SCRIPPS BANK
1992 STOCK OPTION PLAN
A Stock Option Plan is hereby adopted for the benefit of officers,
directors and key employees of Scripps Bank.
1. PURPOSE. The purpose of the Plan is to advance the growth and
prosperity of the Bank and its shareholders by providing to officers,
directors and key employees an incentive to serve the Bank. By encouraging
and enabling such persons to become owners of capital stock of the Bank, the
Bank seeks to attract and retain persons of training, experience and ability
and to furnish additional incentives to those persons upon whose judgement,
initiative and efforts the successful conduct of the Bank's business depends.
It is the intention of the Bank that this objective will be accomplished
through the granting of incentive stock options and nonqualified stock
options to certain officers, directors and key employees of the Bank.
2. DEFINITIONS. As used herein, the following terms shall have the
corresponding meanings.
2.1 "Committee" shall mean the Scripps Bank Stock Option Committee,
to be appointed by the Board of Directors of the Bank. If no such Committee
is appointed, the entire Board of Directors of the Bank shall be deemed to
constitute the Committee.
2.2 "Bank" shall mean Scripps Bank and/or its parent or
subsidiaries, if any, as the context requires. The terms "parent" and
"subsidiary" shall mean any existing or future corporation which would be a
parent or subsidiary corporation of the Bank, as those terms are defined in
Section 424 of the Internal Revenue Code of 1986, as amended, and the
Treasury Regulations promulgated thereunder (the "Code").
2.3 "Date of Grant" shall mean the date of grant of a Stock Option
granted hereunder as set forth in the Stock Option Agreement. In the event
of a grant conditioned, among other things, upon shareholder ratification of
this Plan, the date of such conditional grant shall be the Date of Grant for
purposes of this Plan.
2.4 "Employee" shall mean any full-time employee of the Bank.
2.5 "Fair Market Value" shall mean the mean between the closing bid
and asked price of a Share on the business day immediately preceding the day
for which the determination of fair market value is being made. If Shares
are not publicly traded on an active market of substantial depth on
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the business day immediately preceding the day for which the determination is
being made, Fair Market Value shall mean the fair market value of the Shares
as determined by the Committee in good faith and with reference to the normal
factors that would be considered by a willing buyer and by the Bank, neither
being under a compulsion to buy nor to sell, with respect to an outright sale
of the Shares by the Bank to such willing buyer as of the date for which the
determination is being made, but without regard to any restriction other than
a restriction which by its terms will never lapse. The factors which shall
be considered in determining fair market value include the price at which
securities of reasonably comparable banks are being traded, subject to
appropriate adjustments for the dissimilarities between the banks compared
and the earning history, book value and prospects of the Bank in light of
market conditions generally.
2.6 "Holder" shall mean any person entitled to exercise a Stock
Option pursuant to the terms of the Plan.
2.7 "Plan" shall mean the Scripps Bank 1992 Stock Option Plan, as
herein adopted and as may be amended from time to time.
2.8 "Purchase Price" shall mean the price paid for Shares upon the
exercise of a Stock Option granted hereunder.
2.9 "Shares" shall mean those shares of Common Stock of the Bank
which are available for issuance pursuant to the terms of the Plan.
2.10 "Stock Option" shall mean a stock option giving a Holder the
right to purchase Shares. A Stock Option may be an Incentive Stock Option or
a Nonqualified Stock Option. An "Incentive Stock Option" is a Stock Option
which is intended to qualify for tax treatment as an incentive stock option
under Section 422 of the Code. An Incentive Stock Option may only be granted
to an Employee. A "Nonqualified Stock Option" is a Stock Option which is
intended not to qualify for tax treatment as an incentive stock option under
Section 422 of the Code and may be issued to any officer, director or
Employee of the Bank.
3. TERM AND EFFECTIVE DATE OF PLAN. The Plan shall be effective
on the date of the approval of the Plan by the Board of Directors of the Bank,
provided that the Plan is approved by the shareholders of the Bank within one
year thereafter. No Stock Options shall be granted after ten (10) years from
the effective date of the Plan.
4. SHARES OF STOCK SUBJECT TO THE PLAN. Subject to the
adjustments set forth in the Plan, the shares which may be issued pursuant to
the Plan shall not exceed in the aggregate 100,000 shares of the Bank's
Common Stock, no par value. Such Shares shall be authorized and unissued
shares. Any Shares
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subject to a Stock Option granted under this Plan which for any reason
expires or is terminated unexercised shall again be subject to and be
available for issuance pursuant to the terms of this Plan.
5. ADMINISTRATION OF THE PLAN. Within the limitations described
herein, the Committee shall administer the Plan, select the officers,
directors and Employees to whom Stock Options shall be granted, determine the
number of Shares to be optioned in each grant, determine all other terms of
Stock Options granted hereunder and interpret, construe and implement the
provisions of the Plan. The Committee, if appointed, shall consist of two (2)
or more Directors, who shall serve at the pleasure of the Board of Directors
of the Bank. Vacancies on the Committee shall be filled by the Board of
Directors of the Bank. The Committee shall select one of its members as its
Chair and shall hold its meetings at such times and places as it determines,
or it may act by written consent or telephonic meeting. A majority of the
Committee shall constitute a quorum and the acts of a majority of the members
present at any meeting at which a quorum is present or acts reduced to and
approved in writing by a majority of the members of the Committee shall be
the valid acts of the Committee. All decisions and acts of the Committee
shall be recorded in writing. Decisions of the Committee shall be binding on
the Bank and on all Employees and Holders.
