EXHIBIT 99.1
NORTH BAY BANCORP 2002 STOCK OPTION PLAN AND RELATED AGREEMENTS
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NORTH BAY BANCORP 2002 STOCK OPTION PLAN
Adopted by the North Bay Bancorp Board of Directors on February 25, 2002
Approved by the Shareholders of North Bay Bancorp on April 30, 2002
TABLE OF CONTENTS
1. PURPOSE...............................................................1
2. DEFINITIONS...........................................................1
(a) "Affiliate" shall mean.......................................1
(b) "Board of Directors".........................................1
(c) "Code".......................................................1
(d) "Committee"..................................................1
(e) "Company"....................................................1
(f) "Effective Date".............................................1
(g) "Employee"...................................................1
(h) "Exchange Act"...............................................2
(i) "Exercise Price".............................................2
(j) "Fair Market Value"..........................................2
(k) "ISO"........................................................2
(l) "Nonstatutory Option"........................................2
(m) "Option".....................................................2
(n) "Optionee"...................................................2
(o) "Payroll Employee"...........................................2
(p) "Permanent and Total Disability".............................3
(r) "Plan".......................................................3
(s) "Service"....................................................3
(t) "Share"......................................................3
(u) "Stock"......................................................3
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(v) "Stock Option Agreement".....................................3
(w) "Substitute Option"..........................................3
(x) "Terminating Event"..........................................3
(y) "Vesting Event"..............................................4
3. ADMINISTRATION........................................................4
(a) Committee Membership.........................................4
(b) Committee Procedures.........................................4
(c) Committee Responsibilities...................................5
4. ELIGIBILITY...........................................................5
(a) General Rules................................................6
(b) Ten-Percent Stockholders.....................................6
(c) Attribution Rules............................................6
(d) Outstanding Stock............................................6
5. STOCK SUBJECT TO PLAN.................................................6
(a) Basic Limitation.............................................6
(b) Additional Shares............................................7
6. TERMS AND CONDITIONS OF OPTIONS.......................................7
(a) Stock Option Agreement.......................................7
(b) Number of Shares.............................................7
(c) Exercise Price...............................................7
(d) Withholding Taxes............................................7
(e) Exercisability...............................................8
(f) Term.........................................................8
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(g) Transferability..............................................9
(h) No Rights as a Shareholder...................................9
(i) Modification, Extension and Renewal of Options...............9
(j) Substitute Options..........................................10
7. PAYMENT FOR SHARES...................................................10
(a) General Rule................................................10
(b) Surrender of Stock..........................................10
(c) Exercise/Sale...............................................10
(d) Exercise/Pledge.............................................11
(e) Withholding Taxes...........................................11
8. ADJUSTMENT UPON CHANGES IN CAPITALIZATION............................11
(a) Adjustments Upon Changes in Capitalization..................11
(b) Reservation of Rights.......................................11
9. TERMINATING EVENTS...................................................12
10. SECURITIES LAWS......................................................12
11. NO RETENTION RIGHTS..................................................13
12. DURATION AND AMENDMENTS..............................................13
(a) Term of the Plan............................................13
(b) Right to Amend or Terminate the Plan........................13
(c) Effect of Amendment or Termination..........................13
III
NORTH BAY BANCORP 2002 STOCK OPTION PLAN
1. PURPOSE. The purpose of the Plan is to offer selected employees, directors
and consultants an opportunity to acquire a proprietary interest in the success
of the Company, or to increase such interest, by purchasing Shares of the
Company's Common Stock. The Plan provides both for the grant of Nonstatutory
Options as well as Incentive Stock Options intended to qualify under Section 422
of the Code.
2. DEFINITIONS.
(a) "Affiliate" shall mean any corporation, partnership or limited
liability company which controls, is controlled by, or is under common control
with, the Company. A corporation, partnership or limited liability company that
attains the status of an Affiliate on a date after the adoption of the Plan
shall be considered an Affiliate commencing as of such date.
(b) "Board of Directors" shall mean the Board of Directors of the Company,
as constituted from time to time.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(d) "Committee" shall mean a committee of the Board of Directors, as
described in Section 3(a), or in the absence of such a committee, the Board of
Directors.
(e) "Company" shall mean North Bay Bancorp, a California corporation.
(f) "Effective Date" shall mean the earlier of the date of adoption of the
Plan by the Board of Directors of the Company or the approval of the Plan by the
shareholders of the Company in the manner required by applicable law or
regulation.
(g) "Employee" shall mean:
(i) Any individual who is a full- or part-time salaried or hourly
employee (i.e., paid in accordance with normal payroll procedures) of the
Company or of an Affiliate (a "Payroll Employee");
(ii) A member of the Board of Directors or a member of the Board of
Directors of any Affiliate; and
(iii) An independent contractor who performs services for the Company
or an Affiliate and who is not a member of the Board of Directors.
Service as an independent contractor or member of the Board of Directors shall
be considered employment for all purposes of the Plan, except as provided in
Section 4(a).
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(h) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(i) "Exercise Price" shall mean the amount for which one Share may be
purchased upon exercise of an Option, as specified by the Committee in the
applicable Stock Option Agreement.
(j) "Fair Market Value" shall mean the market price of Stock, determined by
the Committee as follows:
(i) If Stock was traded over-the-counter on the date in question but
was not traded on the NASDAQ system or the NASDAQ National Market System,
then the Fair Market Value shall be equal to the mean between the last
reported representative bid and asked prices quoted for such date by the
principal automated inter-dealer quotation system on which Stock is quoted
or, if Stock is not quoted on any such system, by the "Pink Sheets"
published by the National Quotation Bureau, Inc.;
(ii) If Stock was traded over-the-counter on the date in question and
was traded on the NASDAQ system or the NASDAQ National Market System, then
the Fair Market Value shall be equal to the last transaction price quoted
for such date by the NASDAQ system or the NASDAQ National Market System;
(iii) If Stock was traded on a stock exchange on the date in question,
then the Fair Market Value shall be equal to the closing price reported by
the applicable composite transactions report for such date; and
(iv) If none of the foregoing provisions is applicable, then the Fair
Market Value shall be determined by the Committee in good faith on such
basis as it deems appropriate. In all cases, the determination of Fair
Market Value by the Committee shall be conclusive and binding on all
persons.
(k) "ISO" shall mean an employee incentive stock option described in
Section 422(b) of the Code.
(l) "Nonstatutory Option" shall mean a stock option not described in
Sections 422(b) or 423(b) of the Code.
(m) "Option" shall mean an ISO or Nonstatutory Option granted under the
Plan and entitling the holder to purchase Shares.
(n) "Optionee" shall mean an individual who holds an Option.
(o) "Payroll Employee" shall have the meaning ascribed in paragraph (f)
hereof.
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(p) "Permanent and Total Disability" shall mean as defined in Section
22(e)(3) of the Code.
(q) "Person" shall mean a natural person, firm, association, organization,
partnership, business trust, corporation, limited liability company, or public
entity.
(r) "Plan" shall mean this North Bay Bancorp 2002 Stock Option Plan, as it
may be amended from time to time.
