Document:

Exhibit 10.1

 

THE
WASHINGTON SAVINGS BANK, F.S.B.

 

1988
STOCK INCENTIVE PLAN

 

1.               PURPOSE:

 

This 1988 Stock Incentive Plan (the “Plan”)
is intended as an employment incentive and to encourage capital accumulation
and stock ownership by certain key employees of The Washington Savings Bank,
F.S.B. (the “Bank”) and of its Subsidiaries (as defined below) in order to
increases their proprietary interest in the Bank’s success. Options granted
under this plan may be either incentive stock options intended to quality
as such under Section 422A of the Internal Revenue Code of 1954, as
amended (the “Code”), or non-qualified stock options not intended to qualify
under any section of the Code and subject to Section 83 of the Code.
The Bank may also make restricted stock awards under the Plan, and such
awards shall be subject to Section 83 of the Code.

 

2.               ADMINISTRATION:

 

The Plan shall be administrated by a
committee appointed by the Board of Directors of the Bank (the “Committee”).
The Committee shall consist of not fewer than three members of the Board of
Directors. The Committee shall make recommendations periodically to the Board
of Directors with respect to the persons who shall participate in the plan and
the extent of their participation.

 

The interpretation and construction by the
Committee of any provisions of the plan or any stock option or restricted stock
agreements issued under it and any determination by the Committee pursuant to
any provision of the plan or any such agreement shall be final and conclusive unless
otherwise determined by the Board of Directors, and in any such event such
determination of the Board of Directors shall be final and conclusive. No
member of the Board of Directors or the Committee shall be liable for any
action or determination made in good faith, and the members shall be entitled
to indemnification and reimbursement in the manner provided in the Bank’s
charter or by-laws, and under any directors and officers liability insurance
coverage which may be in effect from time to time.

 

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3.               ELIGIBILITY:

 

The individuals who shall be eligible to
participate in the Plan shall, as the Board of Directors of the Bank shall
determine from time to time, be such key employees of the Bank, including officers
who are also directors, or of any corporation (a ”Subsidiary”) in which
the Bank has a proprietary interest by reason of stock ownership or otherwise,
including any corporation in which the Bank acquires a proprietary interest
after the adoption of this Plan (but only if the Bank owns or controls,
directly or indirectly, stock possessing not less than 50% of the total
combined voting power of all classes of stock in such corporation).

 

4.               AWARD OF OPTIONS:

 

The Board of Directors, at any time and from
time to time, may authorize the granting of options and the making of
restricted stock awards under this Plan to any individual eligible to receive
the same, from among those eligible individuals nominated by the Committee.
Options shall be granted and restricted stock awards shall be made under this Plan
at such times and for such number of shares as the Board of Directors shall
determine after reviewing the recommendations of the Committee; provided
, however , that no option shall be granted and no restricted stock
award shall be made to an individual for the larger number of shares than the
Committee shall recommend for such option or award, and that no person shall
receive options to purchase or restricted stock awards of more than 25% of the
total number of shares of Common Stock available under this Plan. The aggregate
dollar amount of incentive stock options which first becomes exercisable in any
calendar year is subject to limitations, as provided in Section 8(e) hereof.
The Committee shall adopt guidelines with respect to the nature, timing, and
size of grant of options and restricted stock awards under this Plan.

 

5.               AWARD OF STOCK APPRECIATION RIGHTS:

 

Upon the recommendation of the Committee, the
Board of Directors, at any time and from time to time when it shall deem it in
the best interest of the Bank to do so, may authorize the granting of
stock appreciation rights to such optionees who have been granted options under
this Plan as the Board shall select from among those individuals nominated by
the Committee as entitled to receive such rights. Each stock appreciation

 

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right shall relate to a specific option granted under this Plan and may be
granted concurrently with the option to which it relates, or, in the case of a
non-qualified stock option only, at any time prior to the exercise, termination
or expiration of such option.