To the extent necessary to secure the benefits of Rule 16b-3 (or any
successor rule or regulation) of the Securities and Exchange Commission, the
selection of any executive officer or director to be a recipient of any Stock
Option and the number, type and terms of such Stock Option are subject to
approval by a committee of two (2) or more disinterested directors. For
purposes of this Plan, "disinterested" means a person, who, since the time of
becoming a Committee Member and for twelve months prior thereto has not been
granted or awarded discretionary stock awards (except as permitted in Rule
16b-3) pursuant to this Plan or any other plan of the Bank or any affiliate
entitling participants therein to acquire stock appreciation rights, stock or
stock options of the Bank or of any affiliate. Notwithstanding the above, the
Committee, in its sole discretion, may delegate its powers hereunder to grant
Stock Options to persons who are not subject to Section 16b of the Securities
Exchange Act of 1934 to certain officers of the Bank. Any such delegation
shall be in writing and shall clearly describe any limitations to which such
delegation of authority is subject.
6. INDEMNIFICATION. In addition to such other rights of indemnification
as they may have, members of the Board of Directors of the Bank, members of
the Committee and any officers to whom authority to act for the Committee is
delegated shall be indemnified by the Bank against all reasonable expenses,
indemnified by the Bank against all reasonable expenses, including attorneys'
fees, actually and necessarily incurred in
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connection with the defense of any action, suit or proceeding, or in
connection with any appeal therein, to which they or any of them may be a
party by reason of any action taken or failure to act under or in connection
with the Plan, or any right granted hereunder, and against all amounts paid
by them in settlement thereof (provided such settlement is approved by
independent legal counsel selected by the Bank) or paid by them in
satisfaction of a judgment in any such action, suit or proceeding.
Indemnification shall not apply to matters as to which it shall be adjudged
in the action, suit or proceeding that such person is liable for negligence
or misconduct in duties. In addition, indemnification shall not be available
unless within sixty (60) days after the institution of an action, suit or
proceeding, such person shall offer to the Bank, in writing, the opportunity
at its own expense to handle and defend the same.
7. STOCK OPTIONS. The granting of a Stock Option shall be evidenced by
a stock option agreement ("Stock Option Agreement"), in such form and not
inconsistent with this Plan, as the Committee shall approve from time to time
and subject to State Banking Department approval. The terms of the Stock
Option Agreements need not be identical for each grant. Each Stock Option
Agreement shall contain in substance the following terms and conditions:
7.1 PRICE. The Stock Option Agreement shall specify the Purchase
Price per Share. The Purchase Price per Share deliverable upon the exercise
of a Stock Option shall not be less than the Fair Market Value of a Share on
the Date of Grant of the Stock Option. In the case of a grant of an Incentive
Stock Option to an Employee who, at the Date of Grant, owns stock possessing
more than ten percent (10%) of the total combined voting power of all classes
of stock of the Bank, or of any parent or subsidiary corporation, the
Purchase Price per Share deliverable upon the exercise of the Incentive Stock
Option shall not be less than one hundred ten percent (110%) of the Fair
Market Value of such Share on the Date of Grant of the Incentive Stock Option.
7.2 NUMBER OF SHARES. The Stock Option Agreement shall specify the
number of Shares subject to the Stock Option.
7.3 EXERCISABILITY OF STOCK OPTION. A Stock Option may be
exercisable, in part or in full, at any time and from time to time during an
exercise period, and subject to such conditions and restrictions as
determined by the Committee on a case by case basis for each Stock Option,
and as set forth in the Stock Option Agreement. In no event shall the
exercise period of any Incentive Stock Option granted hereunder exceed ten
(10) years from its Date of Grant; provided, however, that in the case of a
grant of an Incentive Stock Option to an Employee, who, at the Date of Grant,
owns stock possessing more than ten percent (10%) of the total
combined voting stock of the Bank, or of any parent or subsidiary
corporation, such Incentive Stock Option
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shall not be exercisable after the expiration of five (5) years from its Date
of Grant. If the exercisability of any Stock Option is subject to a vesting
schedule, the Committee may accelerate the times at which such Stock Option
may be exercised.
In the event that the aggregate Fair Market Value (determined as of the
Date of Grant) of stock with respect to which Incentive Stock Options are
exercisable for the first time by an Employee during any calendar year (under
all stock option plans of the Bank and its parent or subsidiary corporations)
exceeds $100,000, the excess shall be treated as a Nonqualified Stock Option.
In the event that more than one (1) Incentive Stock Option has been granted,
the excess shall be deemed attributable to the latest granted Incentive Stock
Option. If a Stock Option is treated in part as an Incentive Stock Option
and in part as a Nonqualified Stock Option by reason of the limitation
discussed herein, separate certificates shall be issued upon exercise of the
Stock Option identifying the Shares attributable to each portion of the Stock
Option.
7.4 EXERCISE OF STOCK OPTION AND TIME AND METHOD OF PAYMENT. Each
Holder exercising a Stock Option shall notify the Secretary of the Bank (or
such other officer as designated by the Committee) of the exercise thereof,
in writing, and shall pay to the Bank, in cash or by cashier's check, at the
time of delivery of such notice, the total Purchase Price for the number of
Shares to be purchased under the Stock Option. Each Holder may pay, and the
Bank shall accept, full or partial payment of the Purchase Price by delivery
from the Holder of shares of Common Stock of the Bank previously acquired by
the Holder. Such shares shall be valued at their Fair Market Value on the
date of exercise of the Stock Option. If payment of the Purchase Price is
made by delivery of previously acquired shares of Common Stock of the Bank,
the certificate(s) representing such shares shall be duly executed in blank
by the Holder or shall be accompanied by a stock power for the purpose of
transferring such shares duly executed in blank by the Holder. Fractional
shares of Common Stock of the Bank shall not be accepted in payment of the
Purchase Price.
