1999 Stock Option And Incentive Plan

EXHIBIT 10.1


1ST STATE BANCORP, INC.
1999 STOCK OPTION AND INCENTIVE PLAN

1. PURPOSE OF THE PLAN.


The purpose of this Plan is to advance the interests of the Company through providing select key Employees and Directors of the Bank, the Company, and their Affiliates with the opportunity to acquire Shares. By encouraging such stock ownership, the Company seeks to attract, retain and motivate the best available personnel for positions of substantial responsibility and to provide additional incentives to Directors and key Employees of the Company or any Affiliate to promote the success of the business.


2. DEFINITIONS.


As used herein, the following definitions shall apply.


(a) "Affiliate" shall mean any "parent corporation" or "subsidiary corporation" of the Company, as such terms are defined in Section 424(e) and (f), respectively, of the Code.


(b) "Agreement" shall mean a written agreement entered into in accordance with Paragraph 5(c).


(c) "Awards" shall mean, collectively, Options and SARs, unless the context clearly indicates a different meaning.


(d) "Bank" shall mean 1st State Bank.


(e) "Board" shall mean the Board of Directors of the Company.


(f) "Code" shall mean the Internal Revenue Code of 1986, as amended.


(g) "Committee" shall mean not only the Stock Option Committee consisting of at least two Non-Employee Directors appointed by the Board in accordance with Paragraph 5(a) hereof, but also the Board.


(h) "Common Stock" shall mean the common stock of the Company.


(i) "Company" shall mean 1st State Bancorp, Inc.


(j) "Continuous Service" shall mean the absence of any interruption or termination of service as an Employee or Director of the Company or an Affiliate. Continuous Service shall not be considered interrupted in the case of sick leave, military leave or any other leave of absence approved by the Company, in the case of transfers between payroll locations of the Company or between the Company, an Affiliate or a successor, or in the case of a Director's performance of services in an emeritus or advisory capacity.


(k) "Date of Conversion" shall mean the date of the conversion of the Bank from mutual to stock form.


(l) "Director" shall mean any member of the Board, and any member of the board of directors of an Affiliate whose members the Board has by resolution designated as being eligible for participation in this Plan.


(m) "Disability" shall mean a physical or mental condition, which in the sole and absolute discretion of the Committee, is reasonably expected to be of indefinite duration and to substantially prevent a Participant from fulfilling his or her duties or responsibilities to the Company or an Affiliate.


(n) "Effective Date" shall mean the date specified in Paragraph 14 hereof.


(o) "Employee" shall mean any person employed by the Company, the Bank, or an Affiliate.


(p) "Exercise Price" shall mean the price per Optioned Share at which an Option or SAR may be exercised.


(q) "FDIC Award Limitations" shall mean the following percentage limitations, determined with respect to the total Shares reserved for Awards under this Plan: 25% for total Awards to any particular Employee, 5% for total Awards to any particular non-Employee Director, and 30% for total Awards to the non-Employee Directors as a group.


(r) "ISO" shall mean an option to purchase Common Stock which meets the requirements set forth in the Plan, and which is intended to be and is identified as an "incentive stock option" within the meaning of Section 422 of the Code.


(s) "Market Value" shall mean the fair market value of the Common Stock, as determined under Paragraph 8(b) hereof.


(t) "Non-Employee Director" shall have the meaning provided in Rule 16b-3.


(u) "Non-ISO" means an option to purchase Common Stock which meets the requirements set forth in the Plan but which is not intended to be and is not identified as an ISO.


(v) "Option" means an ISO and/or a Non-ISO.


(w) "Optioned Shares" shall mean Shares subject to an Award granted pursuant to this Plan.


(x) "Participant" shall mean any person who receives an Award pursuant to the Plan.


(y) "Plan" shall mean this 1st State Bancorp, Inc. 1999 Stock Option and Incentive Plan.


(z) "Rule 16b-3" shall mean Rule 16b-3 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended.


(aa) "Share" shall mean one share of Common Stock.


(bb) "SAR" (or "Stock Appreciation Right") means a right to receive the appreciation in value, or a portion of the appreciation in value, of a specified number of shares of Common Stock.


(cc) "Year of Service" shall mean a full twelve-month period, measured from the date of an Award and each annual anniversary of that date, during which a Participant has not terminated Continuous Service for any reason.


3. TERM OF THE PLAN AND AWARDS.


(a) Term of the Plan. The Plan shall continue in effect for a term of ten years from the Effective Date, unless sooner terminated pursuant to Paragraph 16 hereof. No Award shall be granted under the Plan after ten years from the Effective Date.


