EXHIBIT 10.8
AMENDED AND RESTATED
OCEAN FINANCIAL CORP.
1997 INCENTIVE PLAN
The Amended and Restated Ocean Financial Corp. 1997 Incentive Plan
(the "Plan") is effective as of October 21, 1998 and reflects certain
amendments to the provisions of the Ocean Financial Corp. 1997 Incentive Plan,
which was effective February 4, 1997.
1. DEFINITIONS.
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(a) "Affiliate" means (i) a member of a controlled group of
corporations of which the Holding Company is a member or (ii) an unincorporated
trade or business which is under common control with the Holding Company as
determined in accordance with Section 414(c) of the Code and the regulations
issued thereunder. For purposes hereof, a "controlled group of corporations"
shall mean a controlled group of corporations as defined in Section 1563(a) of
the Code determined without regard to Section 1563(a)(4) and (e)(3)(C).
(b) "Alternate Option Payment Mechanism" refers to one of several
methods available to a Participant to fund the exercise of a stock option set
out in Section 11 hereof. These mechanisms include: broker assisted cashless
exercise and stock for stock exchange.
(c) "Award" means a grant of one or some combination of one or more
Non-statutory Stock Options, Incentive Stock Options and Stock Awards under the
provisions of this Plan.
(d) "Bank" means Ocean Federal Savings Bank.
(e) "Board of Directors" or "Board" means the board of directors of
the Holding Company or the Bank and directors emeritus of the Holding Company or
the Bank.
(f) "Change in Control" means a change in control of the Bank or
Holding Company of a nature that: (i) would be required to be reported in
response to Item 1 of the current report on Form 8-K, as in effect on the date
hereof, pursuant to Section 13 or 15(d) of the Exchange Act; or (ii) results in
a Change in Control within the meaning of the Home Owners' Loan Act of 1933, as
amended ("HOLA") and the Rules and Regulations promulgated by the Office of
Thrift Supervision ("OTS") (or its predecessor agency), as in effect on the date
hereof (provided, that in applying the definition of change in control as set
forth under such rules and regulations the Board shall substitute its judgment
for that of the OTS); or (iii) without limitation such a Change in Control shall
be deemed to have occurred at such time as (A) any "person" (as the term is used
in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Bank or the Holding Company representing 20% or
more of the Bank's or the Holding Company's outstanding securities except for
any securities of the Bank purchased by the Holding Company and any securities
purchased by any tax qualified employee benefit plan of the Bank; or (B)
individuals who constitute the Board of Directors of the Holding Company on the
date hereof (the "Incumbent Board") cease for any reason to constitute at least
a majority thereof, provided that any person becoming a director subsequent to
the date hereof whose election was approved by a vote of at least three-quarters
of the directors comprising the Incumbent Board, or whose nomination for
election by the Holding Company's stockholders was approved by a Nominating
Committee serving under an Incumbent Board, shall be, for purposes of this
clause (B), considered as though he were a member of the Incumbent Board; or (C)
a plan of reorganization, merger, consolidation, sale of all or substantially
all the assets of the
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Bank or the Holding Company or similar transaction occurs in which the Bank or
Holding Company is not the resulting entity; or (D) after a solicitation of
shareholders of the Holding Company, by someone other than current management of
the Holding Company, stockholders approve a plan of reorganization, merger or
consolidation of the Holding Company or Bank or similar transaction with one or
more corporations, as a result of which the outstanding shares of the class of
securities then subject to the plan would be exchanged for or converted into
cash or property or securities not issued by the Bank or the Holding Company; or
(E) a tender offer is made for 20% or more of the voting securities of the Bank
or the Holding Company and such offer is successful.
(g) "Code" means the Internal Revenue Code of 1986, as amended.
(h) "Committee" means a committee consisting of the entire Board of
Directors or consisting solely of two or more members of the Board of Directors
who are defined as Non-Employee Directors as such term is defined under Rule
16b-3(b)(3)(i) under the Exchange Act as promulgated by the Securities and
Exchange Commission.
(i) "Common Stock" means the Common Stock of the Holding Company,
par value, $.01 per share or any stock exchanged for shares of Common Stock
pursuant to Section 15 hereof.
(j) "Date of Grant" means the effective date of an Award.
(k) "Disability" means the permanent and total inability by
reason of mental or physical infirmity, or both, of a Participant to perform the
work customarily assigned to him or, in the case of a Director, to serve on the
Board. Additionally, a medical doctor selected or approved by the Board of
Directors must advise the Committee that it is either not possible to determine
when such Disability will terminate or that it appears probable that such
Disability will be permanent during the remainder of said Participant's
lifetime.