 

The term “stock appreciation right” shall
mean the right to receive from the Bank, upon surrender of the option or a portion
thereof without payment to the Bank, an amount equal to the fair market value
on the exercise date of the total number of Ordinary Shares, or the value
(based on Book Value Per Share) on the exercise date of the total number of
Book Value Shares, for which the stock appreciation right is exercised, less
the exercise price which the optionee would have otherwise been required to pay
upon purchase of the relevant shares. The amount payable by the Bank upon
exercise of a stock appreciation right may be paid in cash, in ordinary
Shares in the case of an option granted with respect to ordinary Shares, in
Book Value Shares in the case of an option granted with respect to Book Value
Shares, or in any combination of cash and the type of stock with respect to which
the related option is granted, as the Committee in its sole discretion shall
determine. No fractional shares shall be issued under this section and the
optionee shall instead be entitled to receive a cash adjustment equal to the
same fraction of the fair market value per share (in the case of Ordinary
Shares) or the Book Value Per Share as of the exercise date or the most recent
Fiscal Quarter Date (in the case of Book Value Shares), as the case may be.

 

The Committee may fix, with respect to
rights granted under this Plan, such waiting periods, exercise dates, or other
limitations as it shall deem appropriate, provided  that no right
shall be exercisable after the expiration of the option to which it relates. In
addition, the Committee may impose a total prohibition on the exercise of
such rights for such period or periods as it, in its sole discretion, deems to
be in the best interest of the Bank. The shares involved in an option as to
which a stock appreciation right is related shall be used not more than once to
calculate the amounts to the received pursuant to an exercise of such right.
The right of an optionee to exercise an option shall be cancelled if and to the
extent that shares covered by such option are used to calculate amounts
received upon exercise of a related stock appreciation right.

 

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6.               RESTRICTED STOCK
AWARDS:

 

The Board of Directors, at any time and from
time to time, may authorize the issuance of restricted stock at no cash
cost, or for such payment as the Board of Directors, on the advice of the
Committee, shall recommend, to any individual eligible to receive the same,
from among those eligible individuals nominated by the Committee. The issuance
of restricted stock shall be pursuant to restricted stock agreements approved
by the Board of Directors, after reviewing the recommendations of the Committee,
containing provisions requiring that the restricted stock be resold at the
prices specified in such agreements to the Bank if the holder’s employment
terminates for any reason other than death, disability, or retirement, during a
specified period of time (which period shall be a minimum of one year)
following the issuance thereof. No individuals shall be issued a number of
shares of restricted stock greater than the number recommended by the
Committee, and no individual shall receive restricted stock awards and stock
options for more than 10% of the total number of shares of Common Stock
available under this Plan.

 

7.               STOCK:

 

The stock subject to the options, stock
appreciation rights, restricted stock awards, and other provisions of the Plan
shall be shares of the Bank’s authorized but unissued Common Stock and shares
of Common Stock held as treasury stock. As used in this Plan with respect to
stock options and stock appreciation rights only, the term “Common Stock” shall
mean such shares, which may be either Ordinary Shares or Book Value
Shares, (as such terms are defined hereinafter). Subject to adjustment in
accordance with the provisions of paragraph 8(h) hereof: (ii) the
total number of shares of Common Stock on which options or stock appreciation
rights may be granted or restricted stock awards may be made under
the Plan shall not exceed 250, 000 shares of Common Stock; and (ii) the total
number of shares of Common Stock on which options or stock appreciation rights may be
granted or restricted stock awards may be made under the Plan, to officers
who are also directors shall not exceed 200, 000 shares of Common Stock.

 

In the event that any outstanding option or
stock appreciation right under the Plan for any reason expires or is terminated
prior to the end of the period during which options or stock appreciation
rights may be granted, the shares of Common Stock allocable to the unexercised
portion of such

 

4

 

option or stock appreciation right may again be subjected to
options, or stock appreciation rights, or restricted stock awards under the Plan.
In the event that shares issued under a restricted stock award are repurchased
in accordance with the terms of the related restricted stock agreement, such
shares may again be subjected to options, stock appreciation rights, or
restricted stock awards under the Plan.

 

For purposes of this Plan and the stock
option and stock appreciation rights agreements described hereunder, the terms “Ordinary
Shares” and “Book Value Shares” shall have the following meanings: “Ordinary
Shares” means shares of the Bank’s Common Stock which are publicly tradeable. “Book
Value Shares” means shares of the Bank’s Common Stock which shall be authorized
for issuance and which shall have the same voting, dividend, and liquidation
rights as Ordinary Shares, except that they shall not be transferable except to
the Bank and except that they shall be subject to the repurchase provisions set
forth in the stock option agreements. Restricted stock awards shall be made
with respect to Ordinary Shares only.

