PROXY
STATEMENT
FOR
2019
ANNUAL MEETING OF STOCKHOLDERS
GENERAL
INFORMATION
SSB
Bancorp, Inc. is providing this proxy statement to you in connection with the solicitation of proxies by its Board of Directors
only for use at the 2019 annual meeting of stockholders and for any adjournment or postponement of the annual meeting. In this
proxy statement, we may also refer to SSB Bancorp, Inc. as “SSB Bancorp,” “we,” “our” or “us.”
SSB Bancorp is the majority-owned subsidiary of SSB Bancorp, MHC, a mutual holding company.
We
will hold the annual meeting at SSB Bank’s main office, located at 8700 Perry Highway in Pittsburgh, on Wednesday, May 22,
2019 at 4:00 p.m., local time.
We
intend to mail this proxy statement and a proxy card to stockholders of record beginning on or about April 11, 2019.
Important
Notice Regarding the Availability of Proxy Materials
for
the STOCKholder Meeting to Be Held on MAY 22, 2019
This
proxy statement and our Annual Report on Form 10-K, as filed with the Securities and Exchange Commission, are available on the
Internet at
www.cstproxy.com/ssb/2019
. The Annual Report includes our audited consolidated financial statements for the
fiscal year ended December 31, 2018.
INFORMATION
ABOUT VOTING
Who
May Vote at the Meeting
You
are entitled to vote your shares of SSB Bancorp common stock if our records show that you owned your shares as of the close of
business on March 29, 2019. As of the close of business on that date, a total of 2,248,250 shares of common stock were
outstanding, of which 1,236,538 shares were owned by SSB Bancorp, MHC and the remaining 1,011,712 shares were owned by public
stockholders. Each share of common stock has one vote.
Our
Articles of Incorporation provide that record holders of our common stock who beneficially own, either directly or indirectly,
more than 10% of our outstanding shares (other than SSB Bancorp, MHC) are not entitled to any vote with respect to the shares
held in excess of the 10% limit.
Ownership
of Shares
You
may own your shares of common stock of SSB Bancorp in one or more of the following ways:
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Directly
in your name as the stockholder of record;
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Indirectly
through a broker, bank or other holder of record in “street name”;
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Indirectly
through the SSB Bank Employee Stock Ownership Plan (the “ESOP”); or
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Indirectly
through the SSB Bank 401(k) Plan (the “401(k) Plan”).
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If
your shares are registered directly in your name, you are the holder of record of those shares and we are sending these proxy
materials directly to you. As the holder of record, you have the right to give your proxy directly to us to vote at the annual
meeting or you may vote in person at the annual meeting.
If
you hold your shares in “street name” through a broker, bank or other nominee of record, you are considered the beneficial
owner of your shares and your broker, bank or other holder of record is sending these proxy materials to you. As the beneficial
owner, you have the right to direct your broker, bank or other holder of record how to vote by completing a voting instruction
form provided by your broker, bank or other holder of record that accompanies your proxy materials. Your broker, bank or other
holder of record may allow you to provide voting instructions by telephone or by the Internet. Refer to the voting instruction
form that accompanies your proxy materials. If you want to vote your shares of common stock held in street name in person at the
annual meeting, you must obtain a written proxy in your name from the broker, bank or other holder who is the record holder of
your shares.
If
you own shares of common stock indirectly through the ESOP and/or the 401(k) Plan, see “
Participants in the ESOP and
the 401(k) Plan
” below.
Attending
the Meeting
Stockholders
are invited to attend the annual meeting. If you hold your shares in street name, you will need proof of ownership to be admitted
to the meeting. Examples of proof of ownership are a recent brokerage account statement or a letter from your bank or broker.
Quorum
and Vote Required
Quorum
.
We will have a quorum and be able to conduct the business of the annual meeting if a majority of the outstanding shares of
SSB Bancorp common stock entitled to vote, represented in person or by proxy, are present at the meeting.
Votes
Required for Proposals
.
In voting on the election of directors (Proposal 1), you may vote in favor of the nominees or
withhold your vote as to the nominees. There is no cumulative voting for the election of directors. Directors must be elected
by a plurality of the votes cast at the annual meeting. This means that the nominees receiving the largest number of votes cast
will be elected up to the maximum number of directors to be elected at the annual meeting. The maximum number of directors to
be elected at the annual meeting is two.
In
voting on the approval of the SSB Bancorp, Inc. 2019 Equity Incentive Plan (Proposal 2), you may vote in favor of the proposal,
vote against the proposal or abstain from voting. To approve this proposal, the affirmative vote of (i) a majority of all votes
entitled to be cast (“Vote Standard One”), and (ii) a majority of the votes cast by stockholders other than SSB Bancorp,
MHC (“Vote Standard Two”) is required.
In
voting on the ratification of the appointment of the independent registered public accounting firm (Proposal 3), you may vote
in favor of the proposal, vote against the proposal or abstain from voting. The affirmative vote of a majority of the votes cast
at the annual meeting and entitled to vote is required to approve this proposal.
Because
SSB Bancorp, MHC owns more than 50% of the outstanding shares of SSB Bancorp common stock, the votes cast by SSB Bancorp, MHC
will ensure the presence of a quorum and will decide the outcome of the vote on the election of directors (Proposal 1) and the
ratification of the appointment of the independent registered public accounting firm (Proposal 3).
Effect
of Not Casting Your Vote
If
you hold your shares in street name, it is critical that you cast your vote if you want it to count in the election of directors
(Item 1) and in the vote on the approval of the SSB Bancorp, Inc. 2019 Equity Incentive Plan (Proposal 2). Your bank, broker or
other holder of record does not have discretion to vote your uninstructed shares with respect to these two items of business.
Therefore, if you hold your shares in street name and you do not instruct your bank, broker or other holder of record on how to
vote in the election of directors and on the SSB Bancorp, Inc. 2019 Equity Incentive Plan, no votes will be cast on your behalf.
These are referred to as “broker non-votes.” Your bank, broker or other holder of record, however, does have discretion
to vote any uninstructed shares on the ratification of the appointment of the independent registered public accounting firm (Item
3). If you are a stockholder of record and you do not cast your vote, no votes will be cast on your behalf on any of the items
of business at the annual meeting.
How
We Count the Votes
If
you return valid proxy instructions or attend the meeting in person, we will count your shares to determine whether there is a
quorum, even if you abstain from voting. Broker non-votes also will be counted to determine the existence of a quorum.
In
the election of directors, votes that are withheld and broker non-votes will have no effect on the outcome of the election.
In
counting votes on the proposal to approve the SSB Bancorp, Inc. 2019 Equity Incentive Plan, abstentions will have the same effect
as a vote against the proposal for purposes of Vote Standard One. Broker non-votes will have no outcome of the proposal for purposes
of Vote Standard One. Abstentions and broker non-votes will have no effect on the outcome of the proposal for purposes of Vote
Standard Two.
In
counting votes on the proposal to ratify the appointment of the independent registered public accounting firm, broker non-votes
and abstentions will have no effect on the outcome of this proposal.
Voting
by Proxy
The
Board of Directors of SSB Bancorp is sending you this proxy statement for the purpose of requesting that you allow your shares
of SSB Bancorp common stock to be represented at the annual meeting by the designated proxies named by the Board of Directors.
All shares of SSB Bancorp common stock represented at the annual meeting by properly executed and dated proxies will be voted
according to the instructions indicated on the proxy card. If you sign, date and return a proxy card without giving voting instructions,
your shares will be voted as recommended by our Board of Directors.
The
Board of Directors unanimously recommends a vote:
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“FOR”
each nominee for director;
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“FOR”
the approval of the SSB Bancorp, Inc. 2019 Equity Incentive Plan; and
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“FOR”
the ratification of the appointment of Zeno, Pockl, Lilly and Copeland, A.C. to serve as the independent registered
public accounting firm for the year ending December 31, 2019.
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If
any matters not described in this proxy statement are properly presented at the annual meeting, the persons named in the proxy
card will use their own best judgment as to how to vote your shares. This includes a motion to adjourn or postpone the annual
meeting in order to solicit additional proxies. If the annual meeting is postponed or adjourned, your common stock may be voted
by the persons named in the proxy card on the new meeting date as well, unless you have revoked your proxy. We do not know of
any other matters to be presented at the annual meeting.
Instead
of voting by completing and mailing a proxy card, registered stockholders can vote their shares of SSB Bancorp common stock via
the Internet. The Internet voting procedures are designed to authenticate stockholders’ identities, allow stockholders to
provide their voting instructions and confirm that their instructions have been recorded properly. Specific instructions for Internet
voting appear on the enclosed proxy card.
The deadline for voting via the Internet is 11:59 p.m., Eastern Time, on May 21,
2019.
Revoking
Your Proxy
Whether
you vote by mail or via the Internet, if you are a registered stockholder, unless otherwise noted, you may later revoke your proxy
by:
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sending
a written statement to that effect to our Corporate Secretary;
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submitting
a properly signed proxy card with a later date;
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voting
via the Internet at a later time so long as such vote is received by the applicable time and date set forth above for registered
stockholders; or
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voting
in person at the annual meeting (
Note
: Attendance at the annual meeting will not in itself constitute revocation of
your proxy).
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If
you hold your shares through a bank, broker, trustee or nominee and you have instructed the bank, broker, trustee or nominee to
vote your shares, you must follow the directions received from your bank, broker, trustee or nominee to change those instructions.
Participants
in the ESOP and the 401(k) Plan
If
you participate in the ESOP, you will receive a voting instruction card that reflects all shares that you may direct the trustees
to vote on your behalf under the ESOP. If you hold SSB Bancorp common stock in the 401(k) Plan, you will receive a voting instruction
card that reflects all shares that you may direct the 401(k) Plan trustee to vote on your behalf under the 401(k) Plan. Under
the terms of the ESOP, the ESOP trustee votes all shares held by the ESOP, but each participant in the ESOP may direct the trustee
how to vote the shares of SSB Bancorp common stock allocated to his or her account. The ESOP trustee, subject to the exercise
of its fiduciary duties, will vote all unallocated shares of common stock held by the ESOP and all allocated shares for which
no timely voting instructions are received in the same proportion as shares for which it has received valid voting instructions.
Under the terms of the 401(k) Plan, you may direct the 401(k) Plan trustee how to vote the shares allocated to your account. If
the 401(k) Plan trustee does not receive your voting instructions, the 401(k) Plan trustee will be instructed to vote your shares
in the same proportion as the voting instructions received from other 401(k) Plan participants.
The deadline for returning
your voting instruction cards to the ESOP trustee and/or the 401(k) Plan trustee is May 15, 2019.
CORPORATE
GOVERNANCE
General
We
periodically review our corporate governance policies and procedures to ensure that they meet the highest standards of ethical
conduct, report results with accuracy and transparency and fully comply with the laws, rules and regulations that govern our operations.
As part of this periodic corporate governance review, the Board of Directors reviews and adopts best corporate governance policies
and practices for SSB Bancorp.
Director
Independence
The
Board of Directors currently consists of six members. Although SSB Bancorp common stock is quoted on the OTCPink Market and is
not listed on the NASDAQ Stock Market, we refer to the definition of “independent director” contained in the listing
standards of the NASDAQ Stock Market when determining the independence of our directors. All our directors are considered independent
under the listing standards of the NASDAQ Stock Market except for J. Daniel Moon, IV who serves as President and Chief Executive
Officer of SSB Bancorp, MHC, SSB Bancorp and SSB Bank. In determining the independence of directors, the Board of Directors has
considered transactions, relationships and arrangements between SSB Bancorp and its directors that are not required to be disclosed
in this proxy statement under the heading
“Other Information Relating to Directors and Executive Officers—Transactions
With Related Persons.”
Board
Leadership Structure and Board’s Role in Risk Oversight
The
Board of Directors has determined that the separation of the offices of Chairman of the Board and of President enhances Board
independence and oversight. Moreover, the separation of these offices allows the President to better focus on his growing responsibilities
of managing the daily operations of SSB Bancorp and SSB Bank, while allowing the Chairman of the Board to lead the Board of Directors
in its fundamental role of providing advice to and independent oversight of management. Bernie M. Simons currently serves as the
Chairman of the Board and is considered independent under the listing standards of the NASDAQ Stock Market.
Risk
is inherent with every business, and how well a business manages risk can ultimately determine its success. We face a number of
risks, including credit risk, interest rate risk, liquidity risk, operational risk, strategic risk and reputation risk. Management
is responsible for the day-to-day management of risks SSB Bancorp faces, while the Board of Directors, as a whole and through
its committees, has responsibility for the oversight of risk management. In its risk oversight role, the Board of Directors has
the responsibility to satisfy itself that the risk management processes designed and implemented by management are adequate and
functioning as designed. Senior management also attends Board meetings and is available to address any questions or concerns raised
by the Board of Directors on risk management and any other matters.
Committees
of the Board of Directors
The
Board of Directors has established an Audit Committee. Compensation decisions and corporate governance/director nomination decisions
are made by the full Board of Directors. The Board of Directors has not established a Compensation Committee or a Nominating Committee.
Based on the number of independent directors currently serving on the Board of Directors, we believe that the functions customarily
attributable to these committees are sufficiently performed by the full Board of Directors. Mr. Moon does not participate in any
discussions, deliberations or decisions with respect to his compensation.
Audit
Committee
.
The Audit Committee is established according to the requirements of the Securities Exchange Act of 1934, as
amended. Each member of the Audit Committee is considered independent under the listing standards of the NASDAQ Stock Market.
The Audit Committee operates under a written charter, a copy of which is available on SSB Bank’s website
(www.ssbpgh.com)
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The Audit Committee meets periodically with our independent registered public accounting firm and management to review accounting,
auditing, internal control structure and financial reporting matters. The Board of Directors has determined that David H. Docchio,
Jr. is an “audit committee financial expert” under the rules of the Securities and Exchange Commission. The report
of the Audit Committee required by the rules of the Securities and Exchange Commission is included in this proxy statement. See
“Report of the Audit Committee.”
The Audit Committee met 12 times during the year ended December 31, 2018.
Considerations
Respecting Director Nominees and Candidates
Minimum
Qualifications for Director Nominees.
The Board of Directors has adopted a set of criteria that it considers when it selects
individuals to be nominated for election to the Board of Directors. A candidate must meet the eligibility requirements set forth
in our Bylaws, which include a requirement that the candidate not have been subject to certain criminal or regulatory actions.
A candidate also must meet any qualification requirements set forth in any Board of Directors or committee governing documents.
If
a candidate is deemed eligible for election to the Board of Directors, the Board of Directors will then evaluate the following
criteria in selecting nominees:
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contributions
to the range of talent, skill and expertise of the Board of Directors;
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financial,
regulatory and business experience, knowledge of the banking and financial service industries, familiarity with the operations
of public companies and ability to read and understand financial statements;
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familiarity
with our market area and participation in and ties to local businesses and local civic, charitable and religious organizations;
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personal
and professional integrity, honesty and reputation;
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the
ability to represent the best interests of our stockholders and the best interests of the SSB Bancorp;
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the
ability to devote sufficient time and energy to the performance of his or her duties; and
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independence,
as that term is defined under applicable Securities and Exchange Commission and stock exchange listing criteria.
