EXHIBIT 10.5
PACIFIC CONTINENTAL BANK
1999 DIRECTOR STOCK OPTION PLAN
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1. Purpose of the Plan. The purpose of this 1999 Director Stock Option Plan
("Plan") is to secure for Pacific Continental Bank ("Bank") and its
shareholders the benefits which flow from providing Directors of the Bank
with incentive inherent in common stock ownership. It is generally
recognized that stock options plans aid in retaining competent directors,
furnish a device to attract directors of exceptional ability, and provide
incentive to Directors to make the Bank successful. The Bank intends that
Options issued under this Plan will constitute nonqualified stock options.
2. Definitions. As used in this Plan, the following definitions apply:
a. "Bank" has the meaning set forth in paragraph 1 of this Plan.
b. "Board" means the Board of Directors of the Bank.
c. "Code" means the Internal Revenue Code of 1986, as amended.
d. "Common Stock" means the Bank's common stock, currently with a par
value of $1.00 per share.
e. "Committee" has the meaning set forth in subparagraph 4(a) of this
Plan.
f. "Continuous Status as a Director" means the absence of any
interruption or termination of service as a Director.
g. "Date of Grant" of an Option means the date on which the Committee
makes the determination granting such Option, or such later date as
the Committee may designate. The Date of Grant shall be specified in
the Option agreement.
h. "Director" means any person serving as a member of the Board of the
Bank, or a Subsidiary of the Bank which is currently in existence or
is hereafter organized or is acquired by the Bank.
i. "Exercise Price" has the meaning set forth in subparagraph 4(b)(2) of
this Plan.
j. "Option" means a stock option granted under this Plan, which
constitutes a Nonqualified Stock Option.
k. "Optionee" means a Director who receives an Option.
l. "Plan" has the meaning set forth in paragraph 1 of this Plan.
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m. "Parent" means any corporation owning at least eighty percent (80%) of
the total voting power of the issued and outstanding stock of the
Bank, and eighty percent (80%) of the total value of the issued and
outstanding stock of the Bank.
n. "Subsidiary" means any corporation of which not less than fifty
percent (50%) of the voting shares are held by the Bank or a
Subsidiary, whether or not such corporation now exists or is hereafter
organized or acquired by the Bank or a Subsidiary.
3. Stock Subject to Options.
a. Number of Shares Reserved. The maximum number of shares which may be
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optioned and sold under this Plan is one hundred thousand (100,000)
shares of the Common Stock of the Bank (subject to adjustment as
provided in subparagraph 6(j) of this Plan). During the term of this
Plan, the Bank will at all times reserve and keep available a
sufficient number of shares of its Common Stock to satisfy the
requirements of this Plan.
b. Expired Options. If any outstanding Option expires or becomes
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unexercisable for any reason without having been exercised in full,
the shares of Common Stock allocable to the unexercised portion of
such Option will again become available for other Options.
4. Administration of the Plan.
a. The Committee. The Board will administer this Plan directly, acting
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as a Committee of the whole, or if the Board elects, by a separate
Committee appointed by the Board for that purpose and consisting of at
least three Board members. All references in the Plan to the
"Committee" refers to this separate Committee, if any is established,
or if none is then in existence, refers to the Board as a whole. Once
appointed, any Committee will continue to serve until otherwise
directed by the Board. From time to time, the Board may increase the
size of the Committee and appoint additional members, remove members
(with or without cause), appoint new members in substitution, and fill
vacancies however caused. The Committee will select one of its members
as chairman, and will hold meetings at such times and places as the
chairman or a majority of the Committee may determine. At all times,
the Board will have the power to remove all members of the Committee
and thereafter to directly administer this Plan as a Committee of the
whole.
(1) Members of the Committee who are eligible for Options or who have
been granted Options will be counted for all purposes in
determining the existence of a quorum at any meeting of the
Committee and will be eligible to vote on all matters before the
Committee respecting the granting of Options or administration of
this Plan.
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b. Powers of the Committee. All actions of the Committee must be either
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(i) by a majority vote of the members of the full Committee at a
meeting of the Committee, or (ii) by unanimous written consent of all
members of the full Committee without a meeting. All decisions,
determinations and interpretations of the Committee will be final and
binding on all persons, including all Optionees and any other holders
or persons interested in any Options, unless otherwise expressly
determined by a vote of the majority of the entire Board. No member of
the Committee or of the Board will be liable for any action or
determination made in good faith with respect to the Plan or any
Option. Subject to all provisions and limitations of the Plan, the
Committee will have the authority and discretion:
(1) to determine the Directors to whom Options are to be granted, the
Dates of Grant, and the number of shares to be represented by
each Option;
(2) to determine the price at which shares of Common Stock are to be
issued under an Option, subject to subparagraph 6(b) of this Plan
("Exercise Price");
(3) to determine all other terms and conditions of each Option
granted under this Plan (including specification of the dates
upon which Options become exercisable, and whether conditioned on
performance standards, periods of service or otherwise), which
terms and conditions can vary between Options;
(4) to modify or amend the terms of any Option previously granted, or
to grant substitute Options, subject to subparagraphs 6(l) and
6(m) of this Plan;
(5) to authorize any person or persons to execute and deliver Option
agreements or to take any other actions deemed by the Committee
to be necessary or appropriate to effect the grant of Options by
the Committee;
(6) to interpret this Plan and to make all other determinations and
take all other actions which the Committee deems necessary or
appropriate to administer this Plan in accordance with its terms
and conditions.
