
outstanding Awards, provided that in each case the number of shares or other securities subject to
the substituted or assumed stock options and the exercise price thereof shall be determined in a
manner that satisfies the requirements of Treasury Regulation §1.424-1 and the regulations issued
under Section 409A of the Code so that the substituted or assumed option is not deemed to be a
modification of the outstanding Options. Notwithstanding any provision to the contrary, the
exercise price of shares subject to outstanding Awards may be proportionately adjusted upon the
payment of a special large and nonrecurring dividend that has the effect of a return of capital to
the stockholders.

ARTICLE X

AMENDMENT AND TERMINATION OF THE PLAN

     The Board may, by resolution, at any time terminate or amend the Plan with respect to any
shares of Common Stock as to which Awards have not been granted, subject to regulations of the OTS
and any required stockholder approval or any stockholder approval which the Board may deem to be
advisable for any reason, such as for the purpose of obtaining or retaining any statutory or
regulatory benefits under tax, securities or other laws or satisfying any applicable stock exchange
listing requirements. The Board may not, without the consent of the holder of an Award, alter or
impair any Award previously granted or awarded under this Plan as specifically authorized herein.

ARTICLE XI

EMPLOYMENT RIGHTS

     Neither the Plan nor the grant of any Awards hereunder nor any action taken by the Committee
or the Board in connection with the Plan shall create any right on the part of any Employee or
Non-Employee Director of the Corporation or a Subsidiary Company to continue in such capacity.

ARTICLE XII

WITHHOLDING

     12.01 Tax Withholding. The Corporation may withhold from any cash payment made under this
Plan sufficient amounts to cover any applicable withholding and employment taxes, and if the amount
of such cash payment is insufficient, the Corporation may require the Optionee to pay to the
Corporation the amount required to be withheld as a condition to delivering the shares acquired
pursuant to an Award. The Corporation also may withhold or collect amounts

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with respect to a disqualifying disposition of shares of Common Stock acquired pursuant to exercise
of an Incentive Stock Option, as provided in Section 8.10(c).

     12.02 Methods of Tax Withholding. The Board of Directors or the Committee is authorized to
adopt rules, regulations or procedures which provide for the satisfaction of an Optionee’s tax
withholding obligation by the retention of shares of Common Stock to which the Employee would
otherwise be entitled pursuant to an Award and/or by the Optionee’s delivery of previously-owned
shares of Common Stock or other property.

ARTICLE XIII

EFFECTIVE DATE OF THE PLAN; TERM

     13.01 Effective Date of the Plan. This Plan as originally adopted was effective as of the
Effective Date, and Awards may be granted hereunder as of or after the Effective Date and no later
than the termination of the Plan. This Plan was approved by the requisite vote of the holders of
the outstanding voting shares of the Corporation at a meeting of stockholders of the Corporation
held within twelve (12) months of the Effective Date. The amendment and restatement of this Plan
was adopted effective as of November 21, 2006.

     13.02 Term of Plan. Unless sooner terminated, this Plan shall remain in effect for a period
of ten (10) years ending on the tenth anniversary of the Effective Date. Termination of the Plan
shall not affect any Awards previously granted and such Awards shall remain valid and in effect
until they have been fully exercised or earned, are surrendered or by their terms expire or are
forfeited.

ARTICLE XIV

MISCELLANEOUS

     14.01 Governing Law. To the extent not governed by Federal law, this Plan shall be construed
under the laws of the Commonwealth of Pennsylvania.

     14.02 Pronouns. Wherever appropriate, the masculine pronoun shall include the feminine
pronoun, and the singular shall include the plural.

12exv10w9

 

Exhibit 10.9

ESB FINANCIAL CORPORATION

AMENDED AND RESTATED 2001 STOCK OPTION PLAN

ARTICLE I

ESTABLISHMENT OF THE PLAN

     ESB Financial Corporation (the “Corporation”) hereby amends and restates its 2001 Stock Option
Plan (as amended and restated, the “Plan”) upon the terms and conditions hereinafter stated, with
the amendment and restatement effective as of November 21, 2006.

