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EXHIBIT 4(a)
CU BANCORP
1996 EMPLOYEE STOCK OPTION PLAN
Adopted April 16, 1996
Approved by the Shareholders on July 18, 1996
1. PURPOSE.
(a) The purpose of the CU Bancorp 1996 Employee
Stock Option Plan (the "1996 Employee Plan") is to strengthen CU Bancorp (the
"Company") by providing to employees (the "Employees") of the Company or its
subsidiaries added incentives for high levels of performance and to encourage
stock ownership in the Company. The 1996 Employee Plan seeks to accomplish
these goals by providing a means whereby the Employees may be given an
opportunity to purchase by way of option common stock of the Company.
(b) The Company, by means of the 1996 Employee
Plan, seeks to secure and retain the services of such Employees, and to provide
incentives for such persons to exert maximum efforts for the success of the
Company and its subsidiaries.
(c) The Company intends that the options issued
under the 1996 Employee Plan shall, in the discretion of the Committee (as
defined in paragraph 2(a)), be either incentive stock options as that term is
used in Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code") or any successor thereto ("incentive stock options"), or options which
do not qualify as incentive stock options ("non-qualified stock options"). All
options shall be separately designated as incentive stock options or
non-qualified stock options at the time of grant, and a separate certificate or
certificates shall be issued for shares purchased on the exercise of each type
of option.
2. ADMINISTRATION.
(a) The 1996 Employee Plan shall be administered
by the committee (the "Committee") designated by the Board of Directors of the
Company (the "Board"), which shall be composed of not fewer than two (2)
members of the Board. All of the members of the Committee shall be
"disinterested persons" as provided in Rule 16b-3(c)(2)(i) promulgated pursuant
to the Securities Exchange Act of 1934, as amended (the "1934 Act"). The
Committee shall have, in connection with the administration of the 1996 Employee
Plan, the powers set forth in subparagraph 2(b), subject, however, to such
resolutions, not inconsistent with the
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provisions of the 1996 Employee Plan, as may be adopted from time to time by
the Board. Any action of the Committee with respect to administration of the
1996 Employee Plan shall be taken pursuant to a majority vote or to the
unanimous written consent of its members.
(b) The Committee shall have the power, subject
to, and within the limitations of, the express provisions of the 1996 Employee
Plan:
(i) To determine from time to time which
of the persons eligible under the 1996 Employee Plan shall be granted an
option; when and how the option shall be granted; whether the option will be an
incentive stock option or a non-qualified stock option; the provisions of each
option granted (which need not be identical), including, without limitation,
the term of the option; the duration of and purposes of leaves of absence which
may be granted to participants without constituting a termination of their
employment for purposes of the 1996 Employee Plan; and the number of shares for
which an option shall be granted to each such person.
(ii) To determine any conditions or
restrictions imposed on stock acquired pursuant to the exercise of an option
(including, but not limited to, repurchase rights, forfeiture restrictions and
restrictions on transferability).
(iii) To construe and interpret the 1996
Employee Plan and the options granted under it, to construe and interpret any
conditions or restrictions imposed on stock acquired pursuant to the exercise
of an option, to define the terms used herein, and to establish, amend and
revoke rules and regulations for its administration. The Committee, in the
exercise of this power, may correct any defect, omission or inconsistency in
the 1996 Employee Plan or in any option agreement in a manner and to the extent
it shall deem necessary or expedient to make the 1996 Employee Plan fully
effective.
(iv) To cancel, at any time and from time
to time, with the consent of the affected optionee or optionees, any or all
outstanding options granted under the 1996 Employee Plan and the grant and
substitution therefor of new options under the 1996 Employee Plan (subject to
limitations hereof) covering the same or different number of shares of stock at
an option price per share in all events not less than the fair market value on
the new grant date.
(v) Generally, to exercise such powers
and to perform such acts as it deems necessary or expedient to promote the best
interests of the Company.
