CUPERTINO NATIONAL BANCORP
1989 Non-Qualified Stock Option Plan
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EXHIBIT 99.2
Cupertino National Bancorp 1989 Non-Qualified Stock Option Plan
As amended effective May 16, 1996
CUPERTINO NATIONAL BANCORP
1989 Non-Qualified Stock Option Plan
(As Amended Effective May 16, 1996)
Section 1. DESCRIPTION OF PLAN. This is the Non-
Qualified Stock Option Plan, dated as of January 19, 1989 (the
"Plan") of Cupertino National Bancorp, a California corporation
(the "Company"). Under this Plan, directors of the Company or
any of its subsidiaries, to be selected as below set forth, may
be granted common options ("Options") to purchase shares of the
Common Stock of the Company ("Common Stock"). For purposes of
this Plan, the term "subsidiary" means any corporation 50% or
more of the voting stock of which is owned by the Company or by a
subsidiary (as so defined) of the Company. It is intended that
the Options under this Plan will not qualify for treatment as
incentive stock options under Section 422A of the Internal
Revenue Code of 1954, as amended (the "Code").
Section 2. PURPOSE OF PLAN. The purpose of this Plan
and of granting Options to directors who are not bank employees
is to further the growth, development and financial success of
the Company and its subsidiaries by providing additional
incentives to such directors by assisting them to acquire shares
of Common Stock and to benefit directly from the Company's
growth, development and financial success.
Section 3. ELIGIBILITY. The persons shall be eligible
to receive grants of Options under this Plan shall be the
directors of the Company or any of its subsidiaries. A person
who holds an Option is herein referred to as an "Optionee". More
than one Option may be granted to any one Optionee.
Section 4. ADMINISTRATION. The Plan shall be
administered by a committee (the "Non-Qualified Option Committee"
or "Option Committee" herein) to be composed of not less than
three persons who shall be members of the Board of Directors (the
"Board"). Members of the Option Committee shall be appointed
originally and as vacancies occur by the Board, to serve at the
pleasure of the Board. The Board may serve as the Option
Committee. The initial Option Committee shall be the three
members of the Executive Committee who are not also bank
employees. The Option Committee shall meet at such times and
places as it determines. A majority of its members shall
constitute a quorum, and the decision of a majority of those
present at any meeting where a quorum is present shall constitute
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1989 Non-Qualified Stock Option Plan
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the decision of the Option Committee. A memorandum signed by all
of its members shall constitute the decision of the Option
Committee without necessity, in such event, for holding an actual
meeting. The Option Committee is authorized and empowered to
administer the Plan and, subject to the Plan, (i) to select the
Optionees, to specify the number of shares of Common Stock with
respect to which Options are granted to each Optionee, to specify
the Option Price and the terms of Options, and in general to
grant Options; (ii) to determine the dates upon which Options
shall be granted and the terms and conditions thereof in a manner
consistent with this Plan, which terms and conditions need not be
identical as to the various Options granted; (iii) to interpret
the Plan; (iv) to prescribe, amend and rescind rules relating to
the Plan; and (v) to determine the rights and obligations of
participants under the Plan. The interpretation and construction
by the Option Committee of any provision of the Plan or of any
Option granted under it shall be final. No member of the Option
Committee shall be liable for any action or determination made in
good faith with respect to the Plan or any Option granted under
it shall be final. No member of the Option Committee shall be
liable for any action or determination made in good faith with
respect to the Plan or any Option granted under it.
Section 5. SHARES SUBJECT TO THE PLAN. The aggregate
number of shares of Common Stock which may be purchased pursuant
to the exercise of Options granted under the Plan shall not
exceed 110,000(1) shares. Upon the expiration or termination for
any reason of an outstanding Option which shall not have been
exercised in full, any shares of Common Stock then remaining
unissued which shall have been reserved for issuance upon such
exercise shall again become available for the granting of
______________________
(1) 75,000 shares, adjusted for stock dividends subsequent
to the date of the original approval of the Plan, plus 35,000
shares pursuant to an amendment to the Plan effective May 16,
1996.
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1989 Non-Qualified Stock Option Plan
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additional Options under the Plan. Stocks remaining in the Plan
upon its expiration shall be returned to the status of authorized
but unissued shares.
Section 6. EXERCISE OF OPTIONS. Subject to all other
provision of this Plan, each Option shall be exercisable for the
full number of shares of Common Stock subject thereto, or any
part thereof, in such installments and at such intervals as the
Option Committee may determine in granting such Option. Each
Option shall terminate and expire, and shall no longer be subject
to exercise, as the Option Committee may determine in granting
such option, but in no event later than ten (10) calendar years
after the date of grant thereof. The Option shall be exercised
by the Optionee by giving written notice to the Company
specifying the number of full shares to be purchased and
accompanied by payment of the full purchase price therefore in
cash, by check or in such other form of lawful consideration as
the Board may approve from time to time, including without
limitation the assignment and transfer by the Optionee to the
Company of outstanding shares of the Company's Common Stock
theretofore held by the Optionee in a manner intended to comply
with the provision of Rule 16b-3 under the Securities Exchange
Act of 1934.