(b) Term of Awards. The term of each Award granted under the Plan shall be established by the Committee, but shall not exceed ten years; provided, however, that in the case of an Employee who owns Shares representing more than 10% of the outstanding Common Stock at the time an ISO is granted, the term of such ISO shall not exceed five years.


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4. SHARES SUBJECT TO THE PLAN.


(a) General Rule. Except as otherwise required under Paragraph 11, the aggregate number of Shares deliverable pursuant to Awards shall not exceed ________ Shares, which equals 10% of the Shares issued by the Company in connection with the Bank's conversion from mutual to stock form ("Conversion"). Such Shares may either be authorized but unissued Shares, Shares held in treasury, or Shares held in a grantor trust created by the Company. If any Awards should expire, become unexercisable, or be forfeited for any reason without having been exercised, the Optioned Shares shall, unless the Plan shall have been terminated, be available for the grant of additional Awards under the Plan.


(b) Special Rule for SARs. The number of Shares with respect to which an SAR is granted, but not the number of Shares which the Company delivers or could deliver to an Employee or individual upon exercise of an SAR, shall be charged against the aggregate number of Shares remaining available under the Plan; provided, however, that in the case of an SAR granted in conjunction with an Option, under circumstances in which the exercise of the SAR results in termination of the Option and vice versa, only the number of Shares subject to the Option shall be charged against the aggregate number of Shares remaining available under the Plan. The Shares involved in an Option as to which option rights have terminated by reason of the exercise of a related SAR, as provided in Paragraph 10 hereof, shall not be available for the grant of further Options under the Plan.


5. ADMINISTRATION OF THE PLAN.


(a) Appointment of the Committee. The Plan shall be administered by the Committee. Members of the Committee shall serve at the pleasure of the Board. In the absence at any time of a duly appointed Committee, the Plan shall be administered by the Board.


(b) Powers of the Committee. Except as limited by the express provisions of the Plan or by resolutions adopted by the Board, the Committee shall have sole and complete authority and discretion (i) to select Participants and grant Awards, (ii) to determine the form and content of Awards to be issued in the form of Agreements under the Plan, (iii) to interpret the Plan, (iv) to prescribe, amend and rescind rules and regulations relating to the Plan, and (v) to make other determinations necessary or advisable for the administration of the Plan. The Committee shall have and may exercise such other power and authority as may be delegated to it by the Board from time to time. A majority of the entire Committee shall constitute a quorum and the action of a majority of the members present at any meeting at which a quorum is present, or acts approved in writing by a majority of the Committee without a meeting, shall be deemed the action of the Committee.


(c) Agreement. Each Award shall be evidenced by a written agreement containing such provisions as may be approved by the Committee. Each such Agreement shall constitute a binding contract between the Company and the Participant, and every Participant, upon acceptance of such Agreement, shall be bound by the terms and restrictions of the Plan and of such Agreement. The terms of each such Agreement shall be in accordance with the Plan, but each Agreement may include such additional provisions and restrictions determined by the Committee, in its discretion, provided that such additional provisions and restrictions are not inconsistent with the terms of the Plan. In particular, the Committee shall set forth in each Agreement (i) the Exercise Price of an Option or SAR, (ii) the number of Shares subject to the Award, and its expiration date, (iii) the manner, time, and rate (cumulative or otherwise) of exercise or vesting of such Award, and (iv) the restrictions, if any, to be placed upon such Award, or upon Shares which may be issued upon exercise of such Award. The Chairman of the Committee and such other Directors and officers as shall be designated by the Committee are hereby authorized to execute Agreements on behalf of the Company and to cause them to be delivered to the recipients of Awards.


(d) Effect of the Committee's Decisions. All decisions, determinations, and interpretations of the Committee shall be final and conclusive on all persons affected thereby.


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(e) Indemnification. In addition to such other rights of indemnification as they may have, the members of the Committee shall be indemnified by the Company in connection with any claim, action, suit or proceeding relating to any action taken or failure to act under or in connection with the Plan or any Award, granted hereunder to the full extent provided for under the Company's governing instruments with respect to the indemnification of Directors.


6. GRANT OF OPTIONS TO EMPLOYEES.


(a) General Rule. Only Employees shall be eligible to receive Awards. In selecting those Employees to whom Awards will be granted and the number of shares covered by such Awards, the Committee shall consider the position, duties and responsibilities of the eligible Employees, the value of their services to the Company and its Affiliates, and any other factors the Committee may deem relevant. Notwithstanding the foregoing, the Committee shall automatically make the Awards specified in Paragraphs 6(b) and 7 hereof, and (ii) no Employee or non-Employee Director shall recei ...