EXHIBIT 10.2
BYL Bancorp 1997 Stock Option Plan and form of Stock Option Agreement
BYL BANCORP
1997 STOCK OPTION PLAN
Adopted April 23, 1997
Amended July 23, 1997
1. PURPOSE
The purpose of the BYL Bancorp 1997 Stock Option Plan (the "Plan") is to
strengthen BYL Bancorp (the "Corporation") and those corporations which are or
hereafter become subsidiary corporations by providing additional means of
attracting and retaining competent managerial personnel and by providing to
participating directors, officers, key employees, consultants, business
associates and others with business relationships added incentives for high
levels of performance and for unusual efforts to increase the earnings of the
Corporation and any Subsidiary corporations; and to allow such individuals the
opportunity to participate in the ownership of the Corporation and thereby have
an interest in the success and increased value of the Corporation. The Plan
seeks to accomplish these purposes and achieve these results by providing a
means whereby such directors, officers, key employees, consultants, business
associates and others with business relationships may purchase shares of Common
Stock of the Corporation pursuant to Stock Options granted in accordance with
this Plan.
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Stock Options granted pursuant to this Plan are intended to be Incentive
Stock Options or Non-Qualified Stock Options, as shall be determined and
designated by the Stock Option Committee upon the grant of each Stock Option
hereunder.
2. DEFINITIONS
For the purposes of this Plan, the following terms shall have the following
meanings:
(a) "COMMON STOCK." This term shall mean shares of the Corporation's
no par value common stock, subject to adjustment pursuant to Paragraph 14
(Adjustment Upon Changes in Capitalization) hereunder.
(b) "CORPORATION." This term shall mean BYL Bancorp, a California
corporation.
(c) "ELIGIBLE PARTICIPANT." This term shall mean: (i) all directors
of the Corporation or any Subsidiary; (ii) all full time officers (whether or
not they are also directors) of the Corporation or any Subsidiary; (iii) all
full time key employees (as such persons may be determined by the Stock Option
Committee from time to time) of the Corporation or any Subsidiary; and (iv)
consultants, business associates and others with business relationships with the
Corporation.
(d) "EMPLOYER." This term shall mean the Corporation, as defined
herein, or any other subsidiary of the Corporation, as appropriate, depending
upon which company Optionee is employed.
(e) "FAIR MARKET VALUE." This term shall mean the fair market value
of the Corporation's Common Stock as determined by any reasonable valuation
method in
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accordance with the Commissioner of Corporations Regulation Section
260.140.50, which generally provides that in determining whether the price is
fair, predominant weight will be given to the following: (a) if securities
of the same class are publicly traded on an active market of substantial
depth, the recent market price of such securities; (b) if the securities of
the same class have not been so publicly traded, the price at which
securities of reasonable comparable corporations (if any) in the same
industry are being traded, subject to appropriate adjustments for the
dissimilarities between the corporations being compared; or (c) in the
absence of any reliable indicator under subsection (a) or (b), the earnings
history, book value and prospects of the issuer in light of market conditions
generally.
(f) "INCENTIVE STOCK OPTION." This term shall mean a Stock Option
which is an "Incentive Stock Option" within the meaning of Section 422A of the
Internal Revenue Code of 1986, as amended.
(g) "NON-QUALIFIED STOCK OPTION." This term shall mean a Stock Option
which is not an Incentive Stock Option.
(h) "OPTION SHARES." This term shall mean shares of Common Stock
which are covered by and subject to any outstanding unexercised Stock Option
granted pursuant to this Plan.
(i) "OPTIONEE." This term shall mean any Eligible Participant to whom
a stock option has been granted pursuant to this Plan, provided that at least
part of the Stock Option is outstanding and unexercised.
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(j) "PLAN." This term shall mean the BYL Bancorp 1997 Stock Option
Plan as embodied herein and as may be amended from time to time in accordance
with the terms hereof and applicable law.
(k) "STOCK OPTION." This term shall mean the right to purchase from
the Corporation a specified number of shares of Common Stock under the Plan at a
price and upon terms and conditions determined by the Stock Option Committee.
(l) "STOCK OPTION COMMITTEE." The Board of Directors of the
Corporation may select and designate a stock option committee consisting of at
least three and not more than five persons, at least two of whom are directors,
having full authority to act in the matters. Regardless of whether a Stock
Option Committee is selected, the Board of Directors may act as the Stock Option
Committee and any action taken by the Board of Directors as such shall be deemed
to be action taken by the Stock Option Committee. All references in the Plan to
the "Stock Option Committee" shall be deemed references to the Board of
Directors acting as a stock option committee and to a duly appointed Stock
Option Committee, if there be one. In the event of any conflict between any
action taken by the Board of Directors acting as a Stock Option Committee and
any action taken by a duly appointed Stock Option Committee, the action taken by
the Board of Directors shall be controlling and the action taken by the duly
appointed Stock Option Committee shall be disregarded.
(m) "SUBSIDIARY." This term shall mean any subsidiary corporation of
the Corporation as such term is defined in Section 425(f) of the Internal
Revenue Code of 1986, as amended.
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3. ADMINISTRATION
(a) STOCK OPTION COMMITTEE. This Plan shall be administered by the
Stock Option Committee. The Board of Directors of the Corporation shall have
the right, in its sole and absolute discretion, to remove or replace any person
from or on the Stock Option Committee at any time for any reason whatsoever.
(b) ADMINISTRATION OF THE PLAN. Any action of the Stock Option
Committee with respect to the administration of the Plan shall be taken
pursuant to a majority vote, or pursuant to the unanimous written consent, of
its members. Any such action taken by the Stock Option Committee in the
administration of this Plan shall be valid and binding, so long as the same
is in conformity with the terms and conditions of this Plan. Subject to
compliance with each of the terms, conditions and restrictions set forth in
this Plan, including, but not limited to, those set forth in Section 6(a)(ii)
hereof, the Stock Option Committee shall have the exclusive right, in its
sole and absolute discretion, to establish the terms and conditions of any
Stock Options granted under the Plan, including, without limitation, the
power to: (i) establish the number of Stock Options, if any, to be granted
hereunder, in the aggregate and with regard to any individual Eligible
Participant; (ii) determine the time or times when such Stock Options, or any
parts thereof, may be exercised; (iii) determine and designate which Stock
Options granted under the Plan shall be Incentive Stock Options and which
shall be Non-Qualified Stock Options; (iv) determine the Eligible
Participants, if any, to whom Stock Options are granted; (v) determine the
duration and purposes, if any, of leaves of absence which may be
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permitted to holders of unexercised, unexpired Stock Options without such
constituting a termination of employment under the Plan; (vi) prescribe and
amend the terms, provisions and form of any instrument or agreement setting
forth the terms and conditions of every Stock Option granted hereunder; and
(vii) make loans to or guarantee any obligations of any Optionees, except
directors, in connection with the exercise of Stock Options as specified in
Section 8(d) hereof, whenever the Stock Option Committee determines that such
loan or guarantee may reasonably be expected to benefit the corporation,
subject to the provisions of Section 315(b) of the California General
Corporations Law of 1977, as amended and subject to Regulations G, U and T
promulgated by the Board of Governors of the Federal Reserve System pursuant
to Section 7 of the Securities Exchange Act of 1934, if the Option Shares are
listed on a stock exchange or are contained in the list of over-the-counter
margin securities published by the Federal Reserve Board.
(c) DECISIONS AND DETERMINATIONS. Subject to the express provisions
of the Plan, the Stock Option Committee shall have the authority to construe and
interpret the Plan, to define the terms used therein, to prescribe, amend, and
rescind rules and regulations relating to the administration of the Plan, and to
make all other determinations necessary or advisable for administration of the
Plan. Determinations of the Stock Option Committee on matters referred to in
this Section 3 shall be final and conclusive so long as the same are in
conformity with the terms of this Plan.