ARTICLE II

PURPOSE OF THE PLAN

     The purpose of this Plan is to improve the growth and profitability of the Corporation and its
Subsidiary Companies by providing Employees and Non-Employee Directors with a proprietary interest
in the Corporation as an incentive to contribute to the success of the Corporation and its
Subsidiary Companies, and rewarding Employees for outstanding performance and the attainment of
targeted goals. All Incentive Stock Options issued under this Plan are intended to comply with the
requirements of Section 422 of the Code, and the regulations thereunder, and all provisions
hereunder shall be read, interpreted and applied with that purpose in mind.

ARTICLE III

DEFINITIONS

     3.01 “Award” means an Option or Stock Appreciation Right granted pursuant to the terms of this
Plan.

     3.02 “Bank” means ESB Bank, the wholly owned subsidiary of the Corporation.

     3.03 “Board” means the Board of Directors of the Corporation.

     3.04 “Change in Control” shall mean a change in the ownership of the Corporation or the Bank,
a change in the effective control of the Corporation or the Bank or a change in the ownership of a
substantial portion of the assets of the Corporation or the Bank, in each case as provided under
Section 409A of the Code and the regulations thereunder.

     3.05 “Code” means the Internal Revenue Code of 1986, as amended.

     3.06 “Committee” means a committee of two or more directors appointed by the Board pursuant to
Article IV hereof each of whom shall be a non-employee director as defined in Rule 16b-3(b)(3)(i)
of the Exchange Act or any successor thereto and within the meaning of Section 162(m) of the Code
and the regulations promulgated thereunder.

 

 

     3.07 “Common Stock” means shares of the common stock, $.01 par value per share, of the
Corporation.

     3.08 “Disability” means in the case of any Optionee that the Optionee: (i) is unable to engage
in any substantial gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last for a continuous
period of not less than 12 months, or (ii) is, by reason of any medically determinable physical or
mental impairment which can be expected to result in death or can be expected to last for a
continuous period of not less than 12 months, receiving income replacement benefits for a period of
not less than three months under an accident and health plan covering employees of the Corporation
or the Bank (or would have received such benefits for at least three months if he had been eligible
to participate in such plan).

     3.09 “Effective Date” means the day upon which the Board originally adopted this Plan.

     3.10 “Employee” means any person who is employed by the Corporation or a Subsidiary Company,
or is an Officer of the Corporation or a Subsidiary Company, but not including directors who are
not also Officers of or otherwise employed by the Corporation or a Subsidiary Company.

     3.11 “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     3.12 “Fair Market Value” shall be equal to the fair market value per share of the
Corporation’s Common Stock on the date an Award is granted. For purposes hereof, the Fair Market
Value of a share of Common Stock shall be the closing sale price of a share of Common Stock on the
date in question (or, if such day is not a trading day in the U.S. markets, on the nearest
preceding trading day), as reported with respect to the principal market (or the composite of the
markets, if more than one) or national quotation system in which such shares are then traded, or if
no such closing prices are reported, the mean between the high bid and low asked prices that day on
the principal market or national quotation system then in use, or if no such quotations are
available, the price furnished by a professional securities dealer making a market in such shares
selected by the Committee.

     3.13 “Incentive Stock Option” means any Option granted under this Plan which the Board intends
(at the time it is granted) to be an incentive stock option within the meaning of Section 422 of
the Code or any successor thereto.

     3.14 “Non-Employee Director” means a member of the Board of the Corporation or Board of
Directors of the Bank, including an advisory director or a director emeritus of the Board of the
Corporation and/or the Bank, who is not an Officer or Employee of the Corporation or any
Subsidiary Company.

     3.15 “Non-Qualified Option” means any Option granted under this Plan which is not an Incentive
Stock Option.

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     3.16 “Officer” means an Employee whose position in the Corporation or Subsidiary Company is
that of a corporate officer, as determined by the Board.

     3.17 “Option” means a right granted under this Plan to purchase Common Stock.

     3.18 “Optionee” means an Employee or Non-Employee Director or former Employee or Non-Employee
Director to whom an Option is granted under the Plan.

