Document:

Exhibit 10.3

    EXHIBIT
      10.3

     

    STERLING
      BANK

     

    1998
      DIRECTOR STOCK OPTION PLAN

     

    1.  Purpose
      of
      the Plan.

     

    The
      purpose of the Sterling Bank 1998 Director Stock Option Plan (the “Plan”) is to
      encourage stock ownership by the directors of Sterling Bank (the “Bank”) to
      provide an incentive for the directors to contribute to the growth and
      prosperity of the Bank, and to assist the Bank in attracting and retaining
      directors through the grant of options to purchase shares of the Bank’s common
      stock (the “Options”) to all directors of the Bank who are not employees of the
      Bank.

     

    2.  Administration.

     

    (a)  The
      Plan
      shall be administered by a stock option committee (the “Committee”) appointed by
      the Board of Directors of the Bank (the “Board”). The Committee shall consist of
      not less than two members of the Bank’s Board. The Board may from time to time
      remove members from, or add members to, the Committee. Vacancies on the
      Committee, however caused, shall be filled by the Board; provided, however,
      that
      any individual appointed to the Committee shall be a Director who is a
“disinterested person.” The Committee shall hold meetings at such times and
      places as it may determine. If the Committee consists of three or more members,
      the Committee shall select one of its members as Chairman. Acts by a majority
      of
      the Committee at a meeting at which a quorum is present, or acts reduced to
      or
      approved in writing by a majority of the members of the Committee, shall be
      the
      valid acts of the Committee. No person while a member of the Committee shall
      receive a discretionary grant or award under any stock plan of the
      Bank.

     

    (b)  The
      Committee shall be authorized to interpret the Plan and the Options granted
      thereunder, to establish, amend and rescind such rules and regulations as it
      deems necessary for the proper administration of the Plan, and to make all
      other
      determinations necessary or advisable for its administration. The Committee
      shall have the final authority to determine these matters. The interpretation
      and construction by the Committee of any provisions of the Plan or of any Option
      granted under it shall be final. No member of the Board or the Committee shall
      be liable for any action or determination made in good faith with respect to
      the
      Plan or any Option granted thereunder.

     

    3.  Shares
      of Stock Subject
      to
      the Plan.

     

    There
      will be reserved for use upon the exercise of Options to be granted under this
      Plan (subject to the provisions of Section 14 of this Plan), an aggregate of
      40,000 shares of common stock of the Bank (the “Common Stock”), par value $2.00
      per share, which shares may be in whole or in part, as the Board shall from
      time
      to time determine, authorized but unissued shares of Common Stock or issued
      shares of Common Stock which shall have been reacquired by the Bank. Shares
      delivered under the Plan shall be fully paid and non-assessable.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    4.  Eligibility.

     

    All
      persons who are elected to the board of directors of the Bank at its annual
      meeting of shareholders and all persons who shall remain as directors at each
      annual meeting by virtue of the continuation of such persons’ terms as
      directors, except for directors who are employees of the Bank, shall be granted
      Options under the Plan pursuant to the terms of the Plan.

     

    5.  Option
      Grant; Option Price;
      Option Agreement.

     

    (a)  On
      the
      third business day following each annual meeting of shareholders of the Bank
      after the effective date of the Plan, each eligible director of the Bank shall
      receive an Option to purchase shares of Common Stock of the Bank in an amount
      to
      be determined by the Board.

     

    (b)  The
      purchase price to be paid for each share of Common Stock deliverable upon the
      exercise of an Option shall be 100% of the fair market value of the shares
      of
      Common Stock of the Bank on the date of the granting of the Option. During
      such
      time as the Common Stock is not listed upon an established stock exchange or
      traded in the over-the-counter market the fair market value per share shall
      be
      determined by the Committee by relying upon whatever evidence it deems
      appropriate which may include, but need not be limited to, recent sales of
      the
      Common Stock, opinions of professional appraisers and recent sales of comparable
      shares of other companies. If the Common Stock is traded in the over-the-counter
      market, such fair market value shall be the mean between the dealer “bid” and
“ask” prices of the Common Stock in the over-the-counter market on the day the
      Option is granted, as reported by the National Association of Securities
      Dealers, Inc. If the Common Stock is listed upon an established stock exchange
      or exchanges, such fair market value shall be deemed to be the highest closing
      price of the Common Stock on such stock exchange or exchanges on the day the
      Option is granted or if no sale of the Bank’s Common Stock shall have been made
      on any stock exchange on that day, on the next preceding day on which there
      was
      a sale of such stock. Subject to the foregoing, the Committee in fixing the
      option price shall have fully authority and discretion.