(l) "Effective Date" means February 4, 1997, the effective date of
the Plan.
(m) "Employee" means any person who is currently employed by the
Holding Company or an Affiliate, including officers, but such term shall not
include Outside Directors.
(n) "Employee Participant" means an Employee who holds an
outstanding Award under the terms of the Plan.
(o) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(p) "Exercise Price" means the purchase price per share of Common
Stock deliverable upon the exercise of each Option in order for the option to be
exchanged for shares of Common Stock.
(q) "Fair Market Value" means, when used in connection with the
Common Stock on a certain date, the average of the high and low bid prices of
the Common Stock as reported by the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") or the New York Stock Exchange ("NYSE")
(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 next preceding day on which the
Common Stock was traded thereon or the last previous date on which a sale is
reported. If the Common Stock is not traded on the NASDAQ or the NYSE, the Fair
Market Value of the Common Stock is the value so determined by the Board in good
faith.
(r) "Holding Company" means Ocean Financial Corp.
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(s) "Incentive Stock Option" means an Option granted by the
Committee to a Participant, which Option is designated by the Committee as an
Incentive Stock Option pursuant to Section 7 hereof and is intended to be such
under Section 422 of the Code.
(t) "Limited Right" means the right to receive an amount of cash
based upon the terms set forth in Section 8 hereof.
(u) "Non-statutory Stock Option" means an Option to a Participant
pursuant to Section 6 hereof, which is not designated by the Committee as an
Incentive Stock Option or which is redesignated by the Committee as a Non-
statutory Stock Option or which is designated an Incentive Stock Option under
Section 7 hereof, but does not meet the requirements of such under Section 422
of the Code.
(v) "Option" means the right to buy a fixed amount of Common
Stock at the Exercise Price within a limited period of time designated as the
term of the option as granted under Section 6 or 7 hereof.
(w) "Outside Director" means a member of the Board of Directors
or a Director Emeritus of the Holding Company or its Affiliates, who is not also
an Employee.
(x) "Outside Director Participant" means an Outside Director who
holds an outstanding Award under the terms of the Plan.
(y) "Participant(s)" means collectively an Employee Participant
and/or an Outside Director Participant who hold(s) outstanding Awards under the
terms of the Plan.
(z) "Performance Goal" is a specific condition or goal which may be
set by the Committee as a prerequisite to the vesting of a Stock Award in
accordance with Section 9(b) hereof.
(aa) "Retirement" with respect to an Employee Participant means
termination of employment which constitutes retirement under any tax qualified
plan maintained by the Bank. However, "Retirement" will not be deemed to have
occurred for purposes of this Plan if a Participant continues to serve as a
consultant to or on the Board of Directors of the Holding Company or its
Affiliates even if such Participant is receiving retirement benefits under any
retirement plan of the Holding Company or its Affiliates. With respect to an
Outside Director Participant, "Retirement" means the termination of service from
the Board of Directors of the Holding Company or its Affiliates following
written notice to the Board as a whole of such Outside Director's intention to
retire, except that an Outside Director Participant shall not be deemed to have
"retired" for purposes of the Plan in the event he continues to serve as a
consultant to the Board or as an advisory director or director emeritus,
including pursuant to any retirement plan of the Holding Company or the Bank.
(bb) "Stock Awards" are Awards of Common Stock which may vest
immediately or over a period of time. Vesting of Stock Awards under Section 9
hereof may be contingent upon the occurrence of specified events or the
attainment of specified performance goals as determined by the Committee.
(cc) "Termination for Cause" shall mean, in the case of a Director,
removal from the Board of Directors, or, in the case of an Employee, termination
of employment, in both such cases as determined by the Board of Directors,
because of Participant's personal dishonesty, incompetence, willful misconduct,
any breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties, willful violation of any law, rule or regulation (other
than traffic violations or similar offenses) or in the case of an employee
without a written employment agreement with the Bank or Holding Company, any
other grounds provided for under employment policies of the Bank or Holding
Company in effect at the Effective Date or as amended from time to time.
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(dd) "Trust" means a trust established by the Board in connection
with this Plan to hold Plan assets for the purposes set forth herein.
(ee) "Trustee" means that person or persons and entity or entities
approved by the Board to hold legal title to any of the Trust assets for the
purposes set forth herein.
