Information About Shareholder Proposals
If you wish to submit proposals to be included in our proxy
statement for the 2008 Annual Meeting of CMS Bancorp shareholders, we must receive them on or before December 17, 2007, pursuant to the proxy soliciting regulations of the SEC. Nothing in this paragraph shall be deemed to require CMS Bancorp to
include in its proxy statement and proxy card for such meeting any shareholder proposal which does not meet the requirements of the SEC in effect at the time. Any such proposal will be subject to 17 C.F.R. §240.14a-8 of the Rules and
Regulations promulgated by the SEC under the Exchange Act. In addition, under CMS Bancorps Bylaws, if you wish to nominate a director or bring other business before an annual meeting which is not included in the proxy statement for the 2008
Annual Meeting of Shareholders, the following criteria must be met: (i) you must be a shareholder of record; (ii) you must have given timely notice in writing to the Secretary of CMS Bancorp; and (iii) your notice must contain
specific information required in Article II of our Bylaws.
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By Order of the Board of Directors,
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Stephen Dowd
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Senior Vice President, Chief Financial Officer and Secretary
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White Plains, New York
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September 21, 2007
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To assure that your shares are represented at the special meeting, please complete, sign, date and
promptly return the
accompanying proxy card in the postage-paid envelope provided.
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APPENDIX A
CMS BANCORP, INC.
2007 STOCK OPTION PLAN
TABLE OF CONTENTS
CMS BANCORP, INC.
2007 STOCK OPTION PLAN
ARTICLE I
PURPOSE
Section 1.1
General Purpose of the Plan
.
The purpose of the Plan is to promote the growth
and profitability of CMS Bancorp, Inc., to provide eligible directors, certain key officers and employees of CMS Bancorp, Inc. and its affiliates with an incentive to achieve corporate objectives, to attract and retain individuals of outstanding
competence and to provide such individuals with an equity interest in CMS Bancorp, Inc.
ARTICLE II
DEFINITIONS
The following definitions shall apply for the purposes of this Plan, unless a different meaning is plainly indicated by the context:
Section 2.1
Bank
means Community Mutual Savings Bank and any successor thereto.
Section 2.2
Board
means the board of directors of the Company.
Section 2.3
Change of Control
means any of the following events:
(a)
the consummation of a reorganization, merger or consolidation of the Company with one or more other persons, other than a transaction following which:
(i) 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
(ii) 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;
(b) 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;
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(c) a complete liquidation or dissolution of the Company;
(d) 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:
(i) individuals who were members of the Board of Directors of the Company on
the Effective Date; or
(ii) individuals who first became members of the Board of Directors of the Company after the
Effective Date either:
(A) 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
(B) upon election by the shareholders 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
individuals election or nomination did not result from an actual or threatened election contest or other actual or threatened solicitation of proxies or consents other than by or on behalf of the Board of Directors of the Company;
(e) approval by the stockholders of the Company of any agreement, plan or arrangement for the consummation of a transaction which, if
consummated, would result in the occurrence of an event described in section 2.3(a), (b), (c) or (d); or
(f) any event
which would be described in section 2.3(a), (b), (c), (d) or (e) if the term Bank were substituted for the terms 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 2.3, the term person shall have the meaning assigned to it under sections 13(d)(3) or 14(d)(2) of the Exchange Act.
Section 2.4
Code
means the Internal Revenue Code of 1986 (including the corresponding provisions of any succeeding law).
Section 2.5
Committee
means the Committee described in section 4.1.
Section 2.6
Company
means CMS Bancorp, Inc., a Delaware corporation, and any successor thereto.
Section 2.7
Disability
means a condition of total incapacity, mental or physical, for further performance of duty with the Company which the Committee shall have determined, on the basis of
competent medical evidence, is likely to be permanent.
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Section 2.8
Disinterested Board Member
means a member of the Board who (a) is not a current employee of the Company or a subsidiary, (b) is not a former employee of the Company who receives
compensation for prior services (other than benefits under a tax-qualified retirement plan) during the taxable year, (c) has not been an officer of the Company, (d) does not receive remuneration from the Company or a subsidiary, either
directly or indirectly, in any capacity other than as a director except in an amount for which disclosure would not be required pursuant to Item 404(a) of the proxy solicitation rules of the Securities and Exchange Commission and (e) does
not possess an interest in any other transaction, and is not engaged in a business relationship, for which disclosure would be required pursuant to Item 404(a) or (b) of the proxy solicitation rules of the Securities and Exchange
Commission. The term Disinterested Board Member shall be interpreted in such manner as shall be necessary to conform to the requirements of section 162(m) of the Code and Rule 16b-3 promulgated under the Exchange Act.
Section 2.9
Effective Date
means , 2007.
Section 2.10
Eligible Director
means a member of the board of directors of an Employer who is not also an employee or an officer of any Employer.
Section 2.11
Eligible Employee
means any employee whom the Committee may determine to be a key officer or employee of an Employer and select to receive a grant of an Option pursuant to the
Plan.
Section 2.12
Employer
means the Company, the Bank and any successor thereto and, with the prior approval of the Board, and subject to such terms and conditions as may be imposed by the Board,
any other savings bank, savings and loan association, bank, corporation, financial institution or other business organization or institution. With respect to any Eligible Employer or Eligible Director, the Employer shall mean the entity which
employs such person or upon whose board of directors such person serves.
Section 2.13
Exchange Act
means the Securities Exchange Act of 1934, as amended.
Section 2.14
Exercise Price
means the price per Share at which Shares subject to an Option may be purchased upon exercise of the Option, determined in
accordance with section 5.3.
Section 2.15
Fair Market Value
means, with respect to a Share on a specified date:
(a) the final reported sales price on the date in question (or if there is no reported sale on such date, on the last preceding date on which any reported sale occurred) as reported in the principal consolidated
reporting system with respect to securities listed or admitted to trading on the principal United States securities exchange on which the Shares are listed or admitted to trading; or
(b) if the Shares are not listed or admitted to trading on any such exchange, the closing bid quotation with respect to a Share on such
date on the National Association of Securities Dealers Automated Quotations System, or, if no such quotation is provided, on another similar system, selected by the Committee, then in use; or
(c) if sections 2.15(a) and (b) are not applicable, the fair market value of a Share as the Committee may determine.
Section 2.16
Family Member
means the spouse, parent, child or sibling of an Eligible Director or Eligible Employee.
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Section 2.17
OTS Regulations
means the rules and regulations of the Office of Thrift Supervision.
Section 2.18
Incentive Stock Option
means a right to purchase Shares that is granted to Eligible Employees pursuant to section 5.1, that is designated by the Committee to be an Incentive Stock
Option and that is intended to satisfy the requirements of section 422 of the Code.
Section 2.19
Non-Profit Organization
means any organization which is exempt from federal income tax under section 501(c)(3), (4), (5), (6), (7), (8) or (10) of the Internal Revenue
Code.
Section 2.20
Non-Qualified Stock Option
means a right to purchase Shares that is either (a) granted to an Eligible Director or (b) granted to an Eligible Employee and either
(i) is not designated by the Committee to be an Incentive Stock Option, or (ii) does not satisfy the requirements of section 422 of the Code.
Section 2.21
Option
means either an Incentive Stock Option or a Non-Qualified Stock Option granted under the Plan.
Section 2.22
Option Period
means the period during which an Option may be exercised, determined in accordance with section 5.4.
Section 2.23
Person
means an individual, a corporation, a bank, a savings bank, a savings and loan association, a financial institution, a partnership, an association, a joint-stock company, a trust,
an estate, an unincorporated organization and any other business organization or institution.
