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EXHIBIT 10.3 HAVEN BANCORP, INC. STOCK OPTION PLAN FOR OUTSIDE
DIRECTORS
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AMENDED AND RESTATED
HAVEN BANCORP, INC.
STOCK OPTION PLAN FOR OUTSIDE DIRECTORS
I. PURPOSE
The purpose of the Amended and Restated Haven Bancorp, Inc. (the "Holding
Company") Stock Option Plan for Outside Directors of the Holding Company and its
affiliates, including the outside directors of Columbia Federal Savings Bank
(the "Bank") (the "Directors' Option Plan" or the "Plan") is to promote the
growth and profitability of the Holding Company and the Bank by providing
outside directors of the Holding Company and its affiliates with an incentive to
achieve long-term objectives of the Holding Company and to attract and retain
non-employee directors of outstanding competence by providing such outside
directors with an opportunity to acquire an equity interest in the Holding
Company.
II. GRANT OF OPTIONS
(a) Initial Grant. Each outside director (for purposes of this Directors'
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Option Plan, the term "Outside Director" shall mean a member of the Board of
Directors of the Holding Company or any of its affiliates not also serving as a
full-time employee of the Holding Company or any of its affiliates), who is
serving in such capacity on the date of the Holding Company's initial public
offering and at the effective date of this Directors' Option Plan, is hereby
granted non-statutory stock options to purchase 18,597 shares of the common
stock of the Holding Company ("Common Stock"), subject to adjustment as provided
in Section IV hereof.
The purchase price per share of the Common Stock deliverable upon
the exercise of each non- statutory stock option shall be the initial public
offering price of the Common Stock sold in connection with the conversion of the
Bank to stock form. The effective date of these initial grants shall be the
effective date of the Directors' Option Plan as defined in Section V hereof
("Effective Date").
(b) Grants to Subsequent Outside Directors. To the extent options are
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available for grant under the Directors' Option Plan, each Outside Director who
is first elected as a director subsequent to the Effective Date ("Subsequent
Outside Director") is hereby granted, as of the date on which such Subsequent
Outside Director is qualified and first begins to serve as an Outside Director,
non-statutory stock options to purchase 18,597 shares of Common Stock, subject
to adjustment pursuant to Section IV, or to purchase such lesser number of
shares of Common Stock as remain in this Directors' Option Plan. The purchase
price per share of the Common Stock deliverable upon exercise of such option
shall equal the Fair Market Value of the Common Stock on the date the grant of
this Option is effective as determined under paragraph (d) of this Section II.
If options for sufficient shares are not available under the
Directors' Option Plan to fulfill the grant of options under Section II(b)
hereof to any Subsequent Outside Director first elected subsequent to the
Effective Date, and thereafter options become available, such Subsequent Outside
Director shall then receive options to purchase an amount of shares of Common
Stock, determined by dividing pro rata among each Subsequent Outside Director,
options for the number of shares then available under the Outside Directors'
Plan, not to exceed 18,597 shares, subject to adjustment under Section IV as
appropriate. The date of grant shall be the date options for such shares become
available. The purchase price per share of the Common Stock deliverable upon
exercise of such options shall equal the Fair Market Value of the Common Stock
on the date the option is granted as determined under paragraph (d) of this
Section II.
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(c) Ineligibility. An option under the Directors' Option Plan shall not be
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granted to any Outside Director who at any previous time was an employee of
either the Company or the Bank and in such capacity was eligible to receive any
options to purchase Common Stock.
(d) Fair Market Value. For purposes of the Directors' Option Plan, when
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used in connection with Common Stock on a certain date, Fair Market Value means
the average of the bid and ask prices of the Common Stock as reported by the
National Association of Securities dealers Automated Quotation System (as
published by the Wall Street Journal, if published) on the effective date of the
grant, or if the Common Stock was not traded on such date, on the next preceding
day on which the Common Stock was traded thereon. For purposes of the grant of
options in the Conversion as defined in Section V hereof, of the Bank, Fair
Market Value shall mean the initial public offering price of the Common Stock
($10.00 per share).
III. TERMS AND CONDITIONS
(a) Option Agreement. Each option shall be evidenced by a written option
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agreement between the Holding Company and the recipient specifying the number of
shares of Common Stock that may be acquired through its exercise and containing
such other terms and conditions which are not inconsistent with the terms of
this grant.
(b) Vesting. All options granted pursuant to Section II(a) or (b) hereof
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shall become exercisable one (1) year from the date of grant, which in the case
of Outside Directors serving on the Board at the time of the Conversion of the
Bank from mutual to stock form shall be the Effective Date as defined in Section
V; provided, however, that in the event of death, retirement, disability or
change in control of the Holding Company or the Bank all options shall vest
immediately, subject to Section III(f) below. However, no shares of Common Stock
acquired through the exercise of such option may be sold or otherwise disposed
of for a period of one year from the date of grant of the option.
