Registration No. 333-______________
Filed June 17, 1999
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
________________
Coastal Bancorp, Inc.
---------------------
(Exact Name of Registrant as Specified in Its Charter)
Texas
-----
(State or Other Jurisdiction of Incorporation or Organization)
76-0428727
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(I.R.S. Employer Identification No.)
Coastal Banc Plaza, 5718 Westheimer, Suite 600, Houston, Texas 77057
--------------------------------------------------------------------
(Address of Principal Executive Offices, including zip code)
Coastal Bancorp, Inc. 1999 Stock Compensation Program
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(Full Title of the Plan)
Catherine N. Wylie
------------------
Executive Vice President/Chief Financial Officer
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Coastal Banc Plaza
Coastal Bancorp, Inc.
5718 Westheimer, Suite 600
Houston, Texas 77057
Copies to:
----------
Jeffrey A. Koeppel, Esq.
Elias, Matz, Tiernan & Herrick L.L.P.
734 15th Street, N.W., 12th Floor
Washington, D.C. 20005
(Name and Address of Agent For Service)
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Proposed Proposed
Title of Maximum Maximum Amount of
Securities to be Amount to be Offering Price Aggregate Registration
Registered Registered(l) Per Share Offering Price Fee
- ----------------- ------------- ---------------- --------------- -------------
Common Stock,
.01 par value 340,000(2) $ 16.00(3) $ 5,440,000.00 $ 1,512.32
</TABLE>
(1) Together with an indeterminate number of additional shares which may be
necessary to adjust the number of shares reserved for issuance pursuant to the
Coastal Bancorp, Inc. ("Company" or "Registrant") 1999 Stock Compensation
Program ("Program") as the result of a stock split, stock dividend or similar
adjustment of the outstanding Common Stock of the Company.
(2) Represents the number of shares currently reserved for issuance pursuant
to the Program.
(3) Estimated solely for the purposes of calculating the registration fee
and based in accordance with Rule 457(h) under the Securities Act of 1933. The
Proposed Maximum Offering Price Per Share for the 340,000 shares for which stock
options have not been granted under the Program is equal to the average of the
high and low sales price of the common stock of the Company on June 15, 1999 on
the National Association of Securities Dealers Automated Quotation ("NASDAQ")
National Market System.
THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE AUTOMATICALLY UPON THE
DATE OF FILING IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF
1933, AS AMENDED, AND 17 C.F.R. 230.462.
<PAGE>
PART I
INFORMATION REQUIRED IN SECTION 10(A) PROSPECTUS
ITEM 1. PLAN INFORMATION.
No Plan information is included in this Registration Statement pursuant to
the Note Preceding Item I in Part I in Form S-8 and Rule 428 under the
Securities Act of 1933.
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.
No Registrant information or employee plan annual information is included
in this Registration Statement Pursuant to the Note Preceding Item I in Part I
in Form S-8 and Rule 428 under the Securities Act of 1933.
<PAGE>
PART 11
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed or to be filed with the Securities and
Exchange Commission (the "Commission") are incorporated by reference in this
Registration Statement:
(a) The Annual Report on Form 10-K for the Company for the year ended
December 31, 1998, filed with the Commission on March 23, 1999 (File No.
000-24526);
(b) All reports filed by the Company pursuant to Sections 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended ("Exchange Act") since
December 31, 1998;
(c) The description of the Common Stock of the Company under the
caption "Description of Holding Company Capital Stock" contained in the Form 8-B
(SEC No. 0-24526) as filed with the Commission on July 15, 1994.
(d) All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to the
filing of a post-effective amendment which indicates that all securities offered
have been sold or which deregisters all securities then remaining unsold.
Any statement contained in this Registration Statement, or in a document
incorporated or deemed to be incorporated by reference herein, shall be deemed
to be modified or superseded for purposes of this Registration Statement to the
extent that a statement contained herein, or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein,
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable since the Company's Common Stock is registered under Section
12 of the Exchange Act.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
The validity of the Company Stock offered hereby will be passed upon for
the Company by Elias, Matz, Tiernan & Herrick L.L.P., Washington, D.C. Certain
partners in such firm own shares of the Common Stock of the Company.
<PAGE>
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Coastal Bancorp, Inc. is incorporated under the Texas Business Corporation
Act, of which Section 2.02-1 provides as follows:
2.02-1 POWER TO INDEMNIFY AND TO PURCHASE INDEMNITY INSURANCE; DUTY TO
INDEMNIFY.
A. In this article:
(1) "Corporation" includes any domestic or foreign predecessor entity
of the corporation in a merger, conversion, or other transaction in which some
or all of the liabilities of the predecessor are transferred to the corporation
by operation of law and in any other transaction in which the corporation
assumes the liabilities of the predecessor but does not specifically exclude
liabilities that are the subject matter of this article.
(2) "Director" means any person who is or was a director of the
corporation and any person who, while a director of the corporation, is or was
serving at the request of the corporation as a director, officer, partner,
venturer, proprietor, trustee, employee, agent, or similar functionary of
another foreign or domestic corporation, employee benefit plan, other
enterprise, or other entity.
(3) "Expenses" include court costs and attorneys' fees.
(4) "Official capacity" means
(a) when used with respect to a director, the office of director in the
corporation, and
(b) when used with respect to a person other than a director, the
elective or appointive office in the corporation held by the officer or the
employment or agency relationship undertaken by the employee or agent in behalf
of the corporation, but
(c) in both paragraphs (a) and (b) does not include service for any
other foreign or domestic corporation or employee benefit plan, other
enterprise, or other entity.
(5) "Proceeding" means any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, arbitrative, or
investigative, any appeal in such an action, suit, or proceeding, and any
inquiry or investigation that could lead to such an action, suit, or proceeding.
<PAGE>
B. A corporation may indemnify a person who was, is, or is threatened to be
made a named defendant or respondent in a proceeding because the person is or
was a director only if it is determined in accordance with Section F of this
article that the person:
(1) conducted himself in good faith,
(2) reasonably believed:
(a) in the case of conduct in his official capacity as a director of
the corporation, that his conduct was in the corporation's best interests; and
(b) in all other cases, that his conduct was at least not opposed to
the corporation's best interests; and
(3) in the case of any criminal proceeding, had no reasonable cause to
believe his conduct was unlawful.
C. Except to the extent permitted by Section E of this article, a director
director may not be indemnified under Section B of this article in respect of a
proceeding:
(1) in which the person is found liable on the basis that personal
benefit was improperly received by him, whether or not the benefit resulted from
an action taken in the person's official capacity; or
(2) in which the person is found liable to the corporation.
D. The termination of a proceeding by judgment, order, settlement, or
conviction, or on a plea of nolo contendere or its equivalent is not of itself
determinative that the person did not meet the requirements set forth in Section
B of this article. A person shall be deemed to have been found liable in
respect of any claim, issue or matter only after the person shall have been so
adjudged by a court of competent jurisdiction after exhaustion of all appeals
therefrom.
E. A person may be indemnified under Section B of this article against
judgments, penalties (including excise and similar taxes), fines, settlements,
and reasonable expenses actually incurred by the person in connection with the
proceeding, but if the person is found liable to the corporation or is found
liable on the basis that personal benefit was improperly received by the person,
the indemnification (1) is limited to reasonable expenses actually incurred by
the person in connection with the proceeding and (2) shall not be made in
respect of any proceeding in which the person shall have been found liable for
willful or intentional misconduct in the performance of his duty to the
corporation.
F. A determination of indemnification under Section B of this article must
be made:
(1) by a majority vote of a quorum consisting of directors who at the
time of the vote are not named defendants or respondents in the proceeding;
(2) if such a quorum cannot be obtained, by a majority vote of a
committee of the board of directors, designated to act in the matter by a
majority vote of all directors, consisting solely of two or more directors who
at the time of the vote are not named defendants or respondents in the
proceeding;
(3) by special legal counsel selected by the board of directors or a
committee of the board by vote as set forth in Subsection (1) or (2) of this
section, or, if such a quorum cannot be obtained, and such a committee cannot be
established, by a majority vote of all directors; or
(4) by the shareholders in a vote that excludes the shares held by
directors who are named defendants or respondents in the proceeding.
G. Authorization of indemnification and determination as to
reasonableness of expenses must be made in the same manner as the determination
that indemnification is permissible, except that if the determination that
indemnification is permissible is made by special legal counsel, authorization
of indemnification and determination as to reasonableness of expenses must be
made in the manner specified by Subsection (3) of Section F of this article for
the selection of special legal counsel. A provision contained in the articles
of incorporation, the bylaws, a resolution of shareholders or directors, or an
agreement that makes mandatory the indemnification permitted under Section B of
this article shall be deemed to constitute authorization of indemnification in
the manner required by this section even though such provision may not have been
adopted or authorized in the same manner as the determination that
indemnification is permissible.
H. A corporation shall indemnify a director against reasonable expenses
incurred by him in connection with a proceeding in which he is a named defendant
or respondent because he is or was a director if he has been wholly successful,
on the merits or otherwise, in the defense of the proceeding.
I. If, in a suit for the indemnification required by Section H of this
article, a court of competent jurisdiction determines that the director is
entitled to indemnification under that section, the court shall order
indemnification and shall award to the director the expenses incurred in
securing the indemnification.
J. If, upon application of a director, a court of competent
jurisdiction determines, after giving any notice the court considers necessary,
that the director is fairly and reasonably entitled to indemnification in view
of all the relevant circumstances, whether or not he has met the requirements
set forth in Section B of this article or has been found liable in the
circumstances described by Section C of this article, the court may order the
indemnification that the court determines is proper and equitable; but if the
person is found liable to the corporation or is found liable on the basis that
personal benefit was improperly received by the person, the indemnification
shall be limited to reasonable expenses actually incurred by the person in
connection with the proceeding.
K. Reasonable expenses incurred by a director who was, is, or is
threatened to be made a named defendant or respondent in a proceeding may be
paid or reimbursed by the corporation, in advance of the final disposition of
the proceeding and without the determination specified in Section F of this
article or the authorization or determination specified in Section G of this
article, after the corporation receives a written affirmation by the director of
his good faith belief that he has met the standard of conduct necessary for
indemnification under this article and a written undertaking by or on behalf of
the director to repay the amount paid or reimbursed if it is ultimately
determined that he has not met that standard or if it is ultimately determined
that indemnification of the director against expenses incurred by him in
connection with that proceeding is prohibited by Section E of this article. A
provision contained in the articles of incorporation, the bylaws, a resolution
of shareholders or directors, or an agreement that makes mandatory the payment
or reimbursement permitted under this section shall be deemed to constitute
authorization of that payment or reimbursement.
L. The written undertaking required by Section K of this article must
be an unlimited general obligation of the director but need not be secured. It
may be accepted without reference to financial ability to make repayment.
M. A provision for a corporation to indemnify or to advance expenses to
a director who was, is, or is threatened to be made a named defendant or
respondent in a proceeding, whether contained in the articles of incorporation,
the bylaws, a resolution of shareholders or directors, an agreement, or
otherwise, except in accordance with Section R of this article, is valid only to
the extent it is consistent with this article as limited by the articles of
incorporation, if such a limitation exists.
N. Notwithstanding any other provision of this article, a corporation
may pay or reimburse expenses incurred by a director in connection with his
appearance as a witness or other participation in a proceeding at a time when he
is not a named defendant or respondent in the proceeding.