Section 2.24
Plan
means the CMS Bancorp, Inc. 2007 Stock Option Plan, as amended from time to time.
Section 2.25
Retirement
means with respect to an Eligible Employee, termination of all service for all Employers as an employee at or after the normal or early retirement date set forth in any
tax-qualified retirement plan of the Bank, whether or not the individual in question actually participates in any such tax-qualified plan of the Bank, and in the case of an Eligible Director, termination of all service for all Employers as a voting
member of the Employers board of directors after the attainment of the latest age at which the Eligible Director is eligible for election or appointment as a voting member of the Employers board of directors under the Employers
charter.
Section 2.26
Service
means service for the Company (or any subsidiary or affiliate) as an employee in any capacity, service as a director or emeritus director or advisory director of the
Company.
Section 2.27
Share
means a share of Common Stock, par value $.01 share, of CMS Bancorp, Inc.
Section 2.28
Termination for Cause
means termination of service or removal from office with the Employer upon the occurrence of any of the following: (a) the individual intentionally
engages in dishonest conduct in connection with his performance of services for the Employer resulting in his conviction of a felony; (b) the individual is convicted of, or pleads guilty or nolo contendere to, a felony or any crime involving
moral turpitude; (c) the individual breaches his fiduciary duties to the Employer for personal profit; or (d) the individual willfully breaches or violates any law, rule or regulation (other than traffic violations or similar offenses), or
final cease and desist order in connection with his performance of services for the Employer.
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ARTICLE III
AVAILABLE SHARES
Section 3.1
Available Shares
.
(a) The maximum aggregate number of
Shares with respect to which Options may be granted at any time shall be equal to the excess of:
(i) 205,516 Shares; over
(ii) the sum of:
(A) the number of Shares with respect to which previously granted Options may then or may in the future be exercised; plus
(B) the number of Shares with respect to which previously granted Options have been exercised;
subject to adjustment
pursuant to section 7.3.
(b) Options to purchase an aggregate maximum of 61,654 Shares (subject to adjustment pursuant to
section 7.3) may be granted to Eligible Directors, and Options to purchase a maximum of 10,275 Shares (subject to adjustment pursuant to section 7.3) may be granted to any one Eligible Director.
(c) Options to purchase an aggregate maximum of 205,516 Shares (subject to adjustment pursuant to section 7.3) may be granted to Eligible
Employees, and Options to purchase a maximum of 51,379 Shares (subject to adjustment pursuant to section 7.3) may be granted to any one Eligible Employee.
(d) For purposes of this section 3.1, an Option shall not be considered as having been exercised to the extent that such Option terminates by reason other than the purchase of related Shares; provided, however, that
for purposes of meeting the requirements of section 162(m) of the Code, no Eligible Employee who is a covered employee (within the meaning of section 162(m) of the Code) shall receive grants of Options for an aggregate number of Shares that is in
excess of the amount specified for him under this section 3.1, computed as if any Option which is canceled or forfeited reduced the maximum number of Shares.
ARTICLE IV
ADMINISTRATION
Section 4.1
Committee
.
The Plan shall be administered by the Compensation Committee
(the Committee) consisting of all members of the Board or, if designated by the Board, by a committee comprised solely of Disinterested Board Members. If the Committee consists of fewer than two Disinterested Board Members, then the
Board shall appoint to the Committee such additional Disinterested Board Members as shall be necessary to provide for a Committee consisting of at least two Disinterested Board Members.
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Section 4.2
Committee Action
.
The Committee
shall hold such meetings, and may make such administrative rules and regulations, as it may deem proper. A majority of the members of the Committee shall constitute a quorum, and the action of a majority of the members of the Committee present at a
meeting at which a quorum is present, as well as actions taken pursuant to the unanimous written consent of all of the members of the Committee without holding a meeting, shall be deemed to be actions of the Committee. All actions of the Committee
shall be final and conclusive and shall be binding upon the Company and all other interested parties. Any Person dealing with the Committee shall be fully protected in relying upon any written notice, instruction, direction or other communication
signed by the Chair of the Committee and one member of the Committee, by two members of the Committee or by a representative of the Committee authorized to sign the same in its behalf.
Section 4.3
Committee Responsibilities
.
Subject to the terms and conditions of the
Plan and such limitations as may be imposed by the Board, the Committee shall be responsible for the overall management and administration of the Plan and shall have such authority as shall be necessary or appropriate in order to carry out its
responsibilities, including, without limitation, the authority:
(a) to interpret and construe the Plan, and to determine
all questions that may arise under the Plan as to eligibility for participation in the Plan, the number of Shares subject to the Options, if any, to be granted, and the terms and conditions thereof;
(b) to adopt rules and regulations and to prescribe forms for the operation and administration of the Plan; and
(c) to take any other action not inconsistent with the provisions of the Plan that it may deem necessary or appropriate.
ARTICLE V
STOCK OPTION GRANTS
Section 5.1
Grant of Options
.
(a) Subject to the limitations of the
Plan, the Committee may, in its discretion, grant to an Eligible Employee or an Eligible Director an Option to purchase Shares. An Option for Eligible Employees must be designated as either an Incentive Stock Option or a Non-Qualified Stock Option
and, if not designated as either, shall be a Non-Qualified Stock Option. An Option for an Eligible Director shall be a Non-Qualified Stock Option.
(b) Any Option granted under this section 5.1 shall be evidenced by a written agreement which shall:
(i) specify the number of Shares covered by the Option determined in accordance with section 5.2;
(ii) specify the
Exercise Price, determined in accordance with section 5.3, for the Shares subject to the Option;
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(iii) specify the Option Period determined in accordance with section 5.4;
(iv) set forth specifically or incorporate by reference the applicable provisions of the Plan; and
(v) contain such other terms and conditions not inconsistent with the Plan as the Committee may, in its discretion, prescribe with respect
to an Option granted to an Eligible Employee or an Eligible Director.
Section 5.2
Size of Option
.
Subject to section 3.1 and such limitations as the
Board may from time to time impose, the number of Shares as to which an Eligible Employee or Eligible Director may be granted Options shall be determined by the Committee, in its discretion.
Section 5.3
Exercise Price
.
The price per Share at which an Option granted to an
Eligible Employee or Eligible Director shall be determined by the Committee, in its discretion; provided, however, that the Exercise Price shall not be less than the Fair Market Value of a Share on the date on which the Option is granted.
Section 5.4
Option Period
.
Subject to Section 5.5, the Option Period during
which an Option granted to an Eligible Employee may be exercised shall commence on the date specified by the Committee in the Option agreement and shall expire on the date specified in the Option agreement or, if no date is specified, on the
earliest of:
(a) in the case of an Option granted to an Eligible Employee:
(i) the close of business on the last day of the three-month period commencing on the date of the Eligible Employees termination of
employment with the Employer, other than on account of death or Disability, Retirement or a Termination for Cause;
(ii) the
close of business on the last day of the one-year period commencing on the date of the Eligible Employees termination of employment due to death, Disability or Retirement;
(iii) the date and time when the Eligible Employee ceases to be an employee of the Employer due to a Termination for Cause; and
(iv) the last day of the ten-year period commencing on the date on which the Option was granted; and
(b) in the case of an Option granted to an Eligible Director:
(i) removal for cause in accordance with the Employers bylaws, or Termination for Cause; or
(ii) the last day of the ten-year period commencing on the date on which the Option was granted.
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Section 5.5
Required Regulatory Provisions
.
