EXHIBIT *10.5
REGENCY BANCORP
AMENDED AND RESTATED
1990 STOCK OPTION PLAN
TABLE OF CONTENTS
PAGE
1. PURPOSE................................................................. 1
2. ADMINISTRATION.......................................................... 1
3. ELIGIBILITY............................................................. 3
4. THE SHARES.............................................................. 3
5. AUTOMATIC GRANTS TO OUTSIDE DIRECTORS................................... 3
(a) NONSTATUTORY OPTIONS.......................................... 4
(b) OPTION PRICE.................................................. 4
(c) DURATION AND VESTING OF OPTIONS............................... 4
(d) TERMINATION OF TENURE ON THE BOARD............................ 4
(e) NO DISCRETION................................................. 5
6. GRANT, TERMS AND CONDITIONS OF EMPLOYEE OPTIONS......................... 5
(a) OPTION PRICE.................................................. 6
(b) DURATION AND EXERCISE OF OPTIONS.............................. 6
(c) TERMINATION OF EMPLOYMENT..................................... 7
7. TERMS AND CONDITIONS APPLICABLE TO ALL OPTIONS.......................... 8
(a) EXERCISE OF OPTION............................................ 8
(b) TRANSFERABILITY OF OPTION AND SHARES.......................... 9
(c) OTHER TERMS AND CONDITIONS.................................... 9
(d) USE OF PROCEEDS FROM STOCK.................................... 9
(e) RIGHTS AS A SHAREHOLDER....................................... 9
(f) WITHHOLDING................................................... 10
8. ADJUSTMENT OF AND CHANGES IN THE SHARES................................. 10
9. LISTING OR QUALIFICATION OF SHARES...................................... 12
10. BINDING EFFECT OF CONDITIONS............................................ 12
11. AMENDMENT AND TERMINATION OF THE PLAN................................... 13
12. EFFECTIVENESS OF THE PLAN............................................... 13
13. PRIVILEGES OF STOCK OWNERSHIP; SECURITIES LAW
COMPLIANCE; NOTICE OF SALE.............................................. 13
14. INFORMATION TO OPTIONEES................................................ 14
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TABLE OF CONTENTS
(continued)
PAGE
15. INDEMNIFICATION......................................................... 14
ii
Amended and Restated
as of April 1, 1996
REGENCY BANCORP
AMENDED AND RESTATED
1990 STOCK OPTION PLAN
1. PURPOSE.
The purpose of this Stock Option Plan (hereinafter the "Plan") is to
provide a means whereby directors and certain employees of Regency Bancorp
(hereinafter the "Company") and its "affiliates" (as such term is defined below)
may be given an opportunity to purchase shares of the Common Stock (hereinafter
the "Common Stock") of the Company. The Plan is intended to advance the
interests of the Company by encouraging stock ownership on the part of directors
and employees, by enabling the Company to secure and retain the services of
highly qualified persons and by providing directors and employees with an
additional incentive to make every effort to enhance the success of the Company.
The word "affiliate", as used in this Plan, means any bank or corporation
in an 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 committee of the Board of Directors
appointed for this purpose by the Board of Directors. 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, in its discretion, shall 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
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acting, or (ii) reduced to and approved in writing by all members of the
committee, shall be the valid acts of the committee.
(b) Discretionary grants of options to officers of the Company,
including those who are also directors of the Company, shall be made by and all
discretion with respect to the material terms of such options shall be exercised
by (i) the Board of Directors when all members of the Board are Disinterested
Persons, or (ii) a duly appointed committee of the Board composed solely of
Disinterested Persons having full authority to act in the matter. The term
"Disinterested Person" 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 not less than the minimum number of Disinterested Persons from
time to time required by Rule 16b-3.
(c) The full Board of Directors shall administer the Plan with
respect to the automatic grant of options to Outside Directors pursuant to
Section 5 of the Plan.
(d) The Board and any such committee(s) referred to in Section 2(a)
or 2(b) is referred to hereinafter as the "Committee," except where otherwise
expressly provided or where the context requires otherwise.
(e) The Committee shall effect the grant of options under the Plan by
execution of instruments in writing in a form approved by the Committee.
