Exhibit 10(b)
CORNERSTONE BANK
2000 STOCK OPTION PLAN
PLANA
1. PURPOSE OF THE PLAN. The Plan shall be known as the CORNERSTONE BANK
("Bank") 2000 Stock Option Plan, Plan A (the "Plan"). The purpose of the Plan is
to attract and retain qualified personnel for positions of substantial
responsibility and to provide additional incentive to officers, directors, key
employees and other persons providing services to the Bank, or any present or
future parent or subsidiary of the Bank to promote the success of the business.
The Plan is intended to provide for the grant of "Incentive Stock Options,"
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code") and Non-Incentive Stock Options, options that do not so
qualify. The provisions of the Plan relating to Incentive Stock Options shall be
interpreted to conform to the requirements of Section 422 of the Code.
2. DEFINITIONS. The following words and phrases when used in this Plan
with an initial capital letter, unless the context clearly indicates otherwise,
shall have the meaning as set forth below. Wherever appropriate, the masculine
pronoun shall include the feminine pronoun and the singular shall include the
plural.
"Award" means the grant by the Committee of an Incentive Stock
Option or a Non-Incentive Stock Option, or any combination thereof, as provided
in the Plan.
"Bank" shall mean Cornerstone Bank and any successor or Parent
thereto.
"Board" shall mean the Board of Directors of the Bank, or any
successor or parent corporation thereto.
"Change in Control" shall mean: (i) the sale of all, or a
material portion, of the assets of the Bank; (ii) the merger or recapitalization
of the Bank whereby the Bank is not the surviving entity; (iii) a change in
control of the Bank, as otherwise defined or determined by the New Jersey
Department of Banking and Insurance, 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 Bank by any
person, trust, entity or group. This limitation shall not apply to the purchase
of shares by underwriters in connection with a public offering of Bank stock.
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.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and
"Committee" shall mean the Board or the Compensation Committee appointed by the
Board in accordance with Section Sea) of the Plan.
"Common Stock" shall mean the common stock of the Bank, or any
successor or parent corporation thereto.
"Continuous Employment" or "Continuous Status as an Employee"
shall mean the absence of any interruption or termination of employment with the
Bank or any present or future Parent or Subsidiary of the Bank. Employment shall
not be considered interrupted in the case of sick leave, military leave or any
other leave of absence approved by the Bank or in the case of transfers between
payroll locations, of the Bank or between the Bank, its Parent, its Subsidiaries
or a successor.
"Director" shall mean a member of the Board of the Bank, or
any successor or parent corporation thereto.
"Director Emeritus" shall mean 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 Bank 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 Non-Incentive
Stock Options, any physical or mental impairment which renders the Participant
incapable of continuing in the employment or service of the Bank in his then
current capacity as determined by the Committee.
"Effective Date" shall mean the date specified in Section 14
hereof.
"Employee" shall mean any person employed by the Bank or any
present or future Parent or Subsidiary of the Bank.
"Fair Market Value" shall mean: (i) if the Common Stock is
traded otherwise than on a national securities exchange, then the Fair Market
Value per Share shall be equal to the mean between the last bid and ask price of
such Common Stock on such date or, if there is no bid and ask price on said
date, then on the immediately prior business day on which there was a bid and
ask price. If no such bid and ask price is available, then the Fair Market Value
shall be determined by the Committee in good faith; or (ii) if the Common Stock
is listed on a national securities exchange, then the Fair Market Value per
Share shall be not less than the average of the highest and lowest selling price
of such Common Stock on such exchange on such date, or if there were no sales on
said date, then the Fair Market Value shall be not less than the mean between
the last bid and ask price on such date.
"Incentive Stock Option" or "ISO" shall mean an option to
purchase Shares granted by the Committee pursuant to Section 8 here of which is
subject to the limitations and restrictions of Section 8 hereof and is intended
to quality as an incentive stock option under Section 422 of the Code.
"Non-Incentive Stock Option" or "Non-ISO" shall mean an option
to purchase Shares granted pursuant to Section 9 hereof, which option is not
intended to qualify under Section 422 of the Code.
"Option" shall mean an Incentive Stock Option or Non-Incentive
Stock Option granted pursuant to this Plan providing the holder of such Option
with the right to purchase Common Stock.
"Optioned Stock" shall mean stock subject to an Option granted
pursuant to the Plan.
"Optionee" shall mean any person who receives an Option or
Award pursuant to the Plan.
"Parent" shall mean any present or future corporation which
would be a "parent corporation" as defined in Sections 424(e) and (g) of the
Code.
"Participant" means any director, officer or key employee
of the Bank: or any Parent or Subsidiary of the Bank: or any other person
providing a service to the Bank: who is selected by the Committee to
receive an Award, or who by the express terms of the Plan is granted an
Award.
"Plan" shall mean the Cornerstone Bank: 2000 Stock Option
Plan, Plan A.
"Retirement" shall mean termination of service in all
capacities as an Employee, Director and Director Emeritus following attainment
of not less than age 55 and completion of not less than ten years of Service to
the Bank:. Service to the Bank: rendered prior to the Effective Date shall be
recognized in determining eligibility to meet the requirements of Retirement
under the Plan.
"Share" shall mean one share of the Common Stock.
"Subsidiary" shall mean any present or future corporation
which constitutes a "subsidiary corporation" as defined in Sections 424(t) and
(g) of the Code.
3. SHARES SUBJECT TO THE PLAN. Except as otherwise required by the
provisions of Section 12 hereof, the aggregate number of Shares with respect to
which Awards may be made pursuant to the Plan shall not exceed 38,691 (5% of
shares of Common Stock of Bank outstanding) Shares. Such Shares may either be
from authorized but unissued shares or shares purchased in the market for Plan
purposes. If an Award shall expire, become unexercisable, or be forfeited for
any reason prior to its exercise, new Awards may be granted under the Plan with
respect to the number of Shares as to which such expiration has occurred.
4. SIX MONTH HOLDING PERIOD.
Subject to vesting requirements, if applicable, except in the
event of death or Disability of the Optionee or a Change in Control of the Bank,
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.
5. ADMINISTRATION OF THE PLAN.
(a) COMPOSITION OF THE COMMITTEE. The Plan shall be
administered by the Board of Directors of the Bank or a Committee which shall
consist of not less than two Directors of the Bank appointed by the Board and
serving at the pleasure of the Board. All persons designated as members of the
Committee shall meet the requirements of a "Non-Employee Director" within the
meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended, as
found at 17 CFR ss.240.16b-3 to the extent feasible.
(b) POWERS OF THE COMMITTEE. The Committee is authorized (but
only to the extent not contrary to the express provisions of the Plan or to
resolutions adopted by the Board) to interpret the Plan, to prescribe, amend and
rescind rules and regulations relating to the Plan, to determine the form and
content of Awards to be issued under the Plan and to make other determinations
necessary or advisable for the administration of the Plan, and shall have and
may exercise such other power and authority as may be delegated to it by the
Board from time to time. 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.
The President of the Bank and such other officers as shall be
designated by the Committee are hereby authorized to execute written agreements
evidencing Awards on behalf of the Bank and to cause them to be delivered to the
Participants. Such agreements shall set forth the Option exercise price, the
number of shares of Common Stock subject to such Option, the expiration date of
such Options, and such other terms and restrictions applicable to such Award as
are determined in accordance with the Plan or the actions of the Committee.