Notwithstanding anything contained
herein to the contrary:
(a) no Option shall be granted to an Eligible Employee or Eligible Director under the Plan prior to
shareholder approval in accordance with section 8.10;
(b) each Option granted to an Eligible Employee or Eligible Director
shall become exercisable no more rapidly than as follows:
(i) prior to the first anniversary of the grant date, an Option
shall not be exercisable;
(i) on and after the first anniversary, but prior to the second anniversary, of the grant date,
an Option may be exercised as to a maximum of twenty percent (20%) of the Shares subject to the Option when granted;
(ii) on and after the second anniversary, but prior to the third anniversary, of the grant date, an Option may be exercised as to a maximum of forty percent (40%) of the Shares subject to the Option when granted, including in such
forty percent (40%) any optioned Shares purchased prior to such second anniversary;
(iii) on and after the third
anniversary, but prior to the fourth anniversary, of the grant date, an Option may be exercised as to a maximum of sixty percent (60%) of the Shares subject to the Option when granted, including in such sixty percent (60%) any optioned
Shares purchased prior to such third anniversary;
(iv) on and after the fourth anniversary, but prior to the fifth
anniversary, of the grant date, an Option may be exercised as to a maximum of eighty percent (80%) of the Shares subject to the Option when granted, including in such eighty percent (80%) any optioned Shares purchased prior to such fourth
anniversary; and
(v) on and after the fifth anniversary of the grant date and for the remainder of the Option Period, an
Option may be exercised as to the entire number of optioned Shares not theretofore purchased;
to the extent that any Option shall not have become
exercisable and vested prior to the date on which the Option holder terminates Service with an Employer, such Option shall not thereafter become exercisable
provided, however
, that such an Option shall become fully exercisable, and all
optioned Shares not previously purchased shall become available for purchase, on the date of the Option holders death, Disability or upon a Change of Control while in the Service of an Employer. Notwithstanding anything in the Plan to the
contrary, section 5.5(b) shall apply in determining the exercisability of Options granted after shareholder approval of section 9.2 hereof only if no different vesting schedule is established by the Committee and specified in the agreement
evidencing the outstanding Option.
(c) The Option Period of any Option granted hereunder, whether or not previously vested,
shall be suspended as of the time and date at which the Option holder has received notice from the Board that his or her employment is subject to a possible Termination for Cause, or in the case of an Eligible Director, removal for cause in
accordance with the Employers by-laws. Such suspension shall remain in effect until the Option holder receives official notice from the Board that he or she has been cleared of any possible Termination for Cause, or in the case of an Eligible
Director, removal for cause, at which time, the original Exercise Period shall be reinstated without any adjustment for the intervening suspended period. In the event that the Option Period under section 5.4 expires during such suspension, the
Company shall pay to the
8
Eligible Employee, within 30 days after his reinstatement as an employee of the Company, damages equal to the value of the expired Options (based on the Fair
Market Value of a Share as of the expiration of the Option Period less the Exercise Price of such Options).
(d) No Option
granted to an Eligible Employee or Eligible Director hereunder, whether or not previously vested, shall be exercised after the time and date at which the Option holders services with the Employer are terminated in a Termination for Cause, or,
in the case of an Eligible Director, removal for cause in accordance with the Employers by-laws.
Section 5.6
Additional Restrictions on Incentive Stock Options
.
An Option granted
to an Eligible Employee designated by the Committee to be an Incentive Stock Option shall be subject to the following limitations:
(a) If, for any calendar year, the sum of (i) plus (ii) exceeds $100,000, where (i) equals the Fair Market Value (determined as of the date of the grant) of Shares subject to an Option intended to be an Incentive Stock Option
which first become available for purchase during such calendar year, and (ii) equals the Fair Market Value (determined as of the date of grant) of Shares subject to any other options intended to be Incentive Stock Options and previously granted
to the same Eligible Employee which first become exercisable in such calendar year, then that number of Shares optioned which causes the sum of (i) and (ii) to exceed $100,000 shall be deemed to be Shares optioned pursuant to a
Non-Qualified Stock Option or Non-Qualified Stock Options, with the same terms as the Option or Options intended to be an Incentive Stock Option;
(b) The Exercise Price of an Incentive Stock Option granted to an Eligible Employee who, at the time the Option is granted, owns Shares comprising more than 10% of the total combined voting power of all classes of
stock of the Company shall not be less than 110% of the Fair Market Value of a Share, and if an Option designated as an Incentive Stock Option shall be granted at an Exercise Price that does not satisfy this requirement, the designated Exercise
Price shall be observed and the Option shall be treated as a Non-Qualified Stock Option;
(c) The Option Period of an
Incentive Stock Option granted to an Eligible Employee who, at the time the Option is granted, owns Shares comprising more than 10% of the total combined voting power of all classes of stock of the Company, shall expire no later than the fifth
anniversary of the date on which the Option was granted, and if an Option designated as an Incentive Stock Option shall be granted for an Option Period that does not satisfy this requirement, the designated Option Period shall be observed and the
Option shall be treated as a Non-Qualified Stock Option;
(d) An Incentive Stock Option that is exercised during its
designated Option Period but more than:
(i) three (3) months after the termination of employment with the Company, a
parent or a subsidiary (other than on account of disability within the meaning of section 22(e)(3) of the Code or death) of the Eligible Employee to whom it was granted; and
(ii) one (1) year after such individuals termination of employment with the Company, a parent or a subsidiary due to disability
(within the meaning of section 22(e)(3) of the Code) or death;
(iii) may be exercised in accordance with the terms but
shall at the time of exercise be treated as a Non-Qualified Stock Option; and
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(e) Except with the prior written approval of the Committee, no individual shall dispose
of Shares acquired pursuant to the exercise of an Incentive Stock Option until after the later of (i) the second anniversary of the date on which the Incentive Stock Option was granted, or (ii) the first anniversary of the date on which
the Shares were acquired.
ARTICLE VI
OPTIONS IN GENERAL
Section 6.1
Method of Exercise
.
(a) Subject to the limitations of
the Plan and the Option agreement, an Option holder may, at any time during the Option Period, exercise his or her right to purchase all or any part of the Shares to which the Option relates;
provided, however
, that the minimum number of
Shares which may be purchased at any time shall be 100, or, if less, the total number of Shares relating to the Option which remain unpurchased. An Option holder shall exercise an Option to purchase Shares by:
(i) giving written notice to the Committee, in such form and manner as the Committee may prescribe, of his intent to exercise the Option;
(ii) delivering to the Committee full payment, consistent with section 6.1(b), for the Shares as to which the Option is to
be exercised; and
(iii) satisfying such other conditions as may be prescribed in the Option agreement.
(b) The Exercise Price of Shares to be purchased upon exercise of any Option shall be paid in full in cash (by certified or bank check or
such other instrument as the Company may accept) or, if and to the extent permitted by the Committee, in the form of Shares already owned by the Option holder having an aggregate Fair Market Value on the date the Option is exercised equal to the
aggregate Exercise Price to be paid. Payment for any Shares to be purchased upon exercise of an Option may also be made by delivering a properly executed exercise notice to the Company, together with a copy of irrevocable instructions to a broker to
deliver promptly to the Company the amount of sale or loan proceeds to pay the purchase price. To facilitate the foregoing, the Company may enter into agreements for coordinated procedures with one or more brokerage firms. The Committee shall have
no obligation to allow, and may in its sole and absolute discretion decline to allow, the use of any exercise method described in section 6.1(b) in any one or more case or in all cases.
(c) When the requirements of section 6.1(a) and (b) have been satisfied, the Committee shall take such action as is necessary to
cause the issuance of a stock certificate evidencing the Option holders ownership of such Shares. The Person exercising the Option shall have no right to vote or to receive dividends, nor have any other rights with respect to the Shares, prior
to the date as of which such Shares are transferred to such Person on the stock transfer records of the Company, and no adjustments shall be made for any dividends or other rights for which the record date is prior to the date as of which such
transfer is effected, except as may be required under section 7.3.
