Document:

lin_8k0907ex106.htm

    

      Exhibit
        10.6

       

      AMENDED
        AND RESTATED CHANGE IN CONTROL AGREEMENT

       

      This
        Amended and Restated Change in Control Agreement (“Agreement”)
        is made and entered into as of this 1st day of October, 2007, but effective
        as
        of August 15, 2006, by and between Lincoln Bank, an Indiana commercial bank
        whose address is 905 Southfield Drive, Plainfield, Indiana 46168 (which,
        together with any successor thereto which executes and delivers the assumption
        agreement provided for in Section 11(a) hereof or which otherwise becomes
        bound
        by the terms and provisions of this Agreement by operation of law, is
        hereinafter referred to as the “Bank”), and Doug Bennett whose
        residence address is 2517 Caray Court, Bloomington, Indiana 47401 (the
“Employee”).

       

      Whereas,
        the Employee is currently serving as Senior Vice President, Business
        Development, of the Bank; and

       

      Whereas,
        the Bank is a wholly-owned subsidiary of Lincoln Bancorp, a publicly traded
        corporation organized under Indiana law (the “Holding
        Company”); and

       

      Whereas,
        the Board of Directors of the Bank recognizes that, as is the case with publicly
        held corporations generally, the possibility of a change in control of the
        Holding Company may exist and that such possibility, and the uncertainty
        and
        questions which it may raise among management, may result in the departure
        or
        distraction of key management personnel to the detriment of the Bank, the
        Holding Company and its shareholders; and

       

      Whereas,
        the Board of Directors of the Bank believes it is in the best interests of
        the
        Bank to enter into this Agreement with the Employee in order to assure
        continuity of management of the Bank and to reinforce and encourage the
        continued attention and dedication of the Employee to his or her assigned
        duties
        without distraction in the face of potentially disruptive circumstances arising
        from the possibility of a change in control of the Holding Company, although
        no
        such change is now contemplated;

       

      Whereas,
        the current Special Termination Agreement dated as of January 1, 2007, between
        the Bank and Employee needs to be revised to address certain tax changes
        made
        under Section 409A of the Internal Revenue Code of 1986, as amended, and
        the
        parties wish to restate that agreement to make such changes; and

       

      Whereas,
        the Board of Directors of the Bank has approved and authorized the execution
        of
        this Agreement with the Employee to take effect as stated in Section 1
        hereof;

       

      Now,
        Therefore, in consideration of the foregoing and of the respective covenants
        and
        agreements of the parties herein contained, it is agreed as
        follows:

       

      1.           Term
        of Agreement.    The
        term of this Agreement shall be deemed to have commenced as of August 15,
        2006
        (the “Effective Date”), and shall continue until January 1,
        2008. Prior to January 1, 2008, and at each anniversary date thereafter,
        the
        Board of Directors may review this Agreement and, in its discretion, authorize
        extension thereof for an additional one-year period.

       

      
        
          
          

        

        
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      2.           Payments
        to the Employee Upon Change in Control.  (a)           Upon
        the occurrence of a change in control of the Bank or the Holding Company
        (as
        herein defined) at any time during the term of this Agreement followed within
        12
        months by the involuntary or voluntary termination of the Employee’s employment
        with the Bank, whether or not such termination occurs during the term of
        this
        Agreement, the provisions of Section 3 shall apply.

       

      (b)           A
        “change in control” shall mean any of the
        following:

       

      (i)
a
        change in the ownership of
        the Bank or the Holding Company, which shall occur on the date that any one
        person, or more than one person acting as a group, acquires ownership of
        stock
        of the Bank or the Holding Company that, together with stock held by such
        person
        or group, constitutes more than fifty percent (50%) of the total fair market
        value or total voting power of the stock of the Bank or the Holding
        Company.  Such acquisition may occur as a result of a merger of the
        Holding Company or the Bank into another entity which pays consideration
        for the
        shares of capital stock of the Holding Company or the Bank in the merger
        or as a
        result of a merger of another entity into the Holding Company or the Bank
        if the
        entity’s shareholders as a group acquire or receive over 50% of the total fair
        market value or total voting power of the stock of the entity resulting from
        the
        merger.  However, if any one person, or more than one person acting as
        a group, is considered to own more than fifty percent (50%) of the total
        fair
        market value or total voting power of the stock of the Bank or the Holding
        Company, the acquisition of additional stock by the same person or persons
        is
        not considered to cause a change in the ownership of the Bank or the Holding
        Company (or to cause a change in the effective control of the Bank or the
        Holding Company (within the meaning of subsection (ii)).  An increase
        in the percentage of stock owned by any one person, or persons acting as
        a
        group, as a result of a transaction in which the Bank or the Holding Company
        acquires its stock in exchange for property will be treated as an acquisition
        of
        stock for purposes of this subsection.  This subsection applies only
        when there is a transfer of stock of the Bank or the Holding Company (or
        issuance of stock of the Bank or the Holding Company) and stock in the Bank
        or
        the Holding Company remains outstanding after the transaction.

