Document:

EX-10.3

Exhibit (10.3)

THE McGRAW-HILL COMPANIES, INC.

2002 Stock Incentive Plan

(Amended and restated as of January 28, 2009)

 

 

Table of Contents

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	SECTION 1. Purpose; Definitions
	 	 	1	 
	 
	 	 	 	 
	SECTION 2. Administration
	 	 	6	 
	 
	 	 	 	 
	SECTION 3. Stock Subject to Plan
	 	 	8	 
	 
	 	 	 	 
	SECTION 4. Eligibility
	 	 	10	 
	 
	 	 	 	 
	SECTION 5. Stock Options
	 	 	11	 
	 
	 	 	 	 
	(a) Option Price
	 	 	11	 
	(b) Option Term
	 	 	11	 
	(c) Exercisability
	 	 	11	 
	(d) Method of Exercise
	 	 	12	 
	(e) Non-Transferability of Options
	 	 	13	 
	(f) Termination by Death
	 	 	13	 
	(g) Termination by Reason of Disability
	 	 	14	 
	(h) Termination by Reason of Retirement
	 	 	14	 
	(i) Termination by Reason of a Division Sale
	 	 	14	 
	(j) Cause
	 	 	15	 
	(k) Other Termination
	 	 	15	 
	 
	 	 	 	 
	SECTION 6. Stock Appreciation Rights
	 	 	15	 
	 
	 	 	 	 
	(a) In General
	 	 	15	 
	(b) Stock Appreciation Rights Granted Alone
	 	 	16	 
	(c) Stock Appreciation Rights Granted in Tandem with Stock Options
	 	 	16	 
	(d) Stock Appreciation Rights Granted in Tandem with Awards Other Than Stock Options
	 	 	17	 
	(e) Stock Appreciation Rights Defined
	 	 	17	 
	 
	 	 	 	 
	SECTION 7. Stock Awards
	 	 	18	 
	 
	 	 	 	 
	(a) Stock Awards in General
	 	 	18	 
	(b) Performance Stock
	 	 	18	 
	(c) Restricted Stock
	 	 	18	 
	(d) Conditions of Stock Awards
	 	 	19	 
	(e) Restrictions and Conditions of Shares
	 	 	19	 
	 
	 	 	 	 
	SECTION 8. Other Stock-Based Awards
	 	 	21	 
	 
	 	 	 	 
	(a) Other Stock-Based Awards in General
	 	 	21	 
	(b) Terms and Conditions
	 	 	22	 

 

 

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	SECTION 9. Qualifying Awards
	 	 	23	 
	(a) General
	 	 	23	 
	(b) Qualifying Stock Options and Stock Appreciation Rights
	 	 	23	 
	(c) Qualifying Awards other than Stock Options and Stock Appreciation Rights
	 	 	24	 
	 
	 	 	 	 
	SECTION 10. Change In Control Provisions
	 	 	25	 
	(a) Impact of Event
	 	 	26	 
	(b) Definition of “Change in Control”
	 	 	27	 
	(c) Change in Control Price
	 	 	29	 
	 
	 	 	 	 
	SECTION 11. Amendments and Termination
	 	 	30	 
	 
	 	 	 	 
	SECTION 12. Unfunded Status of Plan
	 	 	31	 
	 
	 	 	 	 
	SECTION 13. General Provisions
	 	 	31	 
	 
	 	 	 	 
	(a) Stock Subject to Awards
	 	 	31	 
	(b) Other Plans
	 	 	32	 
	(c) Continued Employment
	 	 	32	 
	(d) Taxes and Withholding
	 	 	32	 
	(e) Governing Law
	 	 	33	 
	(f) Computation of Benefits
	 	 	33	 
	(g) Division Sale
	 	 	33	 
	(h) Foreign Law
	 	 	33	 
	 
	 	 	 	 
	SECTION 14. Plan Effective Date and Duration
	 	 	34	 

 

 

THE McGRAW-HILL COMPANIES, INC.

2002 Stock Incentive Plan

          SECTION 1. Purpose; Definitions.

          The purpose of The McGraw-Hill Companies, Inc. 2002 Stock Incentive Plan is to enable the
Company to offer its employees long-term performance-based stock incentives and other equity
interests in McGraw-Hill, thereby attracting, retaining and rewarding such employees, and
strengthening the mutuality of interests between employees and McGraw-Hill’s shareholders.

          For purposes of the Plan, the following terms shall be defined as set forth below:

          (a) “Aggregate Limit” shall have the meaning set forth in Section 3(a).

          (b) “Amended Plan” shall have the meaning set forth in Section 14.

          (c) “Amended Plan Effective Date” means the date of McGraw-Hill’s 2004 Annual Meeting
of Shareholders.

          (d) “Award” means a Stock Option, Stock Appreciation Right, grant of Performance
Stock, Restricted Stock or Deferred Stock, Dividend Equivalent or other Stock-Based Award or
Qualifying Award.

          (e) “Award Documentation” shall have the meaning set forth in Section 2(d).

          (f) “Board” means the Board of Directors of McGraw-Hill.

          (g) “Cause” shall mean, except as otherwise defined in an employee’s

 

 

2

employment
agreement or the Award Documentation in respect of an Award, the employee’s misconduct in respect
of the employee’s obligations to the Company or other acts of misconduct by the employee occurring
during the course of the employee’s employment, which in either case results in or could reasonably
be expected to result in material damage to the property, business or reputation of the Company;
provided that in no event shall unsatisfactory job performance alone be deemed to be
“Cause”; and provided further that no termination of employment that is carried out
at the request of a person seeking to accomplish a Change in Control or otherwise in anticipation
of a Change in Control shall be deemed to be for “Cause”.

          (h) “Change in Control” and “Change in Control Price” shall have meanings set
forth, respectively, in Sections 10(b) and (c).

          (i) “Code” means the Internal Revenue Code of 1986, as amended from time to time, and
any successor thereto.

          (j) “Commission” means the Securities and Exchange Commission or any successor
thereto.

          (k) “Committee” means the Compensation Committee of the Board. If at any time no
Committee shall be in office, then, subject to the applicable listing requirements of the New York
Stock Exchange, the functions of the Committee specified in the Plan shall be exercised by the
Board or by a committee of Board members.

          (l) “Company” means McGraw-Hill and all domestic and foreign corporations,
partnerships and other legal entities of which at least 20% of the voting securities
or ownership interests in such corporations, partnerships or other legal entities are owned
directly

 

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or indirectly by McGraw-Hill.

          (m) “Deferred Stock” means a right to receive on a specified date following the
settlement date of an Award, at the election of the participant or as required by the terms of such
Award, an amount based on the value of the number of shares of Stock (or cash or other property in
consideration thereof) due upon settlement of such Award (or portion thereof). Payments in respect
of Deferred Stock may be in cash, Stock or other property, or any combination thereof.

          (n) “Disability” means, with respect to an Award, disability as defined under the
Company’s long-term disability plan applicable to the recipient of such Award.

          (o) “Dividend Equivalent” means a right attached to an Award to receive an amount
based on the value of the regular cash dividend paid on an equivalent number of shares of Stock.
Dividend Equivalents may be subject to the same vesting and other provisions of the underlying
Award and may be paid in cash, either currently or deferred, or shares of Stock or Deferred Stock.

          (p) “Division Sale” means the sale, transfer, or other disposition to a third party
not affiliated with the Company of substantially all of the assets or all of the capital stock of a
business unit of the Company, but excluding a Change in Control.

          (q) “Early Retirement” means retirement from the Company on or after attaining age 55,
but before attaining age 65, after having completed at least 10 years of service with the Company
and being eligible to receive Company pension benefits.

          (r) “Exchange Act” means the Securities Exchange Act of 1934, as amended

 

4

from time to
time, and any successor thereto.

          (s) “Fair Market Value” for purposes of this Plan, unless otherwise required by any
applicable provision of the Code or any regulations issued thereunder, shall mean, as of any given
date, the last price at which the Stock is sold on the New York Stock Exchange on such date, or, if
there is no such sale on such date, the last price at which the Stock is sold on the New York Stock
Exchange prior to such date.

          (t) “Individual Limit” shall have the meaning set forth in Section 3(f).

          (u) “McGraw-Hill” means The McGraw-Hill Companies, Inc., a corporation organized under
the laws of the State of New York, or any successor corporation.

          (v) “1993 Plan” means The McGraw-Hill Companies, Inc. 1993 Employee Stock Incentive
Plan.

          (w) “1993 Plan Award” means an award granted under the 1993 Plan.

          (x) “1993 Plan Stock Option” means a stock option granted under the 1993 Plan.

          (y) “Normal Retirement” means retirement from active employment with the Company on or
after age 65.

          (z) “Other Stock-Based Award” means an award under Section 8 that is payable in cash
or Stock and is valued in whole or in part by reference to, or is otherwise based on, Stock.

          (aa) “Outstanding Common Stock” shall have the meaning set forth in

 

5

Section 10(b)(i).

          (bb) “Outstanding Voting Securities” shall have the meaning set forth in Section
10(b)(i).

          (cc) “Performance Stock” means an award of shares of Stock under Section 7 whose
vesting and forfeiture restrictions relate to the attainment of performance goals and objectives.

          (dd) “Plan” means The McGraw-Hill Companies, Inc. 2002 Stock Incentive Plan, as
amended from time to time, including any rules, guidelines or interpretations thereof adopted by
the Committee.

          (ee) “Plan Effective Date” means April 24, 2002.

          (ff) “Qualifying Award” means an Award made in accordance with the provisions of
Section 9.

          (gg) “Restricted Stock” means an award of shares of Stock under Section 7 whose
vesting and forfeiture restrictions relate to the participant’s continued service with the Company
for a specified period of time.

          (hh) “Restriction Period” shall have the meaning set forth in Section 7(e)(ii).

          (ii) “Retirement” means Normal or Early Retirement.

          (jj) “Stock” means the Common Stock, $1.00 par value per share, of McGraw-Hill.

 

6

          (kk) “Stock Award” means an award of Performance Stock or Restricted Stock under
Section 7.

          (ll) “Stock Appreciation Right” shall have the meaning set forth in Section 6(e).

          (mm) “Stock Option” means any option to purchase shares of Stock granted under Section
5.

          SECTION 2. Administration.

          (a) The Plan shall be administered by the Committee. The Committee shall have full authority
to grant Awards, pursuant to the terms of the Plan, to officers and other employees eligible under
Section 4.

          In particular, the Committee shall have the authority:

               (i) to select the officers and other employees of the Company to whom Awards
may from time to time be granted;

               (ii) to determine whether and to what extent the individual types of Awards are
to be granted to one or more eligible employees;

               (iii) to determine the number of shares to be covered by each Award;

               (iv) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any Award (including, but not limited to, the share
price, any restriction or limitation, the granting of restoration options, the
granting of

 

7

Dividend Equivalents, or any vesting acceleration or forfeiture waiver,
based on such factors as the Committee shall determine); and

               (v) to determine whether, to what extent and under what circumstances an Award
may be settled in cash.

          (b) Subject to Section 11 hereof, the Committee shall have the authority to adopt, alter and
repeal such administrative rules, guidelines and practices governing the Plan as it shall, from
time to time, deem advisable; to interpret the terms and provisions of the Plan and any Award (and
any agreements relating thereto); and to otherwise supervise the administration of the Plan. All
actions by the Committee hereunder shall be undertaken in the sole discretion of the Committee and,
absent manifest error, shall be final and binding on all interested persons.