2. ADMINISTRATION.
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(a) The Plan shall be administered by the Committee. The
Committee is authorized, subject to the provisions of the Plan, to grant awards
to Employees and establish such rules and regulations as it deems necessary for
the proper administration of the Plan and to make whatever determinations and
interpretations in connection with the Plan it deems necessary or advisable. All
determinations and interpretations made by the Committee shall be binding and
conclusive on all Employee Participants and Outside Director Participants in the
Plan and on their legal representatives and beneficiaries.
(b) Awards to Outside Directors of the Holding Company or its
Affiliates shall be granted by the Board of Directors or the Committee, pursuant
to the terms of this Plan.
(c) Actual transference of the Award requires no, nor allows any,
discretion by the Trustee.
3. TYPES OF AWARDS AND RELATED RIGHTS.
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The following Awards and related rights as described below in
Paragraphs 6 through 12 hereof may be granted under the Plan:
(a) Non-statutory Stock Options
(b) Incentive Stock Options
(c) Limited Rights
(d) Stock Awards
4. STOCK SUBJECT TO THE PLAN.
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Subject to adjustment as provided in Section 15 hereof, the maximum
number of shares of Common Stock reserved for Awards under the Plan is 1,174,330
shares which number may not be in excess of 14 % of the outstanding shares of
the Common Stock determined immediately as of the Effective Date. Subject to
adjustment as provided in Section 15 hereof, the maximum number of shares of
Common Stock reserved hereby for purchase pursuant to the exercise of Options
and Option-related Awards granted under the Plan is 838,807 shares, which number
may not be in excess of 10% of the outstanding shares of Common Stock as of the
Effective Date. The maximum number of the shares of Common Stock reserved for
award as Stock Awards is 335,523 shares, which number is not in excess of 4% of
the outstanding shares of Common Stock as of the Effective Date. These shares
of Common Stock may be either authorized but unissued shares or authorized
shares previously issued and reacquired by the Holding Company. To the extent
that Options and Stock Awards are granted under the Plan, the shares underlying
such Awards will be unavailable for any other use including future grants under
the Plan except that, to the extent that Stock Awards or Options terminate,
expire, or are forfeited without having been exercised (or in cases where a
Limited Right has been granted in connection with an option, the amount of such
Limited Right received in lieu of the exercise of such option), new Awards may
be made with respect to those shares underlying such terminated, expired or
forfeited Options or Stock Awards.
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5. ELIGIBILITY.
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Subject to the terms herein, all Employees and Outside Directors
shall be eligible to receive Awards under the Plan.
6. NON-STATUTORY STOCK OPTIONS.
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The Committee may, subject to the limitations of the Plan and the
availability of shares reserved but unawarded under the Plan, from time to
time, grant Non-statutory Stock Options to Employees and Outside Directors, upon
such terms and conditions as the Committee may determine. Further, subject to
receipt of stockholder approval, the Committee may grant Non-statutory Stock
Options in exchange for and upon surrender of previously granted Awards under
this Plan under such terms and conditions as the Committee may determine. Non-
statutory Stock Options granted under this Plan are subject to the following
terms and conditions:
(a) Exercise Price. The Exercise Price of each Non-statutory Stock
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Option shall be determined by the Committee, and once determined and documented
in an NSO Agreement, may not be revised without stockholder approval or in
accordance with Section 15 hereof. Such Exercise Price shall not be less than
100% of the Fair Market Value of the Holding Company's Common Stock on the Date
of Grant. Shares of Common Stock underlying a Non-statutory Stock Option may be
purchased only upon full payment of the Exercise Price or upon operation of an
Alternate Option Payment Mechanism set out in Section 11 hereof.
(b) Terms of Non-statutory Stock Options. The term during which
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each Non-statutory Stock Option may be exercised shall be determined by the
Committee, but in no event shall a Non-statutory Stock Option be exercisable in
whole or in part more than 10 years from the Date of Grant. The Committee shall
determine the date on which each Non-statutory Stock Option shall become
exercisable. The shares of Common Stock underlying each Non-statutory Stock
Option installment may be purchased in whole or in part by the Participant at
any time during the term of such Non-statutory Stock Option after such
installment becomes exercisable. The Committee may, in its sole discretion,
accelerate the time at which any Non-statutory Stock Option may be exercised in
whole or in part. The acceleration of any Non-statutory Stock Option under the
authority of this paragraph shall create no right, expectation or reliance on
the part of any other Participant or that certain Participant regarding any
other unaccelerated Non-statutory Stock Options. Unless determined otherwise by
the Committee and except in the event of the Participant's death or pursuant to
a domestic relations order, a Non-statutory Stock Option is not transferable and
may be exercisable in his lifetime only by the Participant to whom it is
granted. Upon the death of a Participant, a Non-statutory Stock Option is
transferable by will or the laws of descent and distribution.
