Exhibit 10.5


 


THE WASHINGTON SAVINGS BANK, F.S.B.


 


STOCK OPTION GRANT AGREEMENT


 


This Grant Agreement (the “Agreement”) is entered into this       
day of          ,           ,
to be effective                           (the
“Grant Date”), by and between The Washington Savings Bank, F.S.B., a
federally-chartered, federally-insured stock savings bank (the “Corporation”),
and                             (“Grantee”).


 


ARTICLE 1


GRANT OF OPTION


 


Section 1.1 Grant of Options. Subject
to the provisions of the Agreement and pursuant to the provisions of The
Washington Savings Bank, F.S.B. 1997 Omnibus Stock Plan (the “Plan”), the
Corporation hereby grants to Grantee as of the Grant Date a stock option (the “Option”)
of the type stated on schedule A, attached hereto and made a part hereof, to
purchase all or any part of the number of shares of Common Stock of the
Corporation, par value of $1.00 per share, set forth on Schedule A, at the
exercise price per share (the “Exercise Price”) set forth on Schedule A.


 


Section 1.2 Terms of Options. Unless
the Option granted pursuant to Section 1.1 terminates earlier pursuant to other
provisions of the Agreement, the Option shall expire at 5:00 p.m. Eastern Time
on the expiration date specified in Schedule A. Notwithstanding the foregoing,
in no event shall an Option that is specified on Schedule A as being an
Incentive Stock Option expire later than 5:00 p.m. Eastern Time on the day
prior to the tenth (10th) anniversary of its Grant Date.


 


ARTICLE 2


VESTING


 


Section 2.1 Vesting Schedule. Unless
the Option has earlier terminated pursuant to the provisions of the Agreement,
Grantee shall become vested in a portion of the Option with respect to a
percentage or number of the underlying shares specified on Schedule A, on each
annual anniversary of such Grant Date, in accordance with the vesting schedule
specified on Schedule A; provided, however, the Grantee shall have been in the
continuous employ or service of the Corporation from the Grant Date through the
specified anniversary of such Grant Date.


 


Section 2.2 Acceleration of Vesting. Unless
the Option has earlier terminated pursuant to the provisions of the Agreement,
vesting of the Option granted to Grantee hereunder shall be accelerated so that
the unvested portion of the option shall become one hundred percent (100 %)
vested in Grantee upon the earlier to occur of: 
(i) Grantee’s Disability, as defined in Article 4 hereunder, or (ii)
termination of Grantee’s employment or service with the Corporation as a result
of Grantee’s death, or (iii) a change in control of the Corporation as defined
by the Office of Thrift Supervision.


 


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ARTICLE 3


EXERCISE OF OPTION


 


Section 3.1 Exercisability of Option. No
Portion of the Option granted to Grantee shall be exercisable by Grantee prior
to such time portion of the Option has vested.


 


Section 3.2 Manner of Exercise. The
vested portion of the Option may be exercised in whole or in part, by
delivering written notice to the Administrator in accordance with Section 5.9
hereof in such form as the Administrator may require from time to time.


 


If the Common Stock is registered under section 12(b) or 12(g) of the
Securities Exchange Act of 1934, the Administrator, subject to such limitations
as it may determine, may authorize payment of the exercise price, in whole or
in part, by delivery of a properly executed exercise notice, together with
irrevocable instructions: (i) to a brokerage firm approved by the Corporation
to deliver promptly to the Corporation the aggregate amount of sale or loan
proceeds to pay the exercise price and any withholding tax obligations that may
arise in connection with the exercise, and (ii) to the Corporation to deliver
the certificates for such purchased shares directly to such brokerage firm.


 


Section 3.3 Issuance of Shares and Payment of
Cash upon Exercise. Upon exercise of the Option,
in whole or in part, in accordance with the terms of the Agreement and upon
payment of the Exercise Price for the shares of Common Stock as to which the
Option is exercised, the Corporation shall issue to Grantee or Grantee’s
permitted transferee, as the case may be, the number of shares of Common Stock
so paid for, in the form of fully paid and non assessable Common Stock. The
stock certificates for any shares of Common Stock issued hereunder shall,
unless such shares are registered or an exemption from registration is
available under applicable federal and state law, bear a legend restricting
transferability of such shares and referencing the Stockholders Agreement, if
applicable.