          (c) Subject to the applicable listing requirements of the New York Stock Exchange, the
Committee may, but need not, from time to time delegate some or all of its authority under the Plan
to one or more members of the Committee or to one or more officers of the Company;
provided, that the Committee may not delegate its authority under Section 2(b) or its
authority to make Qualifying Awards or Awards to participants who are delegated authority hereunder
or who are subject to the reporting rules under Section 16(a) of the Exchange Act at the time the
Award is made. Any delegation hereunder shall be subject to the restrictions and limits that the
Committee specifies at the time of such delegation or thereafter. Nothing in the Plan shall be
construed as obligating the Committee to delegate any authority to any person or persons hereunder.
The Committee may, at any time, rescind any delegation hereunder and any
person or persons who are delegated authority hereunder shall, at all times, serve in such
capacity at the pleasure of the Committee. Any action undertaken by any person or persons in

 

8

accordance with a delegation hereunder shall have the same force and effect as if undertaken
directly by the Committee, and any reference in the Plan to the Committee shall, to the extent
consistent with the terms and limitations of such delegation, be deemed to include a reference to
such person or persons.

          (d) In connection with the grant of an Award, the Committee shall specify the form of award
documentation (the “Award Documentation”) to set forth the terms and conditions of the
Award. Award Documentation may include, without limitation, an agreement signed by the participant
and the Company or a grant or award notice signed only by the Company. Award Documentation may be
in written, electronic or other form approved by the Committee.

          SECTION 3. Stock Subject to Plan.

          (a) The total number of shares of Stock reserved and available for grants of Awards under the
Plan on or after the Amended Plan Effective Date (the “Aggregate Limit”) shall equal the
number of shares of Stock reserved and available for grants of Awards under the Plan immediately
prior to the Amended Plan Effective Date, increased by eight million (8,000,000) shares of Stock.
Such shares may consist, in whole or in part, of authorized and unissued shares or treasury shares.

          (b) Shares of Stock subject to an Award (other than a Stock Option, Stock Appreciation Right
or Dividend Equivalent), or shares of Stock paid in settlement of a Dividend
Equivalent, shall reduce the Aggregate Limit by one share for each such share granted or paid
on or after the Amended Plan Effective Date. Shares of Stock subject to a Stock Option or Stock
Appreciation Right shall reduce the Aggregate Limit by one-third of a share for each such share
granted on or after the Amended Plan Effective Date. Notwithstanding the foregoing, the

 

9

increase
in the Aggregate Limit under Section 3(a) by eight million (8,000,000) shares of Stock shall not
increase the total number of shares of Stock that may be issued under the Plan by more than
nineteen million (19,000,000) shares of Stock.

          (c) Notwithstanding Section 3(b), the Aggregate Limit shall not be reduced by:

               (i) shares of Stock subject to an Award payable only in cash or property other
than Stock, or other Award for which shareholder approval is not required under the
listing standards of the New York Stock Exchange, subject to the applicable
conditions therefore; or

               (ii) in the case of Awards granted in tandem with each other, shares of Stock
in excess of the number of shares of Stock issuable thereunder.

          (d) The Aggregate Limit shall be increased by the number of shares of Stock in the case of an
Award or 1993 Plan Award (other than a Stock Option, Stock Appreciation Right or 1993 Plan Stock
Option), or by one-third of the number of shares of Stock in the case of a Stock Option, Stock
Appreciation Right or 1993 Plan Stock Option, that are:

               (i) forfeited, settled in cash or property other than Stock, or otherwise not
distributable under an Award or 1993 Plan Award;

               (ii) tendered or withheld to pay the exercise or purchase price of an Award or
1993 Plan Award or to satisfy applicable wage or other required tax withholding in
connection with the exercise, vesting or payment of, or other event related to, an
Award or 1993 Plan Award; or

 

10

               (iii) repurchased by the Company with the option proceeds (determined under
generally accepted accounting principles) in respect of the exercise of a Stock
Option or 1993 Plan Stock Option; provided, however, that the
Aggregate Limit shall not be increased under this Section 3(d)(iii) in respect of
any Stock Option or 1993 Stock Option by a number of shares of Stock greater than
(A) the amount of such proceeds divided by (B) the Fair Market Value on the date of
exercise.

          (e) In the event of any merger, reorganization, consolidation, recapitalization, Stock
dividend or other dividend other than the regular cash dividend, Stock split, spin-off or other
change in corporate structure affecting the Stock, including any equity restructuring within the
meaning of Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment,
and the applicable guidance and interpretations thereunder, or any successor thereto, the aggregate
number and the kind of shares reserved or available for issuance under the Plan, the maximum number
of shares issuable to any single participant, the number, kind and, where applicable, option or
exercise price of shares subject to outstanding Awards, will be substituted or adjusted by the
Committee.

          (f) No eligible person may be granted under the Plan in any 60-month period Stock Options or
Stock Appreciation Rights which, in the aggregate, cover more than four
million (4,000,000) shares of Stock (the “Individual Limit”).

          SECTION 4. Eligibility.

          Officers and other employees of the Company (but excluding individuals who serve only as a
director on the Board) who are responsible for or contribute to the management,

 

11

growth or profitability of the business of the Company are eligible for Awards. Eligibility
under the Plan shall be determined by the Committee.

          SECTION 5. Stock Options.

          Stock Options may be granted alone or in tandem with other Awards (including Stock
Appreciation Rights), and may be granted in addition to, or in substitution for, other types of
Awards. Stock Options shall be subject to the following terms and conditions and contain such
additional terms and conditions, including the grant of restoration options, not inconsistent with
the terms of the Plan, as the Committee shall determine:

          (a) Option Price. The option price per share of Stock subject to a Stock Option shall
be determined by the Committee at the time of grant but, except in the case of Stock Options
granted in substitution of awards granted by a business or entity that is acquired by, or whose
assets are acquired by, the Company, shall be not less than 100% of the Fair Market Value of the
Stock at grant.

          (b) Option Term. The option term of each Stock Option shall be fixed by the
Committee; provided however, that no Stock Option shall be exercisable more than
ten years after the date of grant.

          (c)
Exercisability.

     (i) Stock Options shall be exercisable at such time or times and subject to
such terms and conditions as shall be determined by the Committee at or after grant;
provided, however, that, except as otherwise provided herein, unless
the Committee otherwise determines at or after the time of grant, no Stock

 

12

Option shall be exercisable prior to the first anniversary of the date of grant.

     (ii) Notwithstanding anything in this Section 5 to the contrary, if an optionee
dies during a post-termination exercise period under Section 5(g), (h), (i) or (k),
any unexercised Stock Option held by such optionee shall thereafter be exercisable,
to the extent to which it was exercisable at the time of death, for a period of one
year from the date of death.

            (d) Method of Exercise.

     (i) Subject to the applicable installment exercise and waiting period
provisions apply under Section 5(c), Stock Options may be exercised in whole or in
part at any time during the option term, by giving written notice of exercise to the
Company specifying the number of shares to be purchased. Subject to Section
5(d)(iv), such notice shall be accompanied by payment in full of the option price in
such form as the Committee may accept.

     (ii) If and to the extent determined by the Committee at or after grant,
payment in full or in part may also be made by withholding shares of Stock
otherwise issuable in connection with the exercise of the Stock Option or in shares of unrestricted Stock duly owned by the optionee (and for which the optionee
has good title free and clear of any liens and encumbrances) based, in each such
case, on the Fair Market Value of the Stock on the last trading date preceding
payment. Unless otherwise determined by the Committee at or after the time of
grant, such payment may be made by constructive delivery of such shares of owned and
unrestricted Stock pursuant to an attestation or other similar

 

13

form as determined by the Committee.

     (iii) Subject to Section 5(d)(iv), no shares of Stock shall be distributed
until payment therefor, as provided herein, has been made and, if requested, the
optionee has given the representation described in Section 13(a). An optionee shall
not have rights to dividends or other rights of a shareholder with respect to shares
subject to the Stock Option prior to issuance or reissuance of such shares.

     (iv) Stock Options may also be exercised pursuant to a cashless exercise
procedure approved by the Committee pursuant to which shares of Stock are sold by a
broker or other appropriate third party on the market with the proceeds of such sale
(or, if applicable, extension of credit pending such sale) remitted to the Company
to pay the exercise price of the Stock Option and the applicable withholding taxes,
and the balance of such proceeds (less commissions and other expenses of such sale)
paid to the optionee in cash or shares of Stock.

          (e) Non-Transferability of Options. Unless the Committee determines otherwise at or after grant, no Stock Option shall be
transferable by the optionee otherwise than by will or by the laws of descent and distribution,
and, unless the Committee determines otherwise at or after grant, all Stock Options shall be
exercisable, during the optionee’s lifetime, only by the optionee.

          (f) Termination by Death. Unless the Committee otherwise determines at or after the
time of grant, if an optionee’s employment by the Company terminates by reason of death, any Stock
Option held by such optionee shall be fully vested and may thereafter be

 

14

exercised by the legal representative of the estate or by the legatee of the optionee under the will of the optionee,
notwithstanding anything to the contrary in this Section 5, for a period of one year (or such other
period as the Committee may specify at or after grant) from the date of death.

          (g) Termination by Reason of Disability. Unless the Committee otherwise determines at
or after the time of grant, if an optionee’s employment by the Company terminates by reason of
Disability, any Stock Option held by such optionee shall be fully vested and may thereafter be
exercised by the optionee, subject to Section 5(c)(ii), until the expiration of the option term.

          (h) Termination by Reason of Retirement. Unless the Committee otherwise determines at
or after the time of grant, if an optionee’s employment by the Company terminates by reason of
Normal Retirement, any Stock Option held by such optionee shall be fully vested and may thereafter
be exercised by the optionee, subject to Section 5(c)(ii), until the expiration of the option term.
Unless the Committee otherwise determines at or after the time of grant, if an optionee’s employment with
the Company terminates by reason of Early Retirement, any Stock Option held by such optionee may
thereafter be exercised by the optionee to the extent it was exercisable at the date of retirement,
subject to Section 5(c)(ii), until the expiration of the option term. If and only if the Committee
so approves at the time of Early Retirement, if an optionee’s employment with the Company
terminates by reason of Early Retirement, any Stock Option held by the optionee shall be fully
vested and may thereafter be exercised by the optionee as provided above.

          (i) Termination by Reason of a Division Sale. Unless the Committee otherwise
determines at or after the time of grant, if an optionee’s employment by the Company

 

15

terminates by reason of a Division Sale, any Stock Option held by such optionee shall be fully vested and may
thereafter be exercised by the optionee, subject to Section 5(c)(ii), for a period of six months
from the date of such termination of employment or until the expiration of the option term,
whichever period is the shorter; provided, however, that, if the optionee shall be,
on the date of the Division Sale, eligible for Normal Retirement or Early Retirement, any
unexercised Stock Option held by such optionee may thereafter be exercised by the optionee, subject
to Section 5(c)(ii), until the expiration of the option term.

          (j) Cause. If an optionee’s employment with the Company is involuntarily terminated
by the Company for Cause, the Stock Option shall thereupon terminate and shall not be exercisable
thereafter.

          (k) Other Termination. Unless the Committee otherwise determines at or after the time
of grant, if an optionee’s employment terminates for any reason other than death, Disability,
Retirement, Division Sale or for Cause, any Stock Option held by such optionee may thereafter be
exercised by the optionee to the extent it was exercisable at the date of termination, subject to
Section 5(c)(ii), for a period of six months from the date of such termination of employment or
until the expiration of the option term, whichever period is the shorter.

