BYL BANCORP
1997 STOCK OPTION PLAN
Adopted April 23, 1997
Amended July 23, 1997
Amended February 18, 1998
Amended March 24, 1999
1. PURPOSE
The purpose of the BYL Bancorp 1997 Stock Option Plan (the "Plan") is to
strengthen BYL Bancorp (the "Corporation") and those corporations which are or
hereafter become subsidiary corporations by providing additional means of
attracting and retaining competent managerial personnel and by providing to
participating directors, officers, key employees, consultants and others with
significant and material business relationships added incentives for high levels
of performance and for unusual efforts to increase the earnings of the
Corporation and any Subsidiary corporations; and to allow such individuals the
opportunity to participate in the ownership of the Corporation and thereby have
an interest in the success and increased value of the Corporation. The Plan
seeks to accomplish these purposes and achieve these results by providing a
means whereby such directors, officers, key employees, consultants and others
with significant and material business relationships may purchase shares of
Common Stock of the Corporation pursuant to Stock Options granted in accordance
with this Plan.
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Stock Options granted pursuant to this Plan are intended to be Incentive
Stock Options or Non-Qualified Stock Options, as shall be determined and
designated by the Stock Option Committee upon the grant of each Stock Option
hereunder.
2. DEFINITIONS
For the purposes of this Plan, the following terms shall have the
following meanings:
(a) "COMMON STOCK." This term shall mean shares of the Corporation's
no par value common stock, subject to adjustment pursuant to Paragraph 14
(Adjustment Upon Changes in Capitalization) hereunder.
(b) "CORPORATION." This term shall mean BYL Bancorp, a California
corporation.
(c) "ELIGIBLE PARTICIPANT." This term shall mean: (i) all directors
of the Corporation or any Subsidiary; (ii) all full time officers (whether or
not they are also directors) of the Corporation or any Subsidiary; (iii) all
full time key employees (as such persons may be determined by the Stock Option
Committee from time to time) of the Corporation or any Subsidiary; and (iv)
consultants and others with significant and material business relationships with
the Corporation.
(d) "EMPLOYER." This term shall mean the Corporation, as defined
herein, or any other subsidiary of the Corporation, as appropriate, depending
upon which company Optionee is employed.
(e) "FAIR MARKET VALUE." This term shall mean the fair market value
of the Corporation's Common Stock as determined by any reasonable valuation
method in
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accordance with the Commissioner of Corporations Regulation Section
260.140.50, which generally provides that in determining whether the price is
fair, predominant weight will be given to the following: (a) if securities
of the same class are publicly traded on an active market of substantial
depth, the recent market price of such securities; (b) if the securities of
the same class have not been so publicly traded, the price at which
securities of reasonable comparable corporations (if any) in the same
industry are being traded, subject to appropriate adjustments for the
dissimilarities between the corporations being compared; or (c) in the
absence of any reliable indicator under subsection (a) or (b), the earnings
history, book value and prospects of the issuer in light of market conditions
generally.
(f) "INCENTIVE STOCK OPTION." This term shall mean a Stock Option
which is an "Incentive Stock Option" within the meaning of Section 422A of the
Internal Revenue Code of 1986, as amended.
(g) "NON-QUALIFIED STOCK OPTION." This term shall mean a Stock Option
which is not an Incentive Stock Option.
(h) "OPTION SHARES." This term shall mean shares of Common Stock
which are covered by and subject to any outstanding unexercised Stock Option
granted pursuant to this Plan.
(i) "OPTIONEE." This term shall mean any Eligible Participant to whom
a stock option has been granted pursuant to this Plan, provided that at least
part of the Stock Option is outstanding and unexercised.
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(j) "PLAN." This term shall mean the BYL Bancorp 1997 Stock Option
Plan as embodied herein and as may be amended from time to time in accordance
with the terms hereof and applicable law.
(k) "STOCK OPTION." This term shall mean the right to purchase from
the Corporation a specified number of shares of Common Stock under the Plan at a
price and upon terms and conditions determined by the Stock Option Committee.
(l) "STOCK OPTION COMMITTEE." The Board of Directors of the
Corporation may select and designate a stock option committee consisting of at
least three and not more than five persons, at least two of whom are directors,
having full authority to act in the matters. Regardless of whether a Stock
Option Committee is selected, the Board of Directors may act as the Stock Option
Committee and any action taken by the Board of Directors as such shall be deemed
to be action taken by the Stock Option Committee. All references in the Plan to
the "Stock Option Committee" shall be deemed references to the Board of
Directors acting as a stock option committee and to a duly appointed Stock
Option Committee, if there be one. In the event of any conflict between any
action taken by the Board of Directors acting as a Stock Option Committee and
any action taken by a duly appointed Stock Option Committee, the action taken by
the Board of Directors shall be controlling and the action taken by the duly
appointed Stock Option Committee shall be disregarded.
(m) "SUBSIDIARY." This term shall mean any subsidiary corporation of
the Corporation as such term is defined in Section 425(f) of the Internal
Revenue Code of 1986, as amended.
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3. ADMINISTRATION
(a) STOCK OPTION COMMITTEE. This Plan shall be administered by the
Stock Option Committee. The Board of Directors of the Corporation shall have
the right, in its sole and absolute discretion, to remove or replace any person
from or on the Stock Option Committee at any time for any reason whatsoever.