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The
Board of Directors also will consider any other factors it deems relevant, including diversity, competition, size of the Board
of Directors and regulatory disclosure obligations.
When
nominating an existing director for re-election to the Board of Directors, the Board of Directors will consider and review an
existing director’s attendance and performance at Board meetings and at meetings of committees on which he serves; length
of Board service; the experience, skills and contributions that the existing director brings to the Board; and independence.
Director
Nomination Process.
The process that the Board of Directors follows to identify and evaluate individuals to be nominated
for election to the Board of Directors is as follows:
For
purposes of identifying nominees for the Board of Directors, the Board of Directors relies on personal contacts of the committee
members and other members of the Board of Directors, as well as its knowledge of members of the communities SSB Bank serves. The
Board of Directors will also consider director candidates recommended by stockholders according to the policy and procedures set
forth below. The Board of Directors has not used an independent search firm to identify nominees.
In
evaluating potential nominees, the Board of Directors determines whether the candidate is eligible and qualified for service on
the Board of Directors by evaluating the candidate under the criteria set forth above. If such individual fulfills these criteria,
the Board of Directors will conduct a check of the individual’s background and interview the candidate to further assess
the qualities of the prospective nominee and the contributions he or she would make to the Board.
Consideration
of Director Candidates Recommended by Stockholders.
The policy of the Board of Directors is to consider director candidates
recommended by stockholders who appear to be qualified to serve on our Board of Directors. The Board of Directors may choose not
to consider an unsolicited recommendation if no vacancy exists on the Board of Directors and the Board of Directors does not perceive
a need to increase the size of the Board of Directors. The Board of Directors will consider only those director candidates recommended
by stockholders in accordance with the procedures set forth below.
Procedures
to be Followed by Stockholders.
To submit a recommendation of a director candidate to the Board of Directors, a stockholder
should submit the following information in writing, addressed to the Chairman of the Board of Directors, care of the Corporate
Secretary, at our main office:
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A
statement that the writer is a stockholder and is proposing a candidate for consideration by the Board of Directors;
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The
name and address of the stockholder as they appear on our books, and of the beneficial owner, if any, on whose behalf the
nomination is made;
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The
class or series and number of shares of our capital stock that are owned beneficially or of record by such stockholder and
such beneficial owner;
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A
description of all arrangements or understandings between such stockholder and each proposed nominee and any other person
or persons (including their names) pursuant to which the nomination(s) are to be made by such stockholder;
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A
representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the nominee named
in the stockholder’s notice;
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The
name, age, personal and business address of the candidate, the principal occupation or employment of the candidate;
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The
candidate’s written consent to serve as a director;
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A
statement of the candidate’s business and educational experience and all other information relating to such person that
would indicates such person’s qualification to serve on the Board of Directors; and
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Such
other information regarding the candidate or the stockholder as would be required to be included in our proxy statement pursuant
to Regulation 14A of the Securities and Exchange Commission.
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For
a director candidate to be considered for nomination at an annual meeting of stockholders, the Board of Directors must receive
the recommendation at least 120 calendar days before the date our proxy statement was released to stockholders in connection with
the previous year’s annual meeting, advanced by one year.
Board
and Committee Meetings
The
business of SSB Bancorp and SSB Bank is conducted through meetings and activities of their respective Board of Directors and committees.
During the year ended December 31, 2018, the Board of Directors of SSB Bancorp held one meeting and the Board of Directors
of SSB Bank held 13 meetings. No director attended fewer than 75% of the total meetings of the Boards of Directors and of the
committees on which that director served.
Director
Attendance at Annual Meeting
It
is the policy of SSB Bancorp that its directors attend the annual meeting of stockholders. All of our directors attended last
year’s annual meeting.
Code
of Ethics for Senior Officers
We
have adopted a Code of Ethics for Senior Officers, which applies to our principal executive officer and principal financial officer,
addresses conflicts of interest, the treatment of confidential information, and compliance with applicable laws, rules and regulations.
In addition, it is designed to deter wrongdoing and promote honest and ethical conduct, the avoidance of conflicts of interest,
full and accurate disclosure and compliance with all applicable laws, rules and regulations.
Item
2 — Approval of the SSB Bancorp, Inc. 2019 Equity Incentive Plan
The Board of Directors
has adopted, subject to stockholder approval, the SSB Bancorp, Inc. 2019 Equity Incentive Plan (the “2019 Equity Incentive
Plan” or the “Plan”), to provide officers, employees and directors of SSB Bancorp and SSB Bank with additional
incentives to promote the growth and performance of SSB Bancorp and SSB Bank. The Board of Directors believes that the adoption
of the 2019 Equity Incentive Plan is in the best interests of SSB Bancorp and its stockholders as a means of providing SSB Bancorp
and SSB Bank with the ability to retain, reward and, to the extent necessary, attract and incentivize its employees, officers and
directors to promote growth, improve performance and further align their interests with those of SSB Bancorp’s stockholders
through the ownership of additional shares of common stock of SSB Bancorp.
Why We Are Seeking Approval of the 2019
Equity Incentive Plan
Many companies with which
we compete for directors and management-level employees are stockholder-owned companies that offer equity compensation as part
of their overall director and officer compensation programs. By approving the 2019 Equity Incentive Plan, our stockholders will
give us the flexibility we need to continue to attract and retain highly-qualified officers and directors by offering a more competitive
compensation program linked to the performance of our common stock. In addition, the 2019 Equity Incentive Plan further aligns
the interests of our directors and management with the interests of our stockholders by potentially increasing the ownership interests
of directors and officers in the common stock of SSB Bancorp.
We completed our mutual
holding company reorganization and related stock offering on January 24, 2018. As part of the mutual holding company reorganization
and stock offering, we issued a total of 2,248,250 shares of common stock, including 1,236,538 shares issued to SSB Bancorp, MHC.
We raised approximately $12.37 million in gross proceeds from the stock offering. A substantial majority of financial institutions
that complete a mutual holding company reorganization and related stock offering or a mutual-to-stock conversion have adopted an
equity-based incentive plan following the transaction. Our prospectus made clear our intent to adopt an equity incentive plan and
described the regulatory requirements potentially applicable to a plan. Our prospectus also included the pro forma effect of awards
granted under an equity incentive plan.
Highlights of the 2019 Equity Incentive
Plan
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Share Reserve and Terms Generally Consistent with Industry Standards
. In determining the size and terms of the 2019 Equity Incentive Plan, the Board of Directors considered a number of factors, including: (1) industry practices related to the adoption of equity-incentive plans by financial institutions following a mutual holding company reorganization; and (2) applicable regulations related to the adoption of equity-incentive plans by similar financial institutions. In this regard (and as described below), the maximum number of shares of common stock that may delivered pursuant to the exercise of stock options is 4.9% of the number of shares of common stock issued in the reorganization and stock offering, as well as the shares issued to SSB Bancorp, MHC, and the maximum number of shares of common stock that may be issued as restricted stock or restricted stock units is 1.96% of the number of shares of common stock issued in the reorganization and stock offering, as well as the shares issued to SSB Bancorp, MHC.
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Minimum Vesting Periods for Awards
. Subject to limited exceptions in the event of death, disability or involuntary termination without cause following a change in control, the 2019 Equity Incentive Plan requires that awards may not vest more rapidly than over a period of three years.
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Limits on Grants to Directors and Employees
. The maximum number of shares of common stock, in the aggregate, that may be delivered to any one non-employee director pursuant to the exercise of stock options and pursuant to the award of restricted stock or restricted stock units under the 2019 Equity Incentive Plan is 5% (30% in the aggregate for all non-employee directors) of the shares available under the plan for grant or award, respectively. The maximum number of shares of common stock that may be delivered to any one employee pursuant to the exercise of stock options and pursuant to an award of restricted stock or restricted stock units is 25% of the shares available under the plan for grant or award, respectively.
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Share Counting
. The 2019 Equity Incentive Plan provides that, if an option or award is forfeited or expires, the shares covered by the award will be available for future grant. Shares withheld to cover taxes or used to pay the exercise price of stock options will not be available for future grants.
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No Repricing
. The 2019 Equity Incentive Plan prohibits the repricing or exchange of underwater options for cash or shares without stockholder approval.
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No Single-Trigger Vesting of Time-Based Awards
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The 2019 Equity Incentive Plan does not provide for vesting of time-based equity awards solely upon the occurrence of a change in control, without an accompanying involuntary termination of service (including a termination for good reason).
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General
The following is a summary
of the material features of the 2019 Equity Incentive Plan, which is qualified in its entirety by reference to the provisions of
the 2019 Equity Incentive Plan, attached as
Appendix A
. In the event of conflict between the terms of this disclosure and
the terms of the 2019 Equity Incentive Plan, the terms of the 2019 Equity Incentive Plan will control.
Subject to permitted
adjustments for certain corporate transactions, the 2019 Equity Incentive Plan authorizes the issuance or delivery to
participants of up to 154,229 shares of SSB Bancorp’s common stock pursuant to grants of incentive and non-qualified
stock options, restricted stock awards and restricted stock units. Of this number, the maximum number of shares of SSB
Bancorp common stock that may be issued under the 2019 Equity Incentive Plan pursuant to the exercise of stock options is
110,164 shares, and the maximum number of shares of SSB Bancorp common stock that may be issued as restricted stock awards or
restricted stock units is 44,065 shares. These amounts represent 4.9% and 1.96%, respectively, of the number of shares of
common stock issued in the mutual holding company reorganization of SSB Bank and the stock offering of SSB Bancorp, including
the shares issued to SSB Bancorp, MHC. As of April 4, 2019 (the latest practicable date before the printing of this proxy
statement), the closing price of SSB Bancorp’s common stock, as reported on the OTC Market, was $8.50.
The 2019 Equity Incentive
Plan will be administered by a committee of the Board of Directors who are “Disinterested Board Members,” as defined
in the 2019 Equity Incentive Plan. If the Committee consists of fewer than three members, the Board of Directors will appoint an
additional Disinterested Board Member to the Committee or the Board of Directors may act as the Committee. The Committee has full
and exclusive power within the limitations set forth in the 2019 Equity Incentive Plan to make all decisions and determinations
regarding: (1) the selection of participants and the granting of awards; (2) establishing the terms and conditions relating to
each award; (3) adopting rules, regulations and guidelines for carrying out the purposes of the 2019 Equity Incentive Plan; and
(4) interpreting the provisions of the 2019 Equity Incentive Plan and any award agreement. The 2019 Equity Incentive Plan also
permits the Committee to delegate all or part of its responsibilities and powers to any person or persons selected by it. The Committee
may, subject to the limitations set forth in the 2019 Equity Incentive Plan, grant stock options and awards of restricted stock
or restricted stock units to themselves and other members of the Board of Directors, as well as to employees of SSB Bancorp and
its subsidiaries. The 2019 Equity Incentive Plan provides for grants of awards to non-employee directors upon stockholder approval
of the Plan.
Except for accelerating
the vesting of awards to avoid the minimum requirements specified in the 2019 Equity Incentive Plan or accelerating the vesting
requirements applicable to an award as a result of or in connection with a change in control, the Committee has the authority to
reduce, eliminate or accelerate any restrictions or vesting requirements applicable to an award at any time after the grant of
the award or to extend the time period to exercise a stock option, provided that such extension is consistent with regulatory requirements
and Section 409A of the Internal Revenue Code.
Eligibility
All employees and directors
of SSB Bancorp and its subsidiaries are eligible to receive awards under the 2019 Equity Incentive Plan, except that non-employees
may not be granted incentive stock options under the 2019 Equity Incentive Plan. As of March 31, 2019, there were 5 non-employee
directors and approximately 20 employees eligible to receive awards under the 2019 Equity Incentive Plan.
Types of Awards
The Committee may determine
the type and terms and conditions of awards granted under the 2019 Equity Incentive Plan. Awards will be evidenced by award agreements
approved by the Committee and delivered to participants. The award agreements will set forth the terms and conditions of each award.
Awards may be granted as incentive and non-qualified stock options, restricted stock awards and restricted stock units.
Stock Options
.
A stock option gives the recipient or “optionee” the right to purchase shares of common stock at a specified price
for a specified period of time. The exercise price may not be less than the fair market value of the common stock on the date of
grant. “Fair Market Value” for purposes of the 2019 Equity Incentive Plan means, if SSB Bancorp’s common stock
is listed on a securities exchange, the closing sales price of the common stock on the date of grant (or any other applicable date),
or if the common stock was not traded on that date, then on the immediately preceding date on which sales were reported. If the
common stock is not traded on a securities exchange, the Committee will determine the fair market value in good faith and on the
basis of objective criteria consistent with the requirements of Section 422 of the Internal Revenue Code and the applicable requirements
of Section 409A of the Internal Revenue Code. Stock Options may not have a term longer than 10 years from the date of grant.
Stock options are either
“incentive” stock options or “non-qualified” stock options. Incentive stock options have certain tax advantages
and must comply with the requirements of Section 422 of the Internal Revenue Code. Only employees are eligible to receive incentive
stock options. Shares of common stock purchased upon the exercise of a stock option must be paid for in full at the time of exercise:
(1) either in cash or with stock valued at fair market value as of the day of exercise; (2) by a “cashless exercise”
through a third party; (3) by a net settlement of the stock option using a portion of the shares obtained on exercise in payment
of the exercise price of the stock option; (4) by personal, certified or cashiers’ check; (5) by other property deemed acceptable
by the Committee; or (6) by a combination of the foregoing. Stock options are subject to vesting conditions and restrictions as
determined by the Committee.
Restricted Stock
.
A restricted stock award is a grant of common stock, subject to vesting requirements, to a participant for no consideration, or
any minimum consideration that may be required by applicable law. Restricted stock awards under the 2019 Equity Incentive Plan
will be granted only in whole shares of common stock and are subject to vesting conditions and other restrictions established by
the Committee consistent with the 2019 Equity Incentive Plan. Before awards vest, unless otherwise determined by the Committee,
the recipient of a restricted stock award may exercise any voting rights with respect to the common stock subject to the award.
Unless otherwise determined by the Committee, dividends paid on unvested awards will be retained and distributed to the participant
within 30 days of the vesting of the award.
Restricted Stock
Units
. Restricted stock units are similar to restricted stock awards in that the value of a restricted stock unit is denominated
in shares of common stock. However, unlike a restricted stock award, no shares of stock are transferred to the participant until
certain requirements or conditions associated with the award are satisfied. The limitation on the number of restricted stock awards
available described in the paragraph above is also applicable to restricted stock units.