(s) "Service" shall mean service as an Employee.
(t) "Share" shall mean one share of Stock, as adjusted in accordance with
Section 8 (if applicable).
(u) "Stock" shall mean the Common Stock of the Company.
(v) "Stock Option Agreement" shall mean the agreement between the Company
and an Optionee which contains the terms, conditions and restrictions pertaining
to his or her Option.
(w) "Substitute Option" shall mean an option described in Section 6(j).
(x) "Terminating Event" shall mean the occurrence of any of the following
events:
(i) the consummation of a plan of dissolution or liquidation of the
Company;
(ii) the consummation of a plan of reorganization, merger or
consolidation involving the Company, except for a reorganization, merger or
consolidation where (A) the shareholders of the Company immediately prior
to such reorganization, merger or consolidation own directly or indirectly
at least 50% of the combined voting power of the outstanding voting
securities of the corporation resulting from such reorganization, merger or
consolidation (the "Surviving Corporation") in substantially the same
proportion as their ownership of voting securities of the Company
immediately prior to such reorganization, merger or consolidation and the
individuals who were members of the Board of Directors immediately prior to
the execution of the agreement providing for such reorganization, merger or
consolidation constitute at least 50% of the members of the board of
directors of the Surviving Corporation, or a corporation beneficially
directly or indirectly owning a majority of the voting securities of the
Surviving Corporation, or (B) the Company is reorganized, merged or
consolidated with a corporation in which any shareholder owning at least
50% of the combined voting power of the outstanding voting securities of
the Company immediately prior to such reorganization, merger or
consolidation, owns at least 50% of the combined
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voting power of the outstanding voting securities of the corporation
resulting from such reorganization, merger or consolidation.
(iii) the sale of all or substantially all of the assets of the
Company to another Person;
(iv) the acquisition of beneficial ownership of stock representing
more than fifty percent (50%) of the voting power of the Company then
outstanding by another Person.
(y) "Vesting Event" shall mean the approval by the shareholders of the
Company of any matter, plan or transaction which would constitute a Terminating
Event, or if any Terminating Event occurs without shareholder approval, the
occurrence of such Terminating Event.
3. ADMINISTRATION.
(a) Committee Membership. The Board of Directors shall have the authority
to administer the Plan but may delegate its administrative powers under the
Plan, in whole or in part, to one or more committees of the Board of Directors.
With respect to the participation of Employees who are subject to Section 16 of
the Exchange Act, the Plan may be administered by a committee composed solely of
two or more members of the Board of Directors who qualify as "nonemployee
directors" as defined in Securities and Exchange Commission Rule 16b-3 under the
Exchange Act. With respect to the participation of Employees who may be
considered "covered employees" under Section 162(m) of the Code, the Plan may be
administered by a committee composed solely of two or more members of the Board
of Directors who qualify as "outside directors" as defined by the Internal
Revenue Service for plans intended to qualify for an exemption under Section
162(m)(4)(C) of the Code. If the committee members meet both such
qualifications, then one committee may administer the Plan both with respect to
Employees who are subject to Section 16 of the Exchange Act or who are
considered to be "covered employees" under Section 162(m) of the Code. The Board
of Directors may appoint a separate committee, consisting of one or more members
of the Board of Directors who do not meet such qualifications. Such committee
may administer the Plan with respect to Employees who are not officers of the
Company or members of the Board of Directors, may grant Options under the Plan
to such Employees and may determine the timing, number of Shares and other terms
of such grants.
(b) Committee Procedures.The Board of Directors shall designate one of the
members of any Committee appointed under paragraph (a) as chairman. Any such
Committee may hold meetings at such times and places as it shall determine. The
acts of a majority of the Committee members present at meetings at which a
quorum exists, or acts reduced to or approved in writing by all Committee
members, shall be valid acts of the Committee.
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(c) Committee Responsibilities. Subject to the provisions of the Plan, any
such Committee shall have full authority and discretion to take the following
actions:
(i) To interpret the Plan and to apply its provisions;
(ii) To adopt, amend or rescind rules, procedures and forms relating
to the Plan;
(iii) To authorize any person to execute, on behalf of the Company,
any instrument required to carry out the purposes of the Plan;
(iv) To determine when Options are to be granted under the Plan;
(v) To select the Optionees;
(vi) To determine the number of Shares to be made subject to each
Option;
(vii) To prescribe the terms and conditions of each Option, including
(without limitation) the Exercise Price, to determine whether such Option
is to be classified as an ISO or as a Nonstatutory Option, and to specify
the provisions of the Stock Option Agreement relating to such Option;
(viii) To amend any outstanding Stock Option Agreement, subject to
applicable legal restrictions and to the consent of the Optionee who
entered into such agreement;
(ix) To prescribe the consideration for the grant of each Option under
the Plan and to determine the sufficiency of such consideration; and
(x) To take any other actions deemed necessary or advisable for the
administration of the Plan.
Notwithstanding the foregoing, the Committee shall annually deliver financial
statements of the Company to all Optionees to whom such delivery is required by
Section 260.140.46 of the California Code of Regulations, or successor statute
or regulation.
All decisions, interpretations and other actions of the Committee shall be final
and binding on all Optionees, and all persons deriving their rights from an
Optionee. No member of the Committee shall be liable for any action that he or
she has taken or has failed to take in good faith with respect to the Plan or
any Option.
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4. ELIGIBILITY.
(a) General Rules. Only Employees shall be eligible for designation as
Optionees by the Committee. In addition, only Payroll Employees of the Company
or an Affiliate shall be eligible for the grant of ISOs.
(b) Ten-Percent Stockholders. An Employee who owns more than 10 percent of
the total combined voting power of all classes of outstanding stock of the
Company or any of its Subsidiaries shall not be eligible for the grant of an ISO
unless:
(i) The Exercise Price is at least 110 percent of the Fair Market
Value of a Share on the date of grant; and
(ii) Such ISO by its terms is not exercisable after the expiration of
five years from the date of grant.
(c) Attribution Rules. For purposes of Subsection (b) above, in determining
stock ownership, an Employee shall be deemed to own the stock owned, directly or
indirectly, by or for such Employee's brothers, sisters, spouse, ancestors and
lineal descendants. Stock owned, directly or indirectly, by or for a
corporation, partnership, estate or trust shall be deemed to be owned
proportionately by or for its stockholders, partners or beneficiaries. Stock
with respect to which such Employee holds an option shall not be counted.
(d) Outstanding Stock. For purposes of Subsection (b) above, "outstanding
stock" shall include all stock actually issued and outstanding immediately after
the grant. "Outstanding stock" shall not include shares authorized for issuance
under outstanding options held by the Employee or by any other person.
5. STOCK SUBJECT TO PLAN.
(a) Basic Limitation. Shares reserved for issuance pursuant to the exercise
of Options granted under the Plan shall be authorized but unissued Shares.
