UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 10, 2016
PacWest Bancorp
(Exact Name of Registrant as Specified in its Charter)
Delaware |
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001-36408 |
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33-0885320 |
(State or Other Jurisdiction |
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(Commission |
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(IRS Employer |
of Incorporation) |
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File Number) |
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Identification No.) |
9701 Wilshire Blvd., Suite 700 |
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Beverly Hills, California |
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90212 |
(Address of Principal Executive Office) |
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(Zip Code) |
(310) 887-8500
(Registrants telephone number, including area code)
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
ITEM 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Departure of Directors
On February 10, 2016, each of Messrs. Douglas (Tad) H. Lowrey and Timothy B. Matz notified PacWest Bancorp (the Company) of his decision to not stand for re-election at the 2016 Annual Meeting of Stockholders (the Annual Meeting). Each of Messrs. Lowrey and Matz advised the Company that his decision to not stand for re-election did not involve any disagreement with the Company. Mr. Lowrey will remain a director and Chairman of the Board of Directors of the Companys wholly-owned banking subsidiary, Pacific Western Bank.
ITEM 8.01 Other Events
Amended and Restated 2003 Stock Incentive Plan and Awards
On February 10, 2016, the board of directors (the Board) of the Company approved, subject to stockholder approval at the Annual Meeting, the amended and restated PacWest Bancorp 2003 Stock Incentive Plan (the Stock Incentive Plan). Consistent with the initiatives of the Boards Compensation, Nominating and Governance Committee (the CNG Committee) described in the Companys Proxy Statement for the 2015 Annual Meeting of Stockholders (the 2015 Proxy Statement), the adoption of the Stock Incentive Plan is intended to continue the enhancement of the Companys executive compensation programs by further aligning the Companys compensation programs with the long-term interests of the Companys stockholders. The Stock Incentive Plan does not increase the number of shares reserved for future issuance under the Stock Incentive Plan beyond what the Companys stockholders previously approved in 2014 and specifically (i) adds total stockholder return (TSR) to the list of business criteria on which performance goals may be based for awards that are intended to satisfy the performance-based compensation exception to the deductibility limit under Section 162(m) of the Internal Revenue Code, (ii) eliminates the administrators ability to reprice options or other awards without the approval of the Companys stockholders, and (iii) limits the value of awards that may be granted to any of the Companys non-employee directors in a calendar year. Unless sooner terminated, the Stock Incentive Plan will remain in effect for a period of ten years following stockholder approval at the Annual Meeting. The CNG Committee believes that the use of a relative TSR metric, described in more detail below, further focuses executives on managing the returns of the Company in the long-term interests of stockholders.
Except for awards to Mr. Patrick Rusnak in connection with his appointment as Chief Financial Officer of the Company and Mr. Frank Tower, as a result of employment arrangements in connection with the Square 1 Financial, Inc. acquisition, in 2015 no equity awards were made to the Companys executive officers under the prior Stock Incentive Plan or otherwise. On February 10, 2016, in conjunction with the approval of the Stock Incentive Plan, the Board or the CNG Committee, as applicable, granted to the Companys executive officers awards consisting of performance restricted stock units (the PRSUs), described further below, and restricted stock awards (Restricted Stock Awards), which Restricted Stock Awards vest ratably over four years from the date of grant. Consistent with the principles discussed in the 2015 Proxy Statement, the CNG Committee endeavored to tie a significant portion of long-term incentive awards to stockholder interests, with each executive officer receiving 50% of annual long-term incentive awards in the form of PRSUs and 50% of annual long-term incentive awards in the form of Restricted Stock Awards. The PRSUs will vest only if performance goals with respect to relative TSR, diluted earnings per share and return on average assets (weighted 25%, 37.5% and 37.5%, respectively) are met over a three-year performance period. Relative TSR compares the Companys total stockholder return, measured as the appreciation in the Companys common stock price and assuming the reinvestment of dividends, against the KBW Nasdaq Regional Banking Index. The TSR component of the Stock Incentive Plan is subject to stockholder approval at the Annual Meeting. The Restricted Stock Awards and PRSUs granted to the Companys executive officers are as follows:
Name |
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Title |
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Grant |
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Restricted |
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PRSUs(2) |
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Total |
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Matthew P. Wagner |
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Chief Executive Officer |
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2/10/2016 |
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42,506 |
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46,145 |
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88,651 |
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James J. Pieczynski |
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President, CapitalSource Division |
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2/10/2016 |
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31,486 |
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34,180 |
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65,666 |
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Patrick J. Rusnak |
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Chief Financial Officer |
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2/10/2016 |
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18,892 |
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20,508 |
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39,400 |
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Kori L. Ogrosky |
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General Counsel |
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2/10/2016 |
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10,627 |
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11,536 |
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22,163 |
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Christopher D. Blake |
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Human Resources Director |
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2/10/2016 |
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9,446 |
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10,254 |
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19,700 |
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Bryan M. Corsini |
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Chief Credit Officer |
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2/10/2016 |
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11,807 |
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12,818 |
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24,625 |
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J. Frank Tower |
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President, Square 1 Bank Division |
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2/10/2016 |
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9,446 |
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10,254 |
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19,700 |
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(1) The number of Restricted Stock Awards granted to each executive officer was based on the closing price of the Companys common stock on February 10, 2016, or $31.76.
(2) The number of PRSUs granted to each executive officer was (i) with respect to the portion of the PRSUs that vest based on achievement of relative TSR goals, based on an accounting value of $23.66 per PRSU and (ii) with respect to the portion of the PRSUs that vest based on achievement of diluted earnings per share and return on average assets goals, based on the closing price of the Companys common stock on February 10, 2016, or $31.76.
Ownership Guidelines
In an effort to align the interests of the Companys non-employee directors with the interests of stockholders and continue to promote the Companys commitment to sound corporate governance, on February 10, 2016, the CNG Committee approved an amendment to the Stock Ownership Guidelines (the Ownership Guidelines) to require non-employee director ownership of shares of common stock having a value equal to five times their annual cash retainer. Under the Ownership Guidelines, affected non-employee directors will be expected to meet the applicable ownership threshold within five years of the later of May 16, 2016 or the date of their election or appointment to the Board.
