KEARNY FINANCIAL CORP.
2005 STOCK COMPENSATION AND INCENTIVE PLAN
1. PURPOSE OF PLAN.
The purpose of this 2005 Stock Compensation and Incentive Plan is to provide
incentives and rewards to officers, employees and directors that contribute to
the success and growth of Kearny Financial Corp. and its Affiliates, and to
assist all these entities in attracting and retaining directors, executives and
other key employees with experience and ability.
2. DEFINITIONS.
"Affiliate" means any "parent corporation" or "subsidiary corporation" of the
Company, as such terms are defined in Sections 424(e) and 424(f) of the Code.
"Award" means Restricted Stock Awards and/or Stock Options, as set forth in
Section 6 of the Plan.
"Bank" means Kearny Federal Savings Bank, and any successors thereto.
"Beneficiary" means the person or persons designated by the Participant to
receive any benefits payable under the Plan in the event of such Participant's
death. Such person or persons shall be designated in writing by the Participant
and addressed to the Company or the Committee on forms provided for this purpose
by the Committee, and delivered to the Company or the Committee. Such
Beneficiary designation may be changed from time to time by similar written
notice to the Committee. A Participant's last will and testament or any codicil
thereto shall not constitute written designation of a Beneficiary. In the
absence of such written designation, the Beneficiary shall be the Participant's
surviving spouse, if any, or if none, the Participant's estate.
"Board of Directors" means the board of directors of the Company.
"Cause" means the personal dishonesty, incompetence, willful misconduct, breach
of fiduciary duty involving personal profits, intentional failure to perform
stated duties, willful violation of a material provision of any law, rule or
regulation (other than traffic violations and similar offense), or a material
violation of a final cease-and-desist order or any other action which results in
a substantial financial loss to the Company or its Affiliates.
"Change in Control" shall mean: (i) the sale of all, or a material portion, of
the assets of the Company or its Affiliates; (ii) the merger or recapitalization
of the Company whereby the Company is not the surviving entity; (iii) a change
in control of the Company, as otherwise defined or determined by the Office of
Thrift Supervision or regulations promulgated by it; or (iv) the acquisition,
directly or indirectly, of the beneficial ownership (within the meaning of that
term as it is used in Section 13(d) of the Securities Exchange Act of 1934 and
the rules and regulations promulgated thereunder) of twenty-five percent (25%)
or more of the outstanding voting securities of the Company by any person,
trust, entity or group. This limitation shall not apply to the purchase of
shares by underwriters in
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connection with a public offering of Company stock, or the purchase of shares of
up to 25% of any class of securities of the Company by a tax-qualified employee
stock benefit plan which is exempt from the approval requirements, set forth
under 12 C.F.R. Section 574.3(c)(1)(vii) as now in effect or as may hereafter be
amended. The term "person" refers to an individual or a corporation,
partnership, trust, association, joint venture, pool, syndicate, sole
proprietorship, unincorporated organization or any other form of entity not
specifically listed herein. A Change in Control shall not include a transaction
whereby the MHC shall merge into the Company or the Bank and a new Parent of the
Company or the Bank is formed.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the Board of Directors of the Company or the administrative
committee designated, pursuant to Section 3 of the Plan, to administer the Plan.
"Common Stock" means the common stock of the Company.
"Company" means Kearny Financial Corp., and any successor entity or any future
parent corporation of the Bank.
"Director" means a person serving as a member of the Board of Directors of the
Company from time to time.
"Director Emeritus" means a person serving as a director emeritus, advisory
director, consulting director or other similar position as may be appointed by
the Board of Directors of the Company from time to time.
"Disability" means (a) with respect to Incentive Stock Options, the "permanent
and total disability" of the Employee as such term is defined at Section
22(e)(3) of the Code; and (b) with respect to other Awards, any physical or
mental impairment which renders the Participant incapable of continuing in the
employment or service of the Company or its Affiliates in his or her then
current capacity as determined by the Committee.
"Effective Date" shall mean the date of stockholder approval of the Plan by the
stockholders of the Company.
"Eligible Participant" means an Employee or Outside Director who may receive an
Award under the Plan.
"Employee" means any person employed by the Company or an Affiliate. Directors
who are also employed by the Company or an Affiliate shall be considered
Employees under the Plan.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exercise Price" means the price at which an individual may purchase a share of
Common Stock pursuant to an Option.
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"Fair Market Value" means the closing sales price reported on the Nasdaq
National Market (as published by The Wall Street Journal, if published) on such
date or, if the Common Stock was not traded on such date, on the immediately
preceding day on which the Common Stock was traded thereon or the last previous
date on which a sale is reported.
"Incentive Stock Option" means a Stock Option granted under the Plan, that is
intended to meet the requirements of Section 422 of the Code. "MHC" means Kearny
MHC, the mutual holding company of the Bank.
"Non-Statutory Stock Option" means a Stock Option granted to an individual under
the Plan that is not intended to be and is not identified as an Incentive Stock
Option, or an Option granted under the Plan that is intended to be and is
identified as an Incentive Stock Option, but that does not meet the requirements
of Section 422 of the Code.
"Option" or "Stock Option" means an Incentive Stock Option or a Non-Statutory
Stock Option, as applicable.
"Outside Director" means a member of the Board of Directors of the Company who
is not also an Employee.
"Parent" means any present or future corporation which would be a "parent
corporation" of the Bank or the Company as defined in Sections 424(e) and (g) of
the Code.
"Participant" means an individual who is granted an Award pursuant to the terms
of the Plan.
"Plan" means this Kearny Financial Corp. 2005 Stock Compensation and Incentive
Plan.
"Restricted Stock Award" means an Award of shares of restricted stock granted to
a Participant pursuant to Section 6(b) of the Plan.
"Trust" shall mean any grantor trust established by the Company for purposes of
administration of the Plan.