O. An officer of the corporation shall be indemnified as, and to the
same extent, provided by Sections H, I, and J of this article for a director and
is entitled to seek indemnification under those sections to the same extent as a
director. A corporation may indemnify and advance expenses to an officer,
employee, or agent of the corporation to the same extent that it may indemnify
and advance expenses to directors under this article.
P. A corporation may indemnify and advance expenses to persons who are
not or were not officers, employees, or agents of the corporation but who are or
were serving at the request of the corporation as a director, officer, partner,
venturer, proprietor, trustee, employee, agent, or similar functionary of
another foreign or domestic corporation, employee benefit plan, other enterprise
or other entity to the same extent that it may indemnify and advance expenses to
directors under this article.
Q. A corporation may indemnify and advance expenses to an officer,
employee, agent, or person identified in Section P of this article and who is
not a director to such further extent, consistent with law, as may be provided
by its articles of incorporation, bylaws, general or specific action of its
board of directors, or contract or as permitted or required by common law.
R. A corporation may purchase and maintain insurance or another
arrangement on behalf of any person who is or was a director, officer, employee,
or agent of the corporation or who is or was serving at the request of the
corporation as a director, officer, partner, venturer, proprietor, trustee,
employee, agent, or similar functionary of another foreign or domestic
corporation, employee benefit plan, other enterprise or other entity, against
any liability asserted against him and incurred by him in such a capacity or
arising out of his status as such a person, whether or not the corporation would
have the power to indemnify him against that liability under this article. If
the insurance or other arrangement is with a person or entity that is not
regularly engaged in the business of providing insurance coverage, the insurance
or arrangement may provide for payment of a liability with respect to which the
corporation would not have the power to indemnify the person only if including
coverage for the additional liability has been approved by the shareholders of
the corporation. Without limiting the power of the corporation to procure or
maintain any kind of insurance or other arrangement, a corporation may, for the
benefit of persons indemnified by the corporation, (1) create a trust fund; (2)
establish any form of self-insurance; (3) secure its indemnity obligation by
grant of a security interest or other lien on the assets of the corporation; or
(4) establish a letter of credit, guaranty, or surety arrangement. The
insurance or other arrangement may be procured, maintained, or established
within the corporation or with any insurer or other person deemed appropriate by
the board of directors regardless of whether all or part of the stock or other
securities of the insurer or other person are owned in whole or part by the
corporation. In the absence of fraud, the judgment of the board of directors as
to the terms and conditions of the insurance or other arrangement and the
identity of the insurer or other person participating in an arrangement shall be
conclusive and the insurance or arrangement shall not be voidable and shall not
subject the directors approving the insurance or arrangement to liability, on
any ground, regardless of whether directors participating in the approval are
beneficiaries of the insurance or arrangement.
S. Any indemnification of or advance of expenses to a director in
accordance with this article shall be reported in writing to the shareholders
with or before the notice or waiver of notice of the next shareholders' meeting
or with or before the next submission to shareholders of a consent to action
without a meeting pursuant to Section A, Article 9.10, of this Act and, in any
case, within the 12-month period immediately following the date of the
indemnification or advance.
T. For purposes of this article, the corporation is deemed to have
requested a director to serve as a trustee, employee, agent, or similar
functionary of an employee benefit plan whenever the performance by him of his
duties to the corporation also imposes duties on or otherwise involves services
by him to the plan or participants or beneficiaries of the plan. Excise taxes
assessed on a director with respect to an employee benefit plan pursuant to
applicable law are deemed fines. Action taken or omitted by him with respect to
an employee benefit plan in the performance of his duties for a purpose
reasonably believed by him to be in the interest of the participants and
beneficiaries of the plan is deemed to be for a purpose which is not opposed to
the best interests of the corporation.
U. The articles of incorporation of a corporation may restrict the
circumstances under which the corporation is required or permitted to indemnify
a person under Section H, I, J, O, P, or Q of this article.
<PAGE>
Article VIII of Coastal Bancorp, Inc.'s Articles of Incorporation provides as
follows:
ARTICLE VIII
INDEMNIFICATION, ETC. OF OFFICERS, DIRECTORS, EMPLOYEES AND
AGENTS
A. Limitation of Liability. No director shall be personally liable to
the Corporation or its stockholders for monetary damages for any act or omission
by such director as a director; provided that a director's liability shall not
be eliminated to the extent provided by Section 7.06B. of the Texas
Miscellaneous Corporation Laws Act or any successor provision thereto. No
amendment to or repeal of this Subsection (A) to Article VIII shall apply to or
have any effect on the liability or alleged liability of any director of the
Corporation for or with respect to any acts or omissions of such director
occurring prior to such amendment.
B. Indemnification. The Corporation shall indemnify any person who was
or is a party or is threatened to be a made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative, arbitrative or investigative, by reason of the fact that such
person is or was a director, officer, employee or agent of the Corporation or
any predecessor of the Corporation, or is or was serving at the request of the
Corporation or any predecessor of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against liability and expenses (including court costs and
attorney's fees), judgments, fines, excise taxes and amounts paid in
satisfaction, settlement or compromise actually and reasonably incurred by such
person in connection with such action, suit or proceeding to the full extent
authorized by law.
C. Advancement of Expenses. Reasonable expenses incurred by a
director, officer, employee or agent of the Corporation in defending a civil or
criminal action, suit or proceeding described in Article VIII.B. shall be paid
by the Corporation in advance of the final disposition of such action, suit or
proceeding as authorized by the Board of Directors only upon receipt of written
affirmation by or on behalf of such person of his good faith belief that he has
met the standard of conduct necessary for indemnification under relevant law and
a written undertaking to repay such amount if it shall ultimately be determined
that the person has not met that standard or if it is ultimately determined that
indemnification of the person against expenses incurred by him in connection
with that proceeding is prohibited by relevant law.
D. Other Rights and Remedies. The indemnification provided by this
Article VIII shall not be deemed to exclude any other rights to which those
seeking indemnification or advancement of expenses may be entitled under the
Corporation's Articles of Incorporation, any insurance or other agreement, vote
of stockholders or disinterested directors or otherwise, both as to actions in
their official capacity and as to actions in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such person; provided that no indemnification
shall be made to or on behalf of an individual if a judgment or other final
adjudication establishes that his actions, or omissions to act, were material to
the cause of action as adjudicated and (i) the person is found liable on the
basis that personal benefit was improperly received by him; (ii) the person is
found liable to the Corporation; or (iii) the person is found liable for willful
or intentional misconduct in the performance of his duty to the Corporation;
provided, however, that persons found liable under clauses (i) and (ii) above,
may still be indemnified solely as to reasonable expenses actually incurred by
such person in connection with the proceeding.
E. Insurance. Upon resolution passed by the Board, the Corporation may
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the Corporation, or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or another enterprise, against
any liability asserted against him or incurred by him in any such capacity, or
arising out of his status, whether or not the Corporation would have the power
to indemnify him against such liability under the provisions of this Article or
the Act.
F. Modification. The duties of the Corporation to indemnify and to
advance expenses to a director or officer provided in this Article VIII shall be
in the nature of a contract between the Corporation and each such director or
officer, and no amendment or repeal of any provision of this Article VIII shall
alter, to the detriment of such director or officer, the right of such person to
the advance of expenses or indemnification related to a claim based on an act or
failure to act which took place prior to such amendment or repeal.
G. Proceedings Initiated by Indemnified Persons. Notwithstanding any
other provision of this Article VIII, the Corporation shall not indemnify a
director, officer, employee or agent for any liability incurred in an action,
suit or proceeding initiated by (which shall not be deemed to include
counter-claims or affirmative defenses) or participated in as an intervenor or
amicus curiae by the person seeking indemnification unless such initiation of or
participation in the action, suit or proceeding is authorized, either before or
after its commencement, by the affirmative vote of a majority of the directors
then in office.
Article XI of Coastal Bancorp, Inc.'s Bylaws provides as follows:
ARTICLE XI
PERSONAL LIABILITY OF DIRECTORS; INDEMNIFICATION
(a) A director of the Corporation shall not be personally liable for
monetary damages for action taken, or any failure to take action, as a director,
to the extent set forth in the Corporation's Articles of Incorporation, which
provisions are incorporated herein with the same affect as if they were set
forth herein.
(b) The Corporation shall indemnify any person who is a director,
agent, officer, employee or agent of the Corporation to the extent set forth in
the Corporation's Articles of Incorporation, which provisions are incorporated
herein with the same affect as if they were set forth herein.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable since no restricted securities will be reoffered or resold
pursuant to this Registration Statement.
<PAGE>
ITEM 8. EXHIBITS.
The following exhibits are filed with or incorporated by reference into
this Registration Statement on Form S-8 (numbering corresponds to Exhibit Table
in Item 601 of Regulation S-K):
No. Exhibit
- --- -------
4 Common Stock Certificate*
5 Opinion of Elias, Matz, Tiernan & Herrick L.L.P. as to the legality
of the Common Stock
10 1999 Stock Compensation Program
24.1 Consent of Elias, Matz. Tiernan & Herrick L.L.P. (contained in the
opinion included as Exhibit 5)
24.2 Consent of KPMG LLP
25 Power of attorney for any subsequent amendments is located in the
signature pages of this Registration Statement
______________
*Incorporated by reference from the Company's Registration Statement on
Form 8-B (Commission File No. 0-24526) filed with the Commission on July 15,
1994.
**Incorporated by reference from the Company's Registration Statement on
Form S-I (Commission File No. 33-91206) filed with the Commission on April 14,
1995.
ITEM 9. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) to
reflect in the prospectus any facts or events arising after the effective date
of the Registration Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the Registration Statement, and (iii) to include
any material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change in such
information in the Registration Statement; provided, however, that clauses (i)
and (ii) do not apply if the information required to be included in a
post-effective amendment by those clauses is contained in periodic reports filed
by the Registrant pursuant to Section 13 or Section 15(d) of the Exchange Act
that are incorporated by reference in this Registration Statement.
2. That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
3. To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
4. That, for the purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's annual report pursuant
to Section 13(a) or Section 15(d) of the Exchange Act that is incorporated by
reference in this Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
5. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston, State of Texas on the 18th day of June,
1999.
COASTAL BANCORP, INC.
By: /s/ Manuel J. Mehos
----------------------
Manuel J. Mehos
Chairman of the Board
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated. Each person whose signature appears
below hereby makes, constitutes and appoints Manuel J. Mehos or Catherine N.
Wylie, his or her true and lawful attorney, with full power to sign for such
person and in such person's name and capacity indicated below, and with full
power of substitution any and all amendments to this registration statement,
hereby ratifying and confirming such person's signature as it may be signed by
said attorney to any and all amendments.
