<PAGE>
<PAGE>
SCHEDULE 14A INFORMATION
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or
Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
BCSB BANKCORP, INC.
- ----------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- ----------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act
Rules 14a-6(i)(1) and 0-11.
1. Title of each class of securities to which
transaction applies:
________________________________________________________________
2. Aggregate number of securities to which transaction
applies:
________________________________________________________________
3. Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11 (Set
forth the amount on which the filing fee is calculated and state
how it was determined):
________________________________________________________________
4. Proposed maximum aggregate value of transaction:
________________________________________________________________
5. Total fee paid:
________________________________________________________________
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
1. Amount Previously Paid:
____________________________________________
2. Form, Schedule or Registration Statement No.:
____________________________________________
3. Filing Party:
____________________________________________
4. Date Filed:
____________________________________________
<PAGE>
<PAGE>
[BCSB Bankcorp, Inc. Letterhead]
June 11, 1999
Dear Stockholder:
We invite you to attend the Special Meeting of
Stockholders (the "Special Meeting") of BCSB Bankcorp, Inc. (the
"Company") which will be held on Thursday, July 15, 1999, at
Baltimore County Savings Bank, F.S.B.'s Perry Hall office
located at 4208 Ebenezer Road, Baltimore, Maryland at 4:00 p.m.,
eastern time. The attached Notice of Special Meeting and Proxy
Statement describe the formal business to be transacted at the
Special Meeting.
The Special Meeting has been called to consider and vote
upon approval of the Company's 1999 Stock Option Plan and
Management Recognition Plan. Enclosed are a Proxy Statement and
a Proxy Card. Certain directors and officers of the Company
will be present at the Special Meeting to respond to any
questions that our stockholders may have.
The Board of Directors of the Company has determined that
the matters to be considered at the Special Meeting are in the
best interests of the Company and its stockholders. For the
reasons set forth in the Proxy Statement, the Board unanimously
recommends a vote "FOR" each matter to be considered.
ON BEHALF OF THE BOARD OF DIRECTORS, WE URGE YOU TO SIGN,
DATE AND RETURN THE ENCLOSED PROXY CARD AS SOON AS POSSIBLE,
EVEN IF YOU CURRENTLY PLAN TO ATTEND THE SPECIAL MEETING. This
will not prevent you from voting in person but will assure that
your vote is counted if you are unable to attend the Special
Meeting.
On behalf of the Board of Directors and all the employees
of the Company and Baltimore County Savings Bank, F.S.B., I wish
to thank you for your continued support.
Sincerely,
/s/ Gary C. Loraditch
Gary C. Loraditch
President
<PAGE>
<PAGE>
________________________________________________________________
BCSB BANKCORP, INC.
4111 E. JOPPA ROAD, SUITE 300
BALTIMORE, MARYLAND 21236
________________________________________________________________
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 15, 1999
________________________________________________________________
NOTICE IS HEREBY GIVEN that a Special Meeting of
Stockholders (the "Special Meeting") of BCSB Bankcorp, Inc. (the
"Company") will be held at Baltimore County Savings Bank,
F.S.B.'s Perry Hall office located at 4208 Ebenezer Road,
Baltimore Maryland on Thursday, July 15, 1999, at 4:00 p.m.,
eastern time.
A Proxy Statement and Proxy Card for the Special Meeting
are enclosed.
The Special Meeting is for the purpose of considering and
acting upon the following matters:
1. Approval of the BCSB Bankcorp, Inc. 1999 Stock
Option Plan;
2. Approval of the BCSB Bankcorp, Inc. Management
Recognition Plan; and
3. Such other business as may properly come
before the Special Meeting or any adjournment
thereof.
The Board of Directors is not aware of any other business
to come before the Special Meeting.
Any action may be taken on any one of the foregoing pro-
posals at the Special Meeting on the date specified above or on
any date or dates to which, by original or later adjournment,
the Special Meeting may be adjourned. Stockholders of record at
the close of business on June 2, 1999 are the stockholders
entitled to notice of and to vote at the Special Meeting and any
adjournment thereof.
You are requested to fill in and sign the enclosed Proxy
Card which is solicited by the Board of Directors and to mail it
promptly in the enclosed envelope. The proxy will not be used
if you attend and vote at the Special Meeting in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ David M. Meadows
David M. Meadows
Secretary
Baltimore, Maryland
June 11, 1999
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE
COMPANY THE EXPENSE OF FURTHER REQUESTS FOR PROXIES IN ORDER TO
INSURE A QUORUM. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES.
<PAGE>
<PAGE>
________________________________________________________________
PROXY STATEMENT
OF
BCSB BANKCORP, INC.
4111 E. JOPPA ROAD, SUITE 300
BALTIMORE, MARYLAND 21236
________________________________________________________________
SPECIAL MEETING OF STOCKHOLDERS
JULY 15, 1999
________________________________________________________________
GENERAL
________________________________________________________________
This Proxy Statement is furnished to stockholders of BCSB
Bankcorp, Inc. (the "Company") in connection with the
solicitation by the Board of Directors of the Company of proxies
to be used at the Special Meeting of Stockholders (the "Special
Meeting"), which will be held at Baltimore County Savings Bank,
F.S.B.'s Perry Hall office located at 4208 Ebenezer Road,
Baltimore, Maryland on Thursday, July 15, 1999, at 4:00 p.m.,
eastern time, and at any adjournment thereof. The accompanying
Notice of Special Meeting and Proxy Card and this Proxy
Statement are being first mailed to stockholders on or about
June 11, 1999.
________________________________________________________________
VOTING AND REVOCABILITY OF PROXIES
________________________________________________________________
Regardless of the number of shares of the Company's common
stock, par value $.01 per share (the "Common Stock"), owned, it
is important that stockholders be represented by proxy or
present in person at the Special Meeting. Stockholders are
requested to vote by completing the enclosed proxy card and
returning it signed and dated in the enclosed postage-paid
envelope. Stockholders are urged to indicate their vote in the
spaces provided on the proxy card. PROXIES SOLICITED BY THE
BOARD OF DIRECTORS OF THE COMPANY WILL BE VOTED IN ACCORDANCE
WITH THE DIRECTIONS GIVEN THEREIN. WHERE NO INSTRUCTIONS ARE
INDICATED, PROXIES WILL BE VOTED FOR THE APPROVAL OF THE
SPECIFIC PROPOSALS PRESENTED IN THIS PROXY STATEMENT. Proxies
marked as abstentions will not be counted as votes cast. In
addition, shares held in street name which have been designated
by brokers on proxy cards as not voted will not be counted as
votes cast. Proxies marked as abstentions or as broker
nonvotes, however, will be treated as shares present for
purposes of determining whether a quorum is present.
The Board of Directors knows of no additional matters that
will be presented for consideration at the Special Meeting.
Execution of a proxy, however, confers on the designated proxy
holders discretionary authority to vote the shares in accordance
with the determination of a majority of the Board of Directors
on such other business, if any, that may properly come before
the Special Meeting or any adjournments thereof.
A proxy may be revoked at any time prior to its exercise
by the filing of a written notice of revocation with the
Secretary of the Company, by delivering a duly executed proxy
bearing a later date to the Secretary of the Company at the
address listed above, or by attending the Special Meeting and
voting in person. The presence of a stockholder at the Special
Meeting will not in itself revoke such stockholder's proxy.
________________________________________________________________
VOTING SECURITIES AND SECURITY OWNERSHIP
________________________________________________________________
The securities entitled to vote at the Special Meeting
consist of the Company's Common Stock. Stockholders of record
as of the close of business on June 2, 1999 (the "Record Date")
are entitled to one vote for each share of Common Stock then
held. As of the Record Date, there were 6,116,562 shares of
Common Stock issued and outstanding. The presence, in person or
by proxy, of at least one-third of the total number of shares of
Common Stock outstanding and entitled to vote will be necessary
to constitute a quorum at the Special Meeting.
<PAGE>
<PAGE>
Persons and groups beneficially owning more than 5% of the
Common Stock are required to file certain reports with respect
to such ownership pursuant to the Securities Exchange Act of
1934, as amended (the "Exchange Act"). The following table sets
forth information regarding the shares of Common Stock
beneficially owned as of the Record Date by persons who
beneficially own more than 5% of the Common Stock, each of the
Company's directors, including the executive officers of the
Company named in the Summary Compensation Table, set forth under
"Management Compensation -- Executive Compensation," and all of
the Company's directors and executive officers as a group.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
BENEFICIALLY OWNED PERCENT OF
AT RECORD DATE(1) CLASS (2)
--------------------- ----------
<S> <C> <C>
Persons Owning Greater than 5%:
- -----------------------------
Baltimore County Savings Bank, M.H.C. 3,754,960 61.4%
4111 E. Joppa Road, Suite 300
Baltimore, Maryland 21236
BCSB Bankcorp, Inc. 403,916 (3) 6.6%
Employee Stock Ownership Plan et. al.
4111 E. Joppa Road Suite 300
Baltimore, Maryland 21236
Directors:
- ---------
H. Adrian Cox 2,587 *
Frank W. Dunton 5,000 *
Henry V. Kahl 167 *
Gary C. Loraditch 17,051 *
William M. Loughran 4,258 *
John J. Panzer 5,317 *
P. Louis Rohe 4,030 *
All directors and executive 69,711 1.1%
officers of the Company
as a group (10 persons)
<FN>
__________
(1) In accordance with Rule 13d-3 under the Exchange Act, a
person is deemed to be the beneficial owner, for purposes
of this table, of any shares of Common Stock if he or she
has or shares voting or investment power with respect to
such Common Stock. As used herein, "voting power" is the
power to vote or direct the voting of shares and
"investment power" is the power to dispose or direct the
disposition of shares. Except as otherwise noted,
ownership is direct, and the named individuals and group
exercise sole voting and investment power over the shares
of the Common Stock. The listed amounts do not include
shares with respect to which Directors Henry V. Kahl, H.
Adrian Cox and Frank W. Dunton have voting power by virtue
of their positions as trustees of the trusts holding
182,928 shares under the Company's Employee Stock
Ownership Plan (the "ESOP") and 92,161 shares under the
Bank's Deferred Compensation Plan (the "DCP"), nor 75,000
shares as to which such individuals share dispositive
power by virtue of their positions as directors of
Baltimore County Savings Bank Foundation, Inc. (the
"Foundation"). ESOP shares are held in a suspense account
for future allocation among participants as the loan used
to purchase the shares is repaid. Shares held by the ESOP
trust and allocated to the accounts of participants are
voted in accordance with the participants' instructions,
and unallocated shares are voted in the same ratio as ESOP
participants direct the voting of allocated shares or, in
the absence of such direction, in the ESOP trustees' best
judgment. As of the Record Date, 18,292 shares had been
allocated. Shares held by the DCP trust are voted in the
same proportion as are the shares held by the ESOP trust.
Shares held by the Foundation are voted in the same ratio
as all other shares of Common Stock are voted.
(2) Based on a total of 6,116,562 shares of Common Stock
outstanding at the Record Date.
(3) Includes 182,928 shares owned by the ESOP, 92,161 shares
owned by the DCP, 53,827 shares owned by the Bank's 401(k)
Plan and 75,000 shares owned by the Foundation, a Maryland
nonstock corporation dedicated to charitable and
educational purposes within the Baltimore metropolitan
area. Henry V. Kahl, H. Adrian Cox and Frank W. Dunton,
who serve as directors of the Company, serve as trustees
of the ESOP and the DCP and serve as three of the
Foundation's five directors. Such individuals share
voting power over shares held by the ESOP and the DCP and
share dispositive power over shares held by the DCP and
the Foundation. The Bank is the trustee of the 401(k)
Plan assets invested in Common Stock, and in their
capacities as directors of the Bank, Messrs. Kahl, Cox
and Dunton share voting and dispositive power over shares
held by the 401(k) Plan. In their individual capacity,
such individuals disclaim beneficial ownership of shares
held by the ESOP, the DCP, the 401(k) Plan and the
Foundation.
* Less than 1% of outstanding Common Stock.
</FN>
</TABLE>
2
<PAGE>
<PAGE>
________________________________________________________________
MANAGEMENT COMPENSATION
________________________________________________________________
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets
forth the cash and noncash compensation for the last fiscal year
awarded to or earned by the executive officers of the Bank in
fiscal 1998 that exceeded $100,000 for services rendered in all
capacities to the Company, the Bank and their affiliates.
<TABLE>
<CAPTION>
Annual Compensation
--------------------------------------------
Name and Fiscal Other Annual All Other
Principal Position Year Salary Bonus Compensation (1) Compensation
- ------------------ ------ ------ ----- ---------------- ------------
<S> <C> <C> <C> <C> <C>
Michael J. Dietz 1998 $118,975 $20,366 $ -- $13,000 (3)
Former President(2) 1997 118,897 19,554 -- 14,162
William M. Loughran 1998 103,646 17,711 -- 11,306 (3)
Senior Vice 1997 108,159 17,006 -- 12,335
President
Gary C. Loraditch 1998 105,511 17,711 -- 11,306 (3)
Vice President, 1997 107,763 17,006 -- 12,335
Secretary and
Treasurer (4)
<FN>
_____________
(1) Executive officers of the Bank receive indirect compensation in the form of
certain perquisites and other personal benefits. The amount of such benefits
received by the named executive officer in fiscal 1998 did not exceed the
lesser of 10% of the executive officer's salary and bonus or $50,000.
