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EX-10.5




2006 STOCK OPTION PLAN



I. Purpose; Definitions. The purposes of the Bank of New Jersey 2006 Stock Option Plan
(the “Plan”) are to enable the Bank of New Jersey (the “Company”) and its
affiliated companies to recruit and retain highly qualified personnel, to provide those personnel
with an incentive for productivity, and to provide those personnel with an opportunity to share in
the growth and value of the Company.




          For purposes of the Plan, the following terms will have the meanings defined below, unless the
context clearly requires a different meaning:




     A. “Affiliate” means any Person that directly or indirectly controls, or is controlled
by, or is under common control with the Company (or its successors).



     B. “Award Agreement” means, with respect to any particular Option, the written
document that sets forth the terms of that particular Option.



     C. “Board” means the Board of Directors of the Company, as constituted from time to
time; provided, however, that if the Board appoints a Committee to perform some or all of the
Board’s administrative functions hereunder, references in the Plan to the “Board” will be deemed to
also refer to that Committee in connection with matters to be performed by that Committee.



     D. “Cause” means (i) conviction of, or the entry of a plea of guilty or no contest to,
a felony or any other crime that causes the Company or its Affiliates public disgrace or disrepute,
or adversely affects the Company’s or its Affiliates’ operations or financial performance, (ii)
gross negligence or willful misconduct with respect to the Company or any of its Affiliates,
including, without limitation fraud, embezzlement, theft or proven dishonesty in the course of
employment; (iii) alcohol abuse or use of controlled drugs other than in accordance with a
physician’s prescription; or (iv) a material breach of any agreement with or duty owed to the
Company or any of its Affiliates. Notwithstanding the foregoing, if a Participant and the Company
(or any of its Affiliates) have entered into an employment agreement, consulting agreement or other
similar agreement that specifically defines “cause,” then with respect to such Participant, “Cause”
shall have the meaning defined in that employment agreement, consulting agreement or other
agreement.



     E. “Change in Control” means the occurrence of any of the following, in one
transaction or a series of related transactions: (i) any “person” (as such term is used in Sections
13(d) and 14(d) of the Exchange Act) becoming a “beneficial owner” (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company representing more than 50%
of the voting power of the Company’s then outstanding securities; (ii) a consolidation, share
exchange, reorganization or merger of the Company resulting in the stockholders of the Company
immediately prior to such event not owning at least a majority of the voting power of the resulting
entity’s securities outstanding immediately following such event; (iii) the sale or other
disposition of all or substantially all the assets of the Company, (iv) a liquidation or
dissolution of the Company, or (v) any similar event deemed by the Board to constitute a Change in
Control for purposes of this Plan.



     F. “Code” means the Internal Revenue Code of 1986, as amended from time to time, and
any successor thereto.



 









 





     G. “Committee” means a committee appointed by the Board in accordance with Section
II of the Plan.



     H. “Director” means a member of the Board.



     I. “Disability” means a condition rendering a Participant Disabled.



     J. “Disabled” will have the same meaning as set forth in Section 22(e)(3) of the Code.



     K. “Exchange Act” means the Securities Exchange Act of 1934, as amended.



     L. “Fair Market Value” means, as of any date: (i) if the Shares are not then publicly
traded, the value of such Shares on that date, as determined by the Board in its sole and absolute
discretion; or (ii) if the Shares are publicly traded, the closing price for a Share on the
principal national securities exchange on which the Shares are listed or admitted to trading or, if
the Shares are not listed or admitted to trading on any national securities exchange, but are
traded in the over-the-counter market, the closing sale price of a Share or, if no sale is publicly
reported, the average of the closing bid and asked prices, as furnished by two members of the
National Association of Securities Dealers, Inc. who make a market in the Shares selected from time
to time by the Company for that purpose.



     M. “Incentive Stock Option” means any Option intended to be and designated as an
“Incentive Stock Option” within the meaning of Section 422 of the Code.



     N. “Non-Employee Director” will have the meaning set forth in Rule 16b-3(b)(3)(i)
promulgated by the Securities and Exchange Commission under the Exchange Act, or any successor
definition adopted by the Securities and Exchange Commission; provided, however, that the Board or
the Committee may, to the extent that it deems necessary to comply with Section 162(m) of the Code
or regulations thereunder, require that each “Non-Employee Director” also be an “outside director”
as that term is defined in regulations under Section 162(m) of the Code.