     

    (c)  Each
      Option granted hereunder shall be evidenced by a written agreement (the “Stock
      Option Agreement”) dated as of the date of the grant. The Stock Option Agreement
      shall be in such form as the Committee shall, from time to time, approve and
      shall set forth such terms and conditions which are consistent with the
      provisions of the Plan.

     

    6.  Option
      Period and Conditions on Exercise.

     

    (a)  Any
      Option received by a director shall be exercisable, in whole or in part, at
      any
      time.

     

    (b)  No
      Option
      shall be exercisable with respect to any of the shares subject to the Option
      after the expiration of ten years from the date the Option is granted, and
      no
      Option shall be exercisable for less than one-hundred (100) shares.

     

    
      
        
        

      

      
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    7.  Termination
      of Service; Death;
      Retirement and Disability.

     

    If
      any
      director to whom an Option has been granted shall cease to be a director prior
      to the date of an annual meeting of shareholders or shall not be re-elected
      at
      an annual meeting of shareholders, the Option shall be exercisable only to
      the
      following extent, subject to such further limitations as may be determined
      by
      the Board (subject to the restrictions of Section 14) at or prior to the time
      the Option is granted:

     

    (a)  If
      the
      director’s term in office is terminated otherwise than by the death of the
      director, by retirement after attaining the age of sixty-five (65) or as a
      result of permanent disability, the director shall have the right at any time
      within six (6) months after the date of termination (but in no event after
      the
      expiration of ten (10) years from the date the Option is granted) to exercise
      the Option with respect to all or any part of the number of shares which were
      purchasable by him or her at the date of such termination. After the termination
      of the said six-month period, the Option shall terminate.

     

    If
      the
      director’s term in office is terminated by his or her death, the person or
      persons to whom the director’s rights under the Option are transferred by will
      or by laws of descent and distribution shall have the right at anytime until
      the
      expiration date of the Option to exercise the Option with respect to all or
      any
      part of the number of shares which were purchasable by him or her on the date
      of
      death.

     

    (b)  If
      the
      director’s term in office is terminated either by the retirement of the director
      after attaining the age of sixty-five (65), or as a result of the permanent
      disability of the director, the director shall have the right at any time until
      the expiration date of the Option to exercise the Option with respect to all
      or
      any part of the number of shares which were purchasable by him or her at the
      date of such termination; and in the event such former director dies prior
      to
      the expiration date of any Option held by such director on his or her retirement
      date or on the date of disability, the provisions of Section 7(b) above shall
      apply in the same manner as if the director had died while in
      office.

     

    8.  Manner
      of Exercise.

     

    Each
      Option shall be exercised by giving written notice to the Bank, addressed to
      the
      attention of its Secretary at its principal corporate office, which notice
      specifies the number of shares to be purchased and is accompanied by payment
      in
      full for the shares being purchased. Upon the exercise of an Option, the Option
      price shall be payable to the Bank either (i) in cash (including check, bank
      draft or money order), (ii) by delivery of shares of the Bank’s Common Stock
      already owned by the Optionee and having a fair market value equal to the Option
      price, or (iii) by a combination of (i) and (ii) above. The fair market value
      of
      any shares of the Bank’s Common Stock used as payment for the exercise of
      Options hereunder shall be determined pursuant to Section 12
      hereof.