     3.19 “Retirement” means a termination of employment which constitutes a “retirement” under any
applicable qualified pension benefit plan maintained by the Corporation or a Subsidiary
Corporation, or, if no such plan is applicable, which would constitute “retirement” under the
Corporation’s qualified retirement plan, if such individual were a participant in that plan.

     3.20 “Stock Appreciation Right” means a right to surrender an Option in consideration for a
payment by the Corporation in cash and/or Common Stock, as provided in the discretion of the
Committee in accordance with Section 8.10.

     3.21 “Subsidiary Companies” means those subsidiaries of the Corporation, including the Bank,
which meet the definition of “subsidiary corporations” set forth in Section 425(f) of the Code, at
the time of granting of the Option in question.

ARTICLE IV

ADMINISTRATION OF THE PLAN

     4.01 Duties of the Committee. The Plan shall be administered and interpreted by the
Committee, as appointed from time to time by the Board pursuant to Section 4.02. The Committee
shall have the authority to adopt, amend and rescind such rules, regulations and procedures as, in
its opinion, may be advisable in the administration of the Plan, including, without limitation,
rules, regulations and procedures which (i) deal with satisfaction of an Optionee’s tax withholding
obligation pursuant to Section 12.02 hereof, (ii) include arrangements to facilitate the Optionee’s
ability to borrow funds for payment of the exercise or purchase price of an Award, if applicable,
from securities brokers and dealers, and (iii) include arrangements which provide for the payment
of some or all of such exercise or purchase price by delivery of previously-owned shares of Common
Stock or other property and/or by withholding some of the shares of Common Stock which are being
acquired. The interpretation and construction by the Committee of any provisions of the Plan, any
rule, regulation or procedure adopted by it pursuant thereto or of any Award shall be final and
binding in the absence of action by the Board.

     4.02 Appointment and Operation of the Committee. The members of the Committee shall be
appointed by, and will serve at the pleasure of, the Board. The Board from time to time may remove
members from, or add members to, the Committee, provided the Committee shall continue to consist of
two or more members of the Board, each of whom shall be a non-employee director, as defined in Rule
16b-3(b)(3)(i) of the Exchange Act or any successor thereto. In addition, each member of the
Committee shall be an “outside director”

3

 

within the meaning of Section 162(m) of the Code and regulations thereunder at such times as is
required under such regulations. The Committee shall act by vote or written consent of a majority
of its members. Subject to the express provisions and limitations of the Plan, the Committee may
adopt such rules, regulations and procedures as it deems appropriate for the conduct of its
affairs. It may appoint one of its members to be chairman and any person, whether or not a member,
to be its secretary or agent. The Committee shall report its actions and decisions to the Board at
appropriate times but in no event less than one time per calendar year.

     4.03 Revocation for Misconduct. The Board or the Committee may by resolution immediately
revoke, rescind and terminate any Option, or portion thereof, to the extent not yet vested to the
extent not yet exercised, previously granted or awarded under this Plan to an Employee who is
discharged from the employ of the Corporation or a Subsidiary Company for cause, which, for
purposes hereof, shall mean termination because of the Employee’s personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of any law, rule, or regulation (other than
traffic violations or similar offenses) or final cease-and-desist order. Options granted to a
Non-Employee Director who is removed for cause pursuant to the Corporation’s Articles of
Incorporation and Bylaws or the Bank’s Charter and Bylaws shall terminate as of the effective date
of such removal.

     4.04 Limitation on Liability. Neither the members of the Board nor any member of the
Committee shall be liable for any action or determination made in good faith with respect to the
Plan, any rule, regulation or procedure adopted by it pursuant thereto or any Awards granted under
it. If a member of the Board or the Committee is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of anything done or not done by him in such capacity
under or with respect to the Plan, the Corporation shall, subject to the requirements of applicable
laws and regulations, indemnify such member against all liabilities and expenses (including
attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in the best interests of the Corporation and its Subsidiary Companies
and, with respect to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful.