The Bank shall issue and deliver to the Holder, as soon as practical
after receipt of notice of exercise of the Stock Option together with payment
of the applicable Purchase Price and compliance with all other terms and
conditions of exercise as set forth in the Stock Option Agreement, a
certificate or certificates in the name of, or for the account of, the Holder
for the Shares covered by the exercised portion of the Stock Option. No
fractional Shares will be issued in
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connection with the exercise of any Stock Option granted hereunder.
7.5 TERMINATION OF STOCK OPTIONS. Any Stock Option not exercised
within the exercise period set forth in the Stock Option Agreement under
which the Stock Option is granted shall automatically terminate and be
canceled. If the employment or engagement of a Holder terminates within the
applicable exercise period specified in the Stock Option Agreement but prior
to exercise of the Stock Option, the Stock Option will terminate at the time
employment or engagement is terminated. Notwithstanding the preceding
sentence, a Stock Option Agreement may permit a Holder to exercise the Stock
Option after termination of employment or engagement for a specified period
of time not to exceed the following with respect to Incentive Stock Options:
three (3) months after the date of termination of employment if such
termination is for reasons other than death or disability and twelve (12)
months after the date of termination if such termination is due to death or
disability. In each case of exercise after termination of employment or
engagement, the Stock Option must be exercisable on the date of termination
of employment or engagement and, unless expressly stated to the contrary in
the Stock Option Agreement, vesting of the Stock Option shall cease on the
date of such termination. In no event, shall the exercise of a Stock Option
occur after the applicable exercise period specified in the Stock Option
Agreement.
With respect to an Incentive Stock Option, an Employee is disabled if
unable to engage in any substantial gainful activity with the Bank by reason
of any medically determinable physical or mental impairment which can be
expected to result in death or which has lasted, or can be expected to last,
for a continuous period of not less than twelve (12) months. Disability
shall be determined by a physician selected by the Committee. With respect
to an Incentive Stock Option, employment shall be determined in accordance
with the provisions of Section 1.421-7(h) of the Income Tax Regulations (or
any successor regulation). If an Incentive Stock Option is assumed or if a
new Incentive Stock Option is substituted for an Incentive Stock Option
granted hereunder in a transaction to which Section 424 of the Code applies,
employment by the corporation assuming the Incentive Stock Option or
substituting a new Incentive Stock Option (or by a parent or subsidiary
thereof) shall be considered to be employment with the Bank. With respect to
a Nonqualified Stock Option, the Committee shall determine when a Holder
incurs a termination of employment or engagement.
8. RECAPITALIZATION. In the event that dividends are payable in shares
of Common Stock of the Bank or in the event that there are splits,
subdivisions or combinations of shares of the Common Stock of the Bank, the
number of Shares available under the Plan and under any unexercised but
granted Stock Option, whether or not fully vested, shall be increased or
decreased proportionately, as the case may be, without change in
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the aggregate Purchase Price. In the event of a distribution of assets to
shareholders of the Bank which significantly affects the Fair Market Value of
Shares, the Purchase Price per Share shall be decreased to reflect the
distribution of assets. No such decrease shall result in a modification of
any outstanding Incentive Stock Option within the meaning of Section 424 of
the Code unless the Holder consents to the modification.
9. REORGANIZATION. In the event that the Bank and/or its shareholders
enter into an agreement to dispose of all or substantially all of the assets
of the Bank or an amount of the outstanding stock of the Bank sufficient to
constitute effective control of the Bank by means of a sale, merger,
reorganization, separation, liquidation or any other transaction, the
Committee may, in its discretion, accelerate the exercise date of any
outstanding Stock Option. The Committee shall provide each Holder with at
least ten (10) days' advance written notice prior to consummation of any
such pending sale, merger, reorganization, separation, liquidation or other
transaction to enable the Holder to exercise any then vested Stock Option
prior to consummation of the transaction. Upon consummation of any sale,
merger, reorganization, separation, liquidation or other transaction in which
the Bank does not survive, all outstanding Stock Options, whether or not
accelerated, shall terminate and cease to be exercisable unless assumed
pursuant to a written agreement by the successor corporation or parent or
subsidiary thereof.
10. INVESTMENT REPRESENTATIONS. The Committee may require a Holder to whom
a Stock Option is granted, as a condition of receipt and/or exercise of the
Stock Option, to give written assurances in substance and form satisfactory to
the Committee to the effect that Holder is acquiring the Stock Option, Shares
or other rights granted hereunder, as applicable, for Holder's own account
and not with any present intention of selling or otherwise distributing the
same, and to such other effects as the Committee deems necessary or
appropriate in order to comply with federal and applicable state securities
laws. Appropriate legends may be placed on any Stock Option or Shares issued
under the Plan evidencing such representations.
11. COMPLIANCE WITH SECURITIES LAWS. Each Stock Option shall be subject
to the requirement that, if at any time the Committee, in its discretion,
shall determine that the listing, registration or qualification of the Shares
subject to such Stock Option upon any securities exchange or under any state
or federal law, or the consent or approval of any government or regulatory
body, is necessary or desirable as a condition of, or in connection with, the
granting of such Stock Option or the issue or purchase of Shares, such Stock
Option may not be granted or exercised in whole or in part unless such
listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Committee.
Nothing in the Plan or related Stock Option
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Agreements shall be deemed to require the Bank to apply for or obtain such
listing, registration or qualification.
12. RIGHTS AS A SHAREHOLDER. A Holder shall have no rights as a
shareholder of the Bank with respect to any Shares covered by a Stock Option
until said Holder tenders an effective and unconditional notice of exercise
of the Stock Option to the Bank, complies with all other terms and conditions
of exercise and pays the Purchase Price. Except as otherwise expressly
provided in the Plan, no adjustment shall be made for dividends or other
rights for which the record date is prior to the date on which the Holder
tenders notice of exercise, complies with all other terms and conditions of
exercise, and pays any applicable Purchase Price. The Committee shall use its
best efforts to secure prompt issuance of stock certificates following full
performance of exercise by any Holder.