Subject to the express terms and conditions of the Plan and except with respect
to the automatic grant of options to Outside Directors pursuant to Section 5,
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 administration of the Plan,
including, without limitation, the power to: (i) determine which persons meet
the requirements of Section 3 hereof for selection as participants in the Plan
and which persons are considered to be "employees" for purposes of the Internal
Revenue Code of 1986, as amended (the "Code"), and therefore eligible to receive
incentive stock options under 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
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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 Code, or "nonstatutory stock options"; (iv) specify the number of shares
to be covered by each option; (v) in the event a particular option is to be an
incentive stock option, determine and incorporate such terms and provisions, as
well as amendments thereto, as shall be required in the judgment of the
Committee, so as to provide for or conform such option to any change in any law,
regulation, ruling or interpretation applicable thereto; (vi) take appropriate
action to amend any option hereunder, provided that no such action may be taken
without the written consent of the affected optionee; (vii) cancel outstanding
options and issue replacement options therefor with the consent of the affected
optionee, and (viii) make all other determinations deemed necessary or advisable
for administering the Plan. The determination on the foregoing matters by the
Committee shall be conclusive.
3. ELIGIBILITY.
The persons who shall be eligible to receive the discretionary grant of
options under this Plan shall be those officers and key, full-time salaried
employees of the Company and its affiliates (including those who may also be
directors of the Company). Directors of the Company who are not also employees
of the Company ("Outside Directors") are not eligible for the discretionary
grant of options under this Plan. Outside Directors are eligible only for the
nondiscretionary grant of options pursuant to Section 5 of this Plan.
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4. THE SHARES.
The shares of stock subject to options authorized to be granted under the
Plan shall consist of five hundred forty-five thousand four hundred forty-eight
(545,448) shares of the no par value Common Stock of the Company (the "Shares"),
or the number and kind of shares of stock or other securities which shall be
substituted for such shares of stock or to which such shares shall be adjusted
as provided in Section 8. The Shares subject to the Plan may be set aside out
of the authorized but unissued shares of Common Stock of the Company not
reserved for any other purpose or out of shares of Common Stock subject to an
option which, for any reason, expires or becomes unexercisable as to the Shares.
Shares of the Company's Common Stock which are (i) delivered by an optionee, or
(ii) withheld by the Company from the shares otherwise due upon exercise of an
option, in payment of the exercise price of an option and/or in satisfaction of
applicable withholding taxes 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.
5. AUTOMATIC GRANTS TO OUTSIDE DIRECTORS.
Each person who is an Outside Director on April 1, 1996, and who continues
to be an Outside Director as of the date a permit qualifying the grant of
options to such Outside Directors is issued by the California Commissioner of
Corporations (the "Permit Date") shall be granted, as of the Permit Date,
options to purchase 10,000 shares. Each person who is first elected or
appointed as an Outside Director after April 1, 1996, shall be granted options
to purchase 10,000 Shares as of the Permit Date or as of the date such person is
first appointed or elected as an Outside Director, whichever shall last occur.
All options granted pursuant to this section shall be subject to approval of
this section by the shareholders of the Company, and shall not be exercisable
prior to the date such approval is obtained. Subject to the preceding sentence,
twenty percent (20%) of each option granted pursuant to this section shall
become vested and exercisable after the first anniversary date of the grant,
with an additional twenty percent (20%) becoming exercisable on each successive
anniversary date until fully vested. Notwithstanding the foregoing, if there
are insufficient Shares available under the Plan for each Outside Director who
is eligible to receive an option, the number of options that an eligible Outside
Director shall receive, if any, shall be determined on a pro rata basis (as
rounded down to avoid fractional Shares). All options granted to
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Outside Directors shall be subject to the following terms and conditions:
(a) NONSTATUTORY OPTIONS. All stock options granted to Outside
Directors pursuant to the Plan shall be nonstatutory stock options.
(b) OPTION PRICE. The purchase price under each option granted to an
Outside Director shall be 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 Outside Director 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 subject thereto on the date the option is
granted.
(c) DURATION AND VESTING OF OPTIONS. Each option granted to an
Outside Director shall be for a ten-year term and shall be vested for exercise
in the manner specified above.
(d) TERMINATION OF TENURE ON THE BOARD. Upon the termination of an
optionee's status as a member of the Board, his or her rights to exercise any
options then held shall be only as follows:
DEATH OR DISABILITY: If an optionee's tenure on the Board 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 following the date of such termination to exercise
the option to the extent the optionee was entitled to exercise such option on
the date of such termination; provided the actual date of exercise is in no
event after the expiration of the term of the option. 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. To the extent
the option is not exercised within such period the option will terminate.
CAUSE: If an optionee's tenure on the Board is terminated for "cause"
(as such term is defined below), the optionee shall have the right for a period
of thirty (30) 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
5
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.