Copies of the Stock Incentive Plan, the form of the Stock Incentive Plan Stock Unit Award Agreement and the Ownership Guidelines are filed as Exhibit 10.1, 10.2 and 10.3, respectively, hereto and incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. |
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Description |
10.1 |
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Copy of PacWest Bancorp 2003 Stock Incentive Plan as amended and restated February 10, 2016. |
10.2 |
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Copy of Form of PacWest Bancorp Stock Incentive Plan Stock Unit Award Agreement |
10.3 |
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Copy of Stock Ownership Guidelines dated February 10, 2016 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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PacWest Bancorp | |
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Date: February 12, 2016 |
By: |
/s/ Kori L. Ogrosky |
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Name: |
Kori L. Ogrosky |
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Title: |
Executive Vice President, General Counsel & Corporate Secretary |
Exhibit 10.1
PACWEST BANCORP 2003 STOCK INCENTIVE PLAN
as amended and restated, February 10, 2016
1. Purpose of the Plan. The purpose of this PacWest Bancorp 2003 Stock Incentive Plan is to offer certain Employees, Non-Employee Directors, and Consultants the opportunity to acquire a proprietary interest in the Company. Through the Plan, the Company and its subsidiaries seek to attract, motivate, and retain highly competent persons. The success of the Company and its affiliates are dependent upon the efforts of these persons. The Plan provides for the grant of options, restricted stock awards, performance stock awards, and stock appreciation rights. An option granted under the Plan may be a Non-Statutory Stock Option or an Incentive Stock Option, as determined by the Administrator.
2. Definitions. As used herein, the following definitions shall apply.
2003 Plan shall mean PacWest Bancorp 2003 Stock Incentive Plan, originally adopted as of April 18, 2003, and as amended and restated hereby.
Act shall mean the Securities Act of 1933, as amended.
Administrator shall mean the Board or any one of the Committees.
Affiliate shall mean any parent or subsidiary (as defined in Sections 424(e) and (f) of the Code) of the Company.
APB 25 shall mean Opinion 25 of the Accounting Principles Board, as amended, and any successor thereof.
Award shall mean an Option, Stock Award, or a SAR.
Board shall mean the Board of Directors of the Company.
Cause shall have the meaning given to it under the Participants employment agreement with the Company or Affiliate, or a policy of the Company or an Affiliate. If the Participant does not have an employment agreement or the employment agreement does not define this term, or the Company or an Affiliate does not have a policy that defines this term, then Cause shall include malfeasance or gross misfeasance in the performance of duties or conviction of illegal activity in connection therewith or any conduct detrimental to the interests of the Company or an Affiliate which results in termination of the Participants service with the Company or an Affiliate, as determined by the Administrator.
Change in Control shall mean:
(i) the consummation of a plan of dissolution or liquidation of the Company;
(ii) the individuals who, as of the effective date hereof, are members of the Board (Incumbent Board), cease for any reason to constitute at least two-thirds of the members of the Board; provided, however, that if the election, or nomination for election by the Companys stockholders, of any new director was approved by a vote of at least two-thirds of the Incumbent Board, such new director shall, for purposes of this Plan, be considered as a member of the Incumbent Board; provided, further, however, that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result of either an actual or threatened election contest or other actual or threatened solicitation of proxies or consents by or on behalf of an individual, entity or group (within the meaning of Section 13(d) or 14(d) of the Exchange Act)(a Person) other than the Board (a Proxy Contest) including by reason of any agreement intended to avoid or settle any election contest or Proxy Contest;
(iii) the consummation of a plan of reorganization, merger or consolidation involving the Company, except for a reorganization, merger or consolidation where (A) the stockholders of the Company immediately prior to such reorganization, merger or consolidation own directly or indirectly at least 70% of the combined voting power of the outstanding voting securities of the company resulting from such reorganization, merger or consolidation (the Surviving Company) in substantially the same proportion as their ownership of voting securities of the Company immediately prior to such reorganization, merger or consolidation, and (B) the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such reorganization, merger or consolidation constitute at least two-thirds of the members of the board of directors of the Surviving Company, or of a company beneficially owning, directly or indirectly, a majority of the voting securities of the Surviving Company;
(iv) the sale of all or substantially all the assets of the Company to another person; or
(v) the acquisition by another Person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of stock representing more than fifty percent (50%) of the voting power of the Company then outstanding by another Person.
Code shall mean the Internal Revenue Code of 1986, as amended.
Committee shall mean a committee appointed by the Board in accordance with Section 3 below.
Common Stock shall mean the common stock of the Company, no par value.
Company shall mean PacWest Bancorp, a Delaware corporation.
Consultant shall mean any natural person who performs bona fide services for the Company or an Affiliate as a consultant or advisor, excluding Employees and Non-Employee Directors.
Date of Grant shall mean the effective date as of which the Administrator grants an Option to an Optionee, a Stock Award to a Grantee, or a SAR to an Optionee.
Disability shall mean total and permanent disability as defined in Section 22(e)(3) of the Code.
Employee shall mean any individual who is a common-law employee of the Company or an Affiliate.
Exchange Act shall mean the Securities Exchange Act of 1934, as amended.
Exercise Price, in the case of an Option, shall mean the exercise price of a share of Optioned Stock. Exercise Price, in the case of a SAR, shall be determined by the Administrator but shall not be less than 100% of the Fair Market Value of a Share on the Date of Grant of such SAR.
Fair Market Value shall mean, as of any date, the value of Common Stock determined as follows:
(i) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation, the Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for the last market trading day prior to the time of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;
(ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the mean between the high bid and low asked prices for the Common Stock quoted by such recognized securities dealer on the last market trading day prior to the day of determination; or
(iii) In the absence of an established market for the Common Stock, its Fair Market Value shall be determined, in good faith, by the Administrator.