Limitations on Awards Under the 2019 Equity
Incentive Plan
The following limits apply
to awards under the 2019 Equity Incentive Plan:
|
·
|
The maximum number of shares of common stock that may be available for awards under the 2019 Equity Incentive Plan is 154,229 shares, of which up to 110,164 shares of common stock may be delivered pursuant to the exercise of stock options and 44,065 shares of common stock may be issued pursuant to restricted stock awards or restricted stock units.
|
|
|
|
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·
|
The maximum number of shares of common stock that may be delivered to any one employee pursuant to the exercise of stock options and pursuant to restricted stock awards or restricted stock units is 27,541 shares and 11,016 shares, respectively (all of which may be granted in any one calendar year). These maximum amounts represent 25% of the maximum number of shares of common stock that may be delivered under the Plan pursuant to the exercise of stock options and 25% of the number of shares of common stock that may be issued pursuant to restricted stock awards or restricted stock units.
|
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·
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The maximum number of shares of common stock that may be delivered to any one non-employee director pursuant to the exercise of stock options and the issuance of restricted stock awards or restricted stock units is 5,508 shares and 2,203 shares, respectively (all of which may be granted in any one calendar year). These maximum amounts represent 5% of the maximum number of shares of common stock that may be delivered under the Plan pursuant to the exercise of stock options and 5% of the maximum number of shares of common stock that may be issued pursuant to restricted stock awards or restricted stock units. The Committee may, subject to these limitations and the other applicable limitations set forth in the 2019 Equity Incentive Plan, grant stock options and awards of restricted stock or restricted stock units to themselves and other individuals who become members of the Board of Directors.
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|
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·
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The maximum number of shares of common stock that may be delivered to all non-employee directors, in the aggregate, pursuant to the exercise of stock options and the issuance of restricted stock awards or restricted stock units is 33,049 shares and 13,219 shares, respectively (all of which may be granted in any one calendar year). These maximum amounts represent 30% of the maximum number of shares of common stock that may be delivered under the Plan pursuant to the exercise of stock options and 30% of the maximum number of shares of common stock that may be issued pursuant to restricted stock awards or restricted stock units.
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In the event of a corporate
transaction involving the stock of SSB Bancorp (including, without limitation, any stock dividend, stock split or other special
and nonrecurring dividend or distribution, recapitalization, reorganization, merger, consolidation, spin-off, combination or exchange
of shares), the Committee will, in an equitable manner, adjust the number and kind of securities available for grants of stock
options, restricted stock awards or restricted stock units, the number and kind of securities that may be delivered or deliverable
with respect to outstanding stock options, restricted stock awards and restricted stock units, and the exercise price of stock
options.
In addition, the Committee
is authorized to make certain other adjustments to the terms and conditions of stock options, restricted stock awards and restricted
stock units consistent with the terms of the Plan.
Prohibition Against
Repricing of Options
. The 2019 Equity Incentive Plan provides that neither the Committee nor the Board of Directors may
make any adjustment or amendment to the 2019 Equity Incentive Plan or an award that reduces or would have the effect of reducing
the exercise price of a previously granted stock option.
Prohibition on Transfer
.
Generally, all awards, except non-qualified stock options, granted under the 2019 Equity Incentive Plan will be nontransferable
except by will or in accordance with the laws of intestate succession. Awards may be transferable pursuant to a qualified domestic
relations order. At the Committee’s sole discretion, non-qualified stock options may be transferred for valid estate planning
purposes in a manner consistent with the Internal Revenue Code and federal securities laws. During the life of the participant,
awards may be exercised only by the participant. The Committee may permit a participant to designate a beneficiary to exercise
stock options or receive any rights that may exist upon a participant’s death with respect to awards granted under the 2019
Equity Incentive Plan.
Performance Measures
The Committee may use performance
measures for vesting purposes with respect to awards granted under the 2019 Equity Incentive Plan. The performance measures may
include one or more of the following: book value or tangible book value per share; basic earnings per share; basic cash earnings
per share; diluted earnings per share; diluted cash earnings per share; return on equity; net income or net income before taxes;
cash earnings; net interest income; non-interest income; non-interest expense to average assets ratio; cash general and administrative
expense to average assets ratio; efficiency ratio; cash efficiency ratio; return on average assets; cash return on average assets;
return on average stockholders’ equity; cash return on average stockholders’ equity; return on average tangible stockholders’
equity; cash return on average tangible stockholders’ equity; core earnings; operating income; operating efficiency ratio;
net interest rate margin or net interest rate spread; growth in assets, loans, or deposits; loan production volume; non-performing
loans; total stockholder return; cash flow; strategic business objectives consisting of one or more objectives based upon meeting
specified cost targets, business expansion goals, and goals relating to acquisitions or divestitures, or goals relating to capital
raising and capital management; any other measure determined by the Committee or any combination of the foregoing performance measures.
Performance measures may
be based on SSB Bancorp’s performance as a whole or of any one or more subsidiaries or business units of SSB Bancorp or a
subsidiary, may be measured relative to a peer group, an index or a business plan and may be considered as absolute measures or
changes in measures. In establishing the performance measures, the Committee may provide for the inclusion or exclusion of certain
items.
Dividend Equivalents
The Committee is authorized
to grant dividend equivalents with respect to restricted stock units available under the Plan. Dividend equivalents confer on the
participant the right to receive payments equal to cash dividends or distributions with respect to all or a portion of the number
of shares of stock subject to the award
.
Unless otherwise determined by the Committee, the dividend equivalent right will
be paid at the same time as the shares subject to the restricted stock unit are distributed to the participant.
Vesting of Awards
The Committee will specify
the vesting schedule or conditions of each award. Unless the Committee specifies a different vesting schedule at the time of grant,
awards under the 2019 Equity Incentive Plan, other than performance awards, must be granted with a vesting rate not exceeding 20%
per year. However, grants may not vest more rapidly than in approximately equal installments over three years. If the vesting of
an award under the 2019 Equity Incentive Plan is conditioned on the completion of a specified period of service with SSB Bancorp
or its subsidiaries, without the achievement of performance measures or objectives, then the required period of service for full
vesting will be determined by the Committee and evidenced in an award agreement. Vesting may be accelerated in the event of death,
disability, or upon involuntary termination of employment or service following a change in control in a manner consistent with
the Plan.
Change in Control
Unless otherwise stated
in an award agreement, at the time of an involuntary termination of employment or service following a change in control, all stock
options then held by the participant will become fully earned and exercisable (subject to the expiration provisions otherwise applicable
to the stock option). All stock options may be exercised for a period of one year following the participant’s involuntary
termination, provided, however, that no stock option will be eligible for treatment as an incentive stock option in the event the
stock option is exercised more than three months following the termination of employment. At the time of an involuntary termination
of employment or service following a change in control, all awards of restricted stock and restricted stock units will immediately
become fully earned and vested. In the event of a change in control, any performance measures will be deemed satisfied at the “target”
level as of the date of the change in control, unless data supports and the Committee certifies that the performance measures have
been achieved at a level higher than the target level as of the effective date of the change in control, in which case, the performance
award will vest at the higher level.
Amendment and Termination
The Board of Directors
may, at any time, amend or terminate the 2019 Equity Incentive Plan or any award granted under the 2019 Equity Incentive Plan,
provided that, except as provided in the 2019 Equity Incentive Plan, no amendment or termination may adversely impair the rights
of a participant or beneficiary with respect to an award without the participant’s (or the affected beneficiary’s)
written consent. The Board of Directors may not amend the 2019 Equity Incentive Plan to materially increase the benefits accruing
to participants under the Plan, materially increase the aggregate number of securities that may be issued under the plan (other
than as provided in the 2019 Equity Incentive Plan), or materially modify the requirements for participation in the plan, without
approval of stockholders. Notwithstanding the foregoing, the Committee may amend the 2019 Equity Incentive Plan or any award agreement,
to take effect retroactively or otherwise, to conform the Plan or an award agreement to current or future law or to avoid an accounting
treatment resulting from an accounting pronouncement or interpretation issued by the Securities and Exchange Commission or Financial
Accounting Standards Board after the adoption of the 2019 Equity Incentive Plan, or the making of the award affected thereby, which,
in the sole discretion of the Committee, may materially and adversely affect the financial condition or results of operations of
SSB Bancorp.
Duration of the 2019 Equity Incentive Plan
The 2019 Equity Incentive
Plan will become effective upon approval by the stockholders at this meeting. The 2019 Equity Incentive Plan will remain in effect
as long as any award under it is outstanding; however, no awards may be granted under the 2019 Equity Incentive Plan on or after
the 10-year anniversary of the effective date of the Plan. At any time, the Board of Directors may terminate the 2019 Equity Incentive
Plan. However, any termination of the 2019 Equity Incentive Plan will not affect outstanding awards.
Federal Income Tax Considerations
The following is a summary
of the current federal income tax consequences with respect to awards under the 2019 Equity Incentive Plan:
Non-Qualified Stock
Options
. The grant of a non-qualified option will not result in taxable income to the participant. Except as described
below, the participant will recognize ordinary income at the time of exercise in an amount equal to the excess of the fair market
value of the shares acquired over the exercise price for those shares, and SSB Bancorp will be entitled to a corresponding deduction
for tax purposes. Gains or losses realized by the participant upon disposition of the acquired shares will be treated as capital
gains and losses, with the cost basis in the shares equal to the fair market value of the shares at the time of exercise.
Incentive Stock Options
.
The grant of an incentive stock option will not result in taxable income to the participant. The exercise of an incentive stock
option also will not result in taxable income to the participant, provided the participant was, without a break in service, an
employee of SSB Bancorp or a subsidiary during the period beginning on the date of the grant of the option and ending on the date
three months before the date of exercise (one year before the date of exercise if the participant becomes disabled, as that term
is defined in the Internal Revenue Code).
The excess of the fair
market value of the shares at the time of the exercise of an incentive stock option over the exercise price is an adjustment that
is included in the calculation of the participant’s alternative minimum taxable income for the tax year in which the incentive
stock option is exercised. For purposes of determining the participant’s alternative minimum tax liability for the year of
disposition of the shares acquired pursuant to the incentive stock option exercise, the participant will have a basis in those
shares equal to the fair market value of the shares at the time of exercise.
If the participant does
not sell or otherwise dispose of the shares within two years from the date of the grant of the incentive stock option or within
one year after the exercise of the stock option, then, upon disposition of the acquired shares, any amount realized in excess of
the exercise price will be taxed as a capital gain. A capital loss will be recognized to the extent that the amount realized is
less than the exercise price.
If the foregoing holding
period requirements are not met, the participant will generally recognize ordinary income at the time of the disposition of the
shares, in an amount equal to the lesser of: (1) the excess of the fair market value of the shares on the date of exercise over
the exercise price; or (2) the excess, if any, of the amount realized upon disposition of the shares over the exercise price, and
SSB Bancorp will be entitled to a corresponding deduction. If the amount realized exceeds the value of the shares on the date of
exercise, any additional amount will be a capital gain. If the amount realized is less than the exercise price, the participant
will recognize no income, and a capital loss will be recognized equal to the excess of the exercise price over the amount realized
upon the disposition of the shares.
Restricted Stock
.
A participant will not realize taxable income at the time of the grant of restricted stock, provided that the stock subject to
the award is not delivered at the time of grant, or if the stock is delivered, it is subject to restrictions that constitute a
“substantial risk of forfeiture” for federal income tax purposes. Upon the later of delivery or vesting of shares subject
to an award, the holder will recognize ordinary income in an amount equal to the then fair market value of those shares, and SSB
Bancorp will be entitled to a corresponding deduction for tax purposes. Gains or losses realized by the participant upon disposition
of such shares will be treated as capital gains and losses, with the basis in the shares equal to the fair market value of the
shares at the time of delivery or vesting. Dividends paid to the holder during the restriction period, if so provided, will also
be compensation income to the participant, and SSB Bancorp will be entitled to a corresponding deduction for tax purposes. A participant
who makes an election under Section 83(b) of the Internal Revenue Code will include the full fair market value of the restricted
stock award in taxable income in the year of grant at the grant date fair market value.
Restricted Stock
Unit
. A participant who has been granted a restricted stock unit will not realize taxable income as long as the award remains
in the form of a restricted stock unit. When the restricted stock unit is extinguished and a stock award is issued, the tax consequences
for restricted stock awards (see paragraph above) will be recognized. A restricted stock unit does not have voting rights or dividend
rights. Since no stock is transferred to the participant on the grant date of the restricted stock unit, an election to have the
restricted stock unit taxed at the grant date cannot be made since Section 83(b) of the Internal Revenue Code requires a transfer
of stock.
Withholding of Taxes
.
SSB Bancorp may withhold amounts from participants to satisfy withholding tax requirements. Except as otherwise provided by the
Committee, participants may have shares withheld from awards to satisfy the tax withholding requirements, provided the withholding
does not trigger adverse accounting consequences.
Change in Control
.
Any acceleration of the vesting or payment of awards under the 2019 Equity Incentive Plan in the event of a change in control or
termination of employment or service following a change in control may cause part or all of the consideration involved to be treated
as an “excess parachute payment” under Section 280G of the Internal Revenue Code, which may subject the participant
to a 20% excise tax and preclude a deduction by SSB Bancorp with respect to the awards.
Deduction Limits
.
Section 162(m) of the Internal Revenue Code generally limits our ability to deduct for tax purposes compensation in excess of $1.0
million per year for each of our chief executive officer and other executive officers named in the summary compensation table (each,
a “covered employee”) of our annual proxy statement, as well as any employee who has been designated a covered employee
for any fiscal year beginning after December 31, 2016. Compensation resulting from awards under the 2019 Equity Incentive Plan
will be counted toward the $1.0 million limit.
Tax Advice
.
The preceding discussion is based on federal tax laws and regulations currently in effect, which are subject to change, and the
discussion does not purport to be a complete description of the federal income tax aspects of the 2019 Equity Incentive Plan. A
participant may also be subject to state and local taxes in connection with the grant of awards under the 2019 Equity Incentive
Plan. SSB Bancorp suggests participants consult with their own tax advisors to determine the applicability of the tax rules to
the awards granted to them.
Accounting Treatment
Under Financial Accounting
Standards Board (“FASB”) Accounting Standards Codification Topic 718, SSB Bancorp is required to recognize compensation
expense on its income statement over the requisite service period or performance period based on the grant date fair value of stock
options and other equity-based compensation (such as restricted stock).
Awards to be Granted
Each non-employee director
who is in service with SSB Bancorp on the effective date of the 2019 Equity Incentive Plan will automatically be granted the stock
options and restricted stock listed below, provided the Plan is approved by stockholders. The stock options and restricted stock
awards automatically granted to the non-employee directors will vest in approximately equal installments over a five-year period,
with the first installment vesting on the first anniversary of the effective date of the Plan.