(c) The Committee shall comply with the
provisions of Rule 16b-3 promulgated pursuant to the 1934 Act, as in effect
from time to time, to the extent applicable to the 1996 Employee Plan.
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(d) The determinations of the Committee on
matters referred to in this paragraph 2 shall be final and conclusive.
3. SHARES SUBJECT TO THE 1996 Employee Plan.
Subject to the provisions of paragraph 9 relating to
adjustments upon changes in stock, the stock that may be offered pursuant to
options granted under the 1996 Employee Plan shall not exceed the aggregate of
375,000 shares of the Company's common stock. If any option granted under the
1996 Employee Plan shall for any reason expire, be cancelled or otherwise
terminate without having been exercised in full, the stock not purchased under
such option shall again become available for the 1996 Employee Plan.
4. ELIGIBILITY.
(a) All Employees of the Company or its
subsidiaries shall be eligible to receive incentive and/or non-qualified stock
options, at the discretion of the Committee.
(b) The Company may issue incentive stock options
provided that the aggregate fair market value (determined at the time the
incentive stock option is granted) of the stock with respect to which incentive
stock options are exercisable for the first time by the optionee during any
calendar year (under all incentive stock option plans of the Company) shall not
exceed One Hundred Thousand Dollars ($100,000). Should it be determined that
any incentive stock option granted pursuant to the 1996 Employee Plan exceeds
such maximum, such incentive stock option shall be considered to be a
non-qualified option and not to qualify for treatment as an incentive stock
option under Section 422 of the Code to the extent, but only to the extent, of
such excess.
5. OPTION PROVISIONS.
Each option shall be in such form and shall contain such terms
and conditions as the Committee shall deem appropriate. The provisions of
separate options need not be identical, but each option shall include (through
incorporation of provisions hereof by reference in the option or otherwise) the
substance of each of the following provisions:
(a) Each option granted and all rights or
obligations thereunder by its terms shall expire on such date as the Committee
may determine as set forth in such stock option agreement, but not later than
ten (10) years from the date the option was granted and shall be subject to
earlier termination as provided elsewhere in the 1996 Employee Plan.
Notwithstanding the foregoing, any incentive stock option granted to an
optionee who owns (or is deemed to own pursuant to Section 424(d) of the Code)
stock possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or
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any of its affiliates shall expire not later than five (5) years from the date
of grant. For purposes of the 1996 Employee Plan, the date of grant of an
option shall be the date on which the Committee takes final action approving
the award of the option, notwithstanding the date the optionee accepts the
option, the date of execution of the option agreement, or any other date with
respect to such option.
(b) None of the options will be exercisable
during the first 12 months from the date of the grant. Each option shall vest
and become exercisable in the following four cumulative annual installments:
25% on the first anniversary date of the grant; an additional 25% on the second
anniversary date of the grant; an additional 25% on the third anniversary date
of the grant; and the last 25% on the fourth anniversary date of the grant.
From time to time during each of such installment periods, the option may be
exercised with respect to some or all of the shares allotted to that period,
and/or with respect to some or all of the shares allotted to any prior period
as to which the option was not fully exercised. During the remainder of the
term of the option (if its term extends beyond the end of the installment
vesting periods), the option may be exercised from time to time with respect to
any shares then remaining subject to the option. The provisions of this
subparagraph 5(b) are subject to any option provisions governing the minimum
number of shares as to which an option may be exercised.
(c) The exercise price of each option shall be
not less than one hundred percent (100%) of the fair market value of the stock
subject to the option on the date the option is granted; provided, however,
that the purchase price of common stock subject to an incentive stock option
may not be less than one hundred ten percent (110%) of such fair market value
(without regard to any restriction other than a restriction which, by its
terms, will never lapse) where the optionee owns (or is deemed to own pursuant
to Section 424(d) of the Code) stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company. The
fair market value of such stock shall be determined by the Committee in
accordance with any reasonable valuation method, including the valuation method
described in Treasury Regulation Section 20.2031-2.