FASB shall mean the Financial Accounting Standards Board.
Granted Stock shall mean the shares of Common Stock that were granted pursuant to a Stock Award.
Grantee shall mean any person who is granted a Stock Award.
Incentive Stock Option shall mean an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code.
Mature Shares shall mean Shares that had been held by the Participant for a meaningful period of time such as six months or such other period of time that is consistent with FASBs interpretation of APB 25.
Non-Employee Director shall mean a non-employee member of the Board.
Non-Statutory Stock Option shall mean an Option not intended to qualify as an Incentive Stock Option.
Notice of Stock Appreciation Rights Grant shall mean the notice delivered by the Company to the Optionee evidencing the grant of an SAR.
Notice of Stock Option Grant shall mean the notice delivered by the Company to the Optionee evidencing the grant of an Option.
Option shall mean a stock option granted pursuant to the Plan.
Option Agreement shall mean a written agreement that evidences an Option in such form as the Administrator shall approve from time to time.
Optioned Stock shall mean the Common Stock subject to an Option.
Optionee shall mean any person who receives an Option or a SAR.
Participant shall mean an Optionee or a Grantee.
Performance Stock Award shall mean an Award granted pursuant to Section 9 of the Plan.
Plan shall mean this PacWest Bancorp 2003 Stock Incentive Plan, as amended and restated to date.
Qualified Note shall mean a recourse note, with a market rate of interest, that may, at the discretion of the Administrator, be secured by the Optioned Stock or otherwise.
Restricted Stock Award shall mean an Award granted pursuant to Section 8 of the Plan.
Risk of Forfeiture shall mean the Grantees risk that the Granted Stock may be forfeited and returned to the Company in accordance with Section 8 or 9 of the Plan.
Rule 16b-3 shall mean Rule 16b-3 promulgated under the Exchange Act or any successor to Rule 16b-3.
SAR or Stock Appreciation Right shall mean a stock appreciation right granted pursuant to the Plan.
SAR Agreement shall mean a written agreement that evidences a SAR in such form as the Administrator shall approve from time to time.
Service shall mean the performance of services for the Company (or any Affiliate) by an Employee, Non-Employee Director, or Consultant, as determined by the Administrator in its sole discretion. Service shall not be considered interrupted in the case of: (i) a change of status (i.e., from Employee to Consultant, Non-Employee Director to Consultant, or any other combination); (ii) transfers between locations of the Company or between the Company and any Affiliate; or (iii) a leave of absence approved by the Company or an Affiliate. A leave of absence approved by the Company or an Affiliate shall include sick leave, military leave, or any other personal leave approved by an authorized representative of the Company or an Affiliate.
Service Provider shall mean an Employee, Non-Employee Director, or Consultant.
Share shall mean a share of Common Stock.
Stock Award shall mean a Restricted Stock Award or a Performance Stock Award.
Stock Award Agreement shall mean a written agreement that evidences a Restricted Stock Award or Performance Stock Award in such form as the Administrator shall approve from time to time.
Tax or Taxes shall mean the federal, state, and local income, employment and excise tax liabilities incurred by the Participant in connection with his/her Awards.
10% Stockholder shall mean the owner of stock (as determined under Section 424(d) of the Code) possessing more than 10% of the total combined voting power of all classes of stock of the Company (or any Affiliate).
Termination Date shall mean the date on which a Participants Service terminates, as determined by the Administrator in its sole discretion.
Vesting Event shall mean the earlier of: (i) the occurrence of a Change in Control, for all Awards granted with an effective date prior to December 11, 2014; (ii) the termination of a Participants Service (other than for Cause) following the approval by the stockholders of the Company of any matter, plan or transaction which would constitute a Change in Control, for all Awards granted with an effective date prior to December 11, 2014; (iii) the termination of a Participants Service by the Company or any successor entity thereto without Cause or by the Participant for Good Reason (as defined in the Award Agreement, if applicable) within twenty-four months following the occurrence of a Change in Control, for all Awards granted with an effective date of December 11, 2014 or afterward; and (iv) the death of a Participant, for all Awards granted with an effective date of November 2, 2005 or afterward.
3. Administration of the Plan.
(a) Except as otherwise provided for below, the Plan shall be administered by (i) the Board or (ii) a Committee, which Committee shall be constituted to satisfy applicable laws.
(i) Section 162(m). To the extent that the Administrator determines that it is desirable to qualify Awards as performance-based compensation within the meaning of Section 162(m) of the Code, the Plan shall be administered by a Committee comprised solely of two or more outside directors within the meaning of Section 162(m) of the Code.
(ii) Rule 16b-3. To the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder shall be structured to satisfy the requirements for exemption under Rule 16b-3.
(b) Powers of the Administrator. Subject to the provisions of the Plan and in the case of specific duties delegated by the Administrator, and subject to the approval of relevant authorities, including the approval, if required, of any stock exchange or national market system upon which the Common Stock is then listed, the Administrator shall have the authority, in its sole discretion:
(i) to determine the Fair Market Value of the Common Stock;
(ii) to select the Service Providers to whom Awards may, from time to time, be granted under the Plan;
(iii) to determine whether and to what extent Awards are granted under the Plan;
(iv) to determine the number of Shares that pertain to each Award;
(v) to approve the terms of the Option Agreements, Stock Award Agreements, and SAR Agreements;
(vi) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award. Such terms and conditions may include, but are not limited to, the Exercise Price, the status of an Option (Non-Statutory Stock Option or Incentive Stock Option), the time or times when Awards may be exercised, any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine;
(vii) to determine the method of payment of the Exercise Price;
(viii) to delegate to others responsibilities to assist in administering the Plan;
(ix) to construe and interpret the terms of the Plan, Option Agreements, Stock Award Agreements, SAR Agreements and any other documents related to the Awards;
(x) to interpret and administer the terms of the Plan to comply with all Tax rules and regulations; and
(xi) to adopt, alter and repeal such administrative rules, guidelines and practices governing the operation of the Plan as it shall from time to time deem advisable.