(b) ADMINISTRATION OF THE PLAN. Any action of the Stock Option
Committee with respect to the administration of the Plan shall be taken
pursuant to a majority vote, or pursuant to the unanimous written consent, of
its members. Any such action taken by the Stock Option Committee in the
administration of this Plan shall be valid and binding, so long as the same
is in conformity with the terms and conditions of this Plan. Subject to
compliance with each of the terms, conditions and restrictions set forth in
this Plan, including, but not limited to, those set forth in Section 6(a)(ii)
hereof, the Stock Option Committee shall have the exclusive right, in its
sole and absolute discretion, to establish the terms and conditions of any
Stock Options granted under the Plan, including, without limitation, the
power to: (i) establish the number of Stock Options, if any, to be granted
hereunder, in the aggregate and with regard to any individual Eligible
Participant; (ii) determine the time or times when such Stock Options, or any
parts thereof, may be exercised; (iii) determine and designate which Stock
Options granted under the Plan shall be Incentive Stock Options and which
shall be Non-Qualified Stock Options; (iv) determine the Eligible
Participants, if any, to whom Stock Options are granted; (v) determine the
duration and purposes, if any, of leaves of absence which may be permitted to
holders of unexercised,
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unexpired Stock Options without such constituting a termination of employment
under the Plan; (vi) prescribe and amend the terms, provisions and form of
any instrument or agreement setting forth the terms and conditions of every
Stock Option granted hereunder; and (vii) make loans to or guarantee any
obligations of any Optionees, except directors, in connection with the
exercise of Stock Options as specified in Section 8(d) hereof, whenever the
Stock Option Committee determines that such loan or guarantee may reasonably
be expected to benefit the corporation, subject to the provisions of Section
315(b) of the California General Corporations Law of 1977, as amended and
subject to Regulations G, U and T promulgated by the Board of Governors of
the Federal Reserve System pursuant to Section 7 of the Securities Exchange
Act of 1934, if the Option Shares are listed on a stock exchange or are
contained in the list of over-the-counter margin securities published by the
Federal Reserve Board.
(c) DECISIONS AND DETERMINATIONS. Subject to the express provisions
of the Plan, the Stock Option Committee shall have the authority to construe and
interpret the Plan, to define the terms used therein, to prescribe, amend, and
rescind rules and regulations relating to the administration of the Plan, and to
make all other determinations necessary or advisable for administration of the
Plan. Determinations of the Stock Option Committee on matters referred to in
this Section 3 shall be final and conclusive so long as the same are in
conformity with the terms of this Plan.
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4. SHARES SUBJECT TO THE PLAN
Subject to adjustments as provided in Section 14 hereof, the maximum number
of shares of Common Stock which may be issued upon exercise of Stock Options
granted under this Plan is limited to 30% of the issued and outstanding shares
of the Corporation up to a maximum of 759,390 shares in the aggregate. If any
Stock Option shall be canceled, surrendered, or expire for any reason without
having been exercised in full, the unpurchased Option Shares represented thereby
shall again be available for grants of Stock Options under this Plan.
5. ELIGIBILITY
Only Eligible Participants shall be eligible to receive grants of Stock
Options under this Plan.
6. GRANTS OF STOCK OPTIONS
(a) GRANT. Subject to the express provisions and limitations of the
Plan, the Stock Option Committee, in its sole and absolute discretion, may grant
Stock Options to Eligible Participants of the Corporation, for a number of
Option Shares, at the price(s) and time(s), on the terms and conditions and to
such Eligible Participants as it deems advisable and specifies in the respective
grants.
Subject to the limitations and restrictions set forth in the Plan,
an Eligible Participant who has been granted a Stock Option may, if otherwise
eligible, be granted additional Stock Options if the Stock Option Committee
shall so determine. The Stock Option Committee shall designate in each grant
of a Stock Option whether the Stock Option is an Incentive Stock Option or a
Non-Qualified Stock Option.
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An eligible director, officer or employee shall not participate in the
granting of his or her own options.
(b) DATE OF GRANT AND RIGHTS OF OPTIONEE. The determination of the
Stock Option Committee to grant a Stock Option shall not in any way
constitute or be deemed to constitute an obligation of the Corporation, or a
right of the Eligible Participant who is the proposed subject of the grant,
and shall not constitute or be deemed to constitute the grant of a Stock
Option hereunder unless and until both the Corporation and the Eligible
Participant have executed and delivered the form of stock option agreement
then required by the Stock Option Committee as evidencing the grant of the
Stock Option, together with such other instruments as may be required by the
Stock Option Committee pursuant to this Plan; provided, however, that the
Stock Option Committee may fix the date of grant as any date on or after the
date of its final determination to grant the Stock Option (or if no such date
is fixed, then the date of grant shall be the date on which the determination
was finally made by the Stock Option Committee to grant the Stock Option),
and such date shall be set forth in the stock option agreement. The date of
grant as so determined shall be deemed the date of grant of the Stock Option
for purposes of this Plan.
(c) SHAREHOLDER-EMPLOYEES. Notwithstanding anything to the
contrary contained elsewhere herein, a Stock Option shall not be granted
hereunder to an Eligible Participant who owns, directly or indirectly, at the
date of the grant of the Stock Option, more than ten percent (10%) of the
total combined voting power of all classes of capital stock of the
Corporation or a Subsidiary corporation, unless the
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purchase price of the Option Shares subject to said Stock Option is at least
110% of the Fair Market Value of the Option Shares, determined as of the date
said Stock Option is granted.
(d) MAXIMUM VALUE OF STOCK OPTIONS. Except as provided in
paragraph (e) of this Section 6, the maximum aggregate Fair Market Value of
Option Shares (determined as of the respective Stock Option grant dates) for
which an Eligible Participant may be granted Incentive Stock Options in any
calendar year shall not exceed $100,000, plus any "unused carryover amount."
The unused carryover amount, determined on a yearly basis, shall be equal to
one-half (1/2) of the difference between $100,000 and the aggregate Fair
Market Value (determined as of the respective Stock Option grant dates) of
all of the Option Shares subject to Incentive Stock Options granted to the
Optionee during the calendar year under the Plan. The provisions of Section
422A(c)(4) of the Internal Revenue Code of 1986, as amended, are incorporated
herein by this reference for the purpose of the determination and application
of the unused carryover amount.
