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SARATOGA BANCORP
1994 STOCK OPTION PLAN
(AMENDED)
1. PURPOSE.
The purpose of this Saratoga Bancorp 1994 Stock Option Plan ("the "Plan")
is to provide a method whereby those key employees, directors and consultants of
Saratoga Bancorp and its affiliates (hereinafter collectively referred to as the
"Company"), who are primarily responsible for the management and growth of the
Company's business and who are presently making and are expected to make
substantial contributions to the Company's future management and growth, may be
offered incentives in addition to those presently available, and may be
stimulated by increased personal involvement in the fortunes and success of the
Company to continue in its service, thereby advancing the interests of the
Company and its shareholders.
The word "affiliate," as used in the Plan, means any bank or corporation in
any unbroken chain of banks or corporations beginning or ending with the
Company, if at the time of the granting of an option, each such bank or
corporation other than the last in that chain owns stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of
stock in one of the other banks or corporations in the chain.
2. ADMINISTRATION.
The following provisions shall govern the administration of the Plan:
(a) Subject to paragraphs (b) and (c) below, the Plan shall be
administered by the Board of Directors or a duly appointed committee of the
Board consisting of Non-Employee Directors. The term "Non-Employee Director"
as used in the Plan shall have the meaning set forth in Rule 16b-3 as
promulgated by the Securities and Exchange Commission ("SEC") under Section
16(b) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as such rule may be amended from time to time, and as interpreted by the
SEC ("Rule 16b-3"). The committee required by this paragraph shall consist of
the minimum number of Non-Employee Directors from time to time required by Rule
16b-3.
(b) The Board and any such committee is referred to hereinafter as the
"Committee," except where otherwise expressly provided or where the context
requires otherwise. The Board of Directors may from time to time remove members
from or add members to the Committee. Vacancies on the Committee, however
caused, shall be filled by the Board of Directors. The Board of Directors may
designate a Chairman and Vice-Chairman of the Committee from among the Committee
members. Acts of the Committee (i) at a meeting, held at a time and place and
in accordance with rules adopted by the Committee, at which a quorum of the
Committee is present and acting, or (ii) reduced to and approved in writing by
all members of the Committee, shall be the valid acts of the Committee.
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(c) Options granted to employees or directors of the Company subject to
Section 16(b) of the Exchange Act shall be approved by the Committee or shall be
approved or ratified, in compliance with Section 14 of the Exchange Act, by the
affirmative votes of the holders of a majority of the voting securities of the
Company present or represented and entitled to vote at a meeting of shareholders
duly called and hold pursuant to law, provided that any such ratification shall
occur not later than the date of the next annual meeting of shareholders
following the grant.
(d) The grant of options under the Plan shall be affected by execution of
instruments in writing in a form approved by the Committee. Subject to the
express terms and conditions of the Plan, the Committee shall have full power to
construe the Plan and the terms of any option granted under the Plan, to
prescribe, amend and rescind rules and regulations relating to the Plan or such
options and to make all other determinations necessary or advisable for the
Plan's administration, including, without limitation, the power to (i)
determine which persons meet the requirements of Section 3 hereof for selection
as participants in the Plan; (ii) determine to whom of the eligible persons, if
any, options shall be granted under the Plan; (iii) establish the terms and
conditions required or permitted to be included in every option agreement or any
amendments thereto, including whether options to be granted thereunder shall be
"incentive stock options," as defined in Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code") or nonstatutory stock options not
described in Section 422; (iv) specify the number of shares to be covered by
each option; (v) determine the fair market value of shares of the Company's
common stock for any purpose under this Plan; (vi) grant options in exchange
for cancellation of options granted earlier at different exercise prices; (vii)
take appropriate action to amend any option hereunder, provided that no such
action may be taken without the written consent of the affected optionee;
and (viii) make all other determinations deemed necessary or advisable for
administering the Plan. The Committee's determination on the foregoing matters
shall be conclusive.
3. ELIGIBILITY.
The persons who shall be eligible to receive the discretionary grant of
options under this Plan shall be those key employees and officers of the Company
(including officers who may also be directors of the Company), persons who
became employees of the Company within thirty days of the date of grant of an
option, consultants of the Company who render bona fide services to the Company
other than in connection with the offer or sale of securities in a capital
raising transaction ("Consultants"), and directors. Notwithstanding any other
provision of this Plan no person shall be granted options to purchase more than
an aggregate of 100,000 shares under this Plan.