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4. SHARES SUBJECT TO THE PLAN
Subject to adjustments as provided in Section 14 hereof, the maximum number
of shares of Common Stock which may be issued upon exercise of Stock Options
granted under this Plan is limited to 30% of the issued and outstanding shares
of the Corporation up to a maximum of 460,519 shares in the aggregate. If any
Stock Option shall be canceled, surrendered, or expire for any reason without
having been exercised in full, the unpurchased Option Shares represented thereby
shall again be available for grants of Stock Options under this Plan.
5. ELIGIBILITY
Only Eligible Participants shall be eligible to receive grants of Stock
Options under this Plan.
6. GRANTS OF STOCK OPTIONS
(a) GRANT. Subject to the express provisions and limitations of the
Plan, the Stock Option Committee, in its sole and absolute discretion, may grant
Stock Options to Eligible Participants of the Corporation, for a number of
Option Shares, at the price(s) and time(s), on the terms and conditions and to
such Eligible Participants as it deems advisable and specifies in the respective
grants.
Subject to the limitations and restrictions set forth in the Plan,
an Eligible Participant who has been granted a Stock Option may, if otherwise
eligible, be granted additional Stock Options if the Stock Option Committee
shall so determine. The Stock Option Committee shall designate in each grant
of a Stock Option whether the Stock Option is an Incentive Stock Option or a
Non-Qualified Stock Option.
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An eligible director, officer or employee shall not participate in the
granting of his or her own options.
(b) DATE OF GRANT AND RIGHTS OF OPTIONEE. The determination of the
Stock Option Committee to grant a Stock Option shall not in any way constitute
or be deemed to constitute an obligation of the Corporation, or a right of the
Eligible Participant who is the proposed subject of the grant, and shall not
constitute or be deemed to constitute the grant of a Stock Option hereunder
unless and until both the Corporation and the Eligible Participant have executed
and delivered the form of stock option agreement then required by the Stock
Option Committee as evidencing the grant of the Stock Option, together with such
other instruments as may be required by the Stock Option Committee pursuant to
this Plan; provided, however, that the Stock Option Committee may fix the date
of grant as any date on or after the date of its final determination to grant
the Stock Option (or if no such date is fixed, then the date of grant shall be
the date on which the determination was finally made by the Stock Option
Committee to grant the Stock Option), and such date shall be set forth in the
stock option agreement. The date of grant as so determined shall be deemed the
date of grant of the Stock Option for purposes of this Plan.
(c) SHAREHOLDER-EMPLOYEES. Notwithstanding anything to the
contrary contained elsewhere herein, a Stock Option shall not be granted
hereunder to an Eligible Participant who owns, directly or indirectly, at the
date of the grant of the Stock Option, more than ten percent (10%) of the
total combined voting power of all classes of capital stock of the
Corporation or a Subsidiary corporation, unless the
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purchase price of the Option Shares subject to said Stock Option is at least
110% of the Fair Market Value of the Option Shares, determined as of the date
said Stock Option is granted.
(d) MAXIMUM VALUE OF STOCK OPTIONS. Except as provided in paragraph
(e) of this Section 6, the maximum aggregate Fair Market Value of Option Shares
(determined as of the respective Stock Option grant dates) for which an Eligible
Participant may be granted Incentive Stock Options in any calendar year shall
not exceed $100,000, plus any "unused carryover amount." The unused carryover
amount, determined on a yearly basis, shall be equal to one-half (1/2) of the
difference between $100,000 and the aggregate Fair Market Value (determined as
of the respective Stock Option grant dates) of all of the Option Shares subject
to Incentive Stock Options granted to the Optionee during the calendar year
under the Plan. The provisions of Section 422A(c)(4) of the Internal Revenue
Code of 1986, as amended, are incorporated herein by this reference for the
purpose of the determination and application of the unused carryover amount.
The aggregate fair market value (determined at the time the option
is granted) of the stock with respect to which incentive stock options are
exercisable for the first time by such individual under the terms of the Plan
during any calendar year is limited to $100,000, but the value of stock for
which options may be granted to an employee in a given year may exceed
$100,000, but such options in excess of $100,000 shall be treated as
non-qualified options.
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(e) SUBSTITUTED STOCK OPTIONS. If all of the outstanding shares of
common stock of another corporation are changed into or exchanged solely for
common stock in a transaction to which Section 425(a) of the internal Revenue
Code of 1986, as amended, applies, then, subject to the approval of the Board of
Directors of the Bank, Stock Options under the Plan may be substituted
("Substituted Options") in exchange for valid, unexercised and unexpired stock
options of such other corporation. Substituted options shall qualify as
Incentive Stock Options under the Plan, provided that (and to the extent) the
stock options exchanged for the Substituted Options were "Incentive Stock
Options" within the meaning of Section 422A of the Internal Revenue Code of
1986, as amended.
(f) NON-QUALIFIED STOCK OPTIONS. All Stock Options granted by the
Stock Option Committee which: (i) are designated at the time of grant as
Incentive Stock Options but do not so qualify under the provisions of Section
422A of the Code or any regulations or rulings issued by the Internal Revenue
Service for any reason; (ii) are in excess of the fair market value
limitations set forth in Section 6(d); or (iii) are designated at the time of
grant as Non-Qualified Stock Options, shall be deemed Non-Qualified Stock
Options under this Plan. Non-Qualified Stock Options granted or substituted
hereunder shall be so designated in the stock option agreement entered into
between the Corporation and the Optionee.
7. STOCK OPTION EXERCISE PRICE
(a) MINIMUM PRICE. The exercise price of any Option Shares shall be
determined by the Stock Option Committee, in its sole and absolute
discretion, upon
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the grant of a Stock Option. Except as provided elsewhere herein, said
exercise price shall not be less than one hundred percent (100%) of the Fair
Market Value of the Common Stock represented by the Option Share on the date
of grant of the related Stock Option.
(b) EXCHANGED STOCK OPTIONS. Where the outstanding shares of stock of
another corporation are changed into or exchanged for shares of Common Stock of
the Corporation without monetary consideration to that other corporation, then,
subject to the approval of the Board or Directors of the Corporation, Stock
Options may be granted in exchange for unexercised, unexpired stock options of
the other corporation, and the exercise price of the Option Shares subject to
each Stock Option so granted may be fixed at a price less than one hundred
percent (100%) of the Fair Market Value of the Common Stock at the time such
Stock Option is granted if said exercise price has been computed to be not less
than the exercise price set forth in the stock option of the other corporation,
with appropriate adjustment to reflect the exchange ratio of the shares of stock
of the other corporation into the shares of Common Stock of the Corporation.
(c) SUBSTITUTED OPTIONS. The exercise price of the Option Shares
subject to each Substituted Option may be fixed at a price less than one hundred
percent (100%) of the Fair Market Value of the Common Stock at the time such
Substituted option is granted if said exercise price has been computed to be not
less than the exercise price set forth in the stock option of the other
corporation for which it was
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exchanged, with appropriate adjustment to reflect the exchange ratio of the
shares of stock of the other corporation into the shares of Common Stock.