(c) NSO Agreement. The terms and conditions of any Non-statutory
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Stock Option granted shall be evidenced by an agreement (the "NSO Agreement")
which shall be subject to the terms and conditions of the Plan.
(d) Termination of Employment or Service. Unless otherwise
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determined by the Committee, upon the termination of a Participant's employment
or service for any reason other than Disability, death or Termination for Cause,
the Participant's Non-statutory Stock Options shall be exercisable only as to
those shares that were immediately exercisable by the Participant at the date of
termination and only for a period of three months following termination.
Notwithstanding any provisions set forth herein or contained in any NSO
Agreement relating to an award of a Non-statutory Stock Option, in the event of
termination of the Participant's employment or service for Disability or death,
all Non-statutory Stock Options held by such Participant shall immediately vest
and be exercisable for one year after such termination of service, and, in the
event of a
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Termination for Cause, all rights under the Participant's Non-statutory Stock
Options shall expire immediately upon such Termination for Cause.
(e) Change in Control. Unless otherwise determined by the
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Committee, and notwithstanding any other provision of the Plan, in the event of
a Change in Control, all Non-statutory Stock Options held by the Participant,
whether or not vested at such time, shall become vested to the Participant or
his legal representatives or beneficiaries upon the Change in Control.
7. INCENTIVE STOCK OPTIONS.
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The Committee may, subject to the limitations of the Plan and the
availability of shares reserved but unawarded under the Plan, from time to
time, grant Incentive Stock Options to Employees upon such terms and conditions
as the Committee may determine. Incentive Stock Options granted pursuant to the
Plan shall be subject to the following terms and conditions:
(a) Exercise Price. The Exercise Price of each Incentive Stock
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Option shall be not less than 100% of the Fair Market Value of the Common Stock
on the Date of Grant. However, if at the time an Incentive Stock Option is
granted to an Employee Participant, such Employee Participant owns Common Stock
representing more than 10% of the total combined voting securities of the
Holding Company (or, under Section 424(d) of the Code, is deemed to own Common
Stock representing more than 10% of the total combined voting power of all
classes of stock of the Holding Company, by reason of the ownership of such
classes of stock, directly or indirectly, by or for any brother, sister, spouse,
ancestor or lineal descendent of such Employee Participant, or by or for any
corporation, partnership, estate or trust of which such Employee Participant is
a shareholder, partner or beneficiary) ("10% Owner"), the Exercise Price per
share of Common Stock deliverable upon the exercise of each Incentive Stock
Option shall not be less than 110% of the Fair Market Value of the Common Stock
on the Date of Grant. Shares may be purchased only upon payment of the full
Exercise Price or upon operation of an Alternate Option Payment Mechanism set
out in Section 11 hereof.
(b) Amounts of Incentive Stock Options. Incentive Stock Options
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may be granted to any Employee in such amounts as determined by the Committee;
provided that the amount granted is consistent with the terms of Section 422 of
the Code. In the case of an Option intended to qualify as an Incentive Stock
Option, the aggregate Fair Market Value (determined as of the time the Option is
granted) of the Common Stock with respect to which Incentive Stock Options
granted are exercisable for the first time by the Employee Participant during
any calendar year (under all plans of the Employee Participant's employer
corporation and its parent and subsidiary corporations) shall not exceed
$100,000. The provisions of this Section 7(b) shall be construed and applied in
accordance with Section 422(d) of the Code and the regulations, if any,
promulgated thereunder. To the extent an Award of an Incentive Stock Option
under this Section 7 exceeds this $100,000 limit, the portion of the Award in
excess of such limit shall be deemed a Non-statutory Stock Option. The Committee
shall have discretion to redesignate Options granted as Incentive Stock Options
as Non-Statutory Stock Options. Such Non-statutory Stock Options shall be
subject to Section 6 hereof.
(c) Terms of Incentive Stock Options. The term during which each
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Incentive Stock Option may be exercised shall be determined by the Committee,
but in no event shall an Incentive Stock Option be exercisable in whole or in
part more than 10 years from the Date of Grant. If at the time an Incentive
Stock Option is granted to an Employee Participant who is a 10% Owner, the
Incentive Stock Option granted to such Employee Participant shall not be
exercisable after the expiration of five years from the Date of Grant. No
Incentive Stock Option is transferable except by will or the laws of descent
and distribution and is exercisable in his or her lifetime only by the Employee
Participant to whom it is granted. The designation of a beneficiary does not
constitute a transfer.