Restricted Stock Awards
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Name of Non-Employee Director
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Dollar Value
(1)
|
|
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Number of Awards
|
|
Kenneth J. Broadbent
|
|
$
|
18,725.50
|
|
|
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2,203
|
|
David H. Docchio, Jr.
|
|
|
18,725.50
|
|
|
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2,203
|
|
Gretchen Givens Generett
|
|
|
18,725.50
|
|
|
|
2,203
|
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Mark C. Joseph
|
|
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18,725.50
|
|
|
|
2,203
|
|
Bernie M. Simons
|
|
|
18,725.50
|
|
|
|
2,203
|
|
Non-Employee Directors as a Group (5 persons)
|
|
$
|
93,627.50
|
|
|
|
11,015
|
|
(1)
|
Amounts are based on the fair market value of SSB Bancorp, Inc. common stock on March 29, 2019 of $8.50 per share. The actual value of the awards is not determinable since their value will depend upon the fair market value of SSB Bancorp common stock on the date of grant.
|
Stock Option Awards
|
Name of Non-Employee Director
|
|
Dollar Value
(1)
|
|
|
Number of Awards
|
|
Kenneth J. Broadbent
|
|
|
—
|
|
|
|
5,508
|
|
David H. Docchio, Jr.
|
|
|
—
|
|
|
|
5,508
|
|
Gretchen Givens Generett
|
|
|
—
|
|
|
|
5,508
|
|
Mark C. Joseph
|
|
|
—
|
|
|
|
5,508
|
|
Bernie M. Simons
|
|
|
—
|
|
|
|
5,508
|
|
Non-Employee Directors as a Group (5 persons)
|
|
|
—
|
|
|
|
27,540
|
|
(1)
|
Amounts are not determinable, as the actual value of the stock options realized will depend on the extent to which the market value of SSB Bancorp common stock exceeds the exercise price of the stock option on the date of exercise.
|
The exercise price of the
stock options will equal the fair market value of SSB Bancorp common stock on the actual date of grant. Notwithstanding the foregoing,
these awards would vest upon death, disability or involuntary termination of service following a change in control. The restricted
stock serves as a retention tool for the directors, and the stock options are viewed by the Board of Directors as performance-based
because value is only realized if there is stock price appreciation over the term of the options. The awards are not subject to
any specific performance measures.
Any future grants to employees
and directors under the 2019 Equity Incentive Plan will be determined in the discretion of the Committee.
Clawback Policy
The 2019 Equity Incentive
Plan provides that if SSB Bancorp is required to prepare an accounting restatement due to its material noncompliance, as a result
of misconduct, with any financial reporting requirement under the federal securities laws, any participant who is subject to automatic
forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002 or who is subject to clawback under Section 954 of the Dodd-Frank
Act must reimburse SSB Bancorp with the required amount of any payment in settlement of an award earned or accrued during the 12-month
period following the first public issuance or filing with the Securities and Exchange Commission (whichever first occurred) of
the financial document embodying such financial reporting requirement. In addition, awards granted under the 2019 Equity Incentive
Plan are subject to any clawback policy adopted by the Board of Directors.
Recommendation of the Board of Directors
The Board of Directors
unanimously recommends a vote “
FOR
” the approval of the 2019 Equity Incentive Plan.
Submission
of STOCKHOLDER Business Proposals and Nominations
SSB
Bancorp must receive proposals that shareholders seek to include in the proxy statement for our next annual meeting no later than
December 12, 2019. If next year’s annual meeting is held on a date that is more than 30 calendar days from May 22,
2020, a shareholder proposal must be received by a reasonable time before SSB Bancorp begins to print and mail its proxy solicitation
materials for such annual meeting. Any shareholder proposals will be subject to the requirements of the proxy rules adopted by
the Securities and Exchange Commission.
Our
Bylaws provide that, for a stockholder to make nominations for the election of directors or proposals for business to be brought
before the annual meeting, a stockholder must deliver notice to the Corporate Secretary not less than 90 days nor more than 120
days before the date of the annual meeting. However, if less than 90 days’ notice or prior public disclosure of the annual
meeting is given to stockholders and the date of the annual meeting is advanced more than 30 days before or delayed more than
30 days after the anniversary of the preceding year’s annual meeting, such notice must be delivered not later than the close
of business on the tenth day following the day on which notice of the annual meeting was mailed to stockholders or public disclosure
of the annual meeting date was made. A copy of the Bylaws may be obtained by contacting our Corporate Secretary.
STOCKholder
Communications
Stockholders
who wish to communicate with the Board of Directors or an individual director should do so in writing to SSB Bancorp, Inc., 8700
Perry Highway, Pittsburgh, PA 15237. Communications regarding financial or accounting policies may be made in writing to the Chairman
of the Audit Committee, at the same address. All other communications should be sent in writing to the attention of the President
and Chief Executive Officer, at the same address.
Miscellaneous
SSB
Bancorp will pay the cost of this proxy solicitation and will reimburse brokerage firms and other custodians, nominees and fiduciaries
for reasonable expenses they incur in sending proxy materials to the beneficial owners of SSB Bancorp common stock. In addition
to soliciting proxies by mail, our directors, officers and regular employees may solicit proxies personally or by telephone without
receiving additional compensation.
SSB
Bancorp’s Annual Report on Form 10-K is included with this proxy statement. Any stockholder who has not received a copy
of the Form 10-K may obtain a copy by writing to our Corporate Secretary or by accessing a copy online. See “
Important
Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be Held on May 22, 2019
.” The Form
10-K is not to be treated as part of the proxy solicitation material or as having been incorporated in this proxy statement by
reference.
Whether
or not you plan to attend the annual meeting, please vote by marking, signing, dating and promptly returning a proxy card or by
voting via the Internet.
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BY
ORDER OF THE BOARD OF DIRECTORS
|
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Frances
Ann Amorose
|
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Corporate
Secretary
|
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Pittsburgh,
PA
|
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April
11, 2019
|
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Appendix
A
SSB
BANCORP, INC.
2019
Equity Incentive Plan
ARTICLE
1 – GENERAL
Section
1.1
Purpose, Effective Date and Term
. The purpose of the SSB Bancorp, Inc. 2019 Equity Incentive Plan (the “
Plan
”)
is to promote the long-term financial success of SSB Bancorp, Inc. (the “
Company
”), and its Subsidiaries, including
SSB Bank (the “
Bank
”), by providing a means to attract, retain and reward individuals who contribute to that
success and to further align their interests with those of the Company’s stockholders through the ownership of additional
common stock of the Company. The “
Effective Date
” of the Plan shall be the date on which the Plan satisfies
the applicable stockholder approval requirements. The Plan shall remain in effect as long as any Awards are outstanding;
provided,
however,
that no Awards may be granted under the Plan after the day immediately prior to the ten-year anniversary date of
the Effective Date.
Section
1.2
Administration
. The Plan shall be administered by a committee of the Board of Directors or, subject to the limitation
set forth in Section 5.1, by the Board of Directors.
Section
1.3
Participation
. Each individual who is granted and holds an Award in accordance with the terms of the Plan shall
be a Participant in the Plan (a “
Participant
”). The grant of Awards shall be limited to Employees and Directors
of the Company or any Subsidiary.
Section
1.4
Definitions
. Capitalized terms used in this Plan are defined in Article 8 and elsewhere in this Plan.
ARTICLE
2 - AWARDS
Section
2.1
General
. Any Award under the Plan may be granted singularly or in combination with another Award or other Awards.
Each Award under the Plan shall be subject to the terms and conditions of the Plan and any additional terms, conditions, limitations
and restrictions as the Committee shall provide with respect to the Award and as evidenced in an Award Agreement. In the event
of a conflict between the terms of an Award Agreement and the Plan, the terms of the Plan will control. Subject to the provisions
of Section 2.7, an Award may be granted as an alternative to or replacement of an existing Award under the Plan or any other plan
of the Company or any Subsidiary or as the form of payment for grants or rights earned or due under any other compensation plan
or arrangement of the Company or any Subsidiary, including without limitation the plan of any entity acquired by the Company or
any Subsidiary. The types of Awards that may be granted under the Plan include Stock Options, Restricted Stock and Restricted
Stock Units and any Award may be granted as a Performance Award.
Section
2.2
Stock Options
. A Stock Option means a grant that represents the right to purchase shares of Stock at an established
Exercise Price.
(a)
Grant of Stock Options
. Each Stock Option shall be evidenced by an Award Agreement that specifies (i) the number of Stock
Options covered by the Award; (ii) the date of grant of the Stock Option and the Exercise Price; (iii) the vesting period or conditions
to vesting or exercisability (whether time- and/or performance-based); and (iv) any other terms and conditions not inconsistent
with the Plan, including the effect of termination of a Participant’s employment or Service, as the Committee may, in its
discretion, prescribe. Any Stock Option may be either an Incentive Stock Option that is intended to satisfy the requirements applicable
to an “Incentive Stock Option” described in Code Section 422(b), or a Non-Qualified Option that is not intended to
be an ISO; provided, however, that no ISOs may be granted: (i) after the day immediately prior to the ten-year anniversary of
the Effective Date or the date the Plan is approved by the Board of Directors, whichever is earlier; or (ii) to a non-Employee.
Unless otherwise specifically provided by its terms, any Stock Option granted to an Employee under this Plan shall be an ISO to
the maximum extent permitted. Any ISO granted under this Plan that does not qualify as an ISO for any reason (whether at the time
of grant or as the result of a subsequent event) shall be deemed to be a Non-Qualified Option. In addition, any ISO granted under
this Plan may be unilaterally modified by the Committee to disqualify it from ISO treatment, so that it becomes a Non-Qualified
Option; provided, however, that any such modification shall be ineffective if it causes the Award to be subject to Code Section
409A (unless, as modified, the Award complies with Code Section 409A).
(b)
Other Terms and Conditions
. A Stock Option shall be exercisable in accordance with its terms and conditions and during
the periods established by the Committee. In no event, however, shall a Stock Option expire later than ten (10) years after the
date of its grant (or five (5) years with respect to ISOs granted to a 10% Stockholder). The Exercise Price of each Stock Option
shall not be less than 100% of the Fair Market Value of a share of Stock on the date of grant (or, if greater, the par value of
a share of Stock);
provided, however,
that the Exercise Price of an ISO shall not be less than 110% of Fair Market Value
of a share of Stock on the date of grant if granted to a 10% Stockholder;
provided further,
that the Exercise Price may
be higher or lower in the case of Stock Options granted or exchanged in replacement of existing Awards held by an employee or
director of, or service provider to, an acquired entity. The payment of the Exercise Price shall be by cash or, subject to limitations
imposed by applicable law, by any other means as the Committee may from time to time permit, including: (i) by tendering, either
actually or constructively by attestation, shares of Stock valued at Fair Market Value as of the day of exercise; (ii) by irrevocably
authorizing a third party, acceptable to the Committee, to sell shares of Stock (or a sufficient portion of the shares) acquired
upon exercise of the Stock Option and to remit to the Company a sufficient portion of the sale proceeds to pay the entire Exercise
Price and any tax withholding resulting from the exercise; (iii) by a net settlement of the Stock Option, using a portion of the
shares obtained on exercise in payment of the Exercise Price (and if applicable, any tax withholding); (iv) by personal, certified
or cashier’s check; (v) by other property deemed acceptable by the Committee; or (vi) by any combination thereof. The total
number of shares that may be acquired upon the exercise of a Stock Option shall be rounded down to the nearest whole share, with
cash-in-lieu paid by the Company, at its discretion, for the value of any fractional share.
(c)
Prohibition of Cash Buy-Outs of Underwater Stock Options
. Under no circumstances will any underwater Stock Option (i.e.
a Stock Option with an Exercise Price at that time that is greater than the Fair Market Value of Stock) that was granted under
the Plan be bought back by the Company without stockholder approval.
Section
2.3
Restricted Stock
.
(a)
Grant of Restricted Stock
. A Restricted Stock Award means a grant of a share of Stock for no consideration or such minimum
consideration as may be required by applicable law, subject to a vesting schedule or the satisfaction of market conditions or
performance conditions. Each Restricted Stock Award shall be evidenced by an Award Agreement that specifies (i) the number of
shares of Stock covered by the Restricted Stock Award; (ii) the date of grant of the Restricted Stock Award; (iii) the vesting
period (whether time- and/or performance-based); and (iv) any other terms and conditions not inconsistent with the Plan, including
the effect of termination of a Participant’s employment or Service. All Restricted Stock Awards shall be in the form of
issued and outstanding shares of Stock that, at the discretion of the Committee, shall be either (x) registered in the name of
the Participant and held by or on behalf of the Company, together with a stock power executed by the Participant in favor of the
Company, pending the vesting or forfeiture of the Restricted Stock; or (y) registered in the name of, and delivered to, the Participant.
In any event, the certificates evidencing the Restricted Stock Award shall at all times prior to the applicable vesting date bear
the following legend:
The
Stock evidenced hereby is subject to the terms of an Award Agreement with SSB Bancorp, Inc. dated [date], made pursuant to the
terms of the SSB Bancorp, Inc. 2019 Equity Incentive Plan, copies of which are on file at the executive offices of SSB Bancorp,
Inc., and may not be sold, encumbered, hypothecated or otherwise transferred except in accordance with the terms of the Plan and
Award Agreement,
or
such other restrictive legend as the Committee, in its discretion, may specify. Notwithstanding the foregoing, the Company may
in its sole discretion issue Restricted Stock in any other approved format (e.g., electronically) in order to facilitate the paperless
transfer of the Award. In the event Restricted Stock is not issued in certificate form, the Company and the transfer agent shall
maintain appropriate bookkeeping entries that evidence Participants’ ownership of the Awards. Restricted Stock that is not
issued in certificate form shall be subject to the same terms and conditions of the Plan as certificated shares, including the
restrictions on transferability and the provision of a stock power executed by the Participant in favor of the Company, until
the satisfaction of the conditions to which the Restricted Stock Award is subject.
(b)
Terms and Conditions.
Each Restricted Stock Award shall be subject to the following terms and conditions:
(i)
Dividends.
Unless the Committee determines otherwise, cash dividends or distributions, if any, declared with respect to
shares of Stock subject to a Restricted Stock Award shall be retained by the Company and only distributed to a Participant within
thirty (30) days after the vesting date of the underlying Restricted Stock Award. If the underlying Stock does not vest, the dividends
held by the Company with respect to such Stock shall be forfeited by the Participant. No dividends shall be paid with respect
to a Restricted Stock Awards subject to performance-based vesting conditions unless and until the Participant vests in the Restricted
Stock Award. Upon the vesting of Restricted Stock granted as a Performance Award, any dividends declared but not paid to the Participant
during the vesting period shall be paid within thirty (30) days following the vesting date. Any stock dividends declared on shares
of Stock subject to a Restricted Stock Award, whether or not performance-based, shall be subject to the same restrictions and
shall vest at the same time as the shares of Restricted Stock from which the dividends were derived.
(ii)
Voting Rights.
Unless the Committee determines otherwise, a Participant shall have voting rights related to the unvested,
non-forfeited Restricted Stock and the voting rights shall be exercised by the Participant in Participant’s discretion.
(iii)
Tender Offers and Merger Elections.
Each Participant to whom a Restricted Stock Award is granted shall have the right to
respond, or to direct the response, with respect to the related shares of Restricted Stock, to any tender offer, exchange offer,
cash/stock merger consideration election or other offer made to, or elections made by, the holders of shares of Stock. The direction
for any the shares of Restricted Stock shall be given by proxy or ballot (if the Participant is the beneficial owner of the shares
of Restricted Stock for voting purposes) or by completing and filing, with the inspector of elections, the trustee or the other
person who shall be independent of the Company, as the Committee shall designate in the direction (if the Participant is not such
a beneficial owner), a written direction in the form and manner prescribed by the Committee. If no direction is given, then the
shares of Restricted Stock shall not be tendered.
Section
2.4
Restricted Stock Units
.