(2) Mr. Dietz served as President until his retirement on December 31, 1999.
(3) Amounts include $2,254, $1,960 and $1,960 of matching contributions paid by the
Bank pursuant to the Bank's 401(k) Plan and $10,746, $9,346 and $9,346 accrued
by the Bank under the Bank's pension plan for the benefit of Messrs. Dietz,
Loughran and Loraditch, respectively.
(4) Mr. Loraditch was named President effective January 4, 1999.
</FN>
</TABLE>
Change-in-Control Severance Agreements. The Bank's
Severance Agreements with Officers Loraditch and Loughran
(collectively, the "Employees") have a term ending on the
earlier of (a) 36 months after their recent renewal on October
22, 1997, and (b) the date on which the Employee terminates
employment with the Bank. On each annual anniversary date from
the date of commencement of the Severance Agreements, the term
of the Severance Agreements may be extended for additional
one-year periods beyond the then effective expiration date upon
a determination by the Board of Directors that the performance
of these individuals has met the required performance standards
and that such Severance Agreements should be extended. An
Employee becomes entitled to collect severance benefits under
the Severance Agreement in the event of the Employee's (a)
voluntary termination of employment (i) within 30 days following
a change of control or (ii) within 30 days of certain specified
events that both occur during the Covered Period (defined below)
and constitute a change in duties as defined in the Severance
Agreements, or (b) involuntary termination of employment for any
reason other than "for Cause" during the period that begins 12
months before a change in control and ends 18 months after a
change in control (the "Covered Period").
In the event an Employee becomes entitled to receive
severance benefits, the Employee will (i) be paid an amount
equal to (i) 2.99 times the annualized base salary paid to the
Employee in the immediately preceding 12-month period (excluding
board fees and bonuses) and (ii) will receive either cash in an
amount equal to the cost to the Employee of obtaining all
health, life, disability and other benefits which the Employee
would have been eligible to participate in through the second
annual anniversary date of his termination of employment or
continued participation in such benefit plans through the second
annual anniversary date of his termination of employment, to the
extent the Employee would continue to qualify for participation
therein. The Severance Agreements provide that within 10
business days of a change of control, the Bank shall fund, or
cause to be funded, a trust in the amount necessary to pay
amounts owed to the Employees as a result of the change of
control. The amount to be paid to an Employee from this
3
<PAGE>
<PAGE>
trust upon his or her termination is determined according to the
procedures outlined in the Severance Agreements, and any money
not paid to the Employee is returned to the Bank.
The aggregate payments that would be made to Officers
Loraditch and Loughran, assuming termination of employment under
the foregoing circumstances at September 30, 1998, would have
been approximately $800,000. These provisions may have an
anti-takeover effect by making it more expensive for a potential
acquiror to obtain control of the Company. In the event that
one of these Employees prevails over the Bank in a legal dispute
as to the Severance Agreement, he or she will be reimbursed for
legal and other expenses.
The Company and the Bank entered into an agreement with
Michael J. Dietz, who served as President of the Company and the
Bank until his retirement effective December 31, 1998. Pursuant
to the terms of the agreement, Mr. Dietz resigned as an officer
and director of the Company, the Bank and their affiliates and
released the Company, the Bank and related companies and
affiliates from all claims or liabilities based on his
employment with the Company and the Bank or in connection with
the termination of employment. Mr. Dietz also agreed not to
compete with the Company or the Bank for a three-year period.
In exchange for these agreements, the Bank agreed to pay Mr.
Dietz $371,707, payable in one-third installments on January
1stof 1999, 2000, and 2001 with interest on any unpaid amount
calculated at a rate of 7% percent per annum. If the Management
Recognition Plan and Stock Option Plan being voted on at the
Special Meeting do not receive shareholder approval, then
$86,328 of the aforementioned amount would be forfeited.
DIRECTOR COMPENSATION
Fees. The Chairman of the Board of Directors receives a
monthly retainer of $1,250 per month, and all other nonemployee
directors receive $1,000 per month. Each nonemployee director
also receives a fee of $250 per each regular and special Board
and committee meeting attended, except for Loan Committee
meetings, for which a fee of $150 is paid for each meeting
attended. Directors who serve as officers of the Bank do not
receive additional compensation for their service as directors.
Deferred Compensation Plan. The Bank maintains a Deferred
Compensation Plan (the "DCP"), which is a restatement of the
Bank's Directors' Retirement Plan, for directors and select
executive officers. Prior to each DCP year, each non-employee
director may elect to defer receipt of all or part of his future
fees (including retainers), and any other participant may elect
to defer receipt of up to 25% of salary or 100% of bonus
compensation. On each September 30 beginning with 1998, each
DCP participant who has between three and 12 years of service as
a director will have his account credited with $6,000. A
participant who, after the DCP's effective date, completes three
years of service as a director, will have his account credited
with $24,000 on the September 30 following completion of three
years of service. All amounts credited to a participant's
account shall be credited with the investment return which would
have resulted if such amounts had been invested, based upon the
participant's choice, between the dividend-adjusted rate of
return on the Common Stock and the Bank's highest annual rate of
interest on certificates of deposit having a one-year term.
Each participant may make an election to receive distributions
either in a lump sum or in annual installments over a period up
to ten years. During the year ended September 30, 1998, the
Bank did not make any further credits under the DCP, except that
the Bank credited $6,222 to the account of Director Cox.
The Bank has established a grantor trust and may, at any
time or from time to time, make additional contributions to the
trust. In the event of a change in control, the Bank will
contribute to the trust an amount sufficient to provide the
trust with assets having an overall value equal to the aggregate
account balances under the Plan. The trust's assets are subject
to the claims of the Bank's general creditors and are available
for eventual payments to participants.
Incentive Compensation Plan. The Bank's Board of
Directors adopted the Incentive Compensation Plan (the "ICP"),
effective October 1, 1994. The ICP is administered by the
Executive Committee, which is appointed by the Bank's Board of
Directors. Under the ICP, each eligible director and employee
receives annual cash bonus awards based on the Bank's
performance under criteria specified in the ICP. In addition,
pursuant to the terms of the ICP, directors are permitted to
make deferral elections, and to elect to have the rate of return
on their deferrals measured by either the Multiplier times 1.5%
or the highest 12-month CD rate. During the year ended
September 30, 1998, the Bank paid $3,670, $3,494, $4,178,
$17,711, $17,711, $3,728 and $2,852 to Directors Cox, Dunton,
Kahl, Loraditch, Loughran, Panzer and Rohe, respectively,
pursuant to the ICP.
4
<PAGE>
<PAGE>
Reimbursement for Tax Advice. The Bank's Board of
Directors has also adopted a policy to reimburse designated
directors and officers for expenses they incur in connection
with professional tax, estate planning or financial advice they
obtain related to the benefits they receive under the stock and
non-stock related benefit plans of the Bank and the Company.
Reimbursements are limited to $1,000 for each eligible
individual during any fiscal year, with a one-time allowance not
to exceed $5,000 for estate planning expenses. The level of
annual reimbursements may be increased to $2,000 on a one-time
basis in the event of a change in control of the Company. No
reimbursements were made by the Bank during the year ended
September 30, 1998.
______________________________________________________________
PROPOSAL I -- APPROVAL OF THE BCSB BANKCORP, INC.
1999 STOCK OPTION PLAN
______________________________________________________________
GENERAL
The Board of Directors of the Company has adopted the BCSB
Bankcorp, Inc. 1999 Stock Option Plan (the "Option Plan"),
subject to its approval by the Company's stockholders. The
initial grant of stock options under the Option Plan will occur
upon the Option Plan's receipt of stockholder approval. The
Option Plan is attached hereto as Exhibit A and should be
consulted for additional information. All statements made
herein regarding the Option Plan, which are only intended to
summarize the Option Plan, are qualified in their entirety by
reference to the Option Plan.
PURPOSE OF THE OPTION PLAN
The purpose of the Option Plan is to advance the interests
of the Company by providing directors and selected employees of
the Company and its affiliates, including the Bank, with the
opportunity to acquire shares of Common Stock. 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 incentive
to directors and employees of the Company and its affiliates to
promote the success of the business of the Company.
DESCRIPTION OF THE OPTION PLAN
Effective Date. The Option Plan will become effective on
the date of its approval by the Company's stockholders (the
"Effective Date"), and prior thereto no awards may or will be
made.
Administration. The Option Plan is administered by a
committee (the "Committee"), appointed by the Board of
Directors, consisting of at least two directors of the Company
who are "Non-employee Directors" within the meaning of the
federal securities laws. The Committee has discretionary
authority to select participants and grant awards, to determine
the form and content of any awards made under the Option Plan,
to interpret the Option Plan, to prescribe, amend and rescind
rules and regulations relating to the Option Plan, and to make
other decisions necessary or advisable in connection with
administering the Option Plan. All decisions, determinations,
and interpretations of the Committee are final and conclusive on
all persons affected thereby. Members of the Committee will be
indemnified to the full extent permissible under the Company's
governing instruments in connection with any claims or other
actions relating to any action taken under the Option Plan. It
is expected that the Committee will initially consist of
Directors H. Adrian Cox, Henry V. Kahl and John J. Panzer.
Eligible Persons; Types of Awards. Under the Option Plan,
the Committee has discretionary authority to grant stock options
("Options") and stock appreciation rights ("SARs")
(collectively, "Awards") to such employees and directors
(including members of the Committee) and advisory directors as
the Committee shall designate. In addition, all directors, the
advisory director and certain employees will receive the
automatic grants described below (see "Automatic Grants"). As
of the Record Date, the Company and its subsidiaries had
approximately seven employees and five non-employee directors
and one advisory director who were eligible to participate in
the Option Plan.
Shares Available for Grants. The Option Plan reserves
228,660 shares of Common Stock for issuance upon the exercise of
Options or SARs. Although the Company is authorized under the
Option Plan to issue options to purchase up to an aggregate of
228,660 shares, initially the Company intends to issue options
to acquire an aggregate of 80,000 shares and reserve the
remaining 148,660 shares for possible future option grants.
Shares subject to Awards may be (i) authorized but unissued
shares, (ii) shares held in treasury, (iii) shares repurchased
on the open market, or
5
<PAGE>
<PAGE>
(iv) shares held in a grantor trust. In the event of any
merger, consolidation, recapitalization, reorganization,
reclassification, stock dividend, split-up, combination of
shares, or similar event in which the number or kind of shares
is changed without receipt or payment of consideration by the
Company, the Committee will adjust the number and kind of shares
reserved for issuance under the Option Plan and the exercise
prices of such Awards. Generally, the number of shares as to
which SARs are granted are charged against the aggregate number
of shares available for grant under the Option Plan, provided
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 of Common Stock subject to
the Option shall be charged against the aggregate number of
shares of Common Stock remaining available under the Option
Plan. If Awards should expire, become unexercisable or be
forfeited for any reason without having been exercised, the
shares of Common Stock subject to such Options shall, unless the
Option Plan shall have been terminated, be available for the
grant of additional Awards under the Option Plan.
Options. Options may be either incentive stock options
("ISOs") as defined in Section 422 of the Internal Revenue Code,
or Options that are not ISOs ("Non-ISOs"). The exercise price
as to any Option may not be less than the fair market value
(determined under the Option Plan) of the optioned shares on the
date of grant. In the case of a participant who owns more than
10% of the outstanding Common Stock on the date of grant, such
exercise price may not be less than 110% of fair market value of
the shares. As required by federal tax laws, to the extent that
the aggregate fair market value (determined when an ISO is
granted) of the Common Stock with respect to which ISOs are
exercisable by an optionee for the first time during any
calendar year (under all plans of the Company and of any
subsidiary) exceeds $100,000, the Options granted in excess of
$100,000 will be treated as Non-ISOs, and not as ISOs.
Automatic Grants. On the Effective Date, certain
employees and all directors of the Company and the Bank will
receive one-time grants of Options to purchase shares of Common
Stock at an exercise price per share equal to its fair market
value on the Effective Date (see "--Stock Option Grants" and
"New Plan Benefits" below). Options granted to non-employee
directors will have a term of ten years, and expire one year
after a director terminates continuous service as a director for
any reason other than death, but in no event later than the date
on which such Options would otherwise expire. In the event of a
director's death during the term of his or her directorship, the
Options shall become immediately exercisable, and will expire
two years after his or her death. In the event of such
director's disability during his or her directorship, the
director's Option shall become immediately exercisable, and such
Option may be exercised within two years of the termination of
directorship due to disability, but not later than the date that
the Option would otherwise expire.