          SECTION 6. Stock Appreciation Rights.

          (a) In General. Stock Appreciation Rights may be granted alone or in tandem with
other Awards (including Stock Options), and may be granted in addition to, or in substitution for,
other types of Awards. The form of payment of Stock Appreciation Rights may be specified by the
Committee at or after the time of grant, or the Committee may specify at or after grant that a
participant may elect the form of payment at the time of the exercise.

 

16

           (b) Stock Appreciation Rights Granted Alone. Stock Appreciation Rights granted alone
shall be subject, where applicable, to the terms and conditions of Section 5 applicable to Stock
Options and shall contain such additional terms and conditions not inconsistent with the terms of
the Plan, as the Committee shall determine.

          (c) Stock Appreciation Rights Granted in Tandem with Stock Options. Stock
Appreciation Rights granted in tandem with Stock Options shall be subject to the following terms
and conditions and shall contain such additional terms and conditions not inconsistent with the
terms of the Plan, as the Committee shall determine:

          (i) Grant. Stock Appreciation Rights granted in tandem with Stock
Options may be granted at or after the time of grant of such Stock Options.

          (ii) Exercise.

          (A) Stock Appreciation Rights granted in tandem with Stock Options
shall be exercisable only at such time or times and to the extent that the
Stock Options are exercisable in accordance with Section 5 and this Section
6. The Committee may grant in tandem with Stock Options conditional Stock
Appreciation Rights that become exercisable only in the event of a Change in
Control, subject to such terms and conditions as the Committee may specify
at or after grant.

          (B) Stock Appreciation Rights granted in tandem with Stock Options may
be exercised by giving written notice of exercise to the Company specifying
the number of shares for which a Stock Appreciation Right is being exercised
and surrendering the applicable Stock Option (or

 

17

portion thereof). Such Stock Option shall no longer be exercisable upon and to the extent of the exercise of such Stock Appreciation Right.

          (C) Stock Appreciation Rights granted in tandem with Stock Options
shall terminate and no longer be exercisable upon and to the extent of the
termination or exercise of such Stock Options; provided that, unless
the Committee otherwise determines at or after the time of grant, a Stock
Appreciation Right granted with respect to less than the full number of
shares covered by a Stock Option shall only terminate to the extent that the
number of shares covered by an exercise or termination of the Stock Option
exceeds the number of shares not covered by the Stock Appreciation Right.

          (iii) Transferability. Stock Appreciation Rights granted in tandem
with Stock Options shall be transferable only when and to the extent such Stock
Options would be transferable under Section 5(e).

          (d) Stock Appreciation Rights Granted in Tandem with Awards Other Than Stock Options.
Stock Appreciation Rights granted in tandem with Awards other than Stock Options shall be subject
to such terms and conditions as the Committee shall establish at or after the time of grant.

          (e) Stock Appreciation Rights Defined. As used in the Plan, the term “Stock Appreciation Right” shall mean the right
granted under this Section 6 to receive from the Company, upon exercise of such right (or portion
thereof), an amount, which may be paid in cash or shares of Stock (or a combination of cash and
Stock), equal to (i) the Fair Market Value,

 

18

as of the date of exercise, of the shares of Stock covered by such right (or such portion thereof), less (ii) the aggregate exercise price of such
right (or such portion thereof).

          SECTION 7. Stock Awards.

          (a) Stock Awards in General. Stock Awards may be of two types: (i) Performance Stock
and (ii) Restricted Stock. The Committee shall have authority to award to any participant
Performance Stock, Restricted Stock or both types of Stock Awards, and such Stock Awards may be
granted alone or in tandem with other Awards, and may be granted in addition to, or in substitution
for, other types of Awards. The Committee shall determine the eligible persons to whom, and the
time or times at which, grants of Stock Awards will be made, the number of shares subject to Stock
Awards, the price (if any) to be paid by the recipient (subject to Section 7(d)), the time or times
within which Stock Awards may be subject to forfeiture, the performance goals and objectives and
performance periods applicable to, the vesting schedule and rights to acceleration of, and all
other terms and conditions of the Stock Awards. The provisions of Stock Awards need not be the
same with respect to each recipient, and, with respect to individual recipients, need not be the
same in subsequent years.

          (b) Performance Stock. Performance Stock is an award of restricted performance shares
or other award of Stock whose vesting and forfeiture restrictions are related to the attainment of
one or more performance goals and objectives (including the goals and objectives described in
Section 9(c)(i)) and such other terms and conditions as may be specified by the Committee at or
after the date of grant.

          (c) Restricted Stock. Restricted Stock is an award of Stock whose vesting and
forfeiture restrictions are related to the participant’s continued service with the Company for a

 

19

specified period of time and such other terms and conditions as may be specified by the Committee
at or after the date of grant.

          (d) Conditions of Stock Awards. Stock Awards shall be subject to the following
conditions:

     (i) The purchase price, if any, for shares of Stock subject to a Stock Award
shall be set by the Committee at the time of grant.

     (ii) A participant who is selected to receive a Stock Award may be required, as
a condition to receipt of such Stock Award, to execute and to deliver to the Company
the applicable Award Documentation, and to pay whatever price (if any) is required
under Section 7(d)(i).

     (iii) Unless the Committee determines otherwise, in respect of
the shares subject to a Stock Award, the Company shall provide for a book entry
on behalf of the participant. The book entry in respect of shares subject to a
Stock Award shall be subject to the same limitations contained in the Stock Award.

          (e) Restrictions and Conditions of Shares. The shares subject to a Stock Award shall
be subject to the following restrictions and conditions:

     (i) Unless the Committee determines otherwise at or after the time of grant,
such shares shall not vest prior to the first anniversary of the date of grant.
Except in the case of Restricted Stock subject to which the aggregate number of shares does not exceed five percent of the Aggregate Limit, (A) the shares subject
to Restricted Stock shall not vest earlier than in pro rata

 

20

installments over a period of three years and (B) notwithstanding anything in Section 7(e)(v) to the
contrary, the Committee shall not waive or accelerate vesting and forfeiture
restrictions for shares subject to Restricted Stock, other than in connection with
death, Disability, Retirement, termination of employment, sale of the business unit
or Change in Control.

     (ii) Subject to the provisions of this Plan and the Award Documentation, during
a period set by the Committee commencing with the date of grant (the
“Restriction Period”), the participant shall not be permitted to sell,
transfer, pledge or assign such shares. Within these limits, the Committee may
provide for the lapse of such restrictions in installments and may accelerate or
waive such restrictions in whole or in part, based on service, performance or such
other factors or criteria as the Committee may determine.

     (iii) Except as provided in Section 7(e)(ii) and the applicable Award
Documentation, the participant shall have, with respect to such shares, the right to
vote and to receive payment of any cash dividends in cash or in the form of Dividend
Equivalents or such other form as the Committee may determine at or after grant.
Such dividends or Dividend Equivalents may be reinvested in additional Stock Awards
subject to the same vesting and performance conditions as the underlying Stock
Awards, in the discretion of the Committee. Dividends or Dividend Equivalents in
property other than cash shall be subject to the same vesting and forfeiture
conditions as the underlying Stock Awards, unless the Committee determines otherwise
at or after grant.

 

21

     (iv) Subject to the applicable provisions of the Award Documentation and this
Section 7, upon termination of a participant’s employment with the Company for any
reason during the Restriction Period, all such shares still subject to restriction
shall vest or be forfeited in accordance with the terms and conditions established
by the Committee at or after grant.

     (v) In the event of hardship or other special circumstances of a participant
whose employment with the Company is involuntarily terminated (other than for
Cause), the Committee may waive in whole or in part any or all remaining
restrictions with respect to any such shares of the participant.

     (vi) If and when the Restriction Period expires without a prior forfeiture of
any such shares, such remaining shares shall be delivered to the participant, net of
applicable withholding taxes.

          SECTION 8. Other Stock-Based Awards.

          (a) Other Stock-Based Awards in General. Other awards of Stock and other awards that are payable in cash or Stock and are valued in
whole or in part by reference to, or are otherwise based in whole or in part on, Stock (“Other
Stock-Based Awards”), including, without limitation, Deferred Stock, Dividend Equivalents, cash
or Stock settled performance share units and restricted share units, shares valued by reference to
subsidiary performance, and phantom stock and similar units, may be granted alone or in tandem with
other Awards, and may be granted in addition to, or in substitution for, other types of Awards.

          Subject to the provisions of the Plan, the Committee shall have authority to

 

22

determine the persons to whom and the time or times at which Other Stock-Based Awards shall be made, the number
of shares of Stock to be awarded, the cash payment to be made pursuant to, and all other conditions
of, Other Stock-Based Awards.

          The provisions of Other Stock-Based Awards need not be the same with respect to each
recipient.

          (b) Terms and Conditions. Other Stock-Based Awards shall be subject to the following terms and conditions:

     (i) Subject to the provisions of this Plan and the applicable Award
Documentation, participants’ rights with respect to Other Stock-Based Awards,
including the shares subject to Other Stock-Based Awards, may not be sold, assigned,
transferred, pledged or otherwise encumbered prior to the date on which the shares
are distributed to the participant, or, if later, the date on which any applicable
restriction, performance or deferral period lapses.

     (ii) Unless the Committee otherwise determines at the time of award, subject to
the provisions of this Plan and the applicable Award Documentation, recipients of
Other Stock-Based Award shall be entitled to receive, currently or on a deferred
basis, dividends or Dividend Equivalents with respect to the number of shares or
deemed number of shares covered by Other Stock-Based Awards.

     (iii) Other Stock-Based Awards and any cash payments or Stock covered by Other
Stock-Based Awards shall vest or be forfeited to the

 

23

extent so provided in the applicable Award Documentation, as determined by the Committee.

     (iv) In the event of the participant’s Retirement, Disability or death, or in
cases of special circumstances, the Committee may waive in whole or in part any or
all of the limitations imposed hereunder (if any) with respect to any or all Other
Stock-Based Awards.

     (v) Each Other Stock-Based Award shall be confirmed by, and subject to the
terms of, the applicable Award Documentation.

     (vi) Stock distributed on a bonus basis under this Section 8 may be awarded for
no cash consideration.

          SECTION 9. Qualifying Awards.

          (a) General. The Committee may grant an Award to any participant with the intent that such Award
qualifies as “performance-based compensation” for “covered employees” under Section 162(m) of the
Code (a “Qualifying Award”). The provisions of this Section 9, as well as all other
applicable provisions of the Plan not inconsistent with this Section 9, shall apply to all
Qualifying Awards. Qualifying Awards shall be of the type set forth in paragraph (b) or (c)
below. In connection with Qualifying Awards, the functions of the Committee shall be exercised by
a committee of the Board comprised solely of two or more “outside directors” within the meaning of
Section 162(m) of the Code.

          (b) Qualifying Stock Options and Stock Appreciation Rights. Qualifying Awards may be in the form of Stock Options and Stock Appreciation Rights granted
by the

 

24

Committee and subject to the Individual Limit.

          (c) Qualifying Awards other than Stock Options and Stock
Appreciation Rights.