     O. “Non-Qualified Stock Option” means any Option that is not an Incentive Stock
Option.



     P. “Option” means any option to purchase Shares granted pursuant to Section V
hereof.



     Q. “Parent” means, in respect of the Company, a “parent corporation” as defined in
Section 424(e) of the Code



     R. “Participant” means an employee, consultant, Director, or other service provider of
or to the Company or any of its respective Affiliates to whom an Option is granted.



     S. “Person” means an individual, partnership, corporation, limited liability company,
trust, joint venture, unincorporated association, or other entity or association.



     T. “Shares” means shares of the Company’s common stock, par value $10.00, subject to
substitution or adjustment as provided in Section III.C hereof.



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     U. “Subsidiary” means, in respect of the Company, a subsidiary company, as defined in
Sections 424(f) and (g) of the Code.


II. Administration. The Plan will be administered by the Board; provided, however, that
the Board may at any time appoint a Committee to perform some or all of the Board’s administrative
functions hereunder; and provided further, that the authority of any Committee appointed pursuant
to this Section II will be subject to such terms and conditions as the Board may prescribe
and will be coextensive with, and not in lieu of, the authority of the Board hereunder.




          Subject to the requirements of the Company’s by-laws and certificate of incorporation any
other agreement that governs the appointment of Board committees, any Committee to which some or
all of the Board’s administrative functions are delegated under this Section II will be
composed of not fewer than two members, each of whom will serve for such period of time as the
Board determines; provided, however, that if the Company has a class of securities required to be
registered under Section 12 of the Exchange Act, all members of any such Committee will be
Non-Employee Directors. From time to time the Board may increase the size of the Committee and
appoint additional members thereto, remove members (with or without cause) and appoint new members
in substitution therefor, fill vacancies however caused, or remove all members of the Committee and
thereafter directly administer the Plan.




          The Board will have full authority to grant Options under this Plan and determine the terms of
such Options. Such authority will include the right to:




     A. select the persons to whom Options may from time to time be granted hereunder (consistent
with the eligibility conditions set forth in Section IV);



     B. determine the type of Options to be granted to any person hereunder;



     C. determine the number of Shares, if any, to be covered by each Option;



     D. establish the other terms and conditions of each Option issued under the Plan (and any
Award Agreement);



     E. adopt, alter and repeal such administrative rules, guidelines and practices governing the
Plan as it, from time to time, deems advisable;



     F. interpret the terms and provisions of the Plan and any Option issued under the Plan (and
any Award Agreement);



     G. correct any defect, supply any omission or reconcile any inconsistency in the Plan or in
any Award Agreement in the manner and to the extent it deems necessary to carry out the intent of
the Plan; and



     H. otherwise supervise the administration of the Plan.



          All decisions made by the Board pursuant to the provisions of the Plan will be final and
binding on all persons, including the Company and Participants. No Director will be liable for any
good faith determination, act or omission in connection with the Plan or any Award.




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III. Shares Subject to the Plan.




     A. Shares Subject to the Plan. The Shares to be subject to or related to Options
under the Plan will be authorized and unissued Shares of the Company. The maximum number of Shares
that may be subject to Options under the Plan is 109,083 all of which may be issued in respect of
Incentive Stock Options and not more than 109,083 of which may be issued in respect of
Non-Qualified Stock Options. The Company will reserve for the purposes of the Plan, out of its
authorized and unissued Shares, such number of Shares.



     B. Effect of the Expiration or Termination of Options. If and to the extent that an
Option expires, terminates or is canceled or forfeited for any reason without having been exercised
in full, the Shares associated with that Option will again become available for grant under the
Plan. In addition, if any Share is tendered or the delivery of any Share is withheld in settlement
of a tax withholding obligation associated with an Option or in satisfaction of the exercise price
payable upon exercise of an Option, that Share will again become available for grant under the
Plan.



