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8-K - FORM 8-K - JUNIATA VALLEY FINANCIAL CORP | c14094e8vk.htm |
Exhibit 10.1
Juniata Valley Financial Corp.
2011 Stock Option Plan
Approved: March 15, 2011
2011 Stock Option Plan
Approved: March 15, 2011
1. Purpose.
The purpose of the Juniata Valley Financial Corp. 2011 Stock Option Plan (the Plan) is to
attract, retain and motivate highly qualified employees for Juniata Valley Financial Corp. (JUVF)
and its subsidiaries by making provision for the payment of supplemental compensation (Awards) to
officers and key employees for services which substantially contribute to the success of JUVF and
its subsidiaries. The Plan is designed to provide incentives to those employees who are in a
position to contribute to the long-term growth and profitability of JUVF and its subsidiaries. The
Plan will also make JUVFs compensation program more competitive with those of other bank holding
companies and banks. JUVF will benefit from the added interest which employees will have in the
success of JUVF and its subsidiaries as a result of their proprietary interest in JUVF.
2. Administration of the Plan.
(a) The Plan shall be administered by JUVFs Board of Directors (the Board) and the Boards
Personnel and Compensation Committee (or, at the Boards option, The Board may appoint a separate
committee composed of not less than three (3) or more than six (6) members of the Board) (the
"Committee) . No director who is an employee of JUVF or any subsidiary shall serve on the
Committee. The Board may from time to time remove members from, or add members to, the Committee.
Vacancies on the Committee, howsoever caused, shall be filled by the Board. All members of the
Committee must be ineligible (and must have been ineligible for a one (1) year period prior to
appointment to the Committee) to receive an Award under the Plan or any other similar plan of JUVF.
(b) Subject to the express provisions of the Plan and to such orders or resolutions not
inconsistent with the provisions of the Plan as may be issued or adopted from time to time by the
Board, the Committee shall recommend to the Board Awards hereunder. Awards shall be in the form of
stock options (Options"), i.e., a right granted to a Participant (as defined in Section 5)
pursuant to Section 5, to purchase, before a specified date and at a specified price, a specified
number of shares of Stock. The Board shall have the full power and authority, in its discretion,
to grant the Awards hereunder, to determine to whom and the time when Awards will be granted to
determine the purchase price of JUVF common stock (Stock) covered by each Option and the term of
each Option, to determine the terms and provisions of the Option agreements entered into in
connection with awards under the Plan, to interpret the Plan, to supervise the administration of
the Plan, to prescribe, amend, and rescind rules and regulations relating to the Plan, and to make
all other determinations and take any other action deemed necessary or desirable to the proper
operation or administration of the Plan. When the Board takes any such actions relating to the
Plan and Awards under the Plan, only non-employee directors shall participate in such action.
(c) Any determination, decision, or action of the Board provided for in the Plan may be made
or taken by action of a majority of the members of the Board, exclusive of those Board members who
are employees of JUVF or any subsidiary, and shall be final and binding on all persons (including
Participants, JUVF, subsidiaries of JUVF, any shareholder of JUVF, any employee of JUVF, or any
subsidiary of JUVF). No member of the Board or the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any Award granted under it.
(d) Neither the Committee, the Board , JUVF, nor any officer or employee of JUVF or any
subsidiary of JUVF shall have any duty to advise Participants of any rules, interpretations or
determinations by the Board, and each Participant shall be bound by such rules, interpretations or
determinations upon communication thereof to such Participant effective as of such date (prior to,
subsequent to or concurrent with such communication) that each such rule, interpretation or
determination shall have been intended to be effective by the Board.
3. Stock Subject to the Plan, Scope, and Duration.
(a) Awards under the Plan shall be granted in the form of (i) Incentive Stock Options
(ISOs), in conformity with Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code), and (ii) a non-qualified stock option (a NQSO) that does not meet the definition of an
ISO.
(b) The total number of shares of Stock as to which Options may be granted under this Plan
during the period ending March 14, 2021, shall be 300,000 shares, which number shall be adjusted,
as appropriate, if Section 9 below becomes applicable. Issuance of Stock upon exercise of an
Option shall reduce the total number of shares of Stock available under the Plan. There shall not
be counted against this total any shares of Stock covered by an Option that has lapsed unexercised
or which has been forfeited as hereinafter provided.