       

      (ii)
a
        change in the effective
        control of the Bank or the Holding Company, which shall occur only on the
        date
        new directors are added to the Holding Company’s board of directors as a result
        of a merger transaction involving the Holding Company or the Bank, respectively,
        and as a result of such replacement the Holding Company’s or the Bank’s
        directors, respectively, before the merger constitute 50% or less of the
        total
        directors of the Holding Company or the Bank immediately following the merger;
        provided, however, that this provision shall not apply if another
        corporation is a majority shareholder of the Holding Company.  If any
        one person, or more than one person acting as a group, is considered to
        effectively control the Bank or the Holding Company, the acquisition of
        additional control of the Bank or the Holding Company by the same person
        or
        persons is not considered to cause a change in the

       

      
        
          
          

        

        
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      effective
        control of the Bank or the Holding Company (or to cause a change in the
        ownership of the Bank or the Holding Company within the meaning of subsection
        (i) of this section).

       

      (iii)
a
        change in the ownership
        of a substantial portion of the Bank’s assets, which shall occur on the date
        that any one person, or more than one person acting as a group, acquires
        (or has
        acquired during the 12 month period ending on the date of the most recent
        acquisition by such person or persons) assets from the Bank that have a total
        gross fair market value equal to or more than forty percent (40%) of the
        total
        gross fair market value of all of the assets of the Bank immediately before
        such
        acquisition or acquisitions.  For this purpose, gross fair market
        value means the value of the assets of the Bank, or the value of the assets
        being disposed of, determined without regard to any liabilities associated
        with
        such assets.  No change in control event occurs under this subsection
        (iii) when there is a transfer to an entity that is controlled by the
        shareholders of the Bank immediately after the transfer.  A transfer
        of assets by the Bank is not treated as a change in the ownership of such
        assets
        if the assets are transferred to –

       

      1)                 a
        shareholder of the Bank (immediately before the asset transfer) in exchange
        for
        or with respect to its stock;

       

      2)                 an
        entity, 50 percent or more of the total value or voting power of which is
        owned,
        directly or indirectly, by the Bank.

       

      3)                 a
        person, or more than one person acting as a group, that owns, directly or
        indirectly, 50 percent or more of the total value or voting power of all
        the
        outstanding stock of the Bank; or

       

      4)                 an
        entity, at least 50 percent of the total value or voting power of which is
        owned, directly or indirectly, by a person described in paragraph
        (iii).

       

      For
        purposes of this subsection (iii) and except as otherwise provided in paragraph
        1) above, a person’s status is determined immediately after the transfer of the
        assets.

       

      (iv)
For
        purposes of this
        section, persons will not be considered to be acting as a group solely because
        they purchase or own stock of the same corporation at the same time, or as
        a
        result of the same public offering.  Persons will be considered to be
        acting as a group if they are owners of a corporation that enters into a
        merger,
        consolidation, purchase or acquisition of stock, or similar business transaction
        with the Bank or the Holding Company.

       

      (c)           The
        Employee’s employment under this Agreement may be terminated at any time by the
        Board of Directors of the Bank.  If the Employee’s employment is
        terminated for any reason prior to a change in control, no benefits shall
        be
        payable under this Agreement.

       

      (d)           The
        Employee’s employment under this Agreement may be terminated at any time by the
        Board of Directors of the Bank.  The terms “involuntary
        termination” or “involuntarily terminated” in this
        Agreement shall refer to the termination of the

       

      
        
          
          

        

        
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      employment
        of Employee without his or her express written consent.  In addition,
        a ma­terial diminution of or interference with the Employee’s duties,
        responsibilities and benefits shall be deemed and shall constitute an
        involuntary termination of employment to the same extent as express notice
        of
        such involuntary termination.  By way of example and not by way of
        limitation, any of the following actions, if unreasonable and materially
        adverse
        to the Employee, shall constitute such diminution or interference unless
        consented to in writing by the Employee: (1) the requirement that the Employee
        perform his or her principal employment duties more than thirty-five (35)
        miles
        from his or her primary office as of the date of the change in control; (2)
        a
        material reduction in the Employee’s salary, perquisites, contingent benefits or
        vacation time as in effect on the date of the change in control as the same
        may
        be changed by mutual agreement from time to time, unless part of an
        institution-wide reduction; (3) the assignment to the Employee of duties
        and
        responsibilities materially different from those normally associated with
        his or
        her position as referenced in this Agreement; or (4) a material diminution
        or
        reduction in the Employee’s responsibilities or authority (including reporting
        responsibilities) in connection with his or her employment with the
        Bank.