 


ARTICLE 4


TERMINATION OF OPTION


 


Section 4.1 Termination of Employment of
Affiliation for Reasons Other than Death, Disability or Change in Control. Unless
the Option has earlier terminated pursuant to the provisions of the Agreement,
the Option granted to Grantee shall terminate in its entirely, regardless of
whether the Option is vested in whole or in part, three (3) months after the
date Grantee is no longer employed by, nor affiliated with, the Corporation and
its affiliates for any reason other than Grantee’s death or disability. Notwithstanding
the foregoing, the Option granted to Grantee shall terminate in its entirety,
regardless of whether the Option is vested in whole or in part, upon
termination of the employment of the Grantee by the Corporation or an affiliate
for “cause”. If Grantee is a party to a written employment or severance
agreement with the Corporation or an affiliate which contains a definition of “cause”,
“termination for cause” or any other


 


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similar term or phrase, whether
such Grantee is terminated for “cause” pursuant to this Section 4.0 shall be
determined according to the terms of and in a manner consistent with the
provisions of such written employment agreement. If Grantee is not party to
such a written employment or severance agreement with the Corporation or an
affiliate, then for purposes of this Section 4.1, “cause” shall mean (i) any
substantiated act by Grantee involving dishonesty or bad faith against the
Corporation or an affiliate, or any act or omission that demonstrates a lack of
integrity of Grantee with respect to the Corporation or an affiliate; (ii)
Grantee engaging in acts or omissions that demonstrably and materially injure the
business and affairs of the Corporation or an affiliate, monetarily or
otherwise; (iii) breach or threatened breach by Grantee of any non-competition
or confidentiality agreement entered into between Grantee and the Corporation
or its affiliate;(iv) chronic use of alcohol, drugs or any similar substances
affecting Grantee’s work performance, or (v) Grantee being convicted of, or
pleading guilty or nolo contendere to, or being indicted for a felony or other
crime involving theft, fraud or moral turpitude. The good faith determination
by the Administrator of whether Grantee’s employment or service relationship
was terminated by the Corporation for “cause” shall be final and binding fir
all purposes hereunder.


 


Section 4.2 Upon Grantee’s Death. Unless
the Option has earlier terminated pursuant to the provisions of the Agreement,
upon Grantee’s death Grantee’s executor, personal representative, the person to
whom the Option shall have been transferred by will or the laws of descent and
distribution, or such other permitted transferee, as the case may be, may
exercise all or any part of the outstanding Option with respect to shares of
Common Stock as to which the Option is vested as of the Grantee’s date of
death, provided such exercise occurs within twelve (12) months after the date
of Grantee’s death, but not later than the end of the stated term of Option.


 


Section 4.3 Termination of Employment by
Reason of Disability. Unless the Option has
earlier terminated pursuant to the provisions of the Agreement, in the event
that Grantee ceases, by reason of Disability, to be an employee of the
Corporation or an affiliate, the vested portion of the outstanding Option may b
exercised in whole or in part at any time within twelve (12) months after date
of Disability, but not later than the end of the stated term of the Option. For
purposes of this Agreement, Disability shall mean the inability to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or which
has lasted or be expected to last for a continuous period of not less than
twelve (12) months. The Administrator may require such proof of Disability as
the Administrator in its sole discretion deems appropriate and the Administrator’s
determination as to whether Grantee is Disabled shall be final and binding on
all parties concerned.


 


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ARTICLE 5


MISCELLANEOUS


 


Section 5.1 Non-Guarantee of Employment. Nothing
in the Plan or the Agreement shall be construed as a contract of employment
between the Corporation (or an Affiliate) and Grantee, or as a contractual
right of Grantee to continue in the employ of the Corporation or an affiliate,
or as a limitation of the right of the Corporation or an Affiliate to discharge
Grantee at any time.


 


Section 5.2 No Rights of Stockholder. Grantee
shall not have any of the rights of a stockholder with respect to the Shares of
Common Stock that may be issued upon the exercise of the Option until such
shares of Common Stock have been issued to him upon the due exercise of the
Option.


 


Section 5.3 Notice of Disqualifying
Disposition. If Grantee makes a disposition (as
term is defined in §424 (c) of the Code) of ant shares of Common Stock acquired
pursuant to the exercise of an Incentive Stock Option within two (2) years of
the Grant Date or within one (1) year after the shares of Common Stock are
transferred to Grantee, Grantee shall notify the Administrator in writing of
such disposition in writing.