(c) Manner of Exercise. The option when exercisable may be exercised from
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time to time, in whole or in part, by delivering a written notice of exercise to
the President of the Holding Company signed by the recipient. Such notice is
irrevocable and must be accompanied by full payment of the exercise price (as
determined in Section II(a) or (b) hereof) in cash or shares of previously
acquired Common Stock of the Holding Company at the Fair Market Value of such
shares determined on the exercise date by the manner described in Section II(d)
above. If previously acquired shares of Common Stock are tendered in payment of
all or part of the exercise price, the value of such shares shall be determined
as of the date of such exercise.
(d) Transferability. Each option granted hereby may be exercised only by
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the recipient to whom it is issued or in the event of the Outside Director's
death, his or her personal representative(s) or designee(s), heir(s) or
devisee(s) pursuant to the terms of Section III(b) hereof.
(e) Termination of Service. Upon the termination of a recipient's service
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for any reason other than Disability, Retirement, Change in Control, death or
Removal for Cause, the participant's stock options shall be exercisable only as
to those shares which were immediately purchasable by the recipient at the date
of termination.
In the event of death or termination of service due to Disability of
any recipient, all stock options held by such recipient, whether or not
exercisable at such time, shall become immediately exercisable by the recipient
or the recipient's legal representatives or beneficiaries. Upon termination of
the recipient's service due to Retirement, or a Change in Control occurs, all
stock options held by such recipient, whether or not exercisable at such time,
shall become immediately exercisable. For purposes of this plan the following
terms are defined:
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(i) "Change in Control" for purposes of this Plan, a "Change of
Control" of the Bank or Company shall mean an event of a nature that: (1)
would be required to be reported in response to Item 1 of the current
report on Form 8-K, as in effect on the date hereof, pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act");
or (2) results in a Change in Control of the Bank or the Company within
the meaning of the Home Owners' Loan Act, as amended, the Federal Deposit
Insurance Act, and the Rules and Regulations promulgated by the Office of
Thrift Supervision ("OTS") (or its predecessor agency), as in effect on
the date hereof (provided, that in applying the definition of change in
control as set forth under the Rules and Regulations of the OTS, the Board
shall substitute its judgment for that of the OTS); or (3) without
limitation such a Change in Control shall be deemed to have occurred at
such time as (A) any "person" (as the term is used in Sections 13(d) and
14(d) of the Exchange Act) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Bank or the Company representing 20% or more of the
Bank's or the Company's outstanding securities except for any securities
of the Bank purchased by the Company in connection with the conversion of
the Bank to the stock form and any securities purchased by the Bank's
employee stock ownership plan and trust; or (B) individuals who constitute
the Board on the date hereof (the "Incumbent Board") cease for any reason
to constitute at least a majority thereof, provided that any person
becoming a director subsequent to the date hereof whose election was
approved by a vote of at least three-quarters of the directors comprising
the Incumbent Board, or whose nomination for election by the Company's
stockholders was approved by the same Nominating Committee serving under
an Incumbent Board, shall be, for purposes of this clause (B), considered
as though he were a member of the Incumbent Board; or (C) a plan of
reorganization, merger, consolidation, sale of all or substantially all
the assets of the Bank or the Company or similar transaction occurs in
which the Bank or Company is not the resulting entity.
(ii) "Disability" means the permanent and total inability by reason
of mental or physical infirmity, or both, of an outside director to
perform the work customarily assigned to him. Additionally, a medical
doctor selected or approved by the Board of Directors must advise the
Board that it is either not possible to determine when such disability
will terminate or that it appears probable that such disability will be
permanent during the remainder of said recipient's lifetime.
(iii) "Retirement" means the termination of service from the Board
of Directors of the Bank and/or Company following written notice to the
Board as a whole of such Director's intention to retire.
(iv) "Removal for Cause" means the removal of the Outside Director
because of a material loss to the Holding Company or one of its Affiliates
caused by the Outside Director's personal dishonesty, willful misconduct,
any breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, or the willful violation of any law,
rule or regulation (other than traffic violations or similar offenses) or
a final cease and desist order.