(c) Shares of Stock as to which Options under the Plan may be granted may be made available by
JUVF from authorized but unissued Stock or from Stock reacquired by JUVF (including Stock purchased
in the open market).
(d) The Plan shall terminate on March 14, 2021.
4. Eligible Employees.
The persons who shall be eligible to receive Awards under this Plan shall be such officers and
other key employees of JUVF or any of its wholly-owned subsidiaries, without limitation as to
length of service, who are from time to time serving as employees in a managerial, administrative,
or professional position and who are recommended to, and authorized by, the Board for Awards under
the Plan. In addition, in the event JUVF or one of its affiliates acquires another corporation by
merger or other form of acquisition, or the assets of another corporation, and former employees of
said corporation who become employees of JUVF or an affiliate held stock options to acquire shares
of the acquired corporation, the Board, in its discretion, may grant an Award under the Plan to
such newly acquired employees in substitution for the options they held pre-acquisition. The terms
and conditions of any Awards so granted or assumed may vary from the terms and conditions set forth
in this Plan to the extent the Board may deem appropriate to conform, in whole or in part, to the
provisions of the options being submitted or assumed.
5. Granting Awards.
(a) The Committee shall recommend to the Board, which, subject to the limitations of this
Plan, shall select from eligible employees those persons to be granted Awards (Participants) and
shall determine the time when each Award shall be granted, the number of shares of Stock to be
subject to an Award, and the terms and conditions consistent with this Plan, upon which Awards are
to be made. The Board shall make Awards to the officers and key employees so selected for the
number of Options and upon the terms and conditions so determined. No Options or Stock shall be
issued or distributed under this Plan unless and until all legal requirements applicable to the
issuance or transfer of such Options and/or Stock have been complied with to the satisfaction of
the Board and JUVF. Awards may be made at any time, from time to time, after such consultation
with and consideration of the recommendations of management as the Board deems desirable. The
aggregate maximum number of shares of Stock that may be granted to all persons in the form of
Options, in any one calendar year is an aggregate of 40,000 shares of Stock (which number shall be
adjusted, as appropriate, if Section 9 below becomes applicable.
(b) No Awards shall be granted under this Plan after its termination on March 14, 2021, but
Awards granted prior to such termination date may extend beyond the date, and the terms of the Plan
shall continue to apply to such Awards.
6. Terms and Conditions Applicable to all Options.
(a) General. Options awarded under the Plan shall be in the form of ISOs or NQSOs.
Each Option shall be subject to all of the terms and conditions provided in this Section, all other
applicable terms and conditions in the Plan, and such other terms and conditions (Discretionary
Conditions) as may be specified by the Board
with respect to the Option and the Stock covered thereby at the time of the making of the
Award or as may be specified thereafter by the Board in the exercise of its powers under the Plan.
Without limiting the foregoing, it is understood that the Board may, at any time and from time to
time after the granting of an Option under this Plan, specify such additional terms and conditions
with respect to such Option as may be deemed necessary or appropriate to ensure compliance with any
and all applicable laws, including, but not limited to, terms and conditions for compliance with
federal and state securities laws and, in the case of ISOs, Code Section 422 and other applicable
tax laws. The terms and conditions with respect to any Option, or with respect to any Award to any
Participant, need not be identical with the terms and conditions with respect to any other Option
or any other Participant.
(b) Option Agreement. Receipt of an Option shall be subject to execution of a written
agreement (the Option Agreement) between JUVF and the Participant, in a form approved by the
Board, which shall set forth the number of Options awarded, the number of shares of Stock that may
be purchased pursuant to such Options, the applicable Option Price (as defined below) and such
other terms and conditions provided in the Plan as may be deemed appropriate by the Board,
including, but not limited to, any Discretionary Conditions. The Option Agreement shall be subject
to, and shall be deemed amended to include, such additional Discretionary Conditions as the Board
may thereafter specify in the exercise of its powers under this Plan. A fully executed original
counterpart of the Agreement shall be provided to JUVF and the Participant.