Signature Title Date
- --------- ----- ----
/s/ Manuel J. Mehos
- -------------------- Chairman of the Board, President June 17, 1999
Manuel J. Mehos and Chief Executive Officer
(Principal Executive Officer)
/s/ Catherine N. Wylie
- ------------------------- Senior Executive Vice President, June 17, 1999
Catherine N. Wylie Chief Financial Officer and Treasurer
(Principal Financial & Accounting Officer)
/s/ R. Edwin Allday
- ---------------------- Director June 17, 1999
R. Edwin Allday
/s/ D. Fort Flowers
- ---------------------- Director June 17, 1999
D. Fort Flowers
/s/ Dennis S. Frank
- ---------------------- Director June 17, 1999
Dennis S. Frank
Signature Title Date
- --------- ----- ----
/s/ Paul W. Hobby
- -------------------- Director June 17, 1999
Paul W. Hobby
/s/ Robert E. Johnson
- ------------------------ Director June 17, 1999
Robert E. Johnson
/s/ James C. Niver
- --------------------- Director June 17, 1999
James C. Niver
<PAGE>
EXHIBIT INDEX
Sequentially
Numbered
Page
No. Description Method of Filing Location
--- ----------- ------------------ --------
5 Opinion of Elias, Matz, Filed herewith 17
Tiernan & Herrick L.L.P.
10 1999 Stock Compensation Filed herewith 18
Program
24.1 Consent of Elias, Matz, Included in Exhibit 5 --
Tiernan & Herrick L.L.P.
24.2 Consent of KPMG LLP Filed herewith 41
25 Power of Attorney Located in the --
Signature Pages
<PAGE>
EXHIBIT 5
OPINION OF ELIAS, MATZ, TIERNAN & HERRICK L.L.P.
<PAGE>
Law Offices
ELIAS, MATZ, TIERNAN & HERRICK L.L.P.
12th Floor
734 15th Street, N.W.
Washington, D.C. 20005
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<S> <C> <C>
Telephone: (202) 347-0300
Facsimile: (202) 347-2172
TIMOTHY B. MATZ JEFFREY D. HAAS
STEPHEN M. EGE KEVIN M. HOULIHAN
RAYMOND A. TIERNAN KENNETH B. TABACH
W. MICHAEL HERRICK PATRICIA J. WOHL
GERARD L. HAWKINS FIORELLO J. VICENCIO*
NORMAN B. ANTIN DANIEL R. KLEINMAN*
JOHN P. SOUKENIK* ANDREW ROSENSTEIN
GERALD F. HEUPEL, JR. DAVID TEEPLES
JEFFREY A. KOEPPEL CRISTIN ZEISLER*
DANIEL P. WEITZEL ERIC M. MARION*
PHILIP ROSS BEVAN
HUGH T. WILKINSON OF COUNSEL
ALLIN P. BAXTER
JACK I. ELIAS
SHERYL JONES ALU
*NOT ADMITTED IN D.C.
June 17, 1999
VIA EDGAR
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Board of Directors
Coastal Bancorp, Inc.
Coastal Banc Plaza
5718 Westheimer, Suite 600
Houston, Texas 77057
Re: Registration Statement on Form S-8
340,000 Shares of Common Stock
Gentlemen:
We are special counsel to Coastal Bancorp, Inc., a Texas corporation (the
"Corporation"), in connection with the preparation and filing with the
Securities and Exchange Commission pursuant to the Securities Act of 1933, as
amended, of a Registration Statement on Form S-8 (the "Registration Statement"),
relating to the registration of up to 340,000 shares of common stock, $.01 par
value per share ("Common Stock"), of the Corporation to be issued pursuant to
the Corporation's 1999 Stock Compensation Program (the "Program") upon the
exercise of stock options and/or stock appreciation rights and/or the grant of
Common Stock (together, the "Option Rights"). The Registration Statement also
registers an indeterminate number of additional shares which may be necessary
under the Program to adjust the number of shares reserved thereby for issuance
as the result of a stock split, stock dividend or similar adjustment of the
outstanding Common Stock of the Corporation. We have been requested by the
Corporation to furnish an opinion to be included as an exhibit to the
Registration Statement.
For this purpose, we have reviewed the Registration Statement, the Articles of
Incorporation and the Bylaws of the Corporation, the Program, a specimen stock
certificate evidencing the Common Stock of the Corporation and such other
corporate records and documents as we have deemed appropriate. We are relying
upon the originals, or copies certified or otherwise identified to our
satisfaction, of the corporate records of the Corporation and such other
instruments, certificates and representations of public officials, officers and
representatives of the Corporation as we have deemed relevant as a basis for the
opinions expressed herein. In addition, we have assumed, without independent
verification, the genuineness of all signatures and the authenticity of all
documents furnished to us and the conformance in all respects of copies to
originals. Furthermore, we have made such factual inquiries and reviewed such
laws as we determined to be relevant for this opinion.
For purposes of this opinion, we have also assumed that (i) the shares of
Common Stock issuable pursuant to Option Rights granted under the terms of the
Program will continue to be validly authorized on the dates the Common Stock is
issued pursuant to the Option Rights; (ii) on the dates the Option Rights are
exercised, the Option Rights granted under the terms of the Program will
constitute valid, legal and binding obligations of the Corporation and will
(subject to applicable bankruptcy, moratorium, insolvency, reorganization and
other laws and legal principles affecting the enforceability of creditors'
rights generally) be enforceable as to the Corporation in accordance with their
terms; (iii) the Option Rights are exercised in accordance with their terms and
the exercise price, if any, therefor is paid and the terms and conditions of the
grant of the Option Rights are satisfied in accordance with the terms thereof;
(iv) no change occurs in applicable law or the pertinent facts; and (v) the
provisions of "blue sky" and other securities laws as may be applicable will
have been complied with to the extent required.
Based on the foregoing, and subject to the assumptions set forth herein, we
are of the opinion as of the date hereof that the shares of Common Stock to be
issued pursuant to the Program, when issued and sold pursuant to the Program and
upon receipt of the consideration required thereby, will be legally issued,
fully paid and non-assessable shares of Common Stock of the Corporation.
We hereby consent to the reference to this firm under the caption "Legal
Opinion" in the Prospectus of the Program and to the filing of this opinion as
an exhibit to the Registration Statement.
Very truly yours,
ELIAS, MATZ, TIERNAN & HERRICK L.L.P.
By: /s/ Jeffrey A. Koeppel
-------------------------
Jeffrey A. Koeppel, a Partner
<PAGE>
EXHIBIT 10
1999 STOCK COMPENSATION PROGRAM
<PAGE>
COASTAL BANCORP, INC.
1999 STOCK COMPENSATION PROGRAM
1. PURPOSE. This Coastal Bancorp, Inc. 1999 Stock Compensation Program
-------
("Program") is intended to secure for Coastal Bancorp, Inc. (the "Company"), any
Subsidiaries thereof and its stockholders the benefits arising from ownership of
the Company's Common Stock, par value $.01 per share ("Common Stock"), by those
selected Officers and other key Employees of the Company and any Subsidiary
thereof who will be responsible for its future growth. The Program is designed
to help attract and retain superior personnel for positions of substantial
responsibility with the Company and to provide key Employees with an additional
incentive to contribute to the success of the Company. All Incentive Stock
Options issued under the Incentive Plan are intended to comply with the
requirements of Section 422 of the Code, and the regulations thereunder, and all
provisions under the Incentive Plan shall be read, interpreted and applied with
that purpose in mind. Capitalized terms are defined in Article 15 of the
General Provisions of the Stock Compensation Program.
2. ELEMENTS OF THE PROGRAM. In order to maintain flexibility in the
--------------------------
award of stock benefits, the Program is comprised of four parts. The first part
is the Incentive Stock Option Plan ("Incentive Plan"). The second part is the
Compensatory Stock Option Plan ("Compensatory Plan"). The third part is the
Stock Appreciation Rights Plan ("S.A.R. Plan"). The fourth part is the
Performance Share Plan ("Performance Plan"). Copies of the Incentive Plan,
Compensatory Plan, S.A.R. Plan and Performance Plan are attached hereto as Part
I, Part II, Part III and Part IV, respectively, and are collectively referred to
herein as the "Plans" or the "Program." The grant of an Option, Stock
Appreciation Right or Performance Share under one of the Plans shall not be
construed to prohibit the grant of an Option, Stock Appreciation Right or
Performance Share under any of the other Plans.
3. APPLICABILITY OF GENERAL PROVISIONS. Unless any Plan specifically
-------------------------------------
indicates to the contrary, all Plans shall be subject to the General Provisions
of the Stock Compensation Program set forth below.
4. ADMINISTRATION OF THE PLANS. The Plans shall be administered,
------------------------------
construed, governed and amended in accordance with the General Provisions of the
Stock Compensation Program and their respective terms.
GENERAL PROVISIONS OF THE STOCK COMPENSATION PROGRAM
ARTICLE 1. ADMINISTRATION. The Program shall be administered by a
--------------
committee appointed by the Board of Directors of the Company and composed of not
less than three directors of the Company, none of whom is an Officer or Employee
of the Company or any Subsidiary thereof. The Board of Directors may, from time
to time, remove members from, or add members to this Committee, provided that
the Committee shall continue to consist of three or more members of the Board,
none of whom is an Officer or Employee of the Company or any Subsidiary thereof,
and each of whom shall be a "disinterested person" within the meaning of Rule
16b-3 under the Exchange Act. The Committee, when acting to administer the
Program, is referred to herein as the "Program Administrators." Any action of
the Program Administrators shall be taken by majority vote or the written
consent of a majority of the Program Administrators. Subject to the express
provisions and limitations of the Program, this Committee may adopt such rules,
regulations and procedures as it deems appropriate for the conduct of its
affairs. It may appoint one of its members to be chairman, and any person,
whether or not a member of this Committee, to be its secretary or agent. This
Committee shall report its actions and decisions to the Board of Directors at
appropriate times, but in no event less than one time per calendar year. No
Program Administrator or member of the Board of Directors of the Company, shall
be liable for any action or determination made in good faith with respect to the
Program or to any Option, Stock Appreciation Right, or Performance Share granted
thereunder. If a Program Administrator is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of anything
done or not done by him or her in such capacity under or with respect to the
Program, the Company shall, subject to the requirements of applicable laws and
regulations, indemnify such member against all liabilities and expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or her in connection with such action,
suit or proceeding if he or she acted in good faith and in a manner he or she
reasonably believed to be in the best interests of the Company and any of its
Subsidiaries and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
ARTICLE 2. AUTHORITY OF PROGRAM ADMINISTRATORS. Subject to the other
--------------------------------------
provisions of this Program, and with a view to effecting its purpose, the
Program Administrators shall have sole authority in their absolute discretion:
(a) to construe and interpret the Program; (b) to define the terms used herein;
(c) to prescribe, amend and rescind rules, regulations and procedures relating
to the Program, including, without limitation, rules, regulations and procedures
which (i) deal with satisfaction of an Employee's tax withholding obligation
pursuant to Article 11 hereof, (ii) include arrangements to facilitate the
Employee's ability to borrow funds for payment of the exercise or purchase price
of an Award, if applicable, from securities brokers and dealers, and (iii)
include arrangements which provide for the payment of some or all of such
exercise or purchase price by delivery of previously-owned shares of Common
Stock or other property and/or by withholding some of the shares of Common Stock
which are being acquired; (d) to determine the Employees to whom Awards shall be
granted under the Program; (e) to determine the time or times at which Awards
shall be granted under the Program; (f) to determine the number of shares
subject to any Option or Stock Appreciation Right under the Program and the
number of shares to be awarded as Performance Shares under the Program as well
as the option exercise price, and the duration of each Award, and any other
terms and conditions of Awards; (g) to terminate the Program; and (h) to make
any other determinations necessary or advisable for the administration of the
Program and to do everything necessary or appropriate to administer the Program.
All decisions, determinations and interpretations made by the Program
Administrators shall be final, binding and conclusive on all participants in the
Program and on their legal representatives, heirs and beneficiaries.
