SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[ ] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
GOUVERNEUR BANCORP, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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[_] 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.
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Notes:
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Gouverneur Bancorp, Inc.
42 Church Street
Gouverneur, New York 13642
(315) 287-2600
Office of the President
September 9, 1999
Dear Stockholder,
On behalf of our Board of Directors, I invite you to attend our first
meeting of stockholders, which will be held at the Clearview Restaurant, 1180A
U.S. Highway 11 in our home village of Gouverneur. At the meeting, stockholders
will be asked to approve our stock option plan and our management recognition
plan. The two plans are described in detail in the accompanying proxy statement.
Please read the proxy statement carefully before you decide how to vote.
It is very important that you vote your shares, no matter how many
shares you own. We urge you to please return the enclosed proxy card as soon as
possible to be sure that your vote is counted even if you plan to attend the
meeting. You will be allowed to change your vote at the meeting if you want to
do so, but sending in your proxy card will ensure that you votes are counted if
you are unable to attend.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY RECOMMENDED THAT STOCKHOLDERS
APPROVE THE TWO PLANS.
We appreciate your continued support of Gouverneur Bancorp, Inc. and
its subsidiary, Gouverneur Savings and Loan Association.
Sincerely,
Richard F. Bennett, President
<PAGE>
GOUVERNEUR BANCORP, INC.
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42 Church Street
Gouverneur, New York 13642
(315) 287-2600
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PROXY STATEMENT
WITH NOTICE OF SPECIAL MEETING
GENERAL INFORMATION AND NOTICE OF MEETING
Gouverneur Bancorp, Inc., the holding company for Gouverneur Savings
and Loan Association, will be holding its first meeting of stockholders on
October 27, 1999. The meeting will be held at the Clearview Restaurant, 1180A
U.S. Highway 11, Gouverneur, New York 13642, beginning at 10:30 am. At the
meeting, we will ask stockholders to vote on the following matters:
1. The approval of our Stock Option Plan; and
2. The approval of our Management Recognition Plan (known as the
"MRP").
The Board of Directors is soliciting your proxy to vote at the meeting
and at any adjournments of the meeting. Please complete the enclosed proxy card
and return it in the enclosed return envelope as soon as possible. Each of our
stockholders has one vote for each share of common stock owned. Each stockholder
may cast one vote per share for each of the two proposals. We urge you to
exercise your rights as a stockholder to vote and participate in this process.
Stockholders of record on August 31, 1999 are entitled to receive
notice of the meeting and are entitled to vote at the meeting, or at an
adjournment of the meeting. This is known as the "Record Date." Please read this
Proxy Statement carefully before you decide how to vote. We encourage you to
return the proxy card even if you plan to attend the meeting. This will save us
additional expense in soliciting proxies and will ensure that your vote is
counted. You may still to vote in person at the meeting even if you return the
proxy card.
On the Record Date, there were 2,384,040 shares of Gouverneur Bancorp,
Inc. common stock, par value $.01 per share, issued and outstanding.
In this Proxy Statement, the terms "Company," "we," "our," "us," or
similar terms refer to Gouverneur Bancorp, Inc.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE TWO
PROPOSALS DESCRIBED IN THIS PROXY STATEMENT.
This Proxy Statement and Notice of Special Meeting is first being made
available to stockholders on or about September 9, 1999.
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE US THE EXPENSE OF FURTHER
REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE MEETING. WE HAVE ENCLOSED A SELF
ADDRESSED ENVELOPE WHICH YOU CAN USE TO RETURN YOUR PROXY CARD. NO POSTAGE IS
REQUIRED IF YOU MAIL THE ENVELOPE IN THE UNITED STATES.
<PAGE>
VOTING AND PROXY CARDS
If you sign and return a proxy card in the form which the Board of
Directors is soliciting so we receive it before the polls close at the meeting,
your votes will be cast as you mark on the proxy card, unless you revoke your
proxy before the polls close. If you properly sign and return our proxy card but
you do not mark on it how you want to vote on any matter, then the Board of
Directors as your proxy will vote your shares in favor of the two proposals
which we have described in this Proxy Statement. We do not know of any other
matters that stockholders may present for a vote at the meeting. If any
stockholder properly presents any other matter for a vote, including a proposal
to adjourn the meeting, the Board of Directors as the holder of your proxy may
vote on those matters based on its judgment.
If you sign and return the enclosed proxy card, you may revoke it at
any time before the polls close. If you want to revoke your proxy card, you
must: (i) sign and deliver a written notice to the Secretary of the Company at
or before the meeting dated after the date of your proxy stating that you want
to revoke the proxy, (ii) sign and deliver to the Secretary of the Company at or
before the meeting another proxy card relating to the same shares with a later
date, or (iii) attend the meeting and vote in person. Attending the meeting does
not automatically revoke a proxy unless you also take one of the three actions
described in the prior sentence. Any written notice revoking a proxy must be
delivered to Charles Van Vleet, Secretary, Gouverneur Bancorp, Inc., 42 Church
Street, Gouverneur, New York 13642.
If 1,192,021 shares of our common stock are present in person or
represented by proxy at the meeting, there will be a quorum which will allow the
meeting to commence. Once a quorum is present, the meeting can continue even if
some stockholders leave the meeting. If a stockholder is present in person or by
proxy but abstains from voting any shares, or if a broker submits a proxy for
shares but does not vote those shares, then the shares are counted as present
for purposes of determining a quorum.
We can implement the Stock Option Plan or the MRP before March 23,
2000, which we would like to do, only if stockholders cast at least 536,410
votes in favor of the plan without counting the votes of Cambray Mutual Holding
Company (which we refer to as "Cambray MHC" in this proxy statement), the mutual
holding company that owns 55% of our stock. This is equal to a majority of all
votes entitled to be cast at the meeting, excluding Cambray MHC's votes. If
stockholders do not approve either the Stock Option Plan or the MRP with that
number of votes, but stockholders approve the plan by a majority of the votes
cast at the meeting including the votes of Cambray MHC, then we will implement
that plan, but only on or after March 23, 2000, unless the Office of Thrift
Supervision requires otherwise. Cambray MHC has stated that it intends to vote
its shares in favor of the two plans, so approval by a majority of the votes
cast at the meeting is a virtual certainty.
IMPORTANT INFORMATION FOR STOCKHOLDERS WHOSE STOCK IS HELD IN STREET NAME
If you hold your stock in street name, which means that your stock is
held for you in a brokerage account and is not registered on our stock records
in your own name, your broker will not vote your shares on the Stock Option Plan
or the MRP unless you instruct your broker how you want your votes to be cast.
We urge you to tell your broker as soon as possible how to vote your shares to
make sure that your broker has enough time to vote your shares before the polls
close at the meeting. If your stock is held in street name, you do not have the
direct right to vote your shares or revoke a proxy for your shares unless your
broker gives you that right in writing.
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PRINCIPAL OWNERS OF OUR COMMON STOCK
The following table provides you with information, to the best of our
knowledge, about stock ownership by directors, executive officers, and any
person or group known by us to own beneficially more than 5% of our outstanding
common stock. The information is as of the Record Date. We know of no person or
group, except as listed below, who beneficially owned more than 5% of our common
stock as of the Record Date. Information about persons or groups who own
beneficially more than 5% of our common stock is based on filings with the
Securities and Exchange Commission on or before the Record Date.
<TABLE>
<CAPTION>
Shares Beneficially Owned Percent of total
Beneficial Owner at August 31, 1999(1) shares outstanding(2)
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<S> <C> <C>
Cambray Mutual Holding Company 1,311,222 55%
42 Church Street, Gouverneur, New York 13642
Richard F. Bennett, President and Chief Executive 19,600(3) *
Officer and Director
Charles E. Graves, Director and Chairman of Board 2,000 *
Richard E. Jones, Director 2,000(4) *
Frank Langevin, Director 30,000 1.26%
Robert J. Leader, Director 31,000 1.30%
Timothy J. Monroe, Director 2,000 *
Joseph C. Pistolesi, Director 4,000 *
Larry A. Straw, Director 15,000 *
Directors and Executive Officer of the Company, as 105,000 4.43%
a group (8 persons)
</TABLE>
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(1) Amount includes shares held directly and other shares with respect to which
a person may be deemed to have sole or shared voting or investment power. Amount
shown excludes 85,825 shares owned by our Employee Stock Ownership Plan, which
owns 3.2% of our outstanding common stock. None of the shares owned by the ESOP
have been allocated to the accounts of employees, so employees generally have
the right to vote all shares owned by the ESOP in proportion to their last
year's compensation.
(2) Based upon 2,384,040 shares outstanding on the Record Date. An asterisk
("*") means that the percentage is less than 1%.
(3) Includes 6,600 shares owned by Mr. Bennett's spouse's Individual Retirement
Account.
(4) Includes 1,000 shares owned by Mr. Jones' spouse.
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DIRECTORS' COMPENSATION
Directors who are not also employees of the Company or the Bank or any
of their subsidiaries receive an annual retainer of $3,600, plus $300 for each
Board of Directors meeting and $100 for each committee meeting they attend.
Directors will also be eligible for participation in the Stock Option Plan and
the MRP if stockholders approve those plans. All of the directors of the Company
are also directors of the Bank.
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EXECUTIVE OFFICER COMPENSATION
None of our officers receives compensation directly from the Company.
Their compensation is paid by the Bank. We do not expect that we will pay
separate compensation to officers or employees unless and until we engage in
material business activities separate from the Bank.
The following table includes information about compensation paid Mr.
Bennett, who was the only executive officer of the Company or the Bank with
total salary and bonus in excess of $100,000 in fiscal 1998.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
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Annual Compensation(1)
-------------------------------------------
Other Annual All Other
Salary Bonus Compensation(2) Compensation(3)
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<S> <C> <C> <C> <C> <C>
Richard F. Bennett, 1998 $ 81,569 $8,846 None $ 2,635
President and Chief 1997 $ 77,760 None None $ 242
Executive Officer
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</TABLE>
(1) In accordance with Securities and Exchange Commission policy, summary
compensation information is excluded for fiscal 1996 because neither the Bank
nor the Company was a public company during that year.
(2) Mr. Bennett did not receive additional benefits or perquisites totaling more
than 10% of salary and bonus.
(3) Amount represents the Bank's matching contribution under its 401(k) Plan
and, for 1998, includes life insurance premiums of $979.
EMPLOYEE BENEFIT PLANS
401(K) PLAN. The Bank maintains a tax-qualified savings and profit
sharing plan under Section 401(k) of the Internal Revenue Code. Salaried
employees with at least one year of service who are at least age 21 and have
completed at least 1,000 hours of service may make pretax salary deferrals and
after tax contributions under the 401(k) Plan. The Bank contributes 3% of base
salary for each employee participating in the 401(k) Plan without regard to any
employee matching contribution. Participating employees may make voluntary
contributions to the 401(k) Plan up to 15% of their base salary. The Bank may,
from time to time, make additional voluntary contributions. Employees are fully
vested in their salary deferrals and after tax contributions, and are gradually
vested in the Bank's contribution after one year of service and fully vested
after six years.
EMPLOYEE STOCK OWNERSHIP PLAN. This year, we established an Employee
Stock Ownership Plan ("ESOP"). When the Bank converted to the stock form of
ownership, the ESOP purchased 85,825 shares of our common stock. The Company
loaned $429,125 to the ESOP to purchase that stock. Substantially all employees
of the Bank or the Company who have attained age 21 and have completed one year
of service become participants in the ESOP.
The Company and the Bank intend to contribute to the ESOP enough money
to cover the payments due by the ESOP on the loan from the Company. The loan
requires annual principal and interest payments which repay the loan over 10
years. The loan permits optional pre-payment. The Company and the Bank may
contribute more to the ESOP than is necessary to repay the loan.
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The ESOP pledged the shares it purchased as collateral for the loan.
The ESOP allocates those shares among participants as the loan is repaid. If the
Bank repays the ESOP loan as scheduled, an equal number of shares per year will
be released for allocation over the ten year term of the loan. The ESOP
allocates shares among participants, as they are released from the lien of the
ESOP loan, generally based on each participant's share of total taxable
compensation for the year. Benefits generally vest at the rate of 20% per year
beginning after the participant's first year of service, with 100% vesting after
five years of service. Employees receive credit for service prior to the Bank's
mutual holding company reorganization for vesting purposes. Participants are
immediately vested upon termination of employment due to death, retirement at
age 65 or older, permanent disability or upon the occurrence of a change of
control. Forfeitures (shares allocated to an employee which are not yet vested
when such employee's employment terminates) will generally be reallocated among
remaining participating employees, in the same proportion as contributions, or
used to repay the ESOP loan. Vested benefits may be distributed in a single sum
or installment payments and are payable upon death, termination of employment or
attainment of age 65, subject to certain rights to elect to defer the
distribution of benefits.
HSBC Bank is the trustee for the ESOP. The ESOP has not yet allocated
any shares to employee accounts, but once that occurs, the trustee, subject to
its fiduciary duty, must vote all allocated shares held in the ESOP as the
employees to whom the shares have been allocated instruct the trustee. Allocated
shares for which no instructions are received and shares not yet allocated are
voted generally in the same proportion as allocated shares for which voting
instructions are received. Until the ESOP first allocates shares, employees
control the voting of the ESOP's shares generally based upon their relative last
year's compensation. The Personnel Committee of the Company will oversee the
Company's activities related to the ESOP.