8. EXERCISE OF STOCK OPTIONS.
(a) EXERCISE. Except as otherwise provided elsewhere herein, each
Stock Option shall be exercisable in such increments, which need not be equal,
and upon such contingencies as the Stock Option Committee shall determine at the
time of grant of the Stock Option; provided, however, (i) that if an Optionee
shall not in any given period exercise any part of a Stock Option which has
become exercisable during that period, the Optionee's right to exercise such
part of the Stock Option shall continue until expiration of the Stock Option or
any part thereof as may be provided in the related Stock Option Agreement, and
(ii) in the case of options that are not granted to officers, directors or
consultants of the Company, a minimum of 20% of the stock options shall be
exercisable in each year over a five year period from the date the option is
granted. No Stock Option or part thereof shall be exercisable except with
respect to whole shares of Common Stock, and fractional share interests shall be
disregarded except that they may be accumulated.
(b) PRIOR OUTSTANDING INCENTIVE STOCK OPTIONS. Incentive Stock
Options granted to an Optionee may be exercisable while such Optionee has
outstanding and unexercised any Incentive Stock Option previously granted (or
substituted) to him or her pursuant to this Plan. The Stock Option Committee
shall determine if such options shall be exercisable if there are any Incentive
Stock Options previously granted (or substituted) to him or her pursuant to this
Plan, and such determination shall be
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evidenced in the Agreement executed by the Optionee and Company. An
Incentive Stock Option shall be treated as outstanding until it is exercised
in full or expires by reason of lapse of time.
(c) NOTICE AND PAYMENT. Stock Options granted hereunder shall be
exercised by written notice delivered to the Corporation specifying the number
of Option Shares with respect to which the Stock Option is being exercised,
together with concurrent payment in full of the exercise price as hereinafter
provided in Section 8(d) hereof. If the Stock Option is being exercised by any
person or persons other than the Optionee, said notice shall be accompanied by
proof, satisfactory to counsel for the Corporation, of the right to such person
or persons to exercise the Stock Option. The Corporation's receipt of a notice
of exercise without concurrent receipt of the full amount of the exercise price
shall not be deemed an exercise of a Stock Option by an Optionee, and the
Corporation shall have no obligation to an Optionee for any Option Shares unless
and until full payment of the exercise price is received by the Corporation in
accordance with Section 8(d) hereof, and all of the terms and provisions of the
Plan and the related stock option agreement have been complied with.
(d) PAYMENT OF EXERCISE PRICE. The exercise price of any Option
Shares purchased upon the proper exercise of a Stock Option shall be paid in
full at the time of each exercise of a Stock Option in cash and/or, with the
prior written approval of the Stock Option Committee, in Common Stock of the
Corporation which, when added to the cash payment, if any, has an aggregate Fair
Market Value equal to the full
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amount of the exercise price of the Stock Option, or part thereof, then being
exercised and/or, with the prior written approval of the Stock Option
Committee and if legally permitted, on a deferred basis evidenced by a
promissory note, containing such terms and subject to such security as the
Stock Option Committee shall determine to be fair and reasonable from time to
time, for the total option price for the number of shares so purchased. In
addition, the Optionee shall have the right upon the exercise of a stock
Option in the manner set forth above to surrender for cancellation a portion
of the Stock Option to the Company for the number of shares (the "Surrendered
Shares") specified in the holder's notice of exercise, by delivery to the
Company with such notice written instructions from such holder to apply the
Appreciated Value (as defined below) of the Surrendered Shares to payment of
the exercise price for shares subject to the Stock Options that are being
acquired upon such exercise. The term "Appreciated Value" for each share
subject to this Stock Option shall mean the excess of the Fair Market Value
thereof over the exercise price then in effect. No Director may purchase any
Stock Option on a deferred basis evidenced by a promissory note. Unless
payment is on a deferred basis, payment by an Optionee as provided herein
shall be made in full concurrently with the Optionee's notification to the
Corporation of his intention to exercise all or part of a Stock Option. If
all or part of payment is made in shares of Common Stock as heretofore
provided, such payment shall be deemed to have been made only upon receipt by
the Corporation of all required share certificates, and all stock powers and
other required transfer documents necessary to transfer the shares of Common
Stock to the Corporation.
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(e) REORGANIZATION. Notwithstanding any provision in any stock option
agreement pertaining to the time of exercise of a Stock Option, or part thereof,
upon adoption by the requisite holders of the Corporation's outstanding shares
of Common Stock of any plan of dissolution, liquidation, reorganization, merger,
consolidation or sale of all or substantially all of the assets of the
Corporation to another corporation, or the acquisition of stock representing
more than 50% of the voting power of the Corporation then outstanding, by
another corporation or person, which would, upon consummation, result in
termination of a Stock Option in accordance with Section 16 hereof, the Stock
Option shall become immediately exercisable as to all Option Shares, whether or
not vested, for such period of time as may be determined by the Stock Option
Committee, but in any event not less than 30 days prior to the adoption of the
plan of dissolution, liquidation, reorganization, merger, consolidation, sale,
or acquisition on the condition that the terminating event described in Section
16 hereof is consummated. Any Option Shares not exercised will be terminated.
If such Terminating Event is not consummated, Stock Options granted pursuant to
the Plan shall be exercisable in accordance with their respective terms.
(f) MINIMUM EXERCISE. Not less than ten (10) Option Shares may be
purchased at any one time upon exercise of a Stock Option unless the number of
shares purchased is the total number which remains to be purchased under the
Stock Option.
(g) COMPLIANCE WITH LAW. No shares of Common Stock shall be issued by
the Corporation upon exercise of any Stock Option, and an Optionee shall have no
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rights or claim to such shares, unless and until: (a) payment in full as
provided in Section 8(d) hereof has been received by the Corporation; (b) in
the opinion of the counsel for the Corporation, all applicable registration
requirements of the Securities Act of 1933, all applicable listing
requirements of securities exchanges or associations on which the
Corporation's Common Stock is then listed or traded, and all other
requirements of law and of regulatory bodies having jurisdiction over such
issuance and delivery, have been fully complied with; and (c) if required by
federal or state law or regulation, the Optionee shall have paid to the
Corporation the amount, if any, required to be withheld on the amount deemed
to be compensation to the Optionee as a result of the exercise of his or her
Stock Option, or made other arrangements satisfactory to the Corporation, in
its sole discretion, to satisfy applicable income tax withholding
requirements.
9. NONTRANSFERABILITY OF STOCK OPTIONS.
Each Stock Option shall, by its terms, be nontransferable by the Optionee
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 his or her
guardian or legal representative.
10. CONTINUATION OF EMPLOYMENT
Except for Optionees with a written contract for any definite term, this
Agreement shall not obligate the Corporation or a Subsidiary to employ
Optionee. Except if Optionee has a written contract, Optionee acknowledges
that there is no agreement, express or implied, between Optionee and the
Corporation or other Subsidiary of the Corporation for any specific period of
employment, nor for continuing
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long-term employment. Except if Optionee has a written contract, Optionee
and the Employer each have a right to terminate employment, with or without
cause. Except if Optionee has a written contract, Optionee also acknowledges
that the Employer retains the right to demote, transfer, change job duties,
and change the compensation at any time with or without cause in its sole
discretion.
11. CESSATION OF EMPLOYMENT
Except as provided in Sections 8(e), 12, 13, 14, 15 or 16 hereof, except
if Optionee is granted an option as a consultant, business associate or other
person or entity with important business relationships with the Corporation,
if, for any reason, an Optionee's status as an Eligible Participant is
terminated, the Stock Options granted to such Optionee shall expire on the
expiration dates specified for said Stock Options at the time of their
initial grant, or three (3) months after the Optionee's status as an Eligible
Participant is terminated, whichever is earlier. During such period after
Options shall be exercisable only as to those increments, if any, which had
become exercisable as of the date on which such Optionee's status as an
Eligible Participant terminated, and any Stock Options or increments which
had not become exercisable as of such date shall expire and terminate
automatically on such date. If Optionee is granted an option as a
consultant, business associate or other person or entity with business
relationships with the Corporation, this Stock Option shall not expire as a
result of the consultant, business associate or other person or entity with
important business relationships with the Corporation are no longer doing
business or otherwise terminating his or its business relationship with the
Corporation.