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The Committee shall determine the date on which each Incentive Stock
Option shall become exercisable. The shares comprising each installment of the
Incentive Stock Option may be purchased in whole or in part at any time during
the term of such Option after such installment becomes exercisable. The
Committee may, in its sole discretion, accelerate the time at which any
Incentive Stock Option may be exercised in whole or in part. The acceleration
of any Incentive Stock Option under the authority of this paragraph shall not
create a right, expectation or reliance on the part of any other Participant or
that certain Participant regarding any other unaccelerated Incentive Stock
Options.
(d) ISO Agreement. The terms and conditions of any Incentive Stock
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Option granted shall be evidenced by an agreement (the "ISO Agreement") which
shall be subject to the terms and conditions of the Plan.
(e) Termination of Employment. Unless otherwise determined by the
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Committee, upon the termination of an Employee Participant's employment for any
reason other than Disability, death or Termination for Cause, the Employee
Participant's Incentive Stock Options shall be exercisable only as to those
shares that were immediately exercisable by the Participant at the date of
termination and only for a period of three months following termination.
Notwithstanding any provision set forth herein or contained in any ISO Agreement
relating to an award of an Incentive Stock Option, in the event of termination
of the Employee Participant's employment for Disability or death, all Incentive
Stock Options held by such Employee Participant shall immediately vest and be
exercisable for one year after such termination, and, in the event of
Termination for Cause, all rights under the Employee Participant's Incentive
Stock Options shall expire immediately upon termination. No Incentive Stock
Option shall be eligible for treatment as an Incentive Stock Option in the event
such Incentive Stock Option is exercised more than three months following the
date of Participant's cessation of employment. In no event shall an Incentive
Stock Option be exercisable beyond the expiration of the Incentive Stock Option
term.
(f) Change in Control. Unless otherwise determined by the
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Committee, and notwithstanding any other provision of the Plan, in the event of
a Change in Control, all Incentive Stock Options held by the Participant,
whether or not vested at such time, shall become vested to the Participant or
his legal representatives or beneficiaries upon the Change in Control.
(g) Compliance with Code. The Incentive Stock Options granted
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under this Section 7 are intended to qualify as "incentive stock options" within
the meaning of Section 422 of the Code, but the Holding Company makes no
warranty as to the qualification of any Option as an incentive stock option
within the meaning of Section 422 of the Code. All Options that do not so
qualify shall be treated as Non-statutory Stock Options.
8. LIMITED RIGHT.
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Simultaneously with the grant of any Option to an Employee or Outside
Director, the Committee may grant a Limited Right with respect to all or some of
the shares covered by such Option. Limited Rights granted under this Plan are
subject to the following terms and conditions:
(a) Terms of Rights. In no event shall a Limited Right be
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exercisable in whole or in part before the expiration of six months from the
Date of Grant of the Limited Right. A Limited Right may be exercised only in
the event of a Change in Control that is not to be accounted for as a pooling of
interests or in the event the Holding Company's independent auditors opine that
the exercise of such Limited Rights would not adversely affect the accounting
treatment intended for the Change in Control.
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The Limited Right may be exercised only when the underlying Option is
eligible to be exercised, and only when the Fair Market Value of the underlying
shares on the day of exercise is greater than the Exercise Price of the
underlying Option.
Upon exercise of a Limited Right, the underlying Option shall cease to
be exercisable. Upon exercise or termination of an Option, any related Limited
Rights shall terminate. The Limited Rights may be for no more than 100% of the
difference between the purchase price and the Fair Market Value of the Common
Stock subject to the underlying option. The Limited Right is transferable only
when the underlying option is transferable and under the same conditions.
(b) Payment. Upon exercise of a Limited Right, the holder shall
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promptly receive from the Holding Company an amount of cash equal to the
difference between the Exercise Price of the underlying option and the Fair
Market Value of the Common Stock subject to the underlying Option on the date
the Limited Right is exercised, multiplied by the number of shares with respect
to which such Limited Right is exercised. Payments shall be less any applicable
tax withholding as set forth in Section 16 hereof.