       

      3.           Payments
        Upon a Change in Control.

       

      (a)           If
        during the term of this Agreement there is a change in control of the Bank
        or
        the Holding Company and within 12 months following such change in control
        there
        is an involuntary termination of the Employee’s employment with the Bank, other
        than for cause, whether or not such termination occurs during the term of
        this
        Agreement, the Bank shall pay to the Employee in a lump sum in cash within
        25
        business days after the date of severance of employment an amount equal to
        100
        percent of the Employee’s “base amount” of compensation, as defined in Section
        280G(b)(3) of the Internal Revenue Code of 1986, as amended
        (“Code”).

       

      (b)           If
        during the term of this Agreement there is a change in control, and within
        12
        months following such change in control there is an involuntary termination
        of
        the Employee’s employment, whether or not such termination occurs during the
        term of this Agreement, the Bank shall cause to be continued life, health
        and
        disability coverage substantially identical to the coverage maintained by
        the
        Bank for the Employee prior to his severance.  Subject to applicable
        federal and state laws, such coverage shall cease upon the earlier of the
        Employee’s obtaining similar coverage by another employer or twelve (12) months
        from the date of the Employee’s termination.  In the event the
        Employee obtains new employment and receives less coverage for life, health
        or
        disability, the Bank shall provide coverage substantially identical to the
        coverage maintained by the Bank for the Employee prior to termination for
        the
        balance of the twelve (12) month period.

       

      (c)           If
        during the term of this Agreement there is a change in control of the Bank
        or
        the Holding Company, and within 12 months following such change in control,
        the
        Employee voluntarily terminates his or her employment, whether or not such
        voluntary termination of employment occurs during the term of this Agreement,
        the Bank shall continue to pay Employee his or her base compensation and
        shall
        continue to provide life, health and disability coverage maintained for the
        Employee prior to his or her voluntary termination of employment for any
        remaining portion of the period ending 12 months following such change in
        control; provided, however, that subject to applicable federal
        and

       

      
        
          
          

        

        
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      state
        laws, such life, health and disability coverage shall cease upon Employee’s
        obtaining substantially similar coverage from another employer.

       

      4.           Certain
        Reduction of Payments by the Bank.

       

      (a)           Anything
        in this Agreement to the contrary notwithstanding, in the event it shall
        be
        determined that any payment or distribution by the Bank to or for the benefit
        of
        the Employee (whether paid or payable or distributed or distributable pursuant
        to the terms of this Agreement or otherwise) (a “Payment”)
        would be nondeductible (in whole or part) by the Bank for Federal income
        tax
        purposes because of Section 280G of the Code, then the aggregate present
        value
        of amounts payable or distributable to or for the benefit of the Employee
        pursuant to this Agreement (such amounts payable or distributable pursuant
        to
        this Agreement are hereinafter referred to as “Agreement
        Payments”) shall be reduced to the Reduced Amount.  The
“Reduced Amount” shall be an amount, not less than zero,
        expressed in present value which maximizes the aggregate present value of
        Agreement Payments without causing any Payment to be nondeductible by the
        Bank
        because of Section 280G of the Code.  For purposes of this Section 4,
        present value shall be determined in accordance with Section 280G(d)(4) of
        the
        Code.

       

      (b)           All
        determinations required to be made under this Section 4 shall be made by
        the
        Bank’s independent auditors, or at the election of such auditors by such other
        firm or individuals of recognized expertise as such auditors may select (such
        auditors or, if applicable, such other firm or individual, are hereinafter
        referred to as the “Advisory Firm”). The Advisory Firm shall
        within ten business days of the date of termination of the Employee’s employment
        by the Bank or the Holding Company resulting in benefit payments hereunder
        (the
“Date of Termination”), or at such earlier time as is requested
        by the Bank, provide to both the Bank and the Employee an opinion (and detailed
        supporting calculations) that the Bank has substantial authority to deduct
        for
        federal in­come tax purposes the full amount of the Agreement Payments and
        that the Employee has substantial authority not to report on his or her federal
        income tax return any excise tax imposed by Section 4999 of the Code with
        respect to the Agreement Payments.  Any such determination and opinion
        by the Advisory Firm shall be binding upon the Bank and the
        Employee.  The Employee shall determine which and how much, if any, of
        the Agreement Payments shall be eliminated or reduced consistent with the
        requirements of this Section 4, provided that, if the Employee does not make
        such determination within ten business days of the receipt of the calculations
        made by the Advisory Firm, the Bank shall elect which and how much, if any,
        of
        the Agreement Payments shall be eliminated or reduced consistent with the
        requirements of this Section 4 and shall notify the Employee promptly of
        such
        election.  Within five business days of the earlier of (i) the Bank’s
        receipt of the Employee’s determination pursuant to the immediately preceding
        sentence of this Agreement or (ii) the Bank’s election in lieu of such
        determination, the Bank shall pay to or distribute to or for the benefit
        of the
        Employee such amounts as are then due the Employee under this
        Agreement.  The Bank and the Employee shall cooperate fully with the
        Advisory Firm, including without limitation providing to the Advisory Firm
        all
        information and materials reasonably requested by it, in connection with
        the
        making of the determinations required under this Section 4.