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12. TERMINATION FOR VIOLATION OF STANDARDS OF CONDUCT AS REFERENCED IN
OPTIONEE'S EMPLOYEE HANDBOOK
Except if Optionee is granted an option as a consultant, business
associate or other person or entity with important business relationships
with the Corporation, if Optionee's status as an Eligible Participant is
terminated for violation of the Employer's Standards of Conduct, the Stock
Options granted to such Optionee shall automatically expire and terminate in
their entirety immediately upon such termination; provided, however, that the
Stock Option Committee may, in its sole discretion, within thirty (30) days
of such termination, reinstate such Stock Options by giving written notice of
such reinstatement to the Optionee. In the event of such reinstatement, the
Optionee may exercise the Stock Options only to such extent, for such time,
and upon such terms and conditions as in the case of an Optionee whose status
as an Eligible Participant had been terminated for a reason other than
violation of the Employer's Standards of Conduct, disability or death.
Reasons for termination for violation of the Employer's Standards of Conduct
shall include, but not be limited to, termination for malfeasance or gross
misfeasance in the performance of duties or conviction of illegal activity in
connection therewith, and, in any event, the determination of the Stock
Option Committee with respect thereto shall be final and conclusive. If
Optionee is granted an option as a consultant, business advisor or other
person or entity with important business relationships with the Corporation,
and are not classified as eligible employees of the Corporation or any other
Subsidiary, this Stock Option shall not expire as a result of such Optionee's
termination.
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13. DEATH OF OPTIONEE
Except if Optionee is granted an option as a consultant, business associate
or other person or entity with important business relationships with the
Corporation, if an Optionee loses his status as an Eligible Participant by
reason of death, or if an Optionee dies during the three-month period referred
to in Section 12 hereof, the Stock Options granted to such Optionee shall expire
on the expiration dates specified for said Stock Options at the time of their
initial grant, or one (l) year after the date of such death, whichever is
earlier. If Optionee is granted an Stock Option as a consultant, business
associate or other person or entity with important business relationships with
the Corporation, this Stock Option shall not expire as a result of such
Optionees death. After such death but before such expiration, subject to the
terms and provisions of the Plan and the related stock option agreements, the
person or persons to whom such Optionee's rights under the Stock Options shall
have passed by will or by the applicable laws of descent and distribution, or
the executor or administrator of the Optionee's estate, shall have the right to
exercise such Stock Options to the extent that increments, if any, had become
exercisable as of the date on which the Optionee's status as an Eligible
Participant had been lost.
14. DISABILITY OF OPTIONEE
Except if Optionee is granted an option as a consultant, business associate
or other person or entity with important business relationships with the
Corporation, if an Optionee is disabled while employed by or while serving as a
director of the Corporation or a Subsidiary or during the three-month period
referred to in Section 12
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hereof, the Stock Options granted to such Optionee shall expire on the
expiration dates specified for said Stock Options at the time of their
initial grant, or one (l) year after the date of such disability, whichever
is earlier. If Optionee is granted an option as a consultant, business
associate or other person or entity with important business relationships
with the Corporation, this Stock Option shall not expire as a result of such
Optionees disability. After such disability but before such expiration, the
Optionee or a guardian or conservator of the Optionee's estate, as duly
appointed by a court of competent jurisdiction, shall have the right to
exercise such Stock Options to the extent that increments, if any, had become
exercisable as of the date on which the Optionee became disabled or ceased to
be employed by the Corporation or a Subsidiary as a result of the disability.
For the purpose of this Section 14, an Optionee shall be deemed to have
become "disabled" if it shall appear to the Stock Option Committee, upon
written certification delivered to the Corporation by a qualified licensed
physician, that the Optionee has become permanently and totally unable to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death, or which has lasted or can be expected to last for a continuous period
of not less than 12 months.
15. ADJUSTMENT UPON CHANGES IN CAPITALIZATION
If the outstanding shares of Common Stock of the Corporation are increased,
decreased, or changed into or exchanged for a different number or kind of shares
or securities of the Corporation, through a reorganization, merger,
recapitalization,
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reclassification, stock split, stock dividend, stock consolidation, or
otherwise, without consideration to the Corporation, an appropriate and
proportionate adjustment shall be made in the number and kind of shares as to
which Stock Options may be granted. A corresponding adjustment changing the
number or kind of Option Shares and the exercise prices per share allocated
to unexercised Stock Options, or portions thereof, which shall have been
granted prior to any such change, shall likewise be made. Any such
adjustment, however, in an outstanding Stock Option shall be made without
change in the total price applicable to the unexercised portion of the Stock
Option, but with a corresponding adjustment in the price for each Option
Share subject to the Stock Option. Any adjustment under this Section shall
be made by the Stock Option Committee, whose determination as to what
adjustments shall be made, and the extent thereof, shall be final and
conclusive. No fractional shares of stock shall be issued or made available
under the Plan on account of any such adjustment, and fractional share
interests shall be disregarded and the fractional share interest shall be
rounded down to the nearest whole number.
16. TERMINATING EVENTS
Not less than thirty (30) days prior to consummation of a plan of
dissolution or liquidation of the Corporation, or consummation of a plan of
reorganization, merger or consolidation of the Corporation with one or more
corporations, as a result of which the Corporation is not the surviving
corporation and the outstanding securities of the class then subject to options
hereunder are changed or exchanged for cash or property or securities not of the
Corporation's issue, or upon the sale of all or substantially all
-21-
the assets of the Corporation to another corporation, or the acquisition of
stock representing more than fifty percent (50%) of the voting power of the
Corporation then outstanding by another corporation or person (the
"Terminating Event"), the Stock Option Committee or the Board of Directors
shall notify each Optionee of the pendency of the Terminating Event. Upon
the effective date of the Terminating Event, the Plan shall automatically
terminate and all Stock Options theretofore granted shall terminate, unless
provision is made in connection with such transaction for the continuance of
the Plan and/or assumption of Stock Options theretofore granted, or
substitution for such Stock Options with new stock options covering stock of
a successor employer corporation, or a parent or subsidiary corporation
thereof, solely at the discretion of such successor corporation, or parent or
subsidiary corporation, with appropriate adjustments as to number and kind of
shares and prices, in which event the Plan and options theretofore granted
shall continue in the manner and under the terms so provided. If the Plan
and unexercised options shall terminate pursuant to the foregoing sentence,
all persons shall have the right to exercise any unexercised portions of
options outstanding and not exercised, shall have the right, at such time
prior to the consummation of the transaction causing such termination as the
Corporation shall designate and for a period of not less than 30 days, to
exercise all unexercised portions of their options, including the portions
which would, but for this paragraph entitled "Terminating Events," not yet be
exercisable.
-22-
17. AMENDMENT AND TERMINATION
The Board of Directors of the Corporation may at any time and from
time-to-time suspend, amend, or terminate the Plan and may, with the consent
of Optionee, make such modifications of the terms and conditions of a Stock
Option as it shall deem advisable; provided that, except as permitted under
the provisions of Section 16 hereof, no amendment or modification may be
adopted without the Corporation having first obtained all necessary
regulatory approvals and approval of the holders of a majority of the
Corporation's shares of Common Stock present, or represented, and entitled to
vote at a duly held meeting of shareholders of the Corporation if the
amendment or modification would:
(a) materially increase the benefits accruing to participants under
the Plan;
(b) materially increase the number of securities which may be issued
under the Plan;
(c) materially modify the requirements as to eligibility for
participation in the Plan;
(d) increase or decrease the exercise price of any Stock Options
granted under the Plan;
(e) increase the maximum term of Stock Options provided for herein;
(f) permit Stock Options to be granted to any person who is not an
Eligible Participant; or
-23-
(g) change any provision of the Plan which would affect the
qualification as an Incentive Stock Option under the Plan.