4. THE SHARES.
The shares of stock subject to options authorized to be granted under the
Plan shall consist of three hundred twenty-eight thousand five hundred eighty-
two (328,582) shares of the Company's
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no par value common stock (the "Shares"), or the number and kind of shares of
stock or other securities which shall be substituted for such Shares or to
which such Shares shall be adjusted as provided in Section 7 hereof, provided
that, such number of Shares shall be adjusted downward to the extent necessary
to conform to the requirements of Section 260.140.45 of the Rules of the
California Commissioner of Corporations, so that at no time shall the total
number of shares issuable upon exercise of all outstanding options and the total
number of shares provided for under any stock bonus or similar plan of the
Company exceed the applicable percentage as calculated in accordance with the
conditions and exclusions of such Rule.
Upon the expiration or termination for any reason of an outstanding option
under the Plan (or under the Company's expired 1982 Amended Stock Option Plan)
which has not been exercised in full, all unissued Shares thereunder shall
again become available for the grant of options under the Plan. Shares of the
Company's common stock which are (i) delivered by an optionee in payment of the
exercise price of an option pursuant to Section 7(a), or (ii) delivered by an
optionee, or withheld by the Company from the shares otherwise due upon
exercise of a nonstatutory stock option, in satisfaction of applicable
withholding taxes as permitted by Section 7(c) shall again become available for
the grant of options under the Plan only to those eligible participants who are
not subject to Section 16 of the Exchange Act.
The aggregate amount of Shares subject to options granted to all Non-
Employee Directors as a group (not including such options which terminate
unexercised) shall not exceed fifty percent (50%) of the Shares, as adjusted
pursuant to Section 7.
5. OPTION GRANTS.
Options, in the discretion of the Committee, may be granted at any time
prior to the termination of the Plan to persons who are employees of the
Company, including employees who are also directors of the Company, to
Consultants of the Company or to Non-Employee Directors. Options granted by
the Committee shall be subject to the following terms and conditions:
(a) Grant of Options. Options granted to employees pursuant to the Plan
may be either incentive stock options or nonstatutory stock options. If the
aggregate fair market value of the shares issuable upon exercise of incentive
stock options which are exercisable for the first time during any one calendar
year under all incentive stock options held by an optionee exceeds $100,000
(determined at the time of the grant of the options), such options shall be
treated as nonstatutory stock options to the extent of such excess. Options
granted to Non-Employee Directors and to Consultants shall be nonstatutory stock
options.
(b) Option Price. The purchase price under each option shall not be less
than one hundred percent of the fair market value of the Shares subject thereto
on the date the option is granted; provided, however, that the purchase price
of an option granted to an individual who owns stock possessing more than ten
percent of the total combined voting power of all classes of stock of the
Company shall not be less than one hundred ten percent of the fair market
value of the Shares
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subject thereto on the date the option is granted. For any purposes under this
Plan, fair market value per share shall mean, where there is a public market
for the Company's common stock, the mean of the bid and asked prices (or the
closing price if listed on a stock exchange or the Nasdaq National Market) of
the Company's common stock for the date of grant, as reported in the Wall Street
Journal (or, if not so reported, as otherwise reported by the Nasdaq Stock
Market or the National Quotation Bureau). If such information is not
available for the date of grant, then such information for the last preceding
date for which such information is available shall be considered as the fair
market value.
(c) Duration of Options. Each option shall be for a term determined by
the Committee; provided, however, that the term of any option may not exceed ten
years and, provided further, that the term of any incentive stock option granted
to an individual who owns stock possessing more than ten percent of the total
combined voting power of all classes of stock of the Company shall not exceed
five years. Each option shall vest in such manner and at such time as the
Committee shall determine and the Committee may accelerate the time of exercise
of any option; provided, however, that no option shall vest for exercise at a
rate of less than twenty percent per year during the five year period following
the date of grant of an option.
(d) Termination of Director, Employment or Consultant Status. Upon the
termination of an optionee's status as an employee or Consultant or member of
the Board of Directors of the Company, his or her rights to exercise an option
then held shall be only as follows:
DEATH OR DISABILITY: If an optionee's employment or consulting
relationship or tenure on the Board of Directors is terminated by
death or disability, such optionee or such optionee's qualified
representative (in the event of the optionee's mental disability)
or the optionee's estate (in the event of optionee's death) shall
have the right for a period of twelve (12) months (or such longer
period as the Committee may determine at the date of grant or
during the term of the option) following the date of such death or
disability to exercise the option to the extent the optionee was
entitled to exercise such option on the date of the optionee's death
or disability; provided the actual date of exercise is in no event
after the expiration of the term of the option. To the extent the
option is not exercised within such period the option will
terminate. An optionee's "estate" shall mean the optionee's legal
representative or any person who acquires the right to exercise an
option by reason of the optionee's death.