"Trustee" or "Trustee Committee" means that person(s) or entity appointed by the
Committee to hold legal title to the Plan assets under any Trust for the
purposes set forth herein.
3. ADMINISTRATION.
(a) The Committee shall administer the Plan. The Committee shall
consist of two or more disinterested directors of the Company,
who shall be appointed by the Board of Directors. A member of the
Board of Directors shall be deemed to be disinterested only if he
or she satisfies: (i) such requirements as the Securities and
Exchange Commission may establish for non-employee directors
administering plans intended to qualify for exemption under Rule
16b-3 (or its successor) of the Exchange Act and (ii) and to the
extent deemed appropriate by the Board of Directors, such
requirements as the Internal Revenue Service may establish for
outside directors acting under plans
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intended to qualify for exemption under Section 162(m)(4)(C) of
the Code; provided, however, a failure to comply with the
requirements of this subparagraph (ii) shall not disqualify any
actions taken by the Committee. A majority of the entire
Committee shall constitute a quorum and the action of a majority
of the members present at any meeting at which a quorum is
present shall be deemed the action of the Committee. In no event
may the Committee revoke outstanding Awards without the consent
of the Participant. All decisions, determinations and
interpretations of the Committee shall be final and conclusive on
all persons affected thereby.
(b) Subject to paragraph (a) of this Section 3, the Committee shall:
(i) select the individuals who are to receive grants of Awards
under the Plan;
(ii) determine the type, number, vesting requirements and other
features and conditions of Awards made under the Plan;
(iii)interpret the Plan and Award Agreements (as defined below);
and
(iv) make all other decisions related to the operation of the
Plan.
(c) Each Award granted under the Plan shall be evidenced by a written
agreement (i.e., an "Award Agreement"). Each Award Agreement
shall constitute a binding contract between the Company or an
Affiliate and the Participant, and every Participant, upon
acceptance of an Award Agreement, shall be bound by the terms and
restrictions of the Plan and the Award Agreement. The terms of
each Award Agreement shall be set in accordance with the Plan,
but each Award Agreement may also include any additional
provisions and restrictions determined by the Committee. In
particular, and at a minimum, the Committee shall set forth in
each Award Agreement:
(i) the type of Award granted;
(ii) the Exercise Price for any Option;
(iii) the number of shares or rights subject to the Award;
(iv) the expiration date of the Award;
(v) the manner, time and rate (cumulative or otherwise) of
exercise or vesting of the Award; and
(vi) the restrictions, if any, placed on the Award, or upon
shares which may be issued upon the exercise or vesting of
the Award.
The Chairman of the Committee and/or the President of the Company are
hereby authorized to execute Award Agreements on behalf of the Company
or an Affiliate and to cause them to be delivered to the Participants
granted Awards under the Plan.
(d) Six Month Holding Period. Subject to vesting requirements, if
applicable, except in the event of death or Disability of the
Participant or a Change in Control of the Company, a minimum of
six months must elapse between the date of the grant of an Option
and the date of the sale of the Common Stock received through the
exercise of such Option.
4. ELIGIBILITY.
Subject to the terms of the Plan, Employees and Outside Directors, as the
Committee shall determine from time to time, shall be eligible to receive Awards
in accordance with the Plan.
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5. SHARES OF COMMON STOCK SUBJECT TO THE PLAN; SHARE LIMITS.
5.1 Shares Available. Subject to the provisions of Section 7, the Common Stock
that may be delivered under this Plan shall be shares of the Company's
authorized but unissued Common Stock, shares of Common Stock purchased in the
open-market by the Company or any Trust established for purposes of
administration of the Plan and any shares of Common Stock held as treasury
shares.
5.2 Share Limits. The maximum number of shares of Common Stock that may be
delivered pursuant to Awards granted under this Plan (the "Share Limit") equals
4,989,792 shares. The following limits also apply with respect to Awards granted
under this Plan:
(a) The maximum number of shares of Common Stock that may be
delivered pursuant to the exercise of Stock Options granted under
this Plan is 3,564,137 shares.
(b) The maximum number of shares of Common Stock that may be
delivered pursuant to Restricted Stock Awards granted under this
Plan is 1,425,655 shares.
5.3 Awards Settled in Cash, Reissue of Awards and Shares. To the extent that an
Award is settled in cash or a form other than shares of Common Stock, the shares
that would have been delivered had there been no such cash or other settlement
shall be counted against the shares available for issuance under this Plan.
Shares that are subject to or underlie Awards which expire or for any reason are
cancelled or terminated, are forfeited, fail to vest, or for any other reason
are not paid or delivered under this Plan shall again be available for
subsequent Awards under this Plan.
5.4 Reservation of Shares; No Fractional Shares; Minimum Issue. The Company
shall at all times reserve a number of shares of Common Stock sufficient to
cover the Company's obligations and contingent obligations to deliver shares
with respect to Awards then outstanding under this Plan. No fractional shares
shall be delivered under this Plan. The Committee may pay cash in lieu of any
fractional shares in settlements of Awards under this Plan. No fewer than 100
shares may be purchased on exercise of any Stock Option unless the total number
purchased or exercised is the total number at the time available for purchase or
exercise by the Participant.
6. AWARDS.
6.1 Except as otherwise detailed herein, the Committee shall determine the type
or types of Award(s) to be made to each Eligible Participant or Outside
Director. Awards may be granted singularly, in combination or in tandem. Awards
also may be made in combination or in tandem with, in replacement of, as
alternatives to, or as the payment form for grants or rights under any other
employee or compensation plan of the Company. The types of Awards that may be
granted under this Plan are Stock Options and Restricted Stock Awards, as
follows:
(a) STOCK OPTIONS.