 

8.               TERMS AND CONDITIONS OF STOCK OPTION
AGREEMENTS:

 

Stock options and stock appreciation rights
granted pursuant to the Plan shall be evidenced by agreements in such form as
the Board of Directors shall, from time to time, approve. Stock appreciation
rights shall be evidenced by an agreement amending the stock option agreement
to which such rights relate. Such agreement shall comply with and be subject to
the following terms and conditions:

 

(a)                                  Medium
of Payment:

 

Upon exercise
of the option, the option price shall be payable either (i) in United
States dollars in cash or by certified check, Bank draft or money order payable
to the order of the Bank, or (ii) in the discretion of the Committee,
through the delivery of shares of Common Stock of the Bank (which may be
either Ordinary Shares or Book Value Shares, or a combination of both) with a
value equal to the total option price or (iii) by a combination of the
methods described in (i) and (ii).

 

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(b)                                 Number
and Kind of Shares:

 

The agreement
shall state the total number and kind of shares of Common Stock to which it
pertains. The agreement shall provide that Book Value Shares shall be subject
to repurchase by the Bank, as described in such agreement, and that such shares
shall not be assignable or transferable.

 

(c)                                  Option
Price:

 

The option
price for Ordinary Shares covered by an incentive stock option granted
hereunder shall be not less than 100% of the fair market value (and not less
than 110% of the fair market value on the date of the Stock Option Agreement
for an optionee who owns on the date of the Stock Option Agreement, directly or
indirectly, stock representing more than 10% of the total combined voting power
of all classes of stock of the Bank) of such Shares on the date of the granting
of the incentive stock option as determined by the Committee. The option price
for Ordinary Shares covered by non-qualified stock options granted hereunder
shall be not less than 85% of the fair market value, as determined by the
Committee, of such Shares on the date of the granting of the non-qualified
stock option. The “fair market value” for Ordinary Shares shall be the last
reported sales price of the Common Stock on the NASDAQ National Market System
on the date the option is granted, or, if the Common Stock is not quoted on the
NASDAQ National Market System, the mean between the bid and asked prices in the
over-the-counter market on the date that the option is granted, or, in the
absence of such quotations or if the Common Stock is not publicly traded, such
other price as shall be determined by the Committee to the fair market value.

 

The option
price for any Book Value Shares covered by an incentive stock option shall be
not less than the “Book Value Per Share” on the “Fiscal Quarter Date”
coincident with or immediately preceding the date of the granting of the
option, which the Committee believes in good faith to be the fair market value
of such shares at the date of grant; provided, that in the case of an optionee
who owns on the date of the Stock Option Agreement, directly or indirectly,
stock representing more than 10% of the total combined voting power of all
classes

 

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of stock of the Bank, the option price shall
be not less than 110% of such Book Value Per Share. The option price for any
Book Value Share covered by a non-qualified stock option shall be not less than
85% of “Book Value Per Share” on the “Fiscal Quarter Date” coincident with or
immediately preceding the date of the granting of the option. The term “Book
Value Per Share” as of any given date means the common stockholders’ equity, as
stated in the consolidated financial statements of the Bank, as at the Fiscal
Quarter Date coincident with or immediately preceding such given date, divided
by the sum of the number of shares of the Bank’s Common Stock outstanding and
the number of Common Stock equivalents as of such Fiscal Quarter Date (which
calculation shall be made before giving effect to the sale or repurchase of
Book Value Shares on such Fiscal Quarter Date); provided, however,
that the Book Value Per Share, for the purpose of calculating the repurchase
price per share only, may be adjusted to such an extent as may be
determined by the Board of Directors of the Bank to preserve the benefit of the
arrangement for the participants and the Bank, if in the opinion of the Board
of Directors, after consultation with the Bank’s independent accountants,
changes in the Bank’s accounting policies, acquisitions, or other unusual or
extraordinary items have disproportionately and materially affected the number
of shares of the Bank’s common stock outstanding or the Bank’s common
stockholders’ equity. The term “Fiscal Quarter Date” means October 31, January 31,
April 30, or July 31 of any year or such other dates as the Bank may,
from time to time, elect as the end dates of the fiscal quarters of the Bank.