     

    9.  Options
      Not Transferable.

     

    No
      Option
      shall be transferable otherwise than by will or by the laws of descent and
      distribution and during the lifetime of the director to whom any Option is
      granted, it shall be 

     

    
      
        
        

      

      
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    exercisable
      only by him or her. Except as permitted by the preceding sentence, no Option,
      nor any right thereunder, shall be transferred, assigned, pledged or
      hypothecated in any way (whether by operation of law or otherwise) or be subject
      to execution, attachment or similar process. Upon any attempt to transfer,
      assign, pledge, hypothecate or otherwise dispose of any Option, or of any right
      thereunder, contrary to the provisions hereof, the Option and all rights
      thereunder shall immediately become null and void.

     

    10.  Recapitalization.

     

    The
      number of shares subject to the Plan and to Options granted under the Plan
      shall
      be adjusted as follows:

     

    (a)  In
      the
      event that the Bank’s outstanding Common Stock is changed by any stock dividend,
      stock split or combination of shares, the number of shares subject to the Plan
      and to the Options already granted thereunder and the Option price per share
      shall be proportionately adjusted and thereafter the number of shares to be
      granted to each director immediately after the annual meeting as provided in
      Section 5 hereof shall likewise be adjusted proportionately.

     

    (b)  In
      the
      event that the Bank or the shareholders of the Bank enter into an agreement
      to
      dispose of all or substantially all of the assets or stock of the Bank by means
      of sale, merger, reorganization, liquidation or otherwise, the Board may, in
      its
      absolute discretion and notwithstanding anything contained in the Plan to the
      contrary, make provision for or direct (and shall give prompt notice of such
      provision or direction to each Optionee whose Option is affected) that the
      Option shall become immediately exercisable with respect to the full number
      of
      shares subject to the Option and shall terminate not later than the date of
      the
      sale, merger, reorganization or liquidation, as the case may be, or that the
      Option has been converted and changed into an Option to purchase a comparable
      amount of shares of the corporation to which, or into which, or with which
      the
      Bank will sell its assets or stock, or merge or reorganize, as the case may
      be.

     

    11.  Rights
      as a
      Shareholder.

     

    An
      Option
      holder shall have no rights as a shareholder with respect to shares subject
      to
      an Option until the date of the issuance of the shares to the Option holder.
      No
      adjustment will be made for cash dividends or other distributions or rights
      for
      which the record date is prior to the date of such issuance.

     

    12.  Valuation.

     

    The
      fair
      market value of the shares of Common Stock of the Bank as of any date shall
      be
      determined in accordance with the provisions of Section 5(b)
      hereof.

     

    13.  Listing
      and Registration of Shares.

     

    (a)  Each
      Option shall be subject to the requirement that, if at any time the Board
      determines, in its discretion, that the listing, registration or qualification
      of the shares subject to the Option upon any securities exchange or under any
      state or federal law, or the 

     

    
      
        
        

      

      
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    consent
      or approval of any governmental regulatory body, is necessary or desirable
      as a
      condition of, or in connection with, the issue or purchase of shares thereunder,
      such Option may not be exercised in whole or in part unless such listing,
      regulation, qualification, consent or approval shall have been effected or
      obtained and the same shall have been free of any conditions not acceptable
      to
      the Board. Further, the inability of the Bank to obtain from any regulatory
      body
      having jurisdiction the authority deemed by the Bank’s counsel to be necessary
      to the lawful issuance and sale of any shares of its stock hereunder shall
      relieve the Bank of any liability in respect of the non-issuance or sale of
      such
      stock as to which such requisite authority shall not have been
      obtained.

     

    (b)  If
      required by the Bank, the holder of an Option shall represent to the Bank that
      the shares which are issued upon exercise of his or her Option are purchased
      for
      investment and not with a view to resale or distribution, and certificates
      representing such shares shall bear an appropriate legend to reflect the fact
      that such shares have not been registered under the Securities Act of 1933
      and
      that no sale or other disposition of such shares may be made except pursuant
      to
      an effective registration statement under such Act or in a transaction exempt
      from such registration requirement.