     4.05 Compliance with Law and Regulations. All Awards granted hereunder shall be subject to
all applicable federal and state laws, rules and regulations and to such approvals by any
government or regulatory agency as may be required. The Corporation shall not be required to issue
or deliver any certificates for shares of Common Stock prior to the completion of any registration
or qualification of or obtaining of consents or approvals with respect to such shares under any
federal or state law or any rule or regulation of any government body, which the Corporation shall,
in its sole discretion, determine to be necessary or advisable. Moreover, no Option may be
exercised if such exercise would be contrary to applicable laws and regulations.

     4.06 Restrictions on Transfer. The Corporation may place a legend upon any certificate
representing shares acquired pursuant to an Award granted hereunder noting that the transfer of
such shares may be restricted by applicable laws and regulations.

4

 

     4.07 No Deferral of Compensation Under Section 409A of the Code. All Awards granted under the
Plan are designed to not constitute a deferral of compensation for purposes of Section 409A of the
Code. Notwithstanding any other provision in this Plan to the contrary, all of the terms and
conditions of any Options granted under this Plan shall be designed to satisfy the exemption for
stock options set forth in the regulations issued under Section 409A of the Code. Both this Plan
and the terms of all Options granted hereunder shall be interpreted in a manner that requires
compliance with all of the requirements of the exemption for stock options set forth in the
regulations issued under Section 409A of the Code. No Optionee shall be permitted to defer the
recognition of income beyond the exercise date of a Non-Qualified Option or beyond the date that
the Common Stock received upon the exercise of an Incentive Stock Option is sold.

ARTICLE V

ELIGIBILITY

     Awards may be granted to such Employees and Non-Employee Directors of the Corporation and its
Subsidiary Companies as may be designated from time to time by the Board or the Committee. Awards
may not be granted to individuals who are not Employees or Non-Employee Directors of either the
Corporation or its Subsidiary Companies. Non-Employee Directors shall be eligible to receive only
Non-Qualified Options.

ARTICLE VI

COMMON STOCK COVERED BY THE PLAN

     6.01 Option Shares. The aggregate number of shares of Common Stock which may be issued
pursuant to this Plan, subject to adjustment as provided in Article IX, shall be 290,000. None of
such shares shall be the subject of more than one Award at any time, but if an Option as to any
shares is surrendered before exercise, or expires or terminates for any reason without having been
exercised in full, or for any other reason ceases to be exercisable, the number of shares covered
thereby shall again become available for grant under the Plan as if no Awards had been previously
granted with respect to such shares.

     6.02 Source of Shares. The shares of Common Stock issued under the Plan may be authorized but
unissued shares, treasury shares or shares purchased by the Corporation on the open market or from
private sources for use under the Plan.

5

 

ARTICLE VII

DETERMINATION OF

AWARDS, NUMBER OF SHARES, ETC.

     7.01 Determination of Awards. The Board or the Committee shall, in its discretion, determine
from time to time which Employees and Non-Employee Directors will be granted Awards under the
Plan, the number of shares of Common Stock subject to each Award, whether each Option will be an
Incentive Stock Option or a Non-Qualified Stock Option and the exercise price of an Option. In
making all such determinations there shall be taken into account the duties, responsibilities and
performance of each Optionee, his present and potential contributions to the growth and success of
the Corporation, his salary and such other factors deemed relevant to accomplishing the purposes of
the Plan.

     7.02 Maximum Awards to any Person. Notwithstanding anything contained in this Plan to the
contrary, the maximum number of shares of Common Stock to which Awards may be granted to any
individual in any calendar year shall be 50,000.

ARTICLE VIII

OPTIONS AND STOCK APPRECIATION RIGHTS

     Each Option granted hereunder shall be on the following terms and conditions:

     8.01 Stock Option Agreement. The proper Officers on behalf of the Corporation and each
Optionee shall execute a Stock Option Agreement which shall set forth the total number of shares of
Common Stock to which it pertains, the exercise price, whether it is a Non-Qualified Option or an
Incentive Stock Option, and such other terms, conditions, restrictions and privileges as the Board
or the Committee in each instance shall deem appropriate, provided they are not inconsistent with
the terms, conditions and provisions of this Plan. Each Optionee shall receive a copy of his
executed Stock Option Agreement.