(a)
Grant of Restricted Stock Unit Awards
. A Restricted Stock Unit means an Award denominated in shares of Stock that is similar
to a Restricted Stock Award except no shares of Stock are actually awarded on the date of grant. A Restricted Stock Unit is subject
to a vesting schedule or the satisfaction of market conditions or performance conditions and shall be settled in shares of Stock,
provided, however, that in the sole discretion of the Committee, determined at the time of settlement, a Restricted Stock Unit
may be settled in cash based on the Fair Market Value of a share of the Stock multiplied by the number of Restricted Stock Units
being settled, or a combination of shares of Stock and cash. Each Restricted Stock Unit shall be evidenced by an Award Agreement
that specifies (i) the number of Restricted Stock Units covered by the Award; (ii) the date of grant of the Restricted Stock Units;
(iii) the Restriction Period and the vesting period (whether time- and/or performance-based); (iv) any other terms and conditions
not inconsistent with the Plan, including the effect of termination of a Participant’s employment or Services.
(b)
Other Terms and Conditions
. Each Restricted Stock Unit Award shall be subject to the following terms and conditions:
(i)
The Committee shall impose any other conditions and/or restrictions on any Restricted Stock Unit Award as it may deem advisable,
including, without limitation, a requirement that Participants pay a stipulated purchase price for each Restricted Stock Unit,
time-based restrictions and vesting following the attainment of performance measures, restrictions under applicable laws or under
the requirements of any Exchange or market upon which shares of Stock may be listed, or holding requirements or sale restrictions
placed by the Company upon vesting of Restricted Stock Units.
(ii)
The conditions for grant or vesting and the other provisions of Restricted Stock Units (including without limitation any applicable
performance measures) need not be the same with respect to each recipient. An Award of Restricted Stock Units shall be settled
as and when the Restricted Stock Units vest or, in the case of Restricted Stock Units subject to performance measures, after the
Committee has determined that the performance goals have been satisfied.
(iii)
Subject to the provisions of the Plan and the applicable Award Agreement, during the period, if any, set by the Committee, commencing
with the date of such Restricted Stock Unit for which the Participant’s continued Service is required (the “
Restriction
Period
”), and until the later of (A) the expiration of the Restriction Period and (B) the date the applicable performance
measures (if any) are satisfied, the Participant shall not be permitted to sell, assign, transfer, pledge or otherwise encumber
Restricted Stock Units.
(iv)
A Participant shall have no voting rights with respect to any Restricted Stock Units. No dividends shall be paid on Restricted
Stock Units. In the sole discretion of the Committee, exercised at the time of grant, Dividend Equivalent Rights may be assigned
to Restricted Stock Units. In such case, the Dividend Equivalent Right shall be paid at the same time as the shares or cash subject
to the Restricted Stock Unit are distributed to the Participant.
Section
2.5
Vesting of Awards
.
Unless the Committee specifies a different vesting schedule at the time of grant, Awards
under the Plan (other than Performance Awards) shall be granted with a vesting rate not exceeding twenty percent (20%) per year,
with the initial installment vesting no earlier than the one-year anniversary of the date of grant, unless accelerated due to
death, Disability or Involuntary Termination following a Change in Control. Notwithstanding the foregoing sentence, Awards under
the Plan shall not vest more rapidly than in approximately equal installments over a period of three (3) years, unless accelerated
due to death, Disability or Involuntary Termination following a Change in Control. If the right to become vested in an Award (including
the right to exercise a Stock Option) is conditioned on the completion of a specified period of Service, without achievement of
performance measures or other performance objectives being required as a condition of vesting, and without it being granted in
lieu of, or in exchange for, other compensation, then the required period of Service for full vesting shall be evidenced in the
Award Agreement (subject to acceleration of vesting, to the extent permitted by the Plan, the Committee (subject to the limitations
set forth in this Section) or set forth in the Award Agreement, in the event of the Participant’s death, Disability or Involuntary
Termination following a Change in Control).
Section
2.6
Deferred Compensation
. If any Award would be considered “deferred compensation” as defined under Code
Section 409A (“
Deferred Compensation
”), the Committee reserves the absolute right (including the right to delegate
such right) to unilaterally amend the Plan or the Award Agreement, without the consent of the Participant, to maintain exemption
from, or to comply with, Code Section 409A. Any amendment by the Committee to the Plan or an Award Agreement pursuant to this
Section 2.6 shall maintain, to the extent practicable, the original intent of the applicable provision without violating Code
Section 409A. A Participant’s acceptance of any Award under the Plan constitutes acknowledgement and consent to the rights
of the Committee, without further consideration or action. Any discretionary authority retained by the Committee pursuant to the
terms of this Plan or pursuant to an Award Agreement shall not be applicable to an Award which is determined to constitute Deferred
Compensation, if the discretionary authority would contravene Code Section 409A.
Section
2.7
Prohibition Against Option Repricing
. Except for adjustments pursuant to Section 3.4, and reductions of the Exercise
Price approved by the Company’s stockholders, neither the Committee nor the Board of Directors shall have the right or authority
to make any adjustment or amendment that reduces or would have the effect of reducing the Exercise Price of a Stock Option previously
granted under the Plan, whether through amendment, cancellation (including cancellation in exchange for a cash payment in excess
of the Stock Option’s in-the-money value or in exchange for Options or other Awards) or replacement grants, or other means.
Section
2.8.
Effect of Termination of Service on Awards
. The Committee shall establish the effect of a Termination of Service
on the continuation of rights and benefits available under an Award and, in so doing, may make distinctions based upon, among
other things, the cause of Termination of Service and type of Award. Unless otherwise specified by the Committee and set forth
in an Award Agreement between the Company and/or a Subsidiary and the Participant or as set forth in an employment or severance
agreement entered into by and between the Company and/or a Subsidiary and the Participant, the following provisions shall apply
to each Award granted under this Plan:
(a)
Upon a Participant’s Termination of Service for any reason other than due to Disability, death, Retirement or termination
for Cause, Stock Options shall be exercisable only as to those shares that were immediately exercisable by the Participant at
the date of termination, and the Stock Options may be exercised only for a period of three (3) months following termination and
any Restricted Stock Award or Restricted Stock Unit that has not vested as of the date of Termination of Service shall expire
and be forfeited.
(b)
In the event of a Termination of Service for Cause, all Stock Options granted to a Participant that have not been exercised and
all Restricted Stock Awards and Restricted Stock Units granted to a Participant that have not vested shall expire and be forfeited.
(c)
Upon Termination of Service for reason of Disability or death, all Stock Options shall be exercisable as to all shares subject
to an outstanding Award, whether or not then exercisable, and all Restricted Stock Awards and Restricted Stock Units shall vest
as to all shares subject to an outstanding Award, whether or not otherwise immediately vested, at the date of Termination of Service.
Unless the Committee specifies otherwise, Stock Options may be exercised for a period of one year following Termination of Service
due to death or Disability;
provided, however
, that no Stock Option shall be eligible for treatment as an ISO in the event
the Stock Option is exercised more than one year following Termination of Service due to Disability and
provided, further
,
in order to obtain ISO treatment for Stock Options exercised by heirs or devisees of an optionee, the optionee’s death must
have occurred while employed or within three months of Termination of Service. Unless the Committee specifies otherwise, in the
event of Termination of Service due to Retirement, a Participant’s vested Stock Options shall be exercisable for one year
following Termination of Service. No Stock Option shall be eligible for treatment as an ISO in the event such Stock Option is
exercised more than three months following Termination of Service due to Retirement and any Stock Option, Restricted Stock Award
or Restricted Stock Unit that has not vested as of the date of Termination of Service shall expire and be forfeited.
(d)
Notwithstanding anything herein to the contrary, no Stock Option shall be exercisable beyond the last day of the original term
of the Stock Option.
(e)
Notwithstanding the provisions of this Section 2.8, the effect of a Change in Control on the vesting/exercisability of Stock Options,
Restricted Stock Awards and Restricted Stock Units is as set forth in Article 4.
Section
2.9.
Holding Period for Vested Awards
. As a condition of receipt of an Award, the Award Agreement may require a Participant
to agree to hold a vested Award or Stock received upon exercise of a Stock Option for some period of time. The foregoing limitation
shall not apply to the extent that an Award vests due to death, Disability or Involuntary Termination at or following a Change
in Control, or to the extent that (i) a Participant directs the Company to withhold or the Company elects to withhold shares of
Stock with respect to the vesting or exercise, or, in lieu thereof, to retain, or to sell without notice, a sufficient number
of shares of Stock to cover the minimum amount required to be withheld or (ii) a Participant exercises a Stock Option by a net
settlement, and in the case of (i) and (ii) herein, only to the extent of the shares withheld for tax purposes or for purposes
of the net settlement.
ARTICLE
3 -
Shares Subject to Plan
Section
3.1
Available Shares
. The shares of Stock with respect to which Awards may be made under the Plan shall be shares currently
authorized but unissued, currently held or, to the extent permitted by applicable law, subsequently acquired by the Company, including
shares purchased in the open market or in private transactions.
Section
3.2
Share Limitations
.
(a)
Share Reserve
. Subject to the following provisions of this Section 3.2, the maximum number of shares of Stock that may
be delivered to Participants and their beneficiaries under the Plan shall be equal to One Hundred Fifty-Four Thousand Two Hundred
Twenty-Nine (154,229). The maximum number of shares of Stock that may be delivered pursuant to the exercise of Stock Options (all
of which may be granted as ISOs) is One Hundred Ten Thousand One Hundred Sixty-Four (110,164), which represents 4.9% of the number
of shares sold and issued in connection with the reorganization of the Bank from the mutual to the stock form and the Company’s
related stock issuance on January 24, 2018 (the “
Reorganization
”). The maximum number of shares of Stock that
may be issued as Restricted Stock Awards and Restricted Stock Units is Forty-Four Thousand Sixty-Five (44,065), which represents
1.96% of the number of shares sold and issued in the Reorganization. The aggregate number of shares available for grant under
this Plan and the number of shares of Stock subject to outstanding awards shall be subject to adjustment as provided in Section
3.4.
(b)
Computation of Shares Available.
For purposes of this Section 3.2, the number of shares of Stock available for the grant
of additional Stock Options, Restricted Stock Awards or Restricted Stock Units shall be reduced by the number of shares of Stock
previously granted, subject to the following: to the extent any shares of Stock covered by an Award (including Restricted Stock
Awards and Restricted Stock Units) under the Plan are not delivered to a Participant or beneficiary for any reason, including
because the Award is forfeited or canceled or because a Stock Option is not exercised, then such shares shall not be deemed to
have been delivered for purposes of determining the maximum number of shares of Stock available for delivery under the Plan. To
the extent: (i) a Stock Option is exercised by using an actual or constructive exchange of shares of Stock to pay the Exercise
Price; or (ii) shares of Stock are withheld to satisfy withholding taxes upon exercise or vesting of an Award granted hereunder;
or (iii) shares are withheld to satisfy the exercise price of Stock Options in a net settlement of Stock Options, then the number
of shares of Stock available shall be reduced by the gross number of Stock Options exercised rather than by the net number of
shares of Stock issued.
Section
3.3
Limitations on Grants to Individuals
.
(a)
Employee Awards
.
(i)
Stock Options - Employees.
The maximum number of shares of Stock, in the aggregate, that may be covered by a Stock Option
granted to any one Employee under the Plan shall be Twenty-Seven Thousand Five Hundred Forty-One (27,541) shares, all of which
may be granted during any calendar year. This maximum amount represents approximately twenty-five percent (25%) of the maximum
number of shares of Stock that may be delivered pursuant Stock Options under Section 3.2.
(ii)
Restricted Stock Awards and Restricted Stock Units - Employees
. The maximum number of shares of Stock, in the aggregate,
that may be subject to Restricted Stock Awards and Restricted Stock Units granted to any one Employee under the Plan shall be
Eleven Thousand Sixteen (11,016) shares, all of which may be granted during any calendar year. This maximum amount represents
approximately twenty-five percent (25%) of the maximum number of shares of Stock that may be issued as Restricted Stock Awards
and Restricted Stock Units.
(b)
Director Awards.
(i)
Stock Options – Individual non-Employee Directors may be granted Stock Options of up to Five Thousand Five Hundred Eight
(5,508) shares, in the aggregate, all of which may be granted during any calendar year and, in addition, all non-Employee Directors,
in the aggregate, may be granted up to Thirty-Three Thousand Forty-Nine (33,049) shares all of which may be granted during any
calendar year. These maximum amounts represent approximately five percent (5%) and thirty percent (30%), respectively, of the
maximum number of shares of Stock that may be delivered pursuant to Stock Options under Section 3.2.
(ii)
Restricted Stock and Restricted Stock Units – Individual non-Employee Directors may be granted Restricted Stock and/or Restricted
Stock Units of up to Two Thousand Two Hundred Three (2,203) shares, in the aggregate, all of which may be granted during any calendar
year and, in addition, all non-Employee Directors, in the aggregate, may be granted up to Thirteen Thousand Two Hundred Nineteen
(13,219) shares all of which may be granted during any calendar year. These maximum amounts represent approximately five percent
(5%) and thirty percent (30%), respectively, of the maximum number of shares of Stock that may be delivered pursuant to Restricted
Stock and Restricted Stock Units under Section 3.2.
(iii)
Initial Grants to Non-Employee Directors
. Each non-Employee Director who is in the Service of the Company and/or a Subsidiary
on the Effective Date (the date of the 2019 Company annual stockholder meeting at which stockholders approve the Plan (“
2019
Annual Meeting
”)) shall automatically be granted an Award of Stock Options and Restricted Stock as follows:
(A)
Stock Options – Non-Employee Directors.
Each non-Employee Director who is in the Service of the Company and/or a
Subsidiary immediately following the 2019 Annual Meeting shall receive, on the day immediately following the Effective Date, a
grant of Five Thousand Five Hundred Eight (5,508) Stock Options and this amount represents approximately 5.0%, respectively, of
the maximum number of shares of Stock that may be delivered pursuant to Stock Options under Section 3.2.
(B)
Restricted Stock Awards – Non-Employee Directors.
Each non-Employee Director who is in the Service of the Company
and/or a Subsidiary immediately following the 2019 Annual Meeting shall receive, on the day immediately following the Effective
Date, a grant of Two Thousand Two Hundred Three (2,203) shares of Restricted Stock and this amount represents approximately 5.0%,
respectively, of the maximum number of shares of Stock that may be delivered pursuant to Restricted Stock Awards under Section
3.2.
(c)
The aggregate number of shares available for grant under this Plan and the number of shares subject to outstanding Awards, including
the limit on the number of Awards available for grant under this Plan described in this Section 3.3, shall be subject to adjustment
as provided in Section 3.4.
Section
3.4
Corporate Transactions
.
(a)
General.