No Stock Option may be granted during any suspension of the Plan or after
termination of the Plan. Amendment, suspension, or termination of the Plan
shall not (except as otherwise provided in Section 17 hereof), without the
consent of the Optionee, alter or impair any rights or obligations under any
Stock Option theretofore granted.
18. RIGHTS OF ELIGIBLE PARTICIPANTS AND OPTIONEES
Neither any Eligible Participant, any Optionee or any other person shall
have any claim or right to be granted any Stock Option under this Plan, and
neither this Plan nor any action taken hereunder shall be deemed or construed as
giving any Eligible Participant, Optionee or any other person any right to be
retained in the employ of the Corporation or any subsidiary of the Corporation.
Without limiting the generality of the foregoing, there is no vesting of any
right in the classification of any person as an Eligible Participant or
Optionee, such classification being used solely to define and limit those
persons who are eligible for consideration of the grant of Stock Options under
the Plan.
19. PRIVILEGES OF STOCK OWNERSHIP; SECURITIES LAW COMPLIANCE; NOTICE OF SALE
No Optionee shall be entitled to the privileges of stock ownership as to
any Option Shares not actually issued and delivered. No Option Shares may be
purchased upon the exercise of a Stock Option unless and until all then
applicable requirements of all regulatory agencies having jurisdiction and all
applicable requirements of
-24-
securities exchanges upon which the stock of the Corporation is listed (if
any) shall have been fully complied with. The Corporation will diligently
endeavor to comply with all applicable securities laws before any options are
granted under the Plan and before any stock is issued pursuant to options.
The Optionee shall, not more than five (5) days after each sale or other
disposition of shares of Common Stock acquired pursuant to the exercise of
Stock Options, give the Corporation notice in writing of such sale or other
disposition.
The Corporation will provide to each Optionee its Annual Report as required
by Section 260.140.46 of the regulations of the California Commissioner of
Corporations.
20. EFFECTIVE DATE OF THE PLAN
The Plan shall be deemed adopted as of April 23, 1997, and shall be
effective immediately, subject to approval of the Plan by the holders of at
least a majority of the Corporation's outstanding shares of Common Stock and
approval of the Plan by the California Commissioner of Corporations.
21. TERMINATION
Unless previously terminated as aforesaid, the Plan shall terminate ten
(10) years from the earliest date of (i) adoption of the Plan by the Board of
Directors, (ii) approval of the Plan by holders of at least a majority of the
Corporation's outstanding shares of Common Stock, or (iii) approval of the Plan
by the California Commissioner of Corporations. No Stock Options shall be
granted under the Plan thereafter, but such termination shall not affect any
Stock Option theretofore granted.
-25-
22. OPTION AGREEMENT
Each Stock Option granted under the Plan shall be evidenced by a written
stock option agreement executed by the Corporation and the Optionee, and shall
contain each of the provisions and agreements herein specifically required to be
contained therein, and such other terms and conditions as are deemed desirable
by the Stock Option Committee and are not inconsistent with the Plan.
23. STOCK OPTION PERIOD
Each Stock Option and all rights and obligations thereunder shall expire on
such date as the Stock Option Committee may determine, but not later than ten
(10) years from the date such Stock Option is granted, and shall be subject to
earlier termination as provided elsewhere in the Plan.
24. EXCULPATION AND INDEMNIFICATION OF STOCK OPTION COMMITTEE
In addition to such other rights of indemnification which they may have as
directors of the Corporation or as members of the Stock Option Committee, the
present and former members of the Stock Option Committee, and each of them,
shall be indemnified by the Corporation for and against all costs, judgments,
penalties and reasonable expenses, including reasonable attorney's fees,
actually and necessarily incurred by them in connection with any action, suit or
proceeding, or in connection with any appeal thereof, to which they or any of
them may be a party by reason of any act or omission of any member of the Stock
Option Committee under or in connection with the Plan or any Stock Option
granted thereunder; provided, however, that a member of the Stock Option
Committee shall not be entitled to any
-26-
indemnification whatsoever pursuant to this Section for or as a result of any
act or omission of such member which was not taken in good faith and which
constituted willful misconduct or gross negligence by such member; provided
further, that any amounts paid by any member of the Stock Option Committee in
settlement of any action, suit or proceeding for which indemnification may be
sought pursuant to this Section shall be first approved in writing by
independent legal counsel selected by the Corporation; and, provided further,
that within thirty (30) days after institution of any action, suit or
proceeding against any member with respect to which such member is entitled
to indemnification hereunder, such member shall, in writing, offer the
Corporation the opportunity, at its own expense, to handle (including settle)
and conduct the defense thereof. The provisions of this Section shall apply
to the estate, executor and administrator of each member of the Stock Option
Committee.
25. AGREEMENT AND REPRESENTATIONS OF OPTIONEE
Unless the shares of Common Stock covered by this Plan have been registered
with the Securities and Exchange Commission pursuant to Section 5 of the
Securities Act of 1933, each Optionee shall by and upon accepting a Stock
Option, represent and agree in writing, for himself or herself and his or her
transferees by will or the laws of descent and distribution, that he or she is a
bona fide California resident, that all such Option Shares will be acquired for
investment purposes and not for resale or distribution and that the optioned
stock will not be transferred to a person who is not a California resident.
Upon the exercise of a Stock Option, or a part thereof, the person entitled to
exercise the same shall, unless waived by the Corporation, furnish
-27-
evidence satisfactory to the Corporation, including written and signed
representations, to the effect that he or she is a California resident, that
the Option Shares are being acquired for investment purposes and not for
resale or distribution, and that the Option Shares being acquired shall not
be sold or otherwise transferred to any individual or entity not a resident
of the State of California. Furthermore, the Corporation, at its sole
discretion, to assure itself that any sale or distribution by the Optionee
complies with this Plan and any applicable federal or state securities laws,
may take all reasonable steps, including placing stop transfer instructions
with the corporation's transfer agent prohibiting transfers in violation of
the Plan and affixing the following legend (and/or such other legend or
legends as the Stock Option Committee shall require) on certificates
evidencing the shares:
"IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS
SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY
CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF
THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA,
EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES."
and
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED OR OFFERED FOR SALE IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT WITH RESPECT TO THEM UNDER
THE ACT OR A DETERMINATION BY BYL Bancorp THAT REGISTRATION
IS NOT REQUIRED."
At any time that an Optionee contemplated the disposition of any of the Option
Shares (whether by sale, exchange, gift or other form of transfer) he or she
shall first notify
-28-
the Corporation of such proposed disposition and shall thereafter cooperate
with the Corporation in complying with all applicable requirements of law
which, in the opinion of counsel for the Corporation, must be satisfied prior
to the making of such disposition. Before consummating such disposition,
BYL Bancorp shall determine that such disposition will not result in a
violation of any state or federal securities law or regulations. The
Corporation shall remove any legend affixed to certificates for Option Shares
pursuant to this Section if and when all of the restrictions on the transfer
of the Option Shares, whether imposed by this Plan or federal or state law,
have terminated. An Optionee who thereafter sells or disposes of his shares
of Common Stock will be required to notify the Corporation of such sale or
disposition within five (5) days after the sale or disposition.