ARTICLE 3. MAXIMUM NUMBER OF SHARES SUBJECT TO THE PROGRAM. The aggregate
-----------------------------------------------
number of shares of Common Stock available to be issued pursuant to the Plans,
subject to adjustment as provided in Article 6 hereof, shall be equal to 340,000
shares of the Company's Common Stock. If any of the Options granted under this
Program are surrendered before exercise (including surrender in connection with
the exercise of a Stock Appreciation Right), expire or terminate for any reason
before they have been exercised in full, the unpurchased shares subject to those
surrendered, expired or terminated Options shall again be available for the
purposes of the Program as if no Awards had been previously granted with respect
to such shares. If the performance objectives associated with the grant of any
Performance Share(s) are not achieved within the specified performance period or
if the Performance Share grant terminates for any reason before the performance
objective date arrives, the shares of Common Stock associated with such
Performance Shares shall again be available for the purposes of the Program.
The shares of Common Stock issued under the Program may be authorized but
unissued shares, treasury shares or shares purchased by the Company on the open
market or from private sources for use under the Program.
<PAGE>
ARTICLE 4. ELIGIBILITY AND PARTICIPATION. Only regular full-time
-------------------------------
Employees of the Company or any Subsidiary thereof, including Officers whether
or not directors of the Company, or of any Subsidiary, shall be eligible for
selection by the Program Administrators to participate in the Program.
Directors of the Company shall not be eligible to participate in the Program.
ARTICLE 5. EFFECTIVE DATE AND TERM OF PROGRAM. The Program shall become
-----------------------------------
effective upon its adoption by the Board of Directors of the Company and
subsequent approval of the Program by the affirmative vote of the holders of a
majority of the shares entitled to vote thereon at a meeting of stockholders of
the Company and represented in person or by proxy at such meeting at which a
quorum is present, which vote shall be taken within 12 months of adoption of the
Program by the Company's Board of Directors; provided, however, that Awards may
be granted under this Program prior to obtaining stockholder approval of the
Program, except that any such Awards shall be contingent upon such stockholder
approval being obtained and may not be exercised prior to such approval. The
Program shall continue in effect for a term of ten years unless sooner
terminated under Article 2 or Article 7 of the General Provisions. Termination
of the Program shall not affect any Awards previously granted and such Awards
shall remain valid and in effect until they have been fully exercised or earned,
are surrendered or by their terms expire or are forfeited.
ARTICLE 6. ADJUSTMENTS. If the shares of Common Stock of the Company as a
-----------
whole are increased, decreased, changed into or exchanged for a different number
or kind of shares or securities through merger, consolidation, combination,
exchange of shares, other reorganization, recapitalization, reclassification,
stock dividend, stock split or reverse stock split, an appropriate and
proportionate adjustment shall be made in the maximum number and kind of shares
as to which Awards may be granted under this Program. A corresponding
proportionate adjustment of the exercise price of any Option or Stock
Appreciation Right and of the number or kind of shares allocated to unexercised
Options, Stock Appreciation Rights, Performance Shares or portions thereof,
which shall have been granted prior to any such change, shall likewise be made.
In making any adjustment pursuant to this Article 6, any fractional shares shall
be rounded in the discretion of the Program Administrators. If, upon a merger,
consolidation, reorganization, liquidation, recapitalization or the like of the
Company, the shares of the Company's Common Stock shall be exchanged for other
securities of the Company or of another corporation, each recipient of an Award
shall be entitled, subject to the conditions herein stated, to purchase or
acquire such number of shares of Common Stock or amount of other securities of
the Company or such other corporation as were exchangeable for the number of
shares of Common Stock of the Company which such Optionees would have been
entitled to purchase or acquire except for such action, and appropriate
adjustments shall be made to the per share exercise price of outstanding Options
and Stock Appreciation Rights.
ARTICLE 7. TERMINATION AND AMENDMENT OF PROGRAM. The Program shall
----------------------------------------
terminate no later than ten years from the date such Program is adopted by the
Board of Directors or the date such Program is approved by the stockholders,
whichever is earlier. No Awards shall be granted under the Program after that
date. The Board of Directors may amend, suspend or terminate the Program or any
portion thereof at any time, except that it may not amend the Program without
stockholder approval where the absence of such approval would cause the Program
to fail to comply with Rule 16b-3 under the Exchange Act, Section 422 of the
Code, the requirements of any securities exchange or national quotation system
on which the shares of Common Stock are then listed or traded, or any other
requirement of applicable law or regulation. Subject to the limitation
contained in Article 8 of the General Provisions, the Program Administrators may
at any time amend or revise the terms of the Program, including the form and
substance of the Option, Stock Appreciation Right, and Performance Share
agreements to be used hereunder; provided that no amendment or revision shall
(a) increase the maximum aggregate number of shares that may be sold,
appreciated or distributed pursuant to Options, Stock Appreciation Rights or
Performance Shares granted under this Program, except as permitted under Article
6 of the General Provisions; (b) change the minimum purchase price for shares
under Section 4 of Plans I and II, except as permitted under Article 6 of the
General Provisions; (c) increase the maximum term established under the Plans
for any Option, Stock Appreciation Right or Performance Share; or (d) permit the
granting of an Option, Stock Appreciation Right or Performance Share to anyone
other than as provided in Article 4 of the General Provisions.
ARTICLE 8. PRIOR RIGHTS AND OBLIGATIONS. No amendment, suspension or
-------------------------------
termination of the Program shall, without the consent of an Employee who has
received an Award, alter or impair any of that Employee's rights or obligations
under any Award granted under the Program prior to such amendment, suspension or
termination.
ARTICLE 9. PRIVILEGES OF STOCK OWNERSHIP. Notwithstanding the exercise of
-----------------------------
any Options or Stock Appreciation Rights granted pursuant to the terms of this
Program or the achievement of any performance objective specified in any
Performance Share granted pursuant to the terms of this Program, no Employee
shall have any of the rights or privileges of a stockholder of the Company in
respect of any shares of stock issuable upon the exercise of his or her Option
or achievement of his or her performance goal until certificates representing
the shares have been issued and delivered. No shares shall be required to be
issued and delivered upon exercise of any Option or achievement of any
performance goal as specified in a Performance Share unless and until all of the
requirements of law and of all regulatory agencies having jurisdiction over the
issuance and delivery of the securities shall have been fully complied with. No
adjustment shall be made for dividends or any other distributions for which the
record date is prior to the date on which such stock certificate is issued.
ARTICLE 10. RESERVATION OF SHARES OF COMMON STOCK. The Company, during
---------------------------------------
the term of this Program, will at all times reserve and keep available such
number of shares of its Common Stock as shall be sufficient to satisfy the
requirements of the Program. All Awards granted hereunder shall be subject to
all applicable federal and state laws, rules and regulations and to such
approval by any governmental or regulatory agency as may be required. The
Company will from time to time, as is necessary to accomplish the purposes of
this Program, seek to obtain all necessary and appropriate approvals from any
governmental authority or regulatory agency having jurisdiction any requisite
authority in order to issue and sell shares of Common Stock hereunder. The
inability of the Company to obtain from any regulatory agency having
jurisdiction the authority deemed by the Company's counsel to be necessary for
the lawful issuance and sale of any shares of its stock hereunder shall relieve
the Company of any liability in respect of the non-issuance or sale of the stock
as to which the requisite authority shall not have been obtained.
ARTICLE 11. TAX WITHHOLDING. The exercise of any Award granted under the
---------------
Program is subject to the condition that if at any time the Company shall
determine, in its discretion, that the satisfaction of withholding tax or other
withholding liabilities under any state or federal law is necessary or desirable
as a condition of, or in any connection with, such exercise or the delivery or
purchase of shares pursuant thereto, then in such event, the exercise of the
Option, Stock Appreciation Right or Performance Share shall not be effective
unless such withholding tax or other withholding liabilities shall have been
satisfied in a manner acceptable to the Company. The Company may withhold from
any cash payment made under this Program sufficient amounts to cover any
applicable withholding and employment taxes, and if the amount of such cash
payment is insufficient, the Company may require the Optionee to pay to the
Company the amount required to be withheld as a condition to delivering the
shares acquired pursuant to an Award. The Company also may withhold or collect
amounts with respect to a disqualifying disposition of shares of Common Stock
acquired pursuant to exercise of an Incentive Stock Option, as provided in
Section 16 of the Incentive Stock Option Plan. The Program Administrators are
authorized to adopt rules, regulations, or procedures which provide for the
satisfaction of an Employee's tax withholding obligation by, among other things,
the retention of shares of Common Stock to which the Employee would otherwise be
entitled pursuant to an Award and/or by the Employee's delivery of
previously-owned shares of Common Stock or other property.
ARTICLE 12. EMPLOYMENT. Nothing in the Program or in any Option, Stock
----------
Appreciation Right, or Performance Share award, shall confer upon any eligible
Employee any right to continued employment by the Company or any Subsidiary
thereof, or limit in any way the right of the Company or any Subsidiary thereof,
at any time to terminate or alter the terms of that employment.
ARTICLE 13. REVOCATION FOR MISCONDUCT. The Program Administrators may by
-------------------------
resolution immediately revoke, rescind and terminate any Option, or portion
thereof, to the extent not yet vested, or any Stock Appreciation Right, to the
extent not yet exercised, previously granted or awarded under this Program to an
Employee who is discharged from the employ of the Company or any Subsidiary
thereof for cause, which, for purposes hereof, shall mean termination for: (i)
conviction of a felony involving the misappropriation of the Company's or any
Subsidiaries assets or a conviction of a felony which results in a substantial,
demonstrable threat to the Company's or any Subsidiaries reputation, or (ii)
gross and willful failure to perform a substantial portion of the Employee's
duties and responsibilities as an Employee.
ARTICLE 14. RESTRICTIONS ON TRANSFER. The Company may place a legend upon
------------------------
any certificate representing shares acquired pursuant to an Award granted
hereunder noting that the transfer of such shares may be restricted by
applicable laws and regulations.
ARTICLE 15. DEFINITIONS.
-----------
(a) "Award" means an Option, Stock Appreciation Right or Performance
Share granted pursuant to the terms of this Program.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Committee" means a Committee of three or more directors
appointed by the Board pursuant to Article 1 of the General Provisions hereof,
none of whom shall be an Officer or Employee of the Company or any Subsidiary,
and each of whom shall be a "disinterested person" within the meaning of Rule
16b-3 under the Exchange Act.
(e) "Common Stock" means shares of the common stock, $.01 par value
per share, of the Company.
(f) "Disability" means any disability which makes a person unable to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment as defined in Section 22(e)(3) of the
Code.
(g) "Employee" means any person who is employed full time by the
Company or any Subsidiary, or is an Officer of the Company or any Subsidiary,
but not including directors who are not also Officers of, or otherwise employed
by, the Company or any Subsidiary.
(h) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(i) "Fair Market Value" shall be equal to the fair market value per
share of the Company's Common Stock on the date an Award is granted. For
purposes hereof, the Fair Market Value of a share of Common Stock shall be the
closing sale price of a share of Common Stock on the date in question (or, if
such day is not a trading day in the U.S. markets, on the nearest preceding
trading day), as reported with respect to the principal market (or the composite
of the markets, if more than one) or national quotation system in which such
shares are then traded, or if no such closing prices are reported, the mean
between the high bid and low asked prices that day on the principal market or
national quotation system then in use, or if no such quotations are available,
the price furnished by a professional securities dealer making a market in such
shares selected by the Committee.