The ESOP may purchase additional shares of our stock in the future, in
the open market or otherwise, and may do so either with borrowed funds or with
cash dividends, employer contributions or other cash flow.
PENSION PLAN. Neither the Bank nor the Company maintains a defined
benefit pension plan for eligible employees.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
In fulfillment of Securities and Exchange Commission requirements for
disclosure in proxy materials of the Personnel Committee's policies regarding
compensation of executive officers, the committee has prepared the following
report for inclusion in this proxy statement.
GENERAL POLICY CONSIDERATIONS. For fiscal 1998, the compensation of Mr.
Bennett, the sole executive officer that fiscal year, was determined by the
Personnel Committee of the Bank. The committee, in evaluating compensation for
Mr. Bennett, considered the nature of his responsibilities, length of service,
competitive salaries in banking and other industries, quality of performance,
the performance of the Bank officers and employees working under his
supervision, and special projects or unusual difficulties affecting work load
and performance. The Board also created bonus guidelines at the beginning of the
year which provided for the payment of bonuses to all employees, including
executive officers, if specified goals were met. Improved financial performance
is both an indirect compensation factor, as it affects base salary decisions,
and a direct factor, as it affects bonus levels. In June 1998, the Board
considered the additional difficulties faced by Mr. Bennett as a result of
burdens placed upon him with respect to the reorganization of the Bank and the
Bank's plans for growth and voted an increase in his salary effective that
month.
This report is included herein at the direction of the members of the
Personnel Committee, directors Leader (Chairman), Jones and Straw.
SHAREHOLDER RETURN PERFORMANCE GRAPH
No stock performance graph is included in this proxy statement because
the Company first issued stock on March 23, 1999 and thus an annual return graph
would be meaningless.
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Personnel Committees of the Bank and the Company consist of
directors Jones, Leader and Straw. None of these individuals is or has been an
officer or employee of the Company or the Bank, nor has any other director of
the Company or the Bank other than Messrs. Bennett and Graves. When the Board of
Directors functions on matters pertaining to the compensation of Mr. Bennett, he
does not participate in the deliberations or vote by the Board.
THE APPROVAL OF THE STOCK OPTION PLAN AND
THE MANAGEMENT RECOGNITION PLAN
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
APPROVAL OF THE TWO PLANS
GENERAL INFORMATION THAT APPLIES TO BOTH PLANS
This section discusses general information that applies to both the
Stock Option Plan and the Management Recognition Plan (also known as the MRP).
We are discussing these matters together to avoid unnecessary repetition, but
the two plans are separate and the approval or disapproval of one plan, and
awards under one plan, will not affect the approval or disapproval, or any
awards under, the other plan. After this section, there are two separate
sections which provide additional information about the two plans. We have
included the full text of the Stock Option Plan as Exhibit A and the full text
of the MRP as Exhibit B to this Proxy Statement.
VOTE REQUIRED FOR APPROVAL. Under federal regulations, the Company
cannot implement the Stock Option Plan or the MRP before March 23, 2000, unless
a majority of the total number of votes eligible to be cast at the meeting,
excluding shares owned by Cambray MHC, or 536,410 votes, are cast in favor of
that plan. The Board of Directors wants to implement the plans immediately after
the meeting. However, if either plan receives less than 536,410 votes in favor,
without counting the votes of Cambray MHC, but it receives the favorable vote of
a majority of the votes cast including votes cast by Cambray MHC, then that plan
will be approved but we will not implement it until March 23, 2000 and no awards
will be made under that plan until that date. An abstention or a broker non-vote
has the same effect as a vote against a plan when determining whether the
Company can implement the plan before March 23, 2000 but has no effect when
determining whether the plan receives sufficient votes for the Company to
implement it on or after March 23, 2000.
ELIGIBILITY. All directors, officers and other employees of the Company
or the Bank and, with the approval of the Board of Directors, any corporate
affiliate of the Bank or the Company, are eligible to participate in the plans.
SHARES TO FUND AWARDS. We currently expect to fund the MRP with stock
that the MRP will repurchase on the open market promptly after stockholders
approve the MRP and we also expect that in the future we will repurchase shares
on the open market to satisfy any options which we grant under the Stock Option
Plan. We do not currently intend to use authorized but unissued shares to
satisfy MRP awards or the exercise of stock options. Federal regulations do not
permit the Company to issue authorized but unissued stock without the approval
of the Office of Thrift Supervision (the "OTS"). In general, the regulations do
not contemplate the use of authorized but unissued stock for plans similar to
our Stock Option Plan and MRP's unless special permission from the OTS is
received.
REASONS FOR BOARD APPROVAL. Our Board of Directors believes that we
should adopt a flexible and comprehensive Stock Option Plan and MRP so that we
can provide long-term incentive awards to directors, officers and employees. The
Board believes that awards under the plans can enhance and encourage the
recruitment and retention of people who are important to the continued success
of the Company. However, because the awards are granted only to persons
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<PAGE>
affiliated with the Company or the Bank, the Stock Option Plan and the MRP could
make it more difficult for a third party to acquire control of the Company and
therefore could discourage offers for the Company's stock that you, as a
stockholder, may believe is in your best interest.
OTHER POTENTIAL ANTI-TAKEOVER MATTERS. In addition to the possibility
that the approval of the plans could discourage takeover attempts, our mutual
holding company structure discourages potential takeover attempts, particularly
attempts that are not negotiated directly with the Board of Directors of the
Company. Cambray MHC owns 55% of our stock. Federal law generally provides that
Cambray MHC may not simply sell its stock to anyone who seeks to take control of
the Company. Instead, Cambray MHC would generally first have to offer that stock
to the depositors of the Bank. As a mutual holding company, Cambray MHC would
not have the same motivation as a commercial investor to accept a takeover offer
in order to earn a profit. Therefore, a takeover of the Company without the
approval of the Board of Directors of Cambray MHC, which has the same members as
the Board of Directors of the Company, is extremely unlikely. Federal law and
regulations also require OTS approval before any person or company acquires
"control" of the Bank or the Company. These regulations could discourage
takeover attempts of the Company.
LIMITS IF EITHER OF THE PLANS IS IMPLEMENTED PRIOR TO MARCH 23, 2000.
As mentioned above, if stockholders cast a majority of their votes eligible to
be cast at the meeting in favor of either plan, then we will implement that plan
immediately after the meeting, and if both plans receive sufficient votes, we
will implement both plans immediately after the meeting. If this occurs, then
the following limits imposed under federal banking regulations will apply:
o Not more than 20% of any award may vest each year beginning one
year after stockholder approval of the plan, except in the event
of death or disability.
o Awards to non-employee directors of the Company and the Bank may
not exceed 5% per director, and 30% for all directors, of the
total awards available under either plan.
o No person may receive an award of more than 25% of the total
awards available under each plan.
o Stock options must have an exercise price at least equal to the
market price on the date of grant.
AWARDS TO DIRECTORS AND EXECUTIVE OFFICERS. Both plans provide for
automatic awards to non-employee directors of the Company and the Bank when the
plans are approved by stockholders. Each non-employee director of the Company
and the Bank (seven people) will receive an award of 4,500 options and 1,800 MRP
shares ($8,100 of MRP shares based on the closing price of $4.50 per share on
the Record Date). The committee intends to award Mr. Bennett options to purchase
26,750 shares and 10,500 shares under the MRP ($47,250 of MRP shares at $4.50
per share). The exercise price of those options will be the market value of the
stock on October 27, 1999. If either of the plans is approved by a majority of
the votes cast but not a majority of the votes eligible to be cast, the awards
under that plan will not be made until March 23, 2000 and the exercise price of
options will be the market price on that day. YOUR VOTE IN FAVOR OF ONE OR BOTH
OF THE PLANS IS ALSO A VOTE IN FAVOR OF THESE AWARDS UNDER THAT PLAN.
ADMINISTRATION OF THE PLANS. The Personnel Committee of our Board of
Directors will administer the plans. Directors, officers and employees of the
Company or its affiliates, currently approximately 30 people, are eligible to
participate in the plans. The Personnel Committee expects that when it is
deciding on grants under the plans, it will consider, among other things,
position and years of service, the value of the participant's service to the
Company or the Bank and the added responsibilities of such individual as an
employee, director or officer of a public company or its subsidiary. All awards
to officers and employees will be at the discretion of the Personnel Committee.
The Personnel Committee has the authority to select the officers and employees
who will participate in each plan, impose conditions on vesting, change or
accelerate the vesting schedule and establish rules for the implementation of
the plans, but in all cases limited by the requirements of federal laws and
regulations.
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EFFECT OF TERMINATIONS AND FORFEITURES. If a stock option terminates
before the holder exercises the option, or if a MRP award is forfeited before it
vests, then the number of shares covered by the terminated option, or the number
of forfeited MRP shares, will again be available for new awards without
affecting the maximum permitted number of options or shares which can be awarded
under the plans.
RESTRICTIONS ON TRANSFERS. Generally, the recipient of an option may
not assign or transfer any interest in the option except under certain limited
exceptions described in the Stock Option Plan. The recipient of a MRP award may
not transfer the shares represented by the award until the shares vest.
ADDITIONAL INFORMATION ABOUT THE STOCK OPTION PLAN
The Stock Option Plan provides for awards in the form of stock options,
representing a right to purchase our common stock. The plan will permit the
award of options to purchase up to 107,281 shares of our common stock. The term
of the stock options may not exceed ten years. Options can only be exercised
before they expire. No options may be granted after August 17, 2009, which is
ten years after the Board of Directors approved the plan. The Personnel
Committee may award either "incentive stock options" as defined under Section
422 of the Internal Revenue Code, or stock options not intended to qualify as
such ("non-qualified options").
The exercise price for the purchase of shares under an option will not
be less than 100% of the market value of the shares on the date the option is
awarded. The exercise price must be paid in full in cash or, if the Personnel
Committee permits, shares of our stock, or a combination of both.
The plan provides that after a participant dies, the Personnel
Committee may permit options of a deceased participant to be settled in cash
instead of by the delivery of shares. An option will automatically terminate
when a participant is notified of termination for cause.
LIMITS ON INCENTIVE STOCK OPTIONS. Incentive stock options which the
Personnel Committee awards will be subject to the following additional
requirements of Section 422 of the Internal Revenue Code:
o Incentive stock options cannot be awarded to a person owning more
than 10% of the voting power of our stock unless the option
exercise price equals 110% of the fair market value of the stock
at the time of award and the term of the option may not exceed
five years.
o If the total fair market value of the stock underlying options
first exercisable in any year exceeds $100,000, then the options
which cause the excess will not be incentive stock options.
o The tax benefits of an incentive stock option are not effective
for the participant if he or she sells shares obtained upon
exercise of the option within two years after the option is
awarded or within one year after the option is exercised.
o The tax benefits are also not available to the participant unless
the participant is an employee of the Company or its affiliates
continually from the day the option is awarded until not more than
three months before the option is exercised.
LIMITED STOCK APPRECIATION RIGHTS. Each option will be accompanied by a
Limited Stock Appreciation Right ("LSAR") that the holder of the option may
exercise for six months after a change in control (as defined in the Stock
Option Plan), or more than six months after a change in control if necessary to
avoid liability under Section 16 of the Securities Exchange Act of 1934. When a
participant exercises a LSAR, he or she will receive in cash, for each share
covered by the LSAR, the difference between the fair market value of the common
stock at the time of exercise and the exercise price of the related stock
option. The related stock option will then terminate. LSARs will terminate upon
a change of control if the acquiror has agreed to make a monetary payment or
provide substitute options or other property equivalent in value to the value of
the option which terminates.
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EFFECT OF MERGERS AND OTHER ADJUSTMENTS. The Personnel Committee can
adjust both the maximum number of shares covered by the plan, and all
outstanding options, if there is a merger, consolidation, reorganization,
recapitalization (including any distribution of capital to shareholders, whether
taxable or otherwise), combination or exchange of shares, stock dividend, stock
split or other change in our corporate structure or our stock.
AMENDMENT AND TERMINATION OF THE STOCK OPTION PLAN. Our Board of
Directors may amend, suspend or terminate the plan, but only after complying
with any applicable federal banking regulations. Stockholder approval must first
be obtained for any amendment if necessary for the plan to satisfy the
requirements for the award of incentive stock options under Section 422 of the
Internal Revenue Code. For example, stockholder approval will be required for an
amendment which (i) increases the total number of incentive stock options which
may be issued under the plan (except for increases due to mergers and other
permitted adjustments as described above), (ii) materially increases the
benefits to participants with respect to incentive stock options, or (iii)
materially changes the participation eligibility requirements to receive
incentive stock options. No amendment, suspension or termination may reduce the
rights of any participant, without his or her consent, in any option already
awarded. Unless previously terminated, the plan will continue in effect for ten
years, after which no further options may be awarded under the plan.
FEDERAL INCOME TAX CONSEQUENCES. Under present federal income tax laws,
awards of stock options under the plan will have the following consequences:
(1) The participant has no taxable income and the Company is not
entitled to any tax deduction when an option is awarded.