     (i) Qualifying Awards (other than Stock Options and Stock Appreciation Rights)
may be in the form of Stock Awards and Other Stock-Based Awards whose payment is
conditioned upon the achievement of the performance objectives described in this
paragraph. Amounts earned under such Qualifying Awards shall be based upon the
attainment of the performance goals established by the Committee for a performance
cycle in accordance with the provisions of Section 162(m) of the Code and the
applicable regulations thereunder related to performance-based compensation. More
than one performance goal may apply to a given performance cycle and payments may be
made for a given performance cycle based upon the attainment of the performance
objectives for any of the performance goals applicable to that cycle. The duration
of a performance cycle shall be determined by the Committee, and the Committee shall
be authorized to permit overlapping or consecutive performance cycles. The performance goals
and the performance objectives applicable to a performance cycle shall be
established by the Committee in accordance with the timing requirements set forth in
Section 162(m) of the Code and the applicable regulations thereunder. The
performance goals that may be selected by the Committee for a performance cycle
include any of the following: diluted earnings per share, net income, operating
margin, operating income and net operating income, pretax profit, revenue growth,
return on sales, return on equity, return on assets, return on investment, stock
price growth, total return to shareholders, EBITDA, economic

 

25

profit and cash flow, each of which may be established on a corporate-wide basis or established with
respect to one or more operating units, divisions, acquired businesses, minority
investments, partnerships or joint ventures, and may be measured on an absolute
basis or relative to selected peer companies or a market index. The Committee shall
have the discretion, by participant and by Qualifying Award, to reduce some or all
of the amount that would otherwise be payable under the Qualifying Award.

     (ii) For any performance cycle with a duration of thirty-six months, no
participant may receive Qualifying Awards under this Section 9(c) covering more than
600,000 shares of Stock or which provide for the payment for such performance cycle
of more than 600,000 shares of Stock (or cash amounts based on the value of more
than 600,000 shares of Stock). For a performance cycle that is longer or shorter
than thirty-six months, the maximum limits set forth in the previous sentence shall
be adjusted by multiplying such limit by a fraction, the numerator of which is the number of months in the performance cycle and the
denominator of which is thirty-six. Except as otherwise provided in Section 10, no
amounts shall be paid in respect of a Qualifying Award granted under this Section
9(c) unless, prior to the date of such payment, the Committee certifies, in a manner
intended to meet the requirements of Section 162(m) of the Code and the applicable
regulations thereunder related to performance-based compensation, that the criteria
for payment of Qualifying Awards related to that cycle have been achieved.

          SECTION 10. Change In Control Provisions.

 

26

          (a) Impact of Event. Unless the Committee otherwise determines at the time of grant, in the event of a Change in
Control, the following acceleration and valuation provisions shall apply notwithstanding any other
provision of the Plan:

     (i) Any Stock Appreciation Rights and any Stock Options (including Qualifying
Awards) not previously exercisable and vested shall become fully exercisable and
vested and shall remain exercisable for the remainder of their original terms,
notwithstanding any subsequent termination of the applicable participant’s
employment for any reason.

     (ii) The restrictions and deferral limitations applicable to any Stock Awards
and Other Stock-Based Awards (including Qualifying Awards), in
each case to the extent not already vested under the Plan, shall lapse and such
Awards shall be deemed fully vested, notwithstanding any subsequent termination of
the applicable participant’s employment for any reason.

     (iii) All outstanding Awards (including Qualifying Awards) shall either (A) be
cashed out by the Company on the basis of the Change in Control Price as of the date
such Change in Control is determined to have occurred or (B) be converted into
awards based upon publicly traded common stock of the corporation that acquires
McGraw-Hill, with which McGraw-Hill merges, or which otherwise results from the
Change in Control, with appropriate adjustments pursuant to Section 3(e) to preserve
the value of the Awards. The Committee shall determine which of the foregoing
clauses (A) and (B) shall apply; provided, however, that the
Committee shall be obligated to make such

 

27

determination not later than three
business days prior to a Change in Control; provided further that if
no such determination is made by the Committee in accordance with the preceding
clause, then the provisions of Section 10(a)(iii)(A) herein shall apply. In the
event that the provisions of Section 10(a)(iii)(B) herein shall apply following a
determination by the Committee, then all no-trading policies and other internal
corporate approvals required with respect to the exercise or sale of Awards
(including Qualifying Awards) and/or the underlying shares of Stock shall be waived.

          (b) Definition of “Change in Control”. For purposes of this Plan, the term “Change in Control” shall mean the first to occur of any of the following events:

     (i) An acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
20% or more of either (1) the then outstanding shares of Stock (the “Outstanding
Common Stock”) or (2) the combined voting power of the then outstanding voting
securities of McGraw-Hill entitled to vote generally in the election of directors
(the “Outstanding Voting Securities”); excluding, however,
the following: (1) any acquisition directly from McGraw-Hill, other than an
acquisition by virtue of the exercise of a conversion privilege unless the security
being so converted was itself acquired directly from McGraw-Hill; (2) any
acquisition by McGraw-Hill; (3) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by McGraw-Hill or any entity controlled by
McGraw-Hill; or (4) any acquisition pursuant to a transaction which complies

 

28

with clauses (A), (B) and (C) of subsection (iii) of this Section 10(b); or

     (ii) A change in the composition of the Board such that the individuals who, as
of the Plan Effective Date, constitute the Board (such Board shall be hereinafter
referred to as the “Incumbent Board”) cease for any reason to constitute at
least a majority of the Board; provided, however, for purposes of
this Section 10(b), that any individual who becomes a member of the Board subsequent
to the Plan Effective Date, whose election, or nomination for election by
McGraw-Hill’s shareholders, was approved by a vote of at least a majority of those
individuals who are members of the Board and who were also members of the Incumbent Board (or deemed to be such pursuant to this proviso) shall be
considered as though such individual were a member of the Incumbent Board; but
provided further that any such individual whose initial assumption
of office occurs as a result of either an actual or threatened election contest (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act) or other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board shall not be so considered as a member of
the Incumbent Board; or

     (iii) Consummation of a reorganization, merger or consolidation or sale or
other disposition of all or substantially all of the assets of McGraw-Hill
(“Corporate Transaction”); excluding, however, such a
Corporate Transaction pursuant to which all of the following conditions are met:
(A) all or substantially all of the individuals and entities who are the beneficial
owners, respectively, of the Outstanding Common Stock and Outstanding Voting
Securities immediately

 

29

prior to such Corporate Transaction will beneficially own,
directly or indirectly, more than 50% of, respectively, the outstanding shares of
common stock, and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the case may
be, of the corporation resulting from such Corporate Transaction (including, without
limitation, a corporation which as a result of such transaction owns McGraw-Hill or
all or substantially all of McGraw-Hill’s assets either directly or through one or
more subsidiaries) in substantially the same proportions as their ownership,
immediately
prior to such Corporate Transaction, of the Outstanding Common Stock and Outstanding Voting Securities, as the case may be, (B) no Person
(other than McGraw-Hill, any employee benefit plan (or related trust) of McGraw-Hill
or such corporation resulting from such Corporate Transaction) will beneficially
own, directly or indirectly, 20% or more of, respectively, the outstanding shares of
common stock of the corporation resulting from such Corporate Transaction or the
combined voting power of the outstanding voting securities of such corporation
entitled to vote generally in the election of directors except to the extent that
such ownership existed prior to the Corporate Transaction, and (C) individuals who
were members of the Incumbent Board will constitute at least a majority of the
members of the board of directors of the corporation resulting from such Corporate
Transaction; or

     (iv) The approval by the shareholders of McGraw-Hill of a complete liquidation
or dissolution of McGraw-Hill.

(c) Change in Control Price. For purposes of this Section 10, “Change in

 

30

Control Price” means the highest price
per share paid in any transaction reported on the Consolidated Transaction Reporting System, or
paid or offered in the transaction or transactions that result in the Change in Control or any
other bona fide transaction related to a Change in Control or possible change in control of
McGraw-Hill at any time during the sixty-day period ending on the date of the Change in Control, as
determined by the Committee.

     SECTION 11. Amendments and Termination.

     The Board may amend, alter, discontinue or terminate the Plan, but no amendment, alteration,
discontinuation or termination shall be made which would impair the rights of an optionee or
participant under an Award theretofore granted, without the optionee’s or participant’s consent.
In addition, the Board shall have the right to amend, modify or remove the provisions of the Plan
which are included to permit the Plan to comply with the “performance-based” exception to Section
162(m) of the Code if Section 162(m) of the Code is subsequently amended, deleted or rescinded.

     The Committee may amend the terms of any Award theretofore granted, prospectively or
retroactively; but no such amendment or other action by the Committee shall impair the rights of
any holder without the holder’s consent or, subject to Section 3(e), reduce the option price per
share of Stock subject to a Stock Option or Stock Appreciation Right without prior shareholder
approval.

     Unless otherwise expressly provided in the applicable Award Documentation, the Plan and
the Awards are not intended to provide for the deferral of compensation within the meaning
of Section 409A(d)(1) of the Code, and they shall be interpreted and construed in accordance
with such intent. Notwithstanding the foregoing and anything to

 

 31

the contrary in the Plan or any Award, if any provision of the Plan or any Award would
cause the requirements of Section 409A of the Code to be violated, or otherwise cause any
participant to recognize income under Section 409A of the Code, then such provision may be
modified by the Committee or the Board in any reasonable manner that the Committee or the
Board, as applicable, deems appropriate; provided that the Committee or the Board, as
applicable, shall preserve the intent of such provision to the extent reasonably practicable
without violating the requirements of Section 409A of the Code.

          Subject to the above provisions, the Board shall have broad authority to amend the Plan to
take into account changes in applicable securities and tax laws and accounting rules, as well as
other developments.

          SECTION 12. Unfunded Status of Plan. The Plan is intended to constitute an “unfunded” plan for incentive and deferred
compensation. With respect to any payments not yet made to a participant or optionee by the
Company, nothing contained herein shall give any such participant or optionee any rights that are
greater than those of a general creditor of the Company.

          SECTION 13. General Provisions.

     (a) Stock Subject to Awards.
The Committee may require each person purchasing shares of Stock pursuant to
an Award to represent to and agree with the Company in writing that the optionee or
participant is acquiring the shares without a view to distribution thereof. Stock delivered under
the Plan shall be subject to such stop transfer orders and other restrictions as the Committee may
deem advisable under the rules, regulations, and other requirements of the Commission, any stock
exchange upon which the Stock is then listed, any

 

32

applicable federal or state securities law, and
any applicable corporate law.

          (b) Other Plans.
Nothing contained in this Plan shall prevent the Board from adopting other or additional
compensation or equity plans or arrangements, subject to shareholder approval if such approval is
required; and such arrangements may be either generally applicable or applicable only in specific
cases.

          (c) Continued Employment. The adoption of the Plan shall not confer upon any employee of the Company any right to
continued employment with the Company, as the case may be, nor shall it interfere in any way with
the right of the Company to terminate the employment of any of its employees at any time.

          (d) Taxes and Withholding. No later than the date as of which an amount first becomes includible in the gross income
of the participant for income tax purposes with respect to any Award (including dividends or
Dividend Equivalents on any non-vested Stock Award or Other Stock-Based Award), the participant
shall pay to the Company, or make arrangements satisfactory to the
Committee regarding the payment of, any federal, FICA, state, or local taxes of any kind
required by law to be withheld or paid with respect to such amount. The obligations of the Company
under the Plan shall be conditional on such payment or arrangements and the Company shall, to the
extent permitted by law, have the right to deduct any such taxes from any payment of any kind
otherwise due to the participant. Unless the Committee otherwise determines, at or before the time
of payment, tax withholding or payment obligations up to the participant’s minimum required
withholding rate shall be settled with Stock that is part of the Award that gives rise to the
withholding requirement. If and to the extent determined by the Committee, a participant may elect
to satisfy any additional tax withholding or payment

 

33

obligation up to the participant’s maximum
marginal tax rate by delivery of unrestricted stock duly owned by the participant (and for which
the participant has good title free and clear of any liens and encumbrances).