13. NON-ASSIGNABILITY OF OPTIONS. No Incentive Stock Option shall be
assignable or transferable by the Holder except by will or by the laws of
descent and distribution. During the life of the Holder, an Incentive Stock
Option shall be exercisable only by the Holder or by the duly appointed legal
representative of an incompetent Holder. The transferability of a
Nonqualified Stock Option or other award granted hereunder shall be set forth
in the Stock Option Agreement or other Agreement evidencing the grant of the
right.
14. WITHHOLDING TAXES. The Bank shall have the right to deduct from
amounts otherwise due an Employee under a Stock Option or from any wages or
other compensation to be paid to an Employee any sums required by federal,
state and local tax law to be withheld with respect to the exercise of any
Stock Option or with respect to the disposition of Shares issued hereunder
or, in the alternative, to require the Employee to pay such sums to the Bank.
The Bank may, in its discretion and upon request by the Employee, withhold
from the Shares to be issued to Holder under this Plan a number of Shares
(based on the Fair Market Value of the Shares on the date of exercise of the
Stock Option) necessary to satisfy any tax withholding requirements.
15. AMENDMENT OF THE PLAN. The Plan may, at any time or from time to time,
be terminated, modified or amended by the Committee, subject to State Banking
Department approval; except that, without shareholder approval, the Committee
may not increase the number of Shares which may be issued under the Plan
(other than increases due to changes in capitalization), modify the
requirements as to eligibility for participation in the Plan, or materially
increase the benefits accruing to participants under the Plan, including, but
not limited to, reducing the minimum purchase price of options or maximum
term of options. The termination, modification or amendment of the Plan shall
not, without the consent of a Holder, affect the Holder's rights under any
previously granted Stock Option. With the consent of each
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Holder affected, the Board may amend outstanding Stock Option Agreements in
a manner not inconsistent with the Plan.
16. NO SPECIAL EMPLOYMENT RIGHTS. Nothing contained in this Plan or in any
Stock Option shall confer upon any Holder any right with respect to continued
employment or engagement with the Bank or interfere in any way with the right
of the Bank, subject to the terms of any separate agreement with the Holder
to the contrary, at any time to terminate such employment or engagement or to
increase or decrease the compensation or other benefits paid to the Holder.
17. GOVERNING LAW. This Plan and any Stock Options or other rights issued
hereunder shall be governed by and construed in accordance with the laws of
the State of California.
Approved by the Board of Directors on
----------------------------------.
Approved by the Shareholders on
----------------------------------------.
By:
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Its:
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SCRIPPS BANK 1992 STOCK OPTION PLAN
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INCENTIVE STOCK OPTION AGREEMENT
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THIS AGREEMENT, dated as of ________________, 19___, is
entered into by and between Scripps Bank, a California state-
chartered bank ("Bank"), and _____________________________________
("Employee").
WITNESSETH
----------
WHEREAS, pursuant to the Scripps Bank 1992 Stock Option
Plan ("Plan"), the Bank hereby grants to Employee, effective as
of ____________, 19___ ("Date of Grant"), an incentive stock
option ("Option") to purchase shares of common stock of the Bank
("Shares"), for the term and upon the terms and conditions set
forth below:
Number of Shares _________
Price per Share ("Price") $_________
Expiration Date ("Expiration Date") _________ (5PM-PST)
NOW, THEREFORE, in consideration of the mutual promises
and covenants made herein and the mutual benefits to be derived
herefrom, the parties hereto agree as follows:
1. GRANT OF OPTION. The Bank hereby grants to
Employee as a matter of separate inducement and agreement in
connection with Employee's employment, and not in lieu of any
salary or other compensation for services, the right and option
to purchase, in accordance with the Plan and on the terms and
conditions hereinafter set forth, all or any part of an aggregate
of _______________ (______) authorized but unissued Shares at the
Price, exercisable from time to time as set forth herein prior to
the Expiration Date. The Price shall not be less than the Fair
Market Value of a Share on the Date of Grant, determined without
regard to any restriction other than a restriction which, by its
terms, will never lapse. However, if Employee owns, at the Date
of Grant, stock possessing more than ten percent (10%) of the
total combined voting power of all classes of stock of the Bank
or of its parent or subsidiary, the Price shall not be less than
one hundred ten percent (110%) of the Fair Market Value of a
Share on the Date of Grant, determined without regard to any
restriction other than a restriction which, by its terms, will
never lapse. Fair Market Value shall be determined by the
Committee in accordance with the terms of the Plan.
In the event dividends are payable in common stock of
the Bank or in the event that there are splits, subdivisions, or
combination of shares of common stock, the number of Shares
subject to the Option shall be increased or decreased
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proportionately, as the case may be, without change in the total
Price of all Shares initially available under the Option.
The Option granted hereunder is intended to be an
incentive stock option as defined in Section 422 of the Internal
Revenue Code ("Code").
Upon and as a condition to the grant of the Option,
Employee shall, if married on the Date of Grant, furnish the Bank
with a fully executed Consent of Spouse in the form attached
hereto as Exhibit "A."
2. EXERCISABILITY OF OPTION. The Option shall become
exercisable on the anniversaries of the Date of Grant to the
extent of the percent of the total number of Shares represented
by the Option, as follows:
Anniversary Percent of Total Shares
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First 20%
Second 40%
Third 60%
Fourth 80%
Fifth 100%
Provided, however, that if Employee owns, at the Date of Grant,
stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Bank or of
its parent or subsidiary, the Option shall become exercisable in
full one (1) month prior to the fifth anniversary of the Date of
Grant. To the extent that Employee does not exercise the Option
with respect to all of the Shares to which Employee is entitled,
Employee has the right cumulatively thereafter to exercise the
Option with respect to the remaining exercisable Shares and such
right shall continue until the Option terminates. The Option may
be exercised only as to whole Shares. Fractional Share interests
shall be disregarded except that they may be accumulated from
year to year.