The Committee may, subject to the limitations of this Plan and
the availability of shares of Common Stock reserved but not
previously awarded under the Plan, grant Stock Options to
Employees and Outside Directors, subject to terms and conditions
as it may determine, to the extent that such terms and conditions
are consistent with the following provisions:
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(i) EXERCISE PRICE. The Exercise Price of Stock Options shall
not be less than one hundred percent (100%) of the Fair
Market Value of the Common Stock on the date of grant.
(ii) TERMS OF OPTIONS. In no event may an individual exercise an
Option, in whole or in part, more than ten (10) years from
the date of grant.
(iii)NON-TRANSFERABILITY. Unless otherwise determined by the
Committee, an individual may not transfer, assign,
hypothecate, or dispose of an Option in any manner, other
than by will or the laws of intestate succession. The
Committee may, however, in its sole discretion, permit the
transfer or assignment of a Non-Statutory Stock Option, if
it determines that the transfer or assignment is for valid
estate planning purposes and is permitted under the Code and
Rule 16b-3 of the Exchange Act. For purposes of this Section
6.1(a), a transfer for valid estate planning purposes
includes, but is not limited to, transfers:
(1) to a revocable INTER VIVOS trust, as to which an
individual is both settlor and trustee;
(2) for no consideration to: (a) any member of the
individual's Immediate Family; (b) a trust solely for
the benefit of members of the individual's Immediate
Family; (c) any partnership whose only partners are
members of the individual's Immediate Family; or (d)
any limited liability corporation or other corporate
entity whose only members or equity owners are members
of the individual's Immediate Family.
For purposes of this Section 6.1, "Immediate
Family" includes, but is not necessarily limited to, a
Participant's parents, grandparents, spouse, children,
grandchildren, siblings (including half brothers and
sisters), and individuals who are family members by
adoption. Nothing contained in this Section 6.1 shall
be construed to require the Committee to give its
approval to any transfer or assignment of any Non-
Statutory Stock Option or portion thereof, and approval
to transfer or assign any Non-Statutory Stock Option
or portion thereof does not mean that such approval
will be given with respect to any other Non-Statutory
Stock Option or portion thereof. The transferee or
assignee of any Non-Statutory Stock Option shall be
subject to all of the terms and conditions
applicable to such Non-Statutory Stock Option
immediately prior to the transfer or assignment and
shall be subject to any other conditions prescribed
by the Committee with respect to such Non-Statutory
Stock Option.
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(iv) SPECIAL RULES FOR INCENTIVE STOCK OPTIONS.
Notwithstanding the foregoing provisions, the following
rules shall further apply to grants of Incentive Stock
Options:
(1) If an Employee owns or is treated as owning, for
purposes of Section 422 of the Code, Common Stock
representing more than ten percent (10%) of the
total combined voting securities of the Company at
the time the Committee grants the Incentive Stock
Option (a "10% Owner"), the Exercise Price shall
not be less than one hundred and ten percent(110%)
of the Fair Market Value of the Common Stock on
the date of grant.
(2) An Incentive Stock Option granted to a 10% Owner
shall not be exercisable more than five (5) years
from the date of grant.
(3) To the extent the aggregate Fair Market Value
of shares of Common Stock with respect to which
Incentive Stock Options are exercisable for the
first time by an Employee during any calendar
year, under the Plan or any other stock option
plan of the Company, exceeds $100,000, or such
higher value as may be permitted under Section
422 of the Code, Incentive Stock Options in
excess of the $100,000 limit shall be treated as
Non-Statutory Stock Options. Fair Market Value
shall be determined as of the date of grant for
each Incentive Stock Option.
(4) Each Award Agreement for an Incentive Stock Option
shall require the individual to notify the
Committee within ten (10) days of any disposition
of shares of Common Stock under the circumstances
described in Section 421(b) of the Code (relating
to certain disqualifying dispositions).
(5) Incentive Stock Options may only be awarded to an
Employee of the Company or its Affiliates.
(v) OPTION AWARDS TO OUTSIDE DIRECTORS. Subject to the
limitations of Section 6.4(a), Non-Statutory Stock
Options to purchase 133,655 shares of Common Stock will
be granted to each Outside Director of the Company as
of the Effective Date, at an Exercise Price equal to
the Fair Market Value of the Common Stock on such date
of grant. The Options will be first exercisable at the
rate of 20% on the one year anniversary of the
Effective Date and 20% annually thereafter during such
periods of service as a Director or Director Emeritus.
Upon the death or Disability of the Director or
Director Emeritus, such Option shall be deemed
immediately 100% exercisable. Such Options shall
continue to be exercisable for a period of ten years
following the date of grant without regard to the
continued services of such Director as a Director or
Director Emeritus. In the event of the Director's
death, such Options may be exercised by the Beneficiary
or the personal representative of his estate or
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person or persons to whom his rights under such Option
shall have passed by will or by the laws of descent
and distribution. Options may be granted to newly
appointed or elected Outside Directors within the sole
discretion of the Committee. The Exercise Price per
share of such Options granted shall be equal to the
Fair Market Value of the Common Stock at the time such
Options are granted. All outstanding Awards shall
become immediately exercisable in the event of a
Change in Control of the Bank or the Company. Unless
otherwise inapplicable, or inconsistent with the
provisions of this paragraph, the Options to be
granted to Outside Directors hereunder shall be
subject to all other provisions of this Plan.
(b) RESTRICTED STOCK AWARDS.
The Committee may make grants of Restricted Stock Awards,
which shall consist of the grant of some number of shares of
Common Stock to an individual upon such terms and conditions
as it may determine, to the extent such terms and conditions
are consistent with the following provisions:
(i) GRANTS OF STOCK. Restricted Stock Awards may only be
granted in whole shares of Common Stock.
(ii) NON-TRANSFERABILITY. Except to the extent permitted by
the Code, the rules promulgated under Section 16(b) of
the Exchange Act or any successor statutes or rules:
(1) The recipient of a Restricted Stock Award grant
shall not sell, transfer, assign, pledge, or
otherwise encumber shares subject to the grant
until full vesting of such shares has occurred.