(c) Effect of Administrators Decision. All decisions, determinations, and interpretations of the Administrator shall be final and binding on all Participants and any other holders of any Awards. The Administrators decisions and determinations under the Plan need not be uniform and may be made selectively among Participants whether or not such Participants are similarly situated.
(d) Liability. No member of the Committee shall be personally liable by reason of any contract or other instrument executed by such member or on his/her behalf in his/her capacity as a member of the Committee for any mistake of judgment made in good faith, and the Company shall indemnify and hold harmless each member of the Committee and each other employee, officer or director of the Company to whom any duty or power relating to the administration or interpretation of the Plan may be allocated or delegated, against any cost or expense (including counsel fees) or liability (including any sum paid in settlement of a claim) arising out of any act or omission to act in connection with the Plan unless arising out of such persons own fraud or bad faith. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Companys Articles of Incorporation or Bylaws, as a matter of law, or otherwise, or any power the Company may have to indemnify them or hold them harmless.
4. Stock Subject To The Plan.
(a) Basic Limitation. The total number of Options, Stock Awards, and SARs that may be awarded under the Plan may not exceed 9 million, subject to the adjustments provided for in Section 11 of the Plan.
(b) Additional Shares. In the event that any outstanding Award expires or is canceled or otherwise terminated, the Shares that pertain to the unexercised Award shall again be available for the purposes of the Plan. In the event that Shares issued under the Plan are reacquired by the Company at their original purchase price, such Shares shall again be available for the purposes of the Plan, except that the aggregate number of Shares which may be issued upon the exercise of Incentive Stock Options shall in no event exceed 9 million Shares, subject to the adjustments provided for in Section 11 of the Plan.
5. Eligibility. The persons eligible to participate in the Plan shall be limited to Employees, Non-Employee Directors, and Consultants who have the potential to impact the long-term success of the Company and/or its Affiliates and who have been selected by the Administrator to participate in the Plan.
6. Option Terms. Each Option shall be evidenced by an Option Agreement, in the form approved by the Administrator and may contain such provisions as the Administrator deems appropriate; provided, however, that each Option Agreement shall comply with the terms specified below. No person may be granted (in any calendar year) Options to purchase more than 250,000 Shares, subject to the adjustments provided for in Section 11 of the Plan. Each Option Agreement evidencing an Incentive Stock Option shall, in addition, be subject to Section 7 below.
(a) Exercise Price.
(i) The Exercise Price of an Option shall be determined by the Administrator but shall not be less than 100% of the Fair Market Value of a Share on the Date of Grant of such Option.
(ii) Notwithstanding the foregoing, where the outstanding shares of stock of another corporation are changed into or exchanged for shares of Common Stock without monetary consideration to that other corporation, then, subject to the approval of the Board, Options may be granted in exchange for unexercised, unexpired stock options of the other corporation and the exercise price of the Optioned Shares subject to each Option so granted may be fixed at a price less than 100% of the Fair Market Value of the Common Stock at the time such 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 Company.
(iii) The consideration to be paid for the Shares to be issued upon exercise of an Option, including the method of payment, shall be determined by the Administrator and may consist entirely of (A) cash, (B) check, (C) Mature Shares, (D) Qualified Note, or (e) any combination of the foregoing methods of payment. The Administrator may also permit Optionees, either on a selective or aggregate basis, to simultaneously exercise Options and sell the shares of Common Stock thereby acquired, pursuant to a brokerage or similar arrangement, approved in advance by the Administrator, and use the proceeds from such sale as payment of part or all of the exercise price of such shares. Notwithstanding the foregoing, a method of payment may not be used if it causes the Company to: (i) recognize compensation expense for financial reporting purposes; (ii) violate Section 402 of the Sarbanes-Oxley Act of 2002 or any regulations adopted pursuant thereto; or (iii) violate Regulation O, promulgated by the Board of Governors of the Federal Reserve System, as determined by the Administrator in its sole discretion.
(b) Vesting. Any Option granted hereunder shall be exercisable and shall vest at such times and under such conditions as determined by the Administrator and set forth in the Option Agreement. An Option may not be exercised for a fraction of a Share. Notwithstanding anything herein to the contrary, upon the occurrence of a Vesting Event, all Options that are outstanding on the date of the Vesting Event shall become exercisable on such date (whether or not previously vested).
(c) Term of Options. No Option shall have a term in excess of 10 years measured from the Date of Grant of such Option.
(d) Procedure for Exercise. An Option shall be deemed to be exercised when written notice of such exercise has been given to the Administrator in accordance with the terms of the Option Agreement by the person entitled to exercise the Option and full payment of the applicable Exercise Price for the Share being exercised has been received by the Administrator. Full payment may, as authorized by the Administrator, consist of any consideration and method of payment allowable under Subsection (a)(iii) above. In the event of a cashless exercise, the broker shall not be deemed to be an agent of the Administrator.
(e) Effect of Termination of Service.
(i) Termination of Service. Upon termination of an Optionees Service, other than due to death, Disability, or Cause, the Optionee may exercise his/her Option, but only on or prior to the date that is three months following the Optionees Termination Date, and only to the extent that the Optionee was entitled to exercise such Option on the Termination Date (but in no event later than the expiration of the term of such Option, as set forth in the Notice of Stock Option Grant to the Option Agreement). If, on the Termination Date, the Optionee is not entitled to exercise the Optionees entire Option, the Shares covered by the unexercisable portion of the Option shall revert to the Plan. If, after termination of Service, the Optionee does not exercise his/her Option within the time specified herein, the Option shall terminate, and the Optioned Stock shall revert to the Plan.