Except as provided in Section 4 of this Agreement, the
Option may not be exercised at any time unless Employee shall
have been in the continuous employment of the Bank or any of its
parent or subsidiary corporations from the Date of Grant to the
date of exercise of the Option. Employment shall be defined in
accordance with provisions of Section 1.421-7(h) of the
Income Tax Regulations (or any successor regulation). If the
Option is assumed or if a new incentive stock option is
substituted for the Option in a transaction to which Section
424(a) of the Code applies, employment with the corporation
assuming the Option or substituting a new incentive stock option
for the Option (or by a parent of subsidiary thereof) shall be
considered to be employment with the Bank.
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This Agreement and the Option shall terminate on the Expiration Date
unless terminated at an earlier date in accordance with the provisions hereof
and of the Plan.
3. METHOD OF EXERCISE AND PAYMENT. Each exercise of the Option shall
be by means of a written notice of exercise (substantially in the form
attached hereto as Exhibit "B") delivered to the Secretary of the Bank (or
other designated officer) and specifying the number of whole Shares with
respect to which the Option is being exercised, together with tender to the
Bank of the full Price attributable to the Shares to be purchased in cash or
by a cashier's check.
The Committee may, in its sole discretion, elect to permit Employee to
exercise the Option by paying any part of the Price by issuing a fully
recourse promissory note containing such terms and subject to such security as
the Committee determines to be fair and reasonable; provided, however, that
in no event shall the interest rate on any such promissory note tendered in
full or partial payment of the Price be less than the lowest applicable
federal rate, as defined in Section 1274(d) of the Code, in effect on the
date of exercise of the Option (or such other rate established under the Code
as necessary to avoid the imputation of interest on exercise of the Option).
The Committee may, in its sole discretion, permit Employee to exercise
the Option by paying any part of the Price by delivery to the Bank of shares
of common stock of the Bank then owned by Employee having a Fair Market Value
on the date of exercise of the Option equal to the total Price of the Shares
being purchased (or such portion of the total Price that Employee intends to
pay by delivery of previously acquired shares). If payment is made by
delivery of previously acquired shares, the certificate(s) representing such
Shares shall be duly executed in blank by Employee or shall be accompanied by
a stock power, duly executed in blank, for the purpose of transferring such
shares to the Bank. Fractional shares will not be accepted as payment of any
portion of the Price. Fair Market Value shall be determined by the Committee
in accordance with the terms of the Plan.
The Committee may, in its sole discretion, permit the Holder to exercise
the Option by delivery to the Bank of a written notice of exercise
instructing the Committee to deliver the Shares to a designated broker for
sale contingent upon immediate transfer to the Bank of cash proceeds equal to
the Price.
In the event that the Option is to be exercised by any person other than
Employee, notice of exercise shall be accompanied by appropriate proof of the
right of such person to exercise the Option.
4. TERMINATION OF OPTION. Any Option which has not been exercised by
the Expiration Date shall automatically
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terminate and be canceled. If the employment of Employee terminates for
cause prior to the Expiration Date, the Option will terminate at the time
employment is terminated. If Employee's termination of employment is without
cause, Employee shall have three (3) months after the date of such
termination to exercise the Option. If such termination is due to the
disability of Employee, Employee or Employee's legal representative shall
have twelve (12) months from the date of such termination of employment to
exercise the Option. If termination is due to death, or if Employee dies
within three (3) months after termination of employment and such termination
was without cause, Employee's transferees by will or under the laws of
descent and distribution shall have until the Expiration Date to exercise the
Option. In no event shall the Option be exercised after the Expiration Date.
In each case of exercise after termination of employment, the Option must be
exercisable on the date of Employee's termination of employment and vesting
of the Option shall cease as of the date of termination of employment.
"Cause" shall be determined by the Committee and shall include, but not
be limited to, willful misconduct in connection with the Employee's
employment or willful failure to perform employment duties and
responsibilities in the best interests of the Bank. Employee shall be deemed
disabled if unable to engage in any substantial gainful activity with the
Bank by reason of any medically determinable physical or mental impairment
which can be expected to result in death or which has lasted, or can be
expected to last, for a continuous period of not less than twelve (12)
months. Disability shall be determined by a physician selected by the
Committee.
Any Option not exercised prior to the disposition of all or
substantially all of the assets of the Bank or an amount of the outstanding
capital stock of the Bank sufficient to constitute effective control of the
Bank by means of a sale, merger, reorganization, separation, liquidation, or
any other transaction in which the Bank does not survive shall terminate and
cease to be exercisable upon the consummation of such transaction unless the
Option is expressly assumed in writing by the successor to the Bank or the
successor's parent or subsidiary. The Committee shall provide Employee with
at least ten (10) days' advance written notice prior to the consummation of
any such pending sale, merger, reorganization, separation, liquidation or
other transaction to enable Employee to exercise any then vested Options
prior to consummation of the transaction. Any Option not exercised in a
timely manner as set forth herein shall automatically terminate and be
canceled.
5. RESTRICTIONS ON TRANSFER OF SHARES. Shares issued under the Option
shall not be subject to any conditions or restrictions on transfer except as
may be necessary to comply with applicable federal and state securities laws.