CAUSE: If an optionee's employment or consulting relationship is
terminated because such optionee is determined by the Board to have
committed an act of embezzlement, fraud, dishonesty, breach of
fiduciary duty to the Company, or to have deliberately disregarded
the rules of the Company which resulted in loss, damage or injury to
the Company, or if an optionee makes any unauthorized disclosure of
any of the secrets or confidential information of the Company,
induces any client or customer of the Company to break any
contract with the Company or induces any principal for whom the
Company acts as agent to
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terminate such agency relations, or engages in any conduct
which constitutes unfair competition with the Company, or if an
optionee is removed from any office of the Company by any bank
regulatory agency, the optionee shall have the right for a period of
thirty days to exercise the option to the extent the option was
exercisable on the date of termination; provided that the date of
exercise is in no event after the expiration of the term of the
option. To the extent the option is not exercised within such period
the option will terminate. In making the determination pursuant to
this paragraph, the Board shall act fairly and shall give the optionee
whose employment or Consultant status has been terminated an
opportunity to appear and be heard at a hearing before the full Board
and present evidence on the optionee's behalf. For the purpose of
this paragraph, termination of employment or Consultant status shall
be deemed to occur when the Company dispatches notice or advice to the
optionee that the optionee's employment or status as a Consultant is
terminated, and not at the time of optionee's receipt thereof.
OTHER REASONS: If an optionee's employment or consulting relationship
or tenure on the Board of Directors is terminated for any reason other
than those mentioned above under "Death or Disability" and "Cause,"
the optionee may, within three months (or such longer period as the
Committee may determine at the date of grant or during the term of the
option) following such termination, exercise the option to the extent
such option was exercisable on the date of termination of the
optionee's employment or status as a Consultant; provided the date of
exercise is in no event after the expiration of the term of the option
and provided further that any option which is exercised more than
three months following termination shall be treated as a nonstatutory
option whether or not it was designated as such at the time it
was granted. To the extent the option is not exercised within such
period the option will terminate.
6. TERMS AND CONDITIONS APPLICABLE TO ALL OPTIONS.
The following terms and conditions shall apply to all options granted
pursuant to the Plan:
(a) Exercise of Options. To the extent the right to purchase Shares has
vested under an optionee's stock option agreement, options may be exercised from
time to time by delivering payment therefor in cash, certified check, official
bank check, or the equivalent thereof acceptable to the Company, together with
written notice to the Secretary of the Company, identifying the option or part
thereof being exercised and specifying the number of Shares for which payment is
being tendered. An optionee may also exercise an option by the delivery and
surrender of shares of Company Common Stock which (a) have been owned
by the optionee for at least six months or such other period as the Committee
may require; and (b) have an aggregate fair market value on the date of
surrender equal to the exercise price. In addition, an option may be exercised
by delivering to the Company (i) an exercise notice instructing the Company to
deliver the certificates for the Shares
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purchased to a designated brokerage firm and (ii) a copy of irrevocable
instructions delivered to the brokerage firm to sell the Shares acquired upon
exercise of the option and to deliver to the Company from the sale proceeds
sufficient cash to pay the exercise price and applicable withholding taxes
arising as a result of the exercise.
The Company shall deliver to the optionee, which delivery shall be not less
than fifteen (15) days and not more than thirty (30) days after the giving of
such notice, without transfer or issue tax to the optionee (or other person
entitled to exercise the option), at the principal office of the Company, or
such other place as shall be mutually acceptable, a certificate or certificates
for such Shares dated the date the options were validly exercised; provided,
however, that the time of such delivery may be postponed by the Company for such
period as may be required for it with reasonable diligence to comply with any
requirements of law.
(b) Transferability of Option and Shares. Each option shall be
transferrable only by will or the laws of descent and distribution and shall be
exercisable during the optionee's lifetime only by the optionee, or in the event
of disability, the optionee's qualified representative. In addition, in order
for Shares acquired upon exercise of incentive stock options to receive the tax
treatment afforded such Shares, the Shares may not be disposed of within two
years from the date of the option grant nor within one year after the date of
transfer of such Shares to the optionee.