(j) "Incentive Stock Option" means any Option granted under this
Program which the Board intends (at the time it is granted) to be an Incentive
Stock Option within the meaning of Section 422 of the Code.
(k) "Non-Qualified Option" means any Option granted under this Plan
which is not an Incentive Stock Option.
(l) "Officer" means an Employee whose position in the Company or any
Subsidiary thereof is that of a corporate officer, as determined by the Board.
(m) "Option" means a right granted under this Program to purchase
Common Stock.
(n) "Optionee" means an Employee or former Employee to whom an
Option, Stock Appreciation Right, or Performance Share, as appropriate, is
granted under the Program.
(o) "Performance Shares" means a specified number of shares of Common
Stock granted to an Employee, as provided in the discretion of the Program
Administrators in accordance with Performance Share Plan.
(p) "Retirement" means a termination of employment which
constitutes a "retirement" pursuant to the personnel policies of the Company or
any Subsidiary thereof or under any applicable qualified pension benefit plan
maintained by the Company or any Subsidiary thereof.
(q) "Stock Appreciation Right" means a right to surrender an Option
in consideration for a payment by the Company in cash and/or Common Stock, as
provided in the discretion of the Program Administrators in accordance with the
Stock Appreciation Rights Plan.
(r) "Subsidiary" or "Subsidiaries" means those subsidiaries of the
Company, including Coastal Banc ssb, which meet the definition of "Subsidiary
corporations" set forth in Section 424(f) of the Code, at the time of granting
of the Award in question.
(s) "Termination Date" means the date the employee is effectively no
longer an employee. This does not cover time paid for severance.
(t) Other terms are defined as set forth in the General Provisions
and the respective Plans.
<PAGE>
ARTICLE 16. STOCK OPTION AGREEMENT. The proper Officers, on behalf of the
----------------------
Company, and each Optionee shall execute a Stock Option Agreement which shall
set forth the total number of shares of Common Stock to which it pertains, the
exercise price, whether it is a Non-Qualified Option or an Incentive Stock
Option, and such other terms, conditions, restrictions and privileges as the
Program Administrators in each instance shall deem appropriate. Each Optionee
shall receive a copy of his or her executed Stock Option Agreement.
ARTICLE 17. GOVERNING LAW. To the extent not superseded by federal law,
--------------
the provisions of the Program shall be governed by and interpreted in accordance
with the laws of the State of Texas.
<PAGE>
COASTAL BANCORP, INC.
1999 STOCK COMPENSATION PROGRAM
PLAN I - INCENTIVE STOCK OPTION PLAN
SECTION 1. PURPOSE. The purpose of this Coastal Bancorp, Inc. Incentive
-------
Stock Option Plan ("Incentive Plan") is to promote the growth and general
prosperity of the Company by permitting the Company to grant Options to purchase
shares of its Common Stock. The Incentive Plan is designed to help attract and
retain superior personnel for positions of responsibility with the Company, or
of any Subsidiary, and to provide key Employees with an additional incentive to
contribute to the success of the Company. The Company intends that Options
granted pursuant to the provisions of the Incentive Plan will qualify and will
be identified as "incentive stock options" within the meaning of Section 422 of
the Code. This Incentive Plan is Part I of the Coastal Bancorp, Inc. 1999 Stock
Compensation Program. Unless any provision herein indicates to the contrary,
this Incentive Plan shall be subject to the General Provisions of the Program.
SECTION 2. OPTION TERMS AND CONDITIONS. The terms and conditions of
------------------------------
Options granted under the Incentive Plan may differ from one another as the
Program Administrators shall, in their sole discretion, determine, as long as
all Options granted under the Incentive Plan satisfy the requirements of the
Incentive Plan.
SECTION 3. DURATION OF OPTIONS. Each Option and all rights thereunder
---------------------
granted pursuant to the terms of the Incentive Plan shall be exercisable at any
time on or after it vests and becomes exercisable and shall expire on the date
determined by the Program Administrators, but in no event shall any Option
granted under the Incentive Plan expire later than ten years from the date on
which the Option is granted, except that any Employee who owns more than 10% of
the combined voting power of all classes of stock of the Company, or of any
Subsidiary thereof, must exercise any Options within five years from the date of
grant. In addition, each Option shall be subject to early termination as
provided in the Incentive Plan.
SECTION 4. PURCHASE PRICE. The purchase price for shares acquired
---------------
pursuant to the exercise, in whole or in part, of any Incentive Stock Option
shall not be less than one hundred percent (100%) of the Fair Market Value of a
share of Common Stock at the time of the grant of the Option; except that for
any Employee who owns more than 10% of the combined voting power of all classes
of stock of the Company, or of any Subsidiary, the purchase price shall not be
less than one hundred and ten percent (110%) of the Fair Market Value of a share
of Common Stock. All shares sold under the Incentive Plan shall be fully paid
and non-assessable.
SECTION 5. MAXIMUM AMOUNT OF OPTIONS IN ANY CALENDAR YEAR. The aggregate
----------------------------------------------
Fair Market Value (determined as of the time the Option is granted) of the
Common Stock with respect to which Incentive Stock Options, as defined in Code
Section 422(b), are exercisable for the first time by any Employee during any
calendar year (under the terms of this Plan and all such plans of the Company
and any Subsidiary thereof) shall not exceed $100,000. Any Option in excess of
the foregoing limitations shall be pursuant to the Company's Compensatory Stock
Option Plan (Plan II) and shall be clearly and specifically designated as not
being an Incentive Stock Option.
<PAGE>
SECTION 6. EXERCISE OF INCENTIVE STOCK OPTIONS. Each Incentive Stock
---------------------------------------
Option shall become vested and exercisable in one or more installments during
its term, and the right to exercise may be cumulative as determined by the
Program Administrators; provided, however, that in the case of any Incentive
Stock Options exercisable within the first six months following the date the
Incentive Stock Option is granted, the shares of Common Stock received upon the
exercise of such Option may not be sold or disposed of by the Optionee for the
first six months following the date of grant, provided further, however, that in
the case of any Incentive Stock Option granted prior to the date that the
Program is approved by the requisite vote of the stockholders of the Company,
the shares of Common Stock received upon the exercise of such Option may not be
sold or disposed of by the Optionee for the first six months following the date
stockholder approval is received. In determining the number of shares of Common
Stock with respect to which Incentive Stock Options are vested and/or
exercisable, fractional shares will be rounded up to the nearest whole number if
the fraction is 0.5 or higher, and down if it is less. The purchase price of
any shares purchased shall be paid in full in cash or by certified or cashier's
check payable to the order of the Company or by shares of Common Stock
(including shares acquired pursuant to the exercise of an Option) or other
property, or by withholding some of the shares of Common Stock which are being
purchased upon exercise of an Option, if permitted by the Program
Administrators, or by a combination of cash, check or shares of Common Stock or
other property equal in Fair Market Value to the purchase price of the shares to
be acquired pursuant to the Option, at the time of exercise of the Option.
SECTION 7. ACCELERATION OF RIGHT OF EXERCISE OF INSTALLMENTS.
-------------------------------------------------------
Notwithstanding the first sentence of Section 6 of this Incentive Plan, in the
event the Company or its stockholders enter into an agreement to dispose of all
or substantially all of the assets or stock of the Company (or of Coastal Banc
ssb) by means of a sale, merger or other reorganization, liquidation or
otherwise, any Option granted pursuant to the terms of the Incentive Plan shall
become immediately exercisable with respect to the full number of shares subject
to that Option during the period commencing as of the date of the agreement to
dispose of all or substantially all of the assets or stock of the Company and
ending when the disposition of assets or stock contemplated by that agreement is
terminated or the Option is otherwise terminated in accordance with its
provisions or the provisions of this Incentive Plan, whichever occurs first;
provided, however, that no Option shall be immediately exercisable under this
Section 7 on account of any agreement to dispose of all or substantially all of
the assets or stock of the Company (or of Coastal Banc ssb) by means of a sale,
merger or other reorganization, liquidation or otherwise where the stockholders
of the Company immediately before the consummation of the transaction will own
at least 50% of the total combined voting power of all classes of stock entitled
to vote of the surviving entity, whether the Company or some other entity,
immediately after the consummation of the transaction. In the event the
transaction contemplated by the agreement referred to in this Section 7 is not
consummated, but rather is terminated, cancelled or expires, the Options granted
pursuant to the Incentive Plan shall thereafter be treated as if that agreement
had never been entered into.
Notwithstanding the first sentence of Section 6 of this Incentive Plan, in
the event of a change in control of the Company or threatened change in control
of the Company as determined by a vote of not less than a majority of the Whole
Board of Directors and a majority of the Continuing Directors of the Company, as
such terms are defined in the Company's Articles of Incorporation, all Incentive
Stock Options granted prior to such change in control or threatened change of
control shall become immediately exercisable. The term "control" for purposes
of this Section shall refer to the acquisition (subsequent to the approval of
the Program by the stockholders of the Company) of 10% or more of the voting
securities of the Company by any person or by persons acting as a group within
the meaning of Section 13(d) of the Exchange Act; provided, however, that for
purposes of this Incentive Plan, no change in control or threatened change in
control shall be deemed to have occurred if prior to the acquisition of, or
offer to acquire, 10% or more of the voting securities of the Company, the Whole
Board of Directors of the Company shall have adopted by not less than a
two-thirds vote a resolution specifically approving such acquisition or offer
for the specific purpose of preventing the acceleration of the vesting of such
Options. The term "person" for purposes of this Section 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.
SECTION 8. WRITTEN NOTICE REQUIRED. Any Option granted pursuant to the
-------------------------
terms of the Incentive Plan shall be exercised when written notice of that
exercise has been given to the Company at its principal office by the person
entitled to exercise the Option and full payment for the shares with respect to
which the Option is exercised has been received by the Company.
SECTION 9. COMPLIANCE WITH SECURITIES LAWS. Shares of Common Stock shall
-------------------------------
not be issued with respect to any Option granted under the Incentive Plan unless
the exercise of that Option and the issuance and delivery of those shares
pursuant to that exercise shall comply with all relevant provisions of state and
federal law including, without limitation, the Securities Act of 1933, as
amended, the rules and regulations promulgated thereunder, and the requirements
of any stock exchange or national quotation system upon which the shares may
then be listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance. The Program Administrators may also
require an Optionee to whom an Option has been granted under the Incentive Plan
to furnish evidence satisfactory to the Company, including a written and signed
representation letter and consent to be bound by any transfer restriction
imposed by law, legend, condition or otherwise, that the shares are being
purchased only for investment and without any present intention to sell or
distribute the shares in violation of any state or federal law, rule or
regulation. Further, each Optionee shall consent to the imposition of a legend
on the shares of Common Stock subject to his or her Option restricting their
transferability as required by law or by this Section 9.
SECTION 10. EMPLOYMENT OF OPTIONEE. Each Optionee, if requested by the
------------------------
Program Administrators when the Option is granted, must agree in writing as a
condition of receiving his or her Option, that he or she will remain in the
employ of the Company, or any parent or Subsidiary of the Company (or a
corporation or a parent or Subsidiary of such corporation issuing or assuming a
stock option in a transaction to which Section 424(a) of the Code applies), as
the case may be, following the date of the granting of that Option for a period
specified by the Program Administrators, which period shall in no event exceed
three years. Nothing in the Plan or in any Option granted hereunder shall
confer upon any Optionee any right to continued employment by the Company, or
any Subsidiary thereof, or limit in any way the right of the Company or any
Subsidiary thereof, at any time to terminate or alter the terms of that
employment.