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Section 6.2
Limitations on Options
.
(a) An Option by its terms
shall not be transferable by the Option holder other than to Family Members or Non-Profit Organizations or by will or by the laws of descent and distribution and shall be exercisable, during the lifetime of the Option holder, only by the Option
holder, a Family Member or a Non-Profit Organization. Any such transfer shall be effected by written notice to the Company given in such form and manner as the Committee may prescribe and shall be recognized only if such notice is received by the
Company prior to the death of the person giving it. Thereafter, the transferee shall have, with respect to such Option, all of the rights, privileges and obligations which would attach thereunder to the transferor if the Option were issued to such
transferor. If a privilege of the Option depends on the life, employment or other status of the transferor, such privilege of the Option for the transferee shall continue to depend on the life, employment or other status of the transferor. The
Committee shall have full and exclusive authority to interpret and apply the provisions of this Plan to transferees to the extent not specifically described herein. Notwithstanding the foregoing, an Incentive Stock Option is not transferable by an
Eligible Employee other than by will or the laws of descent and distribution, and is exercisable, during his lifetime, solely by him.
(b) The Companys obligation to deliver Shares with respect to an Option shall, if the Committee so requests, be conditioned upon the receipt of a representation as to the investment intention of the Option
holder to whom such Shares are to be delivered, in such form as the Committee shall determine to be necessary or advisable to comply with the provisions of applicable federal, state or local law. It may be provided that any such representation shall
become inoperative upon a registration of the Shares or upon the occurrence of any other event eliminating the necessity of such representation. The Company shall not be required to deliver any Shares under the Plan prior to (i) the admission
of such Shares to listing on any stock exchange on which Shares may then be listed, or (ii) the completion of such registration or other qualification under any state or federal law, rule or regulation as the Committee shall determine to be
necessary or advisable.
ARTICLE VII
AMENDMENT AND TERMINATION
Section 7.1
Termination
.
The Board may suspend or terminate the Plan in whole or in
part at any time prior to the tenth anniversary of the Effective Date by giving written notice of such suspension or termination to the Committee. Unless sooner terminated, the Plan shall terminate automatically on the day preceding the tenth
anniversary of the Effective Date. In the event of any suspension or termination of the Plan, all Options theretofore granted under the Plan that are outstanding on the date of such suspension or termination of the Plan shall remain outstanding and
exercisable for the period and on the terms and conditions set forth in the Option agreements evidencing such Options.
Section 7.2
Amendment
.
The Board may amend or revise the Plan in whole or in part
at any time;
provided, however
, that, to the extent required to comply with section 162(m) of the Code, no such amendment or revision shall be effective if it amends a material term of the Plan unless approved by the holders of a majority of
the votes cast on a proposal to approve such amendment or revision.
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Section 7.3
Adjustments in the Event of a Business Reorganization
.
(a) In the event of any merger, consolidation, or other business reorganization in which the Company is the surviving entity, and in the event of any stock split, stock dividend or other event generally affecting the number of Shares held
by each Person who is then a holder of record of Shares, the number of Shares covered by each outstanding Option and the number of Shares available to any individual or group of individuals pursuant to section 3.1 shall be adjusted to account for
such event. Such adjustment shall be effected by multiplying such number of Shares by an amount equal to the number of Shares that would be owned after such event by a Person who, immediately prior to such event, was the holder of record of one
Share, and the Exercise Price of the Options shall be adjusted by dividing the Exercise Price by such number of Shares;
provided, however
, that the Committee may, in its discretion, establish another appropriate method of adjustment.
(b) In the event of any merger, consolidation, or other business reorganization in which the Company is not the surviving
entity, any Options granted under the Plan which remain outstanding shall be converted into options to purchase voting common equity securities of the business entity which survives such merger, consolidation or other business reorganization having
substantially the same terms and conditions as the outstanding Options under this Plan and reflecting the same economic benefit (as measured by the difference between the aggregate exercise price and the value exchanged for outstanding Shares in
such merger, consolidation or other business reorganization), all as determined by the Committee prior to the consummation of such merger;
provided, however
, that the Committee may, at any time prior to the consummation of such merger,
consolidation or other business reorganization, direct that all, but not less than all, outstanding Options be canceled as of the effective date of such merger, consolidation or other business reorganization in exchange for a cash payment per
optioned Share equal to the excess (if any) of the value exchanged for an outstanding Share in such merger, consolidation or other business reorganization over the Exercise Price of the Option being canceled.
ARTICLE VIII
MISCELLANEOUS
Section 8.1
Status as an Employee Benefit Plan
.
This Plan is not intended to
satisfy the requirements for qualification under section 401(a) of the Code or to satisfy the definitional requirements for an employee benefit plan under section 3(3) of the Employee Retirement Income Security Act of 1974, as amended.
It is intended to be a non-qualified incentive compensation program that is exempt from the regulatory requirements of the Employee Retirement Income Security Act of 1974, as amended. The Plan shall be construed and administered so as to effectuate
this intent.
Section 8.2
No Right to Continued Employment
.
Neither the establishment of the Plan
nor any provisions of the Plan nor any action of the Board or the Committee with respect to the Plan shall be held or construed to confer upon any Eligible Director or Eligible Employee any right to a continuation of his or her position as a
director or employee of the Company. The Employers reserve the right to remove any Eligible Director or dismiss any Eligible Employee or otherwise deal with any Eligible Director or Eligible Employee to the same extent as though the Plan had not
been adopted.
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Section 8.3
Construction of Language
.
Whenever appropriate in the Plan, words used
in the singular may be read in the plural, words used in the plural may be read in the singular, and words importing the masculine gender may be read as referring equally to the feminine or the neuter. Any reference to an Article or section number
shall refer to an Article or section of this Plan unless otherwise indicated.
Section 8.4
Governing Law
.
The Plan shall be construed, administered and enforced
according to the laws of the State of New York without giving effect to the conflict of laws principles thereof, except to the extent that such laws are preempted by federal law. The Plan shall be construed to comply with applicable OTS Regulations.
Section 8.5
Headings
.
The headings of Articles and sections are included solely for
convenience of reference. If there is any conflict between such headings and the text of the Plan, the text shall control.
Section 8.6
Non-Alienation of Benefits
.
The right to receive a benefit under the Plan
shall not be subject in any manner to anticipation, alienation or assignment, nor shall such right be liable for or subject to debts, contracts, liabilities, engagements or torts.
Section 8.7
Taxes
.
The Company shall have the right to deduct from all amounts paid
by the Company in cash with respect to an Option under the Plan any taxes required by law to be withheld with respect to such Option. Where any Person is entitled to receive Shares pursuant to the exercise of an Option, the Company shall have the
right to require such Person to pay the Company the amount of any tax which the Company is required to withhold with respect to such Shares, or, in lieu thereof, to retain, or to sell without notice, a sufficient number of Shares to cover the
minimum amount required to be withheld under applicable law.
Section 8.8
Notices
.
Any communication required or permitted to be given under the
Plan, including any notice, direction, designation, comment, 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 (5) 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:
CMS Bancorp, Inc.
123 Main Street, Suite 750
White Plains,
New York 10601
Attention: Corporate Secretary
|
(b)
|
If to an Option holder, to the Option holders address as shown in the Employers records.
|
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Section 8.9
Required Regulatory Provisions
.
The grant and settlement of Options
under this Plan shall be conditioned upon and subject to compliance with section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C. 1828(k), and the rules and regulations promulgated thereunder.
Section 8.10
Approval of Shareholders
.