Subject to the provisions of Section 8 of this Plan, the aggregate number of
Shares which may be issued pursuant to the exercise of Options granted under the
Plan shall be 235,000, all of which may be issued pursuant to the exercise of
ISOs or Nonstatutory Options granted under the Plan. Except as provided in this
Section, in no event shall options be granted for a number of Shares which
exceeds the number of Shares reserved for issuance under the Plan. The Company,
during the term of the Plan, shall at all times reserve and keep available
sufficient Shares to satisfy the requirements of the Plan. At no time shall the
total number of Shares issuable upon exercise of all outstanding Options and the
total number of Shares provided for under any stock bonus or similar plan of the
Company exceed thirty percent (30%) of the then outstanding Shares of the
Company's Common Stock, calculated in accordance with the conditions and
exclusions of Rule 260.140.45 of the California Code of Regulations, or
successor statute or regulation.
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(b) Additional Shares. In the event that any outstanding option granted
under this Plan, including Substitute Options, for any reason expires or is
canceled or otherwise terminated, the Shares allocable to the unexercised
portion of such option shall become available for the purposes of this Plan. In
addition, any authorized shares not issued or subject to outstanding grants
under the Company's 1993 Stock Option Plan (the "Prior Plan") on the Effective
Date and any shares issued under the Prior Plan that are forfeited or
repurchased by the Company or that are issuable upon exercise of options granted
pursuant to the Prior Plan that expire or become unexercisable for any reason
without having been exercised in full, will no longer be available for grant and
issuance under the Prior Plan, but will be available for grant and issuance
under this Plan.
6. TERMS AND CONDITIONS OF OPTIONS.
(a) Stock Option Agreement. Each grant of an Option under the Plan shall be
evidenced by a Stock Option Agreement executed by the Optionee and the Company.
Such Option shall be subject to all applicable terms and conditions of the Plan
and may be subject to any other terms and conditions which are not inconsistent
with the Plan and which the Committee deems appropriate for inclusion in a Stock
Option Agreement. The provisions of the various Stock Option Agreements entered
into under the Plan need not be identical.
(b) Number of Shares. Each Stock Option Agreement shall specify the number
of Shares that are subject to the Option and shall provide for the adjustment of
such number in accordance with Section 8. The Stock Option Agreement shall also
specify whether the Option is an ISO or a Nonstatutory Option. For so long as
the Code shall so provide, Options granted to any Payroll Employee under the
Plan ( and any other incentive stock option plans of the Company) which are
intended to constitute ISOs shall not constitute ISOs to the extent that such
Options, in the aggregate, become exercisable for the first time in any one(1)
calendar year for shares of Stock with an aggregate fair market value
(determined as of the respective date or dates of grant) of more than $100,000.
(c) Exercise Price. Each Stock Option Agreement shall specify the exercise
Price. The Exercise Price of an Option shall not be less than 100 percent of the
Fair Market Value of a Share on the date of grant, except as otherwise provided
in Section 4(b) with respect to ISOs and Section 6(i) with respect to Substitute
Options. The Exercise Price shall be payable in a form described in Section 7.
(d) Withholding Taxes. As a condition to the exercise of an Option, the
Optionee shall make such arrangements as the Committee may require for the
satisfaction of any federal, state, local or foreign withholding tax obligations
that arise in connection with such exercise. The Optionee shall also make such
arrangements as the Committee may require for the satisfaction of any federal,
state, local or foreign withholding tax obligations that may arise in connection
with the disposition of Shares acquired by exercising an Option. The Committee
may permit the Optionee to satisfy all or part of
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his or her tax obligations related to the Option by having the Company withhold
a portion of any Shares that otherwise would be issued to him or her or by
surrendering any Shares that previously were acquired by him or her. Such Shares
shall be valued at their Fair Market Value on the date when taxes otherwise
would be withheld in cash. The payment of taxes by assigning Shares to the
Company, if permitted by the Committee, shall be subject to such restrictions as
the Committee may impose.
(e) Exercisability. Each Stock Option Agreement shall specify the date when
all or any installment of the Option is to become exercisable. The vesting of
any Option shall be determined by the Committee in its sole discretion; provided
however, that:
(i) Upon the occurrence of a Vesting Event, the Option shall become
immediately exercisable as to all Shares covered by such Option, whether or
not previously vested;
(ii) In the event that an Optionee's Service terminates, the Option
shall be exercisable only to the extent the Option was vested as of the
date of such termination, unless otherwise specified in the Optionee's
Stock Option Agreement; and
(iii) Options granted to Payroll Employees other than officers of the
Company shall vest at the rate of at least 20 percent of the shares subject
thereto per year over five (5) years from the date of grant of the Option.
(f) Term. Each Stock Option Agreement shall specify the term of the Option.
No Option shall have a term exceeding 10 years from the date of grant. Subject
to the preceding sentence, the Committee in its sole discretion shall determine
when an Option is to expire. In the event that the Optionee's Service
terminates:
(i) As a result of such Optionee's death or Permanent and Total
Disability, the term of the Option shall expire twelve months (or such
other period specified in the Optionee's Stock Option Agreement) after such
death or Permanent and Total Disability but not later than the original
expiration date specified in the Stock Option Agreement provided, however,
that the expiration of the term of a Nonstatutory Option may be extended
for such further period as the Committee, in its sole discretion, may
determine, to a date not later than the original expiration date specified
in the Stock Option Agreement.
(ii) As a result of termination of the Employee's employment with the
Company (by resignation or otherwise) for cause, the term of the Option
shall expire immediately upon such termination (notice or advice of which
shall subsequently be given by the Company), and thereafter neither the
Employee nor the Employee's estate shall be entitled to exercise the Option
with respect to any Shares whatsoever, whether or not after such
termination the Employee may receive payment from the Company for vacation
pay, for services rendered prior
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to termination, for services for the day on which termination occurred, for
salary in lieu of notice or for other benefits. For purposes of this Plan,
"cause" shall mean an act of embezzlement, fraud, dishonesty or breach of
fiduciary duty to the Company or its shareholders, disclosure of any of the
secrets or confidential information of the Company, the inducement of any
client or customer of the Company to break any contract with the Company,
or the inducement of any principal for whom the Company acts as agent to
terminate such agency relationship, the engagement of any conduct which
constitutes unfair competition with the Company, the removal of Optionee
from office by any court or bank regulatory agency, or such other similar
acts which the Committee in its discretion reasonably determines to
constitute adequate cause for termination of Optionee's Service. As used in
this Paragraph (ii), Company includes Affiliates of the Company.
(iii) As a result of termination for any reason other than Permanent
and Total Disability, death or cause, the term of the Option shall expire
three months (or such other period specified in the Optionee's Stock Option
Agreement) after such termination, but not later than the original
expiration date specified in the Stock Option Agreement provided, however,
that the expiration of the term of a Nonstatutory Option may be extended
for such further period as the Committee, in its sole discretion, may
determine, to a date not later than the original expiration date specified
in the Stock Option Agreement.
(g) Transferability. During an Optionee's lifetime, such Optionee's Options
shall be exercisable only by him or her and shall not be transferable. An Option
shall not be transferable other than by will or by the laws of descent and
distribution; provided, however, that Nonstatutory options may be transferred by
instrument to an inter vivos or testamentary trust in which the options are to
be passed to beneficiaries upon the death of the trustor/settlor, or by gift to
"immediate family," as that term is defined in 17 C.F.R. 240.16a-1(e) or
successor statute or regulation thereto.
