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EXHIBIT 4C
FORM OF STOCK OPTION AGREEMENT
PAGE 33 OF 43
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HERITAGE OAKS BANK
INCENTIVE STOCK OPTION AGREEMENT
To: Lawrence P. Ward
Date of Grant: February 2, 1993
We are pleased to notify you that Heritage Oaks Bank (the "Bank") this day
hereby grants to you an option to purchase all or any part of 25,000 shares of
the Common Stock Of the Bank (the "Shares") at the option Price of $5.75 per
share (the "Option") as a Stock Option under the Bank's 1990 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 SHAREHOLDERS
HOLDING A MAJORITY OF THE VOTING POWER OF THE ISSUED AND OUTSTANDING SHARES OF
THE BANK AND BY A MAJORITY OF THE DISINTERESTED SHARES.
1. Purpose of the 0ption
One of the purposes of the Plan is to advance the interests
of the Bank by stimulating the efforts of officers and
full-time salaried employees on behalf of the Bank, by
granting them financial participation in the progress and
success of the Bank.
2. Signature on Option Agreement
This option cannot be exercised unless you first sign this
document in the place provided and return it to the Secretary
of the Bank. If you fail to do so, this option will terminate
and be of no effect. However, your signing and delivering this
letter will not bind you to purchase any of the shares subject
to this 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
The aggregate fair market value (as determined at the time the
option is granted) of the shares pursuant to this Agreement
which are exercisable by you for the first time during any
calendar year shall not exceed $100,000.
EXHIBIT 4c Page 34 of 43
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Subject to the provisions of Paragraph 4 below and this
Paragraph 3, this option can be exercised by you at any time
during a period of forty-eight (48) months from the granting
date as follows:
(a) After the expiration of twelve (12) months from the
granting date, this Option may be exercised to the
extent of an additional twenty-five percent (25%) of
the shares;
(b) After the expiration of twenty-four (24) months from
the granting date, this Option may be exercised to
the extent of an additional twenty-five percent (25%)
of the shares;
(c) After the expiration of thirty-six (36) months from
the granting date, this Option may be exercised to
the extent of an additional twenty-five percent (25%)
of the Shares;
(d) After the expiration of forty-eight (48) months from
the granting date, this Option may be exercised to
the extent of an additional twenty-five (25%) 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 date of grant.
This Option may be exercised by delivering to the Secretary of the Bank payment
in full at the Option Price for the number of shares being purchased in cash or
by certified check or official bank check or the equivalent thereof acceptable
to the Bank, together with a written notice in a form satisfactory to the Bank
signed by you specifying the number of Shares you then desire to purchase and
the time of delivery thereof, which shall 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. At such time the Bank shall,
without transfer or issue tax deliver to you (or such other person entitled to
exercise the Option) at the principal office of the Bank, 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 Bank for such period as may be
required for it with reasonable diligence to comply with any requirements of
law. No fractional Shares shall be issued or delivered.
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 such Shares shall have
been issued to you upon the exercise of this Option.
EXHIBIT 4c Page 35 of 43
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4. Termination of Office or Employment
If your status as an employee or officer of the Bank or its affiliates
(as such term is defined in the Plan) is terminated for any reason
other than death, disability or cause, this Option may be exercised
within three (3) months from the date of such termination to the extent
you were entitled to exercise the Option on the date of termination,
but in no event may this Option be exercised after the expiration of
the term of this Option. If, however, you are removed from your office
or your employment with the Bank or its Affiliates is terminated for
cause as defined in the Plan, this Option shall expire at the time
notice or advice of such removal or termination is dispatched by the
Bank or its Affiliates and notwithstanding anything else herein to the
contrary, neither you nor your estate shall be entitled to exercise any
Option with respect to any Shares whatsoever after such removal or
termination.
5. Death or Disability
If you die or become disabled while an officer or employee of the Bank
or its Affiliates, the Option may be exercised in whole or in part by
you or your qualified representative (in the event of your mental
disability) or by the duly authorized executor of your Will or by the
duly authorized administrator or special administrator of your estate
(in the event of your death) within twelve (12) months from the date
of your death or disability to the extent that you had the right to
exercise this Option on the date of your death or disability, but in
no event after the expiration of the term of this Option.
Disability shall be determined under Section 422A of the Code in effect
at the date of such disability. Section 422A of the Code currently uses
the definition of Section 22 (e) (3) of the Code which states:
"(3) PERMANENT AND TOTAL DISABILITY DEFINED --An individual is
permanently and totally disabled if he is 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. An
individual shall not be considered to be permanently and totally
disabled unless he furnishes proof of the existence thereof in
such form and manner, and at such times, as the Secretary may
require."
EXHIBIT 4c Page 36 of 43
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6. 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 Bank the
right to terminate this Option as of the date of such purported
transfer or assignment.
7. Adjustment of and Changes in the Shares
Notwithstanding the preceding provisions of this Option Agreement, upon
receipt of notice from the Stock Option Committee or the Board of
Directors of the pendency of dissolution or liquidation of the Bank or
a reorganization, merger, or consolidation of the Bank with one or more
corporations as a result of which the Bank will not be the surviving
corporation, or a sale of substantially all the assets and property of
the Bank to another person (a "Terminating Event), this Option shall
be exercisable in full and not only as to those shares with respect to
which installments, if any, have then accrued. Upon the date thirty
(30) days after receipt of said notice, this Option or any portion
hereof not exercised shall terminate, unless provision shall be made in
connection with the Terminating Event for assumption of this Option or
for substitution for this Option of new options covering stock of a
successor employer corporation, or a parent or subsidiary corporation
thereof, solely at the option of such successor corporation or parent
or subsidiary corporation, with appropriate adjustments as to the
number and kind of shares and prices.
8. Subject to Terms of the Plan
This Agreement shall be subject in all respects to the terms and
conditions of the Plan. Your signature herein represents your
acknowledgement 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 Bank or 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
Bank's shareholders and a majority of the disinterested shares.
EXHIBIT 4c Page 37 of 43
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10. Tax Effects
THE FEDERAL TAX CONSEQUENCES OF EMPLOYEE STOCK OPTIONS ARE COMPLEX AND
SUBJECT TO CHANGE. A TAXPAYER'S PARTICULAR SITUATION MAY BE SUCH THAT SOME
VARIATION OF THE GENERAL RULE IS APPLICABLE. ACCORDINGLY, AN OPTIONEE (OR
HIS GUARDIAN, ESTATE OR LEGATEE) SHOULD CONSULT WITH HIS OWN TAX ADVISOR
BEFORE EXERCISING ANY OPTION OR DISPOSING OF ANY SHARES ACQUIRED UPON THE
EXERCISE OF AN OPTION.
11. Rights as a Shareholder
You have no rights as a shareholder of the Bank with respect to any Shares
until the date of the issuance of a stock certificate to you for such
Shares.
12. Notification of Sales
You agree that you, or any person acquiring Shares upon exercise of this
Option, will notify the Bank not more than five (5) days after any sale or
disposition of such Shares.
HERITAGE OAKS BANK
By:/s/ B.R. Bryant
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Its: Chairman
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Agreed to this 2nd day of
February, 1993 and I
hereby acknowledge receipt
of a copy of the Plan.
/s/ Lawrence P. Ward
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Optionee
Exhibit 4c Page 38 of 43