26. NOTICES
All notices and demands of any kind which the Stock Option Committee, any
Optionee, Eligible Participant, or any other person may be required or desires
to serve under the terms of this Plan shall be in writing and shall be served by
personal service upon the respective person or by leaving a copy of such notice
or demand at the address of such person as may be reflected in the records of
the Corporation, or in the case of the Stock Option Committee, with the
Secretary of the Corporation, or by mailing a copy thereof by certified or
registered mail, postage prepaid, with return receipt requested. In the case of
service by mail, it shall be deemed complete at the expiration of the third day
after the day of mailing, except for notice of the exercise
-29-
of any Stock Option and payment of the Stock Option exercise price, both of
which must be actually received by the Corporation.
27. LIMITATION OF OBLIGATIONS OF THE CORPORATION
Any obligation of the Corporation arising under or as a result of this Plan
or any Stock Option granted hereunder shall constitute the general unsecured
obligation of the Corporation, and not of the Board of Directors of the
Corporation, or any members thereof, the Stock Option Committee, or any member
thereof, any officer of the Corporation, or any other person or any Subsidiary,
and none of the foregoing, except the Corporation, shall be liable for any debt,
obligation, cost or expense hereunder.
28. LIMITATION OF RIGHTS
The Stock Option Committee, in its sole and absolute discretion, is
entitled to determine who, if anyone, is an Eligible Participant under this
Plan, and which, if any, Eligible Participant shall receive any grant of a Stock
Option. No oral or written agreement by any person on behalf of the Corporation
relating to this Plan or any Stock Option granted hereunder is authorized, and
such agreement may not bind the Corporation or the Stock Option Committee to
grant any Stock Option to any person.
29. SEVERABILITY
If any provision of this Plan as applied to any person or to any
circumstances shall be adjudged by a court of competent jurisdiction to be void,
invalid, or unenforceable, the same shall in no way effect any other provision
hereof, the application of any such provision in any other circumstances, or the
validity of enforceability hereof.
-30-
30. CONSTRUCTION
Where the context or construction requires, all words applied in the plural
shall be deemed to have been used in the singular and vice versa, and the
masculine gender shall include the feminine and the neuter.
31. HEADINGS
The headings of the several paragraphs of this Plan are inserted solely for
convenience of reference and are not intended to form a part of and are not
intended to govern, limit or aid in the construction of any term or provision
hereof.
32. SUCCESSORS
This Plan shall be binding upon the respective successors, assigns, heirs,
executors, administrators, guardians and personal representatives of the
Corporation and any Optionee.
33. GOVERNING LAW
This Plan shall be governed by and construed in accordance with the laws of
the State of California.
34. CONFLICT
In the event of any conflict between the terms and provisions of this Plan,
and any other document, agreement or instrument, including, without limitation,
any stock option agreement, the terms and provisions of this Plan shall control.
-31-
SECRETARY'S CERTIFICATE OF ADOPTION
I, the undersigned, do hereby certify:
1. That I am the duly elected and acting Secretary of BYL Bancorp; and
2. That the foregoing BYL Bancorp 1997 Stock Option Plan, as amended,
was duly adopted by the Board of Directors of BYL Bancorp as the Stock Option
Plan for the Corporation at a meeting duly called as required by law and
convened on the 23rd day of July, 1997.
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the
seal of the Corporation this 23rd day of July, 1997.
/S/ JOHN F. MYERS
------------------------
John F. Myers, Secretary
[SEAL]
-32-
OPTIONEES TO WHOM INCENTIVE STOCK OPTIONS ARE GRANTED MUST MEET CERTAIN HOLDING
PERIOD AND EMPLOYMENT REQUIREMENTS FOR FAVORABLE TAX TREATMENT.
UNLESS OTHERWISE STATED, ALL DEFINED TERMS IN THE PLAN SHALL HAVE THE SAME
MEANING HEREIN AS SET FORTH IN THE PLAN.
BYL BANCORP
STOCK OPTION AGREEMENT
/ / Incentive Stock Option
/ / Non-Qualified Stock Option
THIS AGREEMENT, dated the ____ day of ____________, 19__, by and
between BYL Bancorp, a California corporation (the "Corporation"), and
_____________________ (the "Optionee");
WHEREAS, pursuant to the Corporation's 1997 Stock Option Plan (the
"Plan"), the Stock Option Committee has authorized the grant to Optionee of a
Stock Option to purchase all or any part of _____________________ (______)
authorized but unissued shares of the Corporation's Common Stock at the price of
_________________ Dollars ($_____) per share, such Stock Option to be for the
term and upon the terms and conditions hereinafter stated;
NOW, THEREFORE, it is hereby agreed:
1. GRANT OF STOCK OPTION. Pursuant to said action of the Stock
Option Committee and pursuant to authorizations granted by all appropriate
regulatory and governmental agencies, the Corporation hereby grants to Optionee
a Stock Option to purchase, upon and subject to the terms and conditions of the
Plan, which is
-1-
incorporated in full herein by this Reference, all or any part of
________________ (_______) Option Shares of the Corporation's Common Stock,
at the price of ____________________ Dollars ($_____) per share. For
purposes of this Agreement and the Plan, the date of grant shall be
_________________, 19__. At the date of grant, Optionee [DOES] [DOES NOT OWN]
stock possessing more than 10% of the total combined voting power of all
classes of capital stock of the Corporation or any Subsidiary.
The Stock Option granted hereunder [IS] [IS NOT] intended to qualify
as an Incentive Stock Option within the meaning of Section 422A of the Internal
Revenue Code of 1986, as amended.
2. EXERCISABILITY. This Stock Option shall be exercisable as to
_______ Option Shares on ________________, 19__, as to _______ Option Shares
on ________________, 19__, as to _______ Option Shares on ________________,
19__, as to _______ Option Shares on ________________, 19__, and as to
_______ Option Shares on ________________, 19__. This Stock Option shall
remain exercisable as to all of such Option Shares until _______________,
19__ (but not later than ten (10) years from the date hereof), at which time
it shall expire in its entirety, unless this Stock Option has expired or
terminated earlier in accordance with the provisions hereof. Option shares
as to which this Stock Option becomes exercisable may be purchased at any
time prior to expiration of this Stock Option.
-2-
3. EXERCISE OF STOCK OPTION. Subject to the provision of Paragraph 4
hereof, this Stock Option may be exercised by written notice delivered to the
Corporation stating the number of Option Shares with respect to which this Stock
Option is being exercised, together with cash and/or, if permitted at the time
of exercise by the Stock Option Committee, shares of Common Stock of the
Corporation which, when added to the cash payment, if any, have an aggregate
Fair Market Value equal to the full amount of the purchase price of such Option
Shares, and/or, if permitted at the time of exercise by the Stock Option
Committee and if legally permitted, and if Optionee is not also a director,
consultant or business advisor of the Corporation or any of its subsidiaries, on
a deferred basis evidenced by a promissory note. In addition, the Optionee
shall have the right upon the exercise of this Stock Option in the manner set
forth above to surrender for cancellation a portion of this Stock Option to the
Company for the number of shares (the "Surrendered Shares") specified in the
holder's notice of exercise, by delivery to the Company with such notice written
instructions from such holder to apply the Appreciated Value (as defined below)
of the Surrendered Shares to payment of the exercise price for shares subject to
this Stock Option that are being acquired upon such exercise. The term
"Appreciated Value" for each share subject to this Stock Option shall mean the
excess of the Fair Market Value thereof over the exercise price then in effect.
Not less than ten (10) Option shares may be purchased at any one time unless the
number purchased is the total number which remains to be purchased under this
Stock Option and in no event may the Stock Option be exercised with respect to
fractional shares.
-3-
Upon exercise, Optionee shall make appropriate arrangements and shall be
responsible for the withholding of any federal and state income taxes then
due.