(c) Fair Market Value of Stock. The Fair Market Value of a share of the JUVF common
stock shall mean the closing sales price of the Stock on the principal stock exchange on which the
stock is traded on the day the Option is granted; or if no sale of the Stock has been made on any
stock exchange on that day, the Fair Market Value shall be determined by reference to such price
for the next preceding day on which a sale occurred.
(d) Payment of Option Price. The Option Price for the shares as to which an Option is
exercised shall be paid to JUVF in full on or within ten (10) days after the date of exercise. At
the election of the Participant, such payment may be (i) in cash, (ii) in shares of Stock owned by
the Participant prior to exercising the Option and having a Fair Market Value on the date of
payment equal to the Option Price for the shares of Stock being purchased and which satisfy such
other requirements as may be imposed by the Board, or (iii) partly in cash and partly in such
shares of Stock. Stock acquired by the Participant which is identified as having been obtained
through an ISO under this Plan and still subject to ISO holding requirements as defined in the Code
may not be tendered in payment of the Option Price.
(e) Rights as a Shareholder. No Participant shall have any rights to dividends or
other rights of a shareholder with respect to shares of Stock subject to an Option until the
Participant has given written notice of exercise of the Option, has paid in full the Option Price
for such shares of Stock and has otherwise complied with this Plan, the Option Agreement and such
rules and regulations as may be established by the Board.
(f) Listing and Registration of Shares. No Option granted pursuant to the Plan shall
be exercisable, in whole or in part, prior to the date this Plan has been approved by the
shareholders of JUVF, or if the Board determines, at any time and in its discretion, that the
listing, registration, or qualifications of the shares of Stock subject to such Option on any
securities exchange or under any applicable law, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition of, or in connection with, the granting
of such Option or the issue of shares thereunder, unless such listing, registration, qualification,
consent, or approval shall have been effected or obtained free of any conditions not acceptable to
the Board.
(g) Investment Purpose. Each Option under this Plan shall be granted on the condition
that the purchases of shares of Stock hereunder shall be for investment purposes, and not with a
view to resale or distribution. This condition shall not be applicable if the Stock subject to the
Option is registered under the Securities Act of 1933, as amended, or if, in the opinion of counsel
for JUVF, a resale of such stock without registration is permitted under the Securities Act of 1933
and any other applicable law, regulation, or rule of any governmental agency.
(h) Investment Representation. The Board may require each person purchasing shares of
Stock pursuant to the exercise of an Option to represent to and agree with JUVF in writing that
such shares are being acquired for investment and without a view to distribution thereof. The
certificates for shares of Stock so purchased may include any legend which the Board deems
appropriate to reflect any restriction on transfer. The Board also
may impose, in its discretion, as a condition of any Option, any restrictions on the
transferability of shares of Stock acquired through the exercise of such Option as it may deem fit.
Without limiting the generality of the foregoing, the Board may impose conditions restricting
absolutely the transferability of shares of Stock acquired through the exercise of Options for such
periods as the Board may determine and, further, in the event a Participants employment by JUVF or
a subsidiary terminates during the period in which such shares of Stock are nontransferable, the
Participant may be required, if required by the related Option Agreement, to sell such Stock back
to JUVF at such price and on such other terms as the Board may have specified in the Option
Agreement.
7. Options.
In addition to the other terms and conditions set forth in this Plan, the following shall be
applicable to Options:
(a) Option Price. The purchase price per share of Stock deliverable upon the exercise
of an Option shall not be less than one hundred percent (100%) of the Fair Market Value of the
Stock on the day the Option is granted, but in no event less than the par value of such Stock.
(b) Exercise Term. Each Option Agreement shall state the period or periods of time
within which the Option may be exercised by the Participant, in whole or in part, which shall be
such period or periods of time as may be determined by the Board, provided that the exercise period
shall not commence earlier than six (6) months after the date of the grant of the Option nor end
later than ten (10) years after the date of the grant of the Option. Except as otherwise approved
by the Committee and set forth in the Option Agreement, an Option shall be exercisable as to 20% of
the shares of Stock subject to the Option on or after one year after the date of grant and shall be
exercisable as to an additional 20% of the shares of Stock subject to the Option on each annual
anniversary date of the date of the grant at the Option; provided, however, that if the Participant
is age 55 or older on the date of the grant of the Award, the percentage 20% above shall be
replaced with the percentage 33 1/3%. The Board shall have the power to permit in its discretion
an acceleration of the previously determined exercise terms, subject to the terms set forth herein,
under such circumstances and upon such terms and conditions as it deems appropriate.