     8.02 Option Exercise Price.

          (a) Incentive Stock Options. The per share price at which the subject Common Stock may be
purchased upon exercise of an Incentive Stock Option shall be no less than one hundred percent
(100%) of the Fair Market Value of a share of Common Stock at the time such Incentive Stock Option
is granted, except as provided in Section 8.09(b), and subject to any applicable adjustment
pursuant to Article IX hereof.

          (b) Non-Qualified Options. The per share price at which the subject Common Stock may be
purchased upon exercise of a Non-Qualified Option shall be established by the Committee at the time
of grant, but in no event shall be less than the greater of (i) the par value or (ii) one hundred
percent (100%) of the Fair Market Value of a share of Common Stock at the time such Non-Qualified
Option is granted, and subject to any applicable adjustment pursuant to Article IX hereof.

6

 

     8.03 Vesting and Exercise of Options.

          (a) General Rules. Incentive Stock Options and Non-Qualified Options shall become vested and
exercisable at the rate, to the extent and subject to such limitations as may be specified by the
Board or the Committee. Notwithstanding the foregoing, no vesting shall occur on or after an
Optionee’s employment or service as a Non-Employee Director to the Corporation and all Subsidiary
Companies is terminated for any reason other than his death, Disability, Retirement or a Change in
Control. In determining the number of shares of Common Stock with respect to which Options are
vested and/or exercisable, fractional shares will be rounded up to the nearest whole number if the
fraction is 0.5 or higher, and down if it is less.

          (b) Accelerated Vesting. Unless the Committee or Board shall specifically state otherwise at
the time an Option is granted, all Options granted under this Plan shall become vested and
exercisable in full on the date an Optionee terminates his employment with the Corporation or a
Subsidiary Company or service as a Non-Employee Director because of his death, Disability or
Retirement. In addition, all outstanding Options shall become immediately vested and exercisable
in full as of the effective date of a Change in Control.

     8.04 Duration of Options.

          (a) Employee Grants. Except as provided in Sections 8.04(b) and 8.09, each Option or portion
thereof granted to an Employee shall be exercisable at any time on or after the date it vests and
remain exercisable until the earlier of (i) ten (10) years after its date of grant or (ii) three
(3) months after the date on which the Employee ceases to be employed by Corporation and all
Subsidiary Companies, or any successor thereto, unless the Board or the Committee in its discretion
decides at the time of grant to extend such period of exercise upon termination of employment or
service to a period not exceeding five (5) years.

          (b) Non-Employee Director Grants. Except as provided in Section 8.05(c), each Option or
portion thereof granted to a Non-Employee Director shall be exercisable at any time on or after the
date it vests and becomes exercisable until the earlier of (i) ten (10) years after its date of
grant or (ii) three (3) years the date on which the Optionee ceases to serve as a Non-Employee
Director.

          (c) Exceptions. Unless the Board or the Committee shall specifically state otherwise at the
time an Option is granted, if an Employee terminates his employment with the Corporation or a
Subsidiary Company as a result of Disability or Retirement without having fully exercised his
Options, the Employee shall have the right, during the one (1) year period following his
termination due to Disability or Retirement, to exercise such Options.

     Unless the Board or the Committee shall specifically state otherwise at the time an Option is
granted, if an Employee or Non-Employee Director terminates his employment or service with the
Corporation or a Subsidiary Company following a Change in Control without having fully exercised
his Options, the Optionee shall have the right to exercise such Options during the remainder of the
original ten (10) year term of the Option from the date of grant.

7

 

     If an Optionee dies while in the employ or service of the Corporation or a Subsidiary Company
or terminates employment or service with the Corporation or a Subsidiary Company as a result of
Disability or Retirement and dies without having fully exercised his Options, the executors,
administrators, legatees or distributees of his estate shall have the right, during the one (1)
year period following his death, to exercise such Options.

     In no event, however, shall any Option be exercisable more than ten (10) years from the date
it was granted.