4. PRIOR OUTSTANDING STOCK OPTIONS. Incentive Stock Options granted
to an Optionee may be exercisable while such Optionee has outstanding and
unexercised any Incentive Stock Option previously granted to him or her pursuant
to this Plan. The Stock Option Committee shall determine if such options shall
be exercisable if there are any Incentive Stock Options previously granted (or
substituted) to him or her pursuant to this Plan, and such determination shall
be evidenced in the Agreement executed by the Optionee and the Corporation. An
Incentive Stock Option shall be treated as outstanding until it is exercised in
full or expires by reason of lapse of time.
5. CESSATION OF EMPLOYMENT. Except as provided in paragraphs 7, 9,
or 11 hereof, except if Optionee is granted an option as a consultant, business
associate or other person or entity with important business relationships with
the Corporation, if Optionee's status as an Eligible Participant under the Plan
is terminated, this Stock Option shall expire three (3) months thereafter or on
the date specified in Paragraph 2 hereof, whichever is earlier. During such
period after termination of status as an Eligible Participant, this Stock Option
shall be exercisable only as to those increments, if any, which had become
exercisable as of the date on which the Optionee's status as an Eligible
Participant was terminated, and any Stock Options or increments which had not
become exercisable as of such date shall expire and terminate automatically on
such date. If Optionee is granted an option as a consultant, business associate
or other person or entity with important business relationships with the
Corporation, this
-4-
Stock Option shall not expire as a result of consultant, business associate
or other person or entity with important business relationships with the
Corporation no longer doing business or otherwise terminating his or its
business relationship with the Corporation.
6. TERMINATION FOR VIOLATION OF STANDARDS OF CONDUCT AS REFERENCED IN
OPTIONEE'S EMPLOYEE HANDBOOK. If Optionee's status as an Eligible
Participant under the Plan is terminated for violation of the Employer's
Standard of Conduct, this Stock Option shall automatically expire unless
reinstated by the Stock Option Committee within thirty (30) days of such
termination by giving written notice of such reinstatement to Optionee. In
the event of such reinstatement, Optionee may exercise this Stock Option only
to such extent, for such time, and upon such terms and conditions as in the
case of Optionee's termination as an Eligible Participant under the Plan for
a reason other than violation of the Employer's Standard of Conduct,
disability or death. Termination for violation of the Employer's Standard of
Conduct shall include, but not be limited to, or termination for malfeasance
or gross misfeasance in the performance of duties or conviction of illegal
activity in connection therewith, and, in any event, the determination of the
Stock Option Committee with respect thereto shall be final and conclusive.
If Optionee is granted an option as a consultant, business associate or other
person or entity with important business relationships with the Corporation
and are not classified as eligible employees of the Corporation or any other
Subsidiary, this Stock Option shall not expire as a result of such Optionee's
termination.
-5-
7. DISABILITY OR DEATH OF OPTIONEE. Except if Optionee is granted
an option as a consultant, business associate or other person or entity with
important business relationships with the Corporation, if Optionee loses his
or her status as an Eligible Participant under the Plan by reason of death or
if Optionee is disabled while employed by the Corporation or a Subsidiary, or
if Optionee dies or becomes so disabled during the three-month period
referred to in Paragraph 5 hereof, this Stock Option shall automatically
expire and terminate one (l) year after the date of Optionee's disability or
death or on the day specified in Paragraph 2 hereof, whichever is earlier.
If Optionee is granted an option as a consultant, business associate or other
person or entity with important business relationships with the Corporation,
this Stock Option shall not expire as a result of such Optionee's death or
disability. After Optionee's disability or death but before such expiration,
the person or persons to whom Optionee's rights under this Stock Option shall
have passed by order of a court of competent jurisdiction or by will or the
applicable laws of descent and distribution, or the executor, administrator
or conservator of Optionee's estate, shall have the right to exercise this
Stock Option to the extent that increments, if any, had become exercisable as
of the date on which Optionee's status as an Eligible Participant under the
Plan had been terminated. For purposes hereof, "disability" shall have the
same meaning as set forth in Section 14 of the Plan.
8. NONTRANSFERABILITY. This Stock Option shall not be transferable
except by will or by the laws of descent and distribution, and shall be
exercisable during Optionee's lifetime only by Optionee or his or her guardian
or legal representative.
-6-
9. EMPLOYMENT. Except for directors, consultants, business
associates or other persons or entitles with important business relationships
with the Corporation with a written contract for any definite term, this
Agreement shall not obligate the Corporation or a Subsidiary to employ
Optionee. Except for directors, consultants, business associates or other
persons or entitles with important business relationships with the
Corporation with a written contract for any definite term, Optionee
acknowledges that there is no agreement, express or implied, between Optionee
and the Corporation or other Subsidiary of the Corporation for any specific
period of employment, nor for continuing long-term employment. Except for
Optionees with a written contract for any definite term, Optionee and the
Employer each have a right to terminate employment, with or without cause.
Except for Optionees with a written contract for any definite term, Optionee
also acknowledges that the Employer retains the right to demote, transfer,
change job duties, and change the compensation at any time with or without
cause in its sole discretion.
10. PRIVILEGES OF STOCK OWNERSHIP. Optionee shall have no rights
as a stockholder with respect to the Option Shares unless and until said
Option Shares are issued to Optionee as provided in the Plan. Except as
provided in Section 15 of the Plan, no adjustment will be made for dividends
or other rights in respect of which the record date is prior to the date such
stock certificates are issued.
11. MODIFICATION AND TERMINATION BY BOARD OF DIRECTORS. The rights
of Optionee are subject to modification and termination upon the occurrence of
certain events as provided in Sections 12, 13, 14, 15 and 16 of the Plan. Upon
adoption by
-7-
the requisite holders of the Corporation's outstanding shares of Common Stock
of any plan of dissolution, liquidation, reorganization, merger,
consolidation or sale of all or substantially all of the assets of the
Corporation to, or the acquisition of stock representing more than fifty
percent (50%) of the voting power of the Corporation then outstanding by
another corporation or person which would, upon consummation, result in
termination of this Stock Option in accordance with Section 16 of the Plan,
this Stock Option shall become immediately exercisable as to all unexercised
Option Shares notwithstanding the incremental exercise provisions of
paragraph 2 of this Agreement for a period then specified by the Stock Option
Committee, but in any event not less than 30 days, in accordance with Section
8(e) of the Plan, on the condition that the terminating event described in
Section 16 of the Plan is consummated. If such terminating event is not
consummated, this Stock Option shall be exercisable in accordance with the
terms of the Agreement, excepting this Paragraph 11.
12. NOTIFICATION OF SALE. Optionee agrees that Optionee, or any
person acquiring Option Shares upon exercise of this Stock Option, will notify
the Corporation in writing not more than five (5) days after any sale or other
disposition of such Shares.
13. REPRESENTATIONS OF OPTIONEE. No Option Shares issuable upon the
exercise of this Stock Option shall be issued and delivered unless and until all
requirements of applicable state and federal law and of the Securities and
Exchange Commission pertaining to the issuance and sale of such Option Shares,
and all
-8-
applicable listing requirements of the securities exchanges, if any, on which
shares of Common Stock of the Corporation of the same class are then listed,
shall have been complied with. Without limiting the foregoing, the
undersigned Optionee hereby agrees, represents and warrants that unless and
until the shares of Common Stock covered by the Plan and issued to Optionee
have been registered with the Securities and Exchange Commission pursuant to
the Securities Act of 1933, as amended, Optionee will acquire all Option
Shares upon exercise of this Stock Option for investment purposes only and
not for resale or for distribution, and Optionee hereby agrees to execute and
deliver to the Corporation a representation letter in the form and substance
of Exhibit "A" attached hereto, and to be bound by the representations,
warranties, covenants and promises contained therein. Optionee further
agrees, represents and warrants that upon exercise of all or part of this
Stock Option, Optionee will not transfer any such Option Shares except in
compliance with said registration provisions or an applicable exemption
therefrom. Upon each exercise of any portion of this Stock Option, the
person entitled to exercise same shall, unless waived by the Corporation,
furnish evidence satisfactory to counsel for the Corporation (including
written and signed representations in the form attached hereto as Exhibit
"B") that the Option Shares are being acquired in good faith for investment
purposes only and not for resale or distribution except in compliance with
the state and federal requirements described above or applicable exemptions
therefrom. Furthermore, the Corporation, may, if it deems appropriate, issue
stop transfer
-9-
instructions against any Option Shares and affix to any certificate
representing such Shares the legends of the type described in Section 25 of
the Plan.