(c) Effect of Committee's Decision. All decisions,
determinations and interpretations of the Committee shall be final and
conclusive on all persons affected thereby.
6. ELIGIBILITY FOR AWARDS AND LIMITATIONS.
(a) The Committee shall from time to time determine the
officers, Directors, key employees and other persons who shall be granted Awards
under the Plan, the number of Awards to be granted to each such persons, and
whether Awards granted to each such Participant under the Plan shall be
Incentive and/or Non-Incentive Stock Options. In selecting Participants and in
determining the number of Shares of Common Stock to be granted to each such
Participant, the Committee may consider the nature of the prior and anticipated
future services rendered by each such Participant, each such Participant1s
current and potential contribution to the Bank and such other factors as the
Committee may, in its sole discretion, deem relevant. Participants who have been
granted an Award may, if otherwise eligible, be granted additional Awards.
(b) The aggregate Fair Market Value (determined as of the date
the Option is granted) of the Shares with respect to which Incentive Stock
Options are exercisable for the first time by each Employee during any calendar
year (under all Incentive Stock Option plans, as defined in Section422 of the
Code, of the Bank or any present or future Parent or Subsidiary of the Bank)
shall not exceed $100,000. Notwithstanding the prior provisions of this Section
6, the Committee may grant Options in excess of the foregoing limitations,
provided said Options shall be clearly and specifically designated as not being
Incentive Stock Options.
(c) In no event shall Shares subject to Options granted to any
Participant exceed more than 35 % of the total number of Shares authorized for
delivery under the Plan.
7. TERM OF THE PLAN. The Plan shall continue in effect for a term
often(10) years from the Effective Date, unless sooner terminated pursuant to
Section 17 hereof. No Option shall be granted under the Plan after ten (10)
years from the Effective Date.
8. TERMS AND CONDITIONS OF INCENTIVE STOCK OPTIONS. Incentive Stock
Options may be granted only to Participants who are Employees. Each Incentive
Stock Option granted pursuant to the Plan shall be evidenced by an instrument in
such form as the Committee shall from time to time approve. Each Incentive Stock
Option granted pursuant to the Plan shall comply with, and be subject to, the
following terms and conditions:
(a) OPTION PRICE.
(i) The price per Share at which each Incentive Stock
Option granted by the Committee under the Plan may be exercised shall not, as to
any particular Incentive Stock Option, be less than the Fair Market Value of the
Common Stock on the date that such Incentive Stock Option is granted.
(ii) In the case of an Employee who owns Common Stock
representing more than ten percent (10%) of the outstanding Common Stock at the
time the Incentive Stock Option is granted, the Incentive Stock Option 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 that the Incentive Stock Option
is granted.
(b) PAYMENT. Full payment for each Share of Common Stock
purchased upon the exercise of any Incentive Stock Option granted under the Plan
shall be made at the time of exercise of each such Incentive Stock Option and
shall be paid in cash (in United States Dollars), Common Stock or a combination
of cash and Common Stock. Common Stock utilized in full or partial payment of
the exercise price shall be valued at the Fair Market Value at the date of
exercise. The Bank shall accept full or partial payment in Common Stock only to
the extent permitted by applicable law. No Shares of Common Stock shall be
issued until full payment has been received by the Bank, and no Optionee shall
have any of the rights of a stockholder of the Bank until Shares of Common Stock
are issued to the Optionee.
(c) TERM OF INCENTIVE STOCK OPTION. The term of exercisability
of each Incentive Stock Option granted pursuant to the Plan shall be not more
than ten (10) years from the date each such Incentive Stock Option is granted,
provided that in the case of an Employee who owns stock representing more than
ten percent (10%) of the Common Stock outstanding at the time the Incentive
Stock Option is granted, the term of exercisability of the Incentive Stock
Option shall not exceed five (5) years.
(d) EXERCISE GENERALLY. Except as otherwise provided in
Section 10 hereof, no Incentive Stock Option may be exercised unless the
Optionee shall have been in the employ of the Bank at all times during the
period beginning with the date of grant of any such Incentive Stock Option and
ending on the date three (3) months prior to the date of exercise of any such
Incentive Stock Option. The Committee may impose additional conditions upon the
right of an Optionee to exercise any Incentive Stock Option granted hereunder
which are not inconsistent with the terms of the Plan or the requirements for
qualification as an Incentive Stock Option. Except as otherwise provided by the
terms of the Plan or by action of the Committee at the time of the grant of the
Options, one-third of a grant of Options will be first exercisable on the date
of grant and one-third annually thereafter during such periods of service as an
Employee, Director or Director Emeritus.
(e) CASHLESS EXERCISE. Subject to vesting requirements, if
applicable, an Optionee who has held an Incentive Stock Option for at least six
months may engage in the "cashless exercise" of the Option. Upon a cashless
exercise, an Optionee shall give the Bank written notice of the exercise of the
Option together with an order to a registered broker-dealer or equivalent third
party, to sell part or all of the Optioned Stock and to deliver enough of the
proceeds to the Bank to pay the Option exercise price and any applicable
withholding taxes. If the Optionee does not sell the Optioned Stock through a
registered broker-dealer or equivalent third party, the Optionee can give the
Bank written notice of the exercise of the Option and the third party purchaser
of the Optioned Stock shall pay the Option exercise price plus any applicable
withholding taxes to the Bank.
(f) TRANSFERABILITY. An Incentive Stock Option granted
pursuant to the Plan shall be exercised during an Optionee's lifetime only by
the Optionee to whom it was granted and shall not be assignable or transferable
otherwise than by will or by the laws of descent and distribution.
9. TERMS AND CONDITIONS OF NON-INCENTIVE STOCK OPTIONS. Each
Non-Incentive Stock Option granted pursuant to the Plan shall be evidenced by an
instrument in such form as the Committee shall from time to time approve. Each
Non-Incentive Stock Option granted pursuant to the Plan shall comply with and be
subject to the following terms and conditions.
(a) OPTIONS GRANTED TO DIRECTORS. Subject to the limitations
of Section 6(c), Non-Incentive Stock Options to purchase shares of Common Stock,
as noted below, will be granted to each Director who is not an Employee as of
the Effective Date, at an exercise price equal to the Fair Market Value of the
Common Stock on such date of grant.
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DIRECTOR NUMBER OF OPTIONS
George W. Matteo, Jr. 20,000(1)
Robert W. Hoey 4,850(2)
J. Mark Baiada 3,850(2)
Carol A. Beske 3,850(2)
Gaetano P. Giordano 3,850(2)
Robert A. Kennedy, Jr. 3,850(2)
Ronald S. Murphy 3,850(2)
Kenneth H. Zekavat 3,850(2)
Bruce Paparone 3,850(2)
The Options will be 100% exercisable on the date of grant. 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 Optionee's death, such Options may be
exercised by the personal representative of his estate or 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
non-employee 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. Unless otherwise
inapplicable, or inconsistent with the provisions of this paragraph, the Options
to be granted to Directors hereunder shall be subject to all other provisions of
this Plan.
(b) OPTION PRICE. The exercise price per Share of Common Stock
for each Non-Incentive Stock Option granted pursuant to the Plan shall be at
such price as the Committee may determine in its sole discretion, but in no
event less than the Fair Market Value of such Common Stock on the date of grant
as determined by the Committee in good faith.