The aggregate fair market value (determined at the time the option
is granted) of the stock with respect to which incentive stock options are
exercisable for the first time by such individual under the terms of the Plan
during any calendar year is limited to $100,000, but the value of stock for
which options may be granted to an employee in a given year may exceed
$100,000, but such options in excess of $100,000 shall be treated as
non-qualified options.
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(e) SUBSTITUTED STOCK OPTIONS. If all of the outstanding shares of
common stock of another corporation are changed into or exchanged solely for
common stock in a transaction to which Section 425(a) of the internal Revenue
Code of 1986, as amended, applies, then, subject to the approval of the Board
of Directors of the Bank, Stock Options under the Plan may be substituted
("Substituted Options") in exchange for valid, unexercised and unexpired
stock options of such other corporation. Substituted options shall qualify
as Incentive Stock Options under the Plan, provided that (and to the extent)
the stock options exchanged for the Substituted Options were "Incentive Stock
Options" within the meaning of Section 422A of the Internal Revenue Code of
1986, as amended.
(f) NON-QUALIFIED STOCK OPTIONS. All Stock Options granted by the
Stock Option Committee which: (i) are designated at the time of grant as
Incentive Stock Options but do not so qualify under the provisions of Section
422A of the Code or any regulations or rulings issued by the Internal Revenue
Service for any reason; (ii) are in excess of the fair market value
limitations set forth in Section 6(d); or (iii) are designated at the time of
grant as Non-Qualified Stock Options, shall be deemed Non-Qualified Stock
Options under this Plan. Non-Qualified Stock Options granted or substituted
hereunder shall be so designated in the stock option agreement entered into
between the Corporation and the Optionee.
7. STOCK OPTION EXERCISE PRICE
(a) MINIMUM PRICE. The exercise price of any Option Shares shall
be determined by the Stock Option Committee, in its sole and absolute
discretion, upon
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the grant of a Stock Option. Except as provided elsewhere herein, said
exercise price shall not be less than one hundred percent (100%) of the Fair
Market Value of the Common Stock represented by the Option Share on the date
of grant of the related Stock Option.
(b) EXCHANGED STOCK OPTIONS. Where the outstanding shares of stock
of another corporation are changed into or exchanged for shares of Common
Stock of the Corporation without monetary consideration to that other
corporation, then, subject to the approval of the Board or Directors of the
Corporation, Stock Options may be granted in exchange for unexercised,
unexpired stock options of the other corporation, and the exercise price of
the Option Shares subject to each Stock Option so granted may be fixed at a
price less than one hundred percent (100%) of the Fair Market Value of the
Common Stock at the time such Stock Option is granted if said exercise price
has been computed to be not less than the exercise price set forth in the
stock option of the other corporation, with appropriate adjustment to reflect
the exchange ratio of the shares of stock of the other corporation into the
shares of Common Stock of the Corporation.
(c) SUBSTITUTED OPTIONS. The exercise price of the Option Shares
subject to each Substituted Option may be fixed at a price less than one
hundred percent (100%) of the Fair Market Value of the Common Stock at the
time such Substituted option is granted if said exercise price has been
computed to be not less than the exercise price set forth in the stock option
of the other corporation for which it was
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exchanged, with appropriate adjustment to reflect the exchange ratio of the
shares of stock of the other corporation into the shares of Common Stock.
8. EXERCISE OF STOCK OPTIONS.
(a) EXERCISE. Except as otherwise provided elsewhere herein, each
Stock Option shall be exercisable in such increments, which need not be
equal, and upon such contingencies as the Stock Option Committee shall
determine at the time of grant of the Stock Option; provided, however, (i)
that if an Optionee shall not in any given period exercise any part of a
Stock Option which has become exercisable during that period, the Optionee's
right to exercise such part of the Stock Option shall continue until
expiration of the Stock Option or any part thereof as may be provided in the
related Stock Option Agreement, and (ii) in the case of options that are not
granted to officers, directors, consultants of, or others with significant
and material business relationships with, the Company, a minimum of 20% of
the stock options shall be exercisable in each year over a five year period
from the date the option is granted. No Stock Option or part thereof shall
be exercisable except with respect to whole shares of Common Stock, and
fractional share interests shall be disregarded except that they may be
accumulated.
(b) PRIOR OUTSTANDING INCENTIVE STOCK OPTIONS. Incentive Stock
Options granted to an Optionee may be exercisable while such Optionee has
outstanding and unexercised any Incentive Stock Option previously granted (or
substituted) to him or her pursuant to this Plan. The Stock Option Committee
shall determine if such options shall be exercisable if there are any
Incentive Stock Options previously granted (or
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substituted) to him or her pursuant to this Plan, and such determination
shall be evidenced in the Agreement executed by the Optionee and Company,
subject to the requirements of Rule 260.141.41(f) of the California
Commissioner of Corporations. An Incentive Stock Option shall be treated as
outstanding until it is exercised in full or expires by reason of lapse of
time.
(c) NOTICE AND PAYMENT. Stock Options granted hereunder shall be
exercised by written notice delivered to the Corporation specifying the
number of Option Shares with respect to which the Stock Option is being
exercised, together with concurrent payment in full of the exercise price as
hereinafter provided in Section 8(d) hereof. If the Stock Option is being
exercised by any person or persons other than the Optionee, said notice shall
be accompanied by proof, satisfactory to counsel for the Corporation, of the
right to such person or persons to exercise the Stock Option. The
Corporation's receipt of a notice of exercise without concurrent receipt of
the full amount of the exercise price shall not be deemed an exercise of a
Stock Option by an Optionee, and the Corporation shall have no obligation to
an Optionee for any Option Shares unless and until full payment of the
exercise price is received by the Corporation in accordance with Section 8(d)
hereof, and all of the terms and provisions of the Plan and the related stock
option agreement have been complied with.