(c) Withholding. The Company shall have the right to condition the
issuance of Shares upon exercise of an option upon payment by the optionee of
any applicable taxes required to be withheld under federal, state or local tax
laws or regulations in connection with such exercise. An optionee may elect to
pay such tax by (i) requesting the Company to withhold a sufficient number of
Shares from the total number of Shares issuable upon exercise of the option or
(ii) delivering a sufficient number of shares of Company common stock which
have been held by the optionee for at least six months (or such other period as
the Committee may require) to the Company. The value of shares withheld or
delivered shall be the fair market value of such shares on the date the exercise
becomes taxable as determined by the Committee. Such an election is subject to
approval or disapproval by the Committee, and if the optionee is subject to
Section 16 of the Exchange Act, the timing of the election must satisfy the
requirements of Rule 16b-3.
(d) Other Terms and Conditions. Options may also contain such other
provisions, which shall not be inconsistent with any of the foregoing terms, as
the Committee shall deem appropriate. No option, however, nor anything
contained in the Plan, shall confer upon any optionee any right to continue in
the employ or in the status as a director or Consultant of the Company, nor
limit in any way the right of the Company to terminate an optionee's employment
or status as a Consultant at any time.
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7. ADJUSTMENT OF, AND CHANGES IN, THE SHARES.
(a) Changes in Capitalization. In the event the shares of Common Stock of
the Company, as presently constituted, shall be changed into or exchanged for a
different number or kind of shares of stock or other securities of the Company
or of another corporation (whether by reason of reorganization, merger, consol-
idation, recapitalization, reclassification, stock split, reverse stock split,
combination of shares, or otherwise), or if the number of Shares of common stock
of the Company shall be increased through the payment of a stock dividend, there
shall be substituted for or added to each Share of common stock of the
Company theretofore appropriated or thereafter subject or which may become
subject to an option under the Plan, the number and kind of shares of stock or
other securities into which each outstanding share of common stock of the
Company shall be so changed, or for which each share shall be exchanged, or to
which each such share shall be entitled, as the case may be. In addition,
appropriate adjustment shall be made in the number and kind of Shares as to
which outstanding options, or portions thereof then unexercised, shall be
exercisable, so that any optionee's proportionate interest in the Company by
reason of his or her rights under unexercised portions of such options shall
be maintained as before the occurrence of such event. Such adjustment in
outstanding options shall be made without change in the total price
to the unexercised portion of the option and with a corresponding adjustment in
the option price per share.
(b) Dissolution, Liquidation, Sale or Merger. In the event of a proposed
dissolution or liquidation of the Company, options outstanding under the Plan
shall terminate immediately before the consummation of such proposed action.
The Board will, in such circumstances, provide written notice to the optionees
of the expected dates of termination of outstanding options and consummation of
the proposed dissolution or liquidation.
In the event of a proposed sale of all or substantially all of the assets
of the Company, or the merger of the Company with or into another corporation in
a transaction in which the Company is not the surviving corporation, outstanding
options may be assumed or equivalent options may be substituted by the successor
corporation (or a parent or subsidiary of the successor corporation), unless the
successor corporation does not agree to assume the options or to substitute
equivalent options. If outstanding options are not assumed or substituted by
equivalent options, all outstanding options shall terminate immediately before
the consummation of such sale or merger (subject to the actual consummation of
the sale or merger) and the Company shall provide written notice to the
optionees of the expected dates of termination of the options and consummation
of such transaction. If the transaction is not consummated, unexercised options
shall continue in accordance with their original terms.
(c) Notice of Adjustments, Fractional Shares. To the extent the foregoing
adjustments relate to stock or securities of the Company, such adjustments shall
be made by the Committee, whose determination in that respect shall be final,
binding and conclusive. No right to purchase fractional shares shall result
from any adjustment in options pursuant to this Section 8. In case of any such
adjustment, the shares subject to the option shall be rounded down to the
nearest whole share. Notice of any adjustment shall be given by the Company
to each holder of an option
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which was in fact so adjusted and such adjustment (whether or not such notice is
given) shall be effective and binding for all purposes of the Plan.
No adjustment shall be made for dividends or other rights for which the
record date is prior to the date of such issuance, except as provided in this
Section.
Any issue by the Company of shares of stock of any class, or securities
convertible into shares of any class, shall not affect the number or price of
shares of common stock subject to the option, and no adjustment by reason
thereof shall be made. The grant of an option pursuant to the Plan shall not
affect in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge or to consolidate or to dissolve, liquidate or sell, or
transfer all or any part of its business or assets.