          (e) Governing Law. The Plan and all Awards and actions taken thereunder shall be governed by and construed in
accordance with the laws of the State of New York.

          (f) Computation of Benefits. Any payment under this Plan shall not be deemed compensation for purposes of computing
benefits under any retirement plan of the Company and shall not affect any benefits under any other
benefit plan now or subsequently in effect under which the availability or amount of benefits is
related to the level of compensation.

          (g) Division Sale.
Unless the Committee otherwise determines at or after the time of grant, and except as
otherwise provided herein, if any participant’s employment by the Company terminates by reason of a
Division Sale, such Division Sale shall be treated as an involuntary termination of employment of
such participant hereunder and under the terms of any Award.

          (h) Foreign Law. The Committee may grant Awards to eligible employees who are foreign nationals, who are
located outside the United States, or who are otherwise subject to or cause the Company to be
subject to legal or regulatory provisions of countries or jurisdictions outside the United States,
on such terms and conditions different from those specified in the Plan as may, in the judgment of
the Committee, be necessary or desirable to foster and promote achievement of the purposes of the
Plan and, in furtherance of such purposes, the Committee may make such modifications, amendments,
procedures, subplans and the like as may be necessary or advisable to comply with such legal or
regulatory provisions.

 

34

          SECTION 14. Plan Effective Date and Duration.
The Plan initially became effective as of the Plan Effective Date, and, the Plan, as
amended and restated hereby (the “Amended Plan”), shall become effective, upon shareholder
approval of the Amended Plan, on the Amended Plan Effective Date. If the shareholders of
McGraw-Hill fail to approve the Amended Plan on the Amended Plan Effective Date, then the Plan as
in effect prior thereto shall continue in effect thereafter. The Plan, in such form as shall be
effective as of the Amended Plan Effective Date, shall continue in effect for a period of ten years
thereafter, unless earlier terminated by the Board pursuant to Section 11.

January 28, 2009EX-10.3

Exhibit 10.3

AMENDED AND RESTATED

TWO YEAR CHANGE OF CONTROL AGREEMENT

by and among

HUDSON CITY SAVING BANK,

HUDSON CITY BANCORP, INC.,

and

NAME

Made and entered into

as of December 31, 2008

 Page 1 of 21

 

AMENDED AND RESTATED

TWO-YEAR CHANGE OF CONTROL AGREEMENT

This AMENDED AND RESTATED CHANGE OF CONTROL AGREEMENT (the “Agreement”) is made and entered into as
of December 31, 2008 by and among HUDSON CITY SAVINGS BANK, a savings bank organized and operating
under the federal laws of the United States and having an office at West 80 Century Road, Paramus,
New Jersey 07652-1473 (the “Bank”), HUDSON CITY BANCORP, INC., a business corporation organized and
existing under the laws of the State of Delaware and having an office at West 80 Century Road,
Paramus, New Jersey 07652-1473 (the “Company”) and                     , an individual
residing at                                            (the “Officer”).

INTRODUCTORY STATEMENT

          The Officer currently serves as an officer of the Bank, a wholly-owned subsidiary of the
Company. The Officer, the Bank and the Company are currently parties to a Change of Control
Agreement, made and entered into as of                      (such date, the “Initial Effective Date”
and such agreement, the “Prior Agreement.”). The Board of Directors of the Bank and the Board of
Directors of the Company concluded that it is in the best interests of the Bank, the Company and
their shareholders to establish a working environment for the Officer which minimizes the personal
distractions that might result from possible business combinations in which the Company or the Bank
might be involved. The Bank and the Company decided to provide the Officer with assurance that his
compensation will be continued for a minimum period of two (2) years following termination of
employment (the “Assurance Period”) if his employment terminates under specified circumstances
related to a business combination. The Board of Directors of the Bank and the Board of Directors
of the Company decided to formalize this assurance by entering into the Prior Agreement with the
Officer. The Board of Directors of the Bank and the Board of Directors of the Company have
concluded that it is in the best interests of the Bank and the Company to amend and restate the
Prior Agreement pursuant to Section 18 thereof for the purpose, among others, of compliance with
the applicable requirements of section 409A of the Internal Revenue Code of 1986 (the “Code”).

          The terms and conditions which the Bank, the Company and the Officer have agreed to are as
follows.

AGREEMENT

          Section 1. Effective Date; Term; Change of Control and Pending Change of
Control Defined.

          (a) This Agreement took effect on the Initial Effective Date and shall be in effect during the
period (the “Term”) beginning on the Initial Effective Date and ending on the first anniversary of
the date on which the Bank notifies the Officer of its intent to discontinue the Agreement (the
“Initial Expiration Date”) or, if later, the second anniversary of the latest Change of

 Page 2 of 21

 

Control or Pending Change of Control, as defined below, that occurs after the Initial
Effective Date and before the Initial Expiration Date.

          (b) For all purposes of this Agreement, a “Change of Control” shall be deemed to have occurred
upon the happening of any of the following events:

          (i) the consummation of a reorganization, merger or consolidation of the
Company with one or more other persons, other than a transaction following which:

          (A) at least 51% of the equity ownership interests of the entity
resulting from such transaction are beneficially owned (within the meaning
of Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as
amended (“Exchange Act”)) in substantially the same relative proportions by
persons who, immediately prior to such transaction, beneficially owned
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) at
least 51% of the outstanding equity ownership interests in the Company; and

          (B) at least 51% of the securities entitled to vote generally in the
election of directors of the entity resulting from such transaction are
beneficially owned (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) in substantially the same relative proportions by persons who,
immediately prior to such transaction, beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) at least 51% of
the securities entitled to vote generally in the election of directors of
the Company;

          (ii) the acquisition of all or substantially all of the assets of the Company
or beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 25% or more of the outstanding securities of the Company entitled
to vote generally in the election of directors by any person or by any persons
acting in concert;

          (iii) a complete liquidation or dissolution of the Company;

          (iv) the occurrence of any event if, immediately following such event, at least
50% of the members of the Board of Directors of the Company do not belong to any of
the following groups:

          (A) individuals who were members of the Board of Directors of the
Company on the Initial Effective Date; or

          (B) individuals who first became members of the Board of Directors of
the Company after the Initial Effective Date either:

 Page 3 of 21

 

          (1) upon election to serve as a member of the Board of
Directors of the Company by affirmative vote of three-quarters of
the members of such board, or of a nominating committee thereof, in
office at the time of such first election; or

          (2) upon election by the shareholders of the Board of Directors
of the Company to serve as a member of such board, but only if
nominated for election by affirmative vote of three-quarters of the
members of the Board of Directors of the Company, or of a nominating
committee thereof, in office at the time of such first nomination;

provided, however, that such individual’s election or nomination did not
result from an actual or threatened election contest (within the meaning of
Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or consents (within the meaning
of Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) other
than by or on behalf of the Board of Directors of the Company; or

          (v) any event which would be described in section l (b)(i), (ii), (iii) or (iv)
if the term “Bank” were substituted for the term “Company” therein.

In no event, however, shall a Change of Control be deemed to have occurred as a result of any
acquisition of securities or assets of the Company, the Bank, or a subsidiary of either of them, by
the Company, the Bank, or any subsidiary of either of them, or by any employee benefit plan
maintained by any of them. For purposes of this section 1(b), the term “person” shall have the
meaning assigned to it under sections 13(d)(3) or 14(d)(2) of the Exchange Act.

          (c) For purposes of this Agreement, a “Pending Change of Control” shall mean: (i) the signing
of a definitive agreement for a transaction which, if consummated, would result in a Change of
Control; (ii) the commencement of a tender offer which, if successful, would result in a Change of
Control; or (iii) the circulation of a proxy statement seeking proxies in opposition to management
in an election contest which, if successful, would result in a Change of Control.

          Section 2. Discharge Prior to a Pending Change of Control.

          The Bank may discharge the Officer at any time prior to the occurrence of a Pending Change of
Control for any reason or for no reason. In such event:

          (a) The Bank shall pay to the Officer (or, in the event of his death before
payment, his estate) his earned but unpaid compensation (including, without
limitation, salary and all other items which constitute wages under applicable law)
as of the date of his termination of employment. This payment shall be made at the
time and in the manner prescribed by law applicable to the payment of wages but in
no event later than 30 days after the date of the Officer’s termination of
employment.

 Page 4 of 21

 

          (b) The Bank shall provide the benefits, if any, due to the Officer, his
estate, surviving dependents or designated beneficiaries under the employee benefit
plans and programs and compensation plans and programs maintained for the benefit of
the officers and employees of the Bank, including the annual and long-term bonus
plans (if any) to which the Officer is entitled under any cash-based annual bonus or
performance compensation plan in effect for the year in which his or her termination
occurs, to be paid at the same time and on the terms and conditions (including but
not limited to achievement of performance goals) applicable under the relevant plan.
The time and manner of payment or other delivery of these benefits and the
recipients of such benefits shall be determined according to the terms and
conditions of the applicable plans and programs.

The payments and benefits described in sections 2(a) and (b) shall be referred to in this Agreement
as the “Standard Termination Entitlements.”

          Section 3. Termination of Employment Due to Death.

          The Officer’s employment with the Bank shall terminate, automatically and without any further
action on the part of any party to this Agreement, on the date of the Officer’s death. In such
event, the Bank shall pay and deliver to the Officer’s estate and surviving dependents and
beneficiaries, as applicable, the Standard Termination Entitlements.

          Section 4. Termination Due to Disability after Change of Control or Pending
Change of Control.

          The Bank may terminate the Officer’s employment during the Term and after the occurrence of a
Change of Control or a Pending Change of Control upon a determination, by a majority vote of the
members of the Board of Directors of the Bank, acting in reliance on the written advice of a
medical professional acceptable to it, that the Officer is suffering from a physical or mental
impairment which, at the date of the determination, has prevented the Officer from performing his
assigned duties on a substantially full-time basis for a period of at least one hundred and eighty
(180) days during the period of one (1) year ending with the date of the determination or is likely
to result in death or prevent the Officer from performing his assigned duties on a substantially
full-time basis for a period of at least one hundred and eighty (180) days during the period of one
(1) year beginning with the date of the determination. In such event:

          (a) The Bank shall pay and deliver to the Officer (or in the event of his death
before payment, to his estate and surviving dependents and beneficiaries, as
applicable) the Standard Termination Entitlements.

          (b) In addition to the Standard Termination Entitlements, the Bank shall
continue to pay the Officer his base salary, at the annual rate in effect for him
immediately prior to the termination of his employment, during a period ending on
the earliest of: (i) the expiration of one hundred and eighty (180) days after the
date of termination of his employment; (ii) the date on which long-term disability
insurance benefits are first payable to him under any long-term disability insurance

 Page 5 of 21

 

plan
covering employees of the Bank (the “LTD Eligibility Date”); (iii) the date of his
death; and (iv) the expiration of the Assurance Period (the “Initial Continuation
Period”). If the end of the Initial Continuation Period is neither the LTD
Eligibility Date nor the date of his death, the Bank shall continue to pay the
Officer his base salary, at an annual rate equal to sixty percent (60%) of the
annual rate in effect for him immediately prior to the termination of his
employment, during an additional period ending on the earliest of the LTD
Eligibility Date, the date of his death and the expiration of the Assurance Period.