OTHER REASONS: If an optionee's tenure on the Board is terminated for
any reason other than those mentioned above under "Death or Disability" or
"CAUSE," the optionee may, within three (3) months following such termination,
exercise the option to the extent such option was exercisable by the optionee on
the date of such termination; provided 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.
(e) NO DISCRETION. The automatic grants to Outside Directors
pursuant to this Section 5 shall not be subject to the discretion of any person.
6. GRANT, TERMS AND CONDITIONS OF EMPLOYEE OPTIONS.
Options may be granted at any time prior to the termination of the Plan to
officers and other key, full-time salaried employees of the Company and its
affiliates who, in the judgment of the Committee, contribute to the successful
conduct of the operation of the Company or its affiliates through their
judgment, interest, ability and special efforts; provided, however, that: (i)
the aggregate initial fair market value of the stock (determined as of the date
the option is granted) that may be acquired by any one officer or employee
pursuant to all incentive stock options granted under the Plan that are
exercisable for the first time during any one calendar year (under all stock
option plans of the Company) shall not exceed $100,000; (ii) except in the case
of termination by death or disability, as set forth in Section 6(c) below, the
granted option must be exercised by the optionee no later than three (3) months
after any termination of employment with the Company and said employment must
have been continuous since the granting of the option; and (iii) the total
number of shares subject to options granted to any one optionee, at any one
time, shall not exceed ten percent (10%) of the then issued and outstanding
shares of Common Stock of the Company. In addition, options granted pursuant to
the Plan shall be subject to the following terms and conditions:
(a) OPTION PRICE. The purchase price under each option shall be not
less than one hundred percent (100%) of the fair market value of the Shares
subject thereto on the date the
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option is granted, as such value is determined by the Committee. The fair
market value of such stock shall be determined in accordance with any reasonable
valuation method, including the valuation methods described in Treasury
Regulation Section 20.2031-2. If, however, an optionee owns stock of the
Company possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company, the option price of any incentive
stock option granted to such optionee shall be not less than 110 percent (110%)
of such fair market value at the time such option is granted.
(b) DURATION AND EXERCISE OF OPTIONS. Each option, other than an
option granted pursuant to Paragraph 5(a), shall vest in such manner and at such
time up to but not exceeding ten (10) years from the date the option is granted
as the Committee shall determine in its sole discretion; provided, however, 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; provided further,
that the Committee may accelerate the time of exercise of any option; and
provided further 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. The termination of the Plan shall not alter the maximum duration,
the vesting provisions, or any other term or condition of any option granted
prior to the termination of the Plan.
With respect to incentive stock options granted to a participant under the
Plan in any calendar year, the Company may grant a participant incentive stock
options to purchase Shares having more than $100,000 in initial aggregate fair
market value (determined at the times the options are granted), subject to the
$100,000 limitation set forth in this Section 6 applicable to each year in which
such options first become exercisable. The optionee may exercise, during a
calendar year an incentive stock option only to the extent that the aggregate
initial fair market value of the Shares that may be acquired pursuant to the
option (or portion thereof) and all other incentive stock options that are first
exercisable during the calendar year does not exceed $100,000 (taking into
account all incentive stock options granted under any stock option plan of the
Company or any of its affiliates, or any predecessor of any such corporation).
If permitted under regulations promulgated by the Treasury Department or by a
ruling of the Internal Revenue Service, the optionee may choose, among the
options granted under the Plan that are first exercisable by
7
the optionee in a calendar year, those options the optionee wishes to exercise
subject to the $100,000 limitation. If such choice is not permitted (as
determined by the Board of Directors or the Committee, in its sole discretion),
the optionee may exercise an incentive stock option in a calendar year, either
in whole or in part, only if the aggregate initial fair market value of the
shares that the optionee may acquire under incentive stock options prior to the
first mentioned option and which become first exercisable in such year (without
regard to the $100,000 limitation) does not exceed $100,000. If an optionee
does not exercise an incentive stock option (or portion thereof) that is first
exercisable in a calendar year under the $100,000 limitation, the optionee may
exercise that option (or portion thereof) in subsequent years without regard to
the $100,000 limitation.