     

    14.  Amendment
      or Termination of the Plan.

     

    The
      Board
      may, insofar as permitted by law, from time to time, with respect to any shares
      at the time not subject to Options, suspend or discontinue the Plan or revise
      or
      amend it in any respect whatsoever; provided, that without approval of the
      shareholders, no such revision or amendment shall change the number of shares
      subject to Options (other than as provided in Section 10 or by reallocating
      previously reserved shares), change the designation of the class of persons
      eligible to receive Options, decrease the price at which Options may be granted,
      or remove the administration of the Plan from the Committee. No amendment,
      suspension or termination of the Plan shall, without an Option holder’s consent,
      alter or impair any rights or obligations under any Option already granted,
      and
      such Option shall remain in force and effect.

     

    15.  Continuation
      as a Director.

     

    Neither
      this Plan nor any Option granted hereunder shall confer upon any director any
      right to continue as a director of the Bank or limit in any respect the right
      of
      the shareholders to terminate his or her position as a director.

     

    16.  No
      Prohibition on Corporate Action.

     

    No
      provision of this Plan or any other stock option agreement shall be construed
      to
      prevent the Bank from taking any corporate action deemed by the Bank to be
      appropriate or in its best interest, whether or not such action could have
      an
      adverse effect on the Plan or any Options granted hereunder, and no Option
      holder or Option holder’s estate, personal representative or beneficiary shall
      have any claim against the Bank as a result of taking such action. The adoption
      of the Plan shall not affect any other stock option or incentive or other
      compensation plans in effect for the Bank, nor shall the Plan preclude the
      Bank
      from establishing any other forms of incentive or other compensation for
      directors of the Bank. This Plan is not intended to be and is not a qualified
      stock option plan under Section 422 of the Internal Revenue Code of
      1986.

     

    
      
        
        

      

      
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    17.  Effective
      Date
      and Term of Plan; Shareholder Approval.

     

    This
      Plan
      shall not become effective until and unless it has been adopted by the Board
      and
      approved at a meeting of the Bank’s shareholders by the vote of the holders of
      at least two-thirds (2/3) of the shares of the Bank’s Common Stock entitled to
      vote and a copy of the Plan has been filed with the Department of Banking in
      accordance with the New Jersey Banking Act of 1948, as amended. The effective
      date of the Plan shall be the date of shareholder approval of the Plan, and
      the
      Plan shall have a term of five (5) years from the effective date.

     

    18.  Withholding
      Taxes.

     

    The
      exercise of each Option shall be subject to the condition that if at any time
      the Bank shall determine in its discretion that the satisfaction of withholding
      tax or other withholding liabilities is necessary or desirable as a condition
      of, or in connection with, the exercise or the delivery or purchase of shares
      pursuant to the Option, then in any such events, the exercise shall not be
      effective unless such withholding shall have been paid by the
      Optionee.

     

    
      
        
        

      

      
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    AMENDMENT

    to

    1998
      DIRECTOR STOCK OPTION PLAN

     

    RESOLVED,
      that the first sentence of Section 5(b) of the Sterling Bank 1998 Director
      Stock
      Option Plan be and hereby is amended to read in its entirety as follows: “The
      purchase price to be paid for each share of Common Stock deliverable upon the
      exercise of an Option shall be the higher of the par value or 100% of the fair
      market value of the shares of Common Stock of the Bank on the date of the
      granting of the Option.”

     

    
       

      7Exhibit 10.4

    EXHIBIT
      10.4

     

    STERLING
      BANK

     

    2003
      EMPLOYEE STOCK OPTION PLAN

     

    1.  Purpose
      of the Plan.

     

    This
      Sterling Bank 2003 Employee Stock Option Plan (the “Plan”) is intended to
      encourage stock ownership by certain key employees of Sterling Bank (the “Bank”)
      so that such employees may increase their proprietary interest in the success
      of
      the Bank and be encouraged to remain in the employ of the Bank. It is further
      intended that options issued pursuant to the Plan (the “Options”) shall
      constitute “incentive stock options” within the meaning of Section 422 of the
      Internal Revenue Code (the “Code”), to the maximum extent possible, unless they
      are designated otherwise at the time of grant.