9. STOCK AWARD.
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The Committee may, subject to the limitations of the Plan, from time
to time, make an Award of shares of Common Stock to Employees and Outside
Directors ("Stock Awards"). The Stock Awards shall be made subject to the
following terms and conditions:
(a) Payment of the Stock Award. The Stock Award may only be made
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in whole shares of Common Stock. Stock Awards may only be granted from shares
reserved under the Plan but unawarded at the time the new Stock Award is made.
(b) Terms of the Stock Awards. The Committee shall determine the
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dates on which Stock Awards granted to a Participant shall vest and any specific
conditions or performance goals which must be satisfied prior to the vesting of
any installment or portion of the Stock Award. Notwithstanding other paragraphs
in this Section 9, the Committee may, in its sole discretion, accelerate the
vesting of any Stock Award. The acceleration of any Stock Award under the
authority of this paragraph shall create no right, expectation or reliance on
the part of any other Participant or that certain Participant regarding any
other unaccelerated Stock Awards.
(c) Stock Award Agreement. The terms and conditions of any Stock
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Award shall be evidenced by an agreement (the "Stock Award Agreement") which
such Stock Award Agreement will be subject to the terms and conditions of the
Plan. Each Stock Award Agreement shall set forth:
(i) the period over which the Stock Award will vest;
(ii) the performance goals, if any, which must be satisfied
prior to the vesting of any installment or portion of
the Stock Award. The performance goals may be set by the
Committee on an individual level, for all Participants,
for all Awards made during a given period of time, or
for all Awards for indefinite periods;
(d) Certification of Attainment of the Performance Goal. No Stock
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Award of portion thereof that is subject to a performance goal is to be
distributed to an Employee Participant until the Committee certifies that the
underlying performance goal has been achieved, or in the case of an Outside
Director Participant, until an independent third party presents a certification
to the Board of Directors that the underlying performance goal associated with a
Stock Award has been achieved.
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(e) Termination of Employment or Service. Unless otherwise
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determined by the Committee, upon the termination of a Participant's employment
or service for any reason other than Disability, death or Termination for Cause,
the Participant's unvested Stock Awards as of the date of termination shall be
forfeited and any rights the Participant had to such unvested Stock Awards shall
become null and void. Notwithstanding any provisions set forth herein or
contained in any NSO Agreement relating to an award of a Non-statutory Stock
Option, in the event of termination of the Participant's service due to
Disability or death, all unvested Stock Awards held by such Participant,
including any portion of a Stock Award subject to a performance goal, shall
immediately vest and, in the event of the Participant's Termination for Cause,
the Participant's unvested Stock Awards as of the date of such termination shall
be forfeited and any rights the Participant had to such unvested Stock Awards
shall become null and void.
(f) Change in Control. Unless otherwise determined by the
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Committee, and notwithstanding any other provision of the Plan, in the event of
a Change in Control, all Stock Awards held by the Participant, whether or not
vested at such time, shall become vested to the Participant or his legal
representatives or beneficiaries upon the Change in Control.
(g) Non-Transferability. Except to the extent permitted by the
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Code, the rules promulgated under Section 16(b) of the Exchange Act or any
successor statutes or rules:
(i) The recipient of a Stock Award shall not sell, transfer,
assign, pledge, or otherwise encumber shares subject to
the Stock Award until full vesting of such shares has
occurred. For purposes of this section, the separation
of beneficial ownership and legal title through the use
of any "swap" transaction is deemed to be a prohibited
encumbrance.
(ii) Unless determined otherwise by the Committee and except
in the event of the Participant's death or pursuant to a
domestic relations order, a Stock Award is not
transferable and may be earned in his lifetime only by
the Participant to whom it is granted. Upon the death of
a Participant, a Stock Award is transferable by will or
the laws of descent and distribution. The designation of
a beneficiary does not constitute a transfer.
(iii) If a recipient of a Stock Award is subject to the
provisions of Section 16 of the Exchange Act, shares of
Common Stock subject to such Stock Award may not,
without the written consent of the Committee (which
consent may be given in the Stock Award Agreement), be
sold or otherwise disposed of within six months
following the date of grant of the Stock Award .
(h) Accrual of Dividends. Whenever shares of Common Stock
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underlying a Stock Award are distributed to a Participant or beneficiary thereof
under the Plan, such Participant or beneficiary shall also be entitled to
receive, with respect to each such share distributed, a payment equal to any
cash dividends or distributions (other than distributions in shares of Common
Stock) and the number of shares of Common Stock equal to any stock dividends,
declared and paid with respect to a share of the Common Stock if the record date
for determining shareholders entitled to receive such dividends falls between
the date the relevant Stock Award was granted and the date the relevant Stock
Award or installment thereof is distributed. There shall also be distributed an
appropriate amount of net earnings, if any, of the Trust with respect to any
dividends paid out.
