FIRST WASHINGTON FINANCIALCORP
1999 STOCK OPTION PLAN
Section 1. Purpose
The First Washington FinancialCorp 1999 Stock Option Plan (the "Plan")
is hereby established to foster and promote the long-term success of First
Washington FinancialCorp., its subsidiaries (collectively, the "Corporation")
and its shareholders by providing non-employee directors of the Corporation and
its subsidiaries with an equity interest in the Corporation. The Plan will
assist the Corporation in attracting and retaining the highest quality of
experienced persons as directors and in aligning the interests of such persons
more closely with the interests of the Corporation's shareholders by encouraging
such parties to maintain an equity interest in the Corporation.
Section 2. Definitions
Capitalized terms not specifically defined elsewhere herein shall have
the following meaning:
"Board" means the Board of Directors of the Corporation.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the regulations promulgated thereunder.
"Common Stock" or "Stock" means the Common Stock, no par value, of the
Corporation.
"Corporation" means First Washington FinancialCorp and any present or
future subsidiary corporations of First Washington FinancialCorp (as defined in
Section 424 of the Code) or any successor to such corporations.
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"Disability" shall mean permanent and total disability which if the
Director were an employee of the Corporation would be treated as a total
disability under the terms of the Corporation's long-term disability plan for
employees as in effect from time to time.
"Fair Market Value" shall be the average of the bid and asked price
last quoted by Ryan, Beck & Co. or any other recognized brokerage company or
market maker in the stock or any combination of such quotes, on such Grant Date
or other relevant date. If no such bid prices are available on the Grant Date or
other relevant date, the Fair Market Value of a share of Stock on the Grant Date
or such other relevant date shall be determined by the Board of Directors in the
exercise of their good faith, considering such factors as they may deem
appropriate.
"Option" means an option to purchase shares of common stock of the
Corporation granted hereunder.
"Participant" means a member of the Board of Directors of the
Corporation selected by the Board to receive an Option under the Plan.
"Plan" means the First Washington FinancialCorp 1999 Stock Option Plan.
"Termination for Cause" means termination because of Participant's
intentional failure to perform stated duties, personal dishonesty, willful
violation of any law, rule, regulation (other than traffic violations or similar
offenses) or final cease and desist order issued by any regulatory agency having
jurisdiction over the Participant or the Corporation.
Section 3. Administration
(a) The Plan shall be administered by the Board of Directors. Among
other things, the Board of Directors shall have authority, subject to the terms
of the Plan, to grant Options, to determine the individuals to whom and the time
or times at which Options may be granted to determine the terms and conditions
of any Option granted hereunder, including whether to impose any vesting period,
and the exercise price thereof, subject to the requirements of this Plan.
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(b) Subject to the other provisions of the Plan, the Board of Directors
shall have authority to adopt, amend, alter and repeal such administrative
rules, guidelines and practices governing the operation of the Plan as it shall
from time to time consider advisable, to interpret the provisions of the Plan
and any Option and to decide all disputes arising in connection with the Plan.
The Board may correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any option agreement in the manner and to the
extent it shall deem appropriate to carry the Plan into effect, in its sole and
absolute discretion. The Board's decision and interpretations shall be final and
binding. Any action of the Board with respect to the administration of the Plan
shall be taken pursuant to a majority vote or by the unanimous written consent
of its members.
(c) The Board of Directors may employ such legal counsel, consultants
and agents as it may deem desirable for the administration of the Plan and may
rely upon any opinion received from any such counsel or consultant and any
computation received from any such consultant or agent.
Section 4. Eligibility and Participation
Members of the Board of Directors of the Corporation shall be eligible
to participate in the Plan. The Participants under the Plan shall be selected
from time to time by the Board of Directors, in its sole discretion, from among
those eligible, and the Board shall determine in its sole discretion the numbers
of shares to be covered by the Option or Options granted to each Participant.
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Section 5. Shares of Stock Available for Options
(a) The maximum number of shares of Common Stock which may be issued
and purchased pursuant to Options granted under the Plan is 50,000, subject to
the adjustments as provided in this Section and Section 9, to the extent
applicable. If an Option granted under this Plan expires or terminates before
exercise or is forfeited for any reason, without a payment in the form of Common
Stock being granted to the Participant, the shares of Common Stock subject to
such Option, to the extent of such expiration, termination or forfeiture, shall
again be available for subsequent Option grant under Plan. Shares of Common
Stock issued under the Plan may consist in whole or in part of authorized but
unissued shares or treasury shares.