(c) TERMINATION OF EMPLOYMENT. Upon the termination of an optionee's
status as an employee of the Company or its affiliates, his or her rights to
exercise an option then held shall be only as follows:
DEATH OR DISABILITY: If an optionee's employment 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 the optionee's death) shall have the right for a period of
twelve (12) months following the date of such termination to exercise the option
to the extent the optionee was entitled to exercise such option on the date of
such termination; 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 is terminated because such
optionee is determined by the Committee to have committed an act of
embezzlement, fraud, dishonesty, breach of fiduciary duty to the Company (which
term includes the Company's affiliates for purposes of this paragraph), 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 of confidential information of the Company,
induces any client or customer of the
8
Company to break any contract with the Company or induces any principal for whom
the Company acts as agent to 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 the Federal Deposit Insurance
Corporation or any other bank regulatory agency, the optionee shall have the
right for a period of thirty (30) 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 such determination, the Committee shall act fairly and shall give the
optionee an opportunity to appear and be heard at a hearing before the full
Board of Directors and present evidence on the optionee's behalf. For the
purpose of this paragraph, termination of employment shall be deemed to occur
when the Company dispatches notice or advice to the optionee that the optionee's
employment is terminated and not at the time of optionee's receipt thereof.
OTHER REASONS: If an optionee's employment is terminated for any
reason other than those mentioned above under "Death or Disability" and "Cause",
the optionee may, within three (3) 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 by the optionee on the date of termination of the optionee's
employment, 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 (3) months following such 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.
7. 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 OPTION. 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
9
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 the Company's Common Stock
which (i) have been owned by the optionee for at least six (6) months or such
other period as the Committee may require; and (ii) have an aggregate fair
market value on the date of surrender equal to the exercise price. An optionee,
other than an optionee holding an option granted pursuant to Section 5, may also
elect to satisfy the exercise price by requesting that the Company withhold a
sufficient number of shares from the shares otherwise due upon exercise which
have an aggregate fair market value on the date of exercise equal to the
exercise price. 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 and exercise of the option must satisfy the requirements
of Rule 16b-3. In addition, the Committee may permit an option to be exercised
by delivering to the Company (i) an exercise notice instructing the Company to
deliver the certificates for the Shares 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 unless an earlier or later date shall be mutually agreed upon,
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. If an option covers incentive and nonstatutory stock options, separate
stock certificates will be issued; one or more for incentive stock options and
one or more for the nonstatutory stock options.
(b) TRANSFERABILITY OF OPTION AND SHARES. No option shall be
transferable other than 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
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optionee's 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) 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 an officer of the Company or its affiliates, nor
limit in any way the right of the Company or its affiliates to terminate an
optionee's employment or status as an officer at any time.
(d) USE OF PROCEEDS FROM STOCK. Proceeds from the sale of Shares
pursuant to the exercise of options granted under the Plan shall constitute
general funds of the Company.
(e) RIGHTS AS A SHAREHOLDER. The optionee shall have no rights as a
shareholder with respect to any Shares until the date of issuance of a stock
certificate for such Shares. 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 Section 8 hereof.
(f) WITHHOLDING. The Company shall have the right upon the exercise
of an option to deduct any sums required to be withheld under federal, state or
local tax laws or regulations. The Company may condition the issuance of Shares
upon exercise of any option upon the payment by the optionee of any sums
required to be withheld under applicable laws or regulations. 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 the Company's Common
Stock (which have been held by the optionee for such 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. The Company has no duty to advise any
11
optionee of the existence of any tax or any amounts which may be withheld.
8. ADJUSTMENT OF AND CHANGES IN THE SHARES.
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, consolidation, recapitalization,
reclassification, split-up, 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, the Committee shall substitute for or add 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, the Committee shall make appropriate adjustment 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.
In the event of sale, dissolution or liquidation of the Company or a merger
or consolidation in which the Company is not the surviving or resulting
corporation, the Committee may, in its discretion, provide for the assumption by
the surviving or resulting corporation of every option outstanding hereunder on
its terms and conditions, both as to the number of shares and otherwise;
provided, however, that, if the Committee does not provide for such assumption,
the Committee shall have the power to cause the termination of every option
outstanding hereunder, except that the surviving or resulting corporation may,
in its discretion, tender an option or options to purchase its shares on its
terms and conditions, both as to the number of shares and otherwise; and,
provided, further, that the provisions contained in the following Sections 8(a)
and (b) shall apply to all options granted prior to (but not after) March 1,
1995 (the date on which the merger of Regency Merger Corporation with and into
Regency
12
Bank (the "Bank") was consummated), after which time the Bank became a wholly-
owned subsidiary of the Company and options theretofore and thereafter granted
under this Plan became options to purchase shares of Common Stock of the
Company:
(a) Each optionee shall have the right immediately prior to such
sale, dissolution, liquidation, or merger or consolidation in which the Company
is not the surviving or resulting corporation to notification thereof as soon as
practicable and, thereafter, to exercise the optionee's option to purchase
Shares subject thereto to the extent of any unexercised portion of the option,
regardless of the vesting provisions of Section 6(b) hereof. This right of
exercise shall be conditioned upon the execution of a final plan of dissolution
or liquidation or a definitive agreement of merger or consolidation and the
consummation of the transactions contemplated thereby.