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6. NONASSIGNABILITY OF OPTION. Except as provided below, the Option
and the rights and privileges conferred hereby are not transferrable or
assignable, and shall not be pledged or hypothecated in any way (whether by
operation of law or otherwise) and shall not be subject to execution,
attachment, garnishment, levy or similar process. The Option may be exercised
during the lifetime of Employee only by Employee (or Employee's duly
appointed legal representative if Employee becomes incompetent) or, in the
event of Employee's death, Employee's transferees by will or under the laws
of descent and distribution and not otherwise, regardless of any community
property or other interest therein of the spouse of Employee or such spouse's
successor-in-interest. In the event that the spouse of Employee acquires a
community property interest in the Option, Employee, or Employee's
transferees, may exercise the Option on behalf of the spouse of Employee or
such spouse's successor-in-interest. Any person other than Employee who is
entitled to exercise the Option shall be subject to the provisions of this
Agreement as if such person were the Employee.
7. EMPLOYEE NOT A SHAREHOLDER. Employee shall have no rights as a
shareholder of the Bank with respect to the Shares covered by the Option
until Employee tenders to the Bank notice of exercise of the Option, pays to
the Bank the Price and complies with all other terms and conditions of
exercise as set forth in this Agreement. No adjustment will be made for
dividends or other rights for which the record date is prior to the date on
which such notice of exercise was delivered, the Price tendered and Employee
complied with all other terms and conditions of exercise as set forth in this
Agreement.
8. NOTICES. Any notice to be given under the terms hereof shall be
hand delivered to the Secretary of the Bank (or such other officer as
designated by the Committee) or sent by certified mail, return receipt
requested, to Scripps Bank, 7817 Ivanhoe Avenue, La Jolla, California 92037,
and any notice to be given to the Employee shall be addressed to the Employee
at the address given beneath the Employee's signature hereto, or at such
other address as a party may hereafter designate in writing to the other
party. Notice shall have been deemed duly given when enclosed in a properly
sealed envelope, addressed as aforesaid, certified mail, and deposited
(postage prepaid) in a post office or branch post office regularly maintained
by the United States Government or, if notice is not given through the mail,
when such notice is actually received by the person to whom notice is being
given.
9. APPLICATION OF SECURITIES LAWS. No Shares may be acquired pursuant
to exercise of the Option unless and until any then applicable federal and
state securities law and banking law requirements, requirements of any other
regulatory agency having jurisdiction over the Shares, and requirements of
any exchanges upon which the Shares may be listed shall have been fully
complied with. At the time of exercise of the Option, Employee
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agrees to furnish the Bank with such written representations as the Committee
deems necessary or appropriate in order to comply with applicable federal and
state securities laws. Appropriate legends shall be placed on Shares issued
under this Option to reflect any restrictions imposed by federal or state
securities laws.
10. PLAN. The Option contained in this Agreement is granted pursuant
to the Scripps Bank 1992 Stock Option Plan. The terms of the Plan are hereby
incorporated into this Agreement.
11. TAX WITHHOLDING. The Bank shall have the right to deduct from
Employee's regular wages any sums required by federal, state or local tax law
to be withheld with respect to the exercise of the Option or disposition of
Shares acquired hereunder, or, in the alternative, to require Employee to pay
such sums to the Bank.
12. CONTINUANCE OF EMPLOYMENT. Nothing contained in this Agreement or
in the Plan shall confer upon Employee any right with respect to continued
employment by the Bank or its parent or subsidiary corporations, if any, or
interfere in any way with the right of the Bank (or other entity) at any time
to terminate such employment or to increase or decrease the compensation
received by Employee, but nothing contained herein shall affect any otherwise
existing contractual rights of Employee.
13. LAWS APPLICABLE TO CONSTRUCTION. The interpretation, performance
and enforcement of the Option and this Agreement shall be governed by the
laws of the State of California.
14. ACKNOWLEDGMENT. It is intended that the Option be an "incentive
stock option," as that term is defined in Section 422(b) of the Code, and
that other conditions may be imposed in order for the Option to so qualify
and to continue to so qualify. Notwithstanding the foregoing, Employee agrees
and acknowledges that neither the Bank nor anyone acting on its behalf in
connection with the administration of the plan shall be liable to Employee or
any successor-in-interest of Employee for any loss or damage suffered as a
result of the Option failing to be an incentive stock option under the Code.
Employee further agrees and acknowledges that in the event that the aggregate
Fair Market Value (determined as of the Date of Grant) of stock with respect
to which incentive stock options are exercisable for the first time by
Employee during any calendar year (under all plans of the Bank and its parent
or subsidiary corporations) exceeds $100,000, the portion of the latest
granted incentive stock option(s) equal to such excess shall be treated as a
nonqualified stock option rather than an incentive stock option. In addition,
Employee acknowledges that the disposition of Shares purchased pursuant to
the Option occurring within (i) two years from the Date of Grant or (ii) one
year from the date of exercise of the Option will
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result in any gain recognized on the disposition being rated as taxable
compensation income in the year of the disposition. Employee further
acknowledges that the difference between the aggregate Price and the Fair
Market Value of the Shares on the date of exercise of the Option is an item
of tax preference for purposes of the alternate minimum tax.
15. NOTICE OF DISPOSITION; PROOF OF CONTINUED OWNERSHIP. Employee
agrees to notify the Bank of any disposition of Shares acquired pursuant to
the Option occurring within (i) two years from the Date of Grant or (ii) one
year from date of exercise of the Option. In addition, Employee agrees to
provide such proof of continued ownership of Shares as the Bank may
reasonably require to assess properly any tax deductions associated with the
disposition of Shares acquired through exercise of the Option.
IN WITNESS WHEREOF, Bank and Employee execute this Agreement as of the
day and year first above written.