(2) When a participant exercises an incentive stock option, he or she
has no taxable income at that time. The difference between the exercise price
and the fair market value of the shares on the date of exercise is an item of
tax preference for the participant which may, in certain situations, trigger the
alternative minimum tax. When a participant sells stock which was obtained upon
the exercise of an incentive stock option, the participant has a taxable capital
gain equal to the difference between the amount received on the sale and the
amount paid for the stock. This amount is treated as ordinary income instead of
a capital gain if the stock is sold within one year after exercising the option
or within two years after the option was awarded.
(3) When a participant exercises an option that is not an incentive
stock option, the participant has taxable ordinary income at that time equal to
the difference between the exercise price and the fair market value on the date
of exercise.
(4) When a participant exercises an LSAR, the participant has taxable
ordinary income at that time equal to the cash received as a result of the
exercise.
(5) The Company will be allowed a deduction at the time, and in the
amount of, any ordinary income which the participant has, but in most cases only
if the Company meets its federal withholding tax obligations.
ADDITIONAL INFORMATION ABOUT THE MANAGEMENT RECOGNITION PLAN
The MRP will permit the outright award of up to 42,912 shares of common
stock of the Company to employees and directors of the Company, the Bank and
their affiliates. The recipient of an award will not be required to make any
payment to the Company or the Bank in exchange for the shares and as the award
vests, the vested shares will be the same as any other issued and outstanding
shares of common stock of the Company.
ADMINISTRATIVE MATTERS. The Company will implement the MRP by creating
a trust with an independent trustee. The Company expects that it will contribute
to the trust sufficient funds to allow the trust to purchase 42,912 shares of
stock on the open market. Participant contributions to the trust are not
permitted. The trust will not purchase more than 42,912 shares of our common
stock. The costs and expenses of administering the MRP will be borne by the
Company, but dividends paid on shares not awarded may be used to defer expenses.
9
<PAGE>
MRP awards are held by the trust until they vest. As an award vests,
the trustee distributes the shares to the participant and the shares are then
like all other issued and outstanding shares, without limits imposed by the MRP.
An individual with unvested shares may vote and participate in dividends on
those shares. The trustee will vote shares which have not yet been awarded in
the same proportions as unvested shares which have been awarded and voted. Each
participant who has an unvested award under the MRP may direct the response to
any tender offer, exchange offer or other offer made to shareholders with
respect to those shares. If no direction is given, the trustee will not tender
or exchange the shares. The trustee will generally tender or exchange shares
which have not yet been awarded in the same proportion as the directions
received on awarded but unvested shares.
FEDERAL INCOME TAX CONSEQUENCES. Holders of MRP shares will have
taxable ordinary income as the MRP shares vest, equal to the fair market value
of the shares on that date. In certain circumstances, a holder may instead elect
to recognize ordinary income when the award is made. Holders of MRP shares will
also have taxable ordinary income on any dividends (other that stock dividends)
when dividend payments are received. The Company will have a deduction at the
time, and in the amount of, any ordinary income recognized by the participant if
the Company meets its federal withholding tax obligations.
EFFECT OF MERGER AND OTHER ADJUSTMENTS. If there is a merger,
consolidation, reorganization, recapitalization (including any distribution of
capital to shareholders, whether taxable or otherwise), combination or exchange
of shares, stock dividend, stock split or other change in our corporate
structure or our stock, then the number of shares held by the MRP trust shall be
adjusted to reflect the transaction.
TERMINATION OR AMENDMENT OF THE MRP. The Board of Directors of the
Company may amend, suspend or terminate the MRP at any time, but no amendment or
termination may affect outstanding awards. In addition, OTS regulations may
require that amendments be approved by stockholders. If the Board of Directors
terminates the MRP, any remaining assets of the MRP trust shall be returned to
the Company after making all distributions which the Company's Personnel
Committee directs the trustee to make.
GENERAL
If you properly sign and submit a proxy card on the form we are
distributing with this Proxy Statement, the Board of Directors will vote it so
long as we receive it before we close the polls at the meeting. The Board of
Directors will vote your proxy in the manner you direct on the proxy card. If
you sign and return the proxy card the proxy will be voted "FOR" the two
proposals set forth in this Proxy Statement.
The cost of this proxy statement and the related proxy solicitation
will be borne by the Company. In addition, directors, officers and regular
employees of the Company and the Bank may solicit proxies personally, by
telephone or by other means without additional compensation. The Company will,
upon the request of brokers, dealers, banks and voting trustees, and their
nominees, who were holders of record of shares of the Company's capital stock or
participants in depositories on the Record Date, bear their reasonable expenses
for mailing copies of this Proxy Statement with Notice of Annual Meeting and the
form of proxy card to the beneficial owners of such shares. The Company has
retained the services of Regan & Associates, Inc., a firm experienced in the
solicitation of proxies on behalf of public companies, for a fee of $4,000 plus
expenses of not more than $2,000, to assist in the proxy solicitation process.
The $4,000 fee is not payable unless the stockholders approve the Stock Option
Plan and the MRP.
10
<PAGE>
STOCKHOLDER PROPOSALS AT THE ANNUAL MEETING IN THE YEAR 2000
The Company's Board of Directors will establish the date for the 2000
Annual Meeting of Stockholders. In order for a stockholder to be entitled, under
the regulations of the Securities and Exchange Commission, to have a stockholder
proposal included in the Company's Proxy Statement for the 2000 meeting, the
proposal must be received by the Company at its principal executive offices, 42
Church Street, Gouverneur, New York 13642, Attention: Charles Van Vleet,
Secretary, a reasonable time in advance of the date on which we begin our proxy
solicitation. The stockholder must also satisfy the other requirements of SEC
Rule 14a-8. Note that this filing requirement is separate from the notice
requirements described above regarding the advance notice that is required
before a stockholder is permitted to offer a proposal for a vote at any
stockholders' meeting.
PLEASE SIGN, DATE AND MAIL YOUR PROXY NOW
Gouverneur, New York
September 9, 1999
11
<PAGE>
REVOCABLE PROXY
GOUVERNEUR BANCORP, INC.
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints the Board of Directors of Gouverneur
Bancorp, Inc., or their successors in office, Proxies, with full power of
substitution, to represent and vote all stock that the undersigned is entitled
to vote at the Special Meeting of Stockholders of Gouverneur Bancorp, Inc., to
be held on October 27, 1999 at 10:30 a.m. at the Clearview Restaurant, 1180A
U.S. Highway 11, Gouverneur, New York, or at any adjournments thereof upon the
matters described in the accompanying Proxy Statement and upon other business
that may properly come before the meeting or any adjournment thereof. Said
Proxies are directed to vote or refrain from voting as marked hereon upon the
matters listed herein, and otherwise in their discretion.
For Against Abstain
1. Approval of the Stock Option Plan. [ ] [ ] [ ]
2. Approval of the Management
Recognition Plan. [ ] [ ] [ ]
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" BOTH
PROPOSALS. PLEASE SIGN, DATE AND RETURN THIS PROXY.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO DIRECTION IS SPECIFIED, THIS
PROXY WILL BE VOTED "FOR" THE PROPOSALS. IF ANY OTHER BUSINESS IS PRESENTED AT
THE MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN THEIR
JUDGMENT AND DISCRETION. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO
OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
<PAGE>
THIS PROXY MAY BE REVOKED AT ANY TIME BEFORE IT IS VOTED. PLEASE DATE, SIGN AND
RETURN IN THE ENCLOSED POST-PAID ENVELOPE.
Date_________________________
Signature____________________Signature if held jointly__________________________
Detach above card, sign, date and mail in postage-paid envelope provided.
GOUVERNEUR BANCORP, INC.
Please sign exactly as your name appears on this card. When shares are
held by joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized person.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
<PAGE>
EXHIBIT A
GOUVERNEUR BANCORP, INC.
STOCK OPTION PLAN FOR
DIRECTORS, OFFICERS AND EMPLOYEES
TABLE OF CONTENTS
ARTICLE I
PURPOSE
Section 1.1 General Purpose of the Plan .................................... A-1
ARTICLE II
DEFINITIONS
Section 2.1 Bank ........................................................... A-1
Section 2.2 Banking Regulations ............................................ A-1
Section 2.3 Board .......................................................... A-1
Section 2.4 Change in Control .............................................. A-1
Section 2.5 Code ........................................................... A-2
Section 2.6 Committee ...................................................... A-2
Section 2.7 Company ........................................................ A-2
Section 2.8 Disability ..................................................... A-2
Section 2.9 Disinterested Board Member ..................................... A-2
Section 2.10 Effective Date ................................................ A-2
Section 2.11 Eligible Director ............................................. A-2
Section 2.12 Eligible Employee ............................................. A-2
Section 2.13 Employer ...................................................... A-2
Section 2.14 Exchange Act .................................................. A-2
Section 2.15 Exercise Price ................................................ A-2
Section 2.16 Fair Market Value ............................................. A-2
Section 2.17 Family Member ................................................. A-2
Section 2.18 Incentive Stock Option ........................................ A-3
Section 2.19 Limited Stock Appreciation Right .............................. A-3
Section 2.20 Non-Profit Organization ....................................... A-3
Section 2.21 Non-Qualified Stock Option .................................... A-3
Section 2.22 Option ........................................................ A-3
Section 2.23 Option Period ................................................. A-3
Section 2.24 Person ........................................................ A-3
Section 2.25 Plan .......................................................... A-3
Section 2.26 Retirement .................................................... A-3
Section 2.27 Share ......................................................... A-3
Section 2.28 Termination for Cause ......................................... A-3
ARTICLE III
AVAILABLE SHARES
Section 3.1 Available Shares ............................................... A-4
ARTICLE IV
ADMINISTRATION
Section 4.1 Committee ...................................................... A-4
Section 4.2 Committee Action ............................................... A-4
Section 4.3 Committee Responsibilities ..................................... A-4
A-i
<PAGE>
ARTICLE V
STOCK OPTIONS FOR ELIGIBLE DIRECTORS
Section 5.1 In General ..................................................... A-4
Section 5.2 Exercise Price ................................................. A-5
Section 5.3 Option Period .................................................. A-5
Section 5.4 Future Eligible Directors ...................................... A-5
ARTICLE VI
STOCK OPTIONS FOR ELIGIBLE EMPLOYEES
Section 6.1 Size of Options ................................................ A-6
Section 6.2 Grant of Options ............................................... A-6
Section 6.3 Exercise Price ................................................. A-6
Section 6.4 Option Period .................................................. A-6
Section 6.5 Required Regulatory Provisions ................................. A-6
Section 6.6 Additional Restrictions on Incentive Stock Options ............. A-7
ARTICLE VII
OPTIONS -- IN GENERAL
Section 7.1 Method of Exercise ............................................. A-8
Section 7.2 Limitations on Options ......................................... A-8
Section 7.3 Limited Stock Appreciation Rights .............................. A-9
ARTICLE VIII
AMENDMENT AND TERMINATION
Section 8.1 Termination .................................................... A-9
Section 8.2 Amendment ...................................................... A-9
Section 8.3 Adjustments in the Event of a Business Reorganization ..........A-10
ARTICLE IX
MISCELLANEOUS
Section 9.1 Status as an Employee Benefit Plan .............................A-10
Section 9.2 No Right to Continued Employment ...............................A-10
Section 9.3 Construction of Language .......................................A-11
Section 9.4 Governing Law ..................................................A-11
Section 9.5 Headings .......................................................A-11
Section 9.6 Non-Alienation of Benefits .....................................A-11
Section 9.7 Taxes ..........................................................A-11
Section 9.8 Approval of Shareholders .......................................A-11
Section 9.9 Notices ........................................................A-11
A-ii
<PAGE>
GOUVERNEUR BANCORP, INC. STOCK OPTION PLAN
FOR DIRECTORS, OFFICERS AND EMPLOYEES
ARTICLE I
PURPOSE
SECTION 1.1 GENERAL PURPOSE OF THE PLAN.
The purpose of the Plan is to promote the growth and profitability of
GOUVERNEUR BANCORP, INC. (the "Company") by providing eligible directors,
certain key officers and employees of the Company, and its affiliates with an
incentive to achieve corporate objectives, and by allowing the Company to
attract and retain individuals of outstanding competence by offering such
individuals an equity interest in the Company.
ARTICLE II
DEFINITIONS
The following definitions shall apply for the purposes of this Plan,
unless a different meaning is plainly indicated by the context:
SECTION 2.1 BANK means Gouverneur Savings and Loan Association, a federally
chartered savings and loan association, and any successor thereto.
SECTION 2.2 BANKING REGULATIONS means the regulations issued by the Office of
Thrift Supervision or the Federal Deposit Insurance Corporation and applicable
to the Plan, the Bank or the Company.
SECTION 2.3 BOARD means the board of directors of the Company.