SARs. An SAR may be granted in tandem with all or part of
any Option granted under the Option Plan, or without any
relationship to any Option. An SAR granted in tandem with an
ISO must expire no later than the ISO, must have the same
exercise price as the ISO and may be exercised only when the ISO
is exercisable and when the fair market value of the shares
subject to the ISO exceeds the exercise price of the ISO. For
SARs granted in tandem with Options, the optionee's exercise of
the SAR cancels his or her right to exercise the Option, and
vice versa. Regardless of whether an SAR is granted in tandem
with an Option, exercise of the SAR will entitle the optionee to
receive, as the Committee prescribes in the grant, all or a
percentage of the difference between (i) the fair market value
of the shares of Common Stock subject to the SAR at the time of
its exercise, and (ii) the fair market value of such shares at
the time the SAR was granted (or, in the case of SARs granted in
tandem with Options, the exercise price). The exercise price as
to any particular SAR may not be less than the fair market value
of the optioned shares on the date of grant.
Exercise of Options and SARs. The exercise of Options and
SARs will be subject to such terms and conditions as are
established by the Committee in a written agreement between the
Committee and the optionee. All Options granted on the
Effective Date will vest and become exercisable at the rate of
25% per year upon the completion of each year of service after
the date of grant. Notwithstanding the foregoing, an Option
will become fully exercisable immediately upon termination of
the participant's continuous service due to retirement at or
after age 65, disability, death, or upon a change in control (as
defined in the Option Plan). In the absence of Committee action
to the contrary, an otherwise unexpired Option shall cease to be
exercisable upon (i) an optionee's termination of employment for
"just cause" (as defined in the Option Plan), (ii) the date that
is one year after an optionee terminates service for a reason
other than just cause or death, or (iii) the date that is two
years after an optionee's death.
6
<PAGE>
<PAGE>
An optionee may exercise Options or SARs, subject to
provisions relative to their termination and limitations on
their exercise, only by (i) written notice of intent to exercise
the Option or SAR with respect to a specified number of shares
of Common Stock, and (ii) in the case of Options, payment to the
Company (contemporaneously with delivery of such notice) in
cash, in Common Stock, or a combination of cash and Common
Stock, of the amount of the exercise price for the number of
shares with respect to which the Option is then being exercised.
Common Stock utilized in full or partial payment of the exercise
price for Options shall be valued at its market value at the
date of exercise, and may consist of shares subject to the
Option being exercised.
Conditions on Issuance of Shares. The Committee will have
the discretionary authority to impose, in agreements, such
restrictions on shares of Common Stock issued pursuant to the
Option Plan as it may deem appropriate or desirable, including
but not limited to the authority to impose a right of first
refusal or to establish repurchase rights or both of these
restrictions. In addition, the Committee may not issue shares
unless the issuance complies with applicable securities laws,
and to that end may require that a participant make certain
representations or warranties.
Change in Control. The Option Plan provides that upon the
earlier of a "Change in Control" all Awards shall become fully
exercisable, notwithstanding any other provision of the Option
Plan or any agreement with an optionee. For purposes of the
Option Plan, Change in Control means any one of the following
events: (i) the acquisition of ownership, holding or power to
vote more than 25% of the Bank's or the Company's voting stock,
(ii) the acquisition of the ability to control the election of a
majority of the Bank's or the Company's directors, (iii) the
acquisition of a controlling influence over the management or
policies of the Bank or the Company by any person or by persons
acting as a "group" (within the meaning of Section 13(d) of the
Exchange Act), or (iv) during any period of two consecutive
years, individuals (the "Continuing Directors") who at the
beginning of such period constitute the Board of Directors of
the Company or the Bank (the "Existing Board") cease for any
reason to constitute at least two-thirds thereof, provided that
any individual whose election or nomination for election as a
member of the Existing Board was approved by a vote of at least
two-thirds of the Continuing Directors then in office shall be
considered a Continuing Director. For purposes of defining
Change in Control, the term "person" refers to an individual or
a corporation, partnership, trust, association, joint venture,
pool, syndicate, sole proprietorship, unincorporated
organization or any other form of entity not specifically
listed. The decision of the Bank's non-employee directors as to
whether a Change in Control has occurred shall be conclusive and
binding.
Although these provisions are included in the Option Plan
primarily for the protection of an optionee in the event of a
Change in Control of the Company, they may be regarded as having
a takeover defensive effect, which may reduce the Company's
vulnerability to hostile takeover attempts and certain other
transactions which have not been negotiated with and approved by
the Board of Directors.
Limits on Transferability. Optionees may transfer their
Awards to family members or trusts under specified
circumstances. Awards may not otherwise be sold, pledged,
assigned, hypothecated, transferred or disposed of in any manner
other than by will or by the laws of descent and distribution.
In addition, Common Stock that is purchased upon the exercise of
an Option or SAR may not be sold within the six-month period
following the grant date of that Option or SAR, except in the
event of the optionee's death or disability, or such other event
as the Board of Directors may specifically deem appropriate.
Effect of Dissolution and Related Transactions. In the
event of (i) the liquidation or dissolution of the Company, (ii)
a merger or consolidation in which the Company is not the
surviving entity, or (iii) the sale or disposition of all or
substantially all of the Company's assets (any of the foregoing
to be referred to herein as a "Transaction"), all outstanding
Awards, together with the exercise prices thereof, will be
equitably adjusted for any change or exchange of shares for a
different number or kind of shares or other securities which
results from the Transaction. However, any such adjustment will
be made in such a manner as to not constitute a modification,
within the meaning of Section 424(h) of the Internal Revenue
Code, of outstanding ISOs.
Duration of the Option Plan and Grants. The Option Plan
has a term of 10 years from the Effective Date, after which date
no Awards may be granted. The maximum term for an Award is 10
years from the date of grant, except that the maximum term of an
ISO (and SAR granted in tandem with an ISO) may not exceed five
years if the optionee owns more than 10% of the Common Stock on
the date of grant. The expiration of the Option Plan, or its
termination by the Committee, will not affect any Award then
outstanding.
7
<PAGE>
<PAGE>
Amendment and Termination of the Option Plan. The Board
of Directors of the Company may from time to time amend the
terms of the Option Plan and, with respect to any shares at the
time not subject to Awards, suspend or terminate the Option
Plan. No amendment, suspension, or termination of the Option
Plan will, without the consent of any affected optionee, alter
or impair any rights or obligations under any Award previously
granted.
Financial Effects of Options. The Company will receive no
monetary consideration for the granting of Awards under the
Option Plan. It will receive no monetary consideration other
than the exercise price for shares of Common Stock issued to
optionees upon the exercise of their Option, and will receive no
monetary consideration upon the exercise of SARs. Under
applicable accounting standards, recognition of compensation
expense is not required when Options are granted at an exercise
price equal to or exceeding the fair market value of the Common
Stock on the date the Option is granted.
The granting of SARs will require charges to the income of
the Company based on the amount of the appreciation, if any, in
the average market price of the Common Stock to which the SARs
relate over the exercise price of those shares. If the average
market price of the Common Stock declines subsequent to a charge
against earnings due to estimated appreciation in the Common
Stock subject to SARs, the amount of the decline will reverse
such prior charges against earnings (but not by more than the
aggregate of such prior charges).
FEDERAL INCOME TAX CONSEQUENCES
ISOs. An optionee recognizes no taxable income upon the
grant of ISOs. If the optionee holds the shares purchased upon
exercise of an ISO for at least two years from the date the ISO
is granted, and for at least one year from the date the ISO is
exercised, any gain realized on the sale of the shares received
upon exercise of the ISO is taxed as long-term capital gain.
However, the difference between the fair market value of the
Common Stock on the date of exercise and the exercise price of
the ISO will be treated by the optionee as an item of tax
preference in the year of exercise for purposes of the
alternative minimum tax. If an optionee disposes of the shares
before the expiration of either of the two special holding
periods noted above, the disposition is a "disqualifying
disposition." In this event, the optionee will be required, at
the time of the disposition of the Common Stock, to treat the
lesser of the gain realized or the difference between the
exercise price and the fair market value of the Common Stock at
the date of exercise as ordinary income and the excess, if any,
as capital gain.
The Company will not be entitled to any deduction for
federal income tax purposes as the result of the grant or
exercise of an ISO, regardless of whether or not the exercise of
the ISO results in liability to the optionee for alternative
minimum tax. However, if an optionee has ordinary income
taxable as compensation as a result of a disqualifying
disposition, the Company will be entitled to deduct an
equivalent amount.
Non-ISOs. In the case of a Non-ISO, an optionee will
recognize ordinary income upon the exercise of the Non-ISO in an
amount equal to the difference between the fair market value of
the shares on the date of exercise and the option price (or, if
the optionee is subject to certain restrictions imposed by the
federal securities laws, upon the lapse of those restrictions
unless the optionee makes a special tax election within 30 days
after the date of exercise to have the general rule apply).
Upon a subsequent disposition of such shares, any amount
received by the optionee in excess of the fair market value of
the shares as of the exercise will be taxed as capital gain.
The Company will be entitled to a deduction for federal income
tax purposes at the same time and in the same amount as the
ordinary income recognized by the optionee in connection with
the exercise of a Non-ISO.
SARs. The grant of an SAR has no tax effect on the
optionee or the Company. Upon exercise of the SARs, however,
any cash or Common Stock received by the optionee in connection
with the surrender of his or her SAR will be treated as
compensation income to the optionee, and the Company will be
entitled to a business expense deduction for the amounts treated
as compensation income.
PROPOSED STOCK OPTION GRANTS
Set forth below is certain information relating to all
Options which are to be granted to the specified individuals and
groups of individuals on the Effective Date of the Option Plan.
All such Options (i) will be subject to the terms and conditions
described above, and are contingent on, and not exercisable
until, the Option Plan receives stockholder
8
<PAGE>
<PAGE>
approval, and (ii) will automatically expire ten years after the
date of their grant. The exercise price for these Options will
equal the fair market value of the Common Stock on the date of
grant. The closing sale price of the Common Stock on June 1,
1999, as reported on the Nasdaq National Market System, was
$8.50 per share.
<TABLE>
<CAPTION>
NUMBER OF SHARES
PARTICIPANT OR GROUP SUBJECT TO OPTIONS
-------------------- ------------------
<S> <C>
Non-Employee Directors:
H. Adrian Cox 10,000
Frank W. Dunton 10,000
Henry V. Kahl 10,000
John J. Panzer 10,000
P. Louis Rohe 10,000
Advisory Director:
Martin F. Meyers 10,000
Others:
Gary C. Loraditch, President of the Company
and the Bank 10,000
William M. Loughran, Senior Vice President
of the Company and the Bank 10,000
Michael J. Dietz, former President of the
Company and the Bank --
All current executive officers as a group
(5 persons) 20,000
All current directors and the advisory
directory who are not executive officers
as a group (6 persons) 60,000
All employees, including all current officers
who are not executive officers, as a group --
</TABLE>
For additional information relating to proposed option
grants, see "New Plan Benefits" below.
RECOMMENDATION AND VOTE REQUIRED
The Board of Directors has determined that the Option Plan
is desirable, cost effective, and produces incentives which will
benefit the Company and its stockholders. The Board of
Directors is seeking stockholder approval of the Option Plan in
order to comply with the requirements of applicable corporate
law, to satisfy the requirements of the Code for favorable tax
treatment of ISOs, to comply with Nasdaq listing requirements
and to exempt certain option transactions from the short-swing
trading rules of the Securities and Exchange Commission ("SEC").
Stockholder approval of the Option Plan requires the
affirmative vote of the holders of a majority of the votes
eligible to be cast at the Special Meeting. THE BOARD OF
DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE OPTION PLAN.
9
<PAGE>
<PAGE>
________________________________________________________________
PROPOSAL II -- APPROVAL OF MANAGEMENT RECOGNITION PLAN
________________________________________________________________
GENERAL
The Board of Directors of the Company has adopted the BCSB
Bankcorp, Inc. Management Recognition Plan (the "MRP"), subject
to its approval by the Company's stockholders. The initial
grant of MRP awards will occur upon the MRP's receipt of
stockholder approval. A copy of the MRP is attached hereto as
Exhibit B, and should be consulted for additional information.
All statements made herein regarding the MRP, which are only
intended to summarize the MRP, are qualified in their entirety
by reference to the MRP.
PURPOSE OF THE MRP
The purpose of the MRP is to reward and retain personnel
of experience and ability in key positions of responsibility by
providing employees and directors of the Company, the Bank and
their affiliates with a proprietary interest in the Company,
with compensation for their past contributions to the Company
and the Bank, and with an incentive to make such contributions
in the future.
DESCRIPTION OF THE MRP
Effective Date. The MRP will become effective immediately
upon its approval by the Company's stockholders (the "Effective
Date"), and prior thereto no awards may be made.