(c) PAYMENT. Full payment for each Share of Common Stock
purchased upon the exercise of any Non-Incentive Stock Option granted under the
Plan shall be made at the time of exercise of each such Non-Incentive Stock
Option and shall be paid in cash (in United States Dollars), Common Stock or a
combination of cash and Common Stock. Common Stock utilized in full or partial
payment of the exercise price shall be valued at its Fair Market Value at the
date of exercise. The Bank shall accept full or partial payment in Common Stock
only to the extent permitted by applicable law. No Shares of Common Stock shall
be issued until full payment has been received by the Bank and no Optionee shall
have any of the rights of a stockholder of the Bank until the Shares of Common
Stock are issued to the Optionee.
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(1) 50% under Plan A and 50% under Plan B.
(2) Award under Plan A or Plan B.
(d) TERM. The term of exercisability of each Non-Incentive Stock Option
granted pursuant to the Plan shall be not more than ten (10) years from the date
each such Non-Incentive Stock Option is granted.
(e) EXERCISE GENERALLY. The Committee may impose additional conditions
upon the right of any Participant to exercise any Non-Incentive Stock Option
granted hereunder which is not inconsistent with the terms of the Plan. Except
as otherwise provided by the term of the Plan or by action of the Committee at
the time of the grant of the Options, the Options will be first exercisable at
the rate of one-third on the date of grant and one-third annually there after
during such periods of service as an Employee, Director or Director Emeritus.
(f) CASHLESS EXERCISE. Subject to vesting requirements, if applicable,
an Optionee who has held a Non-Incentive Stock Option for at least six months
may engage in the "cashless exercise" of the Option. Upon a cashless exercise,
an Optionee shall give the Bank written notice of the exercise of the Option
together with an order to a registered broker-dealer or equivalent third party,
to sell part or all of the Optioned Stock and to deliver enough of the proceeds
to the Bank to pay the Option exercise price and any applicable withholding
taxes. If the Optionee does not sell the Optioned Stock through a registered
broker-dealer or equivalent third party, the Optionee can give the Bank written
notice of the exercise of the Option and the third party purchaser of the
Optioned Stock shall pay the Option exercise price plus any applicable
withholding taxes to the Bank.
(g) TRANSFERABILITY. Any Non-Incentive Stock Option granted pursuant to
the Plan shall be exercised during an Optionee's lifetime only by the Optionee
to whom it was granted and shall not be assignable or transferable otherwise
than by will or by the laws of descent and distribution.
10. EFFECT OF TERMINATION OF EMPLOYMENT. DISABILITY. DEATH AND
RETIREMENT ON INCENTIVE STOCK OPTIONS.
(a) TERMINATION OF EMPLOYMENT. In the event that any Optionee's
employment with the Bank shall terminate for any reason, other than Retirement,
Disability or death, all of any such Optionee's Incentive Stock Options, and all
of any such Optionee'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 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 Optionee's continuing status as a Director or Director Emeritus of the Bank,
but only if, and to the extent that, the Optionee 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-Incentive Stock Option.
In the event that a Subsidiary ceases to be a Subsidiary of the Bank, the
employment of all of its employees who are not immediately thereafter employees
of the Bank shall be deemed to terminate upon the date such Subsidiary so ceases
to be a Subsidiary of the Bank.
(b) DISABILITY. In the event that any Optionee's employment with the
Bank shall terminate as the result of the Disability of such Optionee, such
Optionee may exercise any Incentive Stock Options granted to the Optionee
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 Optionee 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 an Optionee, any Incentive
Stock Options granted to such Optionee may be exercised by the person or persons
to whom the Optionee1s rights under any such Incentive Stock Options pass by
will or by the laws of descent and distribution (including the Optionee'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 Optionee but only if, and
to the extent that, the Optionee was entitled to exercise any such Incentive
Stock Options at the date of death. For purposes of this Section 1O(c), any
Incentive Stock Option held by an Optionee 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 Optionee may receive Shares or cash or a
combination thereof If cash shall be paid in lieu of Shares, 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.
(d) INCENTIVE STOCK OPTIONS DEEMED EXERCISABLE. For purposes of
Sections lO(a), lO(b) and 10(c) above, any Incentive Stock Option held by any
Optionee shall be considered exercisable at the date of termination of
employment if any such Incentive Stock Option would have been exercisable at
such date of termination of employment without regard to the Disability or death
of the Participant.
(e) TERMINATION OF INCENTIVE STOCK OPTIONS; VESTING UPON RETIREMENT.
Except as may be specified by the Committee at the time of grant of an Option,
to the extent that any Incentive Stock Option granted under the Plan to any
Optionee whose employment with the Bank terminates shall not have been exercised
within the applicable period set forth in this Section 10, any such Incentive
Stock Option, and all rights to purchase or receive Shares of Common Stock
pursuant thereto, as the case may be, shall terminate on the last day of the
applicable period. Notwithstanding the foregoing, the Committee may authorize at
the time of the grant of an Option that such Award shall be immediately 100%
exercisable upon the Retirement of the Optionee. Such Options shall, as of the
date of Retirement, remain exercisable for the remaining term, but in no event
for a period beyond two (2) years from the date of Retirement.
11. EFFECT OF TERMINATION OF EMPLOYMENT, DISABILITY, DEATH OR
RETIREMENT ON NON-INCENTIVE STOCK OPTIONS. The terms and conditions of
Non-Incentive Stock Options relating to the effect of the Retirement or other
termination of an Optionee `s employment or service, Disability of an Optionee
or his death shall be such terms and conditions as the Committee shall, in its
sole discretion, determine at the time of termination of service, unless
specifically provided for by the terms of the Agreement at the time of grant of
the Award.
12. RECAPITALIZATION, MERGER, CONSOLIDATION, CHANGE IN CONTROL AND
OTHER TRANSACTIONS.
(a) Adjustment. Subject to any required action by the stockholders of
the Bank, within the sole discretion of the Committee, the aggregate number of
Shares of Common Stock for which Options may be granted hereunder, the number of
Shares of Common Stock covered by each outstanding Option, and the exercise
price per Share of Common Stock of each such Option, shall all be
proportionately adjusted for any increase or decrease in the number of issued
and outstanding Shares of Common Stock resulting from a subdivision or
consolidation of Shares (whether by reason of merger, consolidation,
recapitalization, reclassification, split-up, combination of shares, or
otherwise) or the payment of a stock dividend (but only on the Common Stock) or
any other increase or decrease in the number of such Shares of Common Stock
effected without the receipt or payment of consideration by the Bank (other than
Shares held by dissenting stockholders).