 

(d)                                 Term
of Options and Stock Appreciation Rights:

 

Each option
and related stock appreciation right granted under the plan shall expire not
more than 10 years from the date the option is granted; provided  that,
a stock appreciation right shall not be exercisable prior to the time the
related option could be exercised or after the time the related option expires
by its terms.

 

(e)                                  Date of Exercise:

 

The aggregate
fair market value (determined at the time the option is granted) of the
Ordinary

 

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Shares or the Book Value Shares with respect
to which incentive stock options are exercisable for the first time by an
option holder during any calendar year (under this Plan, and all other plans of
the Bank and its subsidiaries) shall not exceed $100,000. The Committee may in
its discretion provide at the time of grant that an option or stock
appreciation right may not be exercised in whole or in part for any
period or periods of time specified by the Committee; provided  that,
options shall not be exercisable until at least the first anniversary of their
grant. Except as may be so provided, any option or stock appreciation
right may be exercised in whole at any time or in part from time to
time during its term.

 

(f)                                    Acceleration:

 

(i)                                     Generally,  in the case of an option or stock
appreciation right not immediately exercisable in full, the Committee may in
its discretion accelerate the time at which an option or stock appreciation
right granted hereunder may be exercised; provided  that, in
all cases, options shall not exercisable until at least the first anniversary
of their grant.

 

(ii)                                  Upon
a Change in Control. In the event that a “change in control,” as
hereinafter defined, shall occur or shall, in the opinion of the Board of
Directors expressed by a formal resolution, be likely to occur, all options or
stock appreciation rights shall thereupon become exercisable and all repurchase
restrictions with respect to restricted stock shall lapse. For the purpose of
this paragraph (ii), “change in control” shall mean any of the following
transactions: (i) any consolidation, merger, or other corporate
reorganization of the Bank with or into another corporation if as a result of
the transaction the stockholders of the Bank immediately before the
transaction, acting jointly to the extent of their holdings of Common Stock of
the Bank immediately before the transaction, would not be able to elect a
majority of the members of the Board of Directors of the Bank or would not be
the beneficial owners, directly or indirectly, of 51% or more of the combined
voting power of the resulting corporation’s then outstanding voting securities;
(ii) any acquisition (by purchase, lease or otherwise) of all or
substantially all of the assets of the Bank by any person, firm or corporation
or group thereof acting jointly; or (iii) any purchase by any person,
firm, or corporation or group thereof acting

 

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jointly (who was not a controlling
stockholder of the Bank on August 1, 1988), of 25% or more of the combined
voting power of the Bank, if such purchase has not been approved by the Board
of Directors of the Bank.

 

(g)                                 Termination of Employment:

 

In the event
that an optionee’s employment by the Bank shall terminate, his option and stock
appreciation right shall terminate on the thirtieth day following termination
of employment, and, during such 30 day period, the option or stock appreciation
right shall be exercisable only to the extent it was exercisable on the date of
termination; provided, however, that if any termination of
employment is due to retirement with the consent of the Bank, the optionee
shall have the right, subject to the provisions of Paragraphs 8(d) and 8(f) hereof,
to exercise his option and stock appreciation right at any time within seven
months from the date of such optionee’s retirement as shall be specified in the
agreement, to the extent that the optionee was entitled to exercise the same
immediately prior to such retirement; and further provided, that if the
optionee shall die while in the employment of the Bank or within the period of
time after retirement with the consent of the Bank during which the optionee
was entitled to exercise the option and stock appreciation right as hereinabove
provided, the optionee’s estate, personal representative, or beneficiary shall
have the right, subject to the provisions of Paragraphs 8(d) and 8(f) hereof,
to exercise the option and stock appreciation right in full at any time within
seven months from the date of the optionee’s death.