     8.05 Nonassignability. Options shall not be transferable by an Optionee except by will or the
laws of descent or distribution, and during an Optionee’s lifetime shall be exercisable only by
such Optionee or the Optionee’s guardian or legal representative. Notwithstanding the foregoing,
or any other provision of this Plan, an Optionee who holds Non-Qualified Options may transfer such
Options to his or her spouse, lineal ascendants, lineal descendants, or to a duly established trust
for the benefit of one or more of these individuals. Options so transferred may thereafter be
transferred only to the Optionee who originally received the grant or to an individual or trust to
whom the Optionee could have initially transferred the Option pursuant to this Section 8.05.
Options which are transferred pursuant to this Section 8.05 shall be exercisable by the transferee
according to the same terms and conditions as applied to the Optionee.

     8.06 Manner of Exercise. Options may be exercised in part or in whole and at one time or from
time to time. The procedures for exercise shall be set forth in the written Stock Option Agreement
provided for in Section 8.01 above.

     8.07 Payment for Shares. Payment in full of the purchase price for shares of Common Stock
purchased pursuant to the exercise of any Option shall be made to the Corporation upon exercise of
the Option. All shares sold under the Plan shall be fully paid and nonassessable. Payment for
shares may be made by the Optionee (i) in cash or by check, (ii) by delivery of a properly executed
exercise notice, together with irrevocable instructions to a broker to sell the shares and then to
properly deliver to the Corporation the amount of sale proceeds to pay the exercise price, all in
accordance with applicable laws and regulations and Emerging Issues Task Force Issue No. 00-23 and
Financial Accounting Standards Board Statement No. 123R, (iii) at the discretion of the Board or
the Committee, by delivering shares of Common Stock (including shares acquired pursuant to the
exercise of an Option) equal in Fair Market Value to the purchase price of the shares to be
acquired pursuant to the Option, (iv) at the discretion of the Board or the Committee, by
withholding some of the shares of Common Stock which are being purchased upon exercise of an
Option, or (v) any combination of the foregoing. With respect to subclause (iii) hereof, the
shares of Common Stock delivered to pay the purchase price must have either been (x) purchased in
open market transactions or (y) issued by the Corporation pursuant to a plan thereof, in each case
more than six months prior to the exercise date of the Option.

     8.08 Voting and Dividend Rights. No Optionee shall have any voting or dividend rights or
other rights of a stockholder in respect of any shares of Common Stock covered by an

8

 

Option prior to the time that his name is recorded on the Corporation’s stockholder ledger as the
holder of record of such shares acquired pursuant to an exercise of an Option.

     8.09 Additional Terms Applicable to Incentive Stock Options. All Options issued under the
Plan as Incentive Stock Options will be subject, in addition to the terms detailed in Sections 8.01
to 8.08 above, to those contained in this Section 8.09.

          (a) Notwithstanding any contrary provisions contained elsewhere in this Plan and as long as
required by Section 422 of the Code, the aggregate Fair Market Value, determined as of the time an
Incentive Stock Option is granted, of the Common Stock with respect to which Incentive Stock
Options are exercisable for the first time by an Optionee during any calendar year under this Plan,
and stock options that satisfy the requirements of Section 422 of the Code under any other stock
option plan or plans maintained by the Corporation (or any parent or Subsidiary Company), shall not
exceed $100,000.

          (b) Limitation on Ten Percent Stockholders. The price at which shares of Common Stock may be
purchased upon exercise of an Incentive Stock Option granted to an individual who, at the time such
Incentive Stock Option is granted, owns, directly or indirectly, more than ten percent (10%) of the
total combined voting power of all classes of stock issued to stockholders of the Corporation or
any Subsidiary Company, shall be no less than one hundred and ten percent (110%) of the Fair Market
Value of a share of the Common Stock of the Corporation at the time of grant, and such Incentive
Stock Option shall by its terms not be exercisable after the earlier of the date determined under
Section 8.04 or the expiration of five (5) years from the date such Incentive Stock Option is
granted.