SECTION 2.4 CHANGE IN CONTROL means any of the following events:
(a) the occurrence of any event upon which any "person" (as such term is
used in sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended ("Exchange Act")), other than (A) a trustee or other fiduciary holding
securities under an employee benefit plan maintained for the benefit of
employees of an Employer; (B) a corporation owned, directly or indirectly, by
the stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company; or (C) any group constituting a person in
which employees of the Company are substantial members, becomes the "beneficial
owner" (as defined in Rule 13d-3 promulgated under the Exchange Act), directly
or indirectly, of securities issued by the Company representing 25% or more of
the combined voting power of all of the Company's then outstanding securities;
or
(b) the occurrence of any event upon which the individuals who on the date
the Plan is adopted by the Board are members of the Board, together with
individuals whose election by the Board or nomination for election by the
Company's stockholders was approved by the affirmative vote of at least
two-thirds of the members of the Board then in office who were either members of
the Board on the date this Plan is adopted or whose nomination or election was
previously so approved, cease for any reason to constitute a majority of the
members of the Board, but excluding, for this purpose, any such individual whose
initial assumption of office is in connection with an actual or threatened
election contest relating to the election of directors of the Company (as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act); or
(c) the shareholders of the Company approve either:
(i) a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation following which both of the
following conditions are satisfied:
(A) either (I) the members of the Board of the Company
immediately prior to such merger or consolidation constitute at least a majority
of the members of the governing body of the institution resulting from such
merger or consolidation; or (II) the shareholders of the Company own securities
of the institution resulting from such merger or consolidation representing 80%
or more of the combined voting power of all such securities of the resulting
institution then outstanding in substantially the same proportions as their
ownership of voting securities of the Company immediately before such merger or
consolidation; and
(B) the entity which results from such merger or consolidation
expressly agrees in writing to assume and perform the Company's obligations
under the Plan; or
A-1
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(ii) a plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of all or substantially all of its
assets; and
(d) any event that would be described in section 2.4(a), (b) or (c) if
"the Bank" were substituted for "the Company" therein.
SECTION 2.5 CODE means the Internal Revenue Code of 1986, as amended (including
the corresponding provisions of any succeeding law).
SECTION 2.6 COMMITTEE means the Personnel Committee of the Company or such other
committee of the Company as the Board shall designate.
SECTION 2.7 COMPANY means Gouverneur Bancorp, Inc., a corporation organized and
existing under the laws of the United States of America, and any successor
thereto.
SECTION 2.8 DISABILITY means a condition of total incapacity, mental or
physical, for further performance of duty with the Employer which the Committee
shall have determined, on the basis of competent medical evidence, is likely to
be permanent.
SECTION 2.9 DISINTERESTED BOARD MEMBER means a member of the Board who (a) is
not a current employee of the Company or a subsidiary, and (b) satisfies all
other requirements which may be necessary so that the Plan qualifies for the
maximum available benefits under Section 162(m) of the Code and any applicable
rules of the Securities and Exchange Commission under Section 16 of the Exchange
Act.
SECTION 2.10 EFFECTIVE DATE means the date on which this Plan is approved by
Shareholders pursuant to section 9.8 hereof, provided, however, that if this
Plan is approved by a majority of the votes cast at the meeting at which this
Plan is presented to stockholders for approval but not by a majority of the
votes eligible to be cast at such meeting, then Effective Date shall mean the
later of March 23, 2000, or the date of such stockholder approval.
SECTION 2.11 ELIGIBLE DIRECTOR means a member of the board of directors of an
Employer who is not also an employee of an Employer.
SECTION 2.12 ELIGIBLE EMPLOYEE means any employee whom the Committee may
determine to be a key officer or employee of an Employer and select to receive a
grant of an Option pursuant to the Plan.
SECTION 2.13 EMPLOYER means the Company, the Bank and any successor thereto and,
with the prior approval of the Board, and subject to such terms and conditions
as may be imposed by the Board, any other business organization or institution
controlled by, controlling or under common control with the Company or the Bank.
With respect to any Eligible Employer or Eligible Director, the Employer shall
mean the entity which employs such person or upon whose board of directors such
person serves.
SECTION 2.14 EXCHANGE ACT means the Securities Exchange Act of 1934, as amended.
SECTION 2.15 EXERCISE PRICE means the price per Share at which Shares subject to
an Option may be purchased upon exercise of the Option, determined in accordance
with section 5.2 or section 6.3, as applicable.
SECTION 2.16 FAIR MARKET VALUE means, with respect to a Share on a specified
date:
(a) the final reported sales price on the date in question (or if there is
no reported sale on such date, on the last preceding date on which any reported
sale occurred) as reported in the principal consolidated reporting system with
respect to securities listed or admitted to trading on the principal United
States securities exchange on which the Shares are listed or admitted to
trading; or
(b) if the Shares are not listed or admitted to trading on any such
exchange, the closing bid quotation with respect to a Share on such date on the
National Association of Securities Dealers Automated Quotations System, or, if
no such quotation is provided, on another similar system, selected by the
Committee, then in use; or
(c) if sections 2.16(a) and (b) are not applicable, the fair market value
of a Share as the Committee may determine.
SECTION 2.17 FAMILY MEMBER means the spouse, parent, child or sibling of an
Eligible Director or Eligible Employee.
A-2
<PAGE>
SECTION 2.18 INCENTIVE STOCK OPTION means a right to purchase Shares that is
granted to Eligible Employees pursuant to section 6.1, that is designated by the
Committee to be an Incentive Stock Option and that is intended to satisfy the
requirements of section 422 of the Code.
SECTION 2.19 LIMITED STOCK APPRECIATION RIGHT means a right granted pursuant to
section 7.3.
SECTION 2.20 NON-PROFIT ORGANIZATION means any organization which is exempt from
federal income tax under section 501(c)(3), (4), (5), (6), (7), (8) or (10) of
the Internal Revenue Code.
SECTION 2.21 NON-QUALIFIED STOCK OPTION means a right to purchase Shares that is
granted pursuant to section 5.1 or 6.2. For Eligible Employees, an Option will
be a Non-Qualified Stock Option if (a) it is not designated by the Committee to
be an Incentive Stock Option, or (b) it does not satisfy the requirements of
section 422 of the Code.
SECTION 2.22 OPTION means either an Incentive Stock Option or a Non-Qualified
Stock Option.
SECTION 2.23 OPTION PERIOD means the period during which an Option may be
exercised, determined in accordance with section 5.3 and 6.4.
SECTION 2.24 PERSON means an individual, a corporation, a bank, a savings bank,
a savings and loan association, a financial institution, a partnership, an
association, a joint-stock company, a trust, an estate, an unincorporated
organization and any other business organization or institution.
SECTION 2.25 PLAN means this Stock Option Plan for Directors, Officers and
Employees, as amended from time to time.
SECTION 2.26 RETIREMENT means retirement at or after the normal or early
retirement date set forth in any tax-qualified retirement plan of the Employer,
but if not defined in any such plan, the term shall mean retirement at or after
reaching age 60 with at least 10 years of service with the Employer.
SECTION 2.27 SHARE means a share of Common Stock, par value $.01 per share, of
the Company.
SECTION 2.28 TERMINATION FOR CAUSE means one of the following:
(a) for an Eligible Employee, "Termination for Cause" means termination
of employment with the Employer upon the occurrence of any of the following: (i)
the employee intentionally engages in dishonest conduct in connection with his
performance of services for the Employer resulting in his conviction of a
felony; (ii) the employee is convicted of, or pleads guilty or nolo contendere
to, a felony or any crime involving moral turpitude; (iii) the employee
willfully fails or refuses to perform his duties under any employment or
retention agreement and fails to cure such breach within sixty (60) days
following written notice thereof from the Employer; (iv) the employee breaches
his fiduciary duties to the Employer for personal profit; (v) the employee's
material willful breach or violation of any law, rule or regulation (other than
traffic violations or similar offenses), or final cease and desist order in
connection with his performance of services for the Employer; or (vi) the
removal of the employee from service with the Employer as the result of any
proceeding for removal by the Federal Deposit Insurance Corporation, the Office
of Thrift Supervision or any other bank regulatory agency having jurisdiction
over the Employer, provided, however, that such individual shall not be deemed
to have been discharged for cause unless and until he shall have received a
written notice of termination from the Board, which notice shall be given to
such individual not later than five (5) business days after the board of
directors of the Employer adopts, and shall be accompanied by, a resolution duly
approved by affirmative vote of a majority of the entire board of directors of
the Employer at a meeting called and held for such purpose (which meeting shall
be held not less than fifteen (15) days nor more than thirty (30) days after
notice to the individual), at which meeting there shall be a reasonable
opportunity for the individual to make oral and written presentations to the
members of the board of directors of the Employer, on his own behalf, or through
a representative, who may be his legal counsel, to refute the grounds for the
proposed determination) finding that in the good faith opinion of the board of
directors of the Employer grounds exist for discharging the individual for
cause; and
(b) for an Eligible Director, removal as a director in accordance with
the provisions of applicable law and the bylaws and charter or certificate of
incorporation of the entity of which the person is a director after a finding
that the Eligible Director has engaged in any of the conduct specified in
section 2.28(a)(i) through (vi).
A-3
<PAGE>
ARTICLE III
AVAILABLE SHARES
SECTION 3.1 AVAILABLE SHARES.
Subject to section 8.3, Options for not more than 107,281 Shares may be
granted under this Plan in the aggregate, provided, however, that if any option
is granted and thereafter expires, terminates or is forfeited without being
exercised in full, then the number of unexercised Shares covered by such Option
at the time of expiration, termination or forfeiture shall then be available for
the grant of Option under this Plan.
ARTICLE IV
ADMINISTRATION
SECTION 4.1 COMMITTEE.
The Plan shall be administered by the Committee, and the members thereof
shall be Disinterested Board Members. If the Committee consists of fewer than
two Disinterested Board Members, then the Board shall appoint to the Committee
such additional Disinterested Board Members as shall be necessary to provide for
a Committee consisting of at least two Disinterested Board Members. Said
Committee shall constitute a compensation committee as that term is used in
section 162(m) of the Code, and the regulations thereunder, and such committee
shall have the authority described therein. If, for any reason, a member of the
Committee is not or ceases to be a Disinterested Board Member, then any action
taken by such person as a member of said Committee shall be void and shall be
disregarded for all purposes. Said person shall be retroactively deemed not to
have been a member of said Committee since said person ceased being a
Disinterested Board Member.
SECTION 4.2 COMMITTEE ACTION.
The Committee shall hold such meetings, and may make such administrative
rules and regulations, as it may deem proper. A majority of the members of the
Committee shall constitute a quorum, and the action of a majority of the members
of the Committee present at a meeting at which a quorum is present, as well as
actions taken pursuant to the unanimous written consent of all of the members of
the Committee without holding a meeting, shall be deemed to be actions of the
Committee. All actions of the Committee shall be final and conclusive and shall
be binding upon the Company and all other interested parties. Any Person dealing
with the Committee shall be fully protected in relying upon any written notice,
instruction, direction or other communication signed by the secretary of the
Committee and one member of the Committee, by two members of the Committee or by
a representative of the Committee authorized to sign the same in its behalf.
SECTION 4.3 COMMITTEE RESPONSIBILITIES.
Subject to the terms and conditions of the Plan and such limitations as
may be imposed from time to time by the Board, the Committee shall be
responsible for the overall management and administration of the Plan and shall
have such authority as shall be necessary or appropriate in order to carry out
its responsibilities, including, without limitation, the authority:
(a) to interpret and construe the Plan, and to determine the answers to
all questions that may arise under the Plan as to eligibility for participation
in the Plan, the number of Shares subject to the Options, if any, to be granted,
and the terms and conditions thereof;
(b) to adopt rules and regulations and to prescribe forms for the
operation and administration of the Plan; and
(c) to take any other action not inconsistent with the provisions of the
Plan that it may deem necessary or appropriate.
ARTICLE V
STOCK OPTIONS FOR ELIGIBLE DIRECTORS
SECTION 5.1 IN GENERAL.
(a) On the Effective Date, each person who is an Eligible Director on the
Effective Date shall be granted an Option to purchase 4,500 Shares. Subject to
any applicable regulatory limits and the availability of sufficient Options
under this Plan, any person who becomes an Eligible Director after the Effective
Date who has not previously received an Option under this Plan shall thereupon
be granted an Option to purchase 4,500 Shares, subject to the right of the Board
of Directors of the Company to reduce or impose restrictions on such Option
prior to its grant.
A-4
<PAGE>
(b) Any Option granted under this section 5.1 or section 5.4 shall be
evidenced by a written agreement which shall specify the number of Shares
covered by the Option, the Exercise Price for the Shares subject to the Option
and the Option Period, all as determined pursuant to this Article V. The Option
agreement shall also set forth specifically or incorporate by reference the
applicable provisions of the Plan.
SECTION 5.2 EXERCISE PRICE.
The price per Share at which an Option granted to an Eligible Director
under section 5.1 or section 5.4 may be exercised shall be the Fair Market Value
of a Share on the date on which the Option is granted.
SECTION 5.3 OPTION PERIOD.
(a) Subject to section 5.3(b), the Option Period during which an Option
granted to an Eligible Director under section 5.1 or section 5.4 may be
exercised shall commence on the date the Option is granted and shall expire on
the earlier of:
(i) Termination for Cause; or
(ii) the last day of the ten-year period commencing on the date on
which the Option was granted.