SECTION 11. OPTION RIGHTS UPON TERMINATION OF EMPLOYMENT. If an Optionee
--------------------------------------------
ceases to be employed by the Company, or any Subsidiary thereof (or a
corporation or a parent or Subsidiary of such corporation issuing or assuming a
stock option in a transaction to which Section 424(a) of the Code applies), for
any reason other than death, Disability or Retirement, his or her Option shall
immediately terminate. Should an employee be re-hired within the mandatory 30
day exercise window, they will be allowed to not exercise their previously
granted options at their discretion.
SECTION 12. OPTION RIGHTS UPON DISABILITY OR RETIREMENT. If an Optionee
--------------------------------------------
becomes disabled within the meaning of Section 22(e)(3) of the Code while
employed by the Company or any Subsidiary thereof (or a corporation or a parent
or Subsidiary of such corporation issuing or assuming a stock option in a
transaction to which Section 424(a) of the Code applies) or ceases to be
employed thereby due to his Retirement, the Option may be exercised, to the
extent exercisable on the date of termination of employment, at any time within
one year after the date of termination of employment due to Disability or
Retirement, unless either the Option or this Incentive Plan otherwise provides
for earlier termination.
SECTION 13. OPTION RIGHTS UPON DEATH OF OPTIONEE. Except as otherwise
---------------------------------------
limited by the Program Administrators at the time of the grant of an Option, if
an Optionee dies while employed by the Company or any Subsidiary thereof (or a
corporation or a Subsidiary of such corporation issuing or assuming a stock
option in a transaction to which Section 424(a) of the Code applies), or within
three months after ceasing to be an Employee thereof, his or her Option shall
expire one year after the date of death unless by its term it expires sooner.
During this one year or shorter period, the Option may be exercised, to the
extent that it remains unexercised on the date of death, by the person or
persons to whom the Optionee's rights under the Option shall pass by will or by
the laws of descent and distribution, but only to the extent that the Optionee
is entitled to exercise the Option at the date of death. However, in order for
the Option to continue to be treated as an Incentive Stock Option under Section
422 of the Code, the Option must be exercised no later than three months after
the date of termination of employment.
SECTION 14. OPTIONS NOT TRANSFERABLE. Options granted pursuant to the
--------------------------
terms of this Incentive Plan may not be sold, pledged, hypothecated, assigned or
transferred in any manner otherwise than by will or the laws of descent or
distribution and may be exercised during the lifetime of an Optionee only by
that Optionee.
SECTION 15. ADJUSTMENTS TO NUMBER AND PURCHASE PRICE OF OPTIONED SHARES.
------------------------------------------------------------
All Options granted pursuant to the terms of this Incentive Plan shall be
adjusted in the manner prescribed by Article 6 of the General Provisions of this
Program.
SECTION 16. NOTICE OF DISPOSITION; WITHHOLDING; ESCROW. An Optionee shall
------------------------------------------
immediately notify the Company in writing of any sale, transfer, assignment or
other disposition (or action constituting a disqualifying disposition within the
meaning of Section 421 of the Code) of any shares of Common Stock acquired
through exercise of an Incentive Stock Option, within two years after the grant
of such Incentive Stock Option or within one year after the acquisition of such
shares, setting forth the date and manner of disposition, the number of shares
disposed of and the price at which such shares were disposed of. The Company
shall be entitled to withhold from any compensation or other payments then or
thereafter due to the Optionee such amounts as may be necessary to satisfy any
withholding requirements of Federal or state law or regulation and, further, to
collect from the Optionee any additional amounts which may be required for such
purpose. The Program Administrators may, in their discretion, require shares of
Common Stock acquired by an Optionee upon exercise of an Incentive Stock Option
to be held in an escrow arrangement for the purpose of enabling compliance with
the provisions of this Section 16.
<PAGE>
COASTAL BANCORP, INC.
1999 STOCK COMPENSATION PROGRAM
PLAN II - COMPENSATORY STOCK OPTION PLAN
SECTION 1. PURPOSE. The purpose of this Coastal Bancorp, Inc.
-------
Compensatory Stock Option Plan ("Compensatory Plan") is to permit the Company to
grant Options to purchase shares of its Common Stock to selected Officers and
full-time, key Employees of the Company, or any Subsidiary thereof. The
Compensatory Plan is designed to help attract and retain superior personnel for
positions of substantial responsibility with the Company and its Subsidiaries
and to provide key Employees with an additional incentive to contribute to the
success of the Company. Any Option granted pursuant to this Compensatory Plan
shall be clearly and specifically designated as not being an Incentive Stock
Option, as defined in Section 422(b) of the Code. This Compensatory Plan is
Part II of the Company's 1999 Stock Compensation Program. Unless any provision
herein indicates to the contrary, this Compensatory Plan shall be subject to the
General Provisions of the Program.
SECTION 2. OPTION TERMS AND CONDITIONS. The terms and conditions of
------------------------------
Options granted under this Compensatory Plan may differ from one another as the
Program Administrators shall, in their discretion, determine as long as all
Options granted under the Compensatory Plan satisfy the requirements of the
Compensatory Plan.
SECTION 3. DURATION OF OPTIONS. Each Option and all rights thereunder
---------------------
granted pursuant to the terms of this Compensatory Plan shall expire on the date
determined by the Program Administrators, but in no event shall any Option
granted under the Compensatory Plan expire later than ten years and one month
from the date on which the Option is granted. In addition, each Option shall be
subject to early termination as provided in the Compensatory Plan.
SECTION 4. PURCHASE PRICE. The purchase price for shares acquired
---------------
pursuant to the exercise, in whole or in part, of any Non-Qualified Option shall
be established by the Program Administrators at the time of grant, but in no
event shall be less than the par value of the Common Stock at the time of the
grant of the Option.
SECTION 5. EXERCISE OF OPTIONS. Each Non-Qualified Option shall become
-------------------
vested and exercisable in one or more installments during its term and the right
to exercise may be cumulative as determined by the Program Administrators,
provided, however, that in the case of any Non-Qualified Option exercisable
within the first six months following the date such Option is granted, the
shares of Common Stock received upon the exercise of such Option may not be sold
or disposed of by the Optionee for the first six months following the date of
grant, provided further, however, that in the case of any Option granted prior
to the date that this Program is approved by the requisite vote of the
stockholders of the Company, the shares of Common Stock received upon the
exercise of such Option may not be sold or disposed of by the Optionee for the
first six months following the date stockholder approval is received. In
determining the number of shares of Common Stock with respect to which Options
are vested and/or exercisable, fractional shares will be rounded up to the
nearest whole number if the fraction is 0.5 or higher, and down if it is less.
The purchase price of any shares purchased shall be paid in full in cash or by
certified or cashier's check payable to the order of the Company or by shares of
Common Stock (including shares acquired pursuant to the exercise of an Option)
or other property or by withholding some of the shares of Common Stock which are
being purchased upon exercise of an Option, if permitted by the Program
Administrators, or by a combination of cash, check or shares of Common Stock or
other property equal in Fair Market Value to the purchase price of the shares to
be acquired pursuant to the Option, at the time of exercise of the Option.
SECTION 6. ACCELERATION OF RIGHT OF EXERCISE OF INSTALLMENTS.
-------------------------------------------------------
Notwithstanding the first sentence of Section 5 of this Compensatory Plan, if
the Company or its stockholders enter into an agreement to dispose of all or
substantially all of the assets or stock of the Company (or of Coastal Banc ssb)
by means of a sale, merger or other reorganization, liquidation, or otherwise,
any Option granted pursuant to the terms of this Compensatory Plan shall become
immediately exercisable with respect to the full number of shares subject to
that Option during the period commencing as of the date of the agreement to
dispose of all or substantially all of the assets or stock of the Company (or of
Coastal Banc ssb) and ending when that agreement is terminated, or the Option is
otherwise terminated in accordance with its provisions or the provisions of this
Compensatory Plan, whichever occurs first; provided, however, that no Option
shall be immediately exercisable under this Section 6 on account of any
agreement to dispose of all or substantially all of the assets or stock of the
Company by means of a sale, merger or other reorganization, liquidation or
otherwise where the stockholders of the Company immediately before the
consummation of the transaction will own at least 50% of the total combined
voting power of all classes of stock entitled to vote of the surviving entity,
whether the Company or some other entity, immediately after the consummation of
the transaction. In the event the transaction contemplated by the agreement
referred to in this Section 6 is not consummated but rather is terminated,
cancelled or expires, the Options granted pursuant to this Compensatory Plan
shall thereafter be treated as if that agreement had never been entered into.
Notwithstanding the first sentence of Section 5 of this Compensatory Plan,
in the event of a change in control of the Company, or threatened change in
control of the Company as determined by a vote of not less than a majority of
the Whole Board of Directors and a majority of the Continuing Directors of the
Company, as such terms are defined in the Company's Articles of Incorporation,
all Non-Qualified Options granted prior to such change in control or threatened
change in control shall become immediately exercisable. The term "control" for
purposes of this Section shall refer to the acquisition (subsequent to the
approval of the Program by the stockholders of the Company) of 10% or more of
the voting securities of the Company by any person or by persons acting as a
group within the meaning of Section 13(d) of the Exchange Act; provided,
however, that for purposes of this Compensatory Plan, no change in control or
threatened change in control shall be deemed to have occurred if prior to the
acquisition of, or offer to acquire, 10% or more of the voting securities of the
Company, the Whole Board of Directors of the Company shall have adopted by not
less than a two-thirds vote a resolution specifically approving such acquisition
or offer for the specific purpose of preventing the acceleration of the vesting
of such Options. The term "person" for purposes of this Section 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.
SECTION 7. WRITTEN NOTICE REQUIRED. Any Option pursuant to the terms of
------------------------
this Compensatory Plan shall be exercised when written notice of that exercise
has been given to the Company at its principal office by the person entitled to
exercise the Option and full payment for the shares with respect to which the
Option is exercised has been received by the Company.
SECTION 8. COMPLIANCE WITH SECURITIES LAWS. Shares shall not be issued
---------------------------------
with respect to any Option granted under the Compensatory Plan unless the
exercise of that Option and the issuance and delivery of the shares pursuant
thereto shall comply with all relevant provisions of state and federal law,
including, without limitation, the Securities Act of 1933, as amended, the rules
and regulations promulgated thereunder, and the requirements of any stock
exchange or national quotation system upon which the shares may then be listed,
and shall be further subject to the approval of counsel for the Company with
respect to such compliance. The Program Administrators may also require an
Optionee to whom an Option has been granted to furnish evidence satisfactory to
the Company, including a written and signed representation letter and consent to
be bound by any transfer restrictions imposed by law, legend, condition or
otherwise, that the shares are being purchased only for investment purposes and
without any present intention to sell or distribute the shares in violation of
any state or federal law, rule or regulation. Further, each Optionee shall
consent to the imposition of a legend on the shares of Common Stock subject to
his or her Option restricting their transferability as required by law or by
this Section 8.