(b) CHANGE IN CONTROL. All outstanding Awards shall become immediately
exercisable in the event of a Change in Control of the Bank. In the event of
such a Change in Control, the Committee and the Board of Directors will take one
or more of the following actions to be effective as of the date of such Change
in Control:
(i) provide that such Options shall be assumed, or equivalent
options shall be substituted, ("Substitute Options") by the acquiring or
succeeding corporation (or an affiliate thereof), provided that: (A) any such
Substitute Options exchanged for Incentive Stock Options shall meet the
requirements of Section 424(a) of the Code, and (B) the shares of stock issuable
upon the exercise of such Substitute Options shall constitute securities
registered in accordance with the Securities Act of 1933, as amended, ("1933
Act") or such securities shall be exempt from such registration in accordance
with Sections 3(a)(2) or 3(a)(5) of the 1933 Act, (collectively, "Registered
Securities"), or in the alternative, if the securities issuable upon the
exercise of such Substitute Options shall not constitute Registered Securities,
then the Optionee will receive upon consummation of the Change in Control
transaction a cash payment for each Option surrendered equal to the difference
between (1) the Fair Market Value of the consideration to be received for each
share of Common Stock in the Change in Control transaction times the number of
shares of Common Stock subject to such surrendered Options, and (2) the
aggregate exercise price of all such surrendered Options, or
(ii) in the event of a transaction under the terms of which
the holders of the Common Stock of the Bank will receive upon consummation
thereof a cash payment (the "Merger Price") for each share of Common Stock
exchanged in the Change in Control transaction, to make or to provide for a cash
payment to the Optionees equal to the difference between (A) the Merger Price
times the number of shares of Common Stock subject to such Options held by each
Optionee (to the extent then exercisable at prices not in excess of the Merger
Price) and (B) the aggregate exercise price of all such surrendered Options in
exchange for such surrendered Options.
(c) EXTRAORDINARY CORPORATE ACTION. Notwithstanding any provisions of
the Plan to the contrary, subject to any required action by the stockholders of
the Bank, in the event of any Change in Control, recapitalization, merger,
consolidation, exchange of Shares, spin-off, reorganization, tender offer,
partial or complete liquidation or other extraordinary corporate action or
event, the Committee, in its sole discretion, shall have the power, prior or
subsequent to such action or event to:
(i) appropriately adjust the number of Shares of Common Stock
subject to each Option, the Option exercise price per Share of Common Stock, and
the consideration to be given or received by the Bank upon the exercise of any
outstanding Option;
(ii) cancel any or all previously granted Options, provided
that appropriate consideration is paid to the Optionee in connection therewith;
and/or
(iii) make such other adjustments in connection with the Plan
as the Committee, in its sole discretion, deems necessary, desirable,
appropriate or advisable; provided, however, that no action shall be taken by
the Committee which would cause Incentive Stock Options granted pursuant to the
Plan to fail to meet the requirements of Section 422 of the Code without the
consent of the Optionee.
(d) ACCELERATION. The Committee shall at all times have the power
to accelerate the exercise date of Options previously granted under the Plan.
(e) NON-RECURRING DIVIDENDS. Upon the payment of a special or
non-recurring cash dividend that has the effect of a return of capital to
the stockholders, the Option exercise price per share shall be adjusted
proportionately and in an equitable manner.
Except as expressly provided in Sections l2(a), l2(b) and l2(e) hereof,
no Optionee shall have any rights by reason of the occurrence of any ofthe
events described in this Section 12.
13. TIME OF GRANTING OPTIONS. The date of grant of an Option under the
Plan shall, for all purposes, be the date on which the Committee makes the
determination of granting such Option. Notice of the grant of an Option shall be
given to each individual to whom an Option is so granted within a reasonable
time after the date of such grant in a form determined by the Committee.
14. EFFECTIVE DATE. The Plan shall become effective upon the date of
approval of the Plan by the stockholders of the Bank. The Committee may make a
determination related to Awards prior to the Effective Date with such Awards to
be effective upon the date of stockholder approval of the Plan.
15. APPROVAL BY STOCKHOLDERS. The Plan shall be approved by
stockholders of the Bank within twelve (12) months before or after the date the
Plan is approved by the Board.
16. MODIFICATION OF OPTIONS. At any time and from time to time, the
Board may authorize the Committee to direct the execution of an instrument
providing for the modification of any outstanding Option, provided no such
modification, extension or renewal shall confer on the holder of said Option any
right or benefit which could not be conferred on the Optionee by the grant of a
new Option at such time, or shall not materially decrease the Optionee's
benefits under the Option without the consent of the holder of the Option,
except as otherwise permitted under Section 17 hereof.
17. AMENDMENT AND TERMINATION OF THE PLAN.
(a) ACTION BY THE BOARD. The Board may alter, suspend or
discontinue the Plan, except that no action of the Board may increase (other
than as provided in Section 12 hereof) the maximum number of Shares permitted to
be optioned under the Plan, materially increase the benefits accruing to
Participants under the Plan or materially modify the requirements for
eligibility for participation in the Plan unless such action of the Board shall
be subject to approval or ratification by the stockholders of the Bank.
(b) CHANGE IN APPLICABLE LAW. Notwithstanding any other
provision contained in the Plan, in the event of a change in any federal or
state law, rule or regulation which would make the exercise of all or part of
any previously granted Option unlawful or subject the Bank to any penalty, the
Committee may restrict any such exercise without the consent of the Optionee or
other holder thereof in order to comply with any such law, rule or regulation or
to avoid any such penalty.
18. CONDITIONS UPON ISSUANCE OF SHARES; LIMITATIONS ON OPTION
EXERCISE; CANCELLATION OF OPTION RIGHTS.
(a) Shares shall not be issued with respect to any Option 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.
(b) The inability of the Bank to obtain any necessary
authorizations, approvals or letters of non-objection from any regulatory body
or authority deemed by the Bank's counsel to be necessary to the lawful issuance
and sale of any Shares issuable hereunder shall relieve the Bank of any
liability with respect to the non-issuance or sale of such Shares.
(c) As a condition to the exercise of an Option, the Bank may
require the person exercising the Option 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.
(d) Notwithstanding anything herein to the contrary, upon the
termination of employment or service of an Optionee by the Bank or its
Subsidiaries for "cause" as determined by the Board of Directors, all Options
held by such Participant shall cease to be exercisable as of the date of such
termination of employment or service.
(e) Upon the exercise of an Option by an Optionee (or the
Optionee's personal representative), the Committee, in its sole and
absolute discretion, may make a cash payment to the Optionee, 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
Optionee or the Bank under Section 16(b) of the Securities Exchange Act of1934,
as amended, and regulations promulgated thereunder.
19. RESERVATION OF SHARES. During the term of the Plan, the Bank will
reserve and keep available a number of Shares sufficient to satisfy the
requirements of the Plan.
20. UNSECURED OBLIGATION. No Participant under the Plan shall have any
interest in any fund or special asset of the Bank by reason of the Plan or the
grant of any Option under the Plan. No trust fund shall be created in connection
with the Plan or any grant of any Option hereunder and there shall be no
required funding of amounts which may become payable to any Participant.
21. WITHHOLDING TAX. The Bank shall have the right to deduct from all
amounts paid in cash with respect to the cashless exercise of Options under the
Plan any taxes required by law to be withheld with respect to such cash
payments. Where a Participant or other person is entitled to receive Shares
pursuant to the exercise of an Option, the Bank shall have the right to require
the Participant or such other person to pay the Bank the amount of any taxes
which the Bank is required to withhold with respect to such Shares, or, in lieu
thereof, to retain, or to sell without notice, a number of such Shares
sufficient to cover the amount required to be withheld.
22. No Employment Rights. No Director, Employee or other person shall
have a right to be selected as a Participant under the Plan. Neither the Plan
nor any action taken by the Committee in administration of the Plan shall be
construed as giving any person any rights of employment or retention as an
Employee, Director or in any other capacity with the Bank or its Subsidiaries.
23. Governing Law. The Plan shall be governed by and construed in
accordance with the laws of the State of New Jersey, except to the extent that
federal law shall be deemed to apply.