     

    2.  Administration;
      Option
      Grant.

     

    (a)  As
      specified herein, the Plan shall be administered by the members of the Board
      of
      Directors (the “Board”) who are “disinterested persons” as such term is defined
      in Rule 16b-3(c)(2)(i) under the Securities Exchange Act of 1934, as amended,
      and by a stock option committee (the “Committee”) appointed by the Board. The
      Committee shall consist of not less than two members of the Bank’s Board who are
“disinterested persons,” and “outside directors” as such term is defined under
      Treasury Regulation §1.162-27(e)(3). The Board may from time to time remove
      members from, or add members to, the Committee. Vacancies on the Committee,
      however caused, shall be filled by the Board; provided, however, that any
      individual appointed to the Committee shall be a Director who is a
“disinterested person,” and an “outside director.” The Committee shall hold
      meetings at such times and places as it may determine. If the Committee consists
      of three or more members, the Committee shall select one of its members as
      Chairman. Acts by a majority of the Committee at a meeting at which a quorum
      is
      present, or acts reduced to or approved in writing by a majority of the members
      of the Committee, shall be the valid acts of the Committee. No person while
      a
      member of the Committee shall receive a discretionary grant or award under
      any
      stock plan of the Bank.

     

    (b)  The
      Committee shall from time to time in its discretion make recommendations to
      the
      Board with respect to the employees to be granted Options and the amount of
      stock subject to such Options. Except as set forth below, the Board shall have
      the final authority to grant Options under this Plan. With respect to “Covered
      Employees” as defined in Section 162(m) of the Internal Revenue Code (chief
      executive officer and the four (4) other highest compensated officers for whom
      compensation is required to be reported to shareholders), only the Committee
      shall have the authority to grant Options under this Plan, subject only to
      ratification by the Board, unless the Board makes a determination that it will
      not comply with Section I 62(m).

     

    (c)  The
      Committee shall be authorized to interpret the Plan and the Options granted
      thereunder, to establish, amend and rescind such rules and regulations as it
      deems necessary for the proper administration of the Plan, and to make all
      other
      determinations necessary or advisable for its administration. The Committee
      shall have the final authority to determine these matters. The interpretation
      and construction by the Committee of any provisions of the Plan or of any Option
      granted under it shall be final. No member of the Board or the Committee shall
      be liable for any action or determination made in good faith or with respect
      to
      the Plan or any Option granted thereunder,

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    3.  Eligibility.

     

    The
      persons who shall be eligible to receive Options shall be the management
      employees (including such employees who may be members of the Board) of the
      Bank, but excluding persons who may own 10% or more of the Bank’s Common Stock
      then outstanding. An Option holder (the “Optionee”) may hold more than one
      Option but only on the terms and subject to the restrictions hereinafter set
      forth.

     

    4.  Shares
      of Stock Subject to the Plan.

     

    There
      will be reserved for use upon the exercise of Options to be granted under this
      Plan (subject to the provisions of Section 5(g) of this Plan) an aggregate
      of
      300,000 shares of common stock of the Bank Common Stock”), par value $2.00 per
      share, which shares may be in whole or in part as the Board shall from time
      to
      time determine, authorized but unissued shares of Common Stock or issued shares
      of Common Stock which shall have been reacquired by the Bank. Shares delivered
      under the Plan shall be fully paid and non-assessable.

     

    5.  Terms
      and Conditions of Options.

     

    When
      the
      Board shall have granted Options, Notices of Grant of Stock Option shall be
      given to such Optionees in such form as the Committee shall from time to time
      approve, which Notices shall comply with and be subject to the following terms
      and conditions:

     

    (a)  Number
      of Shares.
      Each
      Notice of Grant of Stock, Option shall state the number of shares to which
      it
      pertains.