(b) Unless otherwise permitted by the Banking Regulations and approved by
the Committee, the maximum number Shares as to which an outstanding Option may
be exercised shall be as follows:
(i) prior to the first anniversary of the Effective Date, the Option
shall not be exercisable;
(ii) on and after the first anniversary, but prior to the second
anniversary, of the Effective Date, the Option may be exercised as to a maximum
of twenty percent (20%) of the Shares subject to the Option;
(iii) on and after the second anniversary, but prior to the third
anniversary, of the Effective Date, the Option may be exercised as to a maximum
of forty percent (40%) of the Shares subject to the Option, when granted,
including in such number any optioned Shares purchased prior to such second
anniversary;
(iv) on and after the third anniversary, but prior to the fourth
anniversary, of the Effective Date, the Option may be exercised as to a maximum
of sixty percent (60%) of the Shares subject to the Option, when granted,
including in such number any optioned Shares purchased prior to such third
anniversary;
(v) on and after the fourth anniversary, but prior to the fifth
anniversary, of the Effective Date, the Option may be exercised as to a maximum
of eighty percent (80%) of the Shares subject to the Option, when granted,
including in such number any optioned Shares purchased prior to such fourth
anniversary; and
(vi) on and after the fifth anniversary of the Effective Date, and
for the remainder of the Option Period, the Option may be exercised as to the
entire number of optioned Shares not theretofore purchased;
provided, however, that such an Option shall become fully exercisable, and all
optioned Shares not previously purchased shall become available for purchase, on
the date of the Option holder's death or Disability; and provided, further, that
to the extent not prohibited by the Banking Regulations, all Options granted
under section 5.1 or section 5.4 after one year after the consummation of the
Conversion of the Bank to the stock form of ownership shall not be subject to
the foregoing provisions of section 5.3(b), but shall instead be exercisable
immediately upon grant or as otherwise determined by the Committee, and
provided, further, that the Committee shall have the authority, prior to or upon
the grant of any Option, to further delay the vesting of such Option or impose
additional conditions, requirements or limitations on such vesting.
SECTION 5.4 FUTURE ELIGIBLE DIRECTORS
Each person who becomes an Eligible Director after the Effective Date
shall be granted an Option to purchase the same number of Shares for which
Eligible Directors were granted Options under section 5.1(a), provided, however,
that such grant shall be effective only to the extent permitted under the
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Banking Regulations, and provided, further that the provisions of section 5.3
shall apply to such grant except that the term "Effective Date" in section 5.3
shall, for this purpose, mean the date such person becomes an Eligible Director.
ARTICLE VI
STOCK OPTIONS FOR ELIGIBLE EMPLOYEES
SECTION 6.1 SIZE OF OPTIONS.
Subject to sections 6.2 and 6.5 and such limitations as the Board may from
time to time impose, the number of Shares as to which an Eligible Employee may
be granted Options shall be determined by the Committee, in its discretion.
SECTION 6.2 GRANT OF OPTIONS.
(a) Subject to the limitations of the Plan, the Committee may, in its
discretion, grant to an Eligible Employee an Option to purchase Shares. The
Option for such Eligible Employee must be designated as either an Incentive
Stock Option or a Non-Qualified Stock Option and, if not designated as either,
shall be a Non-Qualified Stock Option.
(b) Any Option granted under this section 6.2 shall be evidenced by a
written agreement which shall:
(i) specify the number of Shares covered by the Option;
(ii) specify the Exercise Price, determined in accordance with
section 6.3, for the Shares subject to the Option;
(iii) specify the Option Period determined in accordance with section
6.4;
(iv) set forth specifically or incorporate by reference the
applicable provisions of the Plan; and
(v) contain such other terms and conditions not inconsistent with the
Plan as the Committee may, in its discretion, prescribe with respect to an
Option granted to an Eligible Employee.
SECTION 6.3 EXERCISE PRICE.
The price per Share at which an Option granted to an Eligible Employee
shall be determined by the Committee, in its discretion; provided, however, that
the Exercise Price shall not be less than the Fair Market Value of a Share on
the date on which the Option is granted.
SECTION 6.4 OPTION PERIOD.
Subject to section 6.5, the Option Period during which an Option granted
to an Eligible Employee may be exercised shall commence on the date specified by
the Committee in the Option agreement and shall expire on the date specified in
the Option agreement or, if no date is specified, on the earliest of:
(a) the date and time when the Eligible Employee ceases to be an employee
of the Employer due to a Termination for Cause; and
(b) the last day of the ten-year period commencing on the date on which
the Option was granted.
SECTION 6.5 VESTING PROVISIONS.
Unless otherwise permitted by the Banking Regulations and approved by the
Committee, each Option granted to an Eligible Employee shall become exercisable
as follows:
(i) prior to the first anniversary of the Effective Date, the Option
shall not be exercisable;
(ii) on and after the first anniversary, but prior to the second
anniversary, of the Effective Date, the Option may be exercised as to a maximum
of twenty percent (20%) of the Shares subject to the Option when granted;
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(iii) on and after the second anniversary, but prior to the third
anniversary, of the Effective Date, the Option may be exercised as to a maximum
of forty percent (40%) of the Shares subject to the Option when granted,
including in such forty percent (40%) any optioned Shares purchased prior to
such second anniversary;
(iv) on and after the third anniversary, but prior to the fourth
anniversary, of the Effective Date, the Option may be exercised as to a maximum
of sixty percent (60%) of the Shares subject to the Option when granted,
including in such sixty percent (60%) any optioned Shares purchased prior to
such third anniversary;
(v) on and after the fourth anniversary, but prior to the fifth
anniversary, of the Effective Date, the Option may be exercised as to a maximum
of eighty percent (80%) of the Shares subject to the Option when granted,
including in such eighty percent (80%) any optioned Shares purchased prior to
such fourth anniversary; and
(vi) on and after the fifth anniversary of the Effective Date, and
for the remainder of the Option Period, the Option may be exercised as to the
entire number of optioned Shares not theretofore purchased;
provided, however, that such an Option shall become fully exercisable, and all
optioned Shares not previously purchased shall become available for purchase, on
the date of the Option holder's death or Disability; and provided, further, that
to the extent not inconsistent with Banking Regulations, all Options granted
under section 6.2(a) after one year after the consummation of the Conversion of
the Bank to the stock form of ownership shall not be subject to the foregoing
provisions of this section 6.5, but shall instead be exercisable immediately
upon grant or as otherwise determined by the Committee, and provided, further,
that the Committee shall have the authority, prior to or upon the grant of any
Option, to further delay the vesting of such Option or impose additional
conditions, requirements or limitations on such vesting.
(d) The Option Period of any Option granted to an Eligible Employee
hereunder, whether or not previously vested, shall be suspended as of the time
and date at which the Option holder has received notice from the Board that his
or her employment is subject to a possible Termination for Cause. Such
suspension shall remain in effect until the Option holder receives official
notice from the Board that he or she has been cleared of any possible
Termination for Cause, at which time, the original Exercise Period shall be
reinstated without any adjustment for the intervening suspended period. In the
event that the Option Period under section 6.4 expires during such suspension
for any of the reasons specified in section 6.4(d), the Company shall pay to the
Eligible Employee, damages equal to the value of the expired Options less the
Exercise Price of such Options if it is determined that there had not existed
justification for Termination for Cause on the date of such expiration.
SECTION 6.6 ADDITIONAL RESTRICTIONS ON INCENTIVE STOCK OPTIONS.
In addition to the limitations of section 7.2(a), an Option granted to an
Eligible Employee designated by the Committee to be an Incentive Stock Option
shall be subject to the following limitations:
(a) If, for any calendar year, the sum of (i) plus (ii) exceeds $100,000,
where (i) equals the Fair Market Value (determined as of the date of the grant)
of Shares subject to an Option intended to be an Incentive Stock Option which
first become available for purchase during such calendar year, and (ii) equals
the Fair Market Value (determined as of the date of grant) of Shares subject to
any other options intended to be Incentive Stock Options and previously granted
to the same Eligible Employee which first become exercisable in such calendar
year, then that number of Shares optioned which causes the sum of (i) and (ii)
to exceed $100,000 shall be deemed to be Shares optioned pursuant to a
Non-Qualified Stock Option or Non-Qualified Stock Options, with the same terms
as the Option or Options intended to be an Incentive Stock Option;
(b) The Exercise Price of an Incentive Stock Option granted to an Eligible
Employee who, at the time the Option is granted, owns Shares comprising more
than 10% of the total combined voting power of all classes of stock of the
Company shall not be less than 110% of the Fair Market Value of a Share, and if
an Option designated as an Incentive Stock Option shall be granted at an
Exercise Price that does not satisfy this requirement, the designated Exercise
Price shall be observed and the Option shall be treated as a Non-Qualified Stock
Option;
(c) The Option Period of an Incentive Stock Option granted to an Eligible
Employee who, at the time the Option is granted, owns Shares comprising more
than 10% of the total combined voting power of all classes of stock of the
Company, shall expire no later than the fifth anniversary of the date on which
the Option was granted, and if an Option designated as an Incentive Stock Option
shall be granted for an Option Period that does not satisfy this requirement,
the designated Option Period shall be observed and the Option shall be treated
as a Non-Qualified Stock Option;
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(d) An Incentive Stock Option that is exercised during its designated
Option Period but more than:
(i) three (3) months after the termination of employment with the
Company, a parent or a subsidiary (other than on account of disability within
the meaning of section 22(e)(3) of the Code or death) of the Eligible Employee
to whom it was granted; and
(ii) one (1) year after such individual's termination of employment
with the Company, a parent or a subsidiary due to disability (within the meaning
of section 22(e)(3) of the Code);
may be exercised in accordance with the terms but shall at the time of exercise
be treated as a Non-Qualified Stock Option.
(e) For the purpose of determining whether an Option is an Incentive Stock
Option when it is exercised, a person shall not be considered to have terminated
employment during any period in which such person serves as a member of the
Board of Directors of an Employer to the extent that such service satisfies the
requirements of section 422 of the Code for continuous employment.
ARTICLE VII
OPTIONS -- IN GENERAL
SECTION 7.1 METHOD OF EXERCISE.
(a) Subject to the limitations of the Plan and the Option agreement, an
Option holder may, at any time during the Option Period, exercise his or her
right to purchase all or any part of the Shares to which the Option relates;
provided, however, that the minimum number of Shares which may be purchased at
any time shall be 100, or, if less, the total number of Shares relating to the
Option which remain unpurchased. An Option holder shall exercise an Option to
purchase Shares by:
(i) giving written notice to the Secretary of the Company, in such
form and manner as the Committee may prescribe, of his intent to exercise the
Option;
(ii) delivering to the Secretary of the Company, full payment,
consistent with section 7.1(b), for the Shares as to which the Option is to be
exercised; and
(iii) satisfying such other conditions as may be prescribed in the
Option agreement.
If, at any time that any Option is exercisable there is not a duly appointed
Secretary of the Company, then notice of intent to exercise shall be given, in
writing, accompanied by payment in full, to the Board of Directors of the
Company.
(b) The Exercise Price of Shares to be purchased upon exercise of any
Option shall be paid in full in cash (by certified or bank check or such other
instrument as the Company may accept) or, if and to the extent permitted by the
Committee, by one or more of the following: (i) in the form of Shares already
owned by the Option holder having an aggregate Fair Market Value on the date the
Option is exercised equal to the aggregate Exercise Price to be paid; (ii) by
requesting the Company to cancel without payment Options outstanding to such
Person for that number of Shares whose aggregate Fair Market Value on the date
of exercise, when reduced by their aggregate Exercise Price, equals the
aggregate Exercise Price of the Options being exercised; or (iii) by a
combination thereof. Payment for any Shares to be purchased upon exercise of an
Option may also be made by delivering a properly executed exercise notice to the
Company, together with a copy of irrevocable instructions to a broker to deliver
promptly to the Company the amount of sale or loan proceeds to pay the purchase
price. To facilitate the foregoing, the Company may enter into agreements for
coordinated procedures with one or more brokerage firms.
(c) When the requirements of section 7.1(a) and (b) have been satisfied,
the Committee shall take such action as is necessary to cause the issuance of a
stock certificate evidencing the Option holder's ownership of such Shares. The
Person exercising the Option shall have no right to vote or to receive
dividends, nor have any other rights with respect to the Shares, prior to the
date as of which such Shares are transferred to such Person on the stock
transfer records of the Company, and no adjustments shall be made for any
dividends or other rights for which the record date is prior to the date as of
which such transfer is effected, except as may be required under section 8.3.
SECTION 7.2 LIMITATIONS ON OPTIONS.
(a) An Option by its terms shall not be transferable by the Option holder
other than to Family Members or Non-profit Organizations or by will or by the
laws of descent and distribution and shall be exercisable, during the lifetime
of the Option holder, only by the Option holder, a Family Member or a Non-profit
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Organization. Any such transfer shall be effected by written notice to the
Company given in such form and manner as the Committee may prescribe and shall
be recognized only if such notice is received by the Company prior to the death
of the person giving it. Thereafter, the transferee shall have, with respect to
such Option, all of the rights, privileges and obligations which would attach
thereunder to the transferor if the Option were issued to such transferor. If a
privilege of the Option depends on the life, employment or other status of the
transferor, such privilege of the Option for the transferee shall continue to
depend on the life, employment or other status of the transferor. The Committee
shall have full and exclusive authority to interpret and apply the provisions of
this Plan to transferees to the extent not specifically described herein.