CORNERSTONE BANK
2000 STOCK OPTION PLAN
PLANB
1. PURPOSE OF THE PLAN. The Plan shall be known as the CORNERSTONE
BANK ("Bank") 2000 Stock Option Plan, Plan B (the "Plan"). The purpose of the
Plan is to attract and retain qualified personnel for positions of substantial
responsibility and to provide additional incentive to officers, directors, key
employees and other persons providing services to the Bank, or any present or
future parent or subsidiary of the Bank to promote the success of the business.
The Plan is intended to provide for the grant of "Incentive Stock Options,"
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code") and Non-Incentive Stock Options, options that do not so
qualify. The provisions of the Plan relating to Incentive Stock Options shall be
interpreted to conform to the requirements of Section 422 of the Code.
2. DEFINITIONS. The following words and phrases when used in this Plan
with an initial capital letter, unless the context clearly indicates otherwise,
shall have the meaning as set forth below. Wherever appropriate, the masculine
pronoun shall include the feminine pronoun and the singular shall include the
plural.
"Award" means the grant by the Committee of an Incentive Stock
Option or a Non-Incentive Stock Option, or any combination thereof, as provided
in the Plan.
"Bank" shall mean Cornerstone Bank and any successor or Parent
thereto.
"Board" shall mean the Board of Directors of the Bank, or any
successor or parent corporation thereto.
"Change in Control" shall mean: (i) the sale of all, or a
material portion, of the assets oft he Bank; (ii) the merger or recapitalization
of the Bank whereby the Bank is not the surviving entity; (iii) a change in
control of the Bank, as otherwise defined or determined by the New Jersey
Department of Banking and Insurance, 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 he 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 Bank by any
person, trust, entity or group. This limitation shall not apply to the purchase
of shares by underwriters in connection with a public offering of Bank stock.
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.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and regulations promulgated thereunder.
"Committee" shall mean the Board or the Compensation Committee
appointed by the Board in accordance with Section 5(a) of the Plan.
"Common Stock" shall mean the common stock of the Bank, or any
successor or parent corporation thereto.
"Continuous Employment" or "Continuous Status as an Employee"
shall mean the absence of any interruption or termination of employment with the
Bank or any present or future Parent or Subsidiary of the Bank. Employment shall
not be considered interrupted in the case of sick leave, military leave or any
other leave of absence approved by the Bank or in the case of transfers between
payroll locations, of the Bank or between the Bank, its Parent, its Subsidiaries
or a successor.
"Director" shall mean a member of the Board of the Bank, or
any successor or parent corporation thereto.
"Director Emeritus" shall mean 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 Bank 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 Non-Incentive
Stock Options, any physical or mental impairment which renders the Participant
incapable of continuing in the employment or service of the Bank in his then
current capacity as determined by the Committee.
"Effective Date" shall mean the date specified in Section 14
hereof
"Employee" shall mean any person employed by the Bank or any
present or future Parent or Subsidiary of the Bank.
"Fair Market Value" shall mean: (i) if the Common Stock is
traded otherwise than on a national securities exchange, then the Fair Market
Value per Share shall be equal to the mean between the last bid and ask price of
such Common Stock on such date or, if there is no bid and ask price on said
date, then on the immediately prior business day on which there was a bid and
ask price. If no such bid and ask price is available, then the Fair Market Value
shall be determined by the Committee in good faith; or (ii) if the Common Stock
is listed on a national securities exchange, then the Fair Market Value per
Share shall be not less than the average of the highest and lowest selling price
of such Common Stock on such exchange on such date, or if there were no sales on
said date, then the Fair Market Value shall be not less than the mean between
the last bid and ask price on such date.
"Incentive Stock Option" or "ISO" shall mean an option to
purchase Shares granted by the Committee pursuant to Section 8 here of which is
subject to the limitations and restrictions of Section 8 hereof and is intended
to qualify as an incentive stock option under Section 422 of the Code.
"Non-Incentive Stock Option" or "Non-ISO" shall mean an option
to purchase Shares granted pursuant to Section 9 hereof, which option is not
intended to qualify under Section 422 of the Code.
"Option" shall mean an Incentive Stock Option or Non-Incentive
Stock Option granted pursuant to this Plan providing the holder of such Option
with the right to purchase Common Stock.
"Optioned Stock" shall mean stock subject to an Option granted
pursuant to the Plan.
"Optionee" shall mean any person who receives an Option or
Award pursuant to the Plan.
"Parent" shall mean any present or future corporation which
would be a "parent corporation" as defined in Sections 424(e) and (g) of the
Code.
"Participant" means any director, officer or key employee of
the Bank or any Parent or Subsidiary of the Bank or any other person providing a
service to the Bank who is selected by the Committee to receive an Award, or who
by the express terms of the Plan is granted an Award.
"Plan" shall mean the Cornerstone Bank 2000 Stock Option Plan,
Plan B.
"Retirement" shall mean termination of service in all
capacities as an Employee, Director and Director Emeritus following attainment
of not less than age 55 and completion of not less than ten years of Service to
the Bank. Service to the Bank rendered prior to the Effective Date shall be
recognized in determining eligibility to meet the requirements of Retirement
under the Plan.
"Share" shall mean one share of the Common Stock.
"Subsidiary" shall mean any present or future corporation
which constitutes a "subsidiary corporation" as defined in Sections 424(f) and
(g) of the Code.
3. SHARES SUBJECT TO THE PLAN. Except as otherwise required by the
provisions of Section 12 hereof, the aggregate number of Shares with respect to
which Awards may be made pursuant to the Plan shall not exceed 38,691 (5% of
shares of Common Stock of Bank outstanding) Shares. Such Shares may either be
from authorized but unissued shares or shares purchased in the market for Plan
purposes. If an Award shall expire, become unexercisable, or be forfeited for
any reason prior to its exercise, new Awards may be granted under the Plan with
respect to the number of Shares as to which such expiration has occurred.
4. SIX MONTH HOLDING PERIOD.
Subject to vesting requirements, if applicable, except in the event of
death or Disability of the Optionee or a Change in Control of the Bank, 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.
5. ADMINISTRATION OF THE PLAN.
(a) COMPOSITION OF THE COMMITTEE. The Plan shall be administered by the
Board of Directors of the Bank or a Committee which shall consist of not less
than two Directors of the Bank appointed by the Board and serving at the
pleasure of the Board. All persons designated as members of the Committee shall
meet the requirements of a Non-Employee Director within the meaning of Rule
16b-3 under the Securities Exchange Act of 1934, as amended, as found at 17 CFR
ss.240.16b-3 to the extent feasible.
(b) POWERS OF THE COMMITTEE. The Committee is authorized (but only to
the extent not contrary to the express provisions of the Plan or to resolutions
adopted by the Board) to interpret the Plan, to prescribe, amend and rescind
rules and regulations relating to the Plan, to determine the form and content of
Awards to be issued under the Plan and to make other determinations necessary or
advisable for the administration of the Plan, and shall have and may exercise
such other power and authority as may be delegated to it by the Board from time
to time. 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.
The President of the Bank and such other officers as shall be
designated by the Committee are hereby authorized to execute written agreements
evidencing Awards on behalf of the Bank and to cause them to be delivered to the
Participants. Such agreements shall set forth the Option exercise price, the
number of shares of Common Stock subject to such Option, the expiration date of
such Options, and such other terms and restrictions applicable to such Award as
are determined in accordance with the Plan or the actions of the Committee.