(f) Termination of Option. Each option shall expire upon the earlier of
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(i) one hundred and twenty (120) months following the date of grant, or (ii) one
(1) year following the date on which the outside director ceases to serve in
such capacity for any reason other than Removal for Cause. Provided, however,
that if the recipient's service on the Board of Directors is terminated for any
reason other than being removed for cause prior to the date the Plan is
presented to the shareholders of the Company for ratification, the option may
not be exercised prior to the date of the shareholders' meeting regarding such
ratification but shall remain exercisable for a period of one year from the date
of such meeting. If the Outside Director dies before fully exercising any
portion of an option then exercisable, such option may be exercised by such
Outside Director's personal representative(s), heir(s) or devisee(s) at any time
within the one (1) year period following his or her death; provided, however,
that in no event shall the option be exercisable more than one hundred and
twenty
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(120) months after the date of its grant. If the Outside Director is removed for
cause, all options awarded to him shall expire upon such removal.
IV. COMMON STOCK SUBJECT TO THE DIRECTORS' OPTION PLAN
The shares which shall be issued and delivered upon exercise of options
granted under the Directors' Option Plan may be either authorized and unissued
shares of Common Stock or authorized and issued shares of Common Stock held by
the Holding Company as treasury stock. The number of shares of Common Stock
reserved for issuance under the Directors' Option Plan shall not exceed 148,781
shares of the Common Stock of the Holding Company, par value $.01 per share,
issued by the Holding Company in connection with the Conversion of the Bank from
the mutual to the stock form of ownership, subject to adjustments pursuant to
this Section IV. Any shares of Common Stock subject to an option which for any
reason either terminates unexercised or expires, shall again be available for
issuance under the Directors' Option Plan.
In the event of any change or changes in the outstanding Common Stock of
the Holding Company by reason of any stock dividend or split, recapitalization,
reorganization, merger, consolidation, spin-off, combination or any similar
corporate change, or other increase or decrease in such shares effected without
receipt or payment of consideration by the Company, the number of shares of
Common Stock which may be issued under this Directors' Option Plan, the number
of shares of Common Stock subject to options granted under this Directors'
Option Plan and the option price of such options, shall be automatically
adjusted to prevent dilution or enlargement of the rights granted to recipient
under the Directors' Option Plan.
V. EFFECTIVE DATE OF THE PLAN; SHAREHOLDER RATIFICATION
The Directors' Option Plan after adoption by the Board of Directors shall
become effective upon the conversion of the Bank from the mutual to capital
stock form of ownership and the acquisition of the Bank by the Holding Company
(the "Conversion"). Following Conversion, the Directors' Option Plan shall be
presented to shareholders of the Company for ratification for purposes of (i)
obtaining favorable treatment under Section 16(b) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"); and (ii) maintaining listing on the
Nasdaq National Market; provided, however, that the failure to obtain
shareholder ratification shall not affect the validity of this Plan and the
options granted hereunder.
VI. TERMINATION OF THE PLAN
The right to grant options under the Directors' Option Plan will terminate
upon the earlier of ten years after the Effective Date of the Plan, the issuance
of 148,781 shares of Common Stock (the maximum number of shares of Common Stock
reserved for under this Plan) subject to adjustment pursuant to Section IV
hereof. A majority of the outstanding shares of the Common Stock entitled to
vote is required to terminate the Directors' Option; provided, however, no such
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termination shall, without the consent of the affected recipient, affect such
recipient's rights under a previously granted option.
VII. AMENDMENT OF THE PLAN
The Directors' Option Plan may be amended from time to time by the Board
of Directors of the Company provided that Section II and III hereof, shall not
be amended more than once every six months other than to comport with the
Internal Revenue Code of 1986, as amended, or the Employee Retirement Income
Security Act of 1974, as amended, or the rules thereunder. Except as provided in
Section IV hereof, rights and obligations under any option granted before an
amendment shall not be altered or impaired by such amendment without the written
consent of the optionee. If the Directors' Option Plan becomes qualified under
17 C.F.R. Section 16(b)-3 of the rules and regulations promulgated under the
Exchange Act and an amendment would require
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shareholder approval under such rule 16(b)-3 to retain the Plan's qualification,
then subject to the discretion of the Board of Directors of the Holding Company,
such amendment shall be presented to shareholders for ratification, provided,
however, that the failure to obtain shareholder ratification shall not affect
the validity of this Plan as so amended and the options granted thereunder.
VIII. APPLICABLE LAW
The Plan will be administered in accordance with the laws of the State of
Delaware to the extent not preempted by federal law.
IX. COMPLIANCE WITH SECTION 16
If this Plan is qualified under 17 C.F.R. Section 240.16b-3 of the
Exchange Act of 1934 ("Exchange Act") Rules, transactions under this Plan are
intended to comply with all applicable conditions of Rule 16b-3 or its
successors under the Exchange Act. To the extent any provisions of the Plan fail
to so comply, it shall be deemed null and void, to the extent permitted by law.
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