(c) Exercise in the Event of Termination of Employment.
(i) Death: Unless otherwise provided by the Committee at the time of grant, in
the event of the death of the Participant, the option must be exercised by the Participants
estate or beneficiaries within one year following the death of the Participant and prior to
its expiration. Each option may be exercised as to all or any portion thereof regardless of
whether or not fully exercisable under the terms of the grant.
(ii) Disability: Unless otherwise provided by the Committee at the time of
grant, in the event of the Disability of the Participant, the option must be exercised
within one year following the Participants termination of employment and prior to its
expiration. Each option may be exercised as to all or any portion thereof regardless of
whether or not fully exercisable under the terms of the grant. Disability means the
Participant, by reason of any medically determinable physical or mental impairment that can
be expected to result in death or to last for a continuous period of not less than twelve
months, receives benefits for a period of not less than three months under JUVFS disability
insurance policy
(iii) Retirement: Unless otherwise provided by the Committee at the time of
grant, in the event of the Retirement of the Participant the option must be exercised within
three years following the Participants termination of employment and prior to its
expiration. An unexercised ISO will cease to be treated as such and will become a NQSO
three months following the date of Retirement. Each option may be exercised as to all or
any portion thereof regardless of whether or not fully exercisable under the terms of the
grant. Retirement means termination from employment with JUVF after the Participant has
attained age 62 and has completed a minimum of five years of service with JUVF or
termination of employment under circumstances which the Committee deems equivalent to
retirement.
(iv) Other Terminations: Unless otherwise provided by the Committee at the
time of grant, in the event a Participant ceases to be an employee of the JUVF for any
reason other than death, Disability, or Retirement, options which are exercisable on the
date of termination must be exercised within three months
after termination and prior to the expiration date of any such option. All options
which are not exercisable on the date of termination shall be canceled.
(v) Extension of Exercise Period: Notwithstanding all other provisions under
Section 2.7(c), in the event a Participants employment is terminated, the Committee may, in
its sole discretion, extend the post-termination period during which the option may be
exercised, provided however that such period may not extend beyond the original option
period.
(vi) Exercise In the Event of Change in Control. In the event of any Change in
Control, all Stock Options shall immediately become exercisable without regard to the
exercise period set forth in 2.7(b). A change of control shall be deemed to have occurred
upon the happening of any of the following events:
(a) a change within a twelve month period in a majority of the members of the
Board of Directors of JUVF;
(b) a change within a twelve month period in the holders of more than 50% of
the outstanding voting stock of JUVF; or
(c) any other event deemed to constitute a change of control by the Board of
Directors.
(d) 10% Owners. Notwithstanding anything herein to the contrary, no ISO shall be
granted to any individual if at the time the ISO is to be granted the individual owns Stock
possessing more than ten percent (10%) of the total combined voting power of all classes of Stock
of JUVF unless at the time such ISO is granted the ISO Option Price is at least one hundred ten
percent (110%) of the Fair Market Value of the Stock subject to the ISO and the ISO by its terms is
not exercisable after the expiration of five (5) years from the date such ISO is granted. For
purposes of the preceding sentence, the attribution rule of Stock ownership set forth in Section
425(d) of the Code shall apply.
(e) ISO $100,000 Limitation. To the extent that the aggregate Fair Market Value
(determined at the time of grant) of Stock with respect to which ISOs are exercisable for the first
time by any one Participant during any calendar year exceeds one hundred thousand dollars
($100,000), the options or portions thereof that exceed such limit (according to the order in which
they were granted) shall be treated as non-statutory stock options (i.e., shall not be treated as
ISOs), notwithstanding any contrary provision of the applicable Option Agreements.
(f) Notice of Sale. A Participant shall give prompt notice to JUVF of any disposition
of shares of Stock acquired upon exercise of an ISO if such disposition occurs within either two
(2) years after grant of the ISO or one (1) year after receipt of such Stock by the Participant.