       

      
        
          
          

        

        
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      (c)           As
        a result of uncertainty in application of Section 280G of the Code at the
        time
        of the initial determination by the Advisory Firm hereunder, it is possible
        that
        Agreement Payments will have been made by the Bank which should not have
        been
        made (“Overpayment”) or that additional Agreement Payments will
        not have been made by the Bank which should have been made
        (“Underpayment”), in each case, consistent with the
        calculations required to be made hereunder.  In the event that the
        Advisory Firm, based upon the assertion by the Internal Revenue Service against
        the Employee of a deficiency which the Advisory Firm believes has a high
        probability of success, determines that an Overpayment has been made, any
        such
        Overpayment paid or distributed by the Bank to or for the benefit of Employee
        shall be treated for all purposes as a loan abinitio which the
        Employee shall repay to the Bank together with interest at the applicable
        federal rate provided for in Section 7872(f)(2) of the Code; provided,
        however, that no such loan shall be deemed to have been made and no amount
        shall be payable by the Employee to the Bank if and to the extent such deemed
        loan and payment would not either reduce the amount on which the Employee
        is
        subject to tax under Section 1 and Section 4999 of the Code or generate a
        refund
        of such taxes.  In the event that the Advisory Firm, based upon
        controlling precedent or other substantial authority, determines that an
        Underpayment has occurred, any such Underpayment shall be promptly paid by
        the
        Bank to or for the benefit of the Employee together with interest at the
        applicable federal rate provided for in Section 7872(f)(2) of the
        Code.

       

      5.           Required
        Regulatory Provisions.

       

      (a)           The
        Bank may terminate the Employee’s employment at any time, but any termination by
        the Bank on or after a change in control shall not prejudice the Employee’s
        right to compensation or other benefits under this Agreement.

       

      (b)           If
        the Employee is suspended and/or temporarily prohibited from participating
        in
        the conduct of the Bank’s affairs by a notice served under Section 8(e)(3) or
        (g)(1) of the Federal Deposit Insurance Act, 12 U.S. C. §1818 (e)(3) and (g)(1),
        the Bank’s obligations under this Agreement shall be suspended as of the date of
        service, unless stayed by appropriate proceedings.  If the charges in
        the notice are dismissed, the Bank may in its discretion (i) pay the Employee
        all or part of the compensation withheld while its obligations under this
        Agreement were suspended, and (ii) reinstate (in whole or in part) any of
        the
        obligations which were suspended.

       

      (c)           If
        the Employee is removed from office and/or permanently prohibited from
        participating in the conduct of the Bank’s affairs by an order issued under
        Section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act, 12 U.S.C.
§
1818(e)(4) or (g)(1), all obligations of the Bank under this Agreement shall
        terminate, as of the effective date of the order, but vested rights of the
        parties shall not be affected.

       

      (d)           If
        the Bank is in default (as defined in Section 3(x)(1) of the Federal Deposit
        Insurance Act), all obligations under this Agreement shall terminate as of
        the
        date of default, but this provision (d) shall not affect any vested rights
        of
        the parties.

       

      (e)           All
        obligations under this Agreement may be terminated, except to the extent
        determined that continuation of this Agreement is necessary for the continued
        operation of the Bank: (i) by the Director of the Indiana Department of
        Financial Institutions (the

       

      
        
          
          

        

        
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      “Director”),
        or his or her designee, at the time the Federal Deposit Insurance Corporation
        enters into an agreement to provide assistance to or on behalf of the Bank
        under
        the authority contained in Section 13(c) of the Federal Deposit Insurance
        Act,
        12 U.S.C. §1823(c), or (ii) by the Director, or his or her designee, at the time
        the Director or his or her designee approves a supervisory merger to resolve
        problems related to operation of the Bank or when the Bank is determined
        by the
        Director to be in an unsafe or unsound condition.  Any rights of the
        parties that have already vested, however, shall not be affected by any such
        action.

       

      6.           Reinstatement
        of Benefits Under Section 3.    In
        the event the Employee is suspended and/or temporarily prohibited from
        participating in the conduct of the Bank’s affairs by a notice described in
        Section 5(b) hereof (the “Notice”) during the term of this
        Agreement and a change in control occurs, the Bank will assume its obligation
        to
        pay and the Employee will be entitled to receive all of the termination benefits
        provided for under Section 3 of this Agreement upon the Bank’s receipt of a
        dismissal of charges in the Notice.

       

      7.           Effect
        on Prior Agreements and Existing Benefit Plans.    This
        Agreement contains the entire understanding between the parties hereto and
        supersedes any prior agreement between the Bank and the Employee, including
        the
        Special Termination Agreement dated January 1, 2007, between the Bank and
        the
        Employee which shall be void and without further force and effect from and
        after
        the date hereof.

       

      8.           No
        Attachment.

       

      (a)           Except
        as required by law, no right to receive payments under this Agreement shall
        be
        subject to anticipation, commutation, alienation, sale, assignment, encumbrance,
        charge, pledge, or hypothecation, or to execution, attachment, levy, or similar
        process or assignment by operation of law, and any attempt, voluntary or
        involuntary, to affect any such action shall be null, void, and of no
        effect.