(ii) Disability of Optionee. In the event of termination of an Optionees Service due to his/her Disability, the Optionee may exercise his/her Option, but only on or prior to the date that is twelve months following the Termination Date, and only to the extent that the Optionee was entitled to exercise such Option on the Termination Date (but in no event later than the expiration date of the term of his/her Option, as set forth in the Notice of Stock Option Grant to the Option Agreement). To the extent the Optionee is not entitled to exercise the Option on the Termination Date, or if the Optionee does not exercise the Option to the extent so entitled within the time specified herein, the Option shall terminate, and the Optioned Stock shall revert to the Plan.
(iii) Death of Optionee. In the event that an Optionee should die while in Service, the Optionees Option may be exercised by the Optionees estate or by a person who has acquired the right to exercise the Option by bequest or inheritance, but only on or prior to the date that is twelve months following the date of death, and only to the extent that the Optionee was entitled to exercise the Option at the date of death (but in no event later than the expiration date of the term of his/her Option, as set forth in the Notice of Stock Option Grant to the Option Agreement). If, at the time of death, the Optionee was not entitled to exercise his/her entire Option, the Shares covered by the unexercisable portion of the Option shall immediately revert to the Plan. If after death, the Optionees estate or a person who acquires the right to exercise the Option by bequest or inheritance does not exercise the Option within the time specified herein, the Option shall terminate, and the Optioned Stock shall revert to the Plan.
(iv) Cause. In the event of termination of an Optionees Service due to Cause, the Optionees Options shall terminate on the Termination Date.
(v) To the extent that the Company does not violate Section 409A of the Code or any regulations adopted, Section 402 of the Sarbanes-Oxley Act of 2002 or any regulations adopted pursuant thereto or Regulation O, promulgated by the Board of Governors of the Federal Reserve System (as determined by the Administrator in its sole discretion), the Administrator shall have complete discretion, exercisable either at the time an Option or SAR is granted or at any time while the Option or SAR remains outstanding, to:
(A) extent the period of time for which the Option or SAR is to remain exercisable following the Optionees cessation of Service from the limited exercise period otherwise in effect for that Option or SAR to such greater period of time as the Administrator shall deem appropriate, but in no event beyond the expiration of the Option or SAR term; and/or
(B) permit the Option or SAR to be exercised, during the applicable post-Service exercise period, not only with respect to the number of vested Shares for which such Option or SAR is exercisable at the time of the Optionees cessation of Service but also with respect to one or more additional installments in which the Optionee would have vested had the Optionee continued in Service.
(f) Stockholder Rights. Until the issuance (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company) of the stock certificate evidencing such Shares, no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such certificate promptly upon exercise of the Option. No adjustment will be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in Section 11 below.
(g) Non-transferability of Options. Options may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent and distribution and may be exercised, during the lifetime of the Optionee, only by the Optionee. Notwithstanding the immediately preceding sentence, the Administrator may permit an Optionee to transfer any Award which is not an Incentive Stock Option to one or more of the Optionees immediate family members or to trusts established in whole or in part for the benefit of the Optionee and/or one or more of such immediate family members. For purposes of the Plan, (i) the term immediate family shall mean the Optionees spouse and issue (including adopted and step children) and (ii) the phrase immediate family members or to trusts established in whole or in part for the benefit of the Optionee and/or one or more of such immediate family members shall be further limited, if necessary, so that neither the transfer of an Award other than an Incentive Stock Option to such immediate family member or trust, nor the ability of a Optionee to make such a transfer shall have adverse consequences to the Company or the Optionee by reason of Section 162(m) of the Code.
7. Incentive Stock Options. The terms specified below shall be applicable to all Incentive Stock Options, and these terms shall, as to such Incentive Stock Options, supercede any conflicting terms in Section 6 above. Options which are specifically designated as Non-Statutory Stock Options when issued under the Plan shall not be subject to the terms of this Section.
(a) Eligibility. Incentive Stock Options may only be granted to Employees.
(b) Exercise Price. The Exercise Price of an Incentive Stock Option shall not be less than 100% of the Fair Market Value of a Share on the Date of Grant of such Option, except as otherwise provided for in Subsection (d) below.
(c) Dollar Limitation. In the case of an Incentive Stock Option, the aggregate Fair Market Value of the Optioned Stock (determined as of the Date of Grant of each Option) with respect to Options granted to any Employee under the Plan (or any other option plan of the Company or any Affiliate) that may for the first time become exercisable as Incentive Stock Options during any one calendar year shall not exceed the sum of $100,000. To the extent the Employee holds two or more such Options which become exercisable for the first time in the same calendar year, the foregoing limitation on the exercisability of such Options as Incentive Stock Options shall be applied on the basis of the order in which such Options are granted. Any Options in excess of such limitation shall automatically be treated as Non-Statutory Stock Options.
(d) 10% Stockholder. If any Employee to whom an Incentive Stock Option is granted is a 10% Stockholder, then the Exercise Price shall not be less than 110% of the Fair Market Value of a Share on the Date of Grant of such Option, and the Option term shall not exceed five years measured from the Date of Grant of such Option.
(e) Change in Status. In the event of an Optionees change of status from Employee to Consultant or to Non-Employee Director, an Incentive Stock Option held by the Optionee shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Non-Statutory Stock Option three months and one day following such change of status.
(f) Approved Leave of Absence. If an Optionee is on an approved leave of absence, and the Optionees reemployment upon expiration of such leave is not guaranteed by statute or contract, including Company policies, then on the 91st day of such leave any Incentive Stock Option held by the Optionee shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Non-Statutory Stock Option.
8. Restricted Stock Award. Each Restricted Stock Award shall be evidenced by a Stock Award Agreement, in the form approved by the Administrator and may contain such provisions as the Administrator deems appropriate; provided, however, such Stock Award Agreement shall comply with the terms specified below.
(a) Risk of Forfeiture.
(i) General Rule. Shares or units issued pursuant to a Restricted Stock Award shall initially be subject to a Risk of Forfeiture. The Risk of Forfeiture shall be set forth in the Stock Award Agreement, and shall comply with the terms specified below.