SCRIPPS BANK
By ______________________________
______________________________ Title: ___________________
Employee
______________________________
Address
______________________________
City State Zip Code
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Exhibit "A"
CONSENT OF SPOUSE
In consideration of the execution of the foregoing Incentive Stock
Option Agreement by Scripps Bank, I, the spouse of Employee therein named, do
hereby join with my spouse in executing the foregoing Incentive Stock Option
Agreement and do hereby agree to be bound by all of the terms and provisions
thereof, including Section 6 thereof.
Date ________________________
_________________________
(Signature of Spouse)
_________________________
(Name of Spouse)
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SCRIPPS BANK 1992 STOCK OPTION PLAN
----------------------------------
NONQUALIFIED STOCK OPTION AGREEMENT
-----------------------------------
THIS AGREEMENT, dated as of __________, 19__, is entered into by and
between Scripps Bank, a California state-chartered bank ("Bank"), and
__________________________________ ("Holder").
WITNESSETH
----------
WHEREAS, pursuant to the Scripps Bank 1992 Stock Option Plan ("Plan"),
the Bank hereby grants to the Holder, effective as of __________, 19__ ("Date
of Grant"), a nonqualified stock option ("Option") to purchase shares of
common stock of the Bank ("Shares"), for the term and upon the terms and
conditions set forth below:
Number of Shares __________
Price per Share ("Price") $__________
Expiration Date ("Expiration Date") __________ (5PM-PST)
NOW, THEREFORE, in consideration of the mutual promises and covenants
made herein and the mutual benefits to be derived herefrom, the parties
hereto agree as follows:
1. GRANT OF OPTION. The Bank hereby grants to Holder as a matter of
separate inducement and agreement in connection with Holder's employment or
engagement, and not in lieu of any salary or other compensation for services,
the right and option to purchase, in accordance with the Plan and on the
terms and conditions hereinafter set forth, all or any part of an aggregate
of ____________ (_____) authorized but unissued Shares at the Price,
exercisable from time to time as set forth herein prior to the Expiration
Date. The Price shall not be less than the Fair Market Value of a Share on
the Date of Grant. Fair Market Value shall be determined by the Committee in
accordance with the terms of the Plan. In the event dividends are payable in
common stock of the Bank, or in the event that there are splits,
subdivisions, or combination of shares of common stock, the number of Shares
subject to this Option shall be increased or decreased proportionately, as
the case may be, without change in the total Price of all Shares initially
available under the Option.
The Option granted hereunder is intended not to be an incentive stock
option as defined in Section 422 of the Internal Revenue Code ("Code").
Upon, and as a condition to, the grant of the Option, Holder shall, if
married on the Date of Grant, furnish the Bank with a fully executed Consent
of Spouse in the form attached hereto as Exhibit "A."
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2. EXERCISABILITY OF OPTION. The Option shall become exercisable on
the anniversaries of the Date of Grant to the extent of the percent of the
total number of Shares represented by the Option, as follows:
Anniversary Percent of Total Shares
----------- -----------------------
First 20%
Second 40%
Third 60%
Fourth 80%
Fifth 100%
To the extent that Holder does not exercise the Option with respect to all of
the Shares to which Holder is entitled, Holder has the right cumulatively
thereafter to exercise the Option with respect to the remaining exercisable
Shares and such right shall continue until the Option terminates. The Option
may be exercised only as to whole Shares. Fractional Share interests shall
be disregarded except that they may be accumulated from year to year. This
Agreement and the Option shall terminate on the Expiration Date unless
terminated at an earlier date in accordance with the provisions hereof and of
the Plan.
3. METHOD OF EXERCISE AND PAYMENT. Each exercise of the Option shall
be by means of a written notice of exercise (substantially in the form
attached hereto as Exhibit "B") delivered to the Secretary of the Bank (or
other designated officer) and specifying the number of whole Shares with
respect to which the Option is being exercised, together with tender to the
Bank of the full Price attributable to the Shares to be purchased in cash or
by a cashier's check.
Holder may exercise the Option by paying any part of the Price by
delivery to the Bank of shares of common stock of the Bank then owned by
Holder having a Fair Market Value on the date of exercise of the Option equal
to the total Price of the Shares being purchased (or such portion of the
total Price that Holder intends to pay by delivery of previously acquired
shares). If payment is made by delivery of previously acquired shares, the
certificate(s) representing such Shares shall be duly executed in blank by
Holder or shall be accompanied by a stock power, duly executed in blank, for
the purpose of transferring such shares to the Bank. Fractional shares will
not be accepted as payment of any portion of the Price. Fair Market Value
shall be determined by the Committee in accordance with the terms of the Plan.
-2-
In the event that the Option is to be exercised by any person other
than Holder, notice of exercise shall be accompanied by appropriate proof of
the right of such person to exercise the Option.
4. TERMINATION OF OPTION. Any Option which has not been exercised by
the Expiration Date shall automatically terminate and be canceled. If the
employment or engagement of Holder terminates for cause prior to the
Expiration Date, the Option will terminate at the time employment or
engagement is terminated. If Holder's termination of employment or
engagement is without cause, Holder shall have three (3) months after the
date of such termination to exercise the Option. If such termination is due
to the death or disability of Holder, Holder or Holder's legal representative
shall have twelve (12) months from the date of such termination to exercise
the Option. In no event shall the Option be exercised after termination of
employment or engagement. In each case of exercise after termination of
employment or engagement, the Option must be exercisable on the date of
Holder's termination of employment or engagement and vesting of the Option
shall cease as of the date of termination of employment or engagement. The
Committee shall determine when Holder incurs a termination of employment or
engagement.
"Cause" shall be determined by the Committee and shall include, but not
be limited to, willful misconduct in connection with Holder's employment or
engagement or willful failure to perform employment or engagement duties and
responsibilities in the best interests of the Bank. The Committee shall
determine whether a Holder's termination of employment or engagement is due
to disability.