       

      (b)           This
        Agreement shall be binding upon, and inure to the benefit of, the Employee,
        the
        Bank and their respective successors and assigns.

       

      9.           Modification
        and Waiver.

       

      (a)           This
        Agreement may not be modified or amended except by an instrument in writing
        signed by the parties hereto.

       

      (b)           No
        term or condition of this Agreement shall be deemed to have been waived,
        nor
        shall there be any estoppel against the enforcement of any provision of this
        Agreement, except by written instrument of the party charged with such waiver
        or
        estoppel.  No such written waiver shall be deemed a continuing waiver
        unless specifically stated therein, and each such waiver shall operate only
        as
        to the specific term or condition waived and shall not constitute a waiver
        of
        such term or condition for the future or as to any act other than that
        specifically waived.

       

      10.           NO
        MITIGATION.    Except
        as expressly provided herein, the amount of any payment or benefit provided
        for
        in this Agreement shall not be reduced by any compensation earned by the
        Employee as the result of employment by another employer, by retirement benefits
        after the date of termination or otherwise.

       

      
        
          
          

        

        
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      11.           No
        Assignments.

      (a)           This
        Agreement is personal to each of the parties hereto, and neither party may
        assign or delegate any of its rights or obligations hereunder without first
        obtaining the written consent of the other party; provided, however,
        that the Bank will require any successor or assign (whether direct or indirect,
        by purchase, merger, consolidation or otherwise) to all or substantially
        all of
        the business and/or assets of the Bank, by an assumption agreement in form
        and
        substance satisfactory to the Employee, to expressly assume and agree to
        perform
        this Agreement in the same manner and to the same extent that the Bank would
        be
        required to perform it if no such succession or assignment had taken
        place.  Failure of the Bank to obtain such an assumption agreement
        prior to the effectiveness of any such succession or assignment shall be
        a
        breach of this Agreement and shall entitle the Employee to compensation from
        the
        Bank in the same amount and on the same terms as the compensation pursuant
        to
        Section 3 hereof.  For purposes of implementing the provisions of this
        Section 11(a), the date on which any such succession becomes effective shall
        be
        deemed the Date of Termination.

       

      (b)           This
        Agreement and all rights of the Employee hereunder shall inure to the benefit
        of
        and be enforceable by the Employee’s personal and legal representatives,
        executors, administrators, successors, heirs, distributees, devisees and
        legatees.  If the Employee should die while any amounts would still be
        payable to the Employee hereunder if the Employee had continued to live,
        all
        such amounts, unless otherwise provided herein, shall be paid in accordance
        with
        the terms of this Agreement to the Employee’s devisee, legatee or other designee
        or if there is no such designee, to the Employee’s estate.

       

      12.           Notice.    For
        the purposes of this Agreement, notices and all other communications provided
        for in the Agreement shall be in writing and shall be deemed to have been
        duly
        given when personally delivered or sent by certified mail, return receipt
        requested, postage prepaid, addressed to the respective addresses set forth
        on
        the first page of this Agreement (provided that all notices to the Bank shall
        be
        directed to the attention of the Board of Directors of the Bank with a copy
        to
        the Secretary of the Bank), or to such other address as either party may
        have
        furnished to the other in writing in accordance herewith.

       

      13.           Amendments.    No
        amendments or additions to this Agreement shall be binding unless in writing
        and
        signed by both parties, except as herein otherwise provided.

       

      14.           Paragraph
        Headings.    The
        paragraph headings used in this Agreement are included solely for convenience
        and shall not affect, or be used in connection with, the interpretation of
        this
        Agreement.

       

      15.           Severability.    The
        provisions of this Agreement shall be deemed severable and the invalidity
        or
        unenforceability of any provision shall not affect the validity or
        enforceability of the other provisions hereof.

       

      16.           Governing
        Law.    This
        Agreement shall be governed by the laws of the United States to the extent
        applicable and otherwise by the laws of the State of Indiana.

       

      
        
          
          

        

        
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      17.           Arbitration.    Any
        dispute or controversy arising under or in connection with this Agreement
        shall
        be settled exclusively by arbitration in accordance with the rules of the
        American Arbitration Association then in effect.  Judgment may be
        entered an the arbitrator’s award in any court having jurisdiction.

       

      18.           Reimbursement.    If
        in any event it is determined by a court of competent jurisdiction or by
        an
        arbitrator pursuant to Section 17 that the Bank has failed to make timely
        payment of any amounts owed to the Employee under this Agreement, the Employee
        shall be entitled to reimbursement for all reasonable costs, including
        attorneys’ fees, incurred in challenging such termination or collecting such
        amounts.  Such reimbursement shall be in addition to all rights to
        which the Employee is otherwise entitled under this Agreement.