A termination of employment due to disability under this section 4 shall be effected by a notice of
termination given to the Officer by the Bank and shall take effect on the later of the effective
date of termination specified in such notice or the date on which the notice of termination is
deemed given to the Officer.

          Section 5. Discharge with Cause after Change of Control or Pending Change of
Control.

          (a) The Bank may terminate the Officer’s employment with “Cause” during the Term and after the
occurrence of a Change of Control or Pending Change of Control, but a termination shall be deemed
to have occurred with “Cause” only if

          (i) the Board of Directors of the Bank, by majority vote of its entire
membership, determines that the Officer should be terminated because of 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, or any material breach of this Agreement; and

          (ii) at least forty-five (45) days prior to the vote contemplated by section
1(b)(i), the Bank has provided the Officer with notice of its intent to discharge
the Officer for Cause, detailing with particularity the facts and circumstances
which are alleged to constitute Cause (the “Notice of Intent to Discharge”); and

          (iii) after the giving of the Notice of Intent to Discharge and before the
taking of the vote contemplated by section 5(a)(i), the Officer (together with his
legal counsel, if he so desires) is afforded a reasonable opportunity to make both
written and oral presentations before the Board of Directors of the Bank for the
purpose of refuting the alleged grounds for Cause for his discharge; and

          (iv) after the vote contemplated by section 5(a)(i), the Bank has furnished to
the Officer a notice of termination which shall specify the effective date of his
termination of employment (which shall in no event be earlier than the date on which
such notice is deemed given) and include a copy of a resolution or resolutions
adopted by the Board of Directors of the Bank, certified by its corporate secretary
and signed by each member of the Board of Directors voting in favor of adoption
of the

 Page 6 of 21

 

resolution(s), authorizing the termination of the Officer’s employment with
Cause and stating with particularity the facts and circumstances found to constitute
Cause for his discharge (the “Final Discharge Notice”).

For purposes of this section 5, no act or failure to act, on the part of the Officer, shall be
considered “willful” unless it is done, or omitted to be done, by the Officer in bad faith or
without reasonable belief that the Officer’s action or omission was in the best interests of the
Bank. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted
by the Board of Directors of the Bank or based upon the written advice of counsel for the Bank
shall be conclusively presumed to be done, or omitted to be done, by the Officer in good faith and
in the best interests of the Bank.

          (b) If the Officer is discharged with Cause during the Term and after a Change of Control or
Pending Change of Control, the Bank shall pay and provide to him (or, in the event of his death, to
his estate, his surviving beneficiaries and his dependents) the Standard Termination Entitlements
only. Following the giving of a Notice of Intent to Discharge, the Bank may temporarily suspend
the Officer’s duties and authority and, in such event, may also suspend the payment of salary and
other cash compensation, but not the Officer’s participation in retirement, insurance and other
employee benefit plans. If the Officer is not discharged, or is discharged without Cause, within
forty-five (45) days after the giving of a Notice of Intent to Discharge, payments of salary and
cash compensation shall resume, and all payments withheld during the period of suspension shall be
promptly restored. If the Officer is discharged with Cause not later than forty-five (45) days
after the giving of the Notice of Intent to Discharge, all payments withheld during the period of
suspension shall be deemed forfeited and shall not be included in the Standard Termination
Entitlements. If a Final Discharge Notice is given later than forty-five (45) days, but sooner than
ninety (90) days, after the giving of the Notice of Intent to Discharge, all payments made to the
Officer during the period beginning with the giving of the Notice of Intent to Discharge and ending
with the Officer’s discharge with Cause shall be retained by the Officer and shall not be applied
to offset the Standard Termination Entitlements. If the Bank does not give a Final Discharge Notice
to the Officer within ninety (90) days after giving a Notice of Intent to Discharge, the Notice of
Intent to Discharge shall be deemed withdrawn and any future action to discharge the Officer with
Cause shall require the giving of a new Notice of Intent to Discharge.

          Section 6. Discharge without Cause.

          The Bank may discharge the Officer without Cause at any time after the occurrence of a Change
of Control or Pending Change of Control, and in such event:

          (a) The Bank shall pay and deliver to the Officer (or in the event of his death
before payment, to his estate and surviving dependents and beneficiaries, as
applicable) the Standard Termination Entitlements.

          (b) In addition to the Standard Termination Entitlements:

          (i) During the Assurance Period, the Bank shall provide for the Officer
and his dependents continued group life, health (including

 Page 7 of 21

 

hospitalization,
medical and major medical), dental, accident and long-term disability
insurance benefits on substantially the same terms and conditions (including
any required premium-sharing arrangements, co-payments and deductibles) in
effect for them immediately prior to the Officer’s termination. The coverage
provided under this section 6(b)(i) may, at the election of the Bank, be
secondary to the coverage provided as part of the Standard Termination
Entitlements and to any employer-paid coverage provided by a subsequent
employer or through Medicare, with the result that benefits under the other
coverages will offset the coverage required by this section 6(b)(i).

          (ii) The Bank shall make a lump sum payment to the Officer (or, in the
event of his death before payment, to his estate), in an amount equal to the
estimated present value of the salary that the Officer would have earned if
he had continued working for the Bank during the Assurance Period at the
highest annual rate of salary achieved during the period of three (3) years
ending immediately prior to the date of termination (the “Salary Severance
Payment”). The Salary Severance Payment shall be computed using the
following formula:

where “SSP” is the amount of the Salary Severance Payment (before the
deduction of applicable federal, state and local withholding taxes); “BS” is
the highest annual rate of salary achieved by the Officer during the period
of three (3) years ending immediately prior to the date of termination; “PR”
is the number of payroll periods that occur during a year under the Bank’s
normal payroll practices; “I” equals the applicable federal short term rate
established under section 1274 of the Internal Revenue Code of 1986 (the
“Code”) for the month in which the Officer’s termination of employment
occurs (the “Short Term AFR”) and “n” equals the product of the Assurance
Period at the Officer’s termination of employment (expressed in years and
fractions of years) multiplied by the number of payroll periods that occur
during a year under the Bank’s normal payroll practices. The Salary
Severance Payment shall be made on the day sixty (60) days after the
Officer’s termination of employment and shall be in lieu of any claim to a
continuation of base salary which the Officer might otherwise have and in
lieu of cash severance benefits under any severance benefits program which
may be in effect for officers or employees of the Bank.

          (iii) The Bank shall make a lump sum payment to the Officer (or, in the
event of his death before payment, to his estate), in an amount equal to the
estimated present value of the annual bonuses that the
Officer would have earned if he had continued working for the Bank
during the Assurance Period at the highest annual rate of salary achieved
during the

 Page 8 of 21

 

period of three (3) years ending immediately prior to the date of
termination (the “Bonus Severance Payment”). The Bonus Severance Payment
shall be computed using the following formula:

BSP = SSP x (ABP / ASP)

where “BSP” is the amount of the Bonus Severance Payment (before the
deduction of applicable federal, state and local withholding taxes); “SSP”
is the amount of the Salary Severance Payment (before the deduction of
applicable federal, state and local withholding taxes); “ABP” is the
aggregate of the annual bonuses paid or declared (whether or not paid) for
the most recent period of three (3) calendar years to end on or before the
Officer’s termination of employment; and “ASP” is the aggregate base salary
actually paid to the Officer during such period of three (3) calendar years
(excluding any year for which no bonus was declared or paid). The Bonus
Severance Payment shall be made on the day sixty (60) days after the
Officer’s termination of employment and shall be in lieu of any claim to a
continuation of participation in annual bonus plans of the Bank which the
Officer might otherwise have.

          (iv) The Bank shall make a lump sum payment to the Officer (or, in the
event of his death before payment, to his estate), in an amount equal to the
estimated present value of the long-term incentive bonuses that the Officer
would have earned if he had continued working for the Bank during the
Assurance Period (the “Incentive Severance Payment”). The Incentive
Severance Payment shall be computed using the following formula:

ISP = (SSP / RAP) x (ALTIP / ALTSP) x Y

where “ISP” is the amount of the Incentive Severance Payment (before the
deduction of applicable federal, state and local withholding taxes); “SSP”
is the amount of the Salary Severance Payment (before the deduction of
applicable federal, state and local withholding taxes); “ALTIP” is the
aggregate of the most recently paid or declared (whether or not paid)
long-term incentive compensation payments (but not more than three (3) such
payments) for performance periods that end on or before the Officer’s
termination of employment; and “ALTSP” is the aggregate base salary actually
paid to the Officer during the performance periods covered by the payments
included in “ALTIP” and excluding base salary paid for any period for which
no long-term incentive compensation payment was declared or paid; “RAP” is
the Assurance Period, expressed in years and fractions of years; and “Y” is
the aggregate (expressed in years and fractions of years) of the
Assurance Period plus the number of years and fraction of years that have
elapsed since the end of the last performance period for which a long-term

 Page 9 of 21

 

incentive payment has been declared and paid. The Incentive Severance
Payment shall be made on the day sixty (60) days after the Officer’s
termination of employment and shall be in lieu of any claim to a
continuation of participation in long-term incentive compensation plans of
the Bank which the Officer might otherwise have. Notwithstanding the
foregoing, the Incentive Severance Payment shall be zero if the Officer’s
termination of employment occurs at a time when he is not covered by any
long-term incentive compensation plan.

          (v) The Bank shall pay to the Officer (or in the event of his death, to
his estate), an amount equal to the excess (if any) of : (A) the present
value of the aggregate benefits to which he would be entitled under any and
all tax-qualified and non-tax-qualified defined benefit plans maintained by,
or covering employees of, the Bank (the “Pension Plans”) if he had continued
working for the Bank during the Assurance Period; over (B) the present value
of the benefits to which the Officer and his spouse and/or designated
beneficiaries are actually entitled under such plans (the “Pension Severance
Payment”). The Pension Severance Payment shall be computed according to the
following formula:

PSP =
PPB – APB

where “PSP” is the amount of the Pension Severance Payment (before
deductions for applicable federal, state and local withholding taxes); “APB”
is the aggregate lump sum present value of the actual vested pension
benefits payable under the Pension Plans in the form of a straight life
annuity beginning at the earliest date permitted under the Pension Plans,
computed on the basis of the Officer’s life expectancy at the earliest date
on which payments under the Pension Plans could begin, determined by
reference to Table VI of section 1.72-9 of the Income Tax Regulations (the
“Assumed Life Expectancy”), and on the basis of an interest rate assumption
equal to the average bond-equivalent yield on United States Treasury
Securities with a Constant Maturity of 30 Years for the month prior to the
month in which the Officer’s termination of employment occurs (the “30-Year
Treasury Rate”); and “PPB” is the lump sum present value of the pension
benefits (whether or not vested) that would be payable under the Pension
Plans in the form of a straight life annuity beginning at the earliest date
permitted under the Pension Plans, computed on the basis that the Officer’s
actual age at termination of employment is his attained age as of his last
birthday that would occur during the Assurance Period, that his service for
benefit accrual purposes under the Pension Plans is equal to the aggregate
of his actual service plus the Assurance Period, that his average
compensation figure used in determining his accrued benefit is equal to the
highest annual rate of salary achieved by the
Officer during the period of three (3) years ending immediately prior to the
date of termination, that the Officer’s life expectancy at the earliest date

 Page 10 of 21

 

on which payments under the Pension Plans could begin is the Assumed Life
Expectancy and that the interest rate assumption used is equal to the
30-Year Treasury Rate. The Pension Severance Payment shall be converted into
the same form, and paid at the same time, and in the same manner, as
benefits under the corresponding non-qualified plan, or, if no such
non-qualified plan exists, shall be paid in a lump sum on the day sixty (60)
days after the Officer’s termination of employment and shall be in lieu of
any claim to any actual increase in his accrued benefit in the Pension Plans
in respect of the Assurance Period.