The Plan shall not be effective or implemented unless
approved by the holders of a majority of the total votes eligible to be cast at any duly called annual or special meeting of the Company in which case the Plan shall be effective as of the later of (a) October 3, 2007 or (b) the date
of such approval. No Option shall be granted prior to the date on which the Plan becomes effective.
ARTICLE IX
ADDITIONAL PROVISIONS SUBJECT TO FURTHER SHAREHOLDER APPROVAL
Section 9.1
Accelerated Vesting Upon Retirement
.
Notwithstanding anything in the Plan to the
contrary, but subject to section 9.3, in the event of an Option holders Retirement, all Options granted to the Option holder under the Plan on the date of the Option holders Retirement shall, to the extent not already exercisable, become
exercisable on the date of the Option holders Retirement.
Section 9.2
Discretion to Establish Vesting Schedules and Certain Plan Limits
.
Notwithstanding
anything in this Plan to the contrary, but subject to section 9.3 hereof, section 5.5(b) shall apply in determining the exercisability of Options granted to Eligible Employees and Eligible Directors only if no different vesting schedule is
established by the Committee and specified in the agreement evidencing the outstanding Option which the Committee may do in its discretion. In addition, the limits imposed by section 3.1(b) shall not apply.
Section 9.3
No Effect Prior to Shareholder Approval
.
Notwithstanding anything contained in this
Article IX to the contrary, the provisions of this Article IX shall not be applied, and shall be of no force or effect, unless and until the shareholders of the Company shall have approved such provisions by affirmative vote of the holders of a
majority of the Shares represented in person or by proxy and entitled to vote at a meeting of shareholders duly called and held on or after April 3, 2008.
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APPENDIX B
CMS BANCORP, INC.
2007 RECOGNITION AND RETENTION PLAN
TABLE OF CONTENTS
CMS BANCORP, INC.
2007 MANAGEMENT RECOGNITION AND RETENTION PLAN
ARTICLE I
PURPOSE
Section 1.1
General Purpose of the Plan
.
The purpose of the Plan is to promote the growth
and profitability of CMS Bancorp, Inc. and its affiliated companies and to provide eligible directors, certain key officers and employees of CMS Bancorp, Inc. and its affiliated companies with an incentive to achieve corporate objectives, to attract
and retain directors, key officers and employees of outstanding competence and to provide such directors, officers and employees with an equity interest in CMS Bancorp, Inc. and its affiliated companies.
ARTICLE II
DEFINITIONS
The following definitions shall apply for the purposes of this Plan, unless a different meaning is plainly indicated by the context:
Section 2.1
Award
means a grant of Shares to an Eligible Director or Eligible Employee pursuant to section 6.1 or 6.2.
Section 2.2
Award Notice
means, with respect to a particular Award, a written instrument signed by the Company and the Awards recipient evidencing the granting of the Award and establishing the terms
and conditions thereof.
Section 2.3
Bank
means Community Mutual Savings Bank and any successor thereto.
Section 2.4
Beneficiary
means the Person designated by an Eligible Director or Eligible Employee pursuant to section 7.2 to receive distribution of any Shares available for distribution to such
Eligible Director or Eligible Employee, in the event such Eligible Director or Eligible Employee dies prior to receiving distribution of such Shares.
Section 2.5
Board
means the Board of Directors of the Company.
Section 2.6
Change of Control
means any of the following events:
(a) the
consummation of a reorganization, merger or consolidation of the Company with one or more other persons, other than a transaction following which:
(i) 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
1
(ii) 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;
(b) 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;
(c) a complete liquidation or dissolution of the Company;
(d) 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:
(i) individuals who were members of the board of directors of the Company on
the Effective Date; or
(ii) individuals who first became members of the board of directors of the Company after the
Effective Date either:
(A) 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
(B) upon election by the shareholders 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
individuals election or nomination did not result from an actual or threatened election contest or other actual or threatened solicitation of proxies or consents other than by or on behalf of the board of directors of the Company;
(e) approval by the stockholders of the Company of any agreement, plan or arrangement for the consummation of a transaction which, if
consummated, would result in the occurrence of an event described in section 2.6(a), (b), (c) or (d); or
(f) any event
which would be described in section 2.6(a), (b), (c), (d) or (e) if the term Bank were substituted for the term Company therein.
2
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 2.6, the term
person shall have the meaning assigned to it under sections 13(d)(3) or 14(d)(2) of the Exchange Act.
Section 2.7
Code
means the Internal Revenue Code of 1986 (including the corresponding provisions of any succeeding law).
Section 2.8
Committee
means the Committee described in section 4.1.
Section 2.9
Company
means CMS Bancorp, Inc., a Delaware corporation, and any successor thereto.
Section 2.10
Disability
means a condition of total incapacity, mental or physical, for further performance of duty with the Company which the Committee shall have determined, on the basis of
competent medical evidence, is likely to be permanent.
Section 2.11
Disinterested Board Member
means a member of the Board who (a) is not a current employee of the Company or a subsidiary, (b) does not receive remuneration from the Company or a
subsidiary, either directly or indirectly, in any capacity other than as a director, except in an amount for which disclosure would not be required pursuant to Item 404(a) of the proxy solicitation rules of the Securities and Exchange
Commission and (c) does not possess an interest in any other transaction, and is not engaged in a business relationship, for which disclosure would be required pursuant to Item 404(a) or (b) of the proxy solicitation rules of the
Securities and Exchange Commission. The term Disinterested Board Member shall be interpreted in such manner as shall be necessary to conform to the requirements of Rule 16b-3 promulgated under the Exchange Act.
Section 2.12
Effective Date
means , 2007.
Section 2.13
Eligible Director
means a member of the board of directors of an Employer who is not also an employee of any Employer.
Section 2.14
Eligible Employee
means any employee whom the Committee may determine to be a key officer or employee of the Employer and selects to receive an Award pursuant to the Plan.
Section 2.15
Employer
means the Company, the Bank and any successor thereto and, with the prior approval of the Board of Directors of the Company, and subject to such terms and conditions as may be
imposed by the Board, any other savings bank, savings and loan association, bank, corporation, financial institution or other business organization or institution. With respect to any Eligible Employee or Eligible Director, the Employer shall mean
the entity which employs such person or upon whose board of directors such person serves.
Section 2.16
Exchange Act
means the Securities and Exchange Act of 1934, as amended.
Section 2.17
OTS Regulation
means the rules and regulations of the Office of Thrift Supervision.
Section 2.18
Fund
means the corpus (consisting of contributions paid over to the Funding Agent, and investments thereof), and all earnings, appreciations or additions thereof and thereto, held by the
Funding Agent under the Funding Agreement in accordance with the Plan, less any depreciation thereof and any payments made therefrom pursuant to the Plan.
3
Section 2.19
Funding Agent
means the trustee or custodian of the Fund from time to time in office. The Funding Agent shall serve as Funding Agent until it is removed or resigns from office and is
replaced by a successor Funding Agent or Funding Agents appointed by CMS Bancorp, Inc.
Section 2.20
Funding Agreement
means the agreement between CMS Bancorp, Inc. and the Funding Agent therein named or its successor pursuant to which the Fund shall be held in trust or custody.
Section 2.21
Person
means an individual, a corporation, a bank, a savings bank, a savings and loan association, a financial institution, a partnership, an association, a joint-stock company, a trust,
an estate, an unincorporated organization and any other business organization or institution.
Section 2.22
Plan
means the CMS Bancorp, Inc. 2007 Recognition and Retention Plan as amended from time to time.