5. Eligibility. Options may be granted only to Directors. Granting of Options
under this Plan will be entirely discretionary with the Committee. Adoption
of this Plan will not confer on any Director any right to receive any
Option or Options under this Plan unless and until said Options are granted
by the Committee, in its sole discretion. Neither the adoption of this Plan
nor the granting of any Options under this Plan will confer upon any
Director or Optionee any right with respect to continuation of status as a
Director, nor will the same interfere in any way with his or her right or
with the right of the shareholders of the Bank or any Subsidiary to
terminate his or her status as a Director at any time.
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6. Terms and Conditions of Options. All Options granted under this Plan must
be authorized by the Committee, and must be documented in written Option
agreements in such form as the Committee will approve from time to time,
which agreements must comply with and be subject to all of the following
terms and conditions:
a. Number of Shares. Each Option agreement must state the number of
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shares subject to Option. Any number of Options may be granted to a
single eligible Director at any time and from time to time.
b. Exercise Price and Consideration. Each option agreement must state
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the Exercise Price for the shares of Common Stock to be issued under
the Option, which price must be not less than the greater of (1) the
fair market value of the Common Stock or (2) the net book value of the
Common Stock at the time of grant, as is determined by the Committee.
The Exercise Price is payable either (i) in United States dollars upon
exercise of the Options, or (ii) if approved by the Board or
Committee, other consideration including without limitation Common
Stock of the Bank, services, debt instruments or other property.
c. Term of Option. No Option shall in any event be exercisable after the
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expiration of ten (10) years from the Date of Grant. Subject to other
applicable provisions of this Plan including but not limited to
subparagraphs 6(g), 6(h) and 6(i), the term of each Option will be
determined by the Committee in its discretion.
d. Non-transferability of Options. No Option may be sold, pledged,
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assigned, hypothecated, transferred, or disposed of in any manner
other than by will or by the laws of descent or distribution and may
be exercised, during the lifetime of the Optionee, only by the
Optionee.
e. Manner of Exercise. An Option will be deemed to be exercised when
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written notice of exercise has been given to the Bank in accordance
with the terms of the Option by the person entitled to exercise the
Option, together with full payment for the shares of Common Stock
subject to said notice.
f. Rights as Shareholder. An Optionee shall have none of the rights of a
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shareholder with respect to any shares covered by his or her Option
unless and until the Optionee has exercised such Option and submitted
full payment for the shares.
g. Death of Optionee. In the event of the death of an Optionee who at
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the time of his or her death was a Director and who had been in
Continuous Status as a Director since the Date of Grant of the Option,
the Option will terminate on the earlier of (i) one year after the
date of death of the Optionee, or (ii) the expiration date otherwise
provided in the Option agreement, except that if the expiration date
should occur during the 180-day period immediately following the
Optionee's death, such Option will terminate at the end of such 180-
day period. The Option will be exercisable at any time prior to such
termination by the Optionee's estate,
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or by such person or persons who have acquired the right to exercise
the Option by bequest or by inheritance or by reason of the death of
the Optionee.
h. Disability of Optionee. If an Optionee's status as a Director is
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terminated at any time during the Option period by reason of a
disability (within the meaning of Section 22(e)(3) of the Code) and if
said Optionee had been in Continuous Status as a Director at all times
between the Date of Grant of the Option and the termination of his or
her status as a Director, his or her Option will terminate on the
earlier of (i) one year after the date of termination of his or her
status as a Director, or (ii) the expiration date otherwise provided
in his or her Option agreement.
i. Termination of Status as a Director.
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(1) If an Optionee's status as a Director is terminated at any time
after the grant of an Option to such Director for any reason
other than death or disability, as provided in subparagraphs 6(g)
and 6(h) of this Plan, and excepting if the Director is removed
for cause, as provided in subparagraph (2) below, such Option
will terminate on the earlier of (i) the same day of the third
month after the date of termination of his or her status as a
Director, or (ii) the expiration date otherwise provided in his
or her Option agreement.
(2) If an Optionee is removed as a Director for cause at any time
after the grant of an Option to such Director, then such Option
will terminate immediately upon notice to the Director of
termination of his or her status as a Director. Solely for this
purpose, "cause" will be deemed to exist only if the Board has
reasonable grounds to believe that the Bank has suffered or will
suffer substantial injury as a result of the gross negligence or
dishonesty of the Director who is removed.
j. Adjustments Upon Changes in Capitalization. Subject to any required
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action by the shareholders of the Bank, the number of shares of Common
Stock covered by each outstanding Option, the number of shares of
Common Stock available for grant of additional Options, and the per-
share Exercise Price in each outstanding Option, will be
proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from any stock split or other
subdivision or consolidation of shares, the payment of any stock
dividend (but only on the Common Stock) or any other increase or
decrease in the number of such shares of Common Stock effected without
receipt of consideration by the Bank; provided, however, that
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conversion of any convertible securities of the Bank will not be
deemed to have been "effected without receipt of consideration." Such
adjustment will be made by the Committee, whose determination in that
respect will be final, binding and conclusive.