14. NOTICES. All notices to the Corporation provided for in this
Agreement shall be addressed to it in care of its President or Chief
Financial Officer at its principal office and all notices to Optionee shall
be addressed to Optionee's address on file with the Corporation or a
subsidiary corporation, or to such other address as either may designate to
the other in writing, all in compliance with the notice provisions set forth
in Section 26 of the Plan.
15. INCORPORATION OF PLAN. All of the provisions of the Plan are
incorporated herein by reference as if set forth in full hereat. In the
event of any conflict between the terms of the Plan and any provision
contained herein, the terms of the Plan shall be controlling and the
conflicting provisions herein shall be disregarded.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
BYL Bancorp
By: ___________________________________
By: ___________________________________
OPTIONEE
_______________________________________
-10-
EXHIBIT "A"
____________, 19__
Bank of Yorba Linda
18206 Imperial Highway
Yorba Linda, California 82686
Gentlemen:
On this ___ day of ________ 19__, the undersigned has been granted
pursuant to the BYL Bancorp 1997 Stock Option Plan (the "BYL Plan") and the
Stock Option Agreement (the "Agreement") by and between BYL Bancorp and the
undersigned, dated ________ _, 19__, an option to purchase _____________ (_____)
shares of the no par value Common Stock of BYL Bancorp (the "Stock").
In consideration of the grant of such option by BYL Bancorp:
1. I hereby represent, warrant and certify to you that I am a bona
fide resident and domiciliary of the State of California and that I maintain my
principal residence in the State of California.
2. I hereby represent and warrant to you that the stock to be
acquired pursuant to the option will be acquired by me in good faith and for my
own personal account, and not with a view to distributing the stock to others or
otherwise resell the stock in violation of the Securities Act of 1933, as
amended, or the rules and regulations promulgated thereunder.
3. I hereby acknowledge and agree that (l) the stock to be acquired
by me pursuant to the Plan has not been registered and that there is no
obligation on the part of BYL Bancorp to register such stock under the
Securities Act of 1933, as amended, and the rules and regulations thereunder;
and (2) that the Stock to be acquired by me will not be freely tradeable unless
the Stock is either registered under the Securities Act of 1933, as amended, or
BYL Bancorp determines that the transfer will not violate the Federal securities
laws.
4. I understand that the corporation is relying upon the truth and
accuracy of the representations and agreements contained herein in determining
to grant such options to me and upon subsequently issuing any stock pursuant to
the Plan without first registering the same under the Securities Act of 1933, as
amended.
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5. I understand that the certificate evidencing the stock to be
issued pursuant to the Plan will contain a legend upon the face thereof to the
effect that the stock is not registered under the Securities Act of 1933 and
that stop transfer orders will be placed against the shares with BYL Bancorp's
transfer agent.
6. I am registered to vote in California: Yes / /
No / /
7. I have been a resident of California for ___ years.
8. My permanent residence address is as follows:
_______________________________
_______________________________
_______________________________
9. I hereby agree to inform the Corporation if, during the term of
the option, I move my principal residence outside of California.
The agreements contained herein shall inure to benefit of and be
binding upon the respective legal representatives, successors and assigns of the
undersigned and BYL Bancorp.
Very truly yours,
______________________________________
(Signature)
_______________________________________
(Type or Print Name)
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EXHIBIT "B"
________________, 19__
Bank of Yorba Linda
18206 Imperial Highway
Yorba Linda, California 82686
Gentlemen:
On this ____ day of _______________, 19__, the undersigned has
acquired, pursuant to the BYL Bancorp 1997 Stock Option Plan (the "Plan") and
the Stock Option Agreement (the "Agreement") by and between BYL Bancorp and the
undersigned, dated __________, 19__, ___________ (_____) shares of the no par
value Common Stock of BYL Bancorp (the "Stock"). In consideration of the
issuance of BYL Bancorp to the undersigned said shares of its Common Stock:
1. I hereby represent and warrant to you that the Stock will be
acquired by me in good faith for my own personal account, and not with a view to
distributing the Stock to others or otherwise reselling the Stock in violation
of the Securities Act of 1933, as amended, or the rules and regulations
promulgated thereunder.
2. I hereby represent, warrant and certify to you that I am a bona
fide resident and domiciliary of the State of California and that I maintain my
principal residence in the State of California.
3. I hereby acknowledge and agree that (a) the Stock being acquired
by me pursuant to the Plan has not been registered and that there is no
obligation on the part of BYL Bancorp to register such stock under the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder; and (b) the Stock acquired by me is not freely tradeable and must be
held by me unless traded as provided in Paragraph 4 herein or unless the Stock
is either registered under the Securities Act of 1933 or transferred pursuant to
an exemption from such registration, as accorded by the Securities Act of 1933
or under the rules and regulations promulgated thereunder. I further represent
and acknowledge that I have been informed by legal counsel in connection with
said Plan of the restrictions on my ability to transfer the Stock to be received
by me pursuant to said Plan and Agreement and that I understand the scope and
effect of those restrictions.
4. I hereby represent, warrant, and certify to the Corporation that I
will not sell or otherwise dispose of all or any part of the shares of the stock
being
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acquired by me pursuant to the Plan or any interest therein to an
non-resident individual, corporation, partnership, or other form of business
organization of the State of California.
5. I hereby represent, warrant and certify to the Corporation that
the information supplied to the Corporation pursuant to Exhibit "l" attached
hereto is true and correct and may be relied upon by the Corporation in
connection with the issuance of the Corporation's Stock to me.
6. I understand that the effects of the above representations are the
following: (i) that the undersigned does not presently intend to sell or
otherwise dispose of all or any part of the shares of the Stock to any person or
entity not a bona fide resident of the State of California; and (ii) that the
Corporation is relying upon the truth and accuracy of the representations and
agreements contained herein in issuing said shares of the Stock to me without
first registering the same under the Securities Act of 1933, as amended.
7. I hereby agree that the certificate evidencing the Stock may
contain the following legend stamped upon the face thereof to the effect that
the Stock is not registered under the Securities Act of 1933, as amended, and
that the Stock has been acquired pursuant to the representation in this letter
and Exhibit "1" hereto, the Plan and the Agreement:
"IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR
ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE
PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF
CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES."
and
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED OR OFFERED FOR SALE IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT WITH RESPECT TO THEM UNDER THE ACT OR BY BYL
Bancorp, THAT REGISTRATION IS NOT REQUIRED."
8. I hereby agree and understand that the Corporation will place a
stop transfer notice with its stock transfer agent to ensure that the
restrictions on transfer described herein will be observed.
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The agreements contained herein shall inure to benefit of and be
binding upon the respective legal representatives, successors and assigns of the
undersigned and BYL Bancorp.
Very truly yours,
_______________________________________
(Signature)
_______________________________________
(Type or Print Name)
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