(d) PAYMENT OF EXERCISE PRICE. The exercise price of any Option
Shares purchased upon the proper exercise of a Stock Option shall be paid in
full at the time of each exercise of a Stock Option in cash and/or, with the
prior written approval of the Stock Option Committee, in Common Stock of the
Corporation which, when added
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to the cash payment, if any, has an aggregate Fair Market Value equal to the
full amount of the exercise price of the Stock Option, or part thereof, then
being exercised and/or, with the prior written approval of the Stock Option
Committee and if legally permitted, on a deferred basis evidenced by a
promissory note, containing such terms and subject to such security as the
Stock Option Committee shall determine to be fair and reasonable from time to
time, for the total option price for the number of shares so purchased. No
Director may purchase any Stock Option on a deferred basis evidenced by a
promissory note. Unless payment is on a deferred basis, payment by an
Optionee as provided herein shall be made in full concurrently with the
Optionee's notification to the Corporation of his intention to exercise all
or part of a Stock Option. If all or part of payment is made in shares of
Common Stock as heretofore provided, such payment shall be deemed to have
been made only upon receipt by the Corporation of all required share
certificates, and all stock powers and other required transfer documents
necessary to transfer the shares of Common Stock to the Corporation.
(e) REORGANIZATION. Notwithstanding any provision in any stock
option agreement pertaining to the time of exercise of a Stock Option, or
part thereof, upon adoption by the requisite holders of the Corporation's
outstanding shares of Common Stock of any plan of dissolution, liquidation,
reorganization, merger, consolidation or sale of all or substantially all of
the assets of the Corporation to another corporation, or the acquisition of
stock representing more than 50% of the voting power of the Corporation then
outstanding, by another corporation or person, which would, upon
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consummation, result in termination of a Stock Option in accordance with
Section 16 hereof, the Stock Option shall become immediately exercisable as
to all Option Shares, whether or not vested, for such period of time as may
be determined by the Stock Option Committee, but in any event not less than
30 days prior to the adoption of the plan of dissolution, liquidation,
reorganization, merger, consolidation, sale, or acquisition on the condition
that the terminating event described in Section 16 hereof is consummated.
Any Option Shares not exercised will be terminated. If such Terminating Event
is not consummated, Stock Options granted pursuant to the Plan shall be
exercisable in accordance with their respective terms.
(f) MINIMUM EXERCISE. Not less than ten (10) Option Shares may be
purchased at any one time upon exercise of a Stock Option unless the number
of shares purchased is the total number which remains to be purchased under
the Stock Option.
(g) COMPLIANCE WITH LAW. No shares of Common Stock shall be issued
by the Corporation upon exercise of any Stock Option, and an Optionee shall
have no rights or claim to such shares, unless and until: (a) payment in full
as provided in Section 8(d) hereof has been received by the Corporation; (b)
in the opinion of the counsel for the Corporation, all applicable
registration requirements of the Securities Act of 1933, all applicable
listing requirements of securities exchanges or associations on which the
Corporation's Common Stock is then listed or traded, and all other
requirements of law and of regulatory bodies having jurisdiction over such
issuance and delivery, have been fully complied with; and (c) if required by
federal or state law
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or regulation, the Optionee shall have paid to the Corporation the amount, if
any, required to be withheld on the amount deemed to be compensation to the
Optionee as a result of the exercise of his or her Stock Option, or made
other arrangements satisfactory to the Corporation, in its sole discretion,
to satisfy applicable income tax withholding requirements.
9. NONTRANSFERABILITY OF STOCK OPTIONS.
Each Stock Option shall, by its terms, be nontransferable by the
Optionee other than by will or the laws of descent and distribution, and
shall be exercisable during the Optionee's lifetime only by the Optionee or
his or her guardian or legal representative.
10. CONTINUATION OF EMPLOYMENT
Except for Optionees with a written contract for any definite term, this
Agreement shall not obligate the Corporation or a Subsidiary to employ
Optionee.
11. CESSATION OF EMPLOYMENT
Except as provided in Sections 8(e), 12, 13, 14, 15 or 16 hereof, if,
for any reason, an Optionee's status as an Eligible Participant is
terminated, the Stock Options granted to such Optionee shall expire on the
expiration dates specified for said Stock Options at the time of their
initial grant, or three (3) months after the Optionee's status as an Eligible
Participant is terminated, whichever is earlier. Thereafter, Options shall
be exercisable only as to those increments, if any, which had become
exercisable as of such expiration date, and any Stock Options or increments
which had not become exercisable as of such date shall expire and terminate
automatically on such expiration date.
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12. TERMINATION FOR VIOLATION OF STANDARDS OF CONDUCT AS REFERENCED IN
OPTIONEE'S EMPLOYEE HANDBOOK
If Optionee's status as an Eligible Participant is terminated for
violation of the Employer's Standards of Conduct, the vested portion of Stock
Options granted to such Optionee shall be exercisable for a thirty (30) day
period following such termination, and thereafter such Stock Options shall
automatically expire and terminate in their entirety; provided, however, that
the Stock Option Committee may, in its sole discretion, within thirty (30)
days of such termination, reinstate such Stock Options to the status of
options terminated for reasons other than violations of the Employer's
Standards of Conduct, death or disability by giving written notice of such
reinstatement to the Optionee. In the event of such reinstatement, the
Optionee may exercise the Stock Options as provided in Section 11 herein.
Reasons for termination for violation of the Employer's Standards of Conduct
shall include, but not be limited to, termination for malfeasance or gross
misfeasance in the performance of duties or conviction of illegal activity in
connection therewith, and, in any event, the determination of the Stock
Option Committee with respect thereto shall be final and conclusive.