       

      19.           Specified
        Employee Limits.

       

      (a)           To
        the extent the Employee is a “specified employee” (as defined below), any
        payments due to the Employee upon his separation from service with the Bank
        under this Agreement shall begin no sooner than six months after the Employee’s
        separation from service; provided, however, that any payments not made
        during the six month period described in this Section 19 shall be made in
        a
        single lump sum as soon as administratively practicable after the expiration
        of
        such six month period; provided, further, that the six month delay required
        under this Section 25(a) shall not apply to the portion of any payment resulting
        from the Employee’s “involuntary separation from service” (as defined in
        Treasury Reg. Section 1.409A-1(n) and including a “separation from service
        for good reason,” as defined in Treasury Reg. Section 1.409A-1(n)(2)) that
        (i) is payable no later than the last day of the second year following the
        year
        in which the separation from service occurs, and (ii) does not exceed two
        times
        the lesser of (1) the Employee’s annualized compensation for the year prior to
        the year in which the separation from service occurs, or (2) the dollar limit
        described in Section 401(a)(17) of the Code.

       

      (b)           To
        the extent any life, health, disability or other welfare benefit coverage
        provided to the Employee under this Agreement would be taxable to the Employee,
        the taxable amount of such coverage shall not exceed the applicable dollar
        amount under Section 402(g)(1)(B) of the Code determined as of the year in
        which the Employee’s separation from service occurs.  The intent of
        the foregoing sentence is to permit the Lincoln Bancorp and the Bank to treat
        the provision of such benefits as a limited payment under Treasury Reg.
        Section 1.409A-1(a)(9)(v)(D) so as to avoid application of the six month
        delay rule for specified employees.  For purposes of this Agreement,
        the phrase “separation from service” shall be as defined in Treasury Reg.
        Section 1.409A-1(h).

       

      (c)           For
        purposes of this Agreement, the term “specified employee” shall have the meaning
        set forth in Treasury Reg. Section 1.409A-1(i) and shall include, without
        limitation, (1) an officer of the Bank or Lincoln Bancorp having annual
        compensation greater than $130,000 (as adjusted for inflation under the Code),
        (2) a five percent owner of the Bank or Lincoln Bancorp, or (3) a one percent
        owner of the Bank or Lincoln Bancorp having annual compensation of more than
        $150,000.  The determination of whether the Employee is a “specified
        employee” shall be made by the Bank in good faith applying the applicable
        Treasury regulations.

       

      
        
          
          

        

        
          Page
            9

          
            

          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF, the parties have executed this Amended and Restated Change
        in
        Control Agreement as of the day and year first above written.

       

      THIS
        AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED
        BY THE
        PARTIES.

      

       

      
        	 	
                “Bank”

              
	 	 	 
	 	
                Lincoln
                  Bank

              
	 	 	 
	 	
                By:

              	
                /s/
                  Jerry R. Engle

              
	 	 	
                Jerry
                  R. Engle, President

              
	 	 	 
	 	
                “Employee”

              
	 	 	 
	 	
                /s/
                  Doug Bennett

              
	 	
                Doug
                  Bennett

              
	 	 	 

      

      

      The
        undersigned, Lincoln Bancorp, sole shareholder of Bank, agrees that if it
        shall
        be determined for any reason that any obligation on the part of Bank to continue
        to make any payments due under this Agreement to Employee is unenforceable
        for
        any reason, Lincoln Bancorp agrees to honor the terms of this Agreement and
        continue to make any such payments due hereunder to Employee or to satisfy
        any
        such obligation pursuant to the terms of this Agreement, as though it were
        the
        Bank hereunder.

       

      

      
        	 	
                Lincoln
                  Bancorp

              
	 	 	 
	 	 	 
	 	
                By:

              	
                /s/
                  Jerry R. Engle

              
	 	 	
                Jerry
                  R. Engle, President

              

      

      

      
 

      Page
        9<PAGE>

          10.1    SYNERGY FINANCIAL GROUP, INC. 2003 STOCK OPTION PLAN
                  (AS ASSUMED BY NYCB EFFECTIVE OCTOBER 1, 2007)

<PAGE>

                          SYNERGY FINANCIAL GROUP, INC.

                             2003 STOCK OPTION PLAN
   (AS ASSUMED BY NEW YORK COMMUNITY BANCORP, INC. EFFECTIVE OCTOBER 1, 2007)

         1.   PURPOSE OF THE PLAN. The Plan shall be known as the Synergy
              -------------------
Financial Group, Inc. ("Company") 2003 Stock Option Plan (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, employees and other persons providing services to the Company, or any
present or future parent or subsidiary of the Company 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 Synergy Bank, or any successor corporation
thereto.