Notwithstanding the foregoing, an Incentive Stock Option is not transferable by
an Eligible Employee other than by will or the laws of descent and distribution,
and is exercisable, during his lifetime, solely by him.
(b) The Company's obligation to deliver Shares with respect to an Option
shall, if the Committee so requests, be conditioned upon the receipt of a
representation as to the investment intention of the Option holder to whom such
Shares are to be delivered, in such form as the Committee shall determine to be
necessary or advisable to comply with the provisions of applicable federal,
state or local law. It may be provided that any such representation shall become
inoperative upon a registration of the Shares or upon the occurrence of any
other event eliminating the necessity of such representation. The Company shall
not be required to deliver any Shares under the Plan prior to (i) the admission
of such Shares to listing on any stock exchange on which Shares may then be
listed, or (ii) the completion of such registration or other qualification under
any state or federal law, rule or regulation as the Committee shall determine to
be necessary or advisable.
SECTION 7.3 LIMITED STOCK APPRECIATION RIGHTS.
(a) Each Option granted under this Plan shall be accompanied by a Limited
Stock Appreciation Right that is exercisable at the times and upon the terms and
conditions set forth herein. Each Limited Stock Appreciation Right granted
hereunder shall be exercisable for a period commencing on the date on which a
Change in Control occurs and ending six (6) months after such date or, if later
in the case of any Person, thirty (30) days after the earliest date on which
such Person may exercise the Limited Stock Appreciation Right without subjecting
himself to liability under section 16 of the Securities Exchange Act of 1934, as
amended, provided, however, that a Limited Stock Appreciation Right shall not be
exercisable if and to the extent that the exercise thereof is prohibited by any
then-applicable Banking Regulations. A Person in possession of a Limited Stock
Appreciation Right granted hereunder may exercise such Limited Stock
Appreciation Right by:
(i) giving written notice to the Committee, in such form and manner as the
Committee may prescribe, of his intent to exercise the Limited Stock
Appreciation Right; and
(ii) agreeing in such written notice to the cancellation of Options then
outstanding to him for a number of Shares equal to the number of Shares for
which the Limited Stock Appreciation Right is being exercised.
Except as provided in this Plan, within ten (10) days after the giving of such a
notice, the Committee shall cause the Company to deliver to such Person a
monetary payment in an amount per Share equal to the amount by which the Fair
Market Value of the Share on the date of exercise exceeds the Exercise Price per
Share of each of the Options being canceled.
(b) Notwithstanding anything herein contained to the contrary, the Limited
Stock Appreciation Rights granted hereunder shall be canceled at the effective
time of a Change in Control resulting from a transaction between the Company and
another party pursuant to a written agreement whereby the consummation of the
transaction is conditioned upon the delivery to each Option holder, upon the
closing of such transaction and in exchange for the cancellation of all of such
Option holder's outstanding Options, of a monetary payment or property
(including but not limited to options to purchase securities of the entity
resulting from such transaction) with a value equivalent to the value of the
Options being canceled.
ARTICLE VIII
AMENDMENT AND TERMINATION
SECTION 8.1 TERMINATION.
The Board may suspend or terminate the Plan in whole or in part at any
time prior to the tenth anniversary of the Effective Date by giving written
notice of such suspension or termination to the Committee. Unless sooner
terminated, the Plan shall terminate automatically on the day preceding the
tenth anniversary of the Effective Date. In the event of any suspension or
termination of the Plan, all Options theretofore granted under the Plan that are
outstanding on the date of such suspension or termination of the Plan shall
remain outstanding and exercisable for the period and on the terms and
conditions set forth in the Option agreements evidencing such Options.
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SECTION 8.2 AMENDMENT.
The Board may amend or revise the Plan in whole or in part at any time
whether before or after approval of the Plan by the Shareholders of the Company;
provided, however, that, to the extent required to comply with section 162(m)
and section 422 of the Code, no such amendment or revision shall be effective if
it amends a material term of the Plan unless approved by the holders of a
majority of the voting Shares of Gouverneur Bancorp, Inc. .
SECTION 8.3 ADJUSTMENTS IN THE EVENT OF A BUSINESS REORGANIZATION.
(a) In the event of any merger, consolidation, or other business
reorganization in which the Company is the surviving entity, and in the event of
any stock split, stock dividend or other event generally affecting the number of
Shares held by each Person who is then a holder of record of Shares, the number
of Shares covered by each outstanding Option and the number of Shares available
pursuant to section 3.1 shall be adjusted to account for such event. Such
adjustment shall be effected by multiplying such number of Shares by an amount
equal to the number of Shares that would be owned after such event by a Person
who, immediately prior to such event, was the holder of record of one Share, and
the Exercise Price of outstanding Options shall be adjusted by dividing the
aggregate Exercise Price for all Shares covered by each Option by the adjusted
number of Shares covered by such Option; provided, however, that the Committee
may, in its discretion, establish another appropriate method of adjustment.
(b) In the event of any merger, consolidation, or other business
reorganization in which the Company is not the surviving entity, any Options
granted under the Plan which remain outstanding may be canceled as of the
effective date of such merger, consolidation, business reorganization,
liquidation or sale by the Board upon 30 days' written notice to the Option
holder; provided, however, that on or as soon as practicable following the date
of cancellation, each Option holder shall receive a monetary payment in such
amount, or other property of such kind and value, as the Board determines in
good faith to be equivalent in value to the Options that have been canceled.
(c) In the event that the Company shall declare and pay any dividend with
respect to Shares (other than a dividend payable in Shares) which results in a
nontaxable return of capital to the holders of Shares for federal income tax
purposes or otherwise than by dividend makes distribution of property to the
holders of its Shares, the Company shall make an equivalent payment to each
Person holding an outstanding Option as of the record date for such dividend.
Such payment shall be made at substantially the same time, in substantially the
same form and in substantially the same amount per optioned Share as the
dividend or other distribution paid with respect to outstanding Shares;
provided, however, that if any dividend or distribution on outstanding Shares is
paid in property other than cash, the Company, in its discretion applied
uniformly to all outstanding Options, may make such payment in a cash amount per
optioned Share equal in fair market value to the fair market value of the
non-cash dividend or distribution.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 STATUS AS AN EMPLOYEE BENEFIT PLAN.
This Plan is not intended to satisfy the requirements for qualification
under section 401(a) of the Code or to satisfy the definitional requirements for
an "employee benefit plan" under section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended. It is intended to be a non-qualified incentive
compensation program that is exempt from the regulatory requirements of the
Employee Retirement Income Security Act of 1974, as amended. The Plan shall be
construed and administered so as to effectuate this intent.
SECTION 9.2 NO RIGHT TO CONTINUED EMPLOYMENT.
Neither the establishment of the Plan nor any provisions of the Plan nor
any action of the Board or the Committee with respect to the Plan nor the grant
of any Option or Limited Stock Appreciation Rights shall be held or construed to
confer upon any Eligible Director or Eligible Employee any right to a
continuation of his or her position as a director or employee of the Company.
The Employer reserves the right to remove any Eligible Director or dismiss any
Eligible Employee or otherwise deal with any Eligible Director or Eligible
Employee to the same extent as though the Plan had not been adopted.
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SECTION 9.3 CONSTRUCTION OF LANGUAGE.
Whenever appropriate in the Plan, words used in the singular may be read
in the plural, words used in the plural may be read in the singular, and words
importing the masculine gender may be read as referring equally to the feminine
or the neuter. Any reference to an Article or section number shall refer to an
Article or section of this Plan unless otherwise indicated.
SECTION 9.4 GOVERNING LAW.
The Plan shall be construed, administered and enforced according to the
laws of the United States of America. The Plan shall be construed to comply with
applicable Banking Regulations.
SECTION 9.5 HEADINGS.
The headings of Articles and sections are included solely for convenience
of reference. If there is any conflict between such headings and the text of the
Plan, the text shall control.
SECTION 9.6 NON-ALIENATION OF BENEFITS.
The right to receive a benefit under the Plan shall not be subject in any
manner to anticipation, alienation or assignment, nor shall such right be liable
for or subject to debts, contracts, liabilities, engagements or torts, except to
the extent provided in a qualified domestic relations order as defined in
section 414(p) of the Code.
SECTION 9.7 TAXES.
The Company shall have the right to deduct from all amounts paid by the
Company in cash with respect to an Option under the Plan any taxes required by
law to be withheld with respect to such Option. Where any Person is entitled to
receive Shares pursuant to the exercise of an Option, the Company shall have the
right to require such Person to pay the Company the amount of any tax which the
Company is required to withhold with respect to such Shares, or, in lieu
thereof, to retain, or to sell without notice, a sufficient number of Shares to
cover the amount required to be withheld.
SECTION 9.8 APPROVAL OF SHAREHOLDERS.
This Plan shall not be effective or implemented prior to the one year
anniversary of the reorganization of the Bank to the mutual holding company form
unless approved by the holders of a majority of the total votes eligible to be
cast at any duly called annual or special meeting of the Company, excluding
shares owned by Cambray Mutual Holding Company, in which case the Plan shall be
effective as of the date of such approval. If this Plan is approved by a
majority of the votes, excluding shares owned by Cambray Mutual Holding Company,
cast at such meeting but not by a majority of the votes eligible to be cast at
such meeting, then this Plan shall be effective on the later of the date of such
stockholder approval or March 23, 2000. No Option or Limited Stock Appreciation
Rights shall be granted before this Plan is effective.
SECTION 9.9 NOTICES.
Any communication required or permitted to be given under the Plan,
including any notice, direction, designation, comment, instruction, objection or
waiver, shall be in writing and shall be deemed to have been given at such time
as it is delivered personally or five (5) days after mailing if mailed, postage
prepaid, by registered or certified mail, return receipt requested, addressed to
such party at the address listed below, or at such other address as one such
party may by written notice specify to the other party:
(a) If to the Committee:
The Personnel Committee (or such other committee as may be designated by
the Board)
Gouverneur Bancorp, Inc.
42 Church Street
Gouverneur, New York 13642
(b) If to an Option holder, to the Option holder's address as shown in the
Employer's records.
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EXHIBIT B
GOUVERNEUR BANCORP, INC.
MANAGEMENT RECOGNITION PLAN
FOR DIRECTORS, OFFICERS AND EMPLOYEES
TABLE OF CONTENTS
ARTICLE I
Section 1.1 General Purpose of the Plan ................................... B-1
ARTICLE II
DEFINITIONS
Section 2.1 Award ......................................................... B-1
Section 2.2 Award Date .................................................... B-1
Section 2.3 Bank .......................................................... B-1
Section 2.4 Banking Regulations ........................................... B-1
Section 2.5 Beneficiary ................................................... B-1
Section 2.6 Board ......................................................... B-1
Section 2.7 Change of Control ............................................. B-1
Section 2.8 Code .......................................................... B-2
Section 2.9 Committee ..................................................... B-2
Section 2.10 Company ...................................................... B-2
Section 2.11 Disability ................................................... B-2
Section 2.12 Disinterested Board Member ................................... B-2
Section 2.13 Effective Date ............................................... B-2
Section 2.14 Eligible Director ............................................ B-2
Section 2.15 Eligible Employee ............................................ B-2
Section 2.16 Employer ..................................................... B-2
Section 2.17 Exchange Act ................................................. B-2
Section 2.18 Person ....................................................... B-2
Section 2.19 Plan ......................................................... B-2
Section 2.20 Retirement ................................................... B-3
Section 2.21 Share ........................................................ B-3
Section 2.22 Trust ........................................................ B-3
Section 2.23 Trust Agreement .............................................. B-3
Section 2.24 Trust Fund ................................................... B-3
Section 2.25 Trustee ...................................................... B-3
ARTICLE III
SHARES AVAILABLE UNDER PLAN
Section 3.1 Shares Available Under Plan ................................... B-3
ARTICLE IV
ADMINISTRATION
Section 4.1 Committee ..................................................... B-3
Section 4.2 Committee Action .............................................. B-3
Section 4.3 Committee Responsibilities .................................... B-3
B-i
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ARTICLE IV
THE TRUST FUND
Section 5.1 Contributions ................................................. B-4
Section 5.2 The Trust Fund ................................................ B-4
Section 5.3 Investments ................................................... B-4
ARTICLE VI
AWARDS
Section 6.1 Awards To Eligible Directors .................................. B-4
Section 6.2 Awards To Eligible Employees .................................. B-4
Section 6.3 Awards in General ............................................. B-4
Section 6.4 Shares Allocations ............................................ B-5
Section 6.5 Dividend Rights ............................................... B-5
Section 6.6 Voting Rights ................................................. B-5
Section 6.7 Tender Offers ................................................. B-5
Section 6.8 Limitations on Awards ......................................... B-6
Section 6.9 Forfeiture Upon Voluntary Resignation ......................... B-6
ARTICLE VII
DISTRIBUTION OF SHARES
Section 7.1 Designation of Beneficiary .................................... B-6
Section 7.2 Manner of Distribution ........................................ B-6
Section 7.3 Taxes ......................................................... B-7
ARTICLE VIII
AMENDMENT AND TERMINATION
Section 8.1 Termination ................................................... B-7
Section 8.2 Amendment ..................................................... B-7
Section 8.3 Adjustments in the Event of a Business Reorganization ......... B-7
ARTICLE IX
MISCELLANEOUS
Section 9.1 Status as an Employee Benefit Plan ............................ B-7
Section 9.2 No Right to Continued Employment .............................. B-7
Section 9.3 Construction of Language ...................................... B-8
Section 9.4 Governing Law ................................................. B-8
Section 9.5 Headings ...................................................... B-8
Section 9.6 Non-Alienation of Benefits .................................... B-8
Section 9.7 Notices ....................................................... B-8
Section 9.8 Approval of Shareholders ...................................... B-8
B-ii
<PAGE>
GOUVERNEUR BANCORP, INC.