(c) EFFECT OF COMMITTEE'S DECISION. All decisions, determinations
and interpretations of the Committee shall be final and conclusive on all
persons affected thereby.
6. ELIGIBILITY FOR AWARDS AND LIMITATIONS.
(a) The Committee shall from time to time determine the officers,
Directors, key employees and other persons who shall be granted Awards under the
Plan, the number of Awards to be granted to each such persons, and whether
Awards granted to each such Participant under the Plan shall be Incentive and/or
Non-Incentive Stock Options. In selecting Participants and in determining the
number of Shares of Common Stock to be granted to each such Participant, the
Committee may consider the nature of the prior and anticipated future services
rendered by each such Participant, each such Participant's current and potential
contribution to the Bank and such other factors as the Committee may, in its
sole discretion, deem relevant. Participants who have been granted an Award may,
if otherwise eligible, be granted additional Awards.
(b) The aggregate Fair Market Value (determined as of the date the
Option is granted) of the Shares with respect to which Incentive Stock Options
are exercisable for the first time by each Employee during any calendar year
(under all Incentive Stock Option plans, as defined in Section 422 of the Code,
of the Bank or any present or future Parent or Subsidiary of the Bank) shall not
exceed $100,000. Notwithstanding the prior provisions of this Section 6, the
Committee may grant Options in excess of the foregoing limitations, provided
said Options shall be clearly and specifically designated as not being Incentive
Stock Options.
(c) In no event shall Shares subject to Options granted to any
Participant exceed more than 35 % of the total number of Shares authorized for
delivery under the Plan.
7. TERM OF THE PLAN. The Plan shall continue in effect for a term
often (10) years from the Effective Date, unless sooner terminated pursuant to
Section 17 hereof. No Option shall be granted under the Plan after ten (10)
years from the Effective Date.
8. TERMS AND CONDITIONS OF INCENTIVE STOCK OPTIONS. Incentive Stock
Options may be granted only to Participants who are Employees. Each Incentive
Stock Option granted pursuant to the Plan shall be evidenced by an instrument in
such form as the Committee shall from time to time approve. Each Incentive Stock
Option granted pursuant to the Plan shall comply with, and be subject to, the
following terms and conditions:
(a) OPTION PRICE.
(i) The price per Share at which each Incentive Stock Option
granted by the Committee under the Plan may be exercised shall not, as to any
particular Incentive Stock Option, be less than the Fair Market Value of the
Common Stock on the date that such Incentive Stock Option is granted.
(ii) In the case of an Employee who owns Common Stock
representing more than ten percent (10%) of the outstanding Common Stock at the
time the Incentive Stock Option is granted, the Incentive Stock Option 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 that the Incentive Stock Option is
granted.
(b) PAYMENT. Full payment for each Share of Common Stock purchased upon
the exercise of any Incentive Stock Option granted under the Plan shall be made
at the time of exercise of each such Incentive Stock Option and shall be paid in
cash (in United States Dollars), Common Stock or a combination of cash and
Common Stock. Common Stock utilized in full or partial payment of the exercise
price shall be valued at the Fair Market Value at the date of exercise. The Bank
shall accept full or partial payment in Common Stock only to the extent
permitted by applicable law. No Shares of Common Stock shall be issued until
full payment has been received by the Bank, and no Optionee shall have any of
the rights of a stockholder of the Bank until Shares of Common Stock are issued
to the Optionee.
(c) TERM OF LNCENTIVE STOCK OPTION. The term of exercisability of each
Incentive Stock Option granted pursuant to the Plan shall be not more than ten
(10) years from the date each such Incentive Stock Option is granted, provided
that in the case of an Employee who owns stock representing more than ten
percent (10%) of the Common Stock outstanding at the time the Incentive Stock
Option is granted, the term of exercisability of the Incentive Stock Option
shall not exceed five (5) years.
(d) EXERCISE GENERALLY. Except as otherwise provided in Section 10
hereof, no Incentive Stock Option may be exercised unless the Optionee shall
have been in the employ of the Bank at all times during the period beginning
with the date of grant of any such Incentive Stock Option and ending on the date
three (3) months prior to the date of exercise of any such Incentive Stock
Option. The Committee may impose additional conditions upon the right of an
Optionee to exercise any Incentive Stock Option granted hereunder which are not
inconsistent with the terms of the Plan or the requirements for qualification as
an Incentive Stock Option. Except as otherwise provided by the terms of the Plan
or by action of the Committee at the time of the grant of the Options, one-third
of a grant of Options will be first exercisable on the date of grant and
one-third annually thereafter during such periods of service as an Employee,
Director or Director Emeritus.
(e) CASHLESS EXERCISE. Subject to vesting requirements, if applicable,
an Optionee who has held an Incentive Stock Option for at least six months may
engage in the "cashless exercise" of the Option. Upon a cashless exercise, an
Optionee shall give the Bank written notice of the exercise of the Option
together with an order to a registered broker-dealer or equivalent third party,
to sell part or all of the Optioned Stock and to deliver enough of the proceeds
to the Bank to pay the Option exercise price and any applicable withholding
taxes. If the Optionee does not sell the Optioned Stock through a registered
broker-dealer or equivalent third party, the Optionee can give the Bank written
notice of the exercise of the Option and the third party purchaser of the
Optioned Stock shall pay the Option exercise price plus any applicable
withholding taxes to the Bank.
(f) TRANSFERABILITY. An Incentive Stock Option granted pursuant to the
Plan shall be exercised during an Optionee's lifetime only by the Optionee to
whom it was granted and shall not be assignable or transferable otherwise than
by will or by the laws of descent and distribution.
9. TERMS AND CONDITIONS OF NON-INCENTIVE STOCK OPTIONS. Each
Non-Incentive Stock Option granted pursuant to the Plan shall be evidenced by an
instrument in such form as the Committee shall from time to time approve. Each
Non-Incentive Stock Option granted pursuant to the Plan shall comply with and be
subject to the following terms and conditions.
(a) OPTIONS GRANTED TO DIRECTORS. Subject to the limitations of Section
6(c), Non-Incentive Stock Options to purchase shares of Common Stock, as noted
below, will be granted to each Director who is not an Employee as of the
Effective Date, at an exercise price equal to the Fair Market Value of the
Common Stock on such date of grant.
DIRECTOR NUMBER OF OPTIONS
George W. Matteo, Jf. 20,000(3)
Robert W. Hoey 4,850(4)
J. Mark Baiada 3,850(2)
Carol A. Beske 3,850(2)
Gaetano P. Giordano 3,850(2)
Robert A. Kennedy, Jf. 3,850(2)
Ronald S. Murphy 3,850(2)
Kenneth H. Zekavat 3,850(2)
Bruce Paparone 3,850(2)
The Options will be 100% exercisable on the date of grant. 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 Optionee I s death, such Options may be
exercised by the personal representative of his estate or 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
non-employee 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. Unless otherwise
inapplicable, or inconsistent with the provisions of this paragraph, the Options
to be granted to Directors hereunder shall be subject to all other provisions of
this Plan.
(b) OPTION PRICE. The exercise price per Share of Common Stock for each
Non-Incentive Stock Option granted pursuant to the Plan shall be at such price
as the Committee may determine in its sole discretion, but in no event less than
the Fair Market Value of such Common Stock on the date ofgrant as determined by
the Committee in good faith.