     C. Other Adjustments. In the event of any recapitalization, reorganization, merger,
consolidation, stock split or combination, stock dividend or other similar event or transaction
affecting the Shares, the Board will make such equitable substitutions or adjustments as it deems
appropriate in its sole and absolute discretion; (i) to the aggregate number, class and/or issuer
of securities reserved for issuance under the Plan; (ii) to the number, class and/or issuer of
securities subject to outstanding Options; and (iii) to the exercise price of outstanding Options,
which shall be conclusive and binding for all purposes of the Plan.



     D. Change in Control. Notwithstanding anything to the contrary set forth in the Plan,
upon or in anticipation of any Change in Control, the Board may, in its sole and absolute
discretion and without the need for the consent of any Participant, take one or more of the
following actions contingent upon the occurrence of that Change in Control:



          1. cause any or all outstanding Options to become vested and/or immediately exercisable, in
whole or in part;




          2. cancel any Option in exchange for a substitute option in a manner consistent with the
requirements of Treas. Reg. §1.424-1(a) (notwithstanding the fact that the original Option may
never have been intended to satisfy the requirements for treatment as an Incentive Stock Option);




          3. cause any outstanding Option to become fully vested and immediately exercisable for a
reasonable period in advance of the Change in Control and, to the extent not exercised prior to
that Change in Control, cancel that Option upon closing of the Change in Control; or




          4. cancel any Option in exchange for cash and/or other substitute consideration with a value
equal to (A) the number of Shares subject to that Option, multiplied by (B) the difference, if any,
between the Fair Market Value per Share on the date of the Change in Control and the exercise price
of that Option; provided, that if the Fair Market Value per Share on the date of the Change in
Control does not exceed the exercise price of any such Option, the Board may cancel that Option
without any payment of consideration therefore.




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     In the discretion of the Board, any cash or substitute consideration payable upon cancellation
or redemption of an Option may be subjected to vesting terms substantially identical to those that
applied to the cancelled or redeemed Option prior to the Change in Control.


IV. Eligibility. Employees, Directors, consultants, and other individuals who provide
services to the Company or its Affiliates are eligible to be granted Options under the Plan;
provided, however, that only employees of the Company, its Parent or a Subsidiary are eligible to
be granted Incentive Stock Options.



V. Options. Options granted under the Plan may be Incentive Stock Options or Non-Qualified
Stock Options. Any Option granted under the Plan will be in such form as the Board may at the time
of such grant approve. The Award Agreement evidencing any Option will incorporate the following
terms and conditions and will contain such additional terms and conditions as the Board deems
appropriate in its sole and absolute discretion:




     A. Option Price. The exercise price per Share purchasable under an Option will be
determined by the Board in its sole and absolute discretion and will not be less than 100% of the
Fair Market Value of a Share on the date of the grant. However, any Incentive Stock Option granted
to any Participant who, at the time the Option is granted, owns more than 10% of the voting power
of all classes of shares of the Company, its Parent or a Subsidiary will have an exercise price per
Share of not less than 110% of Fair Market Value of a Share on the date of the grant.



     B. Option Term. The term of each Option will be fixed by the Board, but no Incentive
Stock Option will be exercisable more than 10 years after the date the Option is granted. However,
any Incentive Stock Option granted to any Participant who, at the time such Option is granted, owns
more than 10% of the voting power of all classes of shares of the Company, its Parent or of a
Subsidiary may not have a term of more than five years. No Option may be exercised by any person
after expiration of the term of the Option.



     C. Exercisability. Options will vest and be exercisable at such time or times and
subject to such terms and conditions as determined by the Board.



     D. Method of Exercise. Subject to the terms of the applicable Award Agreement, the
exercisability provisions of Section V.C and the cessation of employment provisions of
Section VI, Options may be exercised in whole or in part from time to time during their
term by the delivery of written notice of exercise by the Participant to the Company specifying the
number of Shares to be purchased. Such notice will be accompanied by payment in full of the
purchase price, either by certified or bank check or such other means as the Board may accept. As
determined by the Board in its sole discretion on or after the date of grant, payment in full or in
part of the exercise price of an Option may be made in the form of previously acquired Shares based
on the Fair Market Value of the Shares on the date the Option is exercised; provided, however,
that, in the case of an Incentive Stock Option, the right to make a payment in the form of
previously acquired Shares may be authorized only at the time the Option is granted.