For purposes of this Section 6.1, the separation
of beneficial ownership and legal title through
the use of any "swap" transaction is deemed to be
a prohibited encumbrance.
(2) Unless otherwise determined by the Committee, and
except in the event of the Participant's death or
pursuant to a qualified domestic relations order,
a Restricted Stock Award grant is not transferable
and may be earned only by the individual to whom
it is granted during his or her lifetime. Upon
the death of a Participant, a Restricted Stock
Award shall be transferred to the Beneficiary.
The designation of a Beneficiary shall not
constitute a transfer.
(3) If the recipient of a Restricted Stock Award is
subject to the provisions of Section 16 of the
Exchange Act, shares of Common Stock subject to
the grant may not, without the written consent
of the Committee (which consent may be given in
the Award Agreement), be sold or otherwise
disposed of within six (6) months following the
date of grant.
(iii)ISSUANCE OF CERTIFICATES. The Committee, in its sole
discretion, may permit the issuance of shares of Common
Stock to be issued pursuant to a Restricted Stock Award
prior to the time that such Award shall be deemed
earned and non-forfeitable, with such stock certificate
evidencing such shares
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registered in the name of the Participant to whom the
Restricted Stock Award was granted; provided, however,
that the Company may not cause a stock certificate to
be issued unless it has received a stock power duly
endorsed in blank with respect to such shares. Further,
each such stock certificate shall bear the following
legend:
THE TRANSFERABILITY OF THIS CERTIFICAT E AND
THE SHARES OF STOCK REPRESENTED THEREBY ARE
SUBJECT TO THE RESTRICTIONS, TERMS AND
CONDITIONS (INCLUDING FORFEITURE PROVISIONS
AND RESTRICTIONS AGAINST TRANSFER) CONTAINED
IN THE KEARNY FINANCIAL CORP. 2005 STOCK
COMPENSATION AND INCENTIVE PLAN AND THE
RELATED AWARD AGREEMENT ENTERED INTO BETWEEN
THE REGISTERED OWNER OF SUCH SHARES AND
KEARNY FINANCIAL CORP. OR ITS AFFILIATES. A
COPY OF THE PLAN AND AWARD AGREEMENT IS ON
FILE IN THE OFFICE OF THE CORPORATE
SECRETARY OF KEARNY FINANCIAL CORP.
This legend shall not be removed until the individual
becomes vested in such Restricted Stock Award
pursuant to the terms of the Plan and Award
Agreement. Each certificate issued pursuant to this
Section 6.1(b) shall be held by the Company or its
Affiliates, unless the Committee determines
otherwise.
(iv) TREATMENT OF DIVIDENDS. Participants are entitled to
all dividends and other distributions declared and paid
on all shares of Common Stock subject to a Restricted
Stock Award, from and after the date of grant of such
Restricted Stock Award; provided that, such dividends
and other distributions shall be held in arrears by the
Plan or Trust, if applicable, until the underlying
Restricted Stock Award shall be deemed earned and
non-forfeitable.
(v) VOTING RIGHTS ASSOCIATED WITH OF RESTRICTED STOCK
AWARDS. Voting rights associated with any Restricted
Stock Award shall not be exercised by the Participant
until certificates of Common Stock representing such
Award have been issued to such Participant. Any shares
of Common Stock held by the Trust prior to issuance to
a Participant shall be voted by the Trustee of such
Trust as directed by the Committee.
(vi) RESTRICTED STOCK AWARDS TO OUTSIDE DIRECTORS.
Notwithstanding anything herein to the contrary, upon
the Effective Date, a Restricted Stock Award consisting
of 53,462 shares of Common Stock shall be awarded to
each Outside Director of the Company. Such Award shall
be earned and non-forfeitable at the rate of one-fifth
as of the one-year anniversary of the Effective Date
and an additional one-fifth following each of the next
four successive years. Such Award shall be immediately
100% earned and non-forfeitable in the event of the
death or Disability of such Director. Such Award shall
be immediately 100% earned and non-forfeitable upon a
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Change in Control of the Company or the Bank.
Subsequent to the Effective Date, Restricted Stock
Awards may be granted to newly elected or appointed
Outside Directors within the discretion of the
Committee, provided that total Restricted Stock Awards
granted to Outside Directors shall not exceed the
limitations set forth at Section 6.4(b) herein.
6.2 Award Payouts. Awards may be paid out in the form of cash, Common Stock, or
combinations thereof as the Committee shall determine, and with such
restrictions as it may impose.
6.3 Consideration for Stock Options. The Exercise Price for any Stock Option
granted under this Plan may be paid by means of any lawful consideration as
determined by the Committee, including, without limitation, one or a combination
of the following methods:
(a) cash, check payable to the order of the Company, or electronic funds
transfer;
(b) the delivery of previously owned shares of Common Stock; or
(c) subject to such procedures as the Committee may adopt, pursuant to a
"cashless exercise" with a third party who provides financing for the
purposes of (or who otherwise facilitates) the purchase or exercise of
such Stock Option.
In no event shall any shares newly-issued by the Company be issued for less than
the minimum lawful consideration for such shares or for consideration other than
consideration permitted by applicable state law. In the event that the Committee
allows a Participant to exercise an Option by delivering shares of Common Stock
previously owned by such Participant, any such shares delivered which were
initially acquired by the Participant from the Company (upon exercise of a stock
option or otherwise) must have been owned by the Participant for at least six
months prior to such date of delivery. Shares of Common Stock used to satisfy
the Exercise Price of an Option shall be valued at their Fair Market Value on
the date of exercise. The Company will not be obligated to deliver any shares
unless and until it receives full payment of the Exercise Price and any related
withholding obligations under Section 9.5 have been satisfied, or until any
other conditions applicable to exercise or purchase have been satisfied. No
Shares of Common Stock shall be issued until full payment has been received by
the Company, and no Participant shall have any of the rights of a stockholder of
the Company until shares of Common Stock are issued upon the exercise of such
Stock Options. Unless expressly provided otherwise in the applicable Award
Agreement, the Committee may at any time within its sole discretion eliminate or
limit a Participant's ability to pay the purchase or Exercise Price of any Award
by any method other than a cash payment to the Company.