(ii) Lapse of Risk of Forfeiture. The Risk of Forfeiture shall lapse as the Grantee vests in the Granted Stock. The Grantee shall vest in the Granted Stock at such times and under such conditions as determined by the Administrator and set forth in the Stock Award Agreement. Notwithstanding the foregoing, upon the occurrence of a Vesting Event, the Grantee shall become 100% vested in those shares of Granted Stock that are outstanding on the date of the Vesting Event.
(iii) Forfeiture of Granted Stock. Except as otherwise determined by the Administrator in its discretion, the Granted Stock that is subject to a Risk of Forfeiture shall automatically be forfeited and immediately returned to the Company on the Grantees Termination Date or the date on which the Administrator determines that any other conditions to the vesting of the Restricted Stock were not satisfied during the designated period of time.
(b) Rights as a Stockholder. Upon vesting of a Restricted Stock Award, the Grantee shall have the rights of a stockholder with respect to the voting of the vested shares of Granted Stock, subject to the conditions contained in the Stock Award Agreement.
(c) Dividends. The Stock Award Agreement may require or permit the immediate payment, waiver, deferral or investment of dividends paid on the Granted Stock.
(d) Non-transferability of Restricted Stock Award. Except as otherwise provided for in Section 12 of the Plan, Restricted Stock Awards may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent and distribution and may be exercised, during the lifetime of the Grantee, only by the Grantee. Notwithstanding the immediately preceding sentence, the Administrator may permit a Grantee to transfer any Award which is not an Incentive Stock Option to one or more of the Grantees immediate family members or to trusts established in whole or in part for the benefit of the Grantee and/or one or more of such immediate family members. For purposes of the Plan, (i) the term immediate family shall mean the Grantees spouse and issue (including adopted and step children) and (ii) the phrase immediate family members or to trusts established in whole or in part for the benefit of the Grantee and/or one or more of such immediate family members shall be further limited, if necessary, so that neither the transfer of an Award other than an Incentive Stock Option to such immediate family member or trust, nor the ability of a Grantee to make such a transfer shall have adverse consequences to the Company or the Grantee by reason of Section 162(m) of the Code.
9. Performance Stock Award. Each Performance Stock Award shall be evidenced by a Stock Award Agreement, in the form approved by the Administrator, and may contain such provisions as the Administrator deems appropriate; provided, however, such Stock Award Agreement shall comply with the terms specified below. No person may be granted (in any calendar year) Performance Stock Awards that pertain to more than 250,000 Shares, subject to the adjustments provided for in Section 11 of the Plan.
(a) Risk of Forfeiture.
(i) General Rule. Shares or units issued pursuant to a Performance Stock Award shall initially be subject to a Risk of Forfeiture. The Risk of Forfeiture shall be set forth in the Stock Award Agreement, and shall comply with the terms specified below.
(ii) Lapse of Risk of Forfeiture. The Risk of Forfeiture shall lapse as the Grantee vests in the Granted Stock. The Grantee shall vest in or accelerate vesting in the Granted Stock, in whole or in part, if certain goals established by the Administrator are achieved over a designated period of time, but not in any event more than 10 years. At the discretion of the Administrator, the goals may be based upon the attainment of one or more of the following business criteria (determined either in absolute terms or relative to the performance of one or more similarly situated companies or a published index covering the performance of a number of companies): net income; return on average assets (ROA); cash ROA; return on average equity (ROE); cash ROE; diluted or basic earnings per share (EPS); cash EPS; stock price; total shareholder return; net charge-offs/total assets; non-performing assets/total assets; classified assets/(Tier I Capital + ALLL); net interest margin (tax equivalent); return on average tangible common equity; and efficiency ratio. Performance goals may be established on a Company-wide basis or with respect to one or more business units or divisions. When establishing performance goals, the Administrator may exclude any or all extraordinary items as determined under U.S. generally accepted accounting principles including, without limitation, the charges or costs associated with restructurings of the Company, discontinued operations, other unusual or non-recurring items, and the cumulative effects of accounting changes. When establishing performance goals, the Administrator may mandate that the performance goals be adjusted in recognition of unusual or non-recurring events affecting the Company, changes in applicable tax laws or accounting principles, or such other factors as the Administrator deems appropriate. Notwithstanding the foregoing, upon the occurrence of a Vesting Event, the Grantee shall become 100% vested in those shares of Granted Stock that are outstanding on the date of the Vesting Event, provided, however, that in the event of the death of a Participant, any outstanding Performance Awards (1) shall be deemed earned at the target level with respect to all open performance period if death occurs during the performance period, and (2) shall be deemed earned at the actual performance level achieved if death occurs after the end of the performance period.
(iii) Certification of Performance. Following the completion of each performance period, the Administrator will determine whether the applicable performance goals have been met with respect to a given Grantee and, if they have, will so certify in writing and ascertain the amount of the applicable Performance Stock Award. No Performance Stock Awards will be paid for such performance period until such certification is made by the Administrator.
(iv) Forfeiture of Granted Stock. The Granted Stock that is subject to a Risk of Forfeiture shall automatically be forfeited and immediately returned to the Company on the Grantees Termination Date or the date on which the Administrator determines that any other conditions to the vesting of the Performance Stock Award, including performance goals, were not satisfied during the designated period of time.
(b) Rights as a Stockholder. Upon vesting of a Performance Stock Award, the Grantee shall have the rights of a stockholder with respect to the voting of the vested shares of Granted Stock, subject to the conditions contained in the Stock Award Agreement.
(c) Dividends. The Stock Award Agreement may require or permit the immediate payment, waiver, deferral or investment of dividends paid on Granted Stock.