             "Board" shall mean the Board of Directors of the Company, 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 Company or its Subsidiaries; (ii) the merger or
recapitalization of the Company whereby the Company is not the surviving entity;
(iii) a change in control of the Company, as otherwise defined or determined by
the Office of Thrift Supervision 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 Company 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 Company stock,
or the purchase of shares of up to 25% of any class of securities of the Company
by a tax-qualified employee stock benefit plan which is exempt from the approval
requirements, set forth under 12 C.F.R. ss.574.3(c)(1)(vi) as now in effect or
as may hereafter be amended. 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 Stock Option Committee
appointed by the Board in accordance with Section 5(a) of the Plan.

<PAGE>

             "Common Stock" shall mean common stock of the Company, or any
successor or parent corporation thereto.

             "Company" shall mean the Synergy Financial Group, Inc., the parent
corporation of the Bank, or any successor or Parent thereof.

             "Continuous Employment" or "Continuous Status as an Employee" shall
mean the absence of any interruption or termination of employment with the
Company or any present or future Parent or Subsidiary of the Company. Employment
shall not be considered interrupted in the case of sick leave, military leave or
any other leave of absence approved by the Company or in the case of transfers
between payroll locations, of the Company or between the Company, its Parent,
its Subsidiaries or a successor.

             "Director" shall mean a member of the Board of the Company, 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 or the Company 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 or the Parent
in his then current capacity as determined by the Committee.

             "Effective Date" shall mean the date specified in Section 15
hereof.

             "Employee" shall mean any person employed by the Company or any
present or future Parent or Subsidiary of the Company.

             "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 hereof 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.

<PAGE>

             "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" of the Bank or the Company as defined in Sections
424(e) and (g) of the Code.

             "Participant" means any Director, officer or employee of the
Company or any Parent or Subsidiary of the Company or any other person providing
a service to the Company 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 Synergy Financial Group, Inc. 2003 Stock
Option 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, including the Bank or Synergy Financial Services, Inc.

         3.   SHARES SUBJECT TO THE PLAN. Except as otherwise required by the
              --------------------------
provisions of Section 13 hereof, the aggregate number of Shares with respect to
which Awards may be made pursuant to the Plan shall not exceed 617,088 Shares.
Such Shares may either be from authorized but unissued shares, treasury 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, 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 Company or a Committee which shall consist of not
less than two Directors of the Company 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.

             (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.

<PAGE>

             The President of the Company and such other officers as shall be
designated by the Committee are hereby authorized to execute written agreements
evidencing Awards on behalf of the Company 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, 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 Company 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 Company or any present or future Parent or Subsidiary of the Company)
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
non-employee Directors in the aggregate under this Plan exceed more than 30% of
the total number of Shares authorized for delivery under this Plan pursuant to
Section 3 herein or more than 5% to any individual non-employee Director. In no
event shall Shares subject to Options granted to any Employee exceed more than
25% 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 of
              ----------------
ten (10) years from the Effective Date, unless sooner terminated pursuant to
Section 18 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:

<PAGE>

                  (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 must have been owned by the party exercising such Option for
not less than six months prior to the date of exercise of such Option, and such
Common Stock shall be valued at the Fair Market Value at the date of exercise.
The Company 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 Company, and no Optionee shall have
any of the rights of a stockholder of the Company 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 Company 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, the Options will be first exercisable at the rate of 20% on the one
year anniversary of the date of grant and 20% 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 gives the Company 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 Company 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
Company 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 Company. The Option shall not be deemed
exercised until the Company has received full payment for the exercise price of
such Option.

<PAGE>

                  (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 23,139 shares of Common
Stock 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. The Options will be first exercisable at the
rate of 20% on the one year anniversary of the Effective Date and 20% annually
thereafter during such periods of service as a Director or Director Emeritus.
Upon the death or Disability of the Director or Director Emeritus, such Option
shall be deemed immediately 100% exercisable. 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. All outstanding Awards shall
become immediately exercisable in the event of a Change in Control of the Bank
or the Company. 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 must have been owned by the party exercising such
Option for not less than six months prior to the date of exercise of such
Option, and such Common Stock shall be valued at the Fair Market Value at the
date of exercise. The Company 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 Company and no
Optionee shall have any of the rights of a stockholder of the Company until the
Shares of Common Stock are issued to the Optionee.

                  (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.

<PAGE>

                  (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 20% on the one year anniversary of the date of grant
and 20% 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 gives the Company 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 Company 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
Company 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 Company. The Option shall not be deemed
exercised until the Company has received full payment for the exercise price of
such Option.

                  (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 OR DEATH ON
              -----------------------------------------------------------
INCENTIVE STOCK OPTIONS.
-----------------------

                  (a) TERMINATION OF EMPLOYMENT. In the event that any
Optionee's employment with the Company shall terminate for any reason, other
than 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 expiration of not more than three (3) months after 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 or the Company,
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 Company, the
employment of all of its employees who are not immediately thereafter employees
of the Company shall be deemed to terminate upon the date such Subsidiary so
ceases to be a Subsidiary of the Company.

                  (b) DISABILITY. In the event that any Optionee's employment
with the Company 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

<PAGE>

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 10(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 10(a), 10(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. 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 Company 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.