Administration. The MRP will be administered by an MRP
Committee consisting of not less than two members of the
Company's Board of Directors who are "Non-employee Directors"
within the meaning of the federal securities laws. Except as
limited by the express provisions of the MRP or by resolutions
adopted by the Board, the MRP Committee has sole and complete
authority and discretion (i) to grant MRP awards to such
employees as the MRP Committee may select, (ii) to determine the
form and content of MRP awards to be issued under the MRP, (iii)
to interpret the MRP, (iv) to prescribe, amend, and rescind
rules and regulations relating to the MRP, and (v) to make other
determinations necessary or advisable for the administration of
the MRP. The MRP provides that members of the MRP Committee
shall be indemnified and held harmless for actions taken under
the MRP in good faith and which he or she reasonably believed to
be in the best interests of the Company and its affiliate and,
with respect to criminal actions or proceedings, he or she has
no reasonable cause to believe his or her conduct was unlawful.
As of the Record Date, the MRP Committee consisted of Directors
H. Adrian Cox, Henry V. Kahl and John J. Panzer.
MRP Trust; Purchase Limitations. The Company may award up
to an aggregate of 91,464 shares under the MRP. Shares awarded
may come from authorized but unissued shares or shares purchased
in the open market. If the Company determines to purchase
shares in the open market, it will contribute sufficient funds
to the MRP Trust to purchase up to 91,464 shares of Common
Stock. The assets of the MRP will be held in a trust (the "MRP
Trust"), as to which Directors H. Adrian Cox, Henry V. Kahl and
John J. Panzer will act as trustees ("MRP Trustees") and thereby
have the responsibility to invest all funds contributed to the
MRP Trust by the Company or the Bank. Although the Company
would be authorized to issue up to 91,464 shares under the MRP,
initially the Company intends to award an aggregate of 45,600
shares of Common Stock and reserve the remaining 45,864 shares
for possible future awards. In the event an MRP award is
forfeited for any reason, the MRP Committee may make awards with
respect to such shares.
Types of Awards; Eligible Persons. The MRP Committee may
make MRP awards, in the form of restricted stock, with respect
to shares held in the underlying MRP Trust. The MRP Committee
has the discretion to select employees, directors and advisory
directors of the Company and/or of the Bank who will receive MRP
awards. In selecting those employees, directors and advisory
directors to whom MRP awards will be granted and the number of
shares covered by such awards, the MRP Committee will consider
the position, duties and responsibilities of eligible employees,
the value of their services to the Company and its affiliates
(including the Bank) and any other factors the MRP Committee may
deem relevant. In addition, the MRP specifically provides for
certain automatic awards to all directors and the advisory
director and certain executive officers.
10
<PAGE>
<PAGE>
Vesting. Pursuant to the MRP, freely transferable shares
of Common Stock will be transferred to participants as they
become vested in their MRP awards. The automatic MRP awards
that will be granted on the effective date will become 25%
vested on each of the four anniversary dates of the award upon
the completion of each continuous year of service. All shares
of Common Stock subject to outstanding awards will be
immediately 100% earned and nonforfeitable upon a participant's
death, disability (as defined in the MRP) or retirement after
age 65. If a participant terminates employment for reasons
other than death, disability or retirement, the participant
forfeits all rights to the shares then under restriction.
The MRP provides that notwithstanding the general rule
with respect to vesting of awards: (i) all shares subject to an
award under the MRP held by a participant whose service with the
Company or an affiliate terminates due to the participant's
death, disability or retirement after age 65, shall be deemed
earned and 100% vested as of the participant's last day of
service with the Company or an affiliate, and (ii) all shares
subject to an award held by a participant shall be deemed earned
and 100% vested upon a "Change in Control." For purposes of the
MRP, Change in Control is defined to mean any one of the
following events: (i) the acquisition of ownership, holding or
power to vote more than 25% of the Bank's or the Company's
voting stock; (ii) the acquisition of the ability to control the
election of a majority of the Bank's or the Company's directors;
(iii) the acquisition of a controlling influence over the
management or policies of the Bank or the Company by any person
or by persons acting as a "group" (within the meaning of Section
13(d) of the Exchange Act); or (iv) during any period of two
consecutive years, individuals (the "Continuing Directors") who
at the beginning of such period constitute the Board of
Directors of the Company or the Bank (the "Existing Board")
cease for any reason to constitute at least two-thirds thereof,
provided that any individual whose election or nomination for
election as a member of the Existing Board was approved by a
vote of at least two-thirds of the Continuing Directors then in
office shall be considered a Continuing Director. For purposes
of the definition of Change in Control, the term "person" refers
to an individual or a corporation, partnership, trust,
association, joint venture, pool, syndicate, sole
proprietorship, unincorporated organization or any other form of
entity not specifically listed. The decision of the Bank's non-
employee directors as to whether a change in control has
occurred shall be conclusive and binding.
No shares may be distributed from the MRP Trust prior to
the date which is five (5) years from the date of the Bank's
reorganization to the mutual holding company form of
organization (the Reorganization") to the extent the recipient
would after receipt of such shares own in excess of 10% of the
issued and outstanding shares of Common Stock, unless such
action is approved in advance by a majority vote of the
nonemployee directors of the Company's Board of Directors. Any
shares remaining undistributed solely by reason of the operation
of this rule shall be distributed to the recipient on the date
which is five years from the date of the Reorganization.
Distributions of Shares; Voting; Dividends. All unvested
shares of Common Stock held by the MRP Trust (whether or not
subject to an MRP award) shall be voted by the MRP Trustees in
the same proportion as the trustee of the Company's Employee
Stock Ownership Plan trust votes Common Stock held therein, and
in the absence of any such voting, shall be voted in the manner
directed by the Board of Directors. The MRP Trustees shall
distribute all shares, together with any shares representing
stock dividends, in the form of Common Stock. One share of
Common Stock shall be given for each share earned. Payments
representing cash dividends (and earnings thereon) will be made
in cash. There shall also be distributed an appropriate amount
of net earnings, if any, of the MRP Trust with respect to any
cash dividends so paid out.
Accrual of Dividends. Whenever shares of Common Stock are
paid to an award recipient or beneficiary thereof, such
recipient or beneficiary shall also be entitled to receive, with
respect to each share paid, an amount equal to any cash
dividends (including special large and nonrecurring dividends,
including one that has the effect of a return of capital to the
Company's stockholders) and a number of shares of Common Stock
equal to any stock dividends, declared and paid with respect to
a share of Common Stock between the date the relevant MRP award
was initially granted to such participant and the date the
shares are being distributed. There shall also be distributed
an appropriate amount of net earnings, if any, of the Trust with
respect to any cash dividends so paid out.
Deferral of Awards. The MRP provides that at any time
prior to December 31st of any year prior to the date on which a
participant becomes vested in any shares subject to his or her
award, a participant who is a member of a select group of
management or highly compensated employees (within the meaning
of the Employees' Retirement Income Security Act of 1973) may
irrevocably elect to defer the receipt of all or a percentage of
the shares that would otherwise be transferred to the
participant upon the vesting of such award (the "Deferred
Shares"). MRP participants
11
<PAGE>
<PAGE>
shall receive earnings on dividends paid on Deferred Shares at a
rate equal to the dividend-adjusted total return on the Common
Stock, as determined from time to time by the MRP Committee in
its sole discretion. The MRP Trustees shall hold each
Participant's Deferred Shares and deferred earnings in the MRP
Trust until distribution is required pursuant to the
participant's election.
Limits on Transferability. Participants may transfer
their MRP awards to family members or trusts under specified
circumstances. MRP awards and rights to shares held in the MRP
Trust are not otherwise transferable by participants in the MRP,
and during the lifetime of a participant, shares held in the MRP
Trust may only be earned by and paid to the participant.
Taxation. Participants will recognize compensation income
when their interest vests, or at an earlier date pursuant to a
participant's election to accelerate recognition pursuant to
Section 83(b) of the Internal Revenue Code.
Financial Effects of Awards. Neither the Company nor the
Bank will receive any monetary consideration for the granting of
awards under the MRP. Under applicable accounting standards,
when MRP awards are granted, the Company must recognize
compensation expense based on the fair market value of the
Common Stock on the date the MRP awards are granted, with such
amount being amortized over the expected vesting period for the
award.
Adjustments for Capital Changes. In the event of any
merger, consolidation, recapitalization, reorganization,
reclassification, stock dividend, split-up, combination of
shares, or similar event in which the number or kind of shares
is changed without receipt or payment of consideration by the
Company, the MRP Committee will adjust both the number and kind
of shares of stock which may be purchased under the MRP and the
number and kind of shares of stock subject to outstanding MRP
awards. In the event of (i) the liquidation or dissolution of
the Company, (ii) a merger or consolidation in which the Company
is not the surviving entity, or (iii) the sale or disposition of
all or substantially all of the Company's assets, all
outstanding MRP awards shall be adjusted for any change or
exchange of shares of Common Stock for a different number or
kind of shares or other securities which results from the
transaction.
Amendment and Termination of the MRP. The Company's Board
of Directors may, by resolution, amend or terminate the MRP at
any time, provided that no amendment or termination of the MRP
will, without the written consent of any affected holders of an
MRP award, impair any rights or obligations under any MRP award
previously granted.
The power to amend or terminate includes the power to
direct the MRP Trustees to return to the Company all or any part
of the assets of the MRP Trust, including shares of Common Stock
held in the plan share reserve of the MRP. However, the
termination of the MRP Trust will not affect a participant's
right to earn outstanding MRP awards and to receive Common Stock
relating thereto, including earnings thereon, in accordance with
the terms of the MRP and the particular MRP award made to the
participant.
Duration of the MRP. The MRP and MRP Trust will remain in
effect until the earlier of (i) termination by the Company's
Board of Directors, or (ii) the distribution of all assets of
the MRP Trust. Termination of the MRP will not affect any MRP
awards previously granted, and such MRP awards will remain valid
and in effect until they have been earned and distributed from
the MRP Trust, or by their terms expire or are forfeited.
Proposed MRP Awards. For information relating to proposed
MRP awards, see "New Plan Benefits" below.
RECOMMENDATION AND VOTE REQUIRED
The Board of Directors has determined that the MRP is
desirable, cost effective, and produces incentives which will
benefit the Company and its stockholders. The Board of
Directors is seeking stockholder approval of the MRP to comply
with the requirements of applicable corporate law, to exempt
certain transactions from the short-swing trading rules of the
SEC and to comply with Nasdaq listing requirements.
Approval of the MRP requires the affirmative vote of the
holders of a majority of the votes eligible to be cast at the
Special Meeting. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
APPROVAL OF THE MRP.
12
<PAGE>
<PAGE>
________________________________________________________________
NEW PLAN BENEFITS
________________________________________________________________
The following tables sets forth certain information
regarding the benefits to be received under the Option Plan and
the MRP.
<TABLE>
<CAPTION>
Option Plan MRP
---------------------- ----------------------
Dollar Number Dollar Number
Name and Position Value ($)(1) of Units Value ($)(2) of Units
- ----------------- ------------ -------- ------------ --------
<S> <C> <C> <C> <C>
Gary C. Loraditch, President $ -- 10,000 $48,450 5,700
of the Company and the Bank
William M. Loughran, Senior Vice -- 10,000 48,450 5,700
President of the Company and
the Bank
Michael J. Dietz, former President
of the Company and the Bank -- -- -- --
All current executive officers as
a group (5 persons) -- 20,000 96,900 11,400
All current directors and the
advisory director who are not
executive officers as a group
(6 persons) -- 60,000 290,700 34,200
All employees, including all current
officers who are not executive
officers, as a group -- -- -- --
<FN>
_____________________
(1) Based on the fair market value of the Common Stock on the date of grant less the
exercise price. All Options will be granted at an exercise price equal to the
fair market value of the underlying shares of Common Stock on the date of the
grant, which will occur upon receipt of stockholder approval at this Special
Meeting.
(2) Based on the closing price of the underlying Common Stock of $8.50 per share as
quoted on the Nasdaq National Market System on June 1, 1999.
</FN>
</TABLE>
________________________________________________________________
OTHER MATTERS
________________________________________________________________
The Board of Directors is not aware of any business to
come before the Special Meeting other than those matters
described above in this proxy statement and matters incident to
the conduct of the Special Meeting. However, if any other
matters should properly come before the Special Meeting, it is
intended that proxies in the accompanying form will be voted in
respect thereof in accordance with the determination of a
majority of the Board of Directors.
________________________________________________________________
MISCELLANEOUS
________________________________________________________________
The cost of soliciting proxies will be borne by the
Company. The Company will reimburse brokerage firms and other
custodians, nominees and fiduciaries for reasonable expenses
incurred by them in sending proxy materials to the beneficial
owners of Common Stock. In addition to solicitations by mail,
directors, officers and regular employees of the Company may
solicit proxies personally or by telegraph or telephone without
additional compensation therefor. The Company has retained
Regan & Associates, Inc., a proxy soliciting firm, to assist in
the solicitation of proxies, for which Regan and Associates,
Inc. will receive a fee of $4,000 plus reimbursement of certain
out-of-pocket expenses.