13. DEATH OF OPTIONEE
If an Optionee loses his status as an Eligible Participant by reason of
death, or if an Optionee dies during the three-month period referred to in
Section 12 hereof, the Stock Options granted to such Optionee shall expire on
the expiration dates specified for said Stock Options at the time of their
initial grant, or one (l) year after the date of
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such death, whichever is earlier. After such death but before such
expiration, subject to the terms and provisions of the Plan and the related
stock option agreements, the person or persons to whom such Optionee's rights
under the Stock Options shall have passed by will or by the applicable laws
of descent and distribution, or the executor or administrator of the
Optionee's estate, shall have the right to exercise such Stock Options to the
extent that increments, if any, had become exercisable as of the date on
which the Optionee's status as an Eligible Participant had been lost.
14. DISABILITY OF OPTIONEE
If an Optionee is disabled while employed by or while serving as a
director of the Corporation or a Subsidiary or during the three-month period
referred to in Section 12 hereof, the Stock Options granted to such Optionee
shall expire on the expiration dates specified for said Stock Options at the
time of their initial grant, or one (l) year after the date of such
disability, whichever is earlier. After such disability but before such
expiration, the Optionee or a guardian or conservator of the Optionee's
estate, as duly appointed by a court of competent jurisdiction, shall have
the right to exercise such Stock Options to the extent that increments, if
any, had become exercisable as of the date on which the Optionee became
disabled or ceased to be employed by the Corporation or a Subsidiary as a
result of the disability. For the purpose of this Section 14, an Optionee
shall be deemed to have become "disabled" if it shall appear to the Stock
Option Committee, upon written certification delivered to the Corporation by
a qualified licensed physician, that the Optionee has become permanently and
totally unable to engage in any substantial gainful activity by reason of any
medically
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determinable physical or mental impairment which can be expected to result in
death, or which has lasted or can be expected to last for a continuous period
of not less than 12 months.
15. ADJUSTMENT UPON CHANGES IN CAPITALIZATION
If the outstanding shares of Common Stock of the Corporation are
increased, decreased, or changed into or exchanged for a different number or
kind of shares or securities of the Corporation, through a reorganization,
merger, recapitalization, reclassification, stock split, stock dividend,
stock consolidation, or otherwise, without consideration to the Corporation,
an appropriate and proportionate adjustment shall be made in the number and
kind of shares as to which Stock Options may be granted. A corresponding
adjustment changing the number or kind of Option Shares and the exercise
prices per share allocated to unexercised Stock Options, or portions thereof,
which shall have been granted prior to any such change, shall likewise be
made. Any such adjustment, however, in an outstanding Stock Option shall be
made without change in the total price applicable to the unexercised portion
of the Stock Option, but with a corresponding adjustment in the price for
each Option Share subject to the Stock Option. Any adjustment under this
Section shall be made by the Stock Option Committee, whose determination as
to what adjustments shall be made, and the extent thereof, shall be final and
conclusive. No fractional shares of stock shall be issued or made available
under the Plan on account of any such adjustment, and fractional share
interests shall be disregarded and the fractional share interest shall be
rounded down to the nearest whole number.
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16. TERMINATING EVENTS
Not less than thirty (30) days prior to consummation of a plan of
dissolution or liquidation of the Corporation, or consummation of a plan of
reorganization, merger or consolidation of the Corporation with one or more
corporations, as a result of which the Corporation is not the surviving
corporation and the outstanding securities of the class then subject to
options hereunder are changed or exchanged for cash or property or securities
not of the Corporation's issue, or upon the sale of all or substantially all
the assets of the Corporation to another corporation, or the acquisition of
stock representing more than fifty percent (50%) of the voting power of the
Corporation then outstanding by another corporation or person (the
"Terminating Event"), the Stock Option Committee or the Board of Directors
shall notify each Optionee of the pendency of the Terminating Event. Upon
the effective date of the Terminating Event, the Plan shall automatically
terminate and all Stock Options theretofore granted shall terminate, unless
provision is made in connection with such transaction for the continuance of
the Plan and/or assumption of Stock Options theretofore granted, or
substitution for such Stock Options with new stock options covering stock of
a successor employer corporation, or a parent or subsidiary corporation
thereof, solely at the discretion of such successor corporation, or parent or
subsidiary corporation, with appropriate adjustments as to number and kind of
shares and prices, in which event the Plan and options theretofore granted
shall continue in the manner and under the terms so provided. If the Plan
and unexercised options shall terminate pursuant to the foregoing sentence,
all persons shall have the right to exercise any unexercised
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portions of options outstanding and not exercised, shall have the right, at
such time prior to the consummation of the transaction causing such
termination as the Corporation shall designate and for a period of not less
than 30 days, to exercise all unexercised portions of teir options, including
the portions which would, but for this paragraph entitled "Terminating
Events," not yet be exercisable.
17. AMENDMENT AND TERMINATION
The Board of Directors of the Corporation may at any time and from
time-to-time suspend, amend, or terminate the Plan and may, with the consent
of Optionee, make such modifications of the terms and conditions of a Stock
Option as it shall deem advisable; provided that, except as permitted under
the provisions of Section 16 hereof, no amendment or modification may be
adopted without the Corporation having first obtained all necessary
regulatory approvals and approval of the holders of a majority of the
Corporation's shares of Common Stock present, or represented, and entitled to
vote at a duly held meeting of shareholders of the Corporation if the
amendment or modification would:
(a) materially increase the benefits accruing to participants under
the Plan;
(b) materially increase the number of securities which may be
issued under the Plan;
(c) materially modify the requirements as to eligibility for
participation in the Plan;
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(d) increase or decrease the exercise price of any Stock Options
granted under the Plan;
(e) increase the maximum term of Stock Options provided for herein;
(f) permit Stock Options to be granted to any person who is not an
Eligible Participant; or
(g) change any provision of the Plan which would affect the
qualification as an Incentive Stock Option under the Plan.
No Stock Option may be granted during any suspension of the Plan or
after termination of the Plan. Amendment, suspension, or termination of the
Plan shall not (except as otherwise provided in Section 17 hereof), without
the consent of the Optionee, alter or impair any rights or obligations under
any Stock Option theretofore granted.