(b) In the event that the Board of Directors determines, in its sole
discretion, that any stock dividend, stock split, reverse stock split or
combination, extraordinary cash dividend, creation of a class of equity
securities, recapitalization, reclassification, reorganization, merger,
consolidation, split-up, spin-off, combination, exchange of shares, warrants or
rights offering to purchase Common Stock at a price substantially below Fair
Market Value, or other similar transaction affects the Common Stock such that an
adjustment is required in order to preserve the benefits or potential benefits
intended to be granted or made available under the Plan to Participants, the
Board shall proportionately and appropriately adjust equitably any or all of (i)
the maximum number and kind of shares of Common Stock in respect of which
Options may be granted under the Plan to Participants, (ii) the number and kind
of shares of Common Stock subject to outstanding Options held by Participants,
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and (iii) the exercise price with respect to any Options held by Participants,
without changing the aggregate purchase price as to which such Options remain
exercisable, and if considered appropriate, the Board may make provision for a
cash payment with respect to any outstanding Options held by a Participant. No
fractional Shares shall be issued on account of any such adjustment.
(c) Any adjustments under this Section will be made by the Board of
Directors, whose determination as to what adjustments, if any, will be made and
the extent thereof will be final, binding and conclusive.
Section 6. Options
6.1 Grant of Options.
The Board of Directors may, from time to time, grant Options to
Participants upon such terms and conditions as the Board of Directors may
determine, and may grant Options in exchange for and upon surrender of
previously granted Stock Options under this Plan. Options granted under this
Plan are subject to the following terms and conditions:
(a) Price. The purchase price per share of Common Stock deliverable
upon the exercise of each Option shall be determined by the Board of Directors
on the date the option is granted. Such purchase price shall not be less than
one hundred percent (100%) of the Fair Market Value of the Common Stock on the
date of grant. Shares may be purchased only upon full payment of the purchase
price. Payment of the purchase price may be made, in whole or in part, through
the surrender of shares of the Common Stock at the Fair Market Value of such
shares on the date of surrender.
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(b) Terms of Options. The term during which each Option may be
exercised shall be determined by the Board of Directors, but in no event shall
an Option be exercisable in whole or in part more than ten (10) years from the
date of grant, except as provided for below. Options granted hereunder are
generally non-transferable, provided, however, that any Option granted hereunder
may be transferred by a Participant to members of the Participant's immediate
family, or to any trust or benefit plan established for the benefit of such
Participant or immediate family member, or pursuant to the laws of descent and
distribution.
(c) Termination of Service. Except as provided in Sections 6.1(d) and
(e) hereof, unless otherwise determined by the Board of Directors, upon the
termination of a Participant's service as a member of the Board of Directors for
any reason other than Disability, death or Termination for Cause, the
Participant's Options shall be exercisable only for a period of three months
following termination. Notwithstanding any provision set forth herein nor
contained in any Agreement relating to the award of an Option, in the event of
Termination for Cause, all rights under the Participant's Options shall expire
upon termination. In the event of death or termination of service as a result of
Disability of any Participant, all Non-Qualified Stock Options held by the
Participant, whether or not exercisable at such time, shall be exercisable by
the Participant or his legal representatives or beneficiaries for one year or
such longer period as determined by the Board following the date of the
Participant's death or termination of service due to Disability, provided that
in no event shall the period extend beyond the expiration of the option term of
the Option.
(d) [INTENTIONALLY DELETED]
(e) Termination of Service Upon a Change In Control
Upon the termination of a Participant's service as a member of the
Board of Directors in connection with a change in control of the corporation (as
defined below), the Participant's Options shall be exercisable, regardless of
their then remaining term, for the greater of (i) a period of 12-months after
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the change in control or (ii) their then remaining term. For purposes of this
provision, the term "change in control of the Corporation" shall mean a
reorganization, merger, consolidation or sale of all or substantially all of the
assets of the Corporation, the acquisition of more than 50% of the voting power
of the capital stock of the Corporation by any person or group, or any similar
transaction in which the Corporation is not the surviving entity.
Section 7. Extension
The Board of Directors may, in its sole discretion, extend the dates
during which all or any particular Option or Options granted under the Plan may
be exercised.
Section 8. General Provisions Applicable to Options
(a) Each Option under the Plan shall be evidenced by a writing
delivered to the Participant specifying the terms and conditions thereof and
containing such other terms and conditions not inconsistent with the provisions
of the Plan as the Board of Directors considers necessary or advisable to
achieve the purposes of the Plan or comply with applicable tax and regulatory
laws and accounting principles.