Any Option not exercised prior to the disposition of all or
substantially all of the assets of the Bank or an amount of the outstanding
capital stock of the Bank sufficient to constitute effective control of the
Bank by means of a sale, merger, reorganization, separation, liquidation, or
any other transaction in which the Bank does not survive, shall terminate and
cease to be exercisable upon the consummation of such transaction unless the
Option is expressly assumed in writing by the successor to the Bank or the
successor's parent or subsidiary. The Committee shall provide Holder with at
least ten (10) days' advance written notice prior to consummation of any such
pending sale, merger, reorganization, separation, liquidation or other
transaction to enable Holder to exercise any then vested Options prior to
consummation of the transaction. Any Option not exercised in a timely manner
as set forth herein shall automatically terminate and be canceled.
5. RESTRICTIONS ON TRANSFER OF SHARES. Shares issued under the Option
shall not be subject to any conditions or restrictions on transfer except as
may be necessary to comply with applicable federal and state securities laws.
-3-
6. NONASSIGNABILITY OF OPTION. Except as provided below, the Option
and the rights and privileges conferred hereby are not transferable or
assignable, and shall not be pledged or hypothecated in any way (whether by
operation of law or otherwise) and shall not be subject to execution,
attachment, garnishment, levy or similar process. The Option may be exercised
during the lifetime of Holder only by Holder (or Holder's duly appointed
legal representative if Holder becomes incompetent) or, in the event of
Holder's death by Holder's transferees by will or under the laws of descent
and distribution and not otherwise, regardless of any community property or
other interest therein of the spouse of Holder or such spouse's
successor-in-interest. In the event that Holder's spouse acquires a community
property interest in the Option, Holder, or Holder's transferees, may
exercise it on behalf of the spouse or such spouse's successor-in-interest.
Any person other than Holder who is entitled to exercise the Option shall be
subject to the provisions of this Agreement as if such person were Holder.
7. HOLDER NOT A SHAREHOLDER. Holder shall have no rights as a
shareholder of the Bank with respect to the Shares covered by the Option
until Holder tenders to the Bank notice of exercise of the Option, pays to the
Bank the Price and complies with all other terms and conditions of exercise
as set forth in this Agreement. No adjustment will be made for dividends or
other rights for which the record date is prior to the date on which such
notice of exercise was delivered, the Price tendered and Holder complied with
all other terms and conditions of exercise as set forth in this Agreement.
8. NOTICES. Any notice to be given under the terms hereof shall be
hand delivered to the Secretary of the Bank (or such other officer as
designated by the Committee) or sent by certified mail, return receipt
requested, to Scripps Bank, 7817 Ivanhoe Avenue, La Jolla, California 92037,
and any notice to be given to Holder shall be addressed to Holder at the
address given beneath Holder's signature hereto, or at such other address as
a party may hereafter designate in writing to the other party. Notice shall
have been deemed duly given when enclosed in a properly sealed envelope,
addressed as aforesaid, certified mail, and deposited (postage prepaid) in a
post office or branch post office regularly maintained by the United States
Government or, if notice is not given through the mail, when such notice is
actually received by the person to whom notice is being given.
9. APPLICATION OF SECURITIES LAWS. No shares may be acquired pursuant
to exercise of the Option unless and until any then applicable federal and
state securities law and banking law requirements, requirements of any other
regulatory agency having jurisdiction over the Shares, and requirements of
any exchanges upon which the Shares may be listed shall have been fully
complied with. At the time of exercise of the Option, Holder agrees to
furnish the Bank with such written representation as the Committee deems
necessary or appropriate in
-4-
order to comply with applicable federal and state securities laws.
Appropriate legends shall be placed on Shares issued under this Option to
reflect any restrictions imposed by federal or state securities laws.
10. PLAN. The Option contained in this Agreement is granted pursuant
to the Scripps Bank 1992 Stock Option Plan. The terms of the Plan are hereby
incorporated into this Agreement.
11. TAX WITHHOLDING. The Bank shall have the right to deduct from any
amounts payable to Holder any sums required by federal, state or local tax
law to be withheld with respect to the exercise of the Option or disposition
of Shares acquired pursuant to exercise of the Option, or, in the
alternative, to require Holder to pay such sums to the Bank. Upon request by
Holder and subject to approval of the Committee, the Bank may withhold from
the Shares to be issued to Holder hereunder a number of Shares (based on the
Fair Market Value of the Shares on the date of exercise of the Option)
necessary to satisfy any tax withholding requirements.
12. CONTINUANCE OF ENGAGEMENT. Nothing contained in this Agreement or
in the Plan shall confer upon Holder any right with respect to continued
employment or engagement by the Bank or its parent or subsidiary corporation,
if any, or interfere in any way with the right of the Bank (or other entity)
at any time to terminate such employment or engagement or to increase or
decrease the compensation received by Holder, but nothing contained herein
shall affect any otherwise existing contractual rights of Holder.
-5-
13. LAWS APPLICABLE TO CONSTRUCTION. The interpretation, performance
and enforcement of the Option and this Agreement shall be governed by the
laws of the State of California.
IN WITNESS WHEREOF, the Bank and Holder execute this Agreement as of
the day and year first above written.
SCRIPPS BANK
By: ________________________
Title: _________________
__________________________________
Holder
__________________________________
Address
__________________________________
City State Zip Code
-6-
Exhibit "A"
CONSENT OF SPOUSE
In consideration of the execution of the foregoing Nonqualified Stock
Option Agreement by Scripps Bank, I, the spouse of Holder therein named, do
hereby join with my spouse in executing the foregoing Nonqualified Stock
Option Agreement and do hereby agree to be bound by all of the terms and
provisions thereof, including Section 6 thereof.
Date
__________________________
_______________________
(Signature of Spouse)
_______________________
(Name of Spouse)
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