          (vi) The Bank shall pay to the Officer (or in the event of his death,
to his estate) an amount equal to the present value of the additional
employer contributions that would have been credited directly to his
account(s) under any and all tax-qualified and non-tax qualified defined
contribution plans maintained by, or covering employees of, the Bank (the
“Non-ESOP DC Plans”), plus the fair market value of the additional shares of
employer securities or other property that would have been allocated to his
account as a result of employer contributions under any tax-qualified
leveraged employee stock ownership plan and any related non-tax-qualified
supplemental plan maintained by, or covering employees of, the Bank (the
“ESOP Plans”) if he had continued in employment during the Assurance Period
(the “Defined Contribution Severance Payment”). The Defined Contribution
Severance Payment shall be computed according to the following formula:

DCSP = [SSP x (EC / BS)] + [(STK + PROP) x Y]

where: “DCSP” is the amount of the Defined Contribution Severance Payment
(before deductions for applicable federal, state and local withholding
taxes); “SSP” is the amount of the Salary Severance Payment (before
deductions for applicable federal, state and local withholding taxes); “EC”
is the amount of employer contributions actually credited to the Officer’s
accounts under the Non-ESOP Plans for the last plan year to end before his
termination of employment; “BS” is the Officer’s compensation taken into
account in computing EC; “Y” is the aggregate (expressed in years and
fractions of years) of the Assurance Period and the number of years and
fractions of years that have elapsed between the end of plan year for which
EC was computed and the date of the Officer’s termination of employment;
“STK” is the fair market value (determined by the final reported sales price
for stock of the same class on the last trading day before the Officer’s
termination of employment) of the employer securities actually allocated to
the Officer’s accounts under the ESOP Plans in respect of employer
contributions and dividends applied to loan amortization payments for the
last plan year to end
before his termination of employment; and “PROP” is the fair market value
(determined as of the day before the Officer’s

 Page 11 of 21

 

termination of employment
using the same valuation methodology used to value the assets of the ESOP
Plans) of the property other than employer securities actually allocated to
the Officer’s accounts under the ESOP Plans in respect of employer
contributions and dividends applied to loan amortization payments for the
last plan year to end before his termination of employment. The Defined
Contribution Severance Payment shall be converted into the same form, and
paid at the same time, and in the same manner, as benefits under the
corresponding non-qualified plan, or, if no such non-qualified plan exists,
shall be paid in a lump sum on the day sixty (60) days after the Officer’s
termination of employment and shall be in lieu of any claim to a
continuation of participation in any defined contribution plans of the Bank
which the Officer might otherwise have.

          (vii) Thirty days following the Officer’s termination of employment
with the Bank, at the election of the Bank, upon the surrender of options or
appreciation rights issued to the Officer under any stock option and
appreciation rights plan or program maintained by, or covering employees of,
the Bank, a lump sum payment in an amount equal to the product of:

          (A) the excess of (I) the fair market value of a share of stock
of the same class as the stock subject to the option or appreciation
right, determined as of the date of termination of employment, over
(II) the exercise price per share for such option or appreciation
right, as specified in or under the relevant plan or program;
multiplied by

          (B) the number of shares with respect to which options or
appreciation rights are being surrendered.

For the purpose of computing this payment, the Officer shall be deemed fully
vested in all options and appreciation rights under any stock option or
appreciation rights plan or program maintained by, or covering employees of,
the Bank, even if he is not vested under such plan or program.

          (viii) Thirty days following the Officer’s termination of employment
with the Bank, at the election of the Bank, upon the surrender of any shares
awarded to the Officer under any restricted stock plan maintained by, or
covering employees of, the Bank, the Bank shall make a lump sum payment in
an amount equal to the product of:

          (A) the fair market value of a share of stock of the same class
of stock granted under such plan, determined as of the date of the
Officer’s termination of employment; multiplied by

 Page 12 of 21

 

          (B) the number of shares which are being surrendered.

For purposes of computing this payment, the Officer shall be deemed fully
vested in all shares awarded under any restricted stock plan maintained by,
or covering employees of, the Bank, even if he is not vested under such
plan; provided, however, that any shares of restricted stock for which
vesting is conditioned on the attainment of one or more performance goals,
with the intent that the award of such shares should satisfy the
requirements of qualified performance-based compensation (within the meaning
of Treasury Regulation section 1.162-27(e)), shall vest only in accordance
with the terms of the associated plan and award, and the Bank’s right to
elect to purchase such shares pursuant to this Section 6(b)(vii) shall not
expire until thirty (30) days after such time as the vesting of such shares
is no longer conditioned on the attainment of any such performance goal.

The payments and benefits described in section 6(b) are referred to in this Agreement as the
“Additional Change of Control Entitlements”.

          Section 7. Resignation.

          (a) The Officer may resign from his employment with the Bank at any time. A resignation under
this section 7 shall be effected by notice of resignation given by the Officer to the Bank and
shall take effect on the later of the effective date of termination specified in such notice or the
date on which the notice of termination is deemed given to the Officer. The Officer’s resignation
of any of the positions within the Bank or the Company to which he has been assigned shall be
deemed a resignation from all such positions.

          (b) The Officer’s resignation shall be deemed to be for “Good Reason” if the effective date of
resignation occurs during the Term, but on or after the effective date of a Change of Control, and
is on account of:

          (i) the failure of the Bank (whether by act or omission of the Board of
Directors, or otherwise) to appoint or re-appoint or elect or re-elect the Officer
to the position with Bank that he held immediately prior to the Change of Control
(the “Assigned Office”) or to a more senior office;

          (ii) if the Officer is or becomes a member of the Board of Directors of the
Bank, the failure of the shareholders of the Bank (whether in an election in which
the Officer stands as a nominee or in an election where the Officer is not a
nominee) to elect or re-elect the Officer to membership at the expiration of his
term of membership, unless such failure is a result of the Officer’s refusal to
stand for election;

          (iii) a material failure by the Bank, whether by amendment of the certificate
of incorporation or organization, by-laws, action of the Board of Directors

 Page 13 of 21

 

of the
Bank or otherwise, to vest in the Officer the functions, duties, or
responsibilities customarily associated with the Assigned Office; provided that
the Officer shall have given notice of such failure to the Bank, and the Bank has
not fully cured such failure within thirty (30) days after such notice is deemed
given;

          (iv) any reduction of the Officer’s rate of base salary in effect from time to
time, whether or not material, or any failure (other than due to reasonable
administrative error that is cured promptly upon notice) to pay any portion of the
Officer’s compensation as and when due;

          (v) any change in the terms and conditions of any compensation or benefit
program in which the Officer participates which, either individually or together
with other changes, has a material adverse effect on the aggregate value of his
total compensation package; provided that the Officer shall have given notice of
such material adverse effect to the Bank, and the Bank has not fully cured such
failure within thirty (30) days after such notice is deemed given;

          (vi) any material breach by the Company or the Bank of any material term,
condition or covenant contained in this Agreement; provided that the Officer shall
have given notice of such material adverse effect to the Company and the Bank, and
the Company or the Bank have not fully cured such failure within thirty (30) days
after such notice is deemed given; or

          (vii) a change in the Officer’s principal place of employment to a place that
is not the principal executive office of the Bank, or a relocation of the Bank’s
principal executive office to a location that is both more than twenty-five (25)
miles away from the Officer’s principal residence and more than twenty-five (25)
miles away from the location of the Bank’s principal executive office on the day
before the occurrence of the Change of Control.

In all other cases, a resignation by the Officer shall be deemed to be without Good Reason. In the
event of resignation, the Officer shall state in his notice of resignation whether he considers his
resignation to be a resignation with Good Reason, and if he does, he shall state in such notice the
grounds which constitute Good Reason. The Officer’s determination of the existence of Good Reason
shall be conclusive in the absence of fraud, bad faith or manifest error.

          (c) In the event of the Officer’s resignation for any reason, the Bank shall pay and deliver
the Standard Termination Entitlements. In the event of the Officer’s resignation with Good Reason,
the Bank shall also pay and deliver the Additional Termination Entitlements.

          Section 8. Terms and Conditions of the Additional Termination Entitlements.

          The Bank and the Officer hereby stipulate that the damages which may be incurred by the
Officer following any termination of employment are not capable of accurate measurement as of the
date first above written and that the Additional Termination Entitlements constitute reasonable
damages under the circumstances and shall be payable without any requirement of proof of actual

 Page 14 of 21

 

damage and without regard to the Officer’s efforts, if any, to mitigate damages. The Bank and the
Officer further agree that the Bank may condition the payment and delivery of the Additional
Termination Entitlements on the receipt of: (a) the Officer’s resignation from any and all
positions which he holds as an officer, director or committee member with respect to the Bank or
any subsidiary or affiliate of either of them; and (b) a release of the Bank and its officers,
directors, shareholders, subsidiaries and affiliates, in form and substance satisfactory to the
Bank, of any liability to the Officer, whether for compensation or damages, in connection with his
employment with the Bank and the termination of such employment except for the Standard Termination
Entitlements and the Additional Termination Entitlements.

          Section 9. No Effect on Employee Benefit Plans or Programs.

          The termination of the Officer’s employment during the Assurance Period or thereafter, whether
by the Bank or by the Officer, shall have no effect on the rights and obligations of the parties
hereto under the Bank’s qualified or non-qualified retirement, pension, savings, thrift,
profit-sharing or stock bonus plans, group life, health (including hospitalization, medical and
major medical), dental, accident and long term disability insurance plans or such other employee
benefit plans or programs, or compensation plans or programs, as may be maintained by, or cover
employees of, the Bank from time to time; provided, however, that nothing in this Agreement shall
be deemed to duplicate any compensation or benefits provided under any agreement, plan or program
covering the Officer to which the Bank or Company is a party and any duplicative amount payable
under any such agreement, plan or program shall be applied as an offset to reduce the amounts
otherwise payable hereunder.

          Section 10. Successors and Assigns.

          This Agreement will inure to the benefit of and be binding upon the Officer, his legal
representatives and testate or intestate distributees, and the Company and the Bank and their
respective successors and assigns, including any successor by merger or consolidation or a
statutory receiver or any other person or firm or corporation to which all or substantially all of
the assets and business of the Company or the Bank may be sold or otherwise transferred. Failure of
the Company to obtain from any successor its express written assumption of the Company’s or Bank’s
obligations hereunder at least 60 days in advance of the scheduled effective date of any such
succession shall, if such succession constitutes a Change of Control, constitute Good Reason for
the Officer’s resignation on or at any time during the Term following the occurrence of such
succession.

          Section 11. Notices.

          Any communication required or permitted to be given under this Agreement, including any
notice, direction, designation, consent, instruction, objection or waiver, shall be in writing and
shall be deemed to have been given at such time as it is delivered personally, or five days after
mailing if mailed, postage prepaid, by registered or certified mail, return receipt requested,
addressed to such party at the address listed below or at such other address as one such party may
by written notice specify to the other party:

 Page 15 of 21

 

If to the Officer:

                                        

                                        

                                        

If to the Company or the Bank:

Hudson City Bancorp, Inc.