In the event any recapitalization, reclassification, forward or reverse stock split, reorganization, merger, consolidation,
spin-off, combination, or exchange of shares of Stock or other securities, stock dividend or other special and nonrecurring dividend
or distribution (whether in the form of cash, securities or other property), liquidation, dissolution, or increase or decrease
in the number of shares of Stock without consideration, or similar corporate transaction or event, affects the shares of Stock
such that an adjustment is appropriate in order to prevent dilution or enlargement of the rights of Participants under the Plan
and/or under any Award granted under the Plan, then the Committee shall, in an equitable manner, adjust any or all of: (i) the
number and kind of securities deemed to be available thereafter for grants of Stock Options, Restricted Stock Awards and Restricted
Stock Units in the aggregate to all Participants and individually to any one Participant; (ii) the number and kind of securities
that may be delivered or deliverable in respect of outstanding Stock Options, Restricted Stock Awards and Restricted Stock Units;
and (iii) the Exercise Price. In addition, the Committee is authorized to make adjustments in the terms and conditions of, and
the criteria included in, Stock Options, Restricted Stock Awards and Restricted Stock Units (including, without limitation, cancellation
of Stock Options, Restricted Stock Awards and Restricted Stock Units in exchange for the in-the-money value, if any, of the vested
portion thereof, or substitution or exchange of Stock Options, Restricted Stock Awards and Restricted Stock Units using stock
of a successor or other entity) in recognition of unusual or nonrecurring events (including, without limitation, events described
in the preceding sentence) affecting the Company or any parent or Subsidiary or the financial statements of the Company or any
parent or Subsidiary, or in response to changes in applicable laws, regulations, or accounting principles.
(b)
Merger in which Company is Not Surviving Entity.
In the event of any merger, consolidation, or other business reorganization
(including, but not limited to, a Change in Control) in which the Company is not the surviving entity, unless otherwise determined
by the Committee at any time at or after grant and prior to the consummation of such merger, consolidation or other business reorganization,
any Stock Options granted under the Plan which remain outstanding shall be converted into Stock Options to purchase voting common
equity securities of the business entity which survives such merger, consolidation or other business reorganization having substantially
the same terms and conditions as the outstanding Stock Options under this Plan and reflecting the same economic benefit (as measured
by the difference between the aggregate Exercise Price and the value exchanged for outstanding shares of Stock in such merger,
consolidation or other business reorganization), all as determined by the Committee prior to the consummation of such merger;
provided, however, that the Committee may, at any time prior to the consummation of such merger, consolidation or other business
reorganization, direct that all, but not less than all, outstanding Stock Options be canceled as of the effective date of such
merger, consolidation or other business reorganization in exchange for a cash payment per share of Stock equal to the excess (if
any) of the value exchanged for an outstanding share of Stock in such merger, consolidation or other business reorganization over
the Exercise Price of the Stock Option being canceled; provided, further, that in the event the Exercise Price of outstanding
Stock Options exceed the value to be exchanged for an outstanding share of Stock (an “
Underwater Stock Option
”)
in such merger, consolidation or other business reorganization, the Committee may, in its discretion, cancel and terminate such
Underwater Stock Options without the consent of the holder of the Stock Option and without any payment to such holder.
Section
3.5
Delivery of Shares
. Delivery of shares of Stock or other amounts under the Plan shall be subject to the following:
(a)
Compliance with Applicable Laws.
Notwithstanding any other provision of the Plan, the Company shall have no obligation
to deliver any shares of Stock or make any other distribution of benefits under the Plan unless the delivery or distribution complies
with all applicable laws (including, the requirements of the Securities Act), and the applicable requirements of any Exchange
or similar entity.
(b)
Certificates.
To the extent that the Plan provides for the issuance of shares of Stock, the issuance may be effected on
a non-certificated basis, to the extent not prohibited by applicable law or the applicable rules of any Exchange.
ARTICLE
4 - CHANGE IN CONTROL
Section
4.1
Consequence of a Change in Control
. Subject to the provisions of Section 2.5 (relating to vesting and acceleration)
and Section 3.4 (relating to the adjustment of shares), and except as otherwise provided in the Plan:
(a)
At the time of a Participant’s Involuntary Termination at or following a Change in Control, all Stock Options then held
by the Participant shall become fully earned and exercisable (subject to the expiration provisions otherwise applicable to the
Stock Option). All Stock Options may be exercised for a period of one year following the Participant’s Involuntary Termination,
provided, however, that no Stock Option shall be eligible for treatment as an ISO in the event such Stock Option is exercised
more than three (3) months following such Involuntary Termination. To the extent not specified herein or in the Award Agreement,
the Committee shall have the discretion to determine the treatment of outstanding unvested Stock Options, provided, however, that
any such Awards will be deemed earned and shall vest if not assumed by a successor entity.
(b)
At the time of a Participant’s Involuntary Termination at or following a Change in Control, all Awards of Restricted Stock
and Restricted Stock Units shall become fully earned and vested immediately. Notwithstanding the above, any Awards, the vesting
of which are based on satisfaction of performance-based conditions will be vested as specified in subsection (c) of this Section
4.1.
(c)
In the event of a Change in Control, Performance Awards under the Plan shall vest pro-rata based on the portion of the performance
period elapsed at the date of the Change in Control and at the actual level of the performance measures that have been achieved,
however, if the performance measures are not reasonably determinable as of the date of the Change in Control, the performance
measures will be assumed to have been achieved at “target.”
(d)
With respect to Awards other than Awards the vesting of which is subject to performance-based conditions, in the event of a Change
in Control, if the acquiring corporation fails to assume the Awards granted hereunder or to convert the Awards to awards for the
acquiror’s stock options, restricted stock or restricted stock units, such awards shall vest immediately upon the effective
time of such Change in Control.
Section
4.2
Definition of Change in Control
. For purposes of this Agreement, the term “
Change in Control
”
shall mean the consummation by the Company or the Bank, in a single transaction or series of related transactions, of any of the
following:
(a)
Merger
: The Company or the Bank merges into or consolidates with another entity, or merges another bank or corporation
into the Company or the Bank, and as a result, less than a majority of the combined voting power of the resulting corporation
immediately after the merger or consolidation is held by persons who were stockholders of the Company or the Bank immediately
before the merger or consolidation;
(b)
Acquisition of Significant Share Ownership
: There is filed, or is required to be filed, a report on Schedule 13D or another
form or schedule (other than a Schedule 13G) required under Section 13(d) or 14(d) of the Exchange Act, if the schedule discloses
that the filing person or persons acting in concert has or have become the beneficial owner of 25% or more of a class of the Company’s
or Bank’s voting securities; provided, however, this clause (b) shall not apply to beneficial ownership of the Company’s
or the Bank’s voting shares held in a fiduciary capacity by an entity of which the Company directly or indirectly beneficially
owns 50% or more of its outstanding Voting Securities;
(c)
Change in Board Composition
: During any period of two consecutive years, individuals who constitute the Company’s
or the Bank’s board of directors at the beginning of the two-year period cease for any reason to constitute at least a majority
of the Company’s or the Bank’s board of directors; provided, however, that for purposes of this clause (c), each director
who is first elected by the board of directors (or first nominated by the board of directors for election by the stockholders)
by a vote of at least two-thirds (2/3) of the directors who were directors at the beginning of the two-year period shall be deemed
to have also been a director at the beginning of such period or who is appointed as a director as a result of a directive, supervisory
agreement or order issued by the primary federal regulator of the Company or the Bank or by the Federal Deposit Insurance Corporation
shall be deemed to have also been a director at the beginning of such period; or
(d)
Sale of Assets
: The Company or the Bank sells to a third party all or substantially all of its assets.
Notwithstanding
the foregoing, in the event that an Award constitutes Deferred Compensation, and the settlement of, or distribution of benefits
under, such Award is to be triggered solely by a Change in Control, then with respect to the Award, a Change in Control shall
be defined as required under Code Section 409A, as in effect at the time of such transaction.
In
addition, in no event shall a reorganization of SSB Bancorp, MHC (
i.e.
, the mutual holding company), the Company and the
Bank solely within its corporate structure or a second-step conversion constitute a Change in Control for purposes of the Plan.
ARTICLE
5 - COMMITTEE
Section
5.1
Administration
. The Plan shall be administered by the members of a committee of the Board of Directors of the Company
who are Disinterested Board Members or by the Board of Directors. If the Committee consists of fewer than three Disinterested
Board Members, then the Board of Directors shall appoint to the Committee additional Disinterested Board Members as shall be necessary
to provide for a Committee consisting of at least three Disinterested Board Members. Any members of the Committee who do not qualify
as Disinterested Board Members shall abstain from participating in any discussion or decision to make or administer Awards that
are made to Participants who at the time of consideration for such Award are persons subject to the short-swing profit rules of
Section 16 of the Exchange Act. The Board of Directors (or if necessary to maintain compliance with the applicable listing standards,
those members of the Board of Directors who are “independent directors” under the corporate governance statutes or
rules of any national Exchange on which the Company lists, has listed or seeks to list its securities) may, in their discretion,
take any action and exercise any power, privilege or discretion conferred on the Committee under the Plan with the same force
and effect under the Plan as if done or exercised by the Committee.
Section
5.2
Powers of Committee
. The administration of the Plan by the Committee shall be subject to the following:
(a)
the Committee will have the authority and discretion to select those persons who shall receive Awards, to determine the time or
times of receipt, to determine the types of Awards and the number of shares covered by the Awards, to establish the terms, conditions,
features (including automatic exercise in accordance with Section 7.17), performance criteria, restrictions (including without
limitation, provisions relating to non-competition, non-solicitation and confidentiality), and other provisions of such Awards
(subject to the restrictions imposed by Article 6), to cancel or suspend Awards and, except with respect to:
(i)
outstanding unvested Awards on the date of a Change in Control (which are subject to vesting in accordance with Section 4.1) or
(ii)
any Award within the first year after grant, or in violation of any minimum vesting requirements set forth in Section 2.5,
to
reduce, eliminate or accelerate any restrictions or vesting requirements applicable to an Award at any time after the grant of
the Award, or to extend the time period to exercise a Stock Option, provided that the extension is consistent with Code Section
409A.
(b)
The Committee will have the authority and discretion to interpret the Plan, to establish, amend and rescind any rules and regulations
relating to the Plan, and to make all other determinations that may be necessary or advisable for the administration of the Plan.
(c)
The Committee will have the authority to define terms not otherwise defined herein.
(d)
In controlling and managing the operation and administration of the Plan, the Committee shall take action in a manner that conforms
to the charter and bylaws of the Company and applicable corporate law.
(e)
The Committee will have the authority to: (i) suspend a Participant’s right to exercise a Stock Option during a blackout
period (or similar restricted period) or to exercise in a particular manner (i.e., such as a “cashless exercise” or
“broker-assisted exercise”) to the extent that the Committee deems it necessary or in the best interests of the Company
in order to comply with the securities laws and regulations issued by the SEC (the “
Blackout Period
”); and
(ii) to extend the period to exercise a Stock Option by a period of time equal to the Blackout Period, provided that such extension
does not violate Section 409A of the Code, the Incentive Stock Option requirements or applicable laws and regulations.
Section
5.3
Delegation by Committee
. Except to the extent prohibited by applicable law, the applicable rules of an Exchange
upon which the Company lists its shares or the Plan, or as necessary to comply with the exemptive provisions of Rule 16b-3 promulgated
under the Exchange Act, the Committee may allocate all or any portion of its responsibilities and powers to any one or more of
its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it, including:
(a) delegating to a committee of one or more members of the Board of Directors who are not “non-employee directors,”
within the meaning of Rule 16b-3, the authority to grant Awards under the Plan to eligible persons who are not then subject to
Section 16 of the Exchange Act; or (b) delegating to a committee of one or more members of the Board of Directors who would be
eligible to serve on the Compensation Committee of the Company, if applicable, pursuant to the listing requirements imposed by
any national securities exchange on which the Company lists, has listed or seeks to list its securities, the authority to grant
awards under the Plan. The acts of such delegates shall be treated hereunder as acts of the Committee and such delegates shall
report regularly to the Committee regarding the delegated duties and responsibilities and any Awards so granted. Any such allocation
or delegation may be revoked by the Committee at any time.
Section
5.4
Information to be Furnished to Committee
. As may be permitted by applicable law, the Company and its Subsidiaries
shall furnish the Committee with data and information it determines may be required for it to discharge its duties. The records
of the Company and its Subsidiaries as to a Participant’s employment, termination of employment, leave of absence, reemployment
and compensation shall be conclusive on all persons unless determined by the Committee to be manifestly incorrect. Subject to
applicable law, Participants and other persons entitled to benefits under the Plan must furnish the Committee such evidence, data
or information as the Committee considers desirable to carry out the terms of the Plan.
Section
5.5
Committee Action
. The Committee shall hold meetings, and may make 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. Subject
to Section 5.1, all actions of the Committee, including interpretations of provisions of the Plan, shall be final and conclusive
and shall be binding upon the Company, Participants 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 a member of the
Committee or by a representative of the Committee authorized to sign the same in its behalf.
ARTICLE
6 - AMENDMENT AND TERMINATION
Section
6.1
General
. The Board of Directors may, as permitted by law, at any time, amend or terminate the Plan, and may amend
any Award Agreement, provided that no amendment or termination (except as provided in Sections 2.6, 3.4 and 6.2) may cause the
Award to violate Code Section 409A, may cause the repricing of a Stock Option, or, in the absence of written consent to the change
by the affected Participant (or, if the Participant is not then living, the affected beneficiary), adversely impair the rights
of any Participant or beneficiary under any Award prior to the date the amendment is adopted by the Board of Directors;
provided,
however
, that, no amendment may (a) materially increase the benefits accruing to Participants under the Plan, (b) materially
increase the aggregate number of securities which may be issued under the Plan, other than pursuant to Section 3.4, or (c) materially
modify the requirements for participation in the Plan, unless the amendment is approved by the Company’s stockholders.
Section
6.2
Amendment to Conform to Law and Accounting Changes
. Notwithstanding any provision in this Plan or any Award Agreement
to the contrary, the Committee may amend the Plan or any Award Agreement, to take effect retroactively or otherwise, as deemed
necessary or advisable for the purpose of: (i) conforming the Plan or the Award Agreement to any present or future law relating
to plans of this or similar nature (including, but not limited to, Code Section 409A); or (ii) avoiding an accounting treatment
resulting from an accounting pronouncement or interpretation thereof issued by the SEC or Financial Accounting Standards Board
subsequent to the adoption of the Plan or the making of the Award affected thereby, which, in the sole discretion of the Committee,
may materially and adversely affect the financial condition or results of operations of the Company. By accepting an Award under
this Plan, each Participant agrees and consents to any amendment made pursuant to this Section 6.2 to any Award granted under
the Plan without further consideration or action.
ARTICLE
7 - GENERAL TERMS
Section
7.1
No Implied Rights
.
(a)
No Rights to Specific Assets.
Neither a Participant nor any other person shall by reason of participation in the Plan acquire
any right in or title to any assets, funds or property of the Company or any Subsidiary whatsoever, including any specific funds,
assets, or other property which the Company or any Subsidiary, in its sole discretion, may set aside in anticipation of a liability
under the Plan. A Participant shall have only a contractual right to the shares of Stock or amounts, if any, payable or distributable
under the Plan, unsecured by any assets of the Company or any Subsidiary, and nothing contained in the Plan shall constitute a
guarantee that the assets of the Company or any Subsidiary shall be sufficient to pay any benefits to any person.
(b)
No Contractual Right to Employment or Future Awards.