13
<PAGE>
<PAGE>
________________________________________________________________
STOCKHOLDER PROPOSALS
________________________________________________________________
For consideration at the Special Meeting, a stockholder
proposal must be delivered or mailed to the Company's Secretary
no later than June 21, 1999. In order to be eligible for
inclusion in the proxy materials of the Company for the Annual
Meeting of Stockholders for the year ending September 30, 1999,
any stockholder proposal to take action at such meeting must be
received at the Company's executive offices at 4111 E. Joppa
Road, Suite 300, Baltimore, Maryland 21236 by no later than
September 22, 1999. Any such proposals shall be subject to the
requirements of the proxy rules adopted under the Exchange Act.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ David M. Meadows
David M. Meadows
Secretary
June 11, 1999
Baltimore, Maryland
YOU ARE CORDIALLY INVITED TO ATTEND THE SPECIAL MEETING IN
PERSON. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING,
YOU ARE REQUESTED TO SIGN AND PROMPTLY RETURN THE
ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
14
<PAGE>
<PAGE>
EXHIBIT A
BCSB BANKCORP, INC.
1999 STOCK OPTION 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 respon-
sibility and to provide additional incentives to Directors and
key Employees of the Company or any Affiliate to promote the
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 Baltimore County Savings Bank,
F.S.B.
(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 BCSB Bankcorp, 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) "Director" shall mean any member of the Board and
any member of the board of directors of any Affiliate that the
Board has by resolution designated as being eligible for
participation in this Plan, and shall include advisory directors
of the Company or its Affiliates.
A-1
<PAGE>
<PAGE>
(l) "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.
(m) "Effective Date" shall mean the date specified in
Paragraph 14 hereof.
(n) "Employee" shall mean any person employed by the
Company, the Bank, or an Affiliate.
(o) "Exercise Price" shall mean the price per Optioned
Share at which an Option or SAR may be exercised.
(p) "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.
(q) "Market Value" shall mean the fair market value of
the Common Stock, as determined under Paragraph 8(b) hereof.
(r) "Non-Employee Director" shall have the meaning
provided in Rule 16b-3.
(s) "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.
(t) "Option" means an ISO and/or a Non-ISO.
(u) "Optioned Shares" shall mean Shares subject to an
Award granted pursuant to this Plan.
(v) [reserved].
(w) "Participant" shall mean any person who receives an
Award pursuant to the Plan.
(x) "Plan" shall mean this BCSB Bankcorp, Inc. 1999
Stock Option Plan.
(y) "Rule 16b-3" shall mean Rule 16b-3 of the General
Rules and Regulations under the Securities Exchange Act of 1934,
as amended.
(z) "Share" shall mean one share of Common Stock.
(aa) "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.
(bb) "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.
A-2
<PAGE>
<PAGE>
(b) Term of Awards. The term of each Award granted
under the Plan shall be established by the Committee, but shall
not exceed 10 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.
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 228,660 Shares, which equals
10% of the Shares issued by the Company to the public in
connection with the Bank's mutual holding company reorganization
("MHC Reorganization"). Such Shares may either be authorized
but unissued Shares, Shares held in treasury, or Shares
repurchased on the open market and 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
A-3
<PAGE>
<PAGE>
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.
(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 and Directors 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.
(b) Automatic Grants to Employees. On the Effective Date,
each of the following Employees shall receive an Option (in the
form of an ISO, to the extent permissible under the Code) to
purchase the number of Shares listed below, at an Exercise Price
per Share equal to the Market Value of a Share on the Effective
Date; provided that such grant shall not be made to an Employee
whose Continuous Service terminates on or before the Effective
Date:
Number of Shares
Participant Reserved under Paragraph 4(a)
----------- -----------------------------
Gary C. Loraditch 10,000
William M. Loughran 10,000
With respect to each of the above-named Participants, the Option
granted to the Participant hereunder (i) shall vest in
accordance with the general rule set forth in Paragraph 9(a) of
the Plan, (ii) shall have a term of ten years from the Effective
Date, and (iii) shall be subject to the general rule set forth
in Paragraph 9(c) with respect to the effect of a Participant's
termination of Continuous Service on the Participant's right to
exercise his Options.
(c) Special Rules for ISOs. The aggregate Market Value,
as of the date the Option is granted, of the Shares with respect
to which ISOs are exercisable for the first time by an Employee
during any calendar year (under all incentive stock option
plans, as defined in Section 422 of the Code, of the Company or
any present or future Affiliate of the Company) shall not exceed
$100,000. Notwithstanding the foregoing, the Committee may
grant Options in excess of the foregoing limitations, in which
case Options granted in excess of such limitation shall be Non-
ISOs.
<PAGE>
7. GRANTS OF OPTIONS TO NON-EMPLOYEE DIRECTORS
(a) Automatic Grants. Notwithstanding any other
provisions of this Plan, each Director who is a Non-Employee
Director on the Effective Date shall receive, on said date, Non-
ISOs to purchase Shares as follows:
Participant Number of Shares Reserved under Paragraph 4(a)
- ----------- ----------------------------------------------
H. Adrian Cox 10,000
Frank W. Dunton 10,000
Henry V. Kahl 10,000
John J. Panzer 10,000
P. Louis Rohe 10,000
A-4
<PAGE>
<PAGE>
Number of Shares Reserved
Advisory Director under Paragraph 4(a)
- ----------------- -------------------------
Martin F. Meyer 10,000
Such Non-ISOs shall have an Exercise Price per Share equal
to the Market Value of a Share on the date of grant.
(b) Terms of Exercise. Options received under the
provisions of this Paragraph (i) shall become exercisable in
accordance with paragraph 9(a) of the Plan, and (ii) may be
exercised from time to time by written notice of intent to
exercise the Option with respect to all or a specified number of
the Optioned Shares, and payment to the Company
(contemporaneously with the delivery of such notice), in cash,
in Common Stock, or a combination of cash and Common Stock, of
the amount of the Exercise Price for the number of the Optioned
Shares with respect to which the Option is then being exercised.
Each such notice and payment shall be delivered, or mailed by
prepaid registered or certified mail, addressed to the Treasurer
of the Company at the Company's executive offices.
Options granted under this Paragraph shall have a term of
ten years; provided that Options granted under this Paragraph
shall expire one year after the date on which a Director
terminates Continuous Service on the Board for a reason other
than death, but in no event later than the date on which such
Options would otherwise expire. In the event of such Director's
death during the term of his directorship, Options granted under
this Paragraph shall be immediately exercisable, and may be
exercised within two years from the date of his death by the
personal representatives of his estate or person or persons to
whom his rights under such Option shall have passed by will or
by laws of descent and distribution, but in no event later than
the date on which such Options would otherwise expire. In the
event of such Director's Disability during his or her
directorship, the Director's Option shall be immediately
exercisable, and such Option may be exercised within one year of
the termination of directorship due to Disability, but not later
than the date that the Option would otherwise expire. Unless
otherwise inapplicable or inconsistent with the provisions of
this Paragraph, the Options to be granted to Directors hereunder
shall be subject to all other provisions of this Plan.
(c) Effect of the Committee's Decisions. The
Committee's determination whether a Participant's Continuous
Service has ceased, and the effective date thereof, shall be
final and conclusive on all persons affected thereby.
8. EXERCISE PRICE FOR OPTIONS.
(a) Limits on Committee Discretion. The Exercise Price
as to any particular Option shall not be less than 100% of the
Market Value of the Optioned Shares on the date of grant. In
the case of an Employee who owns Shares representing more than
10% of the Company's outstanding Shares of Common Stock at the
time an ISO is granted, the Exercise Price shall not be less
than 110% of the Market Value of the Optioned Shares at the time
the ISO is granted.
(b) Standards for Determining Exercise Price. If the
Common Stock is listed on a national securities exchange
(including the NASDAQ National Market System) on the date in
question, then the Market Value per Share shall be the average
of the highest and lowest selling price on such exchange on such
date, or if there were no sales on such date, then the Exercise
Price shall be the mean between the bid and asked price on such
date. If the Common Stock is traded otherwise than on a
national securities exchange on the date in question, then the
Market Value per Share shall be the mean between the bid and
asked price on such date, or, if there is no bid and asked price
on such date, then on the next prior business day on which there
was a bid and asked price. If no such bid and asked price is
available, then the Market Value per Share shall be its fair
market value as determined by the Committee, in its sole and
absolute discretion.
A-5
<PAGE>
<PAGE>
9. EXERCISE OF OPTIONS.
(a) Generally. Unless otherwise provided by the
Committee, each Award to a Participant shall become 25%
exercisable on each of the four succeeding anniversary dates of
the grant date that the Participant maintains Continuous Service
thereon. An Option may not be exercised for a fractional
Share. Notwithstanding the foregoing, an Award shall become
fully vested and exercisable upon a change in control or upon
the termination of a Participant due to the Participant's death,
Disability, or retirement at or after age 65.
For the purpose of this Paragraph 9(a), "change in control"
shall mean:
(i) the acquisition of ownership, holding or power
to vote more than 25% of the Bank's or the Company's
voting stock;
(ii) the acquisition of the ability to control the
election of a majority of the Bank's or the Company's
directors;
(iii) the acquisition of a controlling influence
over the management or policies of the Bank or the Company
by any person or by persons acting as a "group" (within
the meaning of Section 13(d) of the Securities Exchange
Act of 1934); or
(iv) during any period of two consecutive years,
individuals (the "Continuing Directors") who at the
beginning of such period constitute the Board of Directors
of the Bank or the Company (the "Existing Board") cease
for any reason to constitute at least two-thirds thereof,
provided that any individual whose election or nomination
for election as a member of the Existing Board was
approved by a vote of at least two-thirds of the
Continuing Directors then in office shall be considered a
Continuing Director.
Notwithstanding the foregoing, in the case of (i), (ii)
and (iii) hereof, ownership or control of the Bank by the
Company itself shall not constitute a Change of Control. For
purposes of this paragraph only, the term "person" refers to an
individual or a corporation, partnership, trust, association,
joint venture, pool, syndicate, sole proprietorship,
unincorporated organization or any other form of entity not
specifically listed herein. The decision of the Bank's
continuing directors as to whether or not a Change of Control
has occurred shall be conclusive and binding.
(b) Procedure for Exercise. A Participant may exercise
Options, subject to provisions relative to its termination and
limitations on its exercise, only by (1) written notice of
intent to exercise the Option with respect to a specified number
of Shares, and (2) payment to the Company (contemporaneously
with delivery of such notice) in cash, in Common Stock, or a
combination of cash and Common Stock, of the amount of the
Exercise Price for the number of Shares with respect to which
the Option is then being exercised. Each such notice (and
payment where required) shall be delivered, or mailed by prepaid
registered or certified mail, addressed to the Treasurer of the
Company at its executive offices. Common Stock utilized in full
or partial payment of the Exercise Price for Options shall be
valued at its Market Value at the date of exercise.
(c) Period of Exercisability. Except to the extent
otherwise provided in the terms of an Agreement, an Option may
be exercised by a Participant only while he is an Employee and
has maintained Continuous Service from the date of the grant of
the Option, or within one year after termination of such
Continuous Service (but not later than the date on which the
Option would otherwise expire), except if the Employee's
Continuous Service terminates by reason of --
A-6
<PAGE>
<PAGE>
(1) "Just Cause" which for purposes hereof shall
have the meaning set forth in any unexpired employment or
severance agreement between the Participant and the Bank
and/or the Company (and, in the absence of any such
agreement, shall mean termination because of the
Employee's personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties,
willful violation of any law, rule or regulation (other
than traffic violations or similar offenses) or final
cease-and-desist order), then the Participant's rights to
exercise such Option shall expire on the date of such
termination; or
(2) death, then to the extent that the Participant
would have been entitled to exercise the Option
immediately prior to his death, such Option of the
deceased Participant may be exercised within two years
from the date of his death (but not later than the date on
which the Option would otherwise expire) by the personal
representatives of his estate or person or persons to whom
his rights under such Option shall have passed by will or
by laws of descent and distribution.
(d) Effect of the Committee's Decisions. The Committee's
determination whether a Participant's Continuous Service has
ceased, and the effective date thereof, shall be final and
conclusive on all persons affected thereby.
(e) Mandatory Six-Month Holding Period. Notwithstanding
any other provision of this Plan to the contrary, common stock
of the Company that is purchased upon exercise of an Option or
SAR may not be sold within the six-month period following the
grant of that Option or SAR.
10. SARS (STOCK APPRECIATION RIGHTS)
(a) Granting of SARs. In its sole discretion, the
Committee may from time to time grant SARs to Employees either
in conjunction with, or independently of, any Options granted
under the Plan. An SAR granted in conjunction with an Option
may be an alternative right wherein the exercise of the Option
terminates the SAR to the extent of the number of shares
purchased upon exercise of the Option and, correspondingly, the
exercise of the SAR terminates the Option to the extent of the
number of Shares with respect to which the SAR is exercised.