Section 2.23
Retirement
means with respect to an Eligible Employee, termination of all service for all Employers as an employee at or after the normal or early retirement date set forth in any
tax-qualified retirement plan of the Bank, whether or not the individual in question actually participates in any such tax-qualified plan of the Bank, and in the case of an Eligible Director, termination of all service for all Employers as a voting
member of the Employers board of directors after the attainment of the latest age at which the Eligible Director is eligible for election or appointment as a voting member of the Employers board of directors under the Employers
charter.
Section 2.24
Service
means service for the Company (or any subsidiary or affiliate) as an employee in any capacity, service as a director or emeritus director or advisory director of the Company.
Section 2.25
Share
means a share of common stock of CMS Bancorp, Inc., par value $.01 per share.
ARTICLE III
SHARES AVAILABLE UNDER PLAN
Section 3.1
Shares Available Under Plan
.
(a) The maximum number of Shares
available for Awards under the Plan shall be 82,206, subject to adjustment pursuant to section 8.3.
(b) An aggregate
maximum of 24,661 Shares (subject to adjustment pursuant to section 8.3) may be granted as Awards to Eligible Directors, and a maximum of 4,110 Shares (subject to adjustment pursuant to section 8.3) may be granted as Awards to any one Eligible
Director.
(c) An aggregate maximum of 82,206 Shares (subject to adjustment pursuant to section 8.3) may be granted as
Awards to Eligible Employees, and a maximum of 20,551 Shares (subject to adjustment pursuant to section 8.3) may be granted as Awards to any one Eligible Employee.
4
ARTICLE IV
ADMINISTRATION
Section 4.1
Committee
.
The Plan shall be administered by the Compensation Committee (the
Committee) consisting of all members of the Board or, if designated by the Board, by a committee comprised solely of Disinterested Board Members. If the Committee consists of fewer than two Disinterested Board Members, then the Board
shall appoint to the Committee such additional Disinterested Board Members as shall be necessary to provide for a Committee consisting of at least two Disinterested Board Members.
Section 4.2
Committee Action
.
The Committee shall hold such meetings, and may make such
administrative rules and regulations, as it may deem proper. A majority of the members of the Committee shall constitute a quorum, and the action of a majority of the members of the Committee present at a meeting at which a quorum is present, as
well as actions taken pursuant to the unanimous written consent of all of the members of the Committee without holding a meeting, shall be deemed to be actions of the Committee. All actions of the Committee shall be final and conclusive and shall be
binding upon the Company and all other interested parties. Any Person dealing with the Committee shall be fully protected in relying upon any written notice, instruction, direction or other communication signed by the Chair of the Committee and one
member of the Committee, by two members of the Committee or by a representative of the Committee authorized to sign the same in its behalf.
Section 4.3
Committee Responsibilities
.
Subject to the terms and conditions of the Plan
and such limitations as may be imposed by the Board, the Committee shall be responsible for the overall management and administration of the Plan and shall have such authority as shall be necessary or appropriate in order to carry out its
responsibilities, including, without limitation, the authority:
(a) to interpret and construe the Plan, and to determine
all questions that may arise under the Plan as to eligibility for Awards under the Plan, the amount of Shares, if any, to be granted pursuant to an Award, and the terms and conditions of such Award;
(b) to adopt rules and regulations and to prescribe forms for the operation and administration of the Plan; and
(c) to take any other action not inconsistent with the provisions of the Plan that it may deem necessary or appropriate.
ARTICLE V
THE FUND
Section 5.1
Contributions
.
CMS Bancorp, Inc. shall contribute, or cause to be
contributed, to the Fund, from time to time, such amounts of money or property as shall be determined by the Board, in its discretion. No contributions by Eligible Directors or Eligible Employees shall be permitted.
5
Section 5.2
The Fund
.
The Fund shall be held and invested under the Funding Agreement
with the Funding Agent. The provisions of the Funding Agreement shall include provisions conferring powers on the Funding Agent as to investment, control and disbursement of the Trust Fund, and such other provisions not inconsistent with the Plan as
may be prescribed by or under the authority of the Board. No bond or security shall be required of any Funding Agent at any time in office.
Section 5.3
Investments
.
The Funding Agent shall invest the Trust Fund in Shares and in
such other investments as may be permitted under the Funding Agreement, including savings accounts, time or other interest bearing deposits in or other interest bearing obligations of the Company, in such proportions as shall be determined by the
Committee; provided, however, that in no event shall the Fund be used to purchase more than 82,206 Shares (subject to adjustment pursuant to section 8.3). Notwithstanding the immediately preceding sentence, the Funding Agent may temporarily invest
the Fund in short-term obligations of, or guaranteed by, the U.S. Government or an agency thereof, or the Funding Agent may retain the Trust Fund uninvested or may sell assets of the Fund to provide amounts required for purposes of the Plan.
ARTICLE VI
AWARDS
Section 6.1
To Eligible Directors
.
Subject to the limitations of the Plan and such
limitations as the Board may from time to time impose, the number of Shares as to which an Eligible Director may be granted an Award shall be determined by the Committee in its discretion; provided, however, that in no event shall the number of
Shares allocated to an Eligible Director in an Award exceed the number of Shares then held in the Fund and not allocated in connection with other Awards.
Section 6.2
To Eligible Employees
.
Subject to the limitations of the Plan and such
limitations as the Board may from time to time impose, the number of Shares as to which an Eligible Employee may be granted an Award shall be determined by the Committee in its discretion; provided, however, that in no event shall the number of
Shares allocated to an Eligible Employee in an Award exceed the number of Shares then held in the Trust and not allocated in connection with other Awards.
Section 6.3
Awards in General
.
Any Award shall be evidenced by an Award Notice issued by
the Committee to the Eligible Director or Eligible Employee, which notice shall:
(a) specify the number of Shares covered
by the Award;
(b) specify the date of grant of the Award;
(c) specify the dates on which such Shares shall become vested; and
6
(d) contain such other terms and conditions not inconsistent with the Plan as the Board
or Committee may, in its discretion, prescribe.
Section 6.4
Share Allocations
.
Upon the grant of an Award to an Eligible Director or
Eligible Employee, the Committee shall notify the Funding Agent of the Award and of the number of Shares subject to the Award. Thereafter, until such time as the Shares subject to such Award become vested or are forfeited, the books and records of
the Funding Agent shall reflect that such number of Shares have been awarded to such Award recipient.
Section 6.5
Dividend Rights
.
(a) Unless the Committee determines otherwise with respect
to any Award and specifies such determination in the relevant Award Notice, any cash dividends or distributions declared and paid with respect to Shares subject to the Award that are, as of the record date for such dividend, allocated to an Eligible
Director or Eligible Employee in connection with such Award shall be promptly paid to and retained by such Eligible Director or Eligible Employee. Any cash dividends declared and paid with respect to Shares that are not, as of the record date for
such dividend, allocated to any Eligible Director or Eligible Employee in connection with any Award shall, at the direction of the Committee, be held in the Trust or used to pay the administrative expenses of the Plan, including any compensation due
to the Funding Agent.
(b) Unless the Committee determines otherwise with respect to any Award and specifies such determination in the
relevant Award Notice, any dividends or distributions declared and paid in property other than cash with respect to Shares shall be subject to the same vesting and other restrictions as the Shares to which the Award relates. Any such dividends
declared and paid with respect to Shares that are not, as of the record date for such dividend, allocated to any Eligible Director or Eligible Employee in connection with any Award shall, at the direction of the Committee, be held in the Trust or
used to pay the administrative expenses of the Plan, including any compensation due to the Funding Agent or, in the case of a stock dividend, used for future Awards.
Section 6.6
Voting Rights
.