The Plan does not constitute a contract of employment, and selection
as a Participant will not give any participating Employee the right to be retained in the employ of the Company or any Subsidiary
or any right or claim to any benefit under the Plan, unless the right or claim has specifically accrued under the terms of the
Plan. No individual shall have the right to be selected to receive an Award under the Plan, or, having been so selected, to receive
a future Award under the Plan.
(c)
No Rights as a Stockholder
. Except as otherwise provided in the Plan or in the Award Agreement, no Award shall confer upon
the holder thereof any rights as a stockholder of the Company prior to the date on which the individual fulfills all conditions
for receipt of such rights.
Section
7.2
Transferability
. Except as otherwise so provided by the Committee, Stock Options under the Plan are not transferable
except: (i) as designated by the Participant by will or by the laws of descent and distribution; (ii) to a trust established by
the Participant, if under Code Section 671 and applicable state law, the Participant is considered the sole beneficial owner of
the Stock Option while held in trust; or (iii) between spouses incident to a divorce or pursuant to a domestic relations order,
provided, however, in the case of a transfer within the meaning of Section 7.2(iii), the Stock Option shall not qualify as an
ISO as of the day of such transfer. The Committee shall have the discretion to permit the transfer of vested Stock Options (other
than ISOs) under the Plan; provided, however, that such transfers shall be limited to Immediate Family Members of Participants,
trusts and partnerships established for the primary benefit of such family members or to charitable organizations, and; provided,
further, that such transfers are not made for consideration to the Participant.
Awards
of Restricted Stock shall not be transferable prior to the time that the Awards vest in the Participant. A Restricted Stock Unit
Award is not transferable, except in the event of death, prior to the time that the Restricted Stock Unit Award vests and is earned
and the property in which the Restricted Stock Unit is denominated is distributed to the Participant or the Participant’s
Beneficiary.
Section
7.3
Designation of Beneficiaries
. A Participant may file with the Company a written designation of a beneficiary or
beneficiaries under this Plan and may from time to time revoke or amend any such designation. Any designation of beneficiary under
this Plan shall be controlling over any other disposition, testamentary or otherwise (unless such disposition is pursuant to a
domestic relations order);
provided, however,
that if the Committee is in doubt as to the entitlement of any such beneficiary
to any Award, the Committee may determine to recognize only the legal representative of the Participant, in which case the Company,
the Committee and the members thereof shall not be under any further liability to anyone.
Section
7.4
Non-Exclusivity
. Neither the adoption of this Plan by the Board of Directors nor the submission of the Plan to
the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board of Directors
or the Committee to adopt other incentive arrangements as may deemed desirable, including, without limitation, the granting of
Restricted Stock Awards, Restricted Stock Units or Stock Options and such arrangements may be either generally applicable or applicable
only in specific cases.
Section
7.5
Eligibility for Form and Time of Elections/Notification Under Code Section 83(b)
. Unless otherwise specified herein,
each election required or permitted to be made by any Participant or other person entitled to benefits under the Plan, and any
permitted modification or revocation thereof, shall be filed with the Company at such times, in such form, and subject to such
restrictions and limitations, not inconsistent with the terms of the Plan, as the Committee shall require. Notwithstanding anything
herein to the contrary, the Committee may, on the date of grant or at a later date, as applicable, prohibit an individual from
making an election under Code Section 83(b). If the Committee has not prohibited an individual from making this election, an individual
who makes this election shall notify the Committee of the election within ten (10) days of filing notice of the election with
the Internal Revenue Service or as otherwise required by the Committee. This requirement is in addition to any filing and notification
required under the regulations issued under the authority of Code Section 83(b).
Section
7.6
Evidence
. Evidence required of anyone under the Plan may be by certificate, affidavit, document or other information
upon which the person is acting considers pertinent and reliable, and signed, made or presented by the proper party or parties.
Section
7.7
Tax Withholding
. Where a Participant is entitled to receive shares of Stock upon the vesting or exercise of an
Award, the Company shall have the right to require the Participant to pay to the Company the amount of any tax that the Company
is required to withhold with respect to the vesting or exercise, or, in lieu thereof, to retain, or to sell without notice, a
sufficient number of shares of Stock to cover the minimum amount required to be withheld. To the extent determined by the Committee
and specified in an Award Agreement, a Participant shall have the right to direct the Company to satisfy the amount required for
federal, state and local tax withholding by: (i) with respect to a Stock Option, reducing the number of shares of Stock subject
to the Stock Option (without issuance of such shares of Stock to the Stock Option holder) by a number equal to the quotient of
(a) the amount of required tax withholding divided by (b) the excess of the Fair Market Value of a share of Stock on the exercise
date over the Exercise Price per share of Stock; and (ii) with respect to Restricted Stock Awards and Restricted Stock Units,
withholding a number of shares (based on the Fair Market Value on the vesting date) otherwise vesting that would satisfy the amount
of required tax withholding. Provided there are no adverse accounting consequences to the Company (a requirement to have liability
classification of an award under FASB ASC Topic 718 is an adverse consequence), a Participant who is not required to have taxes
withheld may request the Company withhold in accordance with the preceding sentence as if the Award were subject to tax withholding
requirements.
Section
7.8
Action by Company or Subsidiary
. Any action required or permitted to be taken by the Company or any Subsidiary
shall be by resolution of its board of directors, or by action of one or more members of the board of directors (including a committee
of the board of directors) who are duly authorized to act for the board of directors, or (except to the extent prohibited by applicable
law or applicable rules of the Exchange on which the Company lists its securities) by a duly authorized officer of the Company
or such Subsidiary.
Section
7.9
Successors
. All obligations of the Company under the Plan shall be binding upon and inure to the benefit of any
successor to the Company, whether the existence of the successor is the result of a direct or indirect purchase, merger, consolidation
or otherwise, of all or substantially all of the business, stock, and/or assets of the Company.
Section
7.10
Indemnification
. To the fullest extent permitted by law and the Company’s governing documents, each person
who is or shall have been a member of the Committee, or of the Board of Directors, or an officer of the Company to whom authority
was delegated in accordance with Section 5.3, or an Employee of the Company, shall be indemnified and held harmless by the Company
against and from any loss (including amounts paid in settlement), cost, liability or expense (including reasonable attorneys’
fees) that may be imposed upon or reasonably incurred by him in connection with or resulting from any claim, action, suit, or
proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to
act under the Plan and against and from any and all amounts paid by him in settlement thereof, with the Company’s approval,
or paid by him in satisfaction of any judgment in any such action, suit, or proceeding against him, provided he or she shall give
the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend
it on his own behalf, unless such loss, cost, liability, or expense is a result of his own willful misconduct or except as expressly
provided by statute or regulation. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification
to which such persons may be entitled under the Company’s charter or bylaws, as a matter of law, or otherwise, or any power
that the Company may have to indemnify them or hold them harmless. The foregoing right to indemnification shall include the right
to be paid by the Company the expenses incurred in defending any such proceeding in advance of its final disposition, provided,
however, that, if required by applicable law, an advancement of expenses shall be made only upon delivery to the Company of an
undertaking, by or on behalf of such persons to repay all amounts so advanced if it shall ultimately be determined by final judicial
decision from which there is no further right to appeal that such person is not entitled to be indemnified for such expenses.
Section
7.11
No Fractional Shares
. Unless otherwise permitted by the Committee, no fractional shares of Stock shall be issued
or delivered pursuant to the Plan or any Award Agreement. The Committee shall determine whether cash or other property shall be
issued or paid in lieu of fractional shares or whether the fractional shares or any rights thereto shall be forfeited or otherwise
eliminated by rounding down.
Section
7.12
Governing Law
. The Plan, all Awards granted hereunder, and all actions taken in connection herewith shall be governed
by and construed in accordance with the laws of the Commonwealth of Pennsylvania without reference to principles of conflict of
laws, except as superseded by applicable federal law. The federal and state courts located in the Commonwealth of Pennsylvania,
shall have exclusive jurisdiction over any claim, action, complaint or lawsuit brought under the terms of the Plan. By accepting
any Award, each Participant and any other person claiming any rights under the Plan agrees to submit himself and any legal action
that brought with respect to the Plan, to the sole jurisdiction of such courts for the adjudication and resolution of any such
disputes.
Section
7.13
Benefits Under Other Plans
. Except as otherwise provided by the Committee or as set forth in a Qualified Retirement
Plan, non-qualified plan or other benefit plan, Awards to a Participant (including the grant and the receipt of benefits) under
the Plan shall be disregarded for purposes of determining the Participant’s benefits under, or contributions to, any Qualified
Retirement Plan, non-qualified plan and any other benefit plans maintained by the Participant’s employer. The term “
Qualified
Retirement Plan
” means any plan of the Company or a Subsidiary that is intended to be qualified under Code Section 401(a).
Section
7.14
Validity
. If any provision of this Plan is determined to be illegal or invalid for any reason, said illegality
or invalidity shall not affect the remaining parts of the Plan, but this Plan shall be construed and enforced as if such illegal
or invalid provision has never been included herein.
Section
7.16
Notice
. Unless otherwise provided in an Award Agreement, all written notices and all other written communications
to the Company provided for in the Plan or in any Award Agreement, shall be delivered personally or sent by registered or certified
mail, return receipt requested, postage prepaid (provided that international mail shall be sent via overnight or two-day delivery),
or sent by facsimile, email or prepaid overnight courier to the Company at its principal executive office. Notices, demands, claims
and other communications shall be deemed given:
(a)
in the case of delivery by overnight service with guaranteed next day delivery, the next day or the day designated for delivery;
(b)
in the case of certified or registered U.S. mail, five days after deposit in the U.S. mail; or
(c)
in the case of facsimile or email, the date upon which the transmitting party received confirmation of receipt;
provided, however,
that in no event shall any such communications be deemed to be given later than the date they are actually received, provided
they are actually received.
In
the event a communication is not received, it shall only be deemed received upon the showing of an original of the applicable
receipt, registration or confirmation from the applicable delivery service. Communications that are to be delivered by U.S. mail
or by overnight service to the Company shall be directed to the attention of the Company’s Corporate Secretary, unless otherwise
provided in the Award Agreement.
Section
7.16
Forfeiture Events
.
The
Committee may specify in an Award Agreement that the Participant’s rights, payments, and benefits with respect to an Award
shall be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain specified events, in addition
to any otherwise applicable vesting or performance conditions of an Award. Such events include, but are not limited to, termination
of employment for Cause, termination of the Participant’s provision of Services to the Company or any Subsidiary, violation
of material Company or Subsidiary policies, breach of noncompetition, confidentiality, or other restrictive covenants that may
apply to the Participant, or other conduct of the Participant that is detrimental to the business or reputation of the Company
or any Subsidiary.
Section
7.17
Automatic Exercise
. In the sole discretion of the Committee exercised in accordance with Section 5.2(a), any Stock
Options that are exercisable but unexercised as of the day immediately before the tenth anniversary of the date of grant may be
automatically exercised, in accordance with procedures established for this purpose by the Committee, but only if the Exercise
Price is less than the Fair Market Value of a share of Stock on that date and the automatic exercise will result in the issuance
of at least one (1) whole share of Stock to the Participant after payment of the Exercise Price and any applicable tax withholding
requirements. Payment of the Exercise Price and any applicable tax withholding requirements shall be made by a net settlement
of the Stock Option whereby the number of shares of Stock to be issued upon exercise are reduced by a number of shares having
a Fair Market Value on the date of exercise equal to the Exercise Price and any applicable tax withholding.
Section
7.18
Regulatory Requirements
.
(a)
The grant and settlement of Awards shall be conditioned upon and subject to compliance with Section 18(k) of the Federal Deposit
Insurance Act, 12 U.S.C. 1828(k), and the rules and regulations promulgated thereunder (12 C.F.R. Part 359).
(b)
The Board of Governors of the Federal Reserve System shall have the authority to direct the Company to require Participants to
exercise or forfeit their stock rights under the Plan.
Section
7.19.
Awards Subject to Clawback
.
(a)
If the Company is required to prepare an accounting restatement due to the material noncompliance of the Company, as a result
of misconduct, with any financial reporting requirement under the federal securities laws, and the automatic forfeiture provisions
under Section 304 of the Sarbanes-Oxley Act of 2002 apply as a result, any Participant who was an executive officer of the Company
at the time of grant or at the time of restatement shall be subject to “clawback” as if such person was subject to
Section 304 of the Sarbanes-Oxley Act of 2002.
(b)
Awards granted hereunder are subject to any Clawback Policy that may be adopted by the Company from time to time, whether pursuant
to the provisions of Section 954 of the Dodd-Frank Act, implementing regulations thereunder, or otherwise.
ARTICLE
8 - DEFINED TERMS; CONSTRUCTION
Section
8.1
In addition to the other definitions contained herein, unless otherwise specifically provided in an Award Agreement, the
following definitions shall apply:
(a)
“10% Stockholder” means an individual who, at the time of grant, owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company.
(b)
“Award” means any Stock Option, Restricted Stock or Restricted Stock Unit or any other right or interest relating
to Stock or cash, granted to a Participant under the Plan.
(c)
“Award Agreement” means the document (in whatever medium prescribed by the Committee and whether or not a signature
is required or provided by a Participant) that evidences the terms and conditions of an Award. A copy of the Award Agreement shall
be provided (or made available electronically) to each Participant.
(d)
“Board of Directors” means the Board of Directors of the Company.
(e)
If the Participant is subject to a written employment agreement (or other similar written agreement) with the Company or a Subsidiary
that provides a definition of termination for “Cause,” then, for purposes of this Plan, the term “Cause”
shall have meaning set forth in that agreement. In the absence of such a definition, “Cause” means termination because
of a Participant’s personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit,
material breach of the Bank’s Code of Ethics, material violation of the Sarbanes-Oxley requirements for officers of public
companies that in the reasonable opinion of the Chief Executive Officer of the Bank or the Board of Directors will likely cause
substantial financial harm or substantial injury to the reputation of the Bank or the Company, willfully engaging in actions that
in the reasonable opinion of the Board of Directors will likely cause substantial financial harm or substantial injury to the
business reputation of the Bank or the Company, intentional failure to perform stated duties, willful violation of any law, rule
or regulation (other than routine traffic violations or similar offenses) or final cease-and-desist order, or material breach
of any provision of the contract.
(f)
“Change in Control” has the meaning ascribed to it in Section 4.2.
(g)
“Code” means the Internal Revenue Code of 1986, as amended, and any rules, regulations and guidance promulgated thereunder,
as modified from time to time.
(h)
“Director” means a member of the Board of Directors or of a board of directors of a Subsidiary.
(i)
If the Participant is subject to a written employment agreement (or other similar written agreement) with the Company or a Subsidiary
that provides a definition of “Disability” or “Disabled,” then, for purposes of this Plan, the terms “Disability”
or “Disabled” shall have meaning set forth in that agreement. In the absence of such a definition, “Disability”
shall be defined in accordance with the Bank’s long-term disability plan. In the absence of a long-term disability plan
or to the extent that an Award is subject to Code Section 409A, “Disability” or “Disabled” shall mean
that a Participant has been determined to be disabled by the Social Security Administration. Except to the extent prohibited under
Code Section 409A, if applicable, the Committee shall have discretion to determine if a Disability has occurred.