18. RIGHTS OF ELIGIBLE PARTICIPANTS AND OPTIONEES
Neither any Eligible Participant, any Optionee or any other person shall
have any claim or right to be granted any Stock Option under this Plan, and
neither this Plan nor any action taken hereunder shall be deemed or construed
as giving any Eligible Participant, Optionee or any other person any right to
be retained in the employ of the Corporation or any subsidiary of the
Corporation. Without limiting the generality of the foregoing, there is no
vesting of any right in the classification of any person as an Eligible
Participant or Optionee, such classification being used solely to define and
limit those persons who are eligible for consideration of the grant of Stock
Options under the Plan.
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19. PRIVILEGES OF STOCK OWNERSHIP; SECURITIES LAW COMPLIANCE; NOTICE OF SALE
No Optionee shall be entitled to the privileges of stock ownership as to
any Option Shares not actually issued and delivered. No Option Shares may be
purchased upon the exercise of a Stock Option unless and until all then
applicable requirements of all regulatory agencies having jurisdiction and
all applicable requirements of securities exchanges upon which the stock of
the Corporation is listed (if any) shall have been fully complied with. The
Corporation will diligently endeavor to comply with all applicable securities
laws before any options are granted under the Plan and before any stock is
issued pursuant to options. The Optionee shall, not more than five (5) days
after each sale or other disposition of shares of Common Stock acquired
pursuant to the exercise of Stock Options, give the Corporation notice in
writing of such sale or other disposition.
The Corporation will provide to each Optionee its Annual Report as
required by Section 260.140.46 of the regulations of the California
Commissioner of Corporations.
20. EFFECTIVE DATE OF THE PLAN
The Plan shall be deemed adopted as of April 23, 1997, and shall be
effective immediately, subject to approval of the Plan by the holders of at
least a majority of the Corporation's outstanding shares of Common Stock and
approval of the Plan by the California Commissioner of Corporations.
21. TERMINATION
Unless previously terminated as aforesaid, the Plan shall terminate ten
(10) years from the earliest date of (i) adoption of the Plan by the Board of
Directors, or (ii)
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approval of the Plan by holders of at least a majority of the Corporation's
outstanding shares of Common Stock. No Stock Options shall be granted under
the Plan thereafter, but such termination shall not affect any Stock Option
theretofore granted.
22. OPTION AGREEMENT
Each Stock Option granted under the Plan shall be evidenced by a written
stock option agreement executed by the Corporation and the Optionee, and shall
contain each of the provisions and agreements herein specifically required to be
contained therein, and such other terms and conditions as are deemed desirable
by the Stock Option Committee and are not inconsistent with the Plan.
23. STOCK OPTION PERIOD
Each Stock Option and all rights and obligations thereunder shall expire
on such date as the Stock Option Committee may determine, but not later than
ten (10) years from the date such Stock Option is granted, and shall be
subject to earlier termination as provided elsewhere in the Plan.
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24. EXCULPATION AND INDEMNIFICATION OF STOCK OPTION COMMITTEE
In addition to such other rights of indemnification which they may have
as directors of the Corporation or as members of the Stock Option Committee,
the present and former members of the Stock Option Committee, and each of
them, shall be indemnified by the Corporation for and against all costs,
judgments, penalties and reasonable expenses, including reasonable attorney's
fees, actually and necessarily incurred by them in connection with any
action, suit or proceeding, or in connection with any appeal thereof, to
which they or any of them may be a party by reason of any act or omission of
any member of the Stock Option Committee under or in connection with the Plan
or any Stock Option granted thereunder; provided, however, that a member of
the Stock Option Committee shall not be entitled to any indemnification
whatsoever pursuant to this Section for or as a result of any act or omission
of such member which was not taken in good faith and which constituted
willful misconduct or gross negligence by such member; provided further, that
any amounts paid by any member of the Stock Option Committee in settlement of
any action, suit or proceeding for which indemnification may be sought
pursuant to this Section shall be first approved in writing by independent
legal counsel selected by the Corporation; and, provided further, that within
thirty (30) days after institution of any action, suit or proceeding against
any member with respect to which such member is entitled to indemnification
hereunder, such member shall, in writing, offer the Corporation the
opportunity, at its own expense, to handle (including settle) and
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conduct the defense thereof. The provisions of this Section shall apply to
the estate, executor and administrator of each member of the Stock Option
Committee.
25. (Reserved)
26. NOTICES
All notices and demands of any kind which the Stock Option Committee,
any Optionee, Eligible Participant, or any other person may be required or
desires to serve under the terms of this Plan shall be in writing and shall
be served by personal service upon the respective person or by leaving a copy
of such notice or demand at the address of such person as may be reflected in
the records of the Corporation, or in the case of the Stock Option Committee,
with the Secretary of the Corporation, or by mailing a copy thereof by
certified or registered mail, postage prepaid, with return receipt requested.
In the case of service by mail, it shall be deemed complete at the
expiration of the third day after the day of mailing, except for notice of
the exercise of any Stock Option and payment of the Stock Option exercise
price, both of which must be actually received by the Corporation.
27. (Reserved)
28. LIMITATION OF RIGHTS
The Stock Option Committee, in its sole and absolute discretion, is
entitled to determine who, if anyone, is an Eligible Participant under this
Plan, and which, if any, Eligible Participant shall receive any grant of a
Stock Option. No oral or written agreement by any person on behalf of the
Corporation relating to this Plan or any
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Stock Option granted hereunder is authorized, and such agreement may not bind
the Corporation or the Stock Option Committee to grant any Stock Option to
any person.
29. SEVERABILITY
If any provision of this Plan as applied to any person or to any
circumstances shall be adjudged by a court of competent jurisdiction to be
void, invalid, or unenforceable, the same shall in no way effect any other
provision hereof, the application of any such provision in any other
circumstances, or the validity of enforceability hereof.