SECTION 9. EMPLOYMENT OF OPTIONEE. Each Optionee, if requested by the
------------------------
Program Administrators, must agree in writing as a condition of the granting of
his or her Option, to remain in the employ of the Company or any Subsidiary
thereof (or a corporation or a parent or Subsidiary of such corporation issuing
or assuming a stock option in a transaction to which Section 424(a) of the Code
applies), following the date of the granting of that Option for a period
specified by the Program Administrators, which period shall in no event exceed
three years. Nothing in this Compensatory Plan or in any Option granted
hereunder shall confer upon any Optionee any right to continued employment by
the Company or any Subsidiary thereof, or limit in any way the right of the
Company or any Subsidiary at any time to terminate or alter the terms of that
employment.
SECTION 10. OPTION RIGHTS UPON TERMINATION OF EMPLOYMENT. If any Optionee
--------------------------------------------
under this Compensatory Plan ceases to be employed by the Company, or any
Subsidiary (or a corporation or a parent or Subsidiary of such corporation
issuing or assuming a stock option in a transaction to which Section 424(a) of
the Code applies), for any reason other than Disability, death or Retirement,
his or her Option shall immediately terminate, provided, however, that the
Program Administrators may, in their discretion, allow the Option to be
exercised, to the extent exercisable on the date of termination of employment,
at any time within a period of between three months and five years after the
date of termination of employment, unless either the Option or this Compensatory
Plan otherwise provides for earlier termination. Should an employee be re-hired
within the mandatory 30 day exercise window, they will be allowed to not
exercise their previously granted options at their discretion.
SECTION 11. OPTION RIGHTS UPON DISABILITY OR RETIREMENT. If an Optionee
--------------------------------------------
becomes disabled within the meaning of Section 22(e)(3) of the Code while
employed by the Company, or any Subsidiary thereof (or a corporation or a parent
or Subsidiary of such corporation issuing or assuming a stock option in a
transaction to which Section 424(a) of the Code applies) or ceases to be
employed thereby due to his Retirement, the Program Administrators, in their
discretion, may allow the Option to be exercised, to the extent exercisable on
the date of termination of employment, at any time within one year after the
date of termination of employment due to Disability or Retirement, unless either
the Option or this Compensatory Plan otherwise provides for earlier termination.
SECTION 12. OPTION RIGHTS UPON DEATH OF OPTIONEE. Except as otherwise
---------------------------------------
limited by the Program Administrators at the time of the grant of an Option, if
an Optionee dies while employed by the Company, or any Subsidiary thereof, (or a
corporation or a parent or Subsidiary of such corporation issuing or assuming a
stock option in a transaction to which Section 424(a) of the Code applies), his
or her Option shall expire one year after the date of death unless by its terms
it expires sooner. During this one year or shorter period, the Option may be
exercised, to the extent that it remains unexercised on the date of death, by
the person or persons to whom the Optionee's rights under the Option shall pass
by will or by the laws of descent and distribution, but only to the extent that
the Optionee is entitled to exercise the Option at the date of death.
SECTION 13. OPTIONS NOT TRANSFERABLE. Options granted pursuant to the
--------------------------
terms of this Compensatory Plan may not be sold, pledged, hypothecated, assigned
or transferred in any manner otherwise than by will or the laws of descent or
distribution and may be exercised during the lifetime of an Optionee only by
that Optionee.
SECTION 14. ADJUSTMENTS TO NUMBER AND PURCHASE PRICE OF OPTIONED SHARES.
------------------------------------------------------------
All Options granted pursuant to the terms of this Compensatory Plan shall be
adjusted in a manner prescribed by Article 6 of the General Provisions of the
Program.
<PAGE>
COASTAL BANCORP, INC.
1999 STOCK COMPENSATION PROGRAM
PLAN III - STOCK APPRECIATION RIGHTS PLAN
SECTION 1. PURPOSE. The purpose of this Coastal Bancorp, Inc. Stock
-------
Appreciation Rights Plan ("S.A.R. Plan") is to permit the Company to grant Stock
Appreciation Rights for its Common Stock to its full-time, key Employees. The
S.A.R. Plan is designed to help attract and retain superior personnel for
positions of substantial responsibility with the Company and any Subsidiary
thereof and to provide key Employees with an additional incentive to contribute
to the success of the Company. This S.A.R. Plan is Part III of the Coastal
Bancorp, Inc. 1999 Stock Compensation Program.
SECTION 2. TERMS AND CONDITIONS. The Program Administrators may, but
----------------------
shall not be obligated to, authorize, on such terms and conditions as they deem
appropriate in each case, the Company to grant rights to Optionees to surrender
an exercisable Option granted under Plan I or Plan II or any portion thereof, in
consideration for the payment by the Company of an amount equal to the excess of
the Fair Market Value of the shares of Common Stock subject to such Option, or
any portion thereof, surrendered, over the exercise price of the Option with
respect to such shares. Such payment, at the discretion of the Program
Administrators, may be made in shares of Common Stock valued at the then Fair
Market Value thereof, or in cash or partly in cash and partly in shares of
Common Stock; provided that with respect to rights granted in tandem with
Incentive Stock Options, the Program Administrators shall establish the form(s)
of payment allowed the Optionee at the date of grant. The Program
Administrators shall not be authorized to make payment to any Optionee in shares
of the Company's Common Stock unless Section 83 of the Code would apply to the
Common Stock transferred to the Optionee. The Program Administrators may, but
shall not be obligated to, also authorize naked Stock Appreciation Rights in
accordance with Section 9 hereof. Notwithstanding the foregoing, the Company
may not permit the exercise and cancellation of a Stock Appreciation Right
issued pursuant to this S.A.R. Plan until the Company has been subject to the
reporting requirements of Section 13 of the Exchange Act, for a period of at
least one year prior to the exercise and cancellation of any such Stock
Appreciation Right.
SECTION 3. TIME LIMITATIONS. Any election by an Optionee to exercise the
----------------
Stock Appreciation Rights provided in this S.A.R. Plan shall be made during the
period beginning on the third business day following the release for publication
of quarterly or annual financial information required to be prepared and
disseminated by the Company pursuant to the requirements of the Exchange Act and
ending on the twelfth business day following such date. The required release of
information shall be deemed to have been satisfied when the specified financial
data appears on or in a wire service, financial news service or newspaper of
general circulation or is otherwise first made publicly available.
SECTION 4. EXERCISE OF STOCK APPRECIATION RIGHTS: EFFECT ON STOCK OPTIONS
---------------------------------------------------------------
AND VICE VERSA. Upon the exercise of a Stock Appreciation Right, the number of
- ---------------
shares of Common Stock available under the Option to which it relates shall
decrease by a number equal to the number of shares for which the Stock
Appreciation Right was exercised. Upon the exercise of an Option, any related
Stock Appreciation Right shall terminate as to any number of shares subject to
the right that exceeds the total number of shares for which the Option remains
unexercised.
<PAGE>
SECTION 5. TIME OF GRANT. With respect to Options granted under Plan I,
--------------
Stock Appreciation Rights must be granted concurrently with the Incentive Stock
Options to which they relate; with respect to Options granted under Plan II,
Stock Appreciation Rights may be granted concurrently or at any time thereafter
prior to the exercise or expiration of such Non-Qualified Options.
SECTION 6. NON-TRANSFERABLE. The holder of a Stock Appreciation Right may
----------------
not transfer or assign the right otherwise than by will or in accordance with
the laws of descent and distribution. Furthermore, in the event of the
termination of his or her service with the Company as an Officer and/or
Employee, the right may be exercised only within the period, if any, which the
Option to which it relates may be exercised.
SECTION 7. TANDEM INCENTIVE STOCK OPTION - STOCK APPRECIATION RIGHT.
-------------------------------------------------------------
Whenever an Incentive Stock Option authorized pursuant to Plan I and a Stock
Appreciation Right authorized hereunder are granted together and the exercise of
one affects the right to exercise the other, the following requirements shall
apply:
(a) The Stock Appreciation Right will expire no later than the
expiration of the underlying Incentive Stock Option;
(b) The Stock Appreciation Right may be for no more than the difference
between the exercise price of the underlying Option and the market price of the
stock subject to the underlying Option at the time the Stock Appreciation Right
is exercised;
(c) The Stock Appreciation Right is transferable only when the
underlying Incentive Stock Option is transferable and under the same conditions;
(d) The Stock Appreciation Right may be exercised only when the
underlying Incentive Stock Option is eligible to be exercised; and
(e) The Stock Appreciation Right may be exercised only when the market
price of the stock subject to the Option exceeds the exercise price of the stock
subject to the Option.
SECTION 8. TANDEM STOCK OPTION - LIMITED STOCK APPRECIATION RIGHT. The
--------------------------------------------------------
Program Administrators may provide that any tandem Stock Appreciation Right
granted pursuant to this Section 8 shall be a limited Stock Appreciation Right
("Limited Stock Appreciation Right"), in which event:
(a) The Limited Stock Appreciation Right shall be exercisable during
the period beginning on the first day following the expiration of an Offer (as
defined below) and ending on the thirtieth day following such date;
(b) Neither the Option tandem to the Limited Stock Appreciation Right
nor any other Stock Appreciation Right tandem to such Option may be exercised at
any time that the Limited Stock Appreciation Right may be exercised, provided
that this requirement shall not apply in the case of an Incentive Stock Option
tandem to a Limited Stock Appreciation Right if and to the extent that the
Program Administrators determine that such requirement is not consistent with
applicable statutory provisions regarding Incentive Stock Options and the
regulations issued thereunder;
(c) Upon exercise of the Limited Stock Appreciation Right, the Fair
Market Value of the shares to which the right relates shall be determined as the
highest price per share paid in any Offer that is in effect at any time during
the period beginning on the sixtieth day prior to the date on which the Limited
Stock Appreciation Right is exercised and ending on such exercise date;
provided, however, with respect to a Limited Stock Appreciation Right tandem to
an Incentive Stock Option, the Program Administrators shall determine Fair
Market Value of such shares in a different manner if and to the extent that the
Program Administrators deem necessary or desirable to conform with applicable
statutory provisions regarding Incentive Stock Options and the regulations
issued thereunder.
The term "Offer" shall mean any tender offer or exchange offer for shares
of the Company, provided that the person making the offer acquires shares of the
Company's capital stock pursuant to such offer.
SECTION 9. NAKED STOCK APPRECIATION RIGHT. The Program Administrators may
------------------------------
provide that any Stock Appreciation Right granted pursuant to this Section 9
shall be a naked Stock Appreciation Right ("Naked Right"), in which event:
(a) Participants shall be awarded Naked Rights for a period of up to
five years or such shorter period which shall not be less than six months, as
may be determined by the Program Administrators. Such designated period may
vary as among participants and as among awards to a participant. Subject to
compliance with Section 3 hereof, at the end of such designated period with
respect to a participant, such participant shall receive an amount equal to the
appreciation in market value of his or her Naked Rights as determined in
subparagraph (b) of this Section 9 (the "Right Award"). The Right Award shall
be payable in cash or in shares of Common Stock, as may be determined by the
Program Administrators. A participant may receive as many awards of Naked
Rights at various times as may be determined to be appropriate by the Program
Administrators.