(d) Non-transferability of Performance Stock Award. Except as otherwise provided for in Section 12 of the Plan, Performance Stock Awards may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent and distribution and may be exercised, during the lifetime of the Grantee, only by the Grantee. Notwithstanding the immediately preceding sentence, the Administrator may permit a Grantee to transfer any Award which is not an Incentive Stock Option to one or more of the Grantees immediate family members or to trusts established in whole or in part for the benefit of the Grantee and/or one or more of such immediate family members. For purposes of the Plan, (i) the term immediate family shall mean the Grantees spouse and issue (including adopted and step children) and (ii) the phrase immediate family members or to trusts established in whole or in part for the benefit of the Grantee and/or one or more of such immediate family members shall be further limited, if necessary, so that neither the transfer of an Award other than an Incentive Stock Option to such immediate family member or trust, nor the ability of a Grantee to make such a transfer shall have adverse consequences to the Company or the Grantee by reason of Section 162(m) of the Code.
10. Stock Appreciation Rights. Each SAR shall be evidenced by a SAR Agreement, in the form approved by the Administrator and may contain such provisions as the Administrator deems appropriate; provided, however, that each SAR Agreement shall comply with the terms specified below. No person may be granted (in any calendar year) SARs that pertain to more than 250,000 Shares, subject to the adjustments provided for in Section 11 of the Plan.
(a) Exercise Price. The Exercise Price of a SAR shall be determined by the Administrator but shall not be less than 100% of the Fair Market Value of a Share on the Date of Grant of such SAR.
(b) Vesting. Any SAR granted hereunder shall be exercisable and shall vest at such times and under such conditions as determined by the Administrator and set forth in the SAR Agreement. Notwithstanding anything herein to the contrary, upon the occurrence of a Vesting Event, all SARs that are outstanding on the date of the Vesting Event shall become exercisable on such date (whether or not previously vested).
(c) Term of SARs. No SAR shall have a term in excess of 10 years measured from the Date of Grant of such SAR.
(d) Non-transferability of SARs. SARs may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent and distribution and may be exercised, during the lifetime of the Optionee, only by the Optionee. Notwithstanding the immediately preceding sentence, the Administrator may permit an Optionee to transfer any Award which is not an Incentive Stock Option to one or more of the Optionees immediate family members or to trusts established in whole or in part for the benefit of the Optionee and/or one or more of such immediate family members. For purposes of the Plan, (i) the term immediate family shall mean the Optionees spouse and issue (including adopted and step children) and (ii) the phrase immediate family members or to trusts established
in whole or in part for the benefit of the Optionee and/or one or more of such immediate family members shall be further limited, if necessary, so that neither the transfer of an Award other than an Incentive Stock Option to such immediate family member or trust, nor the ability of a Optionee to make such a transfer shall have adverse consequences to the Company or the Optionee by reason of Section 162(m) of the Code.
(e) Procedure for Exercise. A SAR shall be deemed to be exercised when written notice of such exercise has been given to the Administrator in accordance with the terms of the SAR Agreement by the person entitled to exercise the SAR. Upon exercise of a SAR, the Optionee (or any person having the right to exercise the SAR after his or her death) shall receive an amount equal to the amount by which the Fair Market Value (on the date of surrender) of a Share exceeds the Exercise Price of such SAR. The Company shall pay this amount in the form of: (i) Common Stock; (ii) cash; or (iii) a combination of Common Stock and cash, as determined by the Administrator.
(f) Effect of Termination of Service.
(i) Termination of Service. Upon termination of an Optionees Service, other than due to death, Disability, or Cause, the Optionee may exercise his/her SARs, but only on or prior to the date that is three months following the Optionees Termination Date, and only to the extent that the Optionee was entitled to exercise such SARs on the Termination Date (but in no event later than the expiration of the term of such SAR, as set forth in the Notice of Stock Appreciation Rights Grant to the SAR Agreement). If, on the Termination Date, the Optionee is not entitled to exercise all of the Optionees SARs, then the Shares that pertain to the unexercisable SARs shall revert to the Plan. If, after termination of Service, the Optionee does not exercise his/her SARs within the time specified herein, the SARs shall terminate, and the Shares that pertain to the SARs shall revert to the Plan.
(ii) Disability of Optionee. In the event of termination of an Optionees Service due to his/her Disability, the Optionee may exercise his/her SARs, but only on or prior to the date that is twelve months following the Termination Date, and only to the extent that the Optionee was entitled to exercise such SARs on the Termination Date (but in no event later than the expiration date of the term of his/her SAR, as set forth in the Notice of Stock Appreciation Rights Grant to the SAR Agreement). To the extent the Optionee is not entitled to exercise the SARs on the Termination Date, or if the Optionee does not exercise the SARs to the extent so entitled within the time specified herein, the SARs shall terminate, and the Shares that pertain to the SARs shall revert to the Plan.
(iii) Death of Optionee. In the event that an Optionee should die while in Service, the Optionees SARs may be exercised by the Optionees estate or by a person who has acquired the right to exercise the SARs by bequest or inheritance, but only on or prior to the date that is twelve months following the date of death, and only to the extent that the Optionee was entitled to exercise the SARs at the date of death (but in no event later than the expiration date of the term of his/her SAR, as set forth in the Notice of Stock Appreciation Rights Grant to the SAR Agreement). If, at the time of death, the
Optionee was not entitled to exercise all of his/her SARs, the Shares that pertain to the unexercisable SARs shall immediately revert to the Plan. If after death, the Optionees estate or a person who acquires the right to exercise the SARs by bequest or inheritance does not exercise the SARs to the extent so entitled within the time specified herein, the SARs shall terminate, and the Shares that pertain to the SARs shall revert to the Plan.
(iv) Cause. In the event of termination of an Optionees Service due to Cause, the Optionees SARs shall terminate on the Termination Date.
11. Adjustments Upon Changes in Capitalization.
(a) Changes in Capitalization. The limitations set forth in Sections 4, 6, and 10 of the Plan, the number of Shares that pertain to each outstanding Award, and the Exercise Price of each Option and SAR shall be proportionately adjusted for any increase or decrease in the number of issued and outstanding Shares resulting from a stock split, reverse stock split, stock dividend, recapitalization, combination or reclassification of the Common Stock, any extraordinary cash dividend, or any other increase or decrease in the number of issued and outstanding Shares, effected without the receipt of consideration by the Company. Such adjustment shall be made by the Administrator, to the extent possible, so that the adjustment shall not result in an accounting consequence under APB 25 and FASB Interpretation No. 44, as amended, and so that the adjustment shall not result in any taxes to the Company or the Participant. The Administrators determination with respect to the adjustment shall be final, binding, and conclusive.