          (c) Notice of Disposition; Withholding; Escrow. An Optionee shall immediately notify the
Corporation in writing of any sale, transfer, assignment or other disposition (or action
constituting a disqualifying disposition within the meaning of Section 421 of the Code) of any
shares of Common Stock acquired through exercise of an Incentive Stock Option, within two (2) years
after the grant of such Incentive Stock Option or within one (1) year after the acquisition of such
shares, setting forth the date and manner of disposition, the number of shares disposed of and the
price at which such shares were disposed of. The Corporation shall be entitled to withhold from
any compensation or other payments then or thereafter due to the Optionee such amounts as may be
necessary to satisfy any withholding requirements of federal or state law or regulation and,
further, to collect from the Optionee any additional amounts which may be required for such
purpose. The Committee may, in its discretion, require shares of Common Stock acquired by an
Optionee upon exercise of an Incentive Stock Option to be held in an escrow arrangement for the
purpose of enabling compliance with the provisions of this Section 8.09(c).

     8.10 Stock Appreciation Rights.

          (a) General Terms and Conditions. The Board or the Committee may, but shall not be obligated
to, authorize the Corporation, on such terms and conditions as it deems appropriate in each case,
to grant rights to Optionees to surrender an exercisable Option, or any portion thereof, in
consideration for the payment by the Corporation of an amount equal to the

9

 

excess of the Fair Market Value of the shares of Common Stock subject to the Option, or portion
thereof, surrendered over the exercise price of the Option with respect to such shares (any such
authorized surrender and payment being hereinafter referred to as a “Stock Appreciation Right”).
Such payment, at the discretion of the Board or the Committee, may be made in shares of Common
Stock valued at the then Fair Market Value thereof, or in cash, or partly in cash and partly in
shares of Common Stock.

     The terms and conditions set with respect to a Stock Appreciation Right may include (without
limitation), subject to other provisions of this Section 8.10 and the Plan: the period during
which, date by which or event upon which the Stock Appreciation Right may be exercised; the method
for valuing shares of Common Stock for purposes of this Section 8.10; a ceiling on the amount of
consideration which the Corporation may pay in connection with exercise and cancellation of the
Stock Appreciation Right; and arrangements for income tax withholding. The Board or the Committee
shall have complete discretion to determine whether, when and to whom Stock Appreciation Rights may
be granted.

          (b) Time Limitations. If a holder of a Stock Appreciation Right terminates service with the
Corporation as an Officer or Employee, the Stock Appreciation Right may be exercised only within
the period, if any, within which the Option to which it relates may be exercised.

          (c) Effects of Exercise of Stock Appreciation Rights or Options. Upon the exercise of a Stock
Appreciation Right, the number of shares of Common Stock available under the Option to which it
relates shall decrease by a number equal to the number of shares for which the Stock Appreciation
Right was exercised. Upon the exercise of an Option, any related Stock Appreciation Right shall
terminate as to any number of shares of Common Stock subject to the Stock Appreciation Right that
exceeds the total number of shares for which the Option remains unexercised.

          (d) Time of Grant. A Stock Appreciation Right granted in connection with an Incentive Stock
Option must be granted concurrently with the Option to which it relates, and a Stock Appreciation
Right granted in connection with a Non-Qualified Option must also be granted concurrently with the
Option to which it relates.

          (e) Non-Transferable. The holder of a Stock Appreciation Right may not transfer or assign the
Stock Appreciation Right otherwise than by will or in accordance with the laws of descent and
distribution, and during a holder’s lifetime a Stock Appreciation Right may be exercisable only by
the holder.

ARTICLE IX

ADJUSTMENTS FOR CAPITAL CHANGES

     The aggregate number of shares of Common Stock available for issuance under this Plan, the
number of shares to which any outstanding Award relates, the maximum number of shares that can be
covered by Awards to each Employee, each Non-Employee Director and all Non-Employee Directors as a
group, and the exercise price per share of Common Stock under any