Alternatively, an SAR granted in conjunction with an Option may
be an additional right wherein both the SAR and the Option may
be exercised. An SAR may not be granted in conjunction with an
ISO under circumstances in which the exercise of the SAR affects
the right to exercise the ISO or vice versa, unless the SAR, by
its terms, meets all of the following requirements:
(1) The SAR will expire no later than the ISO;
(2) The SAR may be for no more than the difference
between the Exercise Price of the ISO and the Market Value
of the Shares subject to the ISO at the time the SAR is
exercised;
(3) The SAR is transferable only when the ISO is
transferable, and under the same conditions;
(4) The SAR may be exercised only when the ISO may be
exercised; and
(5) The SAR may be exercised only when the Market Value
of the Shares subject to the ISO exceeds the Exercise
Price of the ISO.
(b) Exercise Price. The Exercise Price as to any
particular SAR shall not be less than the Market Value of the
Optioned Shares on the date of grant.
The provisions of Paragraph 9(c) regarding the period of
exercisability of Options are incorporated by reference herein,
and shall determine the period of exercisability of SARs.
A-7
<PAGE>
<PAGE>
(c) Exercise of SARs. An SAR granted hereunder shall be
exercisable at such times and under such conditions as shall be
permissible under the terms of the Plan and of the Agreement
granted to a Participant, provided that an SAR may not be
exercised for a fractional Share. Upon exercise of an SAR, the
Participant shall be entitled to receive, without payment to the
Company except for applicable withholding taxes, an amount equal
to the excess of (or, in the discretion of the Committee if
provided in the Agreement, a portion of) the excess of the then
aggregate Market Value of the number of Optioned Shares with
respect to which the Participant exercises the SAR, over the
aggregate Exercise Price of such number of Optioned Shares.
This amount shall be payable by the Company, in the discretion
of the Committee, in cash or in Shares valued at the then Market
Value thereof, or any combination thereof.
(d) Procedure for Exercising SARs. To the extent not
inconsistent herewith, the provisions of Paragraph 9(b) as to
the procedure for exercising Options are incorporated by
reference, and shall determine the procedure for exercising
SARs.
11. EFFECT OF CHANGES IN COMMON STOCK SUBJECT TO THE
PLAN.
(a) Recapitalizations; Stock Splits, Etc. The number
and kind of shares reserved for issuance under the Plan, and the
number and kind of shares subject to outstanding Awards, and the
Exercise Price thereof, shall be proportionately adjusted for
any increase, decrease, change or exchange of Shares for a
different number or kind of shares or other securities of the
Company which results from a merger, consolidation, recapita-
lization, reorganization, reclassification, stock dividend,
split-up, combination of shares, or similar event in which the
number or kind of shares is changed without the receipt or
payment of consideration by the Company.
(b) Transactions in which the Company is Not the
Surviving Entity. In the event of (i) the liquidation or
dissolution of the Company, (ii) a merger or consolidation in
which the Company is not the surviving entity, or (iii) the sale
or disposition of all or substantially all of the Company's
assets (any of the foregoing to be referred to herein as a
"Transaction"), all outstanding Awards, together with the
Exercise Prices thereof, shall be equitably adjusted for any
change or exchange of Shares for a different number or kind of
shares or other securities which results from the Transaction.
(c) Special Rule for ISOs. Any adjustment made pursuant
to subparagraphs (a) or (b)(1) hereof shall be made in such a
manner as not to constitute a modification, within the meaning
of Section 424(h) of the Code, of outstanding ISOs.
(d) Conditions and Restrictions on New, Additional, or
Different Shares or Securities. If, by reason of any adjustment
made pursuant to this Paragraph, a Participant becomes entitled
to new, additional, or different shares of stock or securities,
such new, additional, or different shares of stock or securities
shall thereupon be subject to all of the conditions and
restrictions which were applicable to the Shares pursuant to the
Award before the adjustment was made.
(e) Other Issuances. Except as expressly provided in
this Paragraph, the issuance by the Company or an Affiliate of
shares of stock of any class, or of securities convertible into
Shares or stock of another class, for cash or property or for
labor or services either upon direct sale or upon the exercise
of rights or warrants to subscribe therefor, shall not affect,
and no adjustment shall be made with respect to, the number,
class, or Exercise Price of Shares then subject to Awards or
reserved for issuance under the Plan.
(f) Certain Special Dividends. The Exercise Price of
shares subject to outstanding Awards shall be proportionately
adjusted upon the payment of a special large and nonrecurring
dividend that has the effect of a return of capital to the
stockholders of the Company.
A-8
<PAGE>
<PAGE>
12. NON-TRANSFERABILITY OF AWARDS.
Awards may not be sold, pledged, assigned, hypothecated,
transferred or disposed of in any manner other than by will or
by the laws of descent and distribution. Notwithstanding the
foregoing, or any other provision of this Plan, a Participant
who holds Awards may transfer such Awards (but not Incentive
Stock Options) to his or her spouse, lineal ascendants, lineal
descendants, or to a duly established trust for the benefit of
one or more of these individuals. Awards so transferred may
thereafter be transferred only to the Participant who originally
received the grant or to an individual or trust to whom the
Participant could have initially transferred the Awards pursuant
to this Paragraph 12. Awards which are transferred pursuant to
this Paragraph 12 shall be exercisable by the transferee
according to the same terms and conditions as applied to the
Participant.
13. TIME OF GRANTING AWARDS.
The date of grant of an Award shall, for all purposes, be
the later of the date on which the Committee makes the deter-
mination of granting such Award, and the Effective Date. Notice
of the determination shall be given to each Participant to whom
an Award is so granted within a reasonable time after the date
of such grant.
14. EFFECTIVE DATE.
The Plan shall become effective immediately upon its
approval by a favorable vote of stockholders owning at least a
majority of the total votes eligible to be cast at a duly called
meeting of the Company's stockholders held in accordance with
applicable laws. No Awards may be made prior to approval of the
Plan by the stockholders of the Company.
15. MODIFICATION OF AWARDS.
At any time, and from time to time, the Board may autho-
rize the Committee to direct execution of an instrument
providing for the modification of any outstanding Award,
provided no such modification shall confer on the holder of said
Award any right or benefit which could not be conferred on him
by the grant of a new Award at such time, or impair the Award
without the consent of the holder of the Award.
16. AMENDMENT AND TERMINATION OF THE PLAN.
The Board may from time to time amend the terms of the
Plan and, with respect to any Shares at the time not subject to
Awards, suspend or terminate the Plan. No amendment, suspension
or termination of the Plan shall, without the consent of any
affected holders of an Award, alter or impair any rights or
obligations under any Award theretofore granted.
17. CONDITIONS UPON ISSUANCE OF SHARES.
(a) Compliance with Securities Laws. Shares of Common
Stock shall not be issued with respect to any Award unless the
issuance and delivery of such Shares shall comply with all
relevant provisions of law, including, without limitation, the
Securities Act of 1933, as amended, the rules and regulations
promulgated thereunder, any applicable state securities law, and
the requirements of any stock exchange upon which the Shares may
then be listed.
(b) Special Circumstances. The inability of the Company
to obtain approval from any regulatory body or authority deemed
by the Company's counsel to be necessary to the lawful issuance
and sale of any Shares hereunder shall relieve the Company of
any liability in respect of the non-issuance or sale of such
Shares. As a condition to the exercise of an Option or SAR, the
Company may require the person exercising the Option or SAR to
make such representations and warranties as may be necessary to
assure the availability of an exemption from the registration
requirements of federal or state securities law.
A-9
<PAGE>
<PAGE>
(c) Committee Discretion. The Committee shall have the
discretionary authority to impose in Agreements such
restrictions on Shares as it may deem appropriate or desirable,
including but not limited to the authority to impose a right of
first refusal or to establish repurchase rights or both of these
restrictions.
18. RESERVATION OF SHARES.
The Company, during the term of the Plan, will reserve and
keep available a number of Shares sufficient to satisfy the
requirements of the Plan.
19. WITHHOLDING TAX.
The Company's obligation to deliver Shares upon exercise
of Options and/or SARs shall be subject to the Participant's
satisfaction of all applicable federal, state and local income
and employment tax withholding obligations. The Committee, in
its discretion, may permit the Participant to satisfy the
obligation, in whole or in part, by irrevocably electing to have
the Company withhold Shares, or to deliver to the Company Shares
that he already owns, having a value equal to the amount
required to be withheld. The value of the Shares to be
withheld, or delivered to the Company, shall be based on the
Market Value of the Shares on the date the amount of tax to be
withheld is to be determined. As an alternative, the Company
may retain, or sell without notice, a number of such Shares
sufficient to cover the amount required to be withheld.
Notwithstanding any other provision of this Plan to the
contrary, to the extent that an Employee or Director elects to
have shares of Common Stock withheld to satisfy tax obligations,
such withholding shall be limited to the minimum required under
the federal, state, and local law.
20. NO EMPLOYMENT OR OTHER RIGHTS.
In no event shall an Employee's or Director's eligibility
to participate or participation in the Plan create or be deemed
to create any legal or equitable right of the Employee,
Director, or any other party to continue service with the
Company, the Bank, or any Affiliate of such corporations.
Except to the extent provided in Paragraphs 6(b) and 7(a), no
Employee or Director shall have a right to be granted an Award
or, having received an Award, the right to again be granted an
Award. However, an Employee or Director who has been granted an
Award may, if otherwise eligible, be granted an additional Award
or Awards.
21. GOVERNING LAW.
The Plan shall be governed by and construed in accordance
with the laws of the State of Maryland, except to the extent
that federal law shall be deemed to apply.
A-10
<PAGE>
<PAGE>
EXHIBIT B
BCSB BANKCORP, INC.
MANAGEMENT RECOGNITION PLAN
ARTICLE I
ESTABLISHMENT OF THE PLAN
1.01 The Company hereby establishes this Plan upon the
terms and conditions hereinafter stated.
1.02 Through acceptance of their appointment to the
Committee, each member of the Committee hereby accepts his or
her appointment hereunder upon the terms and conditions
hereinafter stated.
ARTICLE II
PURPOSE OF THE PLAN
2.01 The purpose of the Plan is to reward and retain
personnel of experience and ability in key positions of
responsibility by providing Employees and Directors of the
Company, the Bank, and their Affiliates with a proprietary
interest in the Company, and as compensation for their past
contributions to the Bank, and as an incentive to make such
contributions in the future.
ARTICLE III
DEFINITIONS
The following words and phrases when used in this Plan
with an initial capital letter, shall have the meanings set
forth below unless the context clearly indicates otherwise.
Wherever appropriate, the masculine pronoun shall include the
feminine pronoun and the singular shall include the plural.
3.01 "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 Internal
Revenue Code of 1986, as amended.
3.02 "Bank" means Baltimore County Savings Bank, F.S.B.
3.03 "Beneficiary" means the person or persons designated
by a Participant to receive any benefits payable under the Plan
in the event of such Participant's death. Such person or
persons shall be designated in writing on forms provided for
this purpose by the Committee and may be changed from time to
time by similar written notice to the Committee. In the absence
of a written designation, the Beneficiary shall be the
Participant's surviving spouse, if any or if none, his estate.
3.04 "Board" means the Board of Directors of the Company.
3.05 "Committee" means the Management Recognition Plan
Committee appointed by the Board pursuant to Article IV hereof.
3.06 "Common Stock" means shares of the common stock of
the Company.
3.07 "Company" means BCSB Bankcorp, Inc.
B-1
<PAGE>
<PAGE>
3.08 "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.
3.09 "Date of the MHC Reorganization" means the date of
the Bank's mutual holding company reorganization.
3.10 "Director" means a member of the Board, as well as
an advisory director.
3.11 "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.
3.12 "Effective Date" means the date on which the Plan
first becomes effective, as determined under Section 8.07
hereof.
3.13 "Employee" means any person who is employed by the
Company or an Affiliate.
3.14 "Non-Employee Director" shall have the meaning
provided in Rule 16b-3 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended.
3.15 [reserved].
3.16 "Participant" means an Employee or Director who
holds a Plan Share Award.
3.17 "Plan" means this BCSB Bankcorp, Inc. Management
Recognition Plan.
3.18 "Plan Shares" means shares of Common Stock held in
the Trust which are awarded or issuable to a Participant
pursuant to the Plan.
3.19 "Plan Share Award" means a right granted under this
Plan to receive Plan Shares.
3.20 "Plan Share Reserve" means the shares of Common
Stock held by the Trustee pursuant to Sections 5.02 and 5.03.
3.21 "Trust" and "Trust Agreement" mean that agreement
entered into pursuant to the terms hereof between the Company
and the Trustee, and "Trust" means the trust created thereunder.
3.22 "Trustee" means that person(s) or entity appointed
by the Board pursuant to the Trust Agreement to hold legal title
to the Plan assets for the purposes set forth herein.
3.23 "Year of Service" shall mean a full twelve-month
period, measured from the date of a Plan Share Award and each
annual anniversary of that date, during which a Participant's
Continuous Service has not terminated for any reason.
B-2
<PAGE>
<PAGE>
ARTICLE IV
ADMINISTRATION OF THE PLAN
4.01 ROLE AND POWERS OF THE COMMITTEE. The Plan shall be
administered and interpreted by the Committee, which shall
consist of not less than two members of the Board who are
Non-Employee Directors. In the absence at any time of a duly
appointed Committee, the Plan shall be administered by those
members of the Board who are Non-Employee Directors, and by the
Board if there are less than two Non-Employee Directors.