(a) Each Eligible Director or Eligible Employee to whom an
Award has been made that is not fully vested shall have the right to exercise, or direct the exercise of, all voting rights appurtenant to unvested Shares related to such Award. Such a direction for any Shares as to which the Eligible Director or
Eligible Employee is not the record owner shall be given by completing and filing, with the inspector of elections, the Funding Agent or such other person who shall be independent of the Company as the Committee shall designate in the direction, a
written direction in the form and manner prescribed by the Committee. If no such direction is given by an Eligible Director or Eligible Employee, then the voting rights appurtenant to the Shares allocated to him shall not be exercised.
(b) To the extent that the Fund contains Shares that are not allocated in connection with an Award, all voting rights appurtenant to such Shares shall
be exercised by the Funding Agent in such manner as the Committee shall direct to reflect the voting directions given by Eligible Directors or Eligible Employees with respect to Shares allocated in connection with their Awards.
(c) The Committee shall furnish, or cause to be furnished, to each Eligible Director or Eligible Employee who is not the record holder of the Shares
relating to his or her Award all annual reports, proxy materials and other information furnished by CMS Bancorp, Inc., or by any proxy solicitor, to the holders of Shares.
7
Section 6.7
Tender Offers
.
(a) Each Eligible Director or Eligible Employee to whom an
Award has been made that is not fully vested shall have the right to respond, or to direct the response, with respect to the Shares related to such Award, to any tender offer, exchange offer or other offer made to the holders of Shares. Such a
direction for any Shares as to which the Eligible Director or Eligible Employee is not the record owner shall be given by completing and filing, with the inspector of elections, the Funding Agent or such other person who shall be independent of the
Company as the Committee shall designate in the direction, a written direction in the form and manner prescribed by the Committee. If no such direction is given by an Eligible Director or Eligible Employee, then the Shares shall not be tendered or
exchanged.
(b) To the extent that the Fund contains Shares that are not allocated in connection with an Award, all responses to tender,
exchange and other offers appurtenant to such Shares shall be given by the Funding Agent in such manner as the Committee shall direct to reflect the responses given by Eligible Directors or Eligible Employees with respect to Shares allocated in
connection with their Awards.
(c) The Committee shall furnish, or cause to be furnished, to each Eligible Director or Eligible Employee,
all information furnished by the offeror to the holders of Shares.
Section 6.8
Limitations on Awards
.
(a) No Award shall be granted under the Plan prior to
the later of the date on which the Plan is approved by shareholders pursuant to section 9.9 or October 3, 2007;
(b) No Award granted
under the Plan prior to shareholder approval of section 10.2 hereof shall become vested more rapidly than under the following schedule:
(i) prior to the first anniversary of the grant date, no part of any Award shall be vested in the absence of the death or Disability of the Award recipient or upon a Change of Control;
(ii) on and after the first anniversary of the grant date and prior to the second anniversary of the grant date, an Award will be vested
as to a maximum of twenty percent (20%) of the Shares subject to the Award when granted in the absence of the death or Disability of the Award recipient or upon a Change of Control;
(iii) on and after the second anniversary of the grant date and prior to the third anniversary of the grant date, an Award may be vested
as to a maximum of forty percent (40%) of the Shares subject to the Award when granted in the absence of the death or Disability of the Award recipient or upon a Change of Control;
(iv) on and after the third anniversary of the grant date and prior to the fourth anniversary of the grant date, an Award may be vested as
to a maximum of sixty percent (60%) of the Shares subject to the Award when granted in the absence of the death or Disability of the Award recipient or upon a Change of Control;
(v) on and after the fourth anniversary of the grant date and prior to the fifth anniversary of the grant date, an Award may be vested as
to a maximum of eighty percent (80%) of the Shares subject to the Award when granted in the absence of the death or Disability of the Award recipient or upon a Change of Control; and
8
(vi) on and after the fifth anniversary of the grant date, the Award may be vested as to
one hundred percent (100%) of the Shares subject to the Award when granted; and
(vii) an Award may become fully vested
on the date of the Award holders death, Disability or upon a Change of Control without regard to the time expired from and after the Effective Date and the grant date.
(c) An Award by its terms shall not be transferable by the Eligible Director or Eligible Employee other than by will or by the laws of descent and
distribution, and the Shares granted pursuant to such Award and held in the Trust shall be distributable, during the lifetime of the Recipient, only to the Recipient.
ARTICLE VII
VESTING
Section 7.1
Vesting of Awards
.
Subject to the terms and conditions of the Plan, unless
otherwise determined by the Committee and specified in the Award Notice relating to an Award, Shares subject to each Award granted to an Eligible Director or Eligible Employee under the Plan shall become vested as follows: (i) twenty percent
(20%) of such Shares shall become vested on the first anniversary of the date of grant; (ii) an additional twenty percent (20%) of such Shares shall become vested on the second anniversary of the date of grant; (iii) an
additional twenty percent (20%) of such Shares shall become vested on the third anniversary of the date of grant; (iv) an additional twenty percent (20%) of such Shares shall become vested on the fourth anniversary of the date of
grant; and (v) an additional twenty percent (20%) of such Shares shall become vested on the fifth anniversary of the date of grant; provided that to the extent that any Award shall not have become vested prior to the date on which the
Award holder terminates Service with an Employer such Award shall not thereafter become vested and provided, further, an Award shall become 100% vested upon the Award recipients death, Disability or upon the occurrence of a Change of Control
while in the Service of an Employer.
Section 7.2
Designation of Beneficiary
.
An Eligible Director or Eligible Employee who has
received an Award may designate a Beneficiary to receive any undistributed Shares that are, or become, available for distribution on, or after, the date of his death. Such designation (and any change or revocation of such designation) shall be made
in writing in the form and manner prescribed by the Committee. In the event that the Beneficiary designated by an Eligible Director or Eligible Employee dies prior to the Eligible Director or Eligible Employee, or in the event that no Beneficiary
has been designated, any undistributed Shares that are, or become, available for distribution on, or after, the Eligible Directors or Eligible Employees death shall be paid to the executor or administrator of the Eligible Directors
or Eligible Employees estate, or if no such executor or administrator is appointed within such time as the Committee, in its sole discretion, shall deem reasonable, to such one or more of the spouse and descendants and blood relatives of such
deceased person as the Committee may select.
Section 7.3
Manner of Distribution
.
(a) Except as provided in section 7.3(b), as soon as
practicable following the date any Shares granted pursuant to an Award become vested pursuant to sections 7.1, the Committee shall take such actions as are necessary to cause the transfer of record ownership of the Shares that have
9
become vested from the Funding Agent to the Award holder and shall cause the Funding Agent to distribute to the Award holder all property other than Shares
then being held in connection with the Shares being distributed.
(b) The Committee may, in its discretion, cause the transfer to an Award
recipient of record ownership of the Shares subject to such Award that have not yet vested. Any such Shares shall be held in certificated form only, and the certificate therefor shall bear the following or a substantially similar legend:
The securities evidenced hereby are subject to the terms of an Award Notice dated
[date]
between the issuer and
[name of Award recipient]
pursuant to the CMS Bancorp, Inc. 2007 Recognition and Retention Plan, a copy of which is on file with the issuer 123 Main Street, Suite 750, White Plains, New York 10601. No sale, transfer, hypothecation or other disposition of these securities may
be made except in compliance with the terms of such Award Notice and the terms of the Plan.
(c) The Companys obligation to deliver
Shares with respect to an Award shall, if the Committee so requests, be conditioned upon the receipt of a representation as to the investment intention of the Eligible Director or Eligible Employee or Beneficiary to whom such Shares are to be
delivered, in such form as the Committee shall determine to be necessary or advisable to comply with the provisions of applicable federal, state or local law. It may be provided that any such representation shall become inoperative upon a
registration of the Shares or upon the occurrence of any other event eliminating the necessity of such representation. The Company shall not be required to deliver any Shares under the Plan prior to (i) the admission of such Shares to listing
on any stock exchange on which Shares may then be listed, or (ii) the completion of such registration or other qualification under any state or federal law, rule or regulation as the Committee shall determine to be necessary or advisable.