(h) No Rights as a Shareholder. An Optionee, or a transferee of an
Optionee, shall have no rights as a shareholder with respect to any Shares
covered by his or her Option until the date of the issuance of a stock
certificate for such Shares. No adjustments shall be made, except as provided in
Section 8.
(i) Modification, Extension and Renewal of Options. Within the limitations
of the Plan, the Committee may modify, extend or renew outstanding Options or
may accept the cancellation of outstanding Options (to the extent not previously
exercised) in return for the grant of new Options at the same or a different
price. The foregoing notwithstanding, no modification of an Option shall,
without the consent of the Optionee, impair such Optionee's rights or increase
his or her obligations under such Option.
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(j) Substitute Options. If the Company at any time should succeed to the
business of another corporation through merger or consolidation, or through the
acquisition of stock or assets of such corporation, Options may be granted under
the Plan in substitution of options previously granted by such corporation to
purchase shares of its stock which options are outstanding at the date of the
succession ("Surrendered Options"). The Committee shall have discretion to
determine the extent to which such Substitute Options shall be granted, the
persons to receive such Substitute Options, the number of Shares to be subject
to such Substitute Options, and the terms and conditions of such Substitute
Options which shall, to the extent permissible within the terms and conditions
of the Plan, be equivalent to the terms and conditions of the Surrendered
Options. The exercise Price may be determined without regard to Section 6(c);
provided however, that the Exercise Price of each Substitute Option shall be an
amount such that, in the sole and absolute judgment of the Committee (and if the
Substitute Options are to be ISO's, in compliance with Section 424(a) of the
Code), the economic benefit provided by such Substitute Option is not greater
than the economic benefit represented by the Surrendered Option as of the date
of the succession.
7. PAYMENT FOR SHARES.
(a) General Rule. The entire Exercise Price of Shares issued under the Plan
shall be payable in lawful money of the United States of America in cash or by
certified check, official bank check, or the equivalent thereof acceptable to
the Company at the time when such Shares are purchased, except as follows:
(i) ISOs. In the case of an ISO granted under the Plan, payment shall
be made only pursuant to the express provisions of the applicable Stock
Option Agreement. However, the Committee (in its sole discretion) may
specify in the Stock Option Agreement that payment may be made pursuant to
Subsections (b), (c) or (d) below.
(ii) Nonstatutory Options. In the case of a Nonstatutory Option
granted under the Plan, the Committee (in its sole discretion) may accept
payment pursuant to Subsections (b), (c), or (d) below.
(b) Surrender of Stock. To the extent that this Subsection (b) is
applicable, payment may be made all or in part with Shares which have already
been owned by the Optionee or his or her representative for more than 6 months
and which are surrendered to the Company in good form for transfer. Such Shares
shall be valued at their Fair Market Value on the date when the new Shares are
purchased under the Plan.
(c) Exercise/Sale. To the extent that this Subsection (c) is applicable,
payment may be made by the delivery (on a form prescribed by the Company) of an
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irrevocable direction to a securities broker approved by the Company to sell
Shares and to deliver all or part of the sales proceeds to the Company in
payment of all or part of the Exercise Price and any withholding taxes.
(d) Exercise/Pledge. To the extent that this Subsection (d) is applicable,
payment may be made by the delivery (on a form prescribed by the Company) of an
irrevocable direction to pledge Shares to a securities broker or lender approved
by the Company, as security for a loan, and to deliver all or part of the loan
proceeds to the Company in payment of all or part of the exercise Price and any
withholding taxes.
(e) Withholding Taxes. 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. The Company has no
duty to advise any Optionee of the existence of any tax or any amounts which may
be withheld.
8. ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
(a) Adjustments Upon Changes in Capitalization. If the outstanding shares
of Stock are increased, decreased, or changed into or exchanged for a different
number or kind of shares or securities of the Company, through a reorganization,
merger, recapitalization, reclassification, stock split, reverse stock split,
stock dividend, stock consolidation, or otherwise, without consideration to the
Company, 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 Shares subject to Options and the
exercise price per Share allocated to unexercised 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 Option shall be made without
change in the total price applicable to the unexercised portion of the Option,
but with a corresponding adjustment in the price for each Share subject to the
Option. Any adjustment under this Section shall be made by the 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.
(b) Reservation of Rights. Except as provided in this Section 8, an
Optionee shall have no rights by reason of any subdivision or consolidation of
shares of stock of any class, the payment of any dividend or any other increase
or decrease in the number of shares of stock of any class. Any issue by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class,
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shall not affect, and no adjustment by reason thereof shall be made with respect
to, the number or Exercise Price of Shares subject to an Option. 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, to merge or consolidate or to dissolve,
liquidate, sell or transfer all or any part of its business or assets.
9. TERMINATING EVENTS.
Not less than thirty (30) days prior to the occurrence of a Terminating
Event, the Committee or the Board 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 Options theretofore granted shall
terminate, unless provision is made in connection with such transaction for the
continuance of the Plan and/or assumption of Options theretofore granted, or
substitution for such Options with new stock options covering stock of a
successor 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 preceding sentence, all persons shall
have the right to exercise the Options then outstanding and not exercised at
such time prior to the consummation of the transaction causing such termination
as the Company shall designate, unless the Board shall have provided for the
cancellation of such Options in exchange for a cash payment equal to the excess
of the Fair Market Value of the Stock as of the date of the Terminating Event
over the exercise price of such Options.
10. SECURITIES LAWS.
Shares shall not be issued under the Plan unless the issuance and delivery
of such Shares complies with (or is exempt from) all applicable requirements of
law, including (without limitation) the Securities Act of 1933, as amended, the
rules and regulations promulgated thereunder, state securities laws and
regulations, and the regulations of any stock exchange on which the Company's
securities may then be listed.
Upon the grant of an Option under this Plan, or upon the exercise of any
Option granted under this Plan, the Company may require an Optionee to sign an
investment covenant to the effect that such Option and such Stock will be
acquired by the Optionee for his or her own account for investment and not with
a view to, or for sale in connection with, any distribution of the Option or
Stock. The certificates representing the shares of Stock purchased under any
Option granted under this Plan may contain such legends as counsel for the
Company shall deem necessary to comply with any applicable securities law, rule,
or regulation.
12
All Options granted under the Plan are subject to the requirement that if
at any time the Board of Directors or 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 Options 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 Board of
Directors or the Committee.
11. NO RETENTION RIGHTS.
Neither the Plan nor any Option shall be deemed to give any individual the
right to remain an employee or consultant of the Company or a Affiliate. The
Company and its Affiliates reserve the right to terminate the Service of any
employee or consultant at any time, with or without cause, subject to applicable
laws and a written employment agreement (if any).
12. DURATION AND AMENDMENTS.
(a) Term of the Plan. The Plan, as set forth herein, shall become effective
as of the Effective Date. The Plan, if not extended, shall terminate
automatically ten years after the Effective Date. It may be terminated on any
earlier date pursuant to Subsection(b) below.