6.4 Limitations on Awards.
(a) Stock Option Award Limitations. In no event shall Shares subject to
Options granted to Outside Directors in the aggregate under this Plan
exceed more than 30% of the total number of shares authorized for
delivery under this Plan with respect to Stock Options or exceed more
than 5% of such shares to any individual Outside Director pursuant to
Section 5.2(a) herein. In no event shall Shares subject to Options
granted to any single Employee exceed more than 25% of the total
number of shares authorized for delivery under the Plan pursuant to
Section 5.2(a) herein.
(b) Restricted Stock Award Limitations. In no event shall shares subject
to Restricted Stock Awards granted to Outside Directors in the
aggregate under this Plan exceed
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more than 30% of the total number of shares authorized for delivery
under this Plan with respect to Restricted Stock Awards or exceed more
than 5% to any individual Outside Director pursuant to Section 5.2(b)
herein. In no event shall shares subject to Restricted Stock Awards
granted to any single Employee exceed more than 25% of the total
number of shares authorized for delivery under the Plan pursuant to
Section 5.2(b) herein.
(c) Vesting of Awards. Except as otherwise provided by the terms of the
Plan or by action of the Committee at the time of the grant of an
Award, Stock Options will be first exercisable and Restricted Stock
Awards will be earned and non-forfeitable at the rate of 20% of such
Award on the one year anniversary of the date of grant and 20%
annually thereafter during such periods of service as an Employee,
Director or Director Emeritus.
7. EFFECT OF TERMINATION OF SERVICE ON AWARDS.
7.1 General. The Committee shall establish the effect of a termination of
employment or service on the continuation of rights and benefits available under
an Award, and, in so doing, may make distinctions based upon, INTER ALIA, the
recipient of such Award, the cause of termination and the type of the Award.
Notwithstanding the foregoing, the terms of Awards shall be consistent with the
following, as applicable:
(a) Termination of Employment. In the event that any Participant's
employment with the Company shall terminate for any reason, other than
Disability or death, all of any such Participant's Incentive Stock
Options, and all of any such Participant's rights to purchase or
receive shares of Common Stock pursuant thereto, shall automatically
terminate on (A) the earlier of (i) or (ii): (i) the respective
expiration dates of any such Incentive Stock Options, or (ii) the
expiration of not more than three (3) months after the date of such
termination of employment; or (B) at such later date as is determined
by the Committee at the time of the grant of such Award based upon the
Participant's continuing status as a Director or Director Emeritus of
the Bank or the Company, but only if, and to the extent that, the
Participant was entitled to exercise any such Incentive Stock Options
at the date of such termination of employment, and further that such
Award shall thereafter be deemed a Non-Statutory Stock Option.
(b) Disability. In the event that any Participant's employment with the
Company shall terminate as the result of the Disability of such
Participant, such Participant may exercise any Incentive Stock Options
granted to the Participant pursuant to the Plan at any time prior to
the earlier of (i) the respective expiration dates of any such
Incentive Stock Options or (ii) the date which is one (1) year after
the date of such termination of employment, but only if, and to the
extent that, the Participant was entitled to exercise any such
Incentive Stock Options at the date of such termination of employment.
(c) Death. In the event of the death of a Participant, any Incentive Stock
Options granted to such Participant may be exercised by the
Participant's Beneficiary or the person or persons to whom the
Participant's rights under any such Incentive Stock Options pass by
will or by the laws of descent and distribution (including the
Participant's estate during the period of administration) at any time
prior to the earlier of (i) the respective expiration dates of any
such Incentive Stock Options or (ii) the date which is two (2) years
after the date of death of such Participant, but only if, and to the
extent that, the
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Participant was entitled to exercise any such Incentive Stock Options
at the date of death. For purposes of this Section 7.1(c), any
Incentive Stock Option held by an Participant shall be considered
exercisable at the date of his death if the only unsatisfied condition
precedent to the exercisability of such Incentive Stock Option at the
date of death is the passage of a specified period of time. At the
discretion of the Committee, upon exercise of such Options, the
Beneficiary may receive Shares or cash or a combination thereof. If
cash shall be paid in lieu of shares of Common Stock, such cash shall
be equal to the difference between the Fair Market Value of such
Shares and the exercise price of such Options on the exercise date.
7.2 Events Not Deemed Terminations of Employment or Service. Unless Company
policy or the Committee provides otherwise, the employment relationship shall
not be considered terminated in the case of (a) sick leave, (b) military leave,
or (c) any other leave of absence authorized by the Company or the Committee;
provided that, unless reemployment upon the expiration of such leave is
guaranteed by contract or law, such leave is for a period of not more than 90
days. In the case of any Employee on an approved leave of absence, continued
vesting of the Award while on leave may be suspended until the Employee returns
to service, unless the Committee otherwise provides or applicable law otherwise
requires. In no event shall an Award be exercised after the expiration of the
term set forth in the Award Agreement.
7.3 Effect of Change of Affiliate Status. For purposes of this Plan and any
Award, if an entity ceases to be an Affiliate of the Company, a termination of
employment or service shall be deemed to have occurred with respect to each
individual who does not continue as an Employee or Outside Director with another
entity within the Company after giving effect to the Affiliate's change in
status.