(b) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify each Participant as soon as practicable prior to the effective date of such proposed transaction. In such event, the Administrator, in its discretion, may provide for a Participant to fully vest in his/her Option and SAR, and the Right of Forfeiture to lapse on his/her Granted Stock. To the extent it has not been previously exercised, an Award will terminate upon termination or liquidation of the Company.
(c) Change in Control. This Section 11(c) shall apply to Awards granted with an effective date of December 11, 2014 or after.
(i) Unless otherwise determined by the Committee (or unless otherwise set forth in an employment agreement or a severance agreement or plan applicable to a Participant), if a Participants Service is terminated by the Company or any successor entity thereto without Cause or by the Participant for Good Reason (as defined in the Award Agreement, if applicable), in each case upon or within twenty-four months after a Change in Control, each Award granted to such Participant prior to such Change in Control shall become fully vested (including the lapsing of all restrictions and conditions) and, as applicable, exercisable as of the date of such termination of Service. As of the Change in Control date, any outstanding Performance Stock Awards shall (1) for awards that have a separate target and maximum performance level (x) be deemed earned at the target level with respect to all open performance periods if a Change in Control occurs within six months after the date of grant or (y) be deemed earned at the actual performance level as of the date of the Change in Control if a Change in Control
occurs more than six months after the date of grant, and (2) for awards that do not have a separate target and maximum performance level, be deemed earned at the maximum performance level, and in all cases, the Performance Stock Awards will cease to be subject to any further performance conditions (and the number of Performance Stock Awards earned under this provision will be treated as the number of shares of Granted Stock that are outstanding, including for purposes of a subsequent Vesting Event) but will continue to be subject to time-based service vesting following the Change in Control in accordance with the original performance period.
(ii) Notwithstanding the foregoing, in the event of a Change in Control, a Participants Award may be treated, to the extent determined by the Committee to be permitted under Section 409A of the Code, in accordance with one of the following methods as determined by the Committee in its sole discretion: (i) provide for the issuance of substitute awards that will substantially preserve the otherwise applicable terms of any affected Award previously granted under the Plan, as determined by the Committee in its sole discretion; (ii) cancel such Award for fair value (as determined in the sole discretion of the Committee) which, in the case of Options and SARs, may equal the excess, if any, of the value of the consideration to be paid in the Change in Control transaction to holders of the same number of shares of Common Stock subject to such Options or SARs over the aggregate Exercise Price of such Options or SARs, as the case may be; or (iii) provide that for a period of at least 20 days prior to the Change in Control, any Options or SARs will be exercisable as to all shares of Common Stock subject thereto (but any such exercise will be contingent upon and subject to the occurrence of the Change in Control and if the Change in Control does not take place within a specified period after giving such notice for any reason whatsoever, the exercise will be null and void) and that any Options or SARs not exercised prior to the consummation of the Change in Control will terminate and be of no further force and effect as of the consummation of the Change in Control. For the avoidance of doubt, in the event of a Change in Control, the Committee may, in its sole discretion, terminate any Option or SAR for which the Exercise Price is equal to or exceeds the per share value of the consideration to be paid in the Change in Control transaction without payment of consideration therefor.
12. Deferral of Stock Awards and SARs. The Administrator, in its sole discretion, may permit a Grantee to defer his/her Stock Awards, and an Optionee to defer his/her SARs pursuant to the terms and conditions provided for in any deferred compensation plan of the Company as in effect from time to time. Notwithstanding the foregoing, to the extent an Award is determined to constitute a deferral of compensation within the meaning of Section 409A, any such subsequent deferral shall be made in accordance with the terms of Code Section 409A(a)(4) and the regulations promulgated thereunder.
13. No Repricings or Reloads. The Administrator may not take any action which would constitute a repricing of Options or other Awards (or cash buyback of underwater Options or other Awards) without the approval of the Companys stockholders prior to effectiveness. The Administrator may not grant any Awards with automatic reload features.
14. Share Escrow/Legends. Unvested Shares issued under the Plan may, in the Administrators discretion, be held in escrow by the Company until the Participants interest in such Shares vests or may be issued directly to the Participant with restrictive legends on the certificates evidencing those unvested Shares.
15. Tax Withholding.
(a) For corporate purposes, the Companys obligation to deliver Shares upon the exercise of Options, deliver Shares or cash upon the exercise of SARs, or deliver Shares or remove any restrictive legends upon vesting of such Shares under the Plan shall be subject to the satisfaction of all applicable federal, state and local income and employment tax withholding requirements.
(b) To the extent permitted under Section 402 of the Sarbanes-Oxley Act of 2002 and the regulations adopted pursuant thereto, the Administrator may, in its discretion, provide any or all holders of Non-Statutory Stock Options or SARS, or unvested Shares under the Plan with the right to use previously vested Shares in satisfaction of all or part of the Taxes incurred by such holders in connection with the exercise of their Non-Statutory Stock Options or SARs, or the vesting of their Shares; provided, however, that this form of payment shall be limited to the withholding amount calculated using the minimum statutory rates. Such right may be provided to any such holder in either or both of the following formats:
(i) Stock Withholding: The election to have the Company withhold, from the Shares otherwise issuable upon the exercise of such Non-Statutory Stock Option or SAR, or the vesting of such Shares, a portion of those Shares with an aggregate Fair Market Value equal to the Taxes calculated using the minimum statutory withholding rates interpreted in accordance with APB 25 and FASB Interpretation No. 44.
(ii) Stock Delivery: The election to deliver to the Company, at the time the Non-Statutory Stock Option or SAR is exercised or the Shares vest, one or more Shares previously acquired by such holder (other than in connection with the Option or SAR exercise, or Share