(i) Voting of Stock Awards. After a Stock Award has been granted,
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but for which the shares covered by such Stock Award have not yet been earned
and distributed to the Participant pursuant to the Plan, the Participant shall
be entitled to direct the Trustee as to the voting of such shares of Common
Stock which the Stock Award covers subject to the rules and procedures adopted
by the Committee for this purpose. All shares
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of Common Stock held by the Trust as to which Participants are not entitled to
direct, or have not directed the voting, shall be voted by the Trustee in the
same proportion as the Common Stock covered by Stock Awards which have been
awarded is voted.
10. PAYOUT ALTERNATIVES
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Payments due to a Participant upon the exercise or redemption of an
Award, may be made subject to the following terms and conditions:
(a) Discretion of the Committee. The Committee has the sole
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discretion to determine what form of payment (whether monetary, Common Stock, a
combination of payout alternatives or otherwise) it shall use in making
distributions of payments for all Awards. If the Committee requests any or all
Participants to make an election as to form of distribution or payment, it shall
not be considered bound by the election.
(b) Payment in the form of Common Stock. Any shares of Common
-----------------------------------
Stock tendered in satisfaction of an obligation arising under this Plan shall be
valued at the Fair Market Value of the Common Stock on the day preceding the
date of the issuance of such stock to the Participant.
11. ALTERNATE OPTION PAYMENT MECHANISM
----------------------------------
The Committee has sole discretion to determine what form of payment
it will accept for the exercise of an Option. The Committee may indicate
acceptable forms in the ISO or NSO Agreement covering such Options or may
reserve its decision to the time of exercise. No Option is to be considered
exercised until payment in full is accepted by the Committee or its agent.
(a) Cash Payment. The exercise price may be paid in cash or by
------------
certified check.
(b) Borrowed Funds. To the extent permitted by law, the Committee
--------------
may portion of the exercise price of an Option to be paid through borrowed
funds.
(c) Exchange of Common Stock.
------------------------
(i) The Committee may permit payment by the tendering of
previously acquired shares of Common Stock. This
includes the use of "pyramiding transactions" whereby
some number of Options are exercised; then the shares
gained through the exercise are tendered back to the
Holding Company as payment for a greater number of
Options. This transaction may be repeated as needed to
exercise all of the Options available .
(ii) Any shares of Common Stock tendered in payment of the
exercise price of an Option shall be valued at the Fair
Market Value of the Common Stock on the date prior to
the date of exercise.
12. RIGHTS OF A SHAREHOLDER: NONTRANSFERABILITY.
-------------------------------------------
No Participant shall have any rights as a shareholder with respect to
any shares of Common Stock covered by an Option until the date of issuance of a
stock certificate for such shares. Nothing in this Plan or in any Award granted
confers on any person any right to continue in the employ or service of the
Holding Company or its Affiliates or interferes in any way with the right of the
Holding Company or its Affiliates to terminate a Participant's services as an
officer or other employee at any time.
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Except as permitted under the Code (with respect to Incentive Stock
Options) and the rules promulgated pursuant to Section 16(b) of the Exchange Act
or any successor statutes or rules, no Award under the Plan shall be
transferable by the Participant other than by will or the laws of intestate
succession or pursuant to a domestic relations order or unless determined
otherwise by the Committee.
13. AGREEMENT WITH GRANTEES.
-----------------------
Each Award will be evidenced by a written agreement(s) (whether
constituting an NSO Agreement, ISO Agreement, Stock Award Agreement or any
combination thereof), executed by the Participant and the Holding Company or its
Affiliates that describes the conditions for receiving the Awards including the
date of Award, the Exercise Price if any, the terms or other applicable periods,
and other terms and conditions as may be required or imposed by the Plan, the
Committee, or the Board of Directors, and may describe or specify tax law
considerations or applicable securities law considerations.
14. DESIGNATION OF BENEFICIARY.
--------------------------
A Participant may, with the consent of the Committee, designate a
person or persons to receive, in the event of death, any Award to which the
Participant would then be entitled. Such designation will be made upon forms
supplied by and delivered to the Holding Company and may be revoked in writing.
If a Participant fails effectively to designate a beneficiary, then the
Participant's estate will be deemed to be the beneficiary.