 

Retirement by
an optionee at the optionee’s normal retirement date in accordance with the
provisions of the retirement plan of the Bank or a Subsidiary under which the
optionee is then covered or such earlier time as shall be specifically approved
by the Board of  Directors shall be
deemed to be a retirement with the consent of the Bank. Whether any other termination
of employment is to be considered a retirement with the consent of the Bank and
whether an authorized leave of absence or absence on military or government
service or for other reasons shall constitute a termination of employment for
the purposes of the Plan shall be determined by the Committee, which
determination shall be final and conclusive, unless otherwise determined by the
Board of Directors, and in any such event such determination of the Board of
Directors shall be final and conclusive. Employment by the Bank shall be deemed
to include employment by, and to continue

 

9

 

during any period in which an optionee is in
the employment of, a Subsidiary.

 

(h)                                 Recapitalization:

 

The aggregate
number of Ordinary Shares and Book Value Shares on which options and stock
appreciation rights may be granted to persons participating under the Plan
and to officers who are also directors, the number of shares thereof covered by
each outstanding option and stock appreciation right, and the price per share
thereof in each such option and stock appreciation right shall all be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock of the Bank resulting from a subdivision or
consolidation of shares or other capital adjustment, or the payment of a stock
dividend or other increase or decrease in such shares, effected without receipt
of consideration by the Bank, provided, however, that any
fractional shares resulting from any such adjustment shall be eliminated.

 

If the Bank
shall be the surviving or resulting corporation in any merger or consolidation,
any option granted hereunder shall pertain to and apply to the securities to
which a holder of the number of shares of Common Stock subject to the option or
stock appreciation right would have been entitled; but a dissolution or
liquidation of the Bank, or a merger or consolidation in which the Bank is not
the surviving or resulting corporation shall cause every option and stock
appreciation right outstanding hereunder to terminate, except that the
surviving or resulting corporation may, in its absolute and uncontrolled
discretion, tender options or stock appreciation rights to purchase its shares
on terms and conditions, both as to the number of shares and otherwise, which
shall substantially preserve the rights and benefits of any option or  stock appreciation right then outstanding
hereunder.

 

In the event
of a change in the Bank’s Common Stock which is limited to a change in the
designation thereof to “Capital Stock” or other similar designation, or to a
change in the par value thereof, or from par value to no par value, without
increase in the number of issued shares, the shares resulting from any such
change shall be deemed to be Common Stock within the meaning of the Plan.

 

10

 

(i)                                     Assignability:

 

No option or
related stock appreciation right shall be assignable or transferable except by
will or by the laws of descent and distribution. During the lifetime of on
optionee, the option or related stock appreciation right shall be exercisable
only by such optionee.

 

(j)                                     Employee’s
Agreement:

 

If, at the
time of the exercise of any option or stock appreciation right for shares of Common
Stock, in the opinion of counsel for the Bank, it is necessary or desirable, in
order to comply with any applicable laws or regulations relating to the sale of
securities, that the optionee exercising the option or stock appreciation right
shall agree to purchase the shares that are subject to the option or stock
appreciation right for investment only and not with any present intention to
resell the same and that the optionee will dispose of such shares only in
compliance with such laws and regulations, the optionee will, upon the request
of the Bank, execute and deliver to the Bank an agreement to such effect.

 

(k)                                  Rights as a
Stockholder:

 

An optionee
shall have no rights as a stockholder with respect to shares covered by the
optionee’s option or stock appreciation right until the date of the issuance of
the shares to the optionee and only after such shares are fully paid. No
adjustment will be made for cash dividends or other rights for which the record
date is prior to the date of such issuance.

 

(l)                                     Certain Tandem
Options Prohibited:

 

An incentive
stock option may not be granted in tandem with a non-qualified option on a
basis whereby the exercise of one affects the right to exercise the other.

 

(m)                               Other Provisions:

 

The stock
option agreements authorized under this Plan may contain such other
provisions including a provision to reacquire an option for cash as the
Committee shall deem advisable.