MANAGEMENT RECOGNITION PLAN
FOR DIRECTORS, OFFICERS AND EMPLOYEES
ARTICLE I
PURPOSE
SECTION 1.1 GENERAL PURPOSE OF THE PLAN.
The purpose of the Plan is to promote the growth and profitability of
GOUVERNEUR BANCORP, INC. (the "Company") and to provide eligible directors,
certain key officers and employees of the Company with an incentive to achieve
corporate objectives, to attract and retain directors, key officers and
employees of outstanding competence and to provide such directors, officers and
employees with an equity interest in the Company.
ARTICLE II
DEFINITIONS
The following definitions shall apply for the purposes of this Plan,
unless a different meaning is plainly indicated by the context:
SECTION 2.1 AWARD means a grant of Shares to an Eligible Director or Eligible
Employee pursuant to section 6.1 or 6.2.
SECTION 2.2 AWARD DATE means, with respect to a particular Award, the date
specified by the Committee in the notice of the Award issued to the Eligible
Director or Eligible Employee by the Committee, pursuant to section 6.3.
SECTION 2.3 BANK means Gouverneur Savings and Loan Association, a federally
chartered savings and loan association, and any successor thereto.
SECTION 2.4 BANKING REGULATIONS means the regulations issued by the Office of
Thrift Supervision or the Federal Deposit Insurance Corporation and applicable
to the Plan, the Bank or the Company.
SECTION 2.5 BENEFICIARY means the Person designated by an Eligible Director or
Eligible Employee pursuant to section 7.1, to receive distribution of any Shares
available for distribution to such Eligible Director or Eligible Employee, in
the event such Eligible Director or Eligible Employee dies prior to receiving
distribution of such Shares.
SECTION 2.6 BOARD means the Board of Directors of the Company.
SECTION 2.7 CHANGE OF CONTROL means any of the following events:
(a) the occurrence of any event upon which any "person" (as such term is
used in sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended ("Exchange Act")), other than (A) a trustee or other fiduciary holding
securities under an employee benefit plan maintained for the benefit of
employees of an Employer; (B) a corporation owned, directly or indirectly, by
the stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company; or (C) any group constituting a person in
which employees of the Company are substantial members, becomes the "beneficial
owner" (as defined in Rule 13d-3 promulgated under the Exchange Act), directly
or indirectly, of securities issued by the Company representing 25% or more of
the combined voting power of all of the Company's then outstanding securities;
or
(b) the occurrence of any event upon which the individuals who on the date
the Plan is adopted by the Board are members of the Board, together with
individuals whose election by the Board or nomination for election by the
Company's stockholders was approved by the affirmative vote of at least
two-thirds of the members of the Board then in office who were either members of
the Board on the date this Plan is adopted or whose nomination or election was
previously so approved, cease for any reason to constitute a majority of the
members of the Board, but excluding, for this purpose, any such individual whose
initial assumption of office is in connection with an actual or threatened
election contest relating to the election of directors of the Company (as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act); or
(c) the shareholders of the Company approve either:
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(i) a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation following which both of the
following conditions are satisfied:
(A) either (1) the members of the Board of the Company
immediately prior to such merger or consolidation constitute at least a majority
of the members of the governing body of the institution resulting from such
merger or consolidation; or (2) the shareholders of the Company own securities
of the institution resulting from such merger or consolidation representing 80%
or more of the combined voting power of all such securities of the resulting
institution then outstanding in substantially the same proportions as their
ownership of voting securities of the Company immediately before such merger or
consolidation; and
(B) the entity which results from such merger or consolidation
expressly agrees in writing to assume and perform the Company's obligations
under the Plan; or
(ii) a plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of all or substantially all of its
assets; and
(d) any event that would be described in section 2.7(a), (b) or (c) if
"the Bank" were substituted for "the Company" therein.
SECTION 2.8 CODE means the Internal Revenue Code of 1986 (including the
corresponding provisions of any succeeding law).
SECTION 2.9 COMMITTEE means the Personnel Committee of the Company, or such
other committee of the Company as the Board shall designate.
SECTION 2.10 COMPANY means Gouverneur Bancorp, Inc., a corporation organized and
existing under the laws of the United States of America, and any successor
thereto.
SECTION 2.11 DISABILITY means a condition of total incapacity, mental or
physical, for further performance of duty with the Employer which the Committee
shall have determined, on the basis of competent medical evidence, is likely to
be permanent.
SECTION 2.12 DISINTERESTED BOARD MEMBER means a member of the Board who (a) is
not a current employee of the Company or a subsidiary, and (b) satisfies all
other requirements which may be necessary so that the Plan qualifies for the
maximum available benefits under section 162(m) of the Code and any applicable
rules of the Securities and Exchange Commission under Section 16 of the Exchange
Act.
SECTION 2.13 EFFECTIVE DATE means the date on which the plan is approved by
Shareholders pursuant to section 9.8, provided, however, that if this Plan is
approved by a majority of the votes cast at the meeting at which this Plan is
presented to stockholders for approval but not by a majority of the votes
eligible to be cast at such meeting, then Effective Date shall mean the later of
March 23, 2000, or the date of such approval.
SECTION 2.14 ELIGIBLE DIRECTOR means a member of the board of directors of the
Employer who is not also an employee of the Employer.
SECTION 2.15 ELIGIBLE EMPLOYEE means any employee whom the Committee may
determine to be a key officer or employee of the Employer and select to receive
an Award pursuant to the Plan.
SECTION 2.16 EMPLOYER means the Company, the Bank and any successor thereto and,
with the prior approval of the Board, and subject to such terms and conditions
as may be imposed by the Board, any other business organization or institution
controlled by, controlling or under common control with the Company or the Bank.
With respect to any Eligible Employee or Eligible Director, the Employer shall
mean the entity which employs such person or upon whose board of directors such
person serves.
SECTION 2.17 EXCHANGE ACT means the Securities Exchange Act of 1934, as amended.
SECTION 2.18 PERSON means an individual, a corporation, a bank, a savings bank,
a savings and loan association, a financial institution, a partnership, an
association, a joint-stock company, a trust, an estate, an unincorporated
organization and any other business organization or institution.
SECTION 2.19 PLAN means the Gouverneur Bancorp, Inc. Management Recognition Plan
for Directors, Officers and Employees, as amended from time to time.
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SECTION 2.20 RETIREMENT means retirement at or after the normal or early
retirement date set forth in any tax-qualified retirement plan of the Employer,
but if not defined in any such plan, the term shall mean retirement at or after
reaching age 60 with at least 10 years of service with the Employer.
SECTION 2.21 SHARE means a share of common stock of the Company, par value $.01
per share.
SECTION 2.22 TRUST means the legal relationship created by the Trust Agreement
pursuant to which the Trustee holds the Trust Fund in trust. The Trust may be
referred to as the "Management Recognition Plan Trust of Gouverneur Bancorp,
Inc."
SECTION 2.23 TRUST AGREEMENT means the agreement between Gouverneur Bancorp,
Inc. and the Trustee therein named or its successor pursuant to which the Trust
Fund shall be held in trust.
SECTION 2.24 TRUST FUND means the corpus (consisting of contributions paid over
to the Trustee, and investments thereof), and all earnings, appreciations or
additions thereof and thereto, held by the Trustee under the Trust Agreement in
accordance with the Plan, less any depreciation thereof and any payments made
therefrom pursuant to the Plan.
SECTION 2.25 TRUSTEE means the Trustee of the Trust Fund from time to time in
office. The Trustee shall serve as Trustee until it is removed or resigns from
office and is replaced by a successor Trustee or Trustees appointed by the
Company.
ARTICLE III
SHARES AVAILABLE UNDER PLAN
SECTION 3.1 SHARES AVAILABLE UNDER PLAN.
The maximum number of Shares under the Plan shall be 42,912.
ARTICLE IV
ADMINISTRATION
SECTION 4.1 COMMITTEE.
The Plan shall be administered by the members of the Committee, all of
whose members shall be Disinterested Board Members. If the Committee consists of
fewer than two Disinterested Board Members, then the Board shall appoint to the
Committee such additional Disinterested Board Members as shall be necessary to
provide for a Committee consisting of at least two Disinterested Board Members.
SECTION 4.2 COMMITTEE ACTION.
The Committee shall hold such meetings, and may make such administrative
rules and regulations, as it may deem proper. A majority of the members of the
Committee shall constitute a quorum, and the action of a majority of the members
of the Committee present at a meeting at which a quorum is present, as well as
actions taken pursuant to the unanimous written consent of all of the members of
the Committee without holding a meeting, shall be deemed to be actions of the
Committee. All actions of the Committee shall be final and conclusive and shall
be binding upon the Company and all other interested parties. Any Person dealing
with the Committee shall be fully protected in relying upon any written notice,
instruction, direction or other communication signed by the Secretary of the
Committee and one member of the Committee, by two members of the Committee or by
a representative of the Committee authorized to sign the same in its behalf.
SECTION 4.3 COMMITTEE RESPONSIBILITIES.
Subject to the terms and conditions of the Plan and such limitations as
may be imposed by the Board, the Committee shall be responsible for the overall
management and administration of the Plan and shall have such authority as shall
be necessary or appropriate in order to carry out its responsibilities,
including, without limitation, the authority:
(a) to interpret and construe the Plan, and to determine the answers to
all questions that may arise under the Plan as to eligibility for Awards under
the Plan, the amount of Shares, if any, to be granted pursuant to an Award, and
the terms and conditions of such Award;
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(b) to adopt rules and regulations and to prescribe forms for the
operation and administration of the Plan; and
(c) to take any other action not inconsistent with the provisions of the
Plan that it may deem necessary or appropriate.
ARTICLE V
THE TRUST FUND
SECTION 5.1 CONTRIBUTIONS.
The Company shall contribute, or cause to be contributed, to the Trust,
from time to time, such amounts of money or property as shall be determined by
the Board, in its discretion. No contributions by Eligible Directors or Eligible
Employees shall be permitted.
SECTION 5.2 THE TRUST FUND.
The Trust Fund shall be held and invested under the Trust Agreement with
the Trustee. The provisions of the Trust Agreement shall include provisions
conferring powers on the Trustee as to investment, control and disbursement of
the Trust Fund, and such other provisions not inconsistent with the Plan as may
be prescribed by or under the authority of the Board. No bond or security shall
be required of any Trustee at any time in office.
SECTION 5.3 INVESTMENTS.
The Trustee shall invest the Trust Fund in Shares and in such other
investments as may be permitted under the Trust Agreement, including savings
accounts, time or other interest bearing deposits in, or other interest bearing
obligations of, the Employer, in such proportions as shall be determined by the
Committee; provided, however, that in no event, other than as the result of an
adjustment pursuant to section 8.3(a), shall the Trust Fund be used to purchase
more than 42,912 Shares. Notwithstanding the immediately preceding sentence, the
Trustee may temporarily invest the Trust Fund in short-term obligations of, or
guaranteed by, the U.S. Government or an agency thereof, or the Trustee may
retain the Trust Fund uninvested or may sell assets of the Trust Fund to provide
amounts required for purposes of the Plan.
ARTICLE VI
AWARDS
SECTION 6.1 AWARDS TO ELIGIBLE DIRECTORS.
On the Effective Date, each Person who is then an Eligible Director shall
be granted an Award of 1,800 Shares. Subject to any applicable regulatory limits
and the availability of sufficient Shares under this Plan, any person who
becomes an Eligible Director after the Effective Date who has not previously
received an Award shall thereupon be granted an Award of 1,800 Shares, subject
to the right of the Board of Directors of the Company to reduce or impose
restrictions on such Award prior to its grant.
SECTION 6.2 AWARDS TO ELIGIBLE EMPLOYEES.
Subject to section 6.8 and such limitations as the Board may from time to
time impose, the number of Shares as to which an Eligible Employee may be
granted an Award shall be determined by the Committee in its discretion;
provided however, that in no event shall the number of Shares allocated to an
Eligible Employee in an Award exceed the number of Shares then held in the Trust
and not allocated in connection with other Awards.
SECTION 6.3 AWARDS IN GENERAL.
Any Award shall be evidenced by a written notice issued by the Committee
to the Eligible Director or Eligible Employee, which notice shall:
(a) specify the number of Shares covered by the Award;
(b) specify the Award Date;
(c) specify the dates on which such Shares shall become available for
distribution to the Eligible Director or Eligible Employee, in accordance with
section 7.2; and
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(d) contain such other terms and conditions not inconsistent with the Plan
as the Board may, in its discretion, prescribe.
SECTION 6.4 SHARE ALLOCATIONS.