Section 7. ISSUANCE OF COMMON STOCK. The Company's
obligation to issue shares of its Common Stock upon exercise of
an Option granted under the Plan is expressly conditioned upon
the completion of the Company of any registration or other
qualification of such shares under any state and/or federal law
or rulings or regulations or other representations and
undertakings by the Optionee (or his legal representative, heir
or legatee, as the case may be) in order to comply with the
requirements of any exemption from any such registration or other
qualification of such share which the Company in its sole
discretion shall deem necessary or advisable. Such required
representations and undertakings may include representations and
agreements that such Optionee (or his legal representative, heir
or legatee): (a) is purchasing such shares for investment and
not with any present intention of selling or otherwise disposing
thereof; and (b) agrees to have placed upon the face and reverse
of any certificates evidencing such shares a legend setting forth
(i) any representations and undertakings which such Optionee has
given to the Company or a reference thereto, and (ii) that, prior
to effecting any sale or other disposition, Optionee will not
violate the applicable requirements of state and federal laws and
regulatory agencies.
Section 8. NONTRANSFERABILITY. No Option shall be
assignable or transferable except by will or by the laws of
descent and distribution. During the lifetime of an Optionee,
any Option granted to him shall be exercisable only by him.
After the death of an Optionee, the Option granted to him may be
exercised, prior to its termination, only by his legal
representative, his legatee or a person who acquired the right to
exercise the Option by reason of the death of the Optionee.
Section 9. RECAPITALIZATION, REORGANIZATION, MERGER OR
CONSOLIDATION. If the outstanding shares of Common Stock of the
Company are increased, decreased or exchanged for different
securities through reorganization, merger, consolidation,
recapitalization, reclassification, stock split, stock dividend
or like capital adjustment, a proportionate adjustment shall be
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1989 Non-Qualified Stock Option Plan
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made: (a) in the aggregate number of shares of Common Stock
which may be purchased pursuant to the exercise of Options
granted under the Plan, as provided in Section 5, and (b) in the
number, price and kind of share subject to any outstanding Option
granted under the Plan.
Upon the dissolution or liquidation of the Company or upon
any reorganization, merger or consolidation in which the Company
does not survive, the Plan and each outstanding Option shall
terminate, provided that in such event: (a) each Optionee to
whom no Option has been tendered by the surviving corporation in
accordance with all of the terms of provision (b) immediately
below shall have the right until five (5) days before the
effective date of such dissolution, liquidation, reorganization,
merger or consolidation, in which the Company is not the
surviving corporation, to exercise, in whole or in part, any
unexpired Option or Options issued to him without regard to the
installment of Section 6 of the Plan or any option agreement; or
(b) in its sole and absolute discretion, the surviving
corporation may, but shall not be so obligated, tender to any
Optionee an Option or Options to purchase shares of the surviving
corporation, and such new Option or Options shall contain such
terms and provisions as shall be required substantially to
preserve the rights and benefits of any option then outstanding
under the Plan.
To the extent that the foregoing adjustments relate to stock
or securities of the Company, such adjustments shall be made by
the Board, whose determination in that respect shall be final,
binding and conclusive. Except as hereinbefore expressly
provided in this Section 9, the Optionee shall have no rights by
reason of any subdivision or consolidation of shares of stock of
any class or the payment of any stock dividend or any other
increase or decrease in the number of shares of stock of any
class, and the number or price of shares of Common Stock subject
to any Option shall not be affected by, and no adjustment shall
be made by reason of, any dissolution, liquidation,
reorganization, merger or consolidation, or any issue by the
Company of shares of stock of any class, or rights to purchase or
subscribe for stock of any class, or securities convertible into
share of stock of any class.
The grant of an Option under the Plan shall not affect in
any way the right or power of the Company to make adjustments,
reclassifications or changes in its capital or business
structures or to merge, consolidate, dissolve, or liquidate or to
sell or transfer all or any part of its business or assets.
Section 10. SUBSTITUTE OPTIONS. If the Company at any
time should succeed to the Business of another corporation
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1989 Non-Qualified Stock Option Plan
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through a merger or consolidation, or through the acquisition of
stock or assets of such corporation, Options may be granted under
the Plan to those directors of such corporation or its
subsidiaries who, in connection with such succession, become
employees of the Company or its subsidiaries, in substitution for
Options to purchase stock of such corporation held by them at the
time of the succession. The Option Committee shall in its sole
and absolute discretion determine the extent to which such
substitute Options shall be granted (if at all), the persons to
receive such substitute Options (who need not be all Optionees of
such corporation), the number of Options to be received by such
person, the Option Price of such Option and the terms and
conditions of such substitute; provided, however, that the Option
Price of each such substituted Option shall be an amount such
that, in the sole and absolute judgement of the Option Committee
and in compliance with Section 425(a) of the Code, the economic
benefit provided by such Option is not greater than the economic
benefit represented by the option in the acquired corporation as
of the date of the Company's acquisition of such corporation.