 

11

 

9.               OPTIONS AND RIGHTS IN SUBSTITUTION
FOR STOCK OPTIONS GRANTED BY OTHER CORPORATIONS:

 

Options and stock appreciation rights may be
granted under the Plan from time to time in substitution for stock options held
by employees of corporations who become or are about to become key employees of
the Bank or a Subsidiary as the result of a merger or consolidation of the
employing corporation with the Bank or a Subsidiary, or the acquisition by the
Bank or a Subsidiary of the assets of the employing corporation, or the
acquisition by the Bank or a Subsidiary of the stock of the employing
corporation as the result of which it becomes a Subsidiary. The terms and
conditions of the substitute options so granted may vary from the terms
and conditions set forth in Paragraph 8 of this Plan to such extent as the
Board of Directors at the time of grant may deem appropriate to conform,
in whole or in part, to the provisions of the options and stock appreciation
rights in substitution for which they are granted.

 

10.         TERM AND EFFECTIVENESS OF PLAN:

 

The Plan shall become effective on the date
it receives approval of the holders of a majority of the stock of the Bank. No
stock option shall be granted and no restricted stock shall be awarded or sold
pursuant to this Plan after May 17, 1998.

 

11.         AMENDMENTS:

 

The Board of Directors may from time to
time alter, amend, suspend, or discontinue this Plan or alter or amend any and
all option, stock appreciation rights, and restricted stock agreements granted
or made hereunder; provided, however, that no such action of the
Board of Directors may, without the approval of the stockholders, alter the
provisions of the Plan so as to (A) materially increase the benefits
accruing to participants under the Plan; (B) materially increase the
number of securities which may be issued under the Plan; or (C) materially
modify the requirements as to eligibility for participation in the Plan.

 

12.         APPLICATION OF FUNDS:

 

The proceeds received by the Bank from the
sale of Common Stock pursuant to options and restricted stock agreements will
be used for general corporate purposes.

 

12

 

13.         NO OBLIGATION TO EXERCISE OPTION OR RIGHT:

 

The granting of an option or related stock
appreciation right shall impose no obligation upon the optionee to exercise
such an option or stock appreciation right.

 

14.         CERTAIN TAX MATTERS:

 

(a)                                 Notification of Certain Events:

 

The agreements
used under the Plan shall require the holder of an option or restricted stock
to notify the Bank of the following events within 10 days of the occurrence
thereof:

 

(i)             the making of an
election under Section 83(b) of the Code relating to an election to
include in gross income in the year of transfer the amounts specified in Section 83(b);
or

 

(ii)          the disposition of any stock
issued pursuant to the exercise of an incentive stock option within less than
two years of the grant of the option or one year of the exercise of the option.

 

(b)         Withholding:

 

Whenever under
the Plan shares of Common Stock are to be delivered upon exercise of a
non-qualified option or whenever a stock appreciation right is exercised or a
restricted stock award is made, the Bank shall be entitled to require as a
condition of delivery that the option holder remit an amount sufficient to
satisfy all federal, state, and other governmental withholding tax requirements
related thereto. In the event a disqualifying disposition covered by paragraph (a) (ii) is
made, the person making such disposition shall remit to the Bank an amount
sufficient to satisfy all federal, state, and other withholding taxes thereby
incurred; provided that in lieu of or in addition to the foregoing, the
Bank shall have the right to withhold such sums from compensation otherwise due
to the Optionee.

 

13Exhibit
10.2

AMENDMENT NUMBER 1 TO

THE WASHINGTON SAVINGS BANK, F.S.B. 1988 STOCK
INCENTIVE PLAN

 

                                WSB Holdings, Inc.
sponsors The Washington Savings Bank, F.S.B. 1988 Stock Incentive Plan (the “Plan”).  The Plan is hereby amended as set forth
below:

 

1.               All references to “The
Washington Savings Bank, F.S.B.” and the “Bank” shall be replaced with and
refer to “WSB Holdings, Inc.”

 

2.               Except as amended above, the
Plan shall remain in full force and effect.

 

                IN WITNESS WHEREOF, WSB Holdings, Inc.
has executed this Plan Amendment Number 1 to The Washington Savings Bank,
F.S.B. 1988 Stock Incentive Plan as of this 16th day of January, 2008.

 

 

	
   

  	
  WSB
  Holdings, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Phillip C. Bowman

  
	
   

  	
   

  	
  Phillip
  C. Bowman

  
	
   

  	
   

  	
  Chief
  Executive Officer

  

 

	
  ATTEST:

  	
   

  
	
   

  	
   

  
	
  /s/
  Cheryl Golden

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