8. AMENDMENT, EFFECTIVENESS AND TERMINATION OF THE PLAN.
The Board shall have complete power and authority to terminate or amend the
Plan; provided, however, that the Board shall not, without the approval of the
shareholders of the Company, amend the Plan in a manner that requires
shareholder approval for continued compliance with the terms of Rule 16b-3, as
promulgated under the Exchange Act, Section 422 of the Code, any successor
rules, or other regulatory authority. Except as provided in Section 8, no
termination, modification or amendment of the Plan may, without the consent
of the optionee to whom such option was previously granted under the Plan,
adversely affect the rights of such optionee. Any consent required by the
preceding sentence may be obtained in any manner deemed appropriate by the
Committee.
The Plan became effective upon adoption by the Board of Directors and
approval by the shareholders of the Company at the Company's 1994 annual meeting
of shareholders.
The Plan, unless sooner terminated, shall terminate on March 18, 2004, ten
years from the date the Plan was originally adopted by the Board. An option may
not be granted under the Plan after the Plan is terminated.
9. INFORMATION TO OPTIONEES.
The Company shall provide to each optionee, during the period for which he
or she has one or more outstanding options, copies of all annual reports and all
other information which is provided to shareholders of the Company. The Company
shall not be required to provide such information to key employees whose duties
in connection with the Company assure their access to equivalent information.
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10. PRIVILEGES OF STOCK OWNERSHIP, SECURITIES LAW
COMPLIANCE AND NOTICE OF SALE.
No optionee shall be entitled to the privileges of stock ownership as to
any Shares not actually issued and delivered to the optionee. The exercise of
any option under the Plan shall be conditioned upon the registration of the
Shares with the SEC and qualification of the options and underlying Shares under
the California securities laws, unless in the opinion of counsel to the Company
such registration or qualification is not necessary. The Company shall
diligently endeavor to comply with all applicable securities laws applicable to
the Plan.
11. NOTICE OF SALE.
The optionee shall give the Company notice of any sale or other disposition
of any Shares acquired upon exercise of an incentive stock option not more than
five days after such sale or disposition.
12. INDEMNIFICATION.
To the extent permitted by applicable law in effect from time to time, no
member of the Board or the Committee shall be liable for any action or omission
of any other member of the Board or Committee nor for any act or omission on the
member's own part, excepting only the member's own willful misconduct or gross
negligence. The Company shall pay expenses incurred by, and satisfy a judgment
or fine rendered or levied against, a present or former director or member of
the Committee in any action against such person (whether or not the Company is
joined as a party defendant) to impose liability or a penalty on such person
for an act alleged to have been committed by such person while a director or
member of the Committee arising with respect to the Plan or administration
thereof or out of membership on the Committee or by the Company, or all or any
combination of the preceding; provided the director or Committee member was
acting in good faith, within what such director or Committee member reasonably
believed to have been within the scope of his or her employment or authority
and for a purpose which he or she reasonably believed to be in the best
interests of the Company or its shareholders. Payments authorized hereunder
include amounts paid and expenses incurred in settling any such action or
threatened action.
This section does not apply to any action instituted or maintained in the right
of the Company by a shareholder or holder of a voting trust certificate
representing shares of the Company.
The provisions of this section shall apply to the estate, executor,
administrator, heirs, legatees or devisees of a director or Committee member,
and the term "person" as used in this section shall include the estate,
executor, administrator, heirs, legatees or devisees of such person.
1
SARATOGA BANCORP
1994 STOCK OPTION PLAN
(AMENDED)
2
SARATOGA BANCORP
1994 STOCK OPTION PLAN
(AMENDED)
TABLE OF CONTENTS
Page
1. PURPOSE. . . . . . . . . . . . . . . . . . . . . . 1
2. ADMINISTRATION . . . . . . . . . . . . . . . . . . 1
3. ELIGIBILITY. . . . . . . . . . . . . . . . . . . . 2
4. THE SHARES . . . . . . . . . . . . . . . . . . . . 2
5. OPTION GRANTS. . . . . . . . . . . . . . . . . . . 3
6. TERMS AND CONDITIONS APPLICABLE TO ALL OPTIONS . . 5
7. ADJUSTMENT OF, AND CHANGES IN, THE SHARES. . . . . 7
8. AMENDMENT, EFFECTIVENESS AND TERMINATION OF THE
PLAN . . . . . . . . . . . . . . . . . . . . . . . 8
9. INFORMATION TO OPTIONEES . . . . . . . . . . . . . 8
10. PRIVILEGES OF STOCK OWNERSHIP, SECURITIES LAW
COMPLIANCE AND NOTICE OF SALE. . . . . . . . . . . 8
11. NOTICE OF SALE . . . . . . . . . . . . . . . . . . 9
12. INDEMNIFICATION. . . . . . . . . . . . . . . . . . 9