30. CONSTRUCTION
Where the context or construction requires, all words applied in the
plural shall be deemed to have been used in the singular and vice versa, and
the masculine gender shall include the feminine and the neuter.
31. HEADINGS
The headings of the several paragraphs of this Plan are inserted solely
for convenience of reference and are not intended to form a part of and are
not intended to govern, limit or aid in the construction of any term or
provision hereof.
32. SUCCESSORS
This Plan shall be binding upon the respective successors, assigns,
heirs, executors, administrators, guardians and personal representatives of
the Corporation and any Optionee.
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33. GOVERNING LAW
This Plan shall be governed by and construed in accordance with the laws of
the State of California.
34. CONFLICT
In the event of any conflict between the terms and provisions of this Plan,
and any other document, agreement or instrument, including, without limitation,
any stock option agreement, the terms and provisions of this Plan shall control.
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SECRETARY'S CERTIFICATE OF ADOPTION
I, the undersigned, do hereby certify:
1. That I am the duly elected and acting Assistant Secretary of BYL
Bancorp; and
2. That the foregoing BYL Bancorp 1997 Stock Option Plan, as amended,
was duly adopted by the Board of Directors of BYL Bancorp as the Stock Option
Plan for the Corporation at a meeting duly called as required by law and
convened on the 24th day of March, 1999.
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the
seal of the Corporation this 24th day of March, 1999.
/s/ John F. Myers
-----------------------------------
John F. Myers, Secretary
[SEAL]
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OPTIONEES TO WHOM INCENTIVE STOCK OPTIONS ARE GRANTED MUST MEET CERTAIN
HOLDING PERIOD AND EMPLOYMENT REQUIREMENTS FOR FAVORABLE TAX TREATMENT.
UNLESS OTHERWISE STATED, ALL DEFINED TERMS IN THE PLAN SHALL HAVE THE SAME
MEANING HEREIN AS SET FORTH IN THE PLAN.
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY
INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR
WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF
CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES.
BYL BANCORP
STOCK OPTION AGREEMENT
/ / Incentive Stock Option
/ / Non-Qualified Stock Option
THIS AGREEMENT, dated the ____ day of ____________, 19__, by and
between BYL Bancorp, a California corporation (the "Corporation"), and
_____________________ (the "Optionee");
WHEREAS, pursuant to the Corporation's 1997 Stock Option Plan (the
"Plan"), the Stock Option Committee has authorized the grant to Optionee of a
Stock Option to purchase all or any part of _____________________ (______)
authorized but unissued shares of the Corporation's Common Stock at the price of
_________________ Dollars ($_____) per share, such Stock Option to be for the
term and upon the terms and conditions hereinafter stated;
NOW, THEREFORE, it is hereby agreed:
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1. GRANT OF STOCK OPTION. Pursuant to said action of the Stock
Option Committee and pursuant to authorizations granted by all appropriate
regulatory and governmental agencies, the Corporation hereby grants to
Optionee a Stock Option to purchase, upon and subject to the terms and
conditions of the Plan, which is incorporated in full herein by this
Reference, all or any part of ________________ (_______) Option Shares of the
Corporation's Common Stock, at the price of ____________________ Dollars
($_____) per share. For purposes of this Agreement and the Plan, the date of
grant shall be _________________, 19__. At the date of grant, Optionee [DOES]
[DOES NOT OWN] stock possessing more than 10% of the total combined voting
power of all classes of capital stock of the Corporation or any Subsidiary.
The Stock Option granted hereunder [IS] [IS NOT] intended to qualify
as an Incentive Stock Option within the meaning of Section 422A of the Internal
Revenue Code of 1986, as amended.
2. EXERCISABILITY. This Stock Option shall be exercisable as to
________________ Option Shares on ________________, 19__, as to
__________________ Option Shares on ________________, 19__, as to
__________________ Option Shares on ________________, 19__, as to
__________________ Option Shares on ________________, 19__, and as to
_________________ Option Shares on ________________, 19__. This Stock
Option shall remain exercisable as to all of such Option Shares until
_______________, 19__ (but not later than ten (10) years from the date
hereof), at which time it shall expire in its entirety, unless this Stock
Option has expired or
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terminated earlier in accordance with the provisions hereof. Option shares
as to which this Stock Option becomes exercisable may be purchased at any
time prior to expiration of this Stock Option.
3. EXERCISE OF STOCK OPTION. Subject to the provision of
Paragraph 4 hereof, this Stock Option may be exercised by written notice
delivered to the Corporation stating the number of Option Shares with respect
to which this Stock Option is being exercised, together with cash and/or, if
permitted at the time of exercise by the Stock Option Committee, shares of
Common Stock of the Corporation which, when added to the cash payment, if
any, have an aggregate Fair Market Value equal to the full amount of the
purchase price of such Option Shares, and/or, if permitted at the time of
exercise by the Stock Option Committee and if legally permitted, and if
Optionee is not also a director, consultant or business advisor of the
Corporation or any of its subsidiaries, on a deferred basis evidenced by a
promissory note. Not less than ten (10) Option shares may be purchased at
any one time unless the number purchased is the total number which remains to
be purchased under this Stock Option and in no event may the Stock Option be
exercised with respect to fractional shares. Upon exercise, Optionee shall
make appropriate arrangements and shall be responsible for the withholding of
any federal and state income taxes then due.
4. PRIOR OUTSTANDING STOCK OPTIONS. Incentive Stock Options
granted to an Optionee may be exercisable while such Optionee has outstanding
and unexercised any Incentive Stock Option previously granted to him or her
pursuant to this Plan. The
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Stock Option Committee shall determine if such options shall be exercisable
if there are any Incentive Stock Options previously granted (or substituted)
to him or her pursuant to this Plan, and such determination shall be
evidenced in the Agreement executed by the Optionee and the Corporation,
subject to the requirements of Rule 260.141.41(f) of the California
Commissioner of Corporations. An Incentive Stock Option shall be treated as
outstanding until it is exercised in full or expires by reason of lapse of
time.