     

    (b)  Option
      Price.
      Each
      Notice of Grant of Stock Option shall state the option price, which shall not
      be
      less than 100% of the fair market value of the shares of Common Stock of the
      Bank on the date of the granting of the Option. During such time as the Common
      Stock is not listed upon an established stock exchange or traded in the
      over-the-counter market, the fair market value per share shall be determined
      by
      the Board by relying upon whatever evidence it deems appropriate which may
      include, but need not be limited to, recent sales of the Common Stock, opinions
      of professional appraisers and recent sales of comparable shares of other
      companies. If the Common Stock is traded in the over-the-counter market such
      fair market value shall be the mean between the dealer “bid” and “ask” prices of
      the Common Stock in the over-the-counter market on the day the option is
      granted,
      as
      reported by the National Association of Securities Dealers, Inc. If the Common
      Stock is listed upon an established stock exchange or exchanges, such fair
      market value shall be deemed to be the closing price of the Common Stock on
      such
      stock exchange or exchanges on the day the option is granted or, if no sale
      of
      the Bank’s Common Stock shall have been made on any stock exchange on that day,
      on the next preceding day on which there was a sale of such stock. Subject
      to
      the foregoing, the Board in fixing the option price shall have full authority
      and discretion.

     

     

    
      
        
        

      

      
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    (c)  Medium
      and Time of Payment.
      Unless
      otherwise specified in the option grant pursuant to
      Section 7 hereof, the option price shall be payable in United States dollars
      upon the exercise of the Option and may be paid in cash or by check. Should
      any
      income or employment tax withholding obligation arise on account of the exercise
      of an option, the grantee must also pay the amount of such withholding to the
      Bank as a condition of the exercise of the Option, or make such other
      arrangement satisfactory to the Bank in its absolute discretion.

     

    (d)  Term
      and Exercise of Options.
      Each
      Notice of Grant of Stock Option shall state the date on which the Option shall
      expire, as determined by the Committee; provided, however, that no Option shall
      be exercisable after ten (10) years from the date on which it is granted.
      Options may be exercised by an Optionee in whole or in part only while he or
      she
      is employed by the Bank except as otherwise provided in Sections 5(e) and 5(f)
      hereof

     

    The
      Notice of Grant of Stock Option, as determined by the Committee, may provide
      that the Option shall be exercisable in installments rather than exercisable
      immediately in full, but the Committee may provide, in the case
      of
      an Option not immediately exercisable in full, for the acceleration of the
      time
      at which the Option may be exercised.

     

    During
      the lifetime of the Optionee, an Option shall be exercisable only by him or
      her,
      shall not be assignable or transferable by him or her, and no other person
      shall
      acquire any rights therein. To the extent not exercised, installments shall
      accumulate and be exercisable, in whole or in part, in any subsequent period
      but
      not later than the expiration date of the Option.

     

    (e)  Termination
      of Employment Except By Death or Disability.
      In the
      event that the employment of an Optionee shall terminate by retirement or for
      any other reason except death or disability, any unexercised Option, only with
      respect to those installments under Section 5(d) for which Optionee’s right to
      exercise had accrued, may be exercised by Optionee (or his or her executor
      or
      administrator) at any time within three (3) months after the date of termination
      of employment; provided, that no Option shall be exercisable after the
      expiration of its term.

     

    (f)  Death
      or Disability.
      If the
      Optionee shall die or become permanently disabled while in the employ of the
      Bank, any unexercised Option, including any installments under Section 5(d)
      for
      which Optionee’s right to exercise had not yet accrued, shall be fully
      exercisable at any time within twelve (12) months after the Optionee’s death or
      disability (as the case may be), by the executors or administrators of the
      Optionee or by any person or persons who shall have acquired the Option directly
      from the Optionee by bequest or inheritance, or by the Optionee, respectively;
      provided, that no Option shall be exercisable after the expiration of its term.
      No Option shall be transferable by the Optionee otherwise than by will or the
      laws of descent and distribution.

     

    (g)  Recapitalization.
      Subject
      to any required action by the shareholders, the number of shares of Common
      Stock
      covered by the Plan and by each outstanding Option, and the price per share
      thereof in
      each
      such Option, shall be proportionately adjusted for any increase or decrease
      in
      the number of issued shares of Common Stock of the Bank resulting from a
      subdivision or consolidation of shares 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 effected without receipt of consideration by the Bank.