         11.  EFFECT OF TERMINATION OF EMPLOYMENT, DISABILITY OR DEATH ON
              -----------------------------------------------------------
NON-INCENTIVE STOCK OPTIONS. The terms and conditions of Non-Incentive Stock
---------------------------
Options relating to the effect of the 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, and provided further that any such
terms and conditions may not be inconsistent with applicable regulations of the
Office of Thrift Supervision or other appropriate banking regulatory agency.

         12.  WITHHOLDING TAX. The Company shall have the right to deduct from
              ---------------
all amounts paid in cash with respect to the cashless exercise of Options 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 Company shall have the right to require the
Participant or such other person to pay the Company the amount of any taxes
which the Company 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.

         13.  RECAPITALIZATION, MERGER, CONSOLIDATION, CHANGE IN CONTROL AND
              --------------------------------------------------------------
OTHER TRANSACTIONS.
------------------

                  (a) ADJUSTMENT. Subject to any required action by the
stockholders of the Company, 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 Company (other
than Shares held by dissenting stockholders).

<PAGE>

                  (b) CHANGE IN CONTROL. All outstanding Awards shall become
immediately exercisable in the event of a Change in Control of the Company or
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 the exercise of the Substitute Options 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 Company 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 Company, 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 Company 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; provided that such action is not contrary to
         regulations of the OTS or other appropriate banking regulatory agency
         then in effect.

<PAGE>

                  (e) NON-RECURRING DIVIDENDS. Notwithstanding anything herein
         to the contrary, upon the payment of a special or non-recurring
         dividend that has the effect of a return of capital distribution to the
         stockholders, the Company shall, within the discretion of the
         Committee, either:

                  (i) adjust the Option exercise price per share in a
         proportionate and equitable manner to reflect the payment of such
         capital distribution, or

                  (ii) make an equivalent payment to each Participant holding an
         outstanding Option as of the dividend record date of such dividend.
         Such payment shall be made at substantially the same time, in
         substantially the same form and in substantially the same amount per
         Optioned Stock as the dividend or other distribution paid with respect
         to outstanding Shares; provided, however, that if any dividend or
         distribution on outstanding Shares is paid in property other than cash,
         the Company, in the Committee's discretion, may make such payment in a
         cash amount per Optioned Stock equal in fair market value to the fair
         market value of the non-cash dividend or distribution; or

                  (iii) take the action described in Section 13(e)(i) with
         respect to certain outstanding Options and the action described in
         Section 13(e)(ii) with respect to the remaining outstanding Options.

                  Except as expressly provided in Sections 13(a) and 13(b), no
Optionee shall have any rights by reason of the occurrence of any of the events
described in this Section 13.

         14.  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.

         15.  EFFECTIVE DATE. The Plan shall become effective upon the date of
              --------------
approval of the Plan by the stockholders of the Company, subject to approval or
non-objection by the Office of Thrift Supervision, if applicable. 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.

         16.  APPROVAL BY STOCKHOLDERS. The Plan shall be approved by
              ------------------------
stockholders of the Company within twelve (12) months before or after the date
the Plan is approved by the Board. A vote of approval by a majority of the
shares of Common Stock shall constitute approval by the stockholders for
purposes of compliance with regulations of the Office of Thrift Supervision. In
addition, a vote of approval by a majority of the shares of Common Stock of all
holders shall constitute approval by the stockholders shall be necessary for the
Plan to be deemed approved by the stockholders of the Company.

         17.  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 18 hereof.

         18.  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 13 hereof) the maximum number of Shares permitted to
be optioned under the Plan, materially increase the benefits accruing to

<PAGE>

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 Company.

                  (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, regulation or policy which would make the exercise of all or
part of any previously granted Option unlawful or subject the Company 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.

         19.  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 Company to obtain any necessary
authorizations, approvals or letters of non-objection from any regulatory body
or authority deemed by the Company's counsel to be necessary to the lawful
issuance and sale of any Shares issuable hereunder shall relieve the Company 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 Company
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 Company or its
Subsidiaries for "cause" as defined at 12 C.F.R. 563.39(b)(1) 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
Company under Section 16(b) of the Securities Exchange Act of 1934, as amended,
and regulations promulgated thereunder.

                  (f) In the event that the Bank shall be deemed critically
undercapitalized (as defined at 12 CFR 565.4), is subject to enforcement action
by the Office of Thrift Supervision, or receives a capital directive under 12
CFR 565.7, then all Options awarded to executive officers or directors of the
Company or its Subsidiaries must exercise such options or forfeit such Options.

         20.  RESERVATION OF SHARES. During the term of the Plan, the Company
              ---------------------
will reserve and keep available a number of Shares sufficient to satisfy the
requirements of the Plan.

<PAGE>

         21.  UNSECURED OBLIGATION. No Participant under the Plan shall have any
              --------------------
interest in any fund or special asset of the Company 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.

         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, Director Emeritus or in any other capacity with the Company,
the Bank or other 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.

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