15. DILUTION AND OTHER ADJUSTMENTS.
------------------------------
In the event of any change in the outstanding shares of Common Stock
by reason of any stock dividend or split, recapitalization, merger,
consolidation, spin-off, reorganization, combination or exchange of shares, or
other similar corporate change, or other increase or decrease in such shares
without receipt or payment of consideration by the Holding Company, or in the
event a capital distribution is made, the Committee will make such adjustments
to Awards to prevent dilution, diminution or enlargement of the rights of the
Participant, as the Committee deems appropriate, including any or all of the
following:
(a) adjustments in the aggregate number or kind of shares of
Common Stock or other securities that may underlie future Awards under the Plan;
(b) adjustments in the aggregate number or kind of shares of
Common Stock or other securities underlying Awards already made under the Plan;
(c) adjustments in the exercise price of outstanding Incentive
and/or Non-statutory Stock Options, or any Limited Rights attached to such
Options.
Alternatively, the Committee could provide the participant with a cash
benefit for shares underlying vested, but unexercised options, in order to
achieve the aforementioned effect. All awards under this Plan shall be binding
upon any successors or assigns of the Holding Company.
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16. TAX WITHHOLDING.
---------------
Awards under this Plan shall be subject to tax withholding to the
extent required by any governmental authority. Any withholding shall comply with
Rule 16b-3 or any amendment or successor rule. Shares of Common Stock withheld
to pay for tax withholding amounts shall be valued at their Fair Market Value on
the date the Award is deemed taxable to the Participant and such shares shall be
considered to have been awarded and forfeited.
17. AMENDMENT OF THE PLAN.
---------------------
The Board of Directors may at any time, and from time to time,
subject to applicable rules and regulations and shareholder approval when
required under the Plan, modify or amend the Plan, or any Award granted under
the Plan, in any respect, prospectively or retroactively; provided however, that
provisions governing grants of Incentive Stock Options, unless permitted by the
rules and regulations or staff pronouncements promulgated under the Code shall
be submitted for shareholder approval to the extent required by such law,
regulation or interpretation.
Failure to ratify or approve amendments or modifications by
shareholders shall be effective only as to the specific amendment or
modification requiring such ratification, or as otherwise determined by the
Board of Directors. Other provisions, sections, and subsections of this Plan
will remain in full force and effect.
No such termination, modification or amendment may adversely affect
the rights of a Participant under an outstanding Award without the written
permission of such Participant.
18. EFFECTIVE DATE OF PLAN.
----------------------
The Plan became effective on February 4, 1997. All amendments are
effective upon approval by the Board of Directors, subject to shareholder
ratification when specifically required under the Plan.
19. TERMINATION OF THE PLAN.
-----------------------
The right to grant Awards under the Plan will terminate upon the
earlier of: (i) ten (10) years after the Effective Date; (ii) the issuance of a
number of shares of Common Stock pursuant to the exercise of Options or the
distribution of Stock Awards which together with the exercise of Limited Rights
is equivalent to the maximum number of shares reserved under the Plan as set
forth in Section 4. The Board of Directors has the right to suspend or terminate
the Plan at any time, provided that no such action will, without the consent of
a Participant, adversely affect a Participant's vested rights under a previously
granted Award.
20. APPLICABLE LAW.
--------------
The Plan will be administered in accordance with the laws of the
State of Delaware and applicable federal law.
21. DELEGATION OF AUTHORITY
-----------------------
The Committee may delegate all authority for: the determination of
forms of payment to be made by or received by the Plan; the execution of Award
agreements; the determination of Fair Market Value; and the determination of all
other aspects of administration of the Plan to the executive officer(s) of the
Holding Company or the Bank. The Committee may rely on the descriptions,
representations, reports and estimates provided to it by the management of the
Holding Company or the Bank for determinations to be made pursuant
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to the Plan, including the attainment of performance goals. However, only the
Committee or a portion of the Committee may certify the attainment of a
performance goal.
IN WITNESS WHEREOF, the Holding Company has established this Plan to
be executed by its duly authorized executive officer and the corporate seal to
be affixed and duly attested, effective as of the 18th day of February, 1998.
[CORPORATE SEAL] OCEAN FINANCIAL CORP.
October 21, 1998 By: /s/ John R. Garbarino
- ---------------- -----------------------------
Date Chairman of the Board
ADOPTED BY THE BOARD OF DIRECTORS:
October 21, 1998 By: /s/ John K. Kelly
- ---------------- -----------------------------
Date Corporate Secretary
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