8. ADJUSTMENTS; ACCELERATION UPON A CHANGE IN CONTROL.
8.1 Adjustments. Upon any reclassification, recapitalization, stock split
(including a stock split in the form of a stock dividend) or reverse stock split
("stock split"); any merger, combination, consolidation, or other
reorganization; any spin-off, split-up, or similar extraordinary dividend
distribution with respect to the Common Stock (whether in the form of securities
or property); any exchange of Common Stock or other securities of the Company,
or any similar, unusual or extraordinary corporate transaction affecting the
Common Stock; or a sale of all or substantially all the business or assets of
the Company in its entirety; then the Committee shall, in such manner, to such
extent (if any) and at such times as it deems appropriate and equitable under
the circumstances:
(a) proportionately adjust any or all of: (1) the number and type of
shares of Common Stock (or other securities) that thereafter may be
made the subject of Awards (including the specific Share Limits,
maximums and numbers of shares set forth elsewhere in this Plan); (2)
the number, amount and type of shares of Common Stock (or other
securities or property) subject to any or all outstanding Awards; (3)
the grant, purchase, or Exercise Price of any or all outstanding
Awards; (4) the securities, cash or other property deliverable upon
exercise or payment of any outstanding Awards; or (5) the performance
standards applicable to any outstanding Awards; or
(b) make provision for a cash payment or for the assumption, substitution
or exchange of any or all outstanding Awards, based upon the
distribution or consideration payable to holders of the Common Stock.
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8.2 The Committee may adopt such valuation methodologies for outstanding Awards
as it deems reasonable in the event of a cash or property settlement and, in the
case of Options, may base such settlement solely upon the excess, if any, of the
per share amount payable upon or in respect of such event over the Exercise
Price or base price of the Award. With respect to any Award of an Incentive
Stock Option, the Committee may make an adjustment that causes the Option to
cease to qualify as an Incentive Stock Option without the consent of the
affected Participant.
8.3 Upon any of the events set forth in Section 8.1, the Committee may take such
action prior to such event to the extent that the Committee deems the action
necessary to permit the Participant to realize the benefits intended to be
conveyed with respect to the Awards in the same manner as is or will be
available to stockholders of the Company generally. In the case of any stock
split or reverse stock split, if no action is taken by the Committee, the
proportionate adjustments contemplated by Section 8.1(a) above shall
nevertheless be made.
8.4 Automatic Acceleration of Awards. Unless otherwise determined by the
Committee, upon the death or Disability of an Award recipient or upon a Change
in Control of the Company or the Bank, each Stock Option then outstanding shall
become fully vested and exercisable and remain exercisable for its remaining
term and all Restricted Stock Awards then outstanding shall be fully vested, be
deemed earned and non-forfeitable and be free of restrictions.
8.5 Acceleration of Vesting. The Committee shall at all times have the power to
accelerate the exercise date of Options and the date that Restricted Stock
Awards shall be earned and non-forfeitable with respect to previously granted
Awards; provided that such action is not contrary to regulations of the Office
of Thrift Supervision or other appropriate banking regulatory agency then in
effect.
9. MISCELLANEOUS PROVISIONS.
9.1 Compliance with Laws. This Plan, the granting and vesting of Awards under
this Plan, the offer, issuance and delivery of shares of Common Stock, the
acceptance of payment of money under this Plan or under Awards are subject to
compliance with all applicable federal and state laws, rules and regulations
(including, but not limited to, state and federal securities laws) and to such
approvals by any listing, regulatory or governmental authority as may, in the
opinion of counsel for the Company, be necessary or advisable in connection
therewith. The person acquiring any securities under this Plan will, if
requested by the Company, provide such assurances and representations to the
Company as may be deemed necessary or desirable to assure compliance with all
applicable legal and accounting requirements.
9.2 Claims. No person shall have any claim or rights to an Award (or additional
Awards, as the case may be) under this Plan, subject to any express contractual
rights to the contrary (set forth in a document other than this Plan).
9.3 No Employment/Service Contract. Nothing contained in this Plan (or in any
other documents under this Plan or in any Award Agreement) shall confer upon any
Participant any right to continue in the employ or other service of the Company,
constitute any contract or agreement of employment or other service or affect an
Employee's status as an employee-at-will, nor interfere in any way with the
right of the Company to change a Participant's compensation or other benefits,
or terminate his or her employment or other service, with or without cause.
Nothing in this Section 9.3, however, is intended to adversely affect any
express independent right of such Participant under a separate employment or
service contract other than an Award Agreement.
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9.4 Plan Not Funded. Awards payable under this Plan shall be payable in shares
of Common Stock or from the general assets of the Company. No Participant,
beneficiary or other person shall have any right, title or interest in any fund
or in any specific asset (including shares of Common Stock, except as expressly
provided otherwise) of the Company by reason of any Award hereunder. Neither the
provisions of this Plan (or of any related documents), nor the creation or
adoption of this Plan, nor any action taken pursuant to the provisions of this
Plan shall create, or be construed to create, a trust of any kind or a fiduciary
relationship between the Company and any Participant, Beneficiary or other
person. Notwithstanding the foregoing, the Company may establish a Trust in
accordance with Section 10 with respect to Awards made in accordance with
Section 6.1(b) herein. To the extent that a Participant, Beneficiary or other
person acquires a right to receive payment pursuant to any Award hereunder, such
right shall be no greater than the right of any unsecured general creditor of
the Company.
9.5 Tax Withholding. Upon any exercise, vesting, or payment of any Award, the
Company shall have the right, within its sole discretion, to:
(a) require the Participant (or the Participant's personal representative
or Beneficiary, as the case may be) to pay or provide for payment of
at least the minimum amount of any taxes which the Company may be
required to withhold with respect to such Award or payment; or
(b) deduct from any amount otherwise payable in cash to the Participant
(or the Participant's personal representative or Beneficiary, as the
case may be) the minimum amount of any taxes which the Company may be
required to withhold with respect to such cash payment, or
(c) in any case where tax withholding is required in connection with the
delivery of shares of Common Stock under this Plan, the Committee may,
in its sole discretion, pursuant to such rules and subject to such
conditions as the Committee may establish, reduce the number of shares
to be delivered to the Participant by the appropriate number of
shares, valued in a consistent manner at their Fair Market Value as
necessary to satisfy the minimum applicable withholding obligation. In
no event shall the shares withheld exceed the minimum whole number of
shares required for tax withholding under applicable law.