Section 7.4
Taxes
.
The Company, the Committee or the Funding Agent shall have the right
to require any person entitled to receive Shares pursuant to an Award to pay the amount of any tax which is required to be withheld with respect to such Shares, or, in lieu thereof, to retain, or to sell without notice, a sufficient number of Shares
to cover the amount required to be withheld.
ARTICLE VIII
AMENDMENT AND TERMINATION
Section 8.1
Termination
.
The Board may suspend or terminate the Plan in whole or in part
at any time by giving written notice of such suspension or termination to the Committee; provided, however, that the Plan may not be terminated while there are outstanding Awards that may thereafter become vested. Upon the termination of the Plan,
the Funding Agent shall make distributions from the Fund in such amounts and to such persons as the Committee may direct and shall return the remaining assets of the Fund, if any, to CMS Bancorp, Inc.
Section 8.2
Amendment
.
The Board may amend or revise the Plan in whole or in part at any
time;
provided, however
, that no such amendment or revision shall alter the stockholder approval standard set forth in
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Article X as a condition precedent to the effectiveness of Article X or otherwise directly or indirectly give effect to the substance of the provisions of
Article X without compliance with the stockholder approval requirement set forth therein.
Section 8.3
Adjustments in the Event of a Business Reorganization
.
(a) In the event of
any merger, consolidation, or other business reorganization (including but not limited to a Change of Control) in which CMS Bancorp, Inc. is the surviving entity, and in the event of any stock split, stock dividend or other event generally affecting
the number of Shares held by each person who is then a holder of record of Shares, the number of Shares held or permitted to be held in the Fund, the number of Shares covered by outstanding Awards, and the number of Shares available as Awards in
total or to particular individuals or groups shall be adjusted to account for such event. Such adjustment shall be effected by multiplying such number of Shares by an amount equal to the number of Shares that would be owned after such event by a
person who, immediately prior to such event, was the holder of record of one Share, unless the Committee, in its discretion, establishes another appropriate method of adjustment.
(b) In the event of any merger, consolidation, or other business reorganization (including but not limited to a Change of Control) in which CMS Bancorp,
Inc. is not the surviving entity, the Funding Agent shall hold in the Fund any money, stock, securities or other property received by holders of record of Shares in connection with such merger, consolidation, or other business reorganization. Any
Award with respect to which Shares had been allocated to an Eligible Director or Eligible Employee shall be adjusted by allocating to the Eligible Director or Eligible Employee receiving such Award the amount of money, stock, securities or other
property received by the Funding Agent for the Shares allocated to such Eligible Director or Eligible Employee, and such money, stock, securities or other property shall be subject to the same terms and conditions of the Award that applied to the
Shares for which it has been exchanged.
ARTICLE IX
MISCELLANEOUS
Section 9.1
Status as an Employee Benefit Plan
.
This Plan is not intended to satisfy the
requirements for qualification under section 401(a) of the Code or to satisfy the definitional requirements for an employee benefit plan under section 3(3) of the Employee Retirement Income Security Act of 1974, as amended. It is
intended to be a non-qualified incentive compensation program that is exempt from the regulatory requirements of the Employee Retirement Income Security Act of 1974, as amended. The Plan shall be construed and administered so as to effectuate this
intent.
Section 9.2
No Right to Continued Employment
.
Neither the establishment of the Plan nor
any provisions of the Plan nor any action of the Board or the Committee with respect to the Plan shall be held or construed to confer upon any Eligible Director or Eligible Employee any right to continue in the service of any Employer. The Employers
reserve the right to dismiss any Eligible Director or Eligible Employee or otherwise deal with any Eligible Director or Eligible Employee to the same extent as though the Plan had not been adopted.
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Section 9.3
Construction of Language
.
Whenever appropriate in the Plan, words used in the
singular may be read in the plural, words used in the plural may be read in the singular, and words importing the masculine gender may be read as referring equally to the feminine or the neuter. Any reference to an Article or section number shall
refer to an Article or section of this Plan unless otherwise indicated.
Section 9.4
Governing Law
.
The Plan shall be construed and enforced in accordance with
the laws of the State of New York without giving effect to the conflict of laws principles thereof, except to the extent that such laws are preempted by the federal laws of the United States of America. The Plan shall be construed to comply with
applicable OTS Regulations.
Section 9.5
Headings
.
The headings of Articles and sections are included solely for
convenience of reference. If there is any conflict between such headings and the text of the Plan, the text shall control.
Section 9.6
Non-Alienation of Benefits
.
The right to receive a benefit under the Plan
shall not be subject in any manner to anticipation, alienation or assignment, nor shall such right be liable for or subject to debts, contracts, liabilities, engagements or torts;
provided, however
, that any recipient of an Award who makes an
election pursuant to section 83(b) of the Code to include the value of the Shares subject to such Award in gross income for federal income purposes when granted rather than when vested shall have the right to margin such Shares to finance the
payment of taxes. Any Shares so margined shall nevertheless remain subject to the forfeiture provisions and other terms and conditions of the Award.
Section 9.7
Notices
.
Any communication required or permitted to be given under the Plan,
including any notice, direction, designation, comment, instruction, objection or waiver, shall be in writing and shall be deemed to have been given at such time as it is personally delivered or 5 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:
CMS Bancorp, Inc.
123 Main Street, Suite 750
White Plains,
New York 10601
Attention:
Corporate Secretary
(b) If to an Eligible Director or Eligible Employee, to the Eligible Directors or Eligible Employees address as shown in the Employers records.
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Section 9.8
Required Regulatory Provisions
.
The making and payment of Awards under this
Plan shall be conditioned upon and subject to compliance with section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C. 1828(k), and the rules and regulations promulgated thereunder.
Section 9.9
Approval of Shareholders
.
The Plan shall not be effective or implemented
unless approved by the holders of a majority of the total votes eligible to be cast at any duly called annual or special meeting of the Company in which case the Plan shall be effective as of the later of (a) October 3, 2007 or
(b) the date of such approval. No Award shall be made prior to the date on which the Plan becomes effective.
ARTICLE X
ADDITIONAL PROVISIONS SUBJECT TO FURTHER SHAREHOLDER APPROVAL
Section 10.1
Accelerated Vesting Upon Retirement
.
Notwithstanding anything in the Plan to
the contrary, but subject to section 10.3, unless otherwise determined by the Committee and specified in the Award Notice relating to an Award in the event of an Award recipients Retirement, all Awards granted to the Award recipient under the
Plan on the date of the Award recipients Retirement shall, to the extent not already vested, become vested on the date of the Award recipients Retirement.
Section 10.2
Discretion to Establish Vesting Schedules and Certain Plan Limits
.
Notwithstanding anything in this Plan to the contrary, but subject to section 10.3 hereof, sections 6.8(b) and 7.1 shall apply in determining the vesting schedule of Awards only if no different vesting schedule is established by the
Committee and specified in the Award Notice which the Committee may do in its discretion. In addition, the limits imposed by sections 3.1(b) and 3.1(c) shall no longer apply.
Section 10.3
No Effect Prior to Stockholder Approval
.
Notwithstanding anything contained
in this Article X to the contrary, the provisions of this Article X shall not be applied, and shall be of no force or effect, unless and until the shareholders of the Company shall have approved such provisions by affirmative vote of the
holders of a majority of the Shares represented in person or by proxy and entitled to vote at a meeting of shareholders duly called and held on or after April 3, 2008.
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