(g) Other Terms. Each ISO Option Agreement, in addition to specifically designating
the Options covered thereby as ISOs, shall contain such other terms, conditions and provisions as
the Board may determine to be necessary or desirable in order to qualify such ISO as a tax-favored
option within the meaning of Section 422 of the Code. Subject to the limitations of Paragraph 11,
and without limiting any other provisions hereof, the Board shall have the power without further
approval to amend the terms of this Plan or any Awards or agreements thereunder for such purpose.
8. Non-transferability of Options.
Options granted under this Plan shall not be transferable by the Participant other than by
will or by the laws of descent and distribution. During the lifetime of a Participant, Options may
be exercised only by the Participant. Options exercisable after the death of a Participant may be
exercised by the legatees, personal representatives, or distributees of the Participant.
9. Stock Adjustments.
(a) In the event that the shares of Stock shall be changed into or exchanged for a different
number or kind of shares of stock of JUVF or of another corporation (whether by reason of merger,
consolidation, recapitalization, reclassification, stock split, combination of shares or
otherwise), or if the number of such shares of Stock shall be increased through the payment of a
stock dividend, then there shall be substituted for or added to each share of Stock subject to, or
which may become subject to, an Award under this Plan, the number and kind of shares into which
each outstanding share of Stock shall be exchanged, or to which each such share shall be entitled,
as the case may be. Outstanding Awards shall also be appropriately amended as to Option Price and
other terms as may be necessary to reflect the foregoing events. In the event there shall be any
other change in the number or kind of outstanding shares of the Stock, or any shares into which
such shares shall have been changed, or for which the Board shall, in its sole discretion,
determine that such change equitably requires an adjustment in any Award theretofore granted or
which may be granted under this Plan, such adjustments shall be made in accordance with such
determination.
(b) Fractional shares resulting from any adjustment in Awards pursuant to this Paragraph 9 may
be settled in cash or otherwise as the Board shall determine. Notice of any adjustments shall be
given by JUVF to each holder of an Award which shall have been so adjusted and such adjustment
(whether or not such notice is given) shall be effective and binding for all purposes of this Plan.
The Board may round down to the next whole number any shares of Stock resulting from any adjustment
in Awards in order to eliminate fractional shares.
(c) The Board shall have the power, in the event of any merger or consolidation of JUVF with
or into any other corporation, or the merger or consolidation of any other corporation with or into
JUVF, or the sale of all or substantially all of the assets of JUVF, or an offer to purchase made
by a party other than JUVF to all shareholders of JUVF for all or any substantial portion of the
outstanding Stock, to amend all outstanding Awards to permit the exercise of all such Awards prior
to the effectiveness of any such merger, consolidation, or sale or the expiration of any such offer
to purchase and to terminate such Awards as of such effectiveness or expiration.
(d) In making the adjustments provided for by this Paragraph 9, consideration shall be given
to applicable tax and securities laws in order to avoid a premature lapse or disqualifying
disposition of an Option due solely to such adjustment.
10. Withholding Taxes.
(a) Subject to the provisions of subparagraph (b), JUVF may require that any Participant, as a
condition of the exercise of an Option, other than an ISO, pay or reimburse any taxes which JUVF or
a subsidiary is required to withhold in connection with the exercise of the Option.
(b) A Participant may satisfy the withholding obligation described in subparagraph (a), in
whole or in part, by electing to have JUVF withhold shares of Stock (otherwise issuable upon the
exercise of an Option) having a Fair Market Value equal to the amount required to be withheld. An
election by a Participant to have shares withheld for this purpose shall be subject to the
following restrictions:
(i) it must be made prior to the date on which the amount of tax to be withheld is
determined;
(ii) it shall be irrevocable;
(iii) it shall be subject to disapproval by the Board; and
(iv) it shall be ineffective if the effect of such election is to cause a violation of
any regulation of the Securities and Exchange Commission.
11. Effective Date, Termination, and Amendment of the Plan.
(a) This Plan shall become effective on March 15, 2011, provided that JUVFs shareholders
shall have adopted the Plan at the Companys 2011 Annual Meeting of Stockholders. Once effective,
this Plan shall terminate March 14, 2021.