     

     

    
      
        
        

      

      
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    Subject
      to any required action by the shareholders, if the Bank shall be the surviving
      corporation in any merger or consolidation, each outstanding Option shall
      pertain to and apply to the securities to which a holder of the number of shares
      of Common Stock subject to the Option would have been entitled. A dissolution
      or
      liquidation of the Bank or a merger or consolidation in which the Bank is not
      the surviving corporation, shall cause each outstanding Option to terminate,
      provided that each Optionee shall, in such event~ have the right immediately
      prior to such dissolution or liquidation, or merger or consolidation in which
      the Bank is, not the surviving corporation, to exercise
      his Option in whole or in part without regard to any installment provisions
      of
      Section 5(d) hereof. Notwithstanding the above provisions, an Option will not
      terminate if assumed by the surviving or acquiring corporation, or its parent;
      upon a merger or consolidation under circumstances which are not deemed a
      modification of the Option within the meaning of Sections 425(a) and,
      425(h)(3)(A) of the Code.

     

    In
      the
      event of a change in the Common Stock of the Bank as presently constituted,
      which is limited to a change of all of its authorized shares with par value
      into
      the same number of shares with a different par value or without par value,
      the
      shares resulting from any such change shall be deemed to be the Common Stock
      within the meaning of the Plan.

     

    To
      the
      extent that the foregoing adjustments relate to stock or securities of the
      Bank,
      such adjustments shall be made by the Committee, whose determination in that
      respect shall be final, binding and conclusive, provided that each Option
      granted pursuant to this Plan shall not be adjusted in a manner that causes
      the
      Option to fail to continue to qualify as an “incentive stock option” within the
      meaning of Section 422 of the Code.

     

    Except
      as
      hereinbefore expressly provided in this Section 5(g), the Optionee shall have
      no
      rights by reason (i) of any subdivision or consolidation of shares of stock
      of
      any class, or (ii) the payment of any stock dividend or any other increase
      or
      decrease in the number of shares of stock of any class, or (iii) any
      dissolution, liquidation, merger or consolidation or spin-off of assets or
      stock
      of another corporation. Any issue by the Bank of shares of stock of any class,
      or securities convertible into shares of any class, for consideration shall
      not
      affect, and no adjustment by reason thereof shall be made with respect to,
      the
      number or price of shares of Common Stock subject to the Option.

     

    The
      grant
      of an Option pursuant to the Plan shall not affect in any way the right or
      power
      of the Bank to make adjustments, reclassifications, reorganizations or changes
      of its capital or business structure or to merge or to consolidate or to
      dissolve, liquidate or sell, or transfer all or any part of its business or
      assets.

     

    (h)  Rights
      as a Shareholder.
      An
      Optionee or a transferee of an Option shall have no rights as a shareholder
      with
      respect to any shares covered by the Option until the date of the issuance
      of
      such shares. No adjustment shall be made for dividends (ordinary or
      extraordinary, whether in cash, securities or other property) or distributions
      or other rights for which the record date is prior to the date such stock is
      issued, except as provided in Section 5(g) hereof.

     

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (i)  Modification
      Extension and Renewal of Options.
      Subject
      to the terms and conditions and within the limitations of the Plan, the Board
      may modify, extend or renew outstanding Options granted under the Plan, or
      accept the surrender of outstanding Options (to the extent not theretofore
      exercised). Notwithstanding the foregoing, however, no modification of an Option
      shall, without the consent of the Optionee, impair any rights or obligations
      under any Option theretofore granted under the Plan.

     

    (j)  Investment
      Purpose.
      Each
      Option under the Plan shall be granted on the condition that the purchases
      of
      stock thereunder shall be for investment purposes and not with a view to resale
      or distribution, except that in the event the stock subject to such Option
      is
      registered under the Securities Act of 1933, as amended, or in the event a
      resale of such stock without such registration would otherwise be permissible,
      such condition shall be inoperative if, in the opinion of counsel for the Bank,
      such condition is not required under the Securities Act of 1933 or any other
      applicable law, regulation or rule of any governmental agency.