(d) The purchase price of stock acquired pursuant
to an option shall be paid at the time the option is exercised in cash or check
payable to the order of the Company in an amount equal to the option price for
the shares being purchased, in whole shares of stock of the Company owned by
the optionee having a fair market value on the exercise date (determined by the
Committee in accordance with any reasonable evaluation method, including the
evaluation method described in Treasury Regulation Section 20.2031-2) equal to
the option price for the shares being purchased, or a combination of stock and
cash or check payable
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to the order of the Company, equal in the aggregate to the option price for the
shares being purchased. Payments of stock shall be made by delivery of stock
certificates properly endorsed for transfer in negotiable form. If other than
the optionee, the person or persons exercising the option shall be required to
furnish the Company appropriate documentation that such person or persons have
the full legal right and power to exercise the option on behalf of and for the
optionee.
(e) An option by its terms may only be
transferred by will or by the laws of descent and distribution upon the death
of the optionee, shall not be transferable during the optionee's lifetime, and
shall be exercisable during the lifetime of the person to whom the option is
granted only by such person.
(f) The Company may require any optionee, or any
person to whom an option is transferred under subparagraph 5(e), as a condition
of exercising any such option, to give written assurances satisfactory to the
Company stating that such person is acquiring the stock subject to the option
for such person's own account and not with any present intention of selling or
otherwise distributing the stock. The requirement of providing written
assurances, and any assurances given pursuant to the requirement, shall be
inoperative if (i) the shares to be issued upon the exercise of the option are
then registered or qualified under the then applicable federal or state
securities laws, or (ii) a determination is made by counsel for the Company
that such written assurances are not required in the circumstances under the
then applicable federal or state securities laws.
(g) If an optionee ceases to be employed by the
Company or its subsidiaries, then such optionee's option shall terminate three
(3) months thereafter, and during such three (3) month period, such option
shall be exercisable only as to those shares with respect to which vested
installments (in accordance with Section 5(b)), if any, had accrued as of the
date on which the optionee ceased to be employed by the Company or its
subsidiaries, unless:
(i) Such termination is due to such
person's permanent and total disability, within the meaning of Section 22(e)(3)
of the Code, in which case the stock option agreement may, but need not,
provide that it may be exercised at any time within one (1) year following such
termination of employment, and provided further that if such optionee dies
during such specified period following such termination of employment, then the
stock option agreement may, but need not, provide that such option may be
exercised at any specified time up to one (1) year following the death of the
optionee by the person or persons to whom the optionee's rights under such
option pass by will or by the laws of descent and distribution, but only to the
extent that the optionee was entitled to exercise said option immediately prior
to the termination of the optionee's employment;
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(ii) The optionee dies while in the
employ of the Company or its subsidiaries (which shall constitute termination
of employment), or within not more than three (3) months after termination of
such employment, in which case the option may, but need not, provide that it
may be exercised at any time within one (1) year following the death of the
optionee by the person or persons to whom the optionee's rights under such
option pass by will or by the laws of descent and distribution, but only to the
extent that the optionee was entitled to exercise said option immediately prior
to the termination of optionee's employment;
(iii) The option by its terms specifies
either (a) that it shall terminate sooner than three (3) months after
termination of the optionee's employment, or (b) that in the case of
non-qualified stock options it may be exercised more than three (3) months
after termination of the optionee's employment, but only to the extent that the
optionee was entitled to exercise said option immediately prior to the
termination of optionee's employment; or
(iv) The optionee's employment is
terminated for cause, whereupon the option terminates immediately unless such
termination is waived by the Committee. Termination for cause shall include
termination for malfeasance or gross misfeasance in the performance of duties,
or conviction of illegal activity in connection therewith, conviction for a
felony, or any conduct detrimental to the interests of the Company or any of
its subsidiaries, and the determination of the Committee with respect thereto
shall be final and conclusive.
This subparagraph 5(g) shall not be construed to extend the
term of any option or to permit anyone to exercise the option after expiration
of its term, nor shall it be construed to increase the number of shares as to
which any option is exercisable from the amount exercisable on the date of
termination of the optionee's employment.