     No Shares will be issued upon exercise of an Option until full payment therefor has been made.
A Participant will not have the right to distributions or dividends or any other rights of a
stockholder with respect to Shares subject to the Option until the Participant has given written
notice of exercise, has paid in full for such Shares, if requested, has given the



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representation described in Section VIII.A hereof and fulfills such other conditions
as may be set forth in the applicable Award Agreement.




     E. Incentive Stock Option Limitations. In the case of an Incentive Stock Option, the
aggregate Fair Market Value (determined as of the time of grant) of the Shares with respect to
which Incentive Stock Options are exercisable for the first time by the Participant during any
calendar year under the Plan and/or any other plan of the Company, its Parent or any Subsidiary
will not exceed $100,000. For purposes of applying the foregoing limitation, Incentive Stock
Options will be taken into account in the order granted. To the extent any Option does not meet
such limitation, that Option will be treated for all purposes as a Non-Qualified Stock Option.



     F. Cessation of Service. Unless otherwise specified in the applicable Award
Agreement, Options will be subject to the terms of Section VI with respect to exercise upon
or following cessation of employment or other service.



     G. Transferability of Options. Except as may otherwise be specifically determined by
the Board with respect to a particular Option: (i) no Option will be transferable by the
Participant other than by will or by the laws of descent and distribution, and (ii) during the
Participant’s lifetime, an Option will be exercisable only by the Participant (or, in the event of
the Participant’s Disability, by his or her personal representative).


VI. Cessation of Service. Unless otherwise specified with respect to a particular Option
in the applicable Award Agreement, Options granted hereunder will remain exercisable after
cessation of service only to the extent specified in this Section VI.




     A. Cessation of by Reason of Death. If a Participant’s service with the Company or
any Affiliate ceases by reason of death, any Option held by such Participant may thereafter be
exercised, to the extent then exercisable or on such accelerated basis as the Board may determine
at or after grant, by the legal representative of the estate or by the legatee of the Participant
under the will of the Participant, for a period expiring (i) at such time as may be specified by
the Board at or after the time of grant, or (ii) if not specified by the Board, then 12 months from
the date of death, or (iii) if sooner than the applicable period specified under (i) or (ii) above,
upon the expiration of the stated term of such Option.



     B. Cessation by Reason of Disability. If a Participant’s service with the Company or
any Affiliate terminates by reason of Disability, any Option held by such Participant may
thereafter be exercised by the Participant or his personal representative, to the extent it was
exercisable at the time of termination, or on such accelerated basis as the Board may determine at
or after the time of grant, for a period expiring (i) at such time as may be specified by the Board
at or after grant, or (ii) if not specified by the Board, then 12 months from the date of
termination of service, or (iii) if sooner than the applicable period specified under (i) or (ii)
above, then upon the expiration of the stated term of such Option.



     C. Termination for Cause. If a Participant’s service with the Company or any
Affiliate is terminated for Cause: (i) any Option not already exercised will be immediately and
automatically forfeited as of the date of such termination, and (ii) any Shares for which the
Company has not yet delivered share certificates will be immediately and automatically forfeited
and the Company will refund to the Participant the Option exercise price paid for such Shares, if
any.



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     D. Other Cessations. If a Participant’s service with the Company and its Affiliates
ceases for any reason other than death, Disability or Cause, any Option held by such Participant
may thereafter be exercised by the Participant, to the extent it was exercisable at the time of
such termination, or on such accelerated basis as the Board may determine at or after grant, for a
period expiring (i) at such time as may be specified by the Board at or after the time of grant, or
(ii) if not specified by the Board, then 90 days from the date of cessation of service
(irrespective of the manner or timing of the cessation and without regards to whether there has
been reasonable notice of cessation), or (iii) if sooner than the applicable period specified under
(i) or (ii) above, upon the expiration of the stated term of such Option.