(b) Right to Amend or Terminate the Plan. The Board of Directors may amend,
suspend or terminate the Plan at any time and for any reason. An amendment of
the Plan shall be subject to the approval of the Company's shareholders only to
the extent required by applicable laws or regulations.
(c) Effect of Amendment or Termination. No Shares shall be issued or sold
under the Plan after the termination thereof, except upon exercise of an Option
granted prior to such termination. The termination of the Plan, or any amendment
thereof, shall not affect any Share previously issued or any Option previously
granted under the Plan.
13. GOVERNING LAW; INTEGRATION
This Plan and the rights and obligations of the Company and the
participants this Plan shall be governed and construed according to the domestic
substantive laws of the State of California without giving effect to choice or
conflict of law provisions that would cause the application of the domestic
substantive laws of any other jurisdiction. This Plan and the Stock Option
Agreements granted from time to time pursuant to the Plan constitute the sole
understanding of the Company and the participants with respect to the subject
matter of the Plan and the Stock Option Agreements.
13
NORTH BAY BANCORP
EMPLOYEE INCENTIVE STOCK OPTION AGREEMENT
UNDER THE 2002 STOCK OPTION PLAN
Granting Date:
TO:
We are pleased to notify you that North Bay Bancorp (the "Company")
this day hereby grants to you an option to purchase all or any part of
______________ shares of the Common Stock of the Company (the "Shares") at the
Option Price of _____________ per share as a stock option under the North Bay
Bancorp 2002 Stock Option Plan (the Plan").
THIS OPTION MAY BE EXERCISED ONLY IN ACCORDANCE WITH THE TERMS OF THE
PLAN. ONLY CERTAIN PROVISIONS OF THE PLAN ARE SUMMARIZED IN THIS AGREEMENT. A
COPY OF THE PLAN IS PROVIDED WITH THIS AGREEMENT.
THIS OPTION MAY BE EXERCISED ONLY IF THE PLAN IS APPROVED BY A MAJORITY
OF ALL THE SHARES REPRESENTED AND VOTING AT A MEETING OF SHAREHOLDERS OF THE
COMPANY.
1. Nature of the Option
This Option is intended to qualify as an incentive stock option as
defined in Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"). However, the Company does not represent or warrant that this Option
qualifies as an incentive stock option. You are responsible to consult with your
own tax advisor regarding the tax effects of the Option and the requirements
necessary to obtain income tax treatment under Section 422 of the Code,
including, but not limited to, holding period requirements. You understand that
if you dispose of any Shares received under this Option less than two (2) years
after the Grant Date of the Option or less than one (1) year after the date this
Option is exercised, you will lose your incentive stock option treatment and be
treated for federal income tax purposes as having received ordinary income at
the time of such disposition in an amount generally measured by the difference
between the Exercise Price and the lower of the Fair Market Value of the Shares
at the date of the exercise or the Fair Market Value of the Shares at the date
of disposition. If you dispose of such Shares at any time after the expiration
of such two-year and one-year holding periods, any gain on such sale will be
taxed as long-term capital gain.
You acknowledge, and the Company affirms, that the methodology by which
the Fair Market Value of the Shares has been determined by the Company
represents a good faith attempt, as defined in the Code and the regulations
thereunder, at reaching an accurate appraisal of the Fair Market Value of the
Shares; and the Company shall not be responsible for any
-1-
additional tax liability incurred by you in the event that the Internal Revenue
Service were to determine that the Option does not qualify as an incentive stock
option for any reason.
2. Signature on Option Agreement.
This option cannot be exercised unless you first sign this Agreement in
the place provided and return it to the Secretary of the Company. However, your
signing and delivering this Agreement will not bind you to purchase any of the
Shares subject to the option. Your obligation to purchase the Shares can arise
only when you exercise this option in the manner described in Paragraph 3 of
this Agreement.
3. Terms of Option.
(a) Exercise of Option.
You may exercise this option during a calendar year only to the extent
that the aggregate fair market value (determined at the times the options are
granted) of the stock that may be acquired pursuant to this option (or portion
thereof) and all other incentive stock options granted that are first
exercisable by you during the calendar year does not exceed $100,000 (taking
into account all incentive stock options under any stock option plan of the
Company or any of its affiliates or any predecessor of any such corporation). If
permitted in regulations promulgated by the Treasury Department or rulings of
the Internal Revenue Service, you may choose, among the incentive stock options
granted under the Plan that are otherwise first exercisable by you in a calendar
year, those options you wish to exercise subject to the $100,000 limitation. For
example, you may decide to exercise the options that have the lowest exercise
prices. If such a choice is not permitted (as determined by the Company in its
sole discretion), you must exercise incentive stock options that became first
exercisable in a calendar year without regard to the $100,000 limitation, in the
order in which they were granted to you (up to the $100,000 limit). If you
choose not to exercise an option that is first exercisable in a calendar year
under the $100,000 limitation, you may exercise that option in subsequent years
without regard to the $100,000 limitation.
Subject to the provisions of Paragraphs 4 and 7 below and this
Paragraph 3, this option can be exercised by you at any time during a period of
one hundred twenty (120) months from the granting date as follows:
(i) After the expiration of __________ (__) months from the
granting date, this option may be exercised to the extent of not more
than __________ percent (__%) of the Shares;
(ii) After the expiration of _________- (__) months from the
granting date, this option may be exercised to the extent of not more
than _______ percent (__%) of the Shares;
-2-
(iii) After the expiration of _____________ (__) months from
the granting date, this option may be exercised to the extent of not
more than _______ percent (__%) of the Shares;
(iv) After the expiration of _____________ (__) months from
the granting date, this option may be exercised to the extent of______
percent (__%) of the Shares;
(v) After the expiration of ______(__) months from the
granting date, this option may be exercised to the extent of
____________ percent (__%) of the Shares.
(vi) After the expiration of __________ (____) months from the
granting date, this option may be exercised to the extent of not more
than _____________________________________ percent (______%) of the
Shares;
(vii) After the expiration of __________ (____) months from
the granting date, this option may be exercised to the extent of not
more than ______________________________________ percent (______%) of
the Shares;
(viii) After the expiration of __________ (____) months from
the granting date, this option may be exercised to the extent of not
more than ______________________________________ percent (______%) of
the Shares;
(ix) After the expiration of __________ (____) months from the
granting date, this option may be exercised to the extent of not more
than ______________________________________ percent (______%) of the
Shares;
(x) After the expiration of __________ (____) months from the
granting date, this option may be exercised to the extent of not more
than ______________________________________ percent (______%) of the
Shares
(xi) After the expiration of __________ (____) months from the
granting date, this option may be exercised to the extent of not more
than ______________________________________ percent (______%) of the
Shares.
Any portion of the option that you do not exercise shall accumulate and
can be exercised by you any time prior to the expiration of one hundred twenty
(120) months from the granting date.
(b) Payment for Option Shares.