10

 

outstanding Option shall be proportionately adjusted for any increase or decrease in the total
number of outstanding shares of Common Stock issued subsequent to the effective date of this Plan
resulting from a split, subdivision or consolidation of shares or any other capital adjustment, the
payment of a stock dividend, or other increase or decrease in such shares effected without receipt
or payment of consideration by the Corporation. If, upon a merger, consolidation, reorganization,
liquidation, recapitalization or the like of the Corporation, the shares of the Corporation’s
Common Stock shall be exchanged for other securities of the Corporation or of another corporation,
each recipient of an Award shall be entitled, subject to the conditions herein stated, to purchase
or acquire such number of shares of Common Stock or amount of other securities of the Corporation
or such other corporation as were exchangeable for the number of shares of Common Stock of the
Corporation which such optionees would have been entitled to purchase or acquire except for such
action, and appropriate adjustments shall be made to the per share exercise price of outstanding
Options, provided that in each case the number of shares or other securities subject to the
substituted or assumed stock options and the exercise price thereof shall be determined in a manner
that satisfies the requirements of Treasury Regulation §1.424-1 and the regulations issued under
Section 409A of the Code so that the substituted or assumed option is not deemed to be a
modification of the outstanding Options.

ARTICLE X

AMENDMENT AND TERMINATION OF THE PLAN

     The Board may, by resolution, at any time terminate or amend the Plan with respect to any
shares of Common Stock as to which Awards have not been granted, subject to any required
stockholder approval or any stockholder approval which the Board may deem to be advisable for any
reason, such as for the purpose of obtaining or retaining any statutory or regulatory benefits
under tax, securities or other laws or satisfying any applicable stock exchange listing
requirements. The Board may not, without the consent of the holder of an Award, alter or impair
any Award previously granted or awarded under this Plan except as specifically authorized herein.

ARTICLE XI

EMPLOYMENT AND SERVICE RIGHTS

     Neither the Plan nor the grant of any Awards hereunder nor any action taken by the Committee
or the Board in connection with the Plan shall create any right on the part of any Employee or
Non-Employee Director to continue in such capacity.

ARTICLE XII

WITHHOLDING

     12.01 Tax Withholding. The Corporation may withhold from any cash payment made under this
Plan sufficient amounts to cover any applicable withholding and employment taxes, and if the amount
of such cash payment is insufficient, the Corporation may require the Optionee to pay to the
Corporation the amount required to be withheld as a condition to delivering the shares acquired
pursuant to an Award. The Corporation also may withhold or collect amounts

11

 

with respect to a disqualifying disposition of shares of Common Stock acquired pursuant to exercise
of an Incentive Stock Option, as provided in Section 8.09(c).

     12.02 Methods of Tax Withholding. The Board or the Committee is authorized to adopt rules,
regulations or procedures which provide for the satisfaction of an Optionee’s tax withholding
obligation by the retention of shares of Common Stock to which the Employee would otherwise be
entitled pursuant to an Award and/or by the Optionee’s delivery of previously-owned shares of
Common Stock or other property.

ARTICLE XIII

EFFECTIVE DATE OF THE PLAN; TERM

     13.01 Effective Date of the Plan. This Plan as originally adopted was effective as of the
Effective Date, and Awards may be granted hereunder no earlier than the date that this Plan was
approved by stockholders of the Corporation and no later than the termination of the Plan. The
stockholders of the Corporation approved this Plan as originally adopted pursuant to Article XIV
hereof. The amendment and restatement of this Plan was adopted effective as of November 21, 2006.

     13.02 Term of the Plan. Unless sooner terminated, this Plan shall remain in effect for a
period of ten (10) years ending on the tenth anniversary of the Effective Date. Termination of the
Plan shall not affect any Awards previously granted and such Awards shall remain valid and in
effect until they have been fully exercised or earned, are surrendered or by their terms expire or
are forfeited.

ARTICLE XIV

STOCKHOLDER APPROVAL

     The stockholders of the Corporation approved this Plan as originally adopted at a meeting of
stockholders of the Corporation held within twelve (12) months following the Effective Date in
order to meet the requirements of (i) Section 422 of the Code and regulations thereunder, (ii)
Section 162(m) of the Code and regulations thereunder, and (iii) the National Association of
Securities Dealers, Inc. for quotation of the Common Stock on the Nasdaq Stock Market’s National
Market.

ARTICLE XV

MISCELLANEOUS

     15.01 Governing Law. To the extent not governed by federal law, this Plan shall be construed
under the laws of the Commonwealth of Pennsylvania.

     15.02 Pronouns. Wherever appropriate, the masculine pronoun shall include the feminine
pronoun, and the singular shall include the plural.

12

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00113-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00113-of-00352.parquet"}]]