(b) Each Option may be granted alone, in addition to or in relation to
any other Option. The terms of each Option need not be identical, and the Board
of Directors need not treat Participants uniformly. Except as otherwise provided
by the Plan or a particular Option, any determination with respect to an Option
may be made by the Board at the time of grant or at any time thereafter.
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(c) In the event of a consolidation, reorganization, merger or sale of
all or substantially all of the assets of the Corporation, in each case in which
outstanding shares of Common Stock are exchanged for securities, cash or other
property of any other corporation or business entity or in the event of a
liquidation of the Corporation, the Board of Directors shall provide for any one
or more of the following actions, as to outstanding Options: (i) provide that
such Options shall be assumed, or equivalent options shall be substituted, by
the acquiring or succeeding corporation (or an affiliate thereof), (ii) upon
written notice to the Participants, provide that all unexercised Options will
terminate immediately prior to the consummation of such transaction unless
exercised (to the extent then exercisable) by the Participant within a specified
period following the date of such notice, (iii) in the event of a merger under
the terms of which holders of the Common Stock of the Corporation will receive
upon consummation thereof a cash payment for each share surrendered in the
merger (the "Merger Price"), make or provide for a cash payment to the
Participants equal to the difference between (A) the Merger Price times the
number of shares of Common Stock subject to such outstanding Options (to the
extent then exercisable at prices not in excess of the Merger Price) and (B) the
aggregate exercise price of all such outstanding Options in exchange for the
termination of such Options, and (iv) provide that all or any outstanding
Options shall become exercisable in full immediately prior to such event.
(d) The Participant shall pay to the Corporation, or make provision
satisfactory to the Board of Directors for payment of, any taxes required by law
to be withheld in respect of Options under the Plan no later than the date of
the event creating the tax liability. In the Board's sole discretion, a
Participant (other than a Participant subject to Section 16 of the Securities
and Exchange Act of 1934 (a "Section 16 Participant"), who shall be subject to
the following sentence) may elect to have such tax obligations paid, in whole or
in part, in shares of Common Stock, including shares retained from the Option
creating the tax obligation. With respect to Section 16 Participants, upon the
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issuance of shares of Common Stock in respect of an Option, such number of
shares issuable shall be reduced by the number of shares necessary to satisfy
such Section 16 Participant's federal, and where applicable, state withholding
tax obligations. For withholding tax purposes, the value of the shares of Common
Stock shall be the Fair Market Value on the date the withholding obligation is
incurred. The Corporation may, to the extent permitted by law, deduct any such
tax obligations from any payment of any kind otherwise due to the Participant.
(e) The Board of Directors may at any time, and from time to time,
amend, modify or terminate the Plan or any outstanding Option held by a
Participant, including substituting therefor another Option of the same or a
different type or changing the date of exercise or realization, provided that
the Participant's consent to each action shall be required unless the Board of
Directors determines that the action, taking into account any related action,
would not materially and adversely affect the Participant.
Section 9. Miscellaneous
(a) No person shall have any claim or right to be granted an Option,
and the grant of an Option shall not be construed as giving a Participant the
right to continued service on the Corporation's Board of Directors. The
Corporation expressly reserves the right at any time to dismiss a Participant
free from any liability or claim under the Plan, except as expressly provided in
the applicable Option.
(b) Nothing contained in the Plan shall prevent the Corporation from
adopting other or additional compensation arrangements.
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(c) Subject to the provisions of the applicable Option, no Participant
shall have any rights as a shareholder (including, without limitation, any
rights to receive dividends, or non cash distributions with respect to such
shares) with respect to any shares of Common Stock to be distributed under the
Plan until he or she becomes the holder thereof.
(d) Notwithstanding anything to the contrary expressed in this Plan,
any provisions hereof that vary from or conflict with any applicable Federal or
State securities laws (including any regulations promulgated thereunder) shall
be deemed to be modified to conform to and comply with such laws.
(e) No member of the Board of Directors shall be liable for any action
or determination taken or granted in good faith with respect to this Plan nor
shall any member of the Board of Directors be liable for any agreement issued
pursuant to this Plan or any grants under it. Each member of the Board of
Directors shall be indemnified by the Corporation against any losses incurred in
such administration of the Plan, unless his action constitutes serious and
willful misconduct.
(f) The Plan shall be effective on November 17, 1999.
(g) The Board may amend, suspend or terminate the Plan or any portion
thereof at any time.
(h) Options may not be granted under the Plan after November 16, 2009,
but then outstanding Options may extend beyond such date.
(i) To the extent that State laws shall not have been preempted by any
laws of the United States, the Plan shall be construed, regulated, interpreted
and administered according to the laws of the State of New Jersey.
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