(b) In the event of the purchase by any person or entity of, or an
offer by any person or entity to all shareholders of the Company to purchase,
25% or more of the shares of Common Stock of the Company (or 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 8 hereof), or which purchase or
offer would result in such person or entity acquiring more than 50% of the
Company's outstanding shares following such purchase, any optionee under this
Plan shall have the right upon such purchase or the commencement of such offer
to exercise the option and purchase shares subject thereto to the extent of any
unexercised or unvested portion of such option.
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
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.
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.
Except as expressly provided in this Section 8, no issuance by the Company
of shares of stock of any class, or securities
13
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
of Common Stock subject to an option. 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.
9. LISTING OR QUALIFICATION OF SHARES.
All options granted under the Plan are subject to the requirement that if
at any time the Committee shall determine in its discretion that the listing or
qualification of the Shares subject thereto on any securities exchange or under
any applicable law, or the consent or approval of any governmental regulatory
body, or if, in the opinion of counsel to the Company, compliance with any state
or federal securities laws is necessary or desirable as a condition of or in
connection with the issuance of Shares under the option, the optionee's right to
exercise any and all options shall be suspended and the option may not be
exercised in whole or in part unless such listing, qualification, consent,
approval, or compliance shall have been effected or obtained free of any
condition not acceptable to the Committee.
10. BINDING EFFECT OF CONDITIONS.
The conditions and stipulations herein contained, or in any option granted
pursuant to the Plan shall be, and constitute, a covenant running with all of
the Shares acquired by the optionee pursuant to this Plan, directly or
indirectly, whether the same have been issued or not, and those Shares owned by
the optionee shall not be sold, assigned or transferred by any person save and
except in accordance with the terms and conditions herein provided, and the
optionee shall agree to use the optionee's best efforts to cause the officers of
the Company to refuse to record on the books of the Company any assignment or
transfer made or attempted to be made except as provided in the Plan and to
cause said officers to refuse to cancel old certificates or to issue or deliver
new certificates therefor where the purchaser or assignee
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has acquired certificates or the Shares represented thereby, except strictly in
accordance with the provisions of the Plan.
11. AMENDMENT AND TERMINATION OF THE PLAN.
The Board of Directors shall have complete power and authority to terminate
or amend the Plan; provided, however, that the Board of Directors shall not,
without the approval of the shareholders of the Company and, if applicable, the
approval of the Superintendent of Banks of the State of California, 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 (if Section
16 is applicable to the officers and directors of the Company), Section 422 of
the Code, any successor rules, or other regulatory authority; and provided
further that the provisions of Section 5 shall not be amended more than once
every six (6) months, other than to comport with changes in the Code, or the
rules thereunder. 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. Unless the Plan shall have been terminated by action of the
Board of Directors prior thereto, it shall terminate on March 22, 2000.
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12. EFFECTIVENESS OF THE PLAN.
The amendments to the Plan contained herein shall become effective only
upon approval by the Board of Directors and, if necessary, by the shareholders
of the Company in accordance with applicable law.
13. PRIVILEGES OF STOCK OWNERSHIP; SECURITIES LAW COMPLIANCE; 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. No Shares shall
be purchased upon the exercise of any option unless and until any then
applicable requirements of any regulatory agencies having jurisdiction,
securities laws, and of any exchanges upon which the Common Stock of the Company
may be listed shall have been fully complied with. The Company shall diligently
endeavor to comply with all applicable securities laws before any options are
granted under the Plan and before any Shares are issued pursuant to the exercise
of such options. 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 (5) days after such sale or other disposition.
14. INFORMATION TO OPTIONEES.
The Company shall provide to each optionee during the period for which he
or she has one or more outstanding options, annual financial statements, and
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 (other than annual financial statements) to key employees whose
duties in connection with the Company assure their access to equivalent
information.
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15. INDEMNIFICATION.
To the extent permitted by applicable law in effect from time to time, no
member of the Board of Directors or the Committee shall be liable for any action
or omission of any other member of the Board of Directors 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 a
liability or 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.
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