 


Section 5.4 Withholding if Taxes. The
Corporation or any affiliate shall have the right to deduct from any
compensation or any other payment of any kind (including withholding the
issuance of Shares of Common Stock) due Grantee the amount of any federal,
state or local taxes required by law to be withheld as the result of the
exercise of the Option or the disposition (as the term defined) §424 (c) of the
Code) of shares of Common Stock acquires pursuant  to the exercise Option; provided, however,
that the value of the shares of Common Stock withheld may not exceed the
statutory minimum withholding amount required by law. In lieu of such
deduction, the Administrator may require Grantee to make cash payment to the
Corporation or an affiliate equal to the amount required to be withheld. If
Grantee does not make such payment when requested, the Corporation may refuse
to issue any Common Stock certificate under the Plan until arrangements
satisfactory to the Administrator for such payment have been made.


 


Section 5.5 Non-Transferability of Option. The
Option shall be nontransferable otherwise than by will or the laws of descent
and distribution and (ii) during the lifetime of Grantee, the Option may be
exercised only by Grantee or, during the period Grantee is under a legal
disability, by Grantee’s guardian or legal representative.


 


Section 5.6 Agreement Subject to Charter,
By-Laws and Governing Laws. This Agreement is
subject to the Charter and By-Laws of the Corporation, and any applicable
Federal or State Laws, rules or regulations, including without limitation, the
laws, rules, and regulations of the State of Maryland, other than the conflict
and choice of laws principles thereof.


 


Section 5.7 Gender. As
used herein the masculine shall include the feminine as the circumstances may
require.


 


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Section 5.8 Headings. The
headings in the Agreement are for reference purposes only and shall not affect
the meaning or interpretation of the Agreement.


 


Section 5.9 Notices. All
notices and other communications made or given pursuant to the Agreement shall
be in writing and shall be sufficiently made or given if hand delivered or
mailed by certified mail, addressed to Grantee at the address contained in the
records of the Corporation, or addressed to the Administrator, care of the
Corporation for the attention of its Secretary at its principal office, or, if
the receiving party consents in advance, transmitted and received via telecopy
or via such other electronic transmission mechanism as may be available to the
parties.


 


Section 5.10 Entire Agreement: Modification. The
Agreement contains the entire Agreement between the parties with respect to the
subject matter contained herein and may not be modified, except as provided in
the Plan or in a written document signed by each of the parties hereto.


 


Section 5.11 Conformity with Plan. This
Agreement is intended to conform in all respects with, and is subject to all
applicable provisions of, the Plan, which is incorporated herein by reference. Unless
stated otherwise herein, capitalized terms in this Agreement shall have the
same meaning defined in the Plan. Inconsistencies between this Agreement and
the Plan shall be resolved in accordance with the terms of the Plan. In the
event of any ambiguity in the Agreement or any matters as to which the
Agreement is silent, the Plan shall govern.


 


IN WITNESS WHEREOF, the parties have executed the Agreement as of the
date first above written.


 


 


	
   

  	
  THE WASHINGTON SAVINGS BANK, F.S.B.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GRANTEE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  



 


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SCHEDULE A


 


	
  Stock Option Granted to

  	
   

  
	
   

  	
   

  
	
  Type of Option:

  	
   

  
	
   

  	
  [Insert
  Incentive Stock Option (“ISO”) or Nonqualified Stock Option]

  
	
   

  	
   

  
	
  Grant Date:

  	
   

  
	
   

  	
   

  
	
  Number of Shares:

  	
   

  
	
   

  	
   

  
	
  Exercise Price Per Share:

  	
   

  
	
   

  	
  [If
  an ISO, insert a price which is at least 100% of the Fair Market Value, or
  for an ISO granted to a more –than-10% owner, at least 110% of the Fair
  Market Value]

  
	
   

  	
   

  
	
  Expiration Date:

  	
   

  
	
   

  	
  [If
  an ISO, insert a date that is no later than the 10th anniversary
  of the Grant Date or, for an ISO granted to a more-than-10% owner, no later
  than the 5th anniversary]

  
	
   

  	
   

  
	
  Vesting Schedule:

  	
   

  
	
   

  	
  Term is two years:

  
	
   

  	
   

  
	
   

  	
  Exercisable 50% one year after grant date

  
	
   

  	
  Additional 50% two years after grant date

  
				



 


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