(c) PAYMENT. Full payment for each Share of Common Stock purchased upon
the exercise of any Non-Incentive Stock Option granted under the Plan shall be
made at the time of exercise of each such Non-Incentive Stock Option and shall
be paid in cash (in United States Dollars), Common Stock or a combination of
cash and Common Stock. Common Stock utilized in full or partial payment of the
exercise price shall be valued at its Fair Market Value at the date of exercise.
The Bank shall accept full or partial payment in Common Stock only to the extent
permitted by applicable law. No Shares of Common Stock shall be issued until
full payment has been received by the Bank and no Optionee shall have any of the
rights of a stockholder of the Bank until the Shares of Common Stock are issued
to the Optionee.
- ------------------------------------
(3) 50% under Plan A and 50% under Plan B.
(4) Award under Plan A or Plan B.
(d) TERM. The term of exercisability of each Non-Incentive Stock Option
granted pursuant to the Plan shall be not more than ten (10) years from the date
each such Non-Incentive Stock Option is granted.
(e) EXERCISE GENERALLY. The Committee may impose additional conditions
upon the right of any Participant to exercise any Non-Incentive Stock Option
granted hereunder which is not inconsistent with the terms of the Plan. Except
as otherwise provided by the terms of the Plan or by action of the Committee at
the time of the grant of the Options, the Options will be first exercisable at
the rate of one-third on the date of grant and one-third annually thereafter
during such periods of service as an Employee, Director or Director Emeritus.
(f) CASHLESS EXERCISE. Subject to vesting requirements, if applicable,
an Optionee who has held a Non-Incentive Stock Option for at least six months
may engage in the "cashless exercise" of the Option. Upon a cashless exercise,
an Optionee shall give the Bank written notice of the exercise of the Option
together with an order to a registered broker-dealer or equivalent third party,
to sell part or all of the Optioned Stock and to deliver enough of the proceeds
to the Bank to pay the Option exercise price and any applicable withholding
taxes. If the Optionee does not sell the Optioned Stock through a registered
broker-dealer or equivalent third party, the Optionee can give the Bank written
notice of the exercise of the Option and the third party purchaser of the
Optioned Stock shall pay the Option exercise price plus any applicable
withholding taxes to the Bank.
(g) TRANSFERABILITY. Any Non-Incentive Stock Option granted pursuant to
the Plan shall be exercised during an Optionee's lifetime only by the Optionee
to whom it was granted and shall not be assignable or transferable otherwise
than by will or by the laws of descent and distribution.
10. EFFECT OF TERMINATION OF EMPLOYMENT, DISABILITY, DEATH AND
RETIREMENT ON INCENTIVE STOCK OPTIONS.
(a) TERMINATION OF EMPLOYMENT. In the event that any Optionee's
employment with the Bank shall terminate for any reason, other than Retirement,
Disability or death, all of any such Optionee's Incentive Stock Options, and all
of any such Optionee'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 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 Optionee's continuing status as a Director or Director Emeritus of the
Bank:, but only if, and to the extent that, the Optionee 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-Incentive Stock Option. In the event that a Subsidiary ceases to be a
Subsidiary of the Bank, the employment of all of its employees who are not
immediately thereafter employees of the Bank shall be deemed to terminate upon
the date such Subsidiary so ceases to be a Subsidiary of the Bank:
(b) DISABILITY. In the event that any Optionee's employment with the
Bank shall terminate as the result of the Disability of such Optionee, such
Optionee may exercise any Incentive Stock Options granted to the Optionee
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 Optionee 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 an Optionee, any Incentive
Stock Options granted to such Optionee may be exercised by the person or persons
to whom the Optionee's rights under any such Incentive Stock Options pass by
will or by the laws of descent and distribution (including the Optionee'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 Optionee but only if, and
to the extent that, the Optionee was entitled to exercise any such Incentive
Stock Options at the date of death. For purposes of this Section 1O(c), any
Incentive Stock Option held by an Optionee 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 Optionee may receive Shares or cash or a
combination thereof If cash shall be paid in lieu of Shares, 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.
(d) INCENTIVE STOCK OPTIONS DEEMED EXERCISABLE. For purposes of
Sections IO(a), IO(b) and IO(c) above, any Incentive Stock Option held by any
Optionee shall be considered exercisable at the date of termination of
employment if any such Incentive Stock Option would have been exercisable at
such date of termination of employment without regard to the Disability or death
of the Participant.
(e) TERMINATION OF INCENTIVE STOCK OPTIONS; VESTING UPON RETIREMENT.
Except as may be specified by the Committee at the time of grant of an Option,
to the extent that any Incentive Stock Option granted under the Plan to any
Optionee whose employment with the Bank terminates shall not have been exercised
within the applicable period set forth in this Section 10, any such Incentive
Stock Option, and all rights to purchase or receive Shares of Common Stock
pursuant thereto, as the case may be, shall terminate on the last day of the
applicable period. Notwithstanding the foregoing, the Committee may authorize at
the time of the grant of an Option that such Award shall be immediately 100%
exercisable upon the Retirement of the Optionee. Such Options shall, as of the
date of Retirement, remain exercisable for the remaining term, but in no event
for a period beyond two (2) years from the date of Retirement.
11. EFFECT OF TERMINATION OF EMPLOYMENT, DISABILITY, DEATH OR
RETIREMENT ON NON-INCENTIVE STOCK OPTIONS. The terms and conditions of
Non-Incentive Stock Options relating to the effect of the Retirement or other
termination of an Optionee's employment or service, Disability of an Optionee or
his death shall be such terms and conditions as the Committee shall, in its sole
discretion, determine at the time of termination of service, unless specifically
provided for by the terms of the Agreement at the time of grant of the Award.
12. RECAPITALIZATION, MERGER, CONSOLIDATION, CHANGE IN CONTROL AND
OTHER TRANSACTIONS.
(a) ADJUSTMENT. Subject to any required action by the stockholders of
the Bank, within the sole discretion of the Committee, the aggregate number of
Shares of Common Stock for which Options may be granted hereunder, the number of
Shares of Common Stock covered by each outstanding Option, and the exercise
price per Share of Common Stock of each such Option, shall all be
proportionately adjusted for any increase or decrease in the number of issued
and outstanding Shares of Common Stock resulting from a subdivision or
consolidation of Shares (whether by reason of merger, consolidation,
recapitalization, reclassification, split-up, combination of shares, or
otherwise) or the payment of a stock dividend (but only on the Common Stock) or
any other increase or decrease in the number of such Shares of Common Stock
effected without the receipt or payment of consideration by the Bank (other than
Shares held by dissenting stockholders).