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(1) Except as otherwise expressly provided in this subparagraph 6(j),
no Optionee will have any rights by reason of any stock split or
the payment of any stock dividend or any other increase or
decrease in the number of shares of Common Stock, and no issuance
by the Bank of shares of stock of any class, or securities
convertible into shares of stock of any class, will affect the
number of shares or Exercise Price subject to any Options, and no
adjustments in Options will be made by reason thereof. The grant
of an Option under this Plan will not affect in any way the right
or power of the Bank to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure.
k. Conditions Upon Issuance of Shares. Shares of Common Stock will not be
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issued with respect to an Option granted under this Plan unless the
exercise of such Option and the issuance and delivery of such shares
pursuant thereto will comply with all applicable provisions of law,
including applicable federal and state securities laws. As a condition
to the exercise of an Option, the Bank may require the person
exercising such Option to represent and warrant at the time of
exercise that the shares of Common Stock are being purchased only for
investment and without any present intention to sell or distribute
such Common Stock if, in the opinion of counsel for the Bank, such a
representation is required by any of the aforementioned relevant
provisions of law.
l. Corporate Sale Transactions. In the event of the merger or
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reorganization of the Bank with or into any other corporation, the
sale of substantially all of the assets of the Bank, or a dissolution
or liquidation of the Bank (collectively, "Sale Transaction"), (1) all
outstanding Options that are not then fully exercisable will become
exercisable upon the date of closing of any sale transaction or such
earlier date as the Committee may fix; and (2) the Committee may, in
the exercise of its sole discretion, terminate all outstanding Options
as of a date fixed by the Committee. In such event, however, the
Committee must notify each Optionee of such action in writing not less
than sixty (60) days prior to the termination date fixed by the
Committee, and each Optionee must have the right to exercise his or
her Option prior to said termination date.
m. Substitute Stock Options. In connection with an internal
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reorganization of the Bank (e.g., formation of a holding company), the
Committee is authorized, in its discretion, to substitute for any
unexercised Option, a new option for shares of the resulting entity's
stock.
n. Tax Compliance. The Bank, in its sole discretion, may take actions
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reasonably believed by it to be required to comply with any local,
state, or federal tax laws relating to the reporting or withholding of
taxes attributable to the grant or exercise of any Option or the
disposition of any shares of Common Stock issued upon exercise of an
Option, including, but not limited to (i) withholding from any
Optionee exercising an Option a number of shares of Common Stock
having a fair market value equal to the amount required to be withheld
by the Bank under
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applicable tax laws, and (ii) withholding from any form of
compensation or other amount due an Optionee, or holder, of shares of
Common Stock issued upon exercise of an Option any amount required to
be withheld by the Bank under applicable tax laws. Withholding or
reporting will be considered required for purposes of this
subparagraph if the Committee, in its sole discretion, so determines.
o. Other Provisions. Option agreements executed under this Plan may
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contain such other provisions as the Committee will deem advisable.
7. Term of the Plan. This Plan will become effective and Options may be
granted upon the Plan's approval by the Board, subject to shareholder
approval. Unless sooner terminated as provided in subparagraph 7(a) of this
Plan, this Plan will terminate on the tenth (10th) anniversary of its
effective date. Options may be granted at any time after the effective date
and prior to the date of termination of this Plan.
a. Amendment or Early Termination of the Plan. The Board may terminate
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this Plan at any time. The Board may amend this Plan at any time and
from time to time in such respects as the Board may deem advisable,
except that, without approval of the shareholders, no revision or
amendment will increase the number of shares of Common Stock subject
to this Plan other than in connection with an adjustment under
subparagraph 6(j) of this Plan.
b. Effect of Amendment or Termination. No amendment or termination of
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this Plan will affect Options granted prior to such amendment or
termination, and all such Options will remain in full force and effect
notwithstanding such amendment or termination.
8. Shareholder Approval. Adoption of this Plan will be subject to
ratification by affirmative vote of shareholders owning at least a majority
of the outstanding Common Stock of the Bank at a duly convened meeting.
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CERTIFICATE OF ADOPTION
I certify that the foregoing Director Stock Option Plan was approved by the
Board of Directors of Pacific Continental Bank on February 9, 1999.
/s/ John M. Gyde
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John M. Gyde, Secretary
I certify that the foregoing Director Stock Option Plan was approved by the
shareholders of Pacific Continental Bank on April 22, 1999.
/s/ John M. Gyde
______________________________________
John M. Gyde, Secretary
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