(h) Options may be exercised by ten (10) days
written notice delivered to the Company stating the number of shares with
respect to which the option is being exercised together with payment for such
shares. Not less than ten (10) shares may be purchased at any one time unless
the number purchased is the total number of shares which may be purchased under
the option.
(i) Any option granted hereunder shall
provide as determined by the Committee for appropriate arrangements for the
satisfaction by the Company or its subsidiaries and the optionee of all
federal, state, local or other income, excise or employment taxes or tax
withholding requirements applicable to the exercise of the option or the later
disposition of the shares of stock thereby acquired. Such arrangements shall
include, without limitation, the right of the Company or any subsidiary thereof
to deduct or withhold in the form of cash or, if
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permitted by law, shares of stock from any transfer or payment to an optionee
or, if permitted by law, to receive transfers of shares of stock or other
property from the optionee, in such amount or amounts deemed required or
appropriate by the Committee in its discretion. Any shares of stock issued
pursuant to the exercise of an option and transferred by the optionee to the
Company for purposes of satisfying any withholding obligation shall not again
be available for purposes of the Plan.
6. COVENANTS OF THE COMPANY.
(a) During the terms of the options granted under
the 1996 Employee Plan, the Company shall keep available at all times the
number of shares of stock required to satisfy such options.
(b) The Company shall seek to obtain from each
regulatory commission or agency having jurisdiction over the 1996 Employee Plan
or the Company such authority as may be required to issue and sell shares of
stock upon exercise of the options granted under the 1996 Employee Plan;
provided, however, that this undertaking shall not require the Company to
register under the Securities Act of 1933, as amended, either the 1996 Employee
Plan, any option granted under the 1996 Employee Plan or any stock issued or
issuable pursuant to any such option or grant. If the Company is unable to
obtain from any such regulatory commission or agency the authority which
counsel for the Company deems necessary for the lawful issuance and sale of
stock under the 1996 Employee Plan, the Company shall be relieved from any
liability for failure to issue and sell stock upon grant or upon exercise of
such options unless and until such authority is obtained.
(c) The Company shall indemnify and hold harmless
the members of the Committee in any action brought against any member in
connection with the administration of the 1996 Employee Plan to the maximum
extent permitted by then applicable law, except in the case of willful
misconduct or gross misfeasance by such member in connection with the 1996
Employee Plan and its administration.
7. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to options granted
under the 1996 Employee Plan shall constitute general funds of the Company.
8. MISCELLANEOUS.
(a) Neither an optionee nor any person to whom an
option is transferred under subparagraph 5(e) shall be deemed to be the holder
of, or to have any of the rights of a holder with respect to, any shares
subject to such option unless and until such person has satisfied all
requirements for exercise of the option pursuant to its terms.
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(b) Nothing contained in the 1996 Employee Plan,
or in any option granted pursuant to the 1996 Employee Plan, shall obligate the
Company or any of its subsidiaries to employ any employee for any period or
interfere in any way with the right of the Company or any of its subsidiaries
to reduce the compensation of any employee.
9. ADJUSTMENTS UPON CHANGES IN STOCK.
If the outstanding shares of the stock of the Company are
increased, decreased, or changed into, or exchanged for a different number or
kind of shares or securities of the Company, without receipt of consideration
by the Company, through reorganization, merger, recapitalization,
reclassification, stock split, stock dividend, stock consolidation, or
otherwise, an appropriate and proportionate adjustment shall be made in the
number and kind of shares as to which options may be granted. 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 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.
Adjustments 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
under the 1996 Employee Plan on account of any such adjustment.