(j)
“Disinterested Board Member” means a member of the Board of Directors who: (i) is not a current Employee of the Company
or a Subsidiary; (ii) is not a former employee of the Company or a Subsidiary who receives compensation for prior Services (other
than benefits under a tax-qualified retirement plan) during the taxable year; (iii) has not been an officer of the Company or
a Subsidiary; (iv) does not receive compensation from the Company or a Subsidiary, either directly or indirectly, for services
as a consultant or in any capacity other than as a Director except in an amount for which disclosure would not be required pursuant
to Item 404 of SEC Regulation S-K in accordance with the proxy solicitation rules of the SEC, as amended or any successor provision
thereto; and (v) does not possess an interest in any other transaction, and is not engaged in a business relationship for which
disclosure would be required pursuant to Item 404(a) of SEC Regulation S-K under the proxy solicitation rules of the SEC, as amended
or any successor provision thereto. The term Disinterested Board Member shall be interpreted in such manner as shall be necessary
to conform to the requirements of Rule 16b-3 promulgated under the Exchange Act and the corporate governance standards imposed
on compensation committees under the listing requirements imposed by any Exchange on which the Company lists or seeks to list
its securities.
(k)
“Dividend Equivalent Rights” means the right, associated with a Restricted Stock Unit, to receive a payment, in cash
or Stock, as applicable, equal to the amount of dividends paid on a share of the Company’s Stock, as specified in the Award
Agreement.
(l)
“Employee” means any person employed by the Company or a Subsidiary. Directors who are also employed by the Company
or a Subsidiary shall be considered Employees under the Plan.
(m)
“Exchange” means any national securities exchange on which the Stock may from time to time be listed or traded.
(n)
“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time.
(o)
“Exercise Price” means the price established with respect to a Stock Option pursuant to Section 2.2.
(p)
“Fair Market Value” on any date, means: (i) if the Stock is listed on an Exchange, the closing sales price on that
Exchange or over such system on that date or, in the absence of reported sales on that date, the closing sales price on the immediately
preceding date on which sales were reported; or (ii) if the Stock is not listed on a securities exchange, “Fair Market Value”
shall mean a price determined by the Committee in good faith on the basis of objective criteria consistent with the requirements
of Code Section 422 and applicable provisions of Code Section 409A.
(q)
A termination of employment by an Employee Participant shall be deemed a termination of employment for “Good Reason”
as a result of the Participant’s resignation from the employ of the Company or any Subsidiary upon the occurrence of any
of the following events:
(i)
a material diminution in Participant’s base compensation;
(ii)
a material diminution in Participant’s authority, duties or responsibilities;
(iii)
a change in the geographic location at which Participant must perform his duties that is more than thirty-five (35) miles from
the location of Participant’s principal workplace on the date of this Agreement; or
(iv)
in the event a Participant is a party to an employment, change in control, severance or similar agreement that provides a definition
for “Good Reason” or a substantially similar term, then the occurrence of any event set forth in such definition.
(r)
“Immediate Family Member” means with respect to any Participant: (i) any of the Participant’s children, stepchildren,
grandchildren, parents, stepparents, grandparents, spouses, former spouses, siblings, nieces, nephews, mothers-in-law, fathers-in-law,
sons-in-law, daughters-in-law, brothers-in-law or sisters-in-law, including relationships created by adoption; (ii) any natural
person sharing the Participant’s household (other than as a tenant or employee, directly or indirectly, of the Participant);
(iii) a trust in which any combination of the Participant and persons described in section (i) and (ii) above own more than fifty
percent (50%) of the beneficial interests; (iv) a foundation in which any combination of the Participant and persons described
in sections (i) and (ii) above control management of the assets; or (v) any other corporation, partnership, limited liability
company or other entity in which any combination of the Participant and persons described in sections (i) and (ii) above control
more than fifty percent (50%) of the voting interests.
(s)
“Involuntary Termination” means the Termination of Service of a Participant by the Company or Subsidiary (other than
termination for Cause) or termination of employment by an Employee Participant for Good Reason.
(t)
“Incentive Stock Option” or “ISO” has the meaning ascribed to it in Section 2.1(a).
(u)
“Non-Qualified Option” means the right to purchase shares of Stock that is either: (i) designated as a Non-Qualified
Option; (ii) granted to a Participant who is not an Employee; or (iii) granted to an Employee, but does not satisfy the requirements
of Code Section 422.
(v)
“Performance Award” means an Award that vests in whole or in part upon the achievement of one or more specified performance
measures, as determined by the Committee. The conditions for grant or vesting and the other provisions of a Performance Award
(including without limitation any applicable performance measures) need not be the same with respect to each recipient. A Performance
Award shall vest, or as to Restricted Stock Units be settled, after the Committee has determined that the performance goals have
been satisfied. Notwithstanding anything herein to the contrary, no Performance Award shall be granted under terms that will permit
its accelerated vesting upon Retirement or other termination of Service (other than death or Disability or upon Involuntary Termination
following a Change in Control). Notwithstanding anything to the contrary herein, in the sole discretion of the Committee exercised
at the time of grant of a Performance Award, in the event of Retirement of a Participant during the performance period, the Award
Agreement may provide for the vesting of all or a portion of the Award, so long as the vesting is not accelerated but shall occur
at the end of the performance period.
Performance
measures can include, but are not limited to: book value or tangible book value per share; basic earnings per share (
e.g.,
earnings before interest and taxes, earnings before interest, taxes, depreciation and amortization; or earnings per share);
basic cash earnings per share; diluted earnings per share; return on equity; net income or net income before taxes; net interest
income; non-interest income; non-interest expense to average assets ratio; cash general and administrative expense to average
assets ratio; efficiency ratio; cash efficiency ratio; financial return ratios; core earnings, capital; increase in revenue; total
stockholder return; net operating income, operating income; net interest margin or net interest rate spread; stock price; assets,
growth in assets, loans or deposits, asset quality level, charge offs, loan reserves, non-performing assets, loans, deposits,
growth of loans, loan production volume, non-performing loans, deposits or assets; regulatory compliance or safety and soundness;
achievement of balance sheet or income statement objectives and strategic business objectives, or any combination of these or
other measures.
Performance
measures may be based on the performance of the Company as a whole or on any one or more Subsidiaries or business units of the
Company or a Subsidiary and may be measured relative to a peer group, an index or a business plan and may be considered as absolute
measures or changes in measures. The terms of an Award may provide that partial achievement of performance measures may result
in partial payment or vesting of the award or that the achievement of the performance measures may be measured over more than
one period or fiscal year. In establishing any performance measures, the Committee may provide for the exclusion of the effects
of the following items, to the extent the exclusion is set forth in the Award Agreement and identified in the audited financial
statements of the Company, including footnotes, or in the Management’s Discussion and Analysis section of the Company’s
annual report or in the Compensation Discussion and Analysis Section, if any, of the Company’s annual proxy statement: (i)
extraordinary, unusual, and/or nonrecurring items of gain or loss; (ii) gains or losses on the disposition of a business; (iii)
dividends declared on the Company’s stock; (iv) changes in tax or accounting principles, regulations or laws; or (v) expenses
incurred in connection with a merger, branch acquisition or similar transaction. Subject to the preceding sentence, if the Committee
determines that a change in the business, operations, corporate structure or capital structure of the Company or the manner in
which the Company or its Subsidiaries conducts its business or other events or circumstances render current performance measures
to be unsuitable, the Committee may modify such performance measures, in whole or in part, as the Committee deems appropriate.
Notwithstanding anything to the contrary herein, performance measures relating to any Award hereunder will be modified, to the
extent applicable, to reflect a change in the outstanding shares of Stock of the Company by reason of any stock dividend or stock
split, or a corporate transaction, such as a merger of the Company into another corporation, any separation of a corporation or
any partial or complete liquidation by the Company or a Subsidiary. If a Participant is promoted, demoted or transferred to a
different business unit during a performance period, the Committee may determine that the selected performance measures or applicable
performance period are no longer appropriate, in which case, the Committee, in its sole discretion, may: (i) adjust, change or
eliminate the performance measures or change the applicable performance period; or (ii) cause to be made a cash payment to the
Participant in an amount determined by the Committee.
(w)
“Restricted Stock” or “Restricted Stock Award” has the meaning ascribed to it in Section 2.3(a).
(x)
“Restricted Stock Unit” has the meaning ascribed to it in Section 2.4(a).
(y)
“Restriction Period” has the meaning set forth in Section 2.4(b)(iii).
(z)
“Retirement” means, unless otherwise specified in an Award Agreement, retirement from employment or service on or
after the attainment of age 65. An Employee who is also a Director shall not be deemed to have terminated due to Retirement for
purposes of vesting of Awards and exercise of Stock Options until both Service as an Employee and Service as a Director has ceased.
A non-Employee Director will be deemed to have terminated due to Retirement under the provisions of this Plan only if the non-Employee
Director has terminated Service on the board(s) of directors of the Company and any Subsidiary or affiliate in accordance with
applicable Company policy, following the provision of written notice to such board(s) of directors of the non-Employee Director’s
intention to retire. A non-Employee Director who continues in Service as a director emeritus or advisory director shall be deemed
to be in Service of the Company or a Subsidiary for purposes of vesting of Awards and exercise of Stock Options.
(aa)
“SEC” means the United States Securities and Exchange Commission.
(bb)
“Securities Act” means the Securities Act of 1933, as amended from time to time.
(cc)
“Service” means service as an Employee or Director of the Company or a Subsidiary, as the case may be, and shall include
service as a director emeritus or advisory director. Service shall not be deemed interrupted in the case of sick leave, military
leave or any other absence approved by the Company or a Subsidiary, in the case of transferees between payroll locations or between
the Company, a Subsidiary or a successor.
(dd)
“Stock” means the common stock of the Company, $0.01 par value per share.
(ee)
“Stock Option” has the meaning ascribed to it in Section 2.2.
(ff)
“Subsidiary” means any corporation, affiliate, bank or other entity which would be a subsidiary corporation with respect
to the Company as defined in Code Section 424(f) and, other than with respect to an ISO, shall also mean any partnership or joint
venture in which the Company and/or other Subsidiary owns more than 50% of the capital or profits interests.
(gg)
“Termination of Service” means the first day occurring on or after a grant date on which the Participant ceases to
be an Employee or Director (including a director emeritus or advisory director) of the Company or any Subsidiary, regardless of
the reason for such cessation, subject to the following:
(i)
The Participant’s cessation as an Employee shall not be deemed to occur by reason of the transfer of the Participant between
the Company and a Subsidiary or between two Subsidiaries.
(ii)
The Participant’s cessation as an Employee shall not be deemed to occur by reason of the Participant’s being on a
bona fide leave of absence from the Company or a Subsidiary approved by the Company or Subsidiary otherwise receiving the Participant’s
Services, provided the leave of absence does not exceed six months, or if longer, so long as the Employee retains a right to reemployment
with the Company or Subsidiary under an applicable statute or by contract. For these purposes, a leave of absence constitutes
a bona fide leave of absence only if there is a reasonable expectation that the Employee will return to perform Services for the
Company or Subsidiary. If the period of leave exceeds six months and the Employee does not retain a right to reemployment under
an applicable statute or by contract, the employment relationship is deemed to terminate on the first day immediately following
the six month period. For purposes of this sub-section, to the extent applicable, an Employee’s leave of absence shall be
interpreted by the Committee in a manner consistent with Treasury Regulation Section 1.409A-1(h)(1).
(iii)
If, as a result of a sale or other transaction, the Subsidiary for whom Participant is employed (or to whom the Participant is
providing Services) ceases to be a Subsidiary, and the Participant is not, following the transaction, an Employee of the Company
or an entity that is then a Subsidiary, then the occurrence of the transaction shall be treated as the Participant’s Termination
of Service caused by the Participant being discharged by the entity by which the Participant is employed or to which the Participant
is providing Services.
(iv)
Except to the extent Code Section 409A may be applicable to an Award, and subject to the foregoing paragraphs of this sub-section,
the Committee shall have discretion to determine if a Termination of Service has occurred and the date on which it occurred. In
the event that any Award under the Plan constitutes Deferred Compensation (as defined in Section 2.6), the term Termination of
Service shall be interpreted by the Committee in a manner consistent with the definition of “Separation from Service”
as defined under Code Section 409A and under Treasury Regulation Section 1.409A-1(h)(ii). For purposes of this Plan, a “
Separation
from Service
” shall have occurred if the employer and Participant reasonably anticipate that no further Services will
be performed by the Participant after the date of the Termination of Service (whether as an employee or as an independent contractor)
or the level of further Services performed will be less than 50% of the average level of bona fide Services in the 36 months immediately
preceding the Termination of Service. If a Participant is a “Specified Employee,” as defined in Code Section 409A
and any payment to be made hereunder shall be determined to be subject to Code Section 409A, then if required by Code Section
409A, the payment or a portion of the payment (to the minimum extent possible) shall be delayed and shall be paid on the first
day of the seventh month following Participant’s Separation from Service.
(v)
With respect to a Participant who is a Director, cessation as a Director will not be deemed to have occurred if the Participant
continues as a director emeritus or advisory director. With respect to a Participant who is both an Employee and a Director, termination
of employment as an Employee shall not constitute a Termination of Service for purposes of the Plan so long as the Participant
continues to provide Service as a Director or director emeritus or advisory director.
(hh)
“Voting Securities” means any securities which ordinarily possess the power to vote in the election of directors without
the happening of any pre-condition or contingency.
Section
8.2
In this Plan, unless otherwise stated or the context otherwise requires, the following uses apply:
(a)
actions permitted under this Plan may be taken at any time and from time to time in the actor’s reasonable discretion;
(b)
references to a statute shall refer to the statute and any successor statute, and to all regulations promulgated under or implementing
the statute or its successor, as in effect at the relevant time;
(c)
in computing periods from a specified date to a later specified date, the words “from” and “commencing on”
(and the like) mean “from and including,” and the words “to,” “until” and “ending on”
(and the like) mean “to, but excluding”;
(d)
references to a governmental or quasi-governmental agency, authority or instrumentality shall also refer to a regulatory body
that succeeds to the functions of the agency, authority or instrumentality;
(e)
indications of time of day mean Eastern Time;
(f)
“including” means “including, but not limited to”;
(g)
all references to sections, schedules and exhibits are to sections, schedules and exhibits in or to this Plan unless otherwise
specified;
(h)
all words used in this Plan will be construed to be of the gender or number as the circumstances and context require;
(i)
the captions and headings of articles, sections, schedules and exhibits appearing in or attached to this Plan have been inserted
solely for convenience of reference and shall not be considered a part of this Plan nor shall any of them affect the meaning or
interpretation of this Plan or any of its provisions;
(j)
any reference to a document or set of documents in this Plan, and the rights and obligations of the parties under any such documents,
shall mean such document or documents as amended from time to time, and any and all modifications, extensions, renewals, substitutions
or replacements thereof; and
(k)
all accounting terms not specifically defined herein shall be construed in accordance with GAAP.
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