(b) The Board may, insofar as permitted by law, from time to time and at any time, with
respect to any Stock at the time not subject to Awards, terminate, suspend, alter, amend or
discontinue the Plan, in whole or in part, except that no such modification, alteration, amendment,
or discontinuation shall, without the Participants consent, impair the rights of any Participant
under any Award granted to such Participant, except in accordance with the provisions of this Plan
and/or the Agreement applicable to any such Award, and further, no modification, alteration, or
amendment shall, without the approval by the holders of a majority of the then outstanding voting
stock of JUVF represented and entitled to vote at a shareholders meeting:
(i) increase the total number of shares of Stock reserved for the purpose of the Plan;
(ii) decrease the Option Price of any Option to less than one hundred percent (100%) of
Fair Market Value on the date of grant of any Option; and
(iii) materially increase the benefits accruing to Participants under this Plan.
12. Miscellaneous.
(a) No Rights to Continued Employment or Award. This Plan does not, directly or
indirectly, create any rights in any employee or class of employees to receive any Awards under the
Plan, or create in any employee or class of employees any right with respect to continuation of
employment by JUVF or a subsidiary, and it shall not be deemed to interfere in any way with the
right of JUVF or any subsidiary to terminate or otherwise modify an employees employment at any
time.
(b) Failure to Comply with Terms and Conditions. Notwithstanding any other provision
of this Plan, no payment or delivery with respect to any Award shall be made, and all rights of the
Participant who receives such Award (or his designated beneficiary or legal representative) to such
payment or delivery under this Plan shall be forfeited, at the discretion of the Board, if, prior
to the time of such payment or delivery, the Participant breaches any restriction or any of the
terms, restrictions and/or conditions of this Plan and/or any agreement with respect to such Award.
(c) Parties in Interest. The provisions of this Plan and the terms and conditions of
any Award shall, in accordance with their terms, be binding upon, and inure to the benefit of, all
successors of each Participant, including, without limitation, such Participants estate,
executors, administrators or trustees thereof, heirs and legatees and any receiver of such estate.
(d) Indemnification. No member of the Committee or the Board shall be personally
liable by reason of any contract or other instrument executed by him or on his behalf in his
capacity as a member of the Committee or the Board, nor for any mistake or judgment made in good
faith, and JUVF shall indemnify and hold harmless each member of the Committee and the Board and
each other officer or employee of JUVF to whom any duty or power relating to the administration or
interpretation of this Plan may be allocated or delegated, against any cost or expense (including
counsel fees) or liability (including any sum paid in settlement of a claim with the approval of
the Board) arising out of any act or omission to act in connection with this Plan, unless arising
out of such persons own fraud or bad faith. This provision shall in no way limit the right to
indemnification, or affect the lack of personal liability to which an employee, officer, or
director is entitled under JUVFs Bylaws or under applicable law.
(e) Designation of Beneficiary. Each Participant may designate a beneficiary or
beneficiaries (on a form supplied by the Board) to exercise his Awards in the event of his death,
and may change such designation from time to time and at any time prior to the death of such
Participant.
(f) Governing Law. All questions pertaining to construction, validity and effect of
the provisions of this Plan and the rights of all persons hereunder shall be governed by the laws
of the Commonwealth of Pennsylvania.
(g) Compliance with Code Section 409A. Section 409A of the Code (herein 409A)
governing the taxation of nonqualified deferred compensation does not, as a general rule, apply to
stock rights of the type to be granted under this Plan. Nevertheless, to the extent that the Board
determines that any Option granted under the Plan is subject to 409A, the Option Agreement
evidencing such Option shall incorporate the terms and conditions required by 409A. To the extent
applicable, the Plan and Option Agreements shall be interpreted in accordance with 409A.
Notwithstanding any provision of the Plan or an Option Agreement to the contrary, in the event the
Board determines that any Option may be subject to 409A, the Board may adopt such amendments to the
Plan and the applicable Option Agreements, or adopt other policies and procedures (including
amendments, policies and procedures with retroactive effect), or take any other actions, that the
Board determines are necessary or appropriate to (1) exempt the Option from 409A and/or preserve
the intended tax treatment of the benefits provided with respect to the Option, or (2) comply with
the requirements of 409A.