(i) General Rule. The entire Exercise Price of Common Stock
issued upon exercise of Options shall be payable in cash at the time
when such Common Stock are purchased, except the Board (or the
Compensation Committee , if authorized) may, in its
-3-
discretion, accept payment pursuant to paragraphs (ii), (iii), and (iv)
below, or any combination of these forms of payment.
(ii) Surrender of Stock. Payment may be made all or in part
with Shares which have already been owned by the Optionee or his or her
representative for more than 6 months and which are surrendered to the
Company in good form for transfer. Such Shares shall be valued at their
Fair Market Value on the date when the new Shares are purchased under
the Plan.
(iii) Exercise/Sale. Payment may be made by the delivery (on a
form prescribed by the Company) of an irrevocable direction to a
securities broker approved by the Company to sell Shares and to deliver
all or part of the sales proceeds to the Company in payment of all or
part of the Exercise Price and any withholding taxes.
(iv) Exercise/ Pledge. Payment may be made by the delivery (on
a form prescribed by the Company) of an irrevocable direction to pledge
Shares to a securities broker or lender approved by the Company, as
security for a loan, and to deliver all or part of the loan proceeds to
the Company in payment of all or part of the Exercise Price and any
withholding taxes.
(v) Withholding Taxes. To the extent required by applicable
federal, state, local or foreign law, you shall make arrangements
satisfactory to the Company for the satisfaction of any withholding tax
obligations that arise by reason of your Option. The Company shall not
be required to issue any Shares under the Plan until such obligations
are satisfied.
(c) Delivery of Stock Certificates.
The Company shall deliver to you (or such other person entitled to
exercise the option), not be less than fifteen (15) days and not more than
thirty (30) days after the giving of such notice unless an earlier or later date
is mutually agreed upon, without transfer or issue tax to you (or such 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. No fractional shares will be issued or
delivered.
4. Termination of Office or Employment.
In the event your services terminate:
(i) As a result of such your death or Permanent and Total
Disability, the term of the Option shall expire twelve months after
such death or Permanent and Total Disability but not later than the
original expiration date specified in the Stock Option Agreement.
-4-
(ii) As a result of termination of your employment with the
Company (by resignation or otherwise) for cause, the term of this
Option shall expire immediately upon such termination (notice or advice
of which shall subsequently be given by the Company), and thereafter
neither you nor your estate shall be entitled to exercise the Option
with respect to any Shares whatsoever, whether or not after such
termination the Employee may receive payment from the Company for
vacation pay, for services rendered prior to termination, for services
for the day on which termination occurred, for salary in lieu of notice
or for other benefits. For purposes of this Plan, "cause" shall mean an
act of embezzlement, fraud, dishonesty or breach of fiduciary duty to
the Company or its shareholders, disclosure of any of the secrets or
confidential information of the Company, the inducement of any client
or customer of the Company to break any contract with the Company, or
the inducement of any principal for whom the Company acts as agent to
terminate such agency relationship, the engagement of any conduct which
constitutes unfair competition with the Company, the removal of
Optionee from office by any court or bank regulatory agency, or such
other similar acts which the Committee in its discretion reasonably
determines to constitute adequate cause for termination of Optionee's
Service. As used in this Paragraph (ii), Company includes Affiliates of
the Company.
(iii) As a result of termination for any reason other than
Permanent and Total Disability, death or cause, the term of the Option
shall expire three months after such termination, but not later than
the original expiration date specified in the Stock Option Agreement.
5. Nontransferability of Option.
This option shall not be transferable except by will or the laws of
descent and distribution and this option may be exercised during your lifetime
only by you. Any purported transfer or assignment of this option shall be void
and of no effect, and shall give the Company the right to terminate this option
as of the date of such purported transfer or assignment.
6. Adjustment In the Event of Changes in the Shares.
If the outstanding shares of the stock of the Company are increased,
decreased, changed into or exchanged for a different number or kind of shares or
securities of the Company through reorganization, merger, recapitalization,
reclassification, stock split, stock dividend, stock consolidation or otherwise,
without consideration to the Company, an appropriate and proportionate
adjustment shall be made in the number and kind of shares subject to this
option. A corresponding adjustment changing the number or kind of shares and the
exercise price per share allocated to unexercised options or portions thereof
which shall have been granted prior to any such change shall likewise be made.
Any adjustment shall be made by the Board, 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, except that they may be accumulated.
-5-
7. Terminating Events/ Vesting Event
A Terminating Event is defined as any one of the following events:
(i) the consummation of a plan of dissolution or liquidation
of the Company;
(ii) the consummation of a plan of reorganization, merger or
consolidation involving the Company, except for a reorganization,
merger or consolidation where (A) the shareholders of the Company
immediately prior to such reorganization, merger or consolidation own
directly or indirectly at least 50% of the combined voting power of the
outstanding voting securities of the corporation resulting from such
reorganization, merger or consolidation (the "Surviving Corporation")
in substantially the same proportion as their ownership of voting
securities of the Company immediately prior to such reorganization,
merger or consolidation and the individuals who were members of the
Board of Directors immediately prior to the execution of the agreement
providing for such reorganization, merger or consolidation constitute
at least 50% of the members of the board of directors of the Surviving
Corporation, or a corporation beneficially directly or indirectly
owning a majority of the voting securities of the Surviving
Corporation, or (B) the Company is reorganized, merged or consolidated
with a corporation in which any shareholder owning at least 50% of the
combined voting power of the outstanding voting securities of the
Company immediately prior to such reorganization, merger or
consolidation, owns at least 50% of the combined voting power of the
outstanding voting securities of the corporation resulting from such
reorganization, merger or consolidation.
(iii) the sale of all or substantially all of the assets of
the Company to another Person;
(iv) the acquisition of beneficial ownership of stock
representing more than fifty percent (50%) of the voting power of the
Company then outstanding by another Person.
A Vesting Event shall mean the approval by the shareholders of the
Company of any matter, plan or transaction which would constitute a Terminating
Event, or if any Terminating Event occurs without shareholder approval, the
occurrence of such Terminating Event.
In the event of a Vesting Event, your Option shall become immediately
excercisable as to all Shares covered by your Option, whether or not previously
vested.
Not less than thirty (30) days prior to the occurrence of a Terminating
Event, the Committee or the Board 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 Options theretofore granted shall
terminate, unless provision is made in connection with such transaction for the
continuance of the Plan and/or assumption of Options theretofore granted, or
substitution for such Options with new stock options covering stock of a
successor 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
-6-
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 preceding sentence,
all persons shall have the right to exercise the Options then outstanding and
not exercised at such time prior to the consummation of the transaction causing
such termination as the Company shall designate, unless the Board shall have
provided for the cancellation of such Options in exchange for a cash payment
equal to the excess of the Fair Market Value of the Stock as of the date of the
Terminating Event over the exercise price of such Options.
8. Your Option is Subject to Terms of the Plan.
This Agreement is subject in all respects to the terms and conditions
of the Plan and in the event of any inconsistencies between the Agreement and
the Plan the terms of the Plan shall be controlling. Your signature on this
Agreement represents your acknowledgment of receipt of a copy of the Plan. Any
dispute or disagreement which arises under or as a result of or pursuant to this
Agreement shall be finally and conclusively determined by the Board of Directors
of the Company, or a duly appointed Committee, in its sole discretion, and such
determination shall be binding upon all parties.