(b) CHANGE IN CONTROL. All outstanding Awards shall become immediately
exercisable in the event of a Change in Control of the Bank. In the event of
such a Change in Control, the Committee and the Board of Directors will take one
or more of the following actions to be effective as of the date of such Change
in Control:
(i) provide that such Options shall be assumed, or equivalent
options shall be substituted, ("Substitute Options") by the acquiring or
succeeding corporation (or an affiliate thereof), provided that: (A) any such
Substitute Options exchanged for Incentive Stock Options shall meet the
requirements of Section 424(a) of the Code, and(B)the shares of stock issuable
upon the exercise of such Substitute Options shall constitute securities
registered in accordance with the Securities Act of 1933, as amended, ("1933
Act") or such securities shall be exempt from such registration in accordance
with Sections 3(a)(2) or 3(a)(5) of the 1933 Act, (collectively, "Registered
Securities"), or in the alternative, if the securities issuable upon the
exercise of such Substitute Options shall not constitute Registered Securities,
then the Optionee will receive upon consummation of the Change in Control
transaction a cash payment for each Option surrendered equal to the difference
between (1) the Fair Market Value of the consideration to be received for each
share of Common Stock in the Change in Control transaction times the number of
shares of Common Stock subject to such surrendered Options, and (2) the
aggregate exercise price of all such surrendered Options, or
(ii) in the event of a transaction under the terms of which
the holders of the Common Stock of the Bank will receive upon consummation there
of a cash payment(the "Merger Price") for each share of Common Stock exchanged
in the Change in Control transaction, to make or to provide for a cash payment
to the Optionees equal to the difference between (A) the Merger Price times the
number of shares of Common Stock subject to such Options held by each Optionee
(to the extent then exercisable at prices not in excess of the Merger Price) and
(B) the aggregate exercise price of all such surrendered Options in exchange for
such surrendered Options.
(c) EXTRAORDINARY CORPORATE ACTION. Notwithstanding any provisions of
the Plan to the contrary, subject to any required action by the stockholders of
the Bank, in the event of any Change in Control, recapitalization, merger,
consolidation, exchange of Shares, spin-off, reorganization, tender offer,
partial or complete liquidation or other extraordinary corporate action or
event, the Committee, in its sole discretion, shall have the power, prior or
subsequent to such action or event to:
(i) appropriately adjust the number of Shares of Common Stock
subject to each Option, the Option exercise price per Share of Common Stock, and
the consideration to be given or received by the Bank upon the exercise of any
outstanding Option;
(ii) cancel any or all previously granted Options,
provided that appropriate consideration is paid to the Optionee in connection
therewith; and/or
(iii) make such other adjustments in connection with the Plan
as the Committee, in its sole discretion, deems necessary, desirable,
appropriate or advisable; provided, however, that no action shall be taken by
the Committee which would cause Incentive Stock Options granted pursuant to the
Plan to fail to meet the requirements of Section 422 of the Code without the
consent of the Optionee.
(d) ACCELERATION. The Committee shall at all times have the power to
accelerate the exercise date of Options previously granted under the Plan.
(e) NON-RECURRING DIVIDENDS. Upon the payment of a special or non-
recurring cash dividend that has the effect of a return of capital to the
stockholders, the Option exercise price per share shall be adjusted
proportionately and in an equitable manner.
Except as expressly provided in Sections 12(a), 12(b) and 12(e) hereof,
no Optionee shall have any rights by reason of the occurrence of any of the
events described in this Section 12.
13. TIME OF GRANTING OPTIONS. The date of grant of an Option under the
Plan shall, for all purposes, be the date on which the Committee makes the
determination of granting such Option. Notice of the grant of an Option shall be
given to each individual to whom an Option is so granted within a reasonable
time after the date of such grant in a form determined by the Committee.
14. EFFECTIVE DATE. The Plan shall become effective upon the date of
approval of the Plan by the stockholders of the Bank. The Committee may
make a determination related to Awards prior to the Effective Date with
such Awards to be effective upon the date of stockholder approval of the
Plan.
15. APPROVAL BY STOCKHOLDERS. The Plan shall be approved by
stockholders of the Bank within twelve (12) months before or after the date the
Plan is approved by the Board.
16. MODIFICATION OF OPTIONS. At any time and from time to time, the
Board may authorize the Committee to direct the execution of an instrument
providing for the modification of any outstanding Option, provided no such
modification, extension or renewal shall confer on the holder of said Option any
right or benefit which could not be conferred on the Optionee by the grant of a
new Option at such time, or shall not materially decrease the Optionee's
benefits under the Option without the consent of the holder of the Option,
except as otherwise permitted under Section 17 hereof
17. AMENDMENT AND TERMINATION OF THE PLAN.
(a) Action by the Board. The Board may alter, suspend or discontinue
the Plan, except that no action of the Board may increase (other than as
provided in Section 12 hereof) the maximum number of Shares permitted to be
optioned under the Plan, materially increase the benefits accruing to
Participants under the Plan or materially modify the requirements for
eligibility for participation in the Plan unless such action of the Board shall
be subject to approval or ratification by the stockholders of the Bank.
(b) Change in Applicable Law. Notwithstanding any other provision
contained in the Plan, in the event of a change in any federal or state law,
rule or regulation which would make the exercise of all or part of any
previously granted Option unlawful or subject the Bank to any penalty, the
Committee may restrict any such exercise without the consent of the Optionee or
other holder there of in order to comply with any such law, rule or regulation
or to avoid any such penalty.
18. CONDITIONS UPON ISSUANCE OF SHARES; LIMITATIONS ON OPTION EXERCISE;
CANCELLATION OF OPTION RIGHTS.
(a) Shares shall not be issued with respect to any Option 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.
(b) The inability of the Bank to obtain any necessary authorizations,
approvals or letters of non-objection from any regulatory body or authority
deemed by the Bank's counsel to be necessary to the lawful issuance and sale of
any Shares issuable hereunder shall relieve the Bank of any liability with
respect to the non-issuance or sale of such Shares.
(c) As a condition to the exercise of an Option, the Bank may require
the person exercising the Option 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.
(d) Notwithstanding anything herein to the contrary, upon the
termination of employment or service of an Optionee by the Bank or its
Subsidiaries for "cause" as determined by the Board of Directors, all Options
held by such Participant shall cease to be exercisable as of the date of such
termination of employment or service.
(e) Upon the exercise of an Option by an Optionee (or the Optionee's
personal representative), the Committee, in its sole and absolute discretion,
may make a cash payment to the Optionee, 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 Optionee or the
Bank under Section 16(b) of the Securities Exchange Act of1934,as amended, and
regulations promulgated thereunder.
19. RESERVATION OF SHARES. During the term of the Plan, the Bank will
reserve and keep available a number of Shares sufficient to satisfy the
requirements of the Plan.
20. UNSECURED OBLIGATION. No Participant under the Plan shall have any
interest in any fund or special asset of the Bank by reason of the Plan or the
grant of any Option under the Plan. No trust fund shall be created in connection
with the Plan or any grant of any Option hereunder and there shall be no
required funding of amounts which may become payable to any Participant.
21. WITHHOLDING TAX. The Bank shall have the right to deduct from all
amounts paid in cash with respect to the cashless exercise of Options under the
Plan any taxes required by law to be withheld with respect to such cash
payments. Where a Participant or other person is entitled to receive Shares
pursuant to the exercise of an Option, the Bank shall have the right to require
the Participant or such other person to pay the Bank the amount of any taxes
which the Bank is required to withhold with respect to such Shares, or, in lieu
thereof, to retain, or to sell without notice, a number of such Shares
sufficient to cover the amount required to be withheld.
22. NO EMPLOYMENT RIGHTS. No Director, Employee or other person shall
have a right to be selected as a Participant under the Plan. Neither the Plan
nor any action taken by the Committee in administration of the Plan shall be
construed as giving any person any rights of employment or retention as an
Employee, Director or in any other capacity with the Bank or its Subsidiaries.
23. GOVERNING LAW. The Plan shall be governed by and construed in
accordance with the laws of the State of New Jersey, except to the extent that
federal law shall be deemed to apply.