The Committee shall have all of the powers allocated to it
in this and other Sections of the Plan. 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 make Plan Share Awards to such Employees
as the Committee may select, (ii) to determine the form and
content of Plan Share Awards to be issued 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. Subject to Section 4.02, the
interpretation and construction by the Committee of any
provisions of the Plan or of any Plan Share Award granted
hereunder shall be final and binding. The Committee
shall act by vote or written consent of a majority of its
members, and shall report its actions and decisions with respect
to the Plan to the Board at appropriate times, but in no event
less than one time per calendar year. The Committee may
recommend to the Board one or more persons or entity to act as
Trustee(s) in accordance with the provisions of this Plan and
the Trust.
4.02 ROLE OF THE BOARD. The members of the Committee
shall be appointed or approved by, and will serve at the
pleasure of, the Board. The Board may in its discretion from
time to time remove members from, or add members to, the
Committee. The Board shall have all of the powers allocated to
it in this and other Sections of the Plan, may take any action
under or with respect to the Plan which the Committee is
authorized to take, and may reverse or override any action taken
or decision made by the Committee under or with respect to the
Plan, provided, however, that the Board may not revoke any Plan
Share Award already made or impair a participant's vested rights
under a Plan Share Award. Members of the Board who are eligible
for or who have been granted Plan Share Awards (other than
pursuant to Section 6.04) may not vote on any matters affecting
the administration of the Plan or the grant of Plan Shares or
Plan Share Awards (although such members may be counted in
determining the existence of a quorum at any meeting of
the Board during which actions with regard thereto are taken).
Further, with respect to all actions taken by the Board in
regard to the Plan, such action shall be taken by a majority of
the Board where such a majority of the directors acting in the
matter are Non-Employee Directors.
4.03 Limitation on Liability. No member of the Board or
the Committee or the Trustee(s) shall be liable for any
determination made in good faith with respect to the Plan or any
Plan Shares or Plan Share Awards granted under it. If a member
of the Board or the Committee or any Trustee is a party or is
threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of anything done or
not done by him in such capacity under or with respect to the
Plan, the Company shall indemnify such member, against expenses
(including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him or her in
connection with such action, suit or proceeding if he or she
acted in good faith and in a manner he or she reasonably
believed to be in the best interests of the Company and its
Affiliates and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was
unlawful.
B-3
<PAGE>
<PAGE>
ARTICLE V
CONTRIBUTIONS; PLAN SHARE RESERVE
5.01 AMOUNT AND TIMING OF CONTRIBUTIONS. The Board shall
determine the amount of shares to be contributed by the Company
to the Trust, provided that the Bank may also make contributions
to the Trust. Such amounts shall be paid to the Trustee at the
time of contribution. No contributions to the Trust by
Employees shall be permitted.
5.02 INVESTMENT OF TRUST ASSETS; MAXIMUM PLAN SHARE
AWARDS. The Trustee shall invest Trust assets only in
accordance with the Trust Agreement; provided that the Trust
shall not purchase, and Plan Share Awards shall not be made with
respect to, more than 91,464 shares. Common Stock purchased by
the Trust may be newly issued shares, treasury shares, or shares
repurchased on the open market and held in a grantor trust.
5.03 EFFECT OF ALLOCATIONS, RETURNS AND FORFEITURES UPON
PLAN SHARE RESERVES. Upon the allocation of Plan Share Awards
under Section 6.02, the Plan Share Reserve shall be reduced by
the number of Shares subject to the Awards so allocated. Any
Shares subject or attributable to an Award which may not be
earned because of a forfeiture by the Participant pursuant to
Section 7.01 shall be added to the Plan Share Reserve.
ARTICLE VI
ELIGIBILITY; ALLOCATIONS
6.01 ELIGIBILITY. Except as otherwise provided in Section
6.04 and 6.05 hereof, the Committee shall make Plan Share Awards
to Directors and Employees in its discretion. In selecting
those Employees to whom Plan Share 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.
6.02 ALLOCATIONS. The Committee will determine which
Employees and Directors will be granted discretionary Plan Share
Awards, and the number of Shares covered by each Plan Share
Award, provided that in no event shall any Awards be made which
will violate the governing instruments of the Bank or its
Affiliates or any applicable federal or state law or regulation.
In the event Plan Shares are forfeited for any reason or
additional shares of Common Stock are purchased by the Trustee,
the Committee may, from time to time, determine which of the
Employees or Directors referenced in Section 6.01 above will be
granted additional Plan Share Awards to be awarded from the
forfeited or acquired Plan Shares.
6.03 FORM OF ALLOCATION. As promptly as practicable after
a determination is made pursuant to Section 6.02 that a Plan
Share Award is to be made, the Committee shall notify the
Participant in writing of the grant of the Award, the number of
Plan Shares covered by the Award, and the terms upon which the
Plan Shares subject to the Award may be earned. The date on
which the Committee so notifies the Participant shall be
considered the date of grant of the Plan Share Awards. The
Committee shall maintain records as to all grants of Plan Share
Awards under the Plan.
6.04 AUTOMATIC GRANTS TO NON-EMPLOYEE DIRECTORS.
Notwithstanding any other provisions of this Plan, each Non-
Employee Director, on the Effective Date shall receive on said
date a Plan Share Award as follows:
Number of Shares Subject
Non-Employee Directors to Plan Share Award
---------------------- ------------------------
H. Adrian Cox 5,700
Frank W. Dunton 5,700
Henry V. Kahl 5,700
John J. Panzer 5,700
P. Louis Rohe 5,700
B-4
<PAGE>
<PAGE>
Number of Shares Subject
Advisory Director Subject to Plan Share Award
----------------- ---------------------------
Martin F. Meyers 5,700
Plan Share Awards received under the provisions of this
Section shall become vested and nonforfeitable according to the
general rules set forth in subsections (a), and (b) of Section
7.01, and the Committee shall have no discretion to alter or
accelerate said vesting requirements. Unless otherwise
inapplicable or inconsistent with the provisions of this
Section, the Plan Share Awards to be granted hereunder shall be
subject to all other provisions of this Plan.
6.05 Automatic Grants to Employees. On the Effective
Date, each of the following individuals shall receive a Plan
Share Award as to the number of Plan Shares listed below,
provided that such award shall not be made to an individual who
is not an Employee on the Effective Date:
Number of Shares Subject
Employee Subject to Plan Share Award
-------- ---------------------------
Gary C. Loraditch 5,700
William M. Loughran 5,700
Plan Share Awards received under the provisions of this Section
shall become vested and nonforfeitable according to the general
rules set forth in subsections (a) and (b) of Section 7.01, and
the Committee shall have no discretion to alter said vesting
requirements. Unless otherwise inapplicable or inconsistent
with the provisions of this Section, the Plan Share Awards to be
granted hereunder shall be subject to all other provisions of
this Plan.
6.06 ALLOCATIONS NOT REQUIRED. Notwithstanding anything
to the contrary in Sections 6.01 and 6.02, but subject to
Sections 6.04 and 6.05, no Employee or Director shall have any
right or entitlement to receive a Plan Share Award hereunder,
such Awards being at the total discretion of the Committee, nor
shall any Employees or Directors as a group have such a right.
The Committee may, with the approval of the Board (or, if so
directed by the Board) return all Common Stock in the Plan Share
Reserve to the Company at any time, and cease issuing Plan Share
Awards.
ARTICLE VII
EARNINGS AND DISTRIBUTION OF PLAN SHARES; VOTING RIGHTS
7.01 EARNING PLAN SHARES; FORFEITURES.
(a) GENERAL RULES. Unless otherwise specified by the
Committee for a Plan Share Award, 25% of the Plan Shares subject
to a Plan Share Award shall become vested and nonforfeitable
upon the completion of each Year of Service by the Participant,
within the four year period immediately after the date of grant.
(b) EXCEPTION FOR CHANGE IN CONTROL OR TERMINATIONS DUE TO
DEATH, DISABILITY, OR RETIREMENT. Notwithstanding the general
rule contained in Section 7.01(a) above, all Plan Shares subject
to a Plan Share Award held by a Participant whose service with
the Company or an Affiliate terminates due to the Participant's
death, Disability, or retirement after age 65, shall be deemed
earned as of the Participant's last day of service with the
Company or an Affiliate and shall be distributed as soon as
practicable thereafter. All outstanding Plan Share Awards shall
also be fully vested and become immediately distributable upon a
change in control.
For the purpose of this Section 7.01(b), "change in
control" shall mean:
(i) the acquisition of ownership, holding or power to
vote more than 25% of the Bank's or the Company's voting
stock;
B-5
<PAGE>
<PAGE>
(ii) the acquisition of the ability to control the
election of a majority of the Bank's or the Company's
directors;
(iii) the acquisition of a controlling influence over
the management or policies of the Bank or the Company by
any person or by persons acting as a "group" (within the
meaning of Section 13(d) of the Securities Exchange Act of
1934); or
(iv) during any period of two consecutive years,
individuals (the "Continuing Directors") who at the
beginning of such period constitute the Board of Directors
of the Bank or the Company (the "Existing Board") cease for
any reason to constitute at least two-thirds thereof,
provided that any individual whose election or nomination
for election as a member of the Existing Board was approved
by a vote of at least two-thirds of the Continuing
Directors then in office shall be considered a Continuing
Director.
Notwithstanding the foregoing, in the case of (i), (ii) and
(iii) hereof, ownership or control of the Bank by the Company
itself shall not constitute a Change of Control. For purposes
of this paragraph only, the term "person" refers to an
individual or a corporation, partnership, trust, association,
joint venture, pool, syndicate, sole proprietorship,
unincorporated organization or any other form of entity not
specifically listed herein. The decision of the Bank's
non-employee directors as to whether or not a Change of Control
has occurred shall be conclusive and binding.
7.02 ACCRUAL OF DIVIDENDS. Whenever Plan Shares are paid
to a Participant or Beneficiary under Section 7.03, such
Participant or Beneficiary shall also be entitled to receive,
with respect to each Plan Share paid, an amount equal to any
cash dividends (including special large and nonrecurring
dividends, including one that has the effect of a return of
capital to the Company's stockholders) and a number of shares of
Common Stock equal to any stock dividends, declared and paid
with respect to a share of Common Stock between the date the
relevant Plan Share Award was initially granted to such
Participant and the date the Plan Shares are being distributed.
There shall also be distributed an appropriate amount of net
earnings, if any, of the Trust with respect to any cash
dividends so paid out.
7.03 DISTRIBUTION OF PLAN SHARES.
(a) TIMING OF DISTRIBUTIONS: GENERAL RULE. Except as
provided in subsections (c), and (d) below, the Trustee shall
distribute Plan Shares and accumulated cash from dividends and
interest to the Participant or his Beneficiary, as the case may
be, as soon as practicable after they have been earned. No
fractional shares shall be distributed.
(b) FORM OF DISTRIBUTION. The Trustee shall distribute
all Plan Shares, together with any shares representing stock
dividends, in the form of Common Stock. One share of Common
Stock shall be given for each Plan Share earned. Payments
representing cash dividends (and earnings thereon) shall be made
in cash.
(c) WITHHOLDING. The Trustee shall withhold from any cash
payment made under this Plan sufficient amounts to cover any
applicable withholding and employment taxes, and if the amount
of such cash payment is not sufficient, the Trustee shall
require the Participant or Beneficiary to pay to the Trustee the
amount required to be withheld as a condition of delivering the
Plan Shares. The Trustee shall pay over to the Company or
Affiliate which employs or employed such Participant any such
amount withheld from or paid by the Participant or Beneficiary.
(d) TIMING: EXCEPTION FOR 10% SHAREHOLDERS. Notwith-
standing Subsections (a) and (b) above, no Plan Shares may be
distributed prior to the date which is five (5) years from the
Date of the MHC Reorganization to the extent the Participant or
Beneficiary, as the case may be, would after receipt of such
Shares own in excess of ten percent (10%) of the issued and
outstanding shares of Common Stock unless such action is
approved in advance by a majority vote of non-employee directors
of the Board. To the extent this limitation would delay the
date on which
B-6
<PAGE>
<PAGE>
a Participant receives Plan Shares, the Participant may elect to
receive from the Trust, in lieu of such Plan Shares, the cash
equivalent thereof. Any Plan Shares remaining undistributed
solely by reason of the operation of this Subsection (d) shall
be distributed to the Participant or his Beneficiary on the date
which is five years from the Date of the MHC Reorganization.
(e) REGULATORY EXCEPTIONS. No Plan Shares shall be
distributed unless and until all of the requirements of all
applicable law and regulation shall have been fully complied
with, including the receipt of approval of the Plan by the
stockholders of the Company by such vote, if any, as may be
required by applicable law and regulations.