9.6 Effective Date, Termination and Suspension, Amendments.
(a) This Plan is effective upon the later of approval of the Plan by the
Board of Directors of the Company or the vote of approval by the
stockholders of the Company ("Approval Date"). Unless earlier
terminated by the Board, this Plan shall terminate at the close of
business on the day before the tenth anniversary of the Approval Date.
After the termination of this Plan either upon such stated expiration
date or its earlier termination by the Board, no additional Awards may
be granted under this Plan, but previously granted Awards (and the
authority of the Committee with respect thereto, including the
authority to amend such Awards) shall remain outstanding in accordance
with their applicable terms and conditions and the terms and
conditions of this Plan.
(b) Board Authorization. Subject to applicable laws and regulations, the
Board of Directors may, at any time, terminate or, from time to time,
amend, modify or suspend this Plan, in whole or in part; provided,
however, that no such amendment may have the effect of repricing the
Exercise Price of Options. No Awards may be granted during any period
that the Board of Directors suspends this Plan.
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(c) Stockholder Approval. Stockholder approval of such Plan shall be
determined by an affirmative vote of a majority of the votes cast,
excluding shares of Common Stock owned by the MHC, at a meeting of
stockholders of the Company, and a vote of a majority of the votes
eligible to be cast, including shares of the Common Stock owned by the
MHC, at such meeting of stockholders, or such other approval vote as
may be required by the Office of Thrift Supervision. Any material
amendment to the Plan deemed to require a ratification vote of
stockholders shall be ratified by an affirmative vote of a majority of
the votes cast at a meeting of stockholders of the Company or such
other approval vote as may be required by the Office of Thrift
Supervision.
(d) Limitations on Amendments to Plan and Awards. No amendment, suspension
or termination of this Plan or change affecting any outstanding Award
shall, without the written consent of the Participant, affect in any
manner materially adverse to the Participant any rights or benefits of
the Participant or obligations of the Company under any Award granted
under this Plan prior to the effective date of such change. Changes,
settlements and other actions contemplated by Section 8 shall not be
deemed to constitute changes or amendments for purposes of this
Section 9.6.
9.7 Governing Law; Compliance with Regulations; Construction; Severability.
(a) This Plan, the Awards, all documents evidencing Awards and all other
related documents shall be governed by, and construed in accordance
with, the laws of the United States and the laws of the State of New
Jersey to the extent not preempted by Federal law.
(b) This Plan will comply with the requirements set forth in 12 C.F.R.
Sec. 575.8 and 12 C.F.R. Sec. 563b.500. Notwithstanding any other
provision in this Plan, no shares of Common Stock shall be issued with
respect to any Award to the extent that such issuance would cause the
MHC to fail to qualify as a mutual holding company of the Bank under
applicable federal laws or regulations.
(c) Severability. If a court of competent jurisdiction holds any provision
invalid and unenforceable, the remaining provisions of this Plan shall
continue in effect.
(d) Plan Construction; Rule 16b-3. It is the intent of the Company that
the Awards and transactions permitted by Awards be interpreted in a
manner that, in the case of Participants who are or may be subject to
Section 16 of the Exchange Act, qualify, to the maximum extent
compatible with the express terms of the Award, for exemption from
matching liability under Rule 16b-3 promulgated under the Exchange
Act. Notwithstanding the foregoing, the Company shall have no
liability to any Participant for Section 16 consequences of Awards or
events affecting Awards if an Award or event does not so qualify.
(e) Shares of Common Stock shall not be issued with respect to any Award
granted under the Plan unless the issuance and delivery of such shares
shall comply with all relevant provisions of applicable law,
including, without limitation, the Securities Act of 1933, as amended,
the rules and regulations promulgated thereunder, any applicable state
securities laws and the requirements of any stock exchange upon which
the shares may then be listed.
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(f) The inability of the Company to obtain any necessary authorizations,
approvals or letters of non-objection from any regulatory body or
authority deemed by the Company's counsel to be necessary to the
lawful issuance and sale of any shares of Common Stock issuable
hereunder shall relieve the Company of any liability with respect to
the non-issuance or sale of such shares.
(g) As a condition to the exercise of any Option or the delivery of shares
in accordance with an Award, the Company may require the person
exercising the Option or receiving delivery of the shares to make such
representations and warranties as may be necessary to assure the
availability of an exemption from the registration requirements of
federal or state securities law.
(h) Notwithstanding anything herein to the contrary, upon the termination
of employment or service of a Participant by the Company or an
Affiliate for "cause" as defined at 12 C.F.R. 563.39(b)(1) as
determined by the Board of Directors or the Committee, all Awards held
by such Participant which have not yet been delivered shall be
forfeited by such Participant as of the date of such termination of
employment or service.
(i) Upon the exercise of an Option, the Committee, in its sole and
absolute discretion, may make a cash payment to the Participant, in
whole or in part, in lieu of the delivery of shares of Common Stock.
Such cash payment to be paid in lieu of delivery of Common Stock shall
be equal to the difference between the Fair Market Value of the Common
Stock on the date of the Option exercise and the exercise price per
share of the Option. Such cash payment shall be in exchange for the
cancellation of such Option. Such cash payment shall not be made in
the event that such transaction would result in liability to the
Participant or the Company under Section 16(b) of the Exchange Act and
regulations promulgated thereunder, or subject the Participant to
additional tax liabilities related to such cash payments pursuant to
Section 409A of the Code.