10. TERMINATING EVENTS.
Not less than thirty (30) days prior to the dissolution or
liquidation of the Company, or a reorganization, merger, or consolidation of the
Company with one or more corporations as a result of which the Company will not
be the surviving or resulting corporation, or a sale of substantially all the
assets of the Company to another person, or a reverse merger in which the
Company is the surviving corporation but the shares of the Company's stock
outstanding immediately preceding the merger are converted by virtue of the
merger into other property (a "Terminating Event"), the Committee shall notify
each optionee of the pendency of the Terminating Event. Upon delivery of said
notice, any option granted prior to the Terminating Event shall be,
notwithstanding the provisions of paragraph 5 hereof, exercisable in full and
not only as to those shares with respect to which vested installments, if any,
have then accrued, subject, however, to earlier expiration or termination as
provided elsewhere in the 1996 Employee Plan. Upon the date thirty (30) days
after delivery of said notice, any option or portion thereof not exercised shall
terminate, and upon the effective date of the Terminating Event, the 1996
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Employee Plan shall terminate, unless provision is made in connection with the
Terminating Event for assumption of options theretofore granted, or substitution
for such options with 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 number and kind of shares and prices.
11. AMENDMENT OF THE 1996 Employee Plan.
(a) The Committee, at any time, and from time to
time, may amend the 1996 Employee Plan. However, except as provided in
paragraph 9 relating to adjustments upon changes in stock, no amendment shall
be effective unless approved by the affirmative vote of a majority of the
shares of the Company present, or represented, and entitled to vote at a duly
held meeting at which a quorum is present or by the written consent of the
holders of a majority of the outstanding shares of the Company entitled to
vote, where the amendment will:
(i) Materially increase the number of
shares reserved for options under the 1996 Employee Plan;
(ii) Materially modify the requirements
as to eligibility for participation in the 1996 Employee Plan; or
(iii) Materially increase the benefits
accruing to participants under the 1996 Employee Plan;
provided, however, that approval at a meeting or by written consent need not be
obtained or may be obtained by a lesser degree of shareholder approval if the
Committee determines, in its discretion after consultation with the Company's
legal counsel, that such approval is not required under, or such lesser degree
of shareholder approval will comply with, all applicable laws, including Rule
16b-3 promulgated pursuant to the 1934 Act, and will not adversely affect the
qualification of the 1996 Employee Plan under Section 422 of the Code. It is
expressly contemplated that the Committee, in its sole discretion, may amend
the 1996 Employee Plan in any respect the Committee deems necessary or
advisable to provide optionees with the maximum benefits provided or to be
provided under the provisions of the Code and the regulations promulgated
thereunder relating to incentive stock options and/or to bring the 1996
Employee Plan and/or options granted under it into compliance therewith.
(b) Rights and obligations under any option
granted pursuant to the 1996 Employee Plan, while the 1996 Employee Plan is in
effect, shall not be altered or impaired by suspension or termination of the
1996 Employee Plan, except with the consent of the person to whom the stock or
option was granted.
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12. TERMINATION OR SUSPENSION OF THE 1996 Employee Plan.
(a) The Committee may suspend or terminate the
1996 Employee Plan at any time. Unless sooner terminated, the 1996 Employee
Plan shall terminate ten years from the Effective Date (as defined in paragraph
13) of the 1996 Employee Plan. No options may be granted under the 1996
Employee Plan while the 1996 Employee Plan is suspended or after it is
terminated.
(b) Rights and obligations under any option
granted pursuant to the 1996 Employee Plan, while the 1996 Employee Plan is in
effect, shall not be altered or impaired by suspension or termination of the
1996 Employee Plan, except with the consent of the person to whom the stock or
option was granted.
13. EFFECTIVE DATE OF PLAN.
The 1996 Employee Plan shall become effective on
________________, 1996, (the "Effective Date") but no options granted under the
1996 Employee Plan shall be exercised unless and until the 1996 Employee Plan
has been approved by the affirmative vote of a majority of the outstanding
shares of the Company present, or represented, and entitled to vote at a duly
held meeting at which a quorum is present or by the written consent of the
holders of a majority of the outstanding shares of the Company entitled to
vote, and, if required, an appropriate permit has been issued by the
appropriate state securities authorities and approval has been obtained from
the appropriate federal or state and/or federal regulatory authorities.
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