(b) For purposes of determining the amount of a Right Award, the
Program Administrators shall determine the market value of Naked Rights held by
such participant at the end of the designated period for which such Naked Rights
have been held ("Valuation Period") and subtract therefrom the market value of
the same Naked Rights on the date awarded to such participant. The market value
of one Naked Right on a valuation date shall be determined by the Program
Administrators on the basis of such factors as they deem appropriate; and shall
be determined without regard to any restriction other than a restriction which,
by its terms, will never lapse. The Fair Market Value of shares of the Common
Stock shall be the Fair Market Value as set forth in Article 15(i) of the
General Provisions and shall be used to determine the market value of one Naked
Right. The market value of Naked Rights held by a participant on a valuation
date shall be determined by multiplying the number of Naked Rights held by such
participant by the market value of one Naked Right on such valuation date. The
measurement of appreciation shall be made separately with respect to each
separate award of Naked Rights.
(c) The Naked Rights shall be used solely as a device for the
measurement and determination of the amount to be paid to participants
hereunder. The Naked Rights shall not constitute or be treated as property or
as a trust fund of any kind. All amounts at any time attributable to the Naked
Rights shall be and remain the sole property of the Company and the
participants' rights hereunder are limited to the right to receive cash and
shares of Common Stock as herein provided.
(d) Notwithstanding the first sentence of subparagraph (a) of this
Section 9, in the event the Company or its stockholders enter into an agreement
to dispose of all or substantially all of the assets or stock of the Company or
of Coastal Banc ssb by means of a sale, merger or other reorganization,
liquidation or otherwise, any Naked Right granted pursuant to subparagraph (a)
of this Section 9 shall become immediately exercisable during the period
commencing as of the date of the agreement to dispose of all or substantially
all of the assets or stock of the Company or of Coastal Banc ssb and ending when
the disposition of assets or stock contemplated by that agreement is terminated
or the Naked Right is otherwise terminated in accordance with its provisions or
the provisions of this S.A.R. Plan, whichever occurs first; provided, however,
that no Naked Right shall be immediately exercisable under this subparagraph (d)
on account of any agreement to dispose of all or substantially all of the assets
or stock of the Company by means of a sale, merger or other reorganization,
liquidation or otherwise where the stockholders of the Company immediately
before the consummation of the transaction will own at least 50% of the total
combined voting power of all classes of stock entitled to vote of the surviving
entity, whether the Company or some other entity, immediately after the
consummation of the transaction. In the event the transaction contemplated by
the agreement referred to in this subparagraph (d) is not consummated, but
rather is terminated, cancelled or expires, the Naked Rights granted pursuant to
subparagraph (a) of this Section 9 shall thereafter be treated as if that
agreement had never been entered into.
Notwithstanding the first sentence of subparagraph (a) of this Section 9,
in the event of a change in control of the Company or threatened change in
control of the Company as determined by a vote of not less than a majority of
the Whole Board of Directors and a majority of the Continuing Directors of the
Company, as such terms are defined in the Company's Articles of Incorporation,
all Naked Rights granted prior to such change in control or threatened change of
control shall become immediately exercisable. The term "control" for purposes
of this Section shall refer to the acquisition (subsequent to the approval of
the Program by the stockholders of the Company) of 10% or more of the voting
securities of the Company by any person or by persons acting as a group within
the meaning of Section 13(d) of the Exchange Act; provided, however, no change
in control or threatened change in control shall be deemed to have occurred if
prior to the acquisition of, or offer to acquire, 10% or more of the voting
securities of the Company, the Whole Board of Directors of the Company shall
have adopted by not less than a two-thirds vote a resolution specifically
approving such acquisition or offer for the specific purpose of preventing the
acceleration of the vesting of such Naked Rights. The term "person" for
purposes of this paragraph 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.
(e) Any Naked Rights granted pursuant to subparagraph (a) of this
Section 9 shall be exercised when written notice of that exercise has been given
to the Company at its principal office by the person entitled to exercise the
Naked Right.
(f) Shares of Common Stock shall not be issued with respect to any
Naked Right granted under subparagraph (a) of this Section 9 unless the exercise
of that Naked Right and the issuance and delivery of those shares pursuant to
that exercise shall comply with all relevant provisions of state and federal law
including, if applicable, the Securities Act of 1933, as amended, the rules and
regulations promulgated thereunder, and the requirements of any stock exchange
or national quotation system upon which the shares may then be listed, and shall
be further subject to the approval of counsel for the Company with respect to
such compliance. The Program Administrators may also require an Employee to
whom a right has been granted under subparagraph (a) of this Section 9 ("Right
Holder") to furnish evidence satisfactory to the Company, including a written
and signed representation letter and consent to be bound by any transfer
restriction imposed by law, legend, condition or otherwise, that the shares are
being acquired without any present intention to sell or distribute the shares in
violation of any state or federal law, rule or regulation. Further, each Right
Holder shall consent to the imposition of a legend on any shares of Common Stock
so acquired restricting their transferability as required by law or by this
subparagraph (f).
(g) Each Right Holder, if requested by the Program Administrators when
a Naked Right is granted, must agree in writing as a condition of receiving his
or her Naked Right, that he or she will remain in the employ of the Company, or
any Subsidiary of the Company (or a corporation or a parent or Subsidiary of
such corporation issuing or assuming a Naked Right), as the case may be,
following the date of the granting of that Naked Right for a period specified by
the Program Administrators, which period shall in no event exceed three years.
Nothing in this Section 9 or in any Naked Right granted hereunder shall confer
upon any Right Holder any right to continued employment by the Company, or any
Subsidiary thereof, or limit in any way the right of the Company or any
Subsidiary thereof at any time to terminate or alter the terms of that
employment.
(h) If a Right Holder ceases to be employed by the Company, or any
Subsidiary thereof (or a corporation or a parent or Subsidiary of such
corporation issuing or assuming a Naked Right), for any reason other than death,
Disability or Retirement, his or her Naked Right shall immediately terminate;
provided, however, that the Program Administrators may, at the time a Naked
Right is granted, in their discretion, allow such Naked Right to be exercised to
the extent exercisable on the date of termination of employment at any time
within three months after the date of termination of employment, unless either
the Naked Right or this Section 9 otherwise provides for earlier termination.
(i) If a Right Holder becomes disabled within the meaning of Section
22(e)(3) of the Code while employed by the Company of any Subsidiary thereof (or
a corporation or a parent or Subsidiary of such corporation issuing or assuming
a Naked Right) or ceases to be employed thereby due to Retirement, his or her
Naked Rights may be exercised, to the extent exercisable on the date of
termination of employment, at any time within one year after the date of
termination of employment due to Disability or Retirement, unless either the
Naked Right or this Section 9 otherwise provides for earlier termination.
(j) Except as otherwise limited by the Program Administrators at the time
of the grant of a Naked Right, if a Right Holder dies while employed by the
Company or any Subsidiary thereof (or a corporation or a parent or Subsidiary of
such corporation issuing or assuming a Naked Right), or within three months
after ceasing to be an Employee thereof, his or her Naked Right shall expire one
year after the date of death unless by its term it expires sooner. During this
one year or shorter period, the Naked Right may be exercised, to the extent that
it remains unexercised on the date of death, by the person or persons to whom
the Right Holder's Naked Rights shall pass by will or by the laws of descent and
distribution, but only to the extent that the Right Holder is entitled to
exercise the Naked Right at the date of death.
(k) Naked Rights granted pursuant to the terms of this Section 9 may not
be sold, pledged, hypothecated, assigned or transferred in any manner otherwise
than by will or the laws of descent or distribution and may be exercised during
the lifetime of a Right Holder only by that Right Holder.
(l) All Naked Rights granted pursuant to the terms of this Section 9 shall
be adjusted in the manner prescribed by Article 6 of the General Provisions of
this Program.
<PAGE>
COASTAL BANCORP, INC.
1999 STOCK COMPENSATION PROGRAM
PLAN IV - PERFORMANCE SHARE PLAN
SECTION 1. PURPOSE. The purpose of this Coastal Bancorp, Inc. Performance
--------
Share Plan ("Performance Plan") is to promote the growth and general prosperity
of the Company by permitting the Company to grant Performance Shares to help
attract and retain superior personnel for positions of substantial
responsibility with the Company and any Subsidiary and to provide key Employees
with an additional incentive to contribute to the success of the Company. This
Performance Plan is Part IV of the Coastal Bancorp, Inc. 1999 Stock Compensation
Program.
SECTION 2. TERMS AND CONDITIONS. The Program Administrators may grant
-----------------------
Performance Shares to any Employee eligible under Article 4 of the General
Provisions. Each Performance Share grant confers upon the recipient thereof the
right to receive a specified number of shares of Common Stock of the Company
contingent upon the achievement of specified performance objectives within a
specified period. The Program Administrators shall specify the performance
objective and the period of duration of the Performance Share grant at the time
that such Performance Share is granted. Any Performance Shares granted under
this Plan shall constitute an unfunded promise to make future payments to the
affected Employee upon the completion of specified conditions. The grant of an
opportunity to receive Performance Shares shall not entitle the affected
Employee to any rights to specific fund(s) or assets of the Company, or any
parent or Subsidiary thereof.
SECTION 3. CASH IN LIEU OF STOCK. In lieu of some or all of the shares of
----------------------
Common Stock earned by achievement of the specified performance objectives
within the specified period, the Program Administrators may distribute cash in
an amount equal to the Fair Market Value of the Common Stock at the time that
the Employee achieves the performance objective within the specified period.
Such Fair Market Value shall be determined by Article 15(i) of the General
Provisions, on the business day next preceding the date of payment. The Program
Administrators shall be authorized to make payment in shares of Common Stock
only if Section 83 of the Code would apply to the transfer of Common Stock to
the Employee.
SECTION 4. PERFORMANCE OBJECTIVE PERIOD. The duration of the period
-------------------------------
within which to achieve the performance objectives is to be determined by the
Program Administrators. The period may not be less than one year nor more than
five years from the date the performance share is granted.
SECTION 5. NON-TRANSFERABLE. A participating Employee may not transfer or
-----------------
assign a performance share.
SECTION 6. PERFORMANCE SHARE RIGHTS UPON DEATH OR TERMINATION OF
------------------------------------------------------------
EMPLOYMENT. If a participating Employee dies or terminates service with the
--
Company, or any Subsidiary thereof (or a corporation or a parent or Subsidiary
of such corporation issuing or assuming a Performance Share in a transaction to
which Section 424(a) of the Code applies,) prior to the expiration of the
performance objective period, any Performance Shares granted to him or her
during that period are terminated.
END OF 1999 STOCK COMPENSATION PROGRAM
<PAGE>
EXHIBIT 24.2
CONSENT OF KPMG
<PAGE>
KPMG
700 Louisiana Telephone 713 319 2000
Houston, Texas 77002 Fax 713 319 2041
The Board of Directors:
Coastal Bancorp, Inc.
We consent to incorporation by reference in the registration statement (No.
333-_____) on Form S-8 of Coastal Bancorp, Inc. of our report dated January 19,
1999, except as to note 6, which is as of February 11, 1999, relating to the
consolidated statements of financial condition of Coastal Bancorp, Inc. and
subsidiaries as of December 31, 1998, and 1997, and the related consolidated
statements of operations, comprehensive income, stockholders' equity and cash
flows for each of the years in the three-year period ended December 31, 1998,
which report appears in the December 31, 1998, annual report on Form 10-K of
Coastal Bancorp, Inc.
/s/ KPMG LLP
Houston, Texas
June 17, 1999