9. Exercise of Option Conditioned on Approval.
Exercise of this option is conditioned upon approval of the Plan by the
shareholders of the Company in accordance with the requirements of the
applicable law and regulations.
10. Tax Effects.
THE FEDERAL TAX CONSEQUENCES OF EMPLOYEE STOCK OPTIONS ARE COMPLEX AND
SUBJECT TO CHANGE. ACCORDINGLY, AN OPTIONEE (OR HIS OR HER GUARDIAN, ESTATE OR
LEGATEE) SHOULD CONSULT WITH HIS OR HER OWN TAX ADVISOR BEFORE EXERCISING ANY
OPTION OR DISPOSING OF ANY SHARES ACQUIRED UPON THE EXERCISE OF AN OPTION.
11. Rights as a Shareholder.
As a holder of an option, you shall have the rights of a shareholder
with respect to the Shares subject to this option only after a stock certificate
representing such Shares shall have been issued to you upon the exercise of this
option.
12. Notification of Sale.
You agree that you, or any person acquiring Shares upon exercise of
this Option, will notify the Company not more than five (5) days after any sale
or disposition of such Shares.
-7-
Agreed to this __th
day of _______, ____.
NORTH BAYBANCORP
By ______________________________
------------------------------
Signature of Optionee
-8-
NORTH BAY BANCORP
NONSTATUTORY STOCK OPTION AGREEMENT
UNDER THE 2002 STOCK OPTION PLAN
Granting Date:
TO:
We are pleased to notify you that North Bay Bancorp (the "Company")
this day hereby grants to you an option to purchase all or any part of
__________ shares of the Common Stock of the Company (the "Shares") at the
Option Price of $____ per share as a stock option under the North Bay Bancorp
2002 Stock Option Plan (the "Plan").
THIS OPTION MAY BE EXERCISED ONLY IN ACCORDANCE WITH THE TERMS OF THE
PLAN. ONLY CERTAIN PROVISIONS OF THE PLAN ARE SUMMARIZED IN THIS AGREEMENT. A
COPY OF THE PLAN IS PROVIDED WITH THIS AGREEMENT.
THIS OPTION MAY BE EXERCISED ONLY IF THE PLAN IS APPROVED BY A MAJORITY
OF ALL THE SHARES REPRESENTED AND VOTING AT THE MEETING OF SHAREHOLDERS OF THE
COMPANY.
1. Purpose of the Option.
One of the purposes of the Plan is to advance the interests of the
Company by stimulating the efforts of full-time salaried employees and officers
on behalf of the Company and its affiliates (collectively the "Company"), by
granting them financial participation in the progress and success of the
Company.
2. Signature on Option Agreement.
This option cannot be exercised unless you first sign this Agreement in
the place provided and return it to the Secretary of the Company. However, your
signing and delivering this Agreement will not bind you to purchase any of the
Shares subject to the option. Your obligation to purchase the Shares can arise
only when you exercise this option in the manner set forth in Paragraph 3 below.
3. Terms of Option and Exercise of Option.
Subject to the provisions of Paragraphs 4 and 7 below and this
Paragraph 3, this option can be exercised by you at any time during a period of
one hundred twenty (120) months from the granting date as follows:
(a) Exercise of Options
(i) After the expiration of __________ (__) months from the
granting date, this option may be exercised to the extent of not more
than __________ percent (__%) of the Shares;
-1-
(ii) After the expiration of __________ (__) months from the
granting date, this option may be exercised to the extent of not more
than __________ percent (__%) of the Shares;
(iii) After the expiration of __________ (__) months from the
granting date, this option may be exercised to the extent of not more
than __________ percent (__%) of the Shares;
(iv) After the expiration of __________ (__) months from the
granting date, this option may be exercised to the extent of not more
than __________ percent (__%) of the Shares;
(v) After the expiration of __________ (__) months from the
granting date, this option may be exercised to the extent of not more
than __________ percent (__%) of the Shares;
(vi) After the expiration of __________ (__) months from the
granting date, this option may be exercised to the extent of not more
than __________ percent (__%) of the Shares;
(vii) After the expiration of __________ (__) months from the
granting date, this option may be exercised to the extent of not more
than __________ percent (__%) of the Shares;
(viii) After the expiration of __________ (__) months from the
granting date, this option may be exercised to the extent of not more
than __________ percent (__%) of the Shares;
(ix) After the expiration of __________ (__) months from the
granting date, this option may be exercised to the extent of not more
than __________ percent (__%) of the Shares;
(x) After the expiration of __________ (__) months from the
granting date, this option may be exercised to the extent of not more
than __________ percent (__%) of the Shares;
(xi) After the expiration of __________ (__) months from the
granting date, this option may be exercised to the extent of not more
than __________ percent (__%) of the Share.
Any portion of the option that you do not exercise shall accumulate and
can be exercised by you any time prior to the expiration of one hundred twenty
(120) months from the granting date.
-2-
(b) Payment for Option Shares.
(i) General Rule. The entire Exercise Price of Common Stock
issued upon exercise of Options shall be payable in cash at the time
when such Common Stock are purchased, except the Board (or the
Compensation Committee , if authorized) may, in its discretion, accept
payment pursuant to paragraphs (ii), (iii), and (iv) below, or any
combination of these forms of payment.
(ii) Surrender of Stock. Payment may be made all or in part
with Shares which have already been owned by the Optionee or his or her
representative for more than 6 months and which are surrendered to the
Company in good form for transfer. Such Shares shall be valued at their
Fair Market Value on the date when the new Shares are purchased under
the Plan.
(iii) Exercise/Sale. Payment may be made by the delivery (on a
form prescribed by the Company) of an irrevocable direction to a
securities broker approved by the Company to sell Shares and to deliver
all or part of the sales proceeds to the Company in payment of all or
part of the Exercise Price and any withholding taxes.
(iv) Exercise/ Pledge. Payment may be made by the delivery (on
a form prescribed by the Company) of an irrevocable direction to pledge
Shares to a securities broker or lender approved by the Company, as
security for a loan, and to deliver all or part of the loan proceeds to
the Company in payment of all or part of the Exercise Price and any
withholding taxes.
(v) Withholding Taxes. To the extent required by applicable
federal, state, local or foreign law, you shall make arrangements
satisfactory to the Company for the satisfaction of any withholding tax
obligations that arise by reason of your Option. The Company shall not
be required to issue any Shares under the Plan until such obligations
are satisfied.
(c) Delivery of Stock Certificates. The Company shall deliver to you
(or such other person entitled to exercise the option), not be less
than fifteen (15) days and not more than thirty (30) days after the
giving of such notice unless an earlier or later date is mutually
agreed upon, without transfer or issue tax to you (or such 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. No fractional shares will be issued or delivered
4. Termination of Office or Employment.
In the event your services terminate:
-3-
(i) As a result of such your death or Permanent and Total
Disability, the term of the Option shall expire twelve months after
such death or Permanent and Total Disability but not later than the
original expiration date specified in the Stock Option Agreement;
provided, however, that the expiration of the term of the Option may be
extended for such further period as the Committee, in its sole
discretion, may determine, to a date not later than the original
expiration date specified in the Stock Option Agreement.