7.04 VOTING OF PLAN SHARES. All shares of Common Stock
held by the Trust (whether or not subject to a Plan Share Award)
shall be voted by the Trustee in the same proportion as the
trustee of the Company's Employee Stock Ownership Plan votes
Common Stock held in the trust associated therewith, and in the
absence of any such voting, shall be voted in the manner
directed by the Board.
7.05. DEFERRAL ELECTIONS BY PARTICIPANTS.
(a) ELECTIONS TO DEFER. At any time prior to December
31stof any year prior to the date on which a Participant becomes
vested in any shares subject to his or her Plan Share Award, a
Participant who is a nonemployee Director or a member of a
select group of management or highly compensated employees
(within the meaning of the Employees' Retirement Income Security
Act of 1973) may irrevocably elect, on the form attached hereto
as Exhibit "A" (the "Election Form"), to defer the receipt of
all or a percentage of the Plan Shares that would otherwise be
transferred to the Participant upon the vesting of such award
(the "Deferred Shares").
(b) RECORDKEEPING; HOLDING OF DEFERRED SHARES. The MRP
Committee shall establish and maintain an individual account in
the name of each Participant who files an Election Form for the
purpose of tracking deferred earnings attributable to cash
dividends paid on Deferred Shares (the "Cash Account"). On the
last day of each fiscal year of the Company, the Committee shall
credit to the Participant's Cash Account earnings on the balance
of the Cash Account at a rate equal to the dividend-adjusted
total return on Common Stock, as determined from time to time by
the MRP Committee in its sole discretion. The Trustees shall
hold each Participant's Deferred Shares and Deferred Earnings in
the Trust until distribution is required pursuant to the
election set forth in the Participant's Election Form.
(c) DISTRIBUTIONS OF DEFERRED SHARES. The Trustee shall
distribute a Participant's Deferred Shares and Deferred Earnings
in accordance with the Participant's Election Form. All
distributions made by the Company and/or the Trustees pursuant
to elections made hereunder shall be subject to applicable
federal, state, and local tax withholding and to such other
deductions as shall at the time of such payment be required
under any income tax or other law, whether of the United States
or any other jurisdiction, and, in the case of payments to a
beneficiary, the delivery to the Committee and/or Trustees of
all necessary waivers, qualifications and other documentation.
Within 90 days after receiving notice of a Participant's death,
the Trustee shall distribute any balance of the Participant's
Deferred Shares and Deferred Earnings to the Participant's
designated beneficiary, if living, or if such designated
beneficiary is deceased or the Participant failed to designate a
beneficiary, to the Participant's estate. If, on the other
hand, a Participant's Continuous Service terminates for a reason
other than the Participant's death, Disability, early
retirement, or normal retirement, the Participant's Deferred
Shares and Deferred Earnings shall be distributed to the
Participant in a lump sum occurring as soon as reasonably
practicable. The distribution provisions of a Participant's
Election Form shall become irrevocable on the date that occurs
(i) one year before the Participant's termination of Continuous
Service for a reason other than death, and (ii) on the
Participant's death if that terminates the Participant's
Continuous Service.
(d) HARDSHIP WITHDRAWALS. Notwithstanding any other
provision of the Plan or a Participant's Election Form, in the
event the Participant suffers an unforeseeable emergency
hardship within the contemplation of this paragraph, the
Participant may apply to the Committee for an immediate
distribution of all or a portion of his Deferred
B-7
<PAGE>
<PAGE>
Shares and Deferred Earnings. The hardship must result from a
sudden and unexpected illness or accident of the Participant or
a dependent of the Participant, casualty loss of property, or
other similar conditions beyond the control of the Participant.
Examples of purposes which are not considered hardships include
post-secondary school expenses or the desire to purchase a
residence. In no event will a distribution be made to the
extent the hardship could be relieved through reimbursement or
compensation by insurance or otherwise, or by liquidation of the
Participant's nonessential assets to the extent such liquidation
would not itself cause a severe financial hardship. The amount
of any distribution hereunder shall be limited to the amount
necessary to relieve the Participant's financial hardship. The
determination of whether a Participant has a qualifying hardship
and the amount which qualifies for distribution, if any, shall
be made by the Committee in its sole discretion. The Committee
may require evidence of the purpose and amount of the need, and
may establish such application or other procedures as it deems
appropriate.
(e) RIGHTS TO DEFERRED SHARES AND EARNINGS. A Participant
may not assign his or her claim to Deferred Shares and Deferred
Earnings during his or her lifetime, except in accordance with
Section 8.03 of this Plan. A Participant's right to Deferred
Shares and Deferred Earnings shall at all times constitute an
unsecured promise of the Company to pay benefits as they come
due. The right of the Participant or his or her beneficiary to
receive benefits hereunder shall be solely an unsecured claim
against the general assets of the Company. Neither the
Participant nor his or her beneficiary shall have any claim
against or rights in any specific assets or other fund of the
Company, and any assets in the Trust shall be deemed general
assets of the Company.
ARTICLE VIII
MISCELLANEOUS
8.01 ADJUSTMENTS FOR CAPITAL CHANGES.
(a) RECAPITALIZATIONS; STOCK SPLITS, ETC. The number and
kind of shares which may be purchased under the Plan, and the
number and kind of shares subject to outstanding Plan Share
Awards, shall be proportionately adjusted for any increase,
decrease, change or exchange of shares of Common Stock for a
different number or kind of shares or other securities of the
Company which results from a merger, consolidation,
recapitalization, reorganization, reclassification, stock
dividend, split-up, combination of shares, or similar event in
which the number or kind of shares is changed without the
receipt or payment of consideration by the Company.
(b) TRANSACTIONS IN WHICH THE COMPANY IS NOT THE SURVIVING
ENTITY. In the event of (i) the liquidation or dissolution of
the Company, (ii) a merger or consolidation in which the Company
is not the surviving entity, or (iii) the sale or disposition of
all or substantially all of the Company's assets (any of the
foregoing to be referred to herein as a "Transaction"), all
outstanding Plan Share Awards shall be adjusted for any change
or exchange of shares of Common Stock for a different number or
kind of shares or other securities which results from the
Transaction.
(c) CONDITIONS AND RESTRICTIONS ON NEW, ADDITIONAL, OR
DIFFERENT SHARES OR SECURITIES. If, by reason of any adjustment
made pursuant to this Section, a Participant becomes entitled to
new, additional, or different shares of stock or securities,
such new, additional, or different shares of stock or securities
shall thereupon be subject to all of the conditions and
restrictions which were applicable to the shares pursuant to the
Plan Share Award before the adjustment was made. In addition,
the Committee shall have the discretionary authority to impose
on the Shares subject to Plan Share Awards to Employees such
restrictions as the Committee may deem appropriate or desirable,
including but not limited to a right of first refusal, or
repurchase option, or both of these restrictions.
(d) OTHER ISSUANCES. Except as expressly provided in this
Section, the issuance by the Company or an Affiliate of shares
of stock of any class, or of securities convertible into shares
of Common Stock or stock of another class, for cash or property
or for labor or services either upon direct sale or upon the
exercise of rights or warrants to subscribe therefor, shall not
affect, and no adjustment shall be made with respect to, the
number or class of shares of Common Stock then subject to Plan
Share Awards or reserved for issuance under the Plan.
B-8
<PAGE>
<PAGE>
8.02 AMENDMENT AND TERMINATION OF PLAN. The Board may, by
resolution, at any time amend or terminate the Plan; provided
that no amendment or termination of the Plan shall, without the
written consent of a Participant, impair any rights or
obligations under a Plan Share Award theretofore granted to the
Participant.
The power to amend or terminate the Plan in accordance with
this Section 8.02 shall include the power to direct the Trustee
to return to the Company all or any part of the assets of the
Trust, including shares of Common Stock held in the Plan Share
Reserve. However, the termination of the Trust shall not affect
a Participant's right to earn Plan Share Awards and to receive a
distribution of Common Stock relating thereto, including
earnings thereon, in accordance with the terms of this Plan and
the grant by the Committee or the Board.
8.03 NONTRANSFERABILITY. Plan Share Awards may not be
sold, pledged, assigned, hypothecated, transferred or disposed
of in any manner other than by will or by the laws of descent
and distribution. Notwithstanding the foregoing, or any other
provision of this Plan, a Participant who holds Plan Share
Awards may transfer such Awards to his or her spouse, lineal
ascendants, lineal descendants, or to a duly established trust
for the benefit of one or more of these individuals. Plan Share
Awards so transferred may thereafter be transferred only to the
Participant who originally received the grant or to an
individual or trust to whom the Participant could have initially
transferred the Awards pursuant to this Section 8.03. Plan
Share Awards which are transferred pursuant to this Section 8.03
shall be exercisable by the transferee according to the same
terms and conditions as applied to the Participant.
8.04 NO EMPLOYMENT OR OTHER RIGHTS. Neither the Plan nor
any grant of a Plan Share Award or Plan Shares hereunder nor any
action taken by the Trustee, the Committee or the Board in
connection with the Plan shall create any right, either express
or implied, on the part of any Employee or Director to continue
in the service of the Company, the Bank, or an Affiliate
thereof.
8.05 VOTING AND DIVIDEND RIGHTS. No Participant shall
have any voting or dividend rights or other rights of a
stockholder in respect of any Plan Shares covered by a Plan
Share Award prior to the time said Plan Shares are actually
distributed to him.
8.06 GOVERNING LAW. The Plan and Trust shall be governed
and construed under the laws of the State of Maryland to the
extent not preempted by Federal law.
8.07 EFFECTIVE DATE. The Plan shall become effective
immediately upon its approval by a favorable vote of
stockholders of the Company who own at least a majority of the
total votes eligible to be cast at a duly called meeting of the
Company's stockholders held in accordance with applicable laws.
In no event shall Plan Share Awards be made prior to the
Effective Date.
8.08 TERM OF PLAN. This Plan shall remain in effect until
the earlier of (i) termination by the Board, or (ii) the
distribution of all assets of the Trust. Termination of the
Plan shall not affect any Plan Share Awards previously granted,
and such Awards shall remain valid and in effect until they have
been earned and paid, or by their terms expire or are forfeited.
8.09 TAX STATUS OF TRUST. It is intended that (i) the
Trust associated with the Plan be treated as a grantor trust of
the Company under the provisions of Section 671 et seq. of the
Code, as the same may be amended from time to time, and (ii)
that in accordance with Revenue Procedure 92-65 (as the same may
be amended from time to time), Participants have the status of
general unsecured creditors of the Company, the Plan constitutes
a mere unfunded promise to make benefit payments in the future,
the Plan is unfunded for tax purposes and for purposes of Title
I of the Employee Retirement Income Security Act of 1974, as
amended, and the Trust has been and will continue to be
maintained in conformity with Revenue Procedure 92-64 (as the
same may be amended from time to time).
B-9
<PAGE>
REVOCABLE PROXY
BCSB BANKCORP, INC.
SPECIAL MEETING OF STOCKHOLDERS
JULY 15, 1999
The undersigned hereby appoints H. Adrian Cox, Henry V.
Kahl and John J. Panzer, with full powers of substitution, to
act as attorneys and proxies for the undersigned, to vote all
shares of the common stock of BCSB Bankcorp, Inc. which the
undersigned is entitled to vote at the Special Meeting of
Stockholders, to be held at Baltimore County Savings Bank,
F.S.B.'s office located at 4208 Ebenezer Road, Baltimore,
Maryland, on Thursday, July 15, 1999, at 4:00 p.m., eastern time
(the "Special Meeting"), and at any and all adjournments
thereof, as follows:
FOR AGAINST
--- -------
1. Approval of the BCSB Bankcorp, Inc.
1999 Stock Option Plan
[ ] [ ]
2. Approval of the BCSB Bankcorp, Inc.
Management Recognition Plan
[ ] [ ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE
LISTED PROPOSITIONS.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO
INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED FOR EACH OF
THE PROPOSITIONS STATED. IF ANY OTHER BUSINESS IS PRESENTED AT
THE SPECIAL MEETING, INCLUDING MATTERS RELATING TO THE CONDUCT
OF THE SPECIAL MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED
IN THIS PROXY IN ACCORDANCE WITH THE DETERMINATION OF A MAJORITY
OF THE BOARD OF DIRECTORS. AT THE PRESENT TIME, THE BOARD OF
DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE
SPECIAL MEETING.
<PAGE>
<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the
Special Meeting or at any adjournment thereof, then the power of
said attorneys and prior proxies shall be deemed terminated and
of no further force and effect. The undersigned may also revoke
his proxy by filing a subsequent proxy or notifying the
Secretary of his decision to terminate his proxy.
The undersigned acknowledges receipt from the Company
prior to the execution of this proxy of a Notice of Special
Meeting and a Proxy Statement dated June 11, 1999.
Dated: _________________, 1999
_____________________________ ____________________________
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
_____________________________ ____________________________
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on the enclosed
card. When signing as attorney, executor, administrator,
trustee or guardian, please give your full title. Corporation
proxies should be signed in corporate name by an authorized
officer. If shares are held jointly, each holder should sign.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