5. CESSATION OF EMPLOYMENT. Except as provided in paragraphs 7,
9, or 11 hereof, if Optionee's status as an Eligible Participant under the
Plan is terminated, this Stock Option shall expire three (3) months
thereafter or on the date specified in Paragraph 2 hereof, whichever is
earlier. During such period after termination of status as an Eligible
Participant, this Stock Option shall be exercisable only as to those
increments, if any, which had become exercisable as of the date on which the
Optionee's status as an Eligible Participant was terminated, and any Stock
Options or increments which had not become exercisable as of such date shall
expire and terminate automatically on such date.
6. TERMINATION FOR VIOLATION OF STANDARDS OF CONDUCT AS REFERENCED IN
OPTIONEE'S EMPLOYEE HANDBOOK. If Optionee's status as an Eligible
Participant under the Plan is terminated for violation of the Employer's
Standard of Conduct, the vested portion of this Stock Option shall be
exercisable for a thirty (30) day period following such termination, and
thereafter this Stock Option shall automatically expire and terminate in
their entirety; provided, however, that the Stock Option Committee may,
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in its sole discretion, within thirty (30) days of such termination,
reinstate such Stock Options to the status of options terminated for reasons
other than voilations of the Employer's Standards of Conduct, death or
disability by giving written notice of such reinstatements to the Optionee.
In the event of such reinstatement, the Optionee may exercise the Stock
Options as provided in Section 11 herein. Termination for violation of the
Employer's Standard of Conduct shall include, but not be limited to, or
termination for malfeasance or gross misfeasance in the performance of duties
or conviction of illegal activity in connection therewith, and, in any event,
the determination of the Stock Option Committee with respect thereto shall be
final and conclusive.
7. DISABILITY OR DEATH OF OPTIONEE. If Optionee loses his or her
status as an Eligible Participant under the Plan by reason of death or if
Optionee is disabled while employed by the Corporation or a Subsidiary, or if
Optionee dies or becomes so disabled during the three-month period referred
to in Paragraph 5 hereof, this Stock Option shall automatically expire and
terminate one (l) year after the date of Optionee's disability or death or on
the day specified in Paragraph 2 hereof, whichever is earlier. After
Optionee's disability or death but before such expiration, the person or
persons to whom Optionee's rights under this Stock Option shall have passed
by order of a court of competent jurisdiction or by will or the applicable
laws of descent and distribution, or the executor, administrator or
conservator of Optionee's estate, shall have the right to exercise this Stock
Option to the extent that increments, if any, had become exercisable as of
the date on which Optionee's status as an Eligible Participant
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under the Plan had been terminated. For purposes hereof, "disability" shall
have the same meaning as set forth in Section 14 of the Plan.
8. NONTRANSFERABILITY. This Stock Option shall not be
transferable except by will or by the laws of descent and distribution, and
shall be exercisable during Optionee's lifetime only by Optionee or his or
her guardian or legal representative.
9. EMPLOYMENT. Except for optionees with a written contract for
any definite term, this Agreement shall not obligate the Corporation or a
Subsidiary to employ Optionee.
10. PRIVILEGES OF STOCK OWNERSHIP. Optionee shall have no rights
as a stockholder with respect to the Option Shares unless and until said
Option Shares are issued to Optionee as provided in the Plan. Except as
provided in Section 15 of the Plan, no adjustment will be made for dividends
or other rights in respect of which the record date is prior to the date such
stock certificates are issued.
11. MODIFICATION AND TERMINATION BY BOARD OF DIRECTORS. The
rights of Optionee are subject to modification and termination upon the
occurrence of certain events as provided in Sections 12, 13, 14, 15 and 16
of the Plan. Upon adoption by the requisite holders of the Corporation's
outstanding shares of Common Stock of any plan of dissolution, liquidation,
reorganization, merger, consolidation or sale of all or substantially all of
the assets of the Corporation to, or the acquisition of stock representing
more than fifty percent (50%) of the voting power of the Corporation then
outstanding by another corporation or person which would, upon consummation,
result in termination of this Stock Option in accordance with Section 16 of
the Plan,
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this Stock Option shall become immediately exercisable as to all unexercised
Option Shares notwithstanding the incremental exercise provisions of
paragraph 2 of this Agreement for a period then specified by the Stock Option
Committee, but in any event not less than 30 days, in accordance with Section
8(e) of the Plan, on the condition that the terminating event described in
Section 16 of the Plan is consummated. If such terminating event is not
consummated, this Stock Option shall be exercisable in accordance with the
terms of the Agreement, excepting this Paragraph 11.
12. NOTIFICATION OF SALE. Optionee agrees that Optionee, or any
person acquiring Option Shares upon exercise of this Stock Option, will
notify the Corporation in writing not more than five (5) days after any sale
or other disposition of such Shares.
13. (Reserved)
14. NOTICES. All notices to the Corporation provided for in this
Agreement shall be addressed to it in care of its President or Chief
Financial Officer at its principal office and all notices to Optionee shall
be addressed to Optionee's address on file with the Corporation or a
subsidiary corporation, or to such other address as either may designate to
the other in writing, all in compliance with the notice provisions set forth
in Section 26 of the Plan.
15. INCORPORATION OF PLAN. All of the provisions of the Plan are
incorporated herein by reference as if set forth in full hereat. In the
event of any conflict between the terms of the Plan and any provision
contained herein, the terms
-7-
of the Plan shall be controlling and the conflicting provisions herein shall
be disregarded.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
BYL BANCORP
By:
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By:
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OPTIONEE
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