(ii) As a result of termination of your employment with the
Company (by resignation or otherwise) for cause, the term of this
Option shall expire immediately upon such termination (notice or advice
of which shall subsequently be given by the Company), and thereafter
neither you nor your estate shall be entitled to exercise the Option
with respect to any Shares whatsoever, whether or not after such
termination the Employee may receive payment from the Company for
vacation pay, for services rendered prior to termination, for services
for the day on which termination occurred, for salary in lieu of notice
or for other benefits. For purposes of this Plan, "cause" shall mean an
act of embezzlement, fraud, dishonesty or breach of fiduciary duty to
the Company or its shareholders, disclosure of any of the secrets or
confidential information of the Company, the inducement of any client
or customer of the Company to break any contract with the Company, or
the inducement of any principal for whom the Company acts as agent to
terminate such agency relationship, the engagement of any conduct which
constitutes unfair competition with the Company, the removal of
Optionee from office by any court or bank regulatory agency, or such
other similar acts which the Committee in its discretion reasonably
determines to constitute adequate cause for termination of Optionee's
Service. As used in this Paragraph (ii), Company includes Affiliates of
the Company.
(iii) As a result of termination for any reason other than
Permanent and Total Disability, death or cause, the term of the Option
shall expire three months after such termination, but not later than
the original expiration date specified in the Stock Option Agreement;
provided, however, that the expiration of the term of the Option may be
extended for such further period as the Committee, in its sole
discretion, may determine, to a date not later than the original
expiration date specified in the Stock Option Agreement.
5. Nontransferability of Option.
This option shall not be transferable except by will or the laws of
descent and distribution, and this option may be exercised during your lifetime
only by you. Any purported transfer or assignment of this option shall be void
and of no effect, and shall give the Company the right to terminate this option
as of the date of such purported transfer or assignment.
-4-
6. Adjustment of and Changes in the Shares.
If the outstanding shares of the stock of the Company are increased,
decreased, changed into or exchanged for a different number or kind of shares or
securities of the Company through reorganization, merger, recapitalization,
reclassification, stock split, stock dividend, stock consolidation or otherwise,
without consideration to the Company, an appropriate and proportionate
adjustment shall be made in the number and kind of shares subject to this
option. A corresponding adjustment changing the number or kind of shares and the
exercise price per share allocated to unexercised options or portions thereof
which shall have been granted prior to any such change shall likewise be made.
Any adjustment shall be made by the Board, 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, except that they may be accumulated.
7. Terminating Events/ Vesting Event .
A Terminating Event is defined as any one of the following events:
(i) the consummation of a plan of dissolution or liquidation
of the Company;
(ii) the consummation of a plan of reorganization, merger or
consolidation involving the Company, except for a reorganization,
merger or consolidation where (A) the shareholders of the Company
immediately prior to such reorganization, merger or consolidation own
directly or indirectly at least 50% of the combined voting power of the
outstanding voting securities of the corporation resulting from such
reorganization, merger or consolidation (the "Surviving Corporation")
in substantially the same proportion as their ownership of voting
securities of the Company immediately prior to such reorganization,
merger or consolidation and the individuals who were members of the
Board of Directors immediately prior to the execution of the agreement
providing for such reorganization, merger or consolidation constitute
at least 50% of the members of the board of directors of the Surviving
Corporation, or a corporation beneficially directly or indirectly
owning a majority of the voting securities of the Surviving
Corporation, or (B) the Company is reorganized, merged or consolidated
with a corporation in which any shareholder owning at least 50% of the
combined voting power of the outstanding voting securities of the
Company immediately prior to such reorganization, merger or
consolidation, owns at least 50% of the combined voting power of the
outstanding voting securities of the corporation resulting from such
reorganization, merger or consolidation.
(iii) the sale of all or substantially all of the assets of
the Company to another Person;
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(iv) the acquisition of beneficial ownership of stock
representing more than fifty percent (50%) of the voting power of the
Company then outstanding by another Person.
A Vesting Event shall mean the approval by the shareholders of the
Company of any matter, plan or transaction which would constitute a Terminating
Event, or if any Terminating Event occurs without shareholder approval, the
occurrence of such Terminating Event.
In the event of a Vesting Event, your Option shall become immediately
excercisable as to all Shares covered by your Option, whether or not previously
vested.
Not less than thirty (30) days prior to the occurrence of a Terminating
Event, the Committee or the Board 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 Options theretofore granted shall
terminate, unless provision is made in connection with such transaction for the
continuance of the Plan and/or assumption of Options theretofore granted, or
substitution for such Options with new stock options covering stock of a
successor 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 preceding sentence, all persons shall
have the right to exercise the Options then outstanding and not exercised at
such time prior to the consummation of the transaction causing such termination
as the Company shall designate, unless the Board shall have provided for the
cancellation of such Options in exchange for a cash payment equal to the excess
of the Fair Market Value of the Stock as of the date of the Terminating Event
over the exercise price of such Options.
8. Subject to Terms of the Plan.
This Agreement shall be subject in all respects to the terms and
conditions of the Plan and in the event of any inconsistencies between the
Agreement and the Plan the terms of the Plan shall be controlling. Your
signature herein represents your acknowledgment of receipt of a copy of the
Plan. Any dispute or disagreement which shall arise under or as a result of or
pursuant to this Agreement shall be finally and conclusively determined by the
Board of Directors of the Company or a duly appointed Committee in its sole
discretion, and such determination shall be binding upon all parties.
9. Exercise of Option Conditioned on Approval.
Exercise of this option is conditioned upon approval of the Plan by the
shareholders of the Company in accordance with the requirements of the
Commissioner of Financial Institutions of the State of California.
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10. Tax Effects.
THE FEDERAL AND STATE TAX CONSEQUENCES OF EMPLOYEE STOCK OPTIONS ARE
COMPLEX AND SUBJECT TO CHANGE. ACCORDINGLY, AN OPTIONEE (OR HIS OR HER GUARDIAN,
ESTATE OR LEGATEE) SHOULD CONSULT WITH HIS OR HER OWN TAX ADVISOR BEFORE
EXERCISING ANY OPTION OR DISPOSING OF ANY SHARES ACQUIRED UPON THE EXERCISE OF
AN OPTION.
11. Rights as a Shareholder.
As a holder of an option, you shall have the rights of a shareholder
with respect to the Shares subject to this option only after a stock certificate
representing such Shares shall have been issued to you upon the exercise of this
option.
12. Notification of Sale.
You agree that you, or any person acquiring Shares upon exercise of
this Option, will notify the Company not more than five (5) days after any sale
or disposition of such Shares.
Agreed to this ___th day of ______ ____
NORTH BAY BANCORP.
By ___________________________
---------------------------
Signature of Optionee
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