VII. Amendments and Termination. The Board may amend, alter or discontinue the Plan at any
time, provided that no amendment, alteration or discontinuation will be made which, without the
approval of such amendment within twelve (12) months of its adoption by the Board, by the Company’s
stockholders in a manner consistent with Treas. Reg. § 1.422-3 (or any successor provision), would:
(i) increase the total number of Shares reserved for the purposes of the Plan (except as otherwise
provided in Section III), or (ii) change the persons or class of persons eligible to receive
Options.




VIII. General Provisions.




     A. The Board may require each Participant to represent to and agree with the Company in
writing that the Participant is acquiring securities of the Company for investment purposes and
without a view to distribution thereof and as to such other matters as the Board believes are
appropriate. The Award Agreement evidencing any Option and securities issued pursuant thereto may
include any legend which the Board deems appropriate to reflect any restrictions on transfer and
compliance with applicable securities laws.



     B. All certificates for Shares or other securities delivered under the Plan will be subject to
such share-transfer orders and other restrictions as the Board may deem advisable under the rules,
regulations and other requirements of any stock exchange upon which the Shares are then listed, and
any applicable securities laws, and the Board may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.



     C. Neither the adoption of the Plan nor the execution of any document in connection with the
Plan will: (i) confer upon any employee of the Company or an Affiliate any right to continued
employment or engagement with the Company or such Affiliate, or (ii) interfere in any way with the
right of the Company or such Affiliate to terminate the employment of any of its employees at any
time.



     D. No later than the date as of which an amount first becomes includible in the gross income
of the Participant for federal income tax purposes with respect to any Option under the Plan, the
Participant will pay to the Company, or make arrangements satisfactory to the Board regarding the
payment of taxes of any kind required by law to be withheld with respect to such amount. The
obligations of the Company under the Plan will be conditioned on such payment or arrangements and
the Company will have the right to deduct any such taxes from any payment of any kind otherwise due
to the Participant. Unless otherwise determined by the Board, the minimum required withholding
obligation with respect to an Option may be settled in Shares, including the Shares that are
subject to that Option.



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IX. Effective Date of Plan. The Plan will become effective on the date that it is adopted
by the Board.



X. Term of Plan. The Plan will continue in effect until terminated in accordance with
Section VII; provided, however, that no Incentive Stock Option will be granted hereunder on
or after the 10th anniversary of the date the Plan becomes effective (or, if the stockholders
approve an amendment that (i) increases the number of shares subject to the Plan or (ii) extends
the period which Incentive Stock Options may be granted hereunder, the 10th anniversary
of the effective date of such increase or extension).



XI. Invalid Provisions. In the event that any provision of this Plan is found to be
invalid or otherwise unenforceable under any applicable law, such invalidity or unenforceability
will not be construed as rendering any other provisions contained herein as invalid or
unenforceable, and all such other provisions will be given full force and effect to the same extent
as though the invalid or unenforceable provision was not contained herein.



XII. Governing Law. The Plan and all Options granted hereunder will be governed by and
construed in accordance with the laws of the State of New Jersey, without regard to the application
of the principles of conflicts of laws.



XIII. Board Action. Notwithstanding anything to the contrary set forth in the Plan, any
and all actions of the Board or Committee, as the case may be, taken under or in connection with
the Plan and any agreements, instruments, documents, certificates or other writings entered into,
executed, granted, issued and/or delivered pursuant to the terms hereof, will be subject to and
limited by any and all votes, consents, approvals, waivers or other actions of all or certain
stockholders of the Company or other persons required by:




     A. the Company’s Certificate of Incorporation (as the same may be amended and/or restated from
time to time);



     B. the Company’s Bylaws (as the same may be amended and/or restated from time to time); and



     C. any other agreement, instrument, document or writing now or hereafter existing, between or
among the Company and its stockholders or other persons (as the same may be amended from time to
time).


XIV. Notices. Any notice to be given to the Company pursuant to the provisions of the Plan
shall be given by registered or certified mail, postage prepaid, and addressed, if to the Company
to its principal executive office to the attention of its [Chief Financial Officer] (or such other
person as the Company may designate in writing from time to time), and, if to a Participant, to the
address contained in the Company’s personnel records, or to such other address as that Participant
may hereafter designate in writing to the Company. Any such notice shall be deemed given or
delivered three days after the date of mailing.





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