Any Option substituted for another option in accordance with this
Section 19 shall expire upon the earlier of the expiration date
of such other option or ten (10) years from the date such Option
is granted, and, notwithstanding, the provisions of Section 6
hereof will be exercisable during the period in which the other
option would have been exercisable. Any provision of this
Section 10 to the contrary notwithstanding, no Option shall be
granted, nor any action taken, permitted or omitted, which would
have the effect of causing the Plan, or any Option granted
hereunder as to which Rule 16b-3 under the Securities and
Exchange Act of 1934 may apply, not to comply with such Rule.
Section 11. OPTION AGREEMENT. Each Option granted under
the Plan shall be evidenced by a written stock option agreement
executed by the Company and accepted by the Optionee, which (a)
shall contain each of the provision and agreements herein
specifically required to be contained therein, including, without
limitation, in the case of Options granted prior to the approval
of the Plan by the shareholders of the Company as set forth in
Section 15, a provision specifically stating that such Option may
not be exercised unless and until such approval is obtained; (b)
shall contain such other terms and conditions as the Option
Committee may deem desirable and which are not inconsistent with
the Plan.
Section 12. RIGHTS AS SHAREHOLDER. Any Optionee or a
transferee of an Option shall have no rights as a shareholder
with respect to any shares covered by his Option until the date
of issuance of a stock certificate to him for such shares. No
adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property) or
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1989 Non-Qualified Stock Option Plan
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distributions or other rights for which the record date is prior
to the date such stock certificate is issued, except as expressly
provided in Section 6.
Section 13. TERMINATION OF OPTIONS. Each Option granted
under the Plan shall set forth a termination date thereof, which
date shall not be later than ten (10) years from the date such
Option is granted. In any event, all Options shall terminate and
expire upon the first to occur of the following events:
a) the expiration of three (3) months from the date an
Optionee is no longer serving as a director, except that if an
Optionee is then disabled (within the meaning of Section
105(d)(4) of the Code), the expiration of one (1) year from the
date such Optionee is no longer serving as a director;
b) The expiration of twelve (12) months from the date of
the death of an Optionee if his death occurs while he is a
director of the Company or any of its subsidiaries, or
c) the termination of the Option pursuant to Section 10 of
the Plan.
The termination of service as a director or an Optionee by
death or otherwise shall not accelerate or otherwise affect the
number of shares with respect to which an option may only be
exercised; provided, however, that an Option may only be
exercised with respect to that number of shares which could have
been purchased under the Option had the Option been exercised by
the Optionee on the date of such termination.
Section 14. WITHHOLDING OF TAXES. The Company shall
deduct and withhold from the wages, salary, bonus and other
compensation paid by the Company to the Optionee the requisite
tax upon the amount of taxable income, if any, recognized by the
Optionee in connection with the exercise in whole or in part of
any Option or the sale of Common Stock issued to the Optionee
upon exercise of the Option, all as may be required from time to
time under any federal or state tax laws and regulations. This
withholding of tax shall be made from the Company's concurrent or
next payment of wages, salary, bonus or other income to the
Optionee of the required withholding tax, as the Option Committee
may determine.
Section 15. EFFECTIVENESS AND TERMINATION OF PLAN. The
Plan shall be effective as of the date on which it is adopted by
the Board of Directors of the Company; provided, however, that no
Option shall be exercisable unless and until the Plan has been
approved by the affirmative vote of the holders of a majority of
that voting stock of the Company which is represented and is
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1989 Non-Qualified Stock Option Plan
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entitled to vote at a duly held meeting of the Company's
shareholders; provided, further, that no Option may be granted
hereunder on or after that date which is ten (10) years from the
effective date of the Plan. The Plan shall terminate when all
Options granted hereunder either have been fully exercised, and
all share of Common Stock which may be purchased pursuant to the
exercise of such Options have been so purchased, or have expired;
provided, however, that the Board of Directors of the Company may
in its absolute discretion terminate the Plan at any time. No
such termination, other than as provided for in Section 9 hereof,
shall in any way affect any Option then outstanding.
Section 16. AMENDMENT OF PLAN. The Board may make such
amendments to the Plan, and, with the consent of each Optionee
affected, in the terms and conditions of granted Options, as it
shall deem advisable, including but not limited to, accelerating
the time at which an Option may be exercised, but may not,
without the written consent of approval of the holders of a
majority of that voting stock of the Company which is represented
and is entitled to vote at a duly held shareholders' meeting, (a)
increase the maximum number of shares subject to Options, except
pursuant to Section 9 of the Plan; (b) change the designation of
the class of persons eligible to receive Options; or (c) in any
manner materially increase the benefits accruing to participants
under the Plan, or otherwise modify the Plan such that it fails
to meet the requirements of Rule 16b-3 of the Securities and
Exchange Commission for the exemption of the acquisition,
cancellation, expiration or surrender of Options from the
operation of Section 16(b) of the Securities Exchange Act of
1934.