(j) In the event that the Bank shall be deemed critically undercapitalized
(as defined at 12 C.F.R. Section 565.4), is subject to enforcement
action by the Office of Thrift Supervision, or receives a capital
directive under 12 C.F.R. Section 565.7, then all Options awarded to
executive officers or Directors of the Company or its Affiliates must
exercise such Options or forfeit such Options.
9.8 Captions. Captions and headings are given to the sections and subsections of
this Plan solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction or
interpretation of this Plan or any provision thereof.
9.9 Non-Exclusivity of Plan. Nothing in this Plan shall limit or be deemed to
limit the authority of the Board of Directors or the Committee to grant Awards
or authorize any other compensation, with or without reference to the Common
Stock, under any other plan or authority.
9.10 Limitation on Liability. No Director, member of the Committee or the
Trustee shall be liable for any determination made in good faith with respect to
the Plan, the Trust or any Awards granted. If a Director, member of the
Committee or the Trustee is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative
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or investigative, by any reason of anything done or not done by him in such
capacity under or with respect to the Plan, the Company shall indemnify such
person against expenses (including attorney's fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him or her in
connection with such action, suit or proceeding if he or she acted in good faith
and in a manner he or she reasonably believed to be in the best interests of the
Company and its Affiliates and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
10. TRUST.
10.1 Activities of Trustee. The Trustee(s) shall receive, hold, administer,
invest and make distributions and disbursements from the Trust in accordance
with the provisions of the Plan and the applicable directions, rules,
regulations, procedures and policies established by the Committee pursuant to
the Plan.
10.2 Management of Trust. It is the intention of this Plan that the Trustee
shall have complete authority and discretion with respect to the management,
control and investment of the Trust, and that the Trustee shall invest all
assets of the Trust, except those attributable to cash dividends paid with
respect to unearned and unawarded Restricted Stock Awards, in Common Stock to
the fullest extent practicable, except to the extent that the Trustee determines
that the holding of monies in cash or cash equivalents is necessary to meet the
obligations of the Trust. In performing their duties, the Trustees shall have
the power to do all things and execute such instruments as may be deemed
necessary or proper, including the following powers:
(a) To invest up to one hundred percent (100%) of all Trust assets in the
Common Stock without regard to any law now or hereafter in force
limiting investments for Trustees or other fiduciaries. The investment
authorized herein may constitute the only investment of the Trust, and
in making such investment, the Trustee is authorized to purchase
Common Stock from the Parent or from any other source, and such Common
Stock so purchased may be outstanding, newly issued, or treasury
shares.
(b) To invest any Trust assets not otherwise invested in accordance with
(a) above in such deposit accounts, and certificates of deposit
(including those issued by the Bank), obligations of the United States
government or its agencies or such other investments as shall be
considered the equivalent of cash.
(c) To sell, exchange or otherwise dispose of any property at any time
held or acquired by the Trust.
(d) To cause stocks, bonds or other securities to be registered in the
name of a nominee, without the addition of words indicating that such
security is an asset of the Trust (but accurate records shall be
maintained showing that such security is an asset of the Trust).
(e) To hold cash without interest in such amounts as may be in the opinion
of the Trustee reasonable for the proper operation of the Plan and
Trust.
(f) To employ brokers, agents, custodians, consultants and accountants.
(g) To hire counsel to render advice with respect to their rights, duties
and obligations hereunder, and such other legal services or
representation as they may deem desirable.
(h) To hold funds and securities representing the amounts to be
distributed to a Participant or his Beneficiary as a consequence of a
dispute as to the disposition thereof, whether in a segregated account
or held in common with other assets.
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(i) As may be directed by the Committee or the Board from time to time,
the Trustee shall pay to the Company any earnings of the Trust
attributable to unawarded or forfeited Restricted Stock Awards.
Notwithstanding anything herein contained to the contrary, the Trustee
shall not be required to make any inventory, appraisal or settlement or report
to any court, or to secure any order of a court for the exercise of any power
herein contained, or to maintain bond.
10.3 Records and Accounts. The Trustee shall maintain accurate and detailed
records and accounts of all transactions of the Trust, which shall be available
at all reasonable times for inspection by any legally entitled person or entity
to the extent required by applicable law, or any other person determined by the
Committee.
10.4 Earnings. All earnings, gains and losses with respect to Trust assets shall
be allocated in accordance with a reasonable procedure adopted by the Committee,
to bookkeeping accounts for Participants or to the general account of the Trust,
depending on the nature and allocation of the assets generating such earnings,
gains and losses. In particular, any earnings on cash dividends received with
respect to Restricted Stock Awards shall be allocated to accounts for
Participants, except to the extent that such cash dividends are distributed to
Participants, if such shares are the subject of outstanding Restricted Stock
Awards, or, otherwise held by the Trust or returned to the Company.
10.5 Expenses. All costs and expenses incurred in the operation and
administration of this Plan, including those incurred by the Trustee, shall be
paid by the Company or, if not so paid, then paid from the cash assets of the
Trust.
10.6 Indemnification. Subject to the requirements and limitations of applicable
laws and regulations, the Company shall indemnify, defend and hold the Trustee
harmless against all claims, expenses and liabilities arising out of or related
to the exercise of the Trustee's powers and the discharge of their duties
hereunder, unless the same shall be due to their gross negligence or willful
misconduct.
10.7 Term of Trust. The Trust, if established, shall remain in effect until the
earlier of (i) termination by the Committee, (ii) the distribution of all assets
of the Trust, or (iii) 21 years from the Effective Date. Termination of the
Trust shall not effect any Restricted Stock Award previously granted, and such
Restricted Stock Award shall remain valid and in effect until they have been
earned and paid, or by their terms expire or are forfeited.
10.8 Tax Status of Trust. It is intended that the Trust established hereby shall
be treated as a grantor trust of the Company under the provisions of Section 671
et seq. of the Code.
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