West 80 Century Road

Paramus, New Jersey 07652-1473

Attention: Chairman, Human Resources Committee

with a copy to:

Thacher Proffitt & Wood llp

Two World Financial Center

New York, New York 10281

Attention: W. Edward Bright, Esq.

          Section 12. Indemnification for Attorneys’ Fees.

          (a) The Bank shall indemnify, hold harmless and defend the Officer against reasonable costs,
including legal fees and expenses, incurred by him in connection with or arising out of any action,
suit or proceeding (including any tax controversy) in which he may be involved, as a result of his
efforts, in good faith, to defend or enforce the terms of this Agreement. For purposes of this
Agreement, any settlement agreement which provides for payment of any amounts in settlement of the
Bank’s obligations hereunder shall be conclusive evidence of the Officer’s entitlement to
indemnification hereunder, and any such indemnification payments shall be in addition to amounts
payable pursuant to such settlement agreement, unless such settlement agreement expressly provides
otherwise.

          (b) The Bank’s obligation to make the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Bank may have against the Officer or others. In
no event shall the Officer be obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to the Officer under any of the provisions of this Agreement and
such amounts shall not be reduced whether or not the Officer obtains other employment. Unless it is
determined that the Officer has acted frivolously or in bad faith, the Bank shall pay as incurred,
to the full extent permitted by law, all legal fees and expenses which the Officer may reasonably
incur as a result of or in connection with his consultation with legal counsel or arising out of
any action, suit, proceeding, tax controversy or contest (regardless of the outcome thereof) by the
Bank, the Officer or others regarding the validity or enforceability of, or liability under, any
provision of this Agreement or any guarantee of performance thereof (including as a

 Page 16 of 21

 

result of any
contest by the Officer about the amount of any payment pursuant to this Agreement), plus in each
case interest on any delayed payment at the applicable Federal rate provided for in section
7872(f)(2)(A) of the Code.

          (c) Any payment or reimbursement to effect indemnification under this section 12 shall be made
no later than the last day of the calendar year following (i) the calendar year in which the
Officer incurs the expense, or (ii), if later, within sixty (60) days after the settlement or
resolution that gives rise to the Officer’s right to reimbursement; provided, however, that the
Officer shall have submitted to the Bank documentation supporting such expenses at such time and in
such manner as the Bank may reasonably require.

          Section 13. Severability.

          A determination that any provision of this Agreement is invalid or unenforceable shall not
affect the validity or enforceability of any other provision hereof.

          Section 14. Waiver.

          Failure to insist upon strict compliance with any of the terms, covenants or conditions hereof
shall not be deemed a waiver of such term, covenant, or condition. A waiver of any provision of
this Agreement must be made in writing, designated as a waiver, and signed by the party against
whom its enforcement is sought. Any waiver or relinquishment of any right or power hereunder at any
one or more times shall not be deemed a waiver or relinquishment of such right or power at any
other time or times.

          Section 15. Counterparts.

          This Agreement may be executed in two or more counterparts, each of which shall be deemed an
original, and all of which shall constitute one and the same Agreement.

          Section 16. Governing Law.

          Except to the extent preempted by federal law, this Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New Jersey applicable to
contracts entered into and to be performed entirely within the State of New Jersey.

          Section 17. Headings and Construction.

          The headings of sections in this Agreement are for convenience of reference only and are not
intended to qualify the meaning of any section. Any reference to a section number shall refer to a
section of this Agreement, unless otherwise stated.

          Section 18. Entire Agreement; Modifications.

          This instrument contains the entire agreement of the parties relating to the subject matter
hereof, and supersedes in its entirety any and all prior agreements, understandings or

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representations relating to the subject matter hereof. No modifications of this Agreement shall be
valid unless made in writing and signed by the parties hereto; provided, however, that this
Agreement shall be subject to amendment in the future in such manner as the Bank shall reasonably
deem necessary or appropriate to effect compliance with section 409A of the Code and the
regulations thereunder (“Section 409A”) and to avoid the imposition of penalties and additional
taxes under Section 409A, it being the express intent of the parties that any such amendment shall
not diminish the economic benefit of the Agreement to the Officer on a present value basis.

          Section 19. Required Regulatory Provisions.

          The following provisions are included for the purposes of complying with various laws, rules
and regulations applicable to the Company or the Bank:

          (a) Notwithstanding anything herein contained to the contrary, in no event
shall the aggregate amount of compensation payable to the Officer pursuant to
Section 6(b) of this Agreement (exclusive of amounts described in Section 6(b)(vii)
or (viii)) exceed three times the Officer’s average annual total compensation for
the last five consecutive calendar years to end prior to the Officer’s termination
of employment with the Bank (or for the Officer’s entire period of employment with
the Bank if less than five calendar years).

          (b) Notwithstanding anything herein contained to the contrary, any payments to
the Officer by the Company or the Bank, whether pursuant to this Agreement or
otherwise, are subject to and conditioned upon their compliance with Section 18(k)
of the Federal Deposit Insurance Act (“FDI Act”), 12 U.S.C. Section 1828(k), and any
regulations promulgated thereunder.

          (c) Notwithstanding anything herein contained to the contrary, if the Officer
is suspended from office and/or temporarily prohibited from participating in the
conduct of the affairs of the Bank pursuant to a notice served under Section 8(e)(3)
or 8(g)(1) of the FDI Act, 12 U.S.C. Section 1818(e)(3) or 1818(g)(1), the Bank’s
obligations under this Agreement shall be suspended as of the date of service of
such notice, unless stayed by appropriate proceedings. If the charges in such notice
are dismissed, the Bank, in its discretion, may (i) pay to the Officer all or part
of the compensation withheld while the Bank’s obligations hereunder were suspended
and (ii) reinstate, in whole or in part, any of the obligations which were
suspended.

          (d) Notwithstanding anything herein contained to the contrary, if the Officer
is removed and/or permanently prohibited from participating in the conduct of the
Bank’s affairs by an order issued under Section 8(e)(4) or 8(g)(1) of the FDI Act,
12 U.S.C. Section 1818(e)(4) or (g)(1), all prospective obligations of the Bank
under this Agreement shall terminate as of the effective date of the order, but
vested rights and obligations of the Bank and the Officer shall not be affected.

 Page 18 of 21

 

          (e) Notwithstanding anything herein contained to the contrary, if the Bank is
in default (within the meaning of Section 3(x)(1) of the FDI Act, 12
U.S.C. Section 1813(x)(1), all prospective obligations of the Bank under this
Agreement shall terminate as of the date of default, but vested rights and
obligations of the Bank and the Officer shall not be affected.

          (f) Notwithstanding anything herein contained to the contrary, all prospective
obligations of the Bank hereunder shall be terminated, except to the extent that a
continuation of this Agreement is necessary for the continued operation of the Bank:

          (i) by the Director of the Office of Thrift Supervision (“OTS”) or his
or her designee or the Federal Deposit Insurance Corporation (“FDIC”), at
the time the FDIC enters into an agreement to provide assistance to or on
behalf of the Bank under the authority contained in Section 13(c) of the FDI
Act, 12 U.S.C. Section 1823(c);

          (ii) by the Director of the OTS or his or her designee at the time such
Director or designee approves a supervisory merger to resolve problems
related to the operation of the Bank or when the Bank is determined by such
Director to be in an unsafe or unsound condition.

The vested rights and obligations of the parties shall not be affected. If and to the extent that
any of the foregoing provisions shall cease to be required by applicable law, rule or regulation,
the same shall become inoperative as though eliminated by formal amendment of this Agreement.

          Section 20. Guaranty.

          The Company hereby irrevocably and unconditionally guarantees to the Officer the payment of
all amounts, and the performance of all other obligations, due from the Bank in accordance with the
terms of this Agreement as and when due without any requirement of presentment, demand of payment,
protest or notice of dishonor or nonpayment.

          Section 21. Section 409A of the Internal Revenue Code.

          The Officer and the Bank acknowledge that each of the payments and benefits promised to the
Officer under this Agreement must either comply with the requirements of Section 409A or qualify
for an exception from compliance. To that end, the Officer and the Bank agree that:

          (a) the payment described in section 2(a) is intended to be excepted from
compliance with Section 409A pursuant to Treasury Regulation section 1.409A-1(b)(3)
as payment made pursuant to the Bank’s customary payment timing arrangement;

 Page 19 of 21

 

          (b) the benefits and payments described in section 2(b) are expected to comply
with or be excepted from compliance with Section 409A on their own terms;

          (c) the benefits and payments on disability described in section 4 are intended
to be excepted from compliance with Section 409A as “disability pay” pursuant to
Treasury Regulation section 1.409A-1(a)(5); and

          (d) the welfare benefits provided in kind under section 6(b)(i) are intended to
be excepted from compliance with Section 409A as welfare benefits pursuant to
Treasury Regulation section 1.409A-1(a)(5) and/or as benefits not includible in
gross income.

          (e) the legal fee reimbursements described in section 12 are intended to
satisfy the requirements for “reimbursement or in-kind benefit plans” described in
Treasury Regulation section 1.409A-3(i)(1)(iv) and shall be administered to satisfy
such requirements;

          In the case of a payment that is not excepted from compliance with Section 409A, and that is
not otherwise designated to be paid immediately upon a permissible payment event within the meaning
of Treasury Regulation section 1.409A-3(a), the payment shall not be made prior to, and shall, if
necessary, be deferred (with interest at the annual rate of 6%, compounded monthly from the date of
the Officer’s termination of employment to the date of actual payment) to and paid on the later of
the day five (5) days after the Officer’s earliest separation from service (within the meaning of
Treasury Regulation section 1.409A-1(h)) and, if the Officer is a specified employee (within the
meaning of Treasury Regulation section 1.409A-1(i)) on the date of his separation from service, the
first day of the seventh month following the Officer’s separation from service. Each amount
payable under this plan that is required to be deferred beyond the Officer’s separation from
service, shall be deposited on the date on which, but for such deferral, the Bank would have paid
such amount to the Officer, in a grantor trust which meets the requirements of Revenue Procedure
92-65 (as amended or superseded from time to time), the trustee of which shall be a financial
institution selected by the Bank with the approval of the Officer (which approval shall not be
unreasonably withheld or delayed), pursuant to a trust agreement the terms of which are approved by
the Officer (which approval shall not be unreasonably withheld or delayed) (the “Rabbi Trust”), and
payments made shall include earnings on the investments made with the assets of the Rabbi Trust,
which investments shall consist of short-term investment-grade fixed-income securities or units of
interest in mutual funds or other pooled investment vehicles designed to invest primarily in such
securities. Furthermore, this Agreement shall be construed and administered in such manner as
shall be necessary to effect compliance with Section 409A.

 Page 20 of 21

 

          IN WITNESS WHEREOF, the Bank and the Company have caused this Agreement to be executed and the
Officer has hereunto set his hand, all as of the day and year first above written.

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Hudson City Savings Bank	 	 
	 
	 	 	 	 	 	 	 	 
	Attest:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By

	 	 	 	By	 	 	 	 
	 

	 	 
	 	 	 	 	 	 
	 

	 	Name:
	 	 	 	Name:	 	 
	 

	 	Title:
	 	 	 	Title:	 	 
	 
	[Seal]
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Attest:	 	 	 	Hudson City Bancorp, Inc	 	 
	 
	 	 	 	 	 	 	 	 
	By

	 	 	 	By	 	 	 	 
	 

	 	 

Name:
	 	 	 	 

Name:
	 	 
	 

	 	Title:
	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 	 	 
	[Seal]
	 	 	 	 	 	 	 	 

 Page 21 of 21

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