Upon the grant of an Award to an Eligible Director or Eligible Employee,
the Committee shall notify the Trustee of the Award and of the number of Shares
subject to the Award. Thereafter, until such time as the Shares subject to such
Award become vested or are forfeited, the books and records of the Trustee shall
reflect that such number of Shares are being held for the benefit of the Award
recipient.
SECTION 6.5 DIVIDEND RIGHTS.
(a) Any cash dividends or distributions declared and paid with respect to
Shares in the Trust Fund that are, as of the record date for such dividend,
allocated to an Eligible Director or Eligible Employee in connection with an
Award shall be promptly paid to such Eligible Director or Eligible Employee. Any
cash dividends declared and paid with respect to Shares that are not, as of the
record date for such dividend, allocated to any Eligible Director or Eligible
Employee in connection with any Award shall, at the direction of the Committee,
be held in the Trust or used to pay the administrative expenses of the Plan,
including any compensation due to the Trustee.
(b) Any dividends or distributions declared and paid with respect to
Shares in property other than cash shall be held in the Trust Fund. If, as of
the record date for such dividend or distribution, the Shares with respect to
which it is paid are allocated to an Eligible Director or Eligible Employee in
connection with an Award, the property so distributed shall be similarly
allocated such Eligible Director or Eligible Employee in connection with such
Award and shall be held for distribution or forfeiture in accordance with the
terms and conditions of the Award.
SECTION 6.6 VOTING RIGHTS.
(a) Each Eligible Director or Eligible Employee to whom an Award has been
made that is not fully vested, or which is fully vested but which has not yet
been transferred on the stock records of the Company as of the applicable record
date, shall have the right to direct the manner in which all voting rights
appurtenant to the Shares related to such Award will be exercised while such
Shares are held in the Trust Fund. Such a direction shall be given by completing
and filing, with the inspector of elections, the Trustee or such other person
who shall be independent of the Company as the Committee shall designate, a
written direction in the form and manner prescribed by the Committee. If no such
direction is given by an Eligible Director or Eligible Employee, then the voting
rights appurtenant to the Shares allocated to him shall not be exercised.
(b) To the extent that the Trust Fund contains Shares that are not
allocated in connection with an Award, all voting rights appurtenant to such
Shares shall be exercised by the Trustee in such manner as the Committee shall
direct based upon the same proportions as the voting directions given by
Eligible Directors and Eligible Employees with respect to Shares allocated in
connection with their Awards.
(c) The Committee shall furnish, or cause to be furnished, to each
Eligible Director and Eligible Employee, all annual reports, proxy materials and
other information furnished by the Company, or by any proxy solicitor, to the
holders of Shares.
SECTION 6.7 TENDER OFFERS.
(a) Each Eligible Director or Eligible Employee to whom an Award has been
made that is not fully vested, or which is fully vested but which has not yet
been transferred on the stock records of the Company as of the applicable record
date, shall have the right to direct, with respect to the Shares related to such
Award, the manner of response to any tender offer, exchange offer or other offer
made to the holders of Shares. Such a direction shall be given by completing and
filing, with the inspector of elections, the Trustee or such other person who
shall be independent of the Company as the Committee shall designate, a written
direction in the form and manner prescribed by the Committee. If no such
direction is given by an Eligible Director or Eligible Employee, then the Shares
shall not be tendered or exchanged.
(b) To the extent that the Trust Fund contains Shares that are not
allocated in connection with an Award, all responses to tender, exchange and
other offers appurtenant to such Shares shall be given by the Trustee in such
manner as the Committee shall direct to reflect the responses given by Eligible
Directors and Eligible Employees with respect to Shares allocated in connection
with their Awards.
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(c) The Committee shall furnish, or cause to be furnished, to each
Eligible Director and Eligible Employee, all information furnished by the
offeror to the holders of Shares.
SECTION 6.8 LIMITATIONS ON AWARDS.
(a) Unless otherwise permitted by the Banking Regulations and approved by
the Committee, each Award shall become vested and distributable ratably so that
20% of the award shall become vested on each of the first five anniversaries of
the Effective Date, provided, however, that such Award shall become fully vested
and distributable on the date of the Award holder's death or Disability; and
provided, further, that to the extent not inconsistent with Banking Regulations,
all Awards granted under this Plan after one year after the consummation of the
Conversion of the Bank to the stock form of ownership shall not be subject to
the foregoing provisions of section 6.8(a) related to 20% annual vesting, but
shall instead vest and be distributable immediately upon grant or as otherwise
determined by the Committee, and provided, further, that the Committee shall
have the authority, prior to or upon the grant of any Award, to further delay
the vesting or distribution of such Award or impose additional conditions,
requirements or limitations on such vesting or distribution.
(b) An Award by its terms shall not be transferable by the Eligible
Director or Eligible Employee other than by will or by the laws of descent and
distribution, and the Shares granted pursuant to such Award shall be
distributable, during the lifetime of the Recipient, only to the Recipient.
SECTION 6.9 FORFEITURE UPON VOLUNTARY RESIGNATION.
(a) All Awards granted to an Eligible Employee which have not yet vested
and become distributable who voluntarily terminates employment with the
Employer, other than a voluntary termination constituting Retirement, shall
expire immediately when the voluntary termination is effective. The provisions
of this section 6.9(a) shall not apply so long as such Eligible Employee
continues to be a director of an Employer.
(b) All Awards granted to an Eligible Director which have not yet vested
and become distributable who voluntarily resigns as a director of the Employer,
other than a voluntary resignation that would constitute Retirement if the
directorship is treated as employment, shall expire immediately when the
voluntary resignation is effective.
ARTICLE VII
DISTRIBUTION OF SHARES
SECTION 7.1 DESIGNATION OF BENEFICIARY.
An Eligible Director or Eligible Employee who has received an Award may
designate a Beneficiary to receive any undistributed Shares that are, or become,
available for distribution on, or after, the date of his death. Such designation
(and any change or revocation of such designation) shall be made in writing in
the form and manner prescribed by the Committee. In the event that the
Beneficiary designated by an Eligible Director or Eligible Employee dies prior
to the Eligible Director or Eligible Employee, or in the event that no
Beneficiary has been designated, any undistributed Shares that are, or become,
available for distribution on, or after, the Eligible Director's or Eligible
Employee's death shall be paid to the executor or administrator of the Eligible
Director's or Eligible Employee's estate, or if no such executor or
administrator is appointed within such time as the Committee, in its sole
discretion, shall deem reasonable, to such one or more of the spouse and
descendants and blood relatives of such deceased person as the Committee may
select.
SECTION 7.2 MANNER OF DISTRIBUTION.
(a) As soon as practicable following the date any Shares granted pursuant
to an Award become vested as set forth in section 6.8, the Committee shall take
such actions as are necessary to cause the transfer of record ownership of the
Shares that have become vested from the Trustee to the Award holder and shall
cause the Trustee to distribute to the Award holder all property other than
Shares then being held in connection with the Shares being distributed.
(b) The Company's obligation to deliver Shares with respect to an Award
shall, if the Committee so requests, be conditioned upon the receipt of a
representation as to the investment intention of the Eligible Director or
Eligible Employee or Beneficiary to whom such Shares are to be delivered, in
such form as the Committee shall determine to be necessary or advisable to
comply with the provisions of applicable federal, state or local law. It may be
provided that any such representation shall become inoperative upon a
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registration of the Shares or upon the occurrence of any other event eliminating
the necessity of such representation. The Company shall not be required to
deliver any Shares under the Plan prior to (i) the admission of such Shares to
listing on any stock exchange on which Shares may then be listed, or (ii) the
completion of such registration or other qualification under any state or
federal law, rule or regulation as the Committee shall determine to be necessary
or advisable.
SECTION 7.3 TAXES.
The Company, the Committee or the Trustee shall have the right to require
any person entitled to receive Shares pursuant to an Award to pay the amount of
any tax which is required to be withheld with respect to such Shares, or, in
lieu thereof, to retain, or to sell without notice, a sufficient number of
Shares to cover the amount required to be withheld.
ARTICLE VIII
TERMINATION AND AMENDMENT
SECTION 8.1 TERMINATION.
The Board may suspend or terminate the Plan in whole or in part at any
time by giving written notice of such suspension or termination to the
Committee; provided, however, that the Plan may not be terminated while there
are outstanding Awards that may thereafter become vested. Upon the termination
of the Plan, the Trustee shall make distributions from the Trust Fund in such
amounts and to such persons as the Committee may direct and shall return the
remaining assets of the Trust Fund, if any, to the Company.
SECTION 8.2 AMENDMENT.
The Board may amend or revise the Plan in whole or in part at any time but
no amendment may adversely affect outstanding awards and all amendments are
subject to applicable laws and regulations.
SECTION 8.3 ADJUSTMENTS IN THE EVENT OF A BUSINESS REORGANIZATION.
(a) In the event of any merger, consolidation, or other business
reorganization (including but not limited to a Change of Control) in which the
Company is the surviving entity, and in the event of any stock split, stock
dividend or other event generally affecting the number of Shares held by each
person who is then a holder of record of Shares, the number of Shares held in
the Trust Fund, including Shares covered by Awards, shall be adjusted to account
for such event. Such adjustment shall be effected by multiplying such number of
Shares by an amount equal to the number of Shares that would be owned after such
event by a person who, immediately prior to such event, was the holder of record
of one Share; provided, however, that the Committee may, in its discretion,
establish another appropriate method of adjustment.
(b) In the event of any merger, consolidation, or other business
reorganization (including but not limited to a Change of Control) in which the
Company is not the surviving entity, the Trustee shall hold in the Trust Fund
any money, stock, securities or, other property received by holders of record of
Shares in connection with such merger, consolidation, or other business
reorganization. Any Award with respect to which Shares had been allocated to an
Eligible Director or Eligible Employee shall be adjusted by allocating to the
Eligible Director or Eligible Employee receiving such Award the amount of money,
stock, securities or other property received by the Trustee for the Shares
allocated to such Eligible Director or Eligible Employee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 STATUS AS AN EMPLOYEE BENEFIT PLAN.
This Plan is not intended to satisfy the requirements for qualification
under section 401(a) of the Code or to satisfy the definitional requirements for
an "employee benefit plan" under section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended. It is intended to be a non-qualified incentive
compensation program that is exempt from the regulatory requirements of the
Employee Retirement Income Security Act of 1974, as amended. The Plan shall be
construed and administered so as to effectuate this intent.
SECTION 9.2 NO RIGHT TO CONTINUED EMPLOYMENT.
Neither the establishment of the Plan nor any provisions of the Plan nor
any action of the Board or the Committee with respect to the Plan shall be held
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or construed to confer upon any Eligible Director or Eligible Employee any right
to a continuation of employment by the Employer. The Employer reserves the right
to dismiss any Eligible Director or Eligible Employee or otherwise deal with any
Eligible Director or Eligible Employee to the same extent as though the Plan had
not been adopted.
SECTION 9.3 CONSTRUCTION OF LANGUAGE.
Whenever appropriate in the Plan, words used in the singular may be read
in the plural, words used in the plural may be read in the singular, and words
importing the masculine gender may be read as referring equally to the feminine
or the neuter. Any reference to an Article or section number shall refer to an
Article or section of this Plan unless otherwise indicated.
SECTION 9.4 GOVERNING LAW.
The Plan shall be construed and enforced in accordance with the laws of
the United States of America. The Plan shall be construed to comply with
applicable Banking Regulations.
SECTION 9.5 HEADINGS.
The headings of Articles and sections are included solely for convenience
of reference. If there is any conflict between such headings and the text of the
Plan, the text shall control.
SECTION 9.6 NON-ALIENATION OF BENEFITS.
The right to receive a benefit under the Plan shall not be subject in any
manner to anticipation, alienation or assignment, nor shall such right be liable
for or subject to debts, contracts, liabilities, engagements or torts, except to
the extent provided in a qualified domestic relations order as defined in
section 414(p) of the Code.
SECTION 9.7 NOTICES.
Any communication required or permitted to be given under the Plan,
including any notice, direction, designation, comment, instruction, objection or
waiver, shall be in writing and shall be deemed to have been given at such time
as it is personally delivered or (5) five days after mailing if mailed, postage
prepaid, by registered or certified mail, return receipt requested, addressed to
such party at the address listed below, or at such other address as one such
party may by written notice specify to the other:
(a) If to the Committee:
The Personnel Committee (or such other committee as may be designated
by the Board)
Gouverneur Bancorp, Inc.
42 Church Street
Gouverneur, New York 13642
(b) If to an Eligible Director or Eligible Employee, to the Eligible
Director's or Eligible Employee's address as shown in the Employer's records.
SECTION 9.8 APPROVAL OF SHAREHOLDERS.
This Plan shall not be effective or implemented prior to the one year
anniversary of the reorganization of the Bank to the mutual holding company form
unless approved by the holders of a majority of the total votes eligible to be
cast at any duly called annual or special meeting of the Company, excluding
shares owned by Cambray Mutual Holding Company, in which case the Plan shall be
effective as of the date of such approval. If this Plan is approved by a
majority of the votes cast at such meeting but not by a majority of the votes
eligible, excluding shares owned by Cambray Mutual Holding Company, to be cast
at such meeting, then this Plan shall be effective on the later of the date of
such stockholder approval or March 23, 2000. No awards of Shares may occur or be
effective before this Plan is effective.
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