     

    (k)  Other
      Provisions.
      The
      Notice of Grant of Stock Option shall contain such other provisions, including,
      without limitation, restrictions upon the exercise of the Option or the transfer
      of the shares received upon an exercise, as the Committee and the Board shall
      deem advisable. Any Notice of Grant of Stock Option shall contain such
      limitations and restrictions upon the exercise of the Option as shall be
      necessary in order that such option will be an “incentive stock option” as
      defined in Section 422 of the Code or to conform to any change in the law,
      unless the Option is designated as one that will not be treated as an incentive
      stock option.

     

    6.  Annual
      Limitation Per Employee.

     

    The
      aggregate fair market value (determined as of the time the Option is granted
      under the Plan) of the stock for which any employee may be granted incentive
      stock options which are first exercisable in any calendar year (under all such
      plans of the Bank) shall not exceed $100,000. Subject to the adjustment under
      Section 5(g), no employee shall be granted Options covering more than 50,000
      shares during any calendar year.

     

    7.  Permissible
      Provisions.

     

    In
      addition to the other powers granted to the Committee and the Board under this
      Plan, the Committee and the Board shall have the discretion to include in any
      Option grant the right of the Optionee to make payment for the exercise of
      Options by delivery of Common Stock having a fair market value equal to the
      option price.

     

    8.  Effective
      Date and
      Term of Plan; Shareholder Approval.

     

    This
      Plan
      shall not become effective until and unless it has been adopted by the Board
      and
      approved at a meeting of the Bank’s shareholders by the vote of the holders of
      at least two-thirds (2/3) of the shares of the Bank’s Common Stock entitled to
      vote and a copy of the Plan has been filed with the Department of Banking in
      accordance with the New Jersey Banking Act of 1948, as amended. The effective
      date of the Plan shall be the date of shareholder approval of the Plan, and
      the
      Plan shall have a term of nine (9) years from the effective date.

     

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    9.  Indemnification
      of Committee.

     

    In
      addition to such other rights of indemnification as they may have as Directors
      or as members of the Committee, the members of the Committee and the Board
      shall
      be indemnified by the Bank against the reasonable expenses, including attorneys’
fees actually and necessarily incurred in connection with the defense of any
      action, suit or proceeding, or in connection with any appeal therein, to which
      they or any of them may be a party by reason of any action taken or failure
      to
      act under or in connection with the Plan or any Option granted thereunder,
      and
      against all amounts paid by them in settlement thereof (provided such settlement
      is approved by independent legal counsel selected by the Bank) or paid by them
      in satisfaction of a judgment in any such action, suit or proceeding except
      in
      relation to matters as to which it shall be adjudged in such action, suit or
      proceeding that such Board or Committee member is liable for negligence or
      misconduct in the performance of his duties; provided that within sixty (60)
      days after institution of any such action suit or proceeding the Board or
      Committee member shall in writing offer the Bank the opportunity, at its own
      expense, to handle and defend the same.

     

    10.  Amendment
      of the Plan.

     

    The
      Board
      of the Bank may, insofar as permitted by law, from time to time, with respect
      to
      any shares at the time not subject to Options, suspend or discontinue the Plan
      or revise or amend it in any respect whatsoever except that, without approval
      of
      the shareholders, no such revision or amendment shall change the number of
      shares subject to the Plan, change the designation of the class of employees
      eligible to receive Options, decrease the price at which Options may be granted,
      or remove the administration of the Plan from the Committee. Furthermore, the
      Plan may not, without the approval of the shareholders, be amended in any manner
      that will cause Options issued under it to fail to meet the requirements of
      “incentive stock options” as defined in Section 422 of the Code.

     

    11.  No
      Obligation to Exercise Option.

     

    The
      granting of an Option shall impose no obligation upon the Optionee to exercise
      such Option.

     

    12.  Continued
      Employment.

     

    The
      grant
      of an Option pursuant to the Plan shall not be construed to imply or to
      constitute evidence of any agreement, express or implied, on the part of the
      Bank to continue to employ an employee or not to alter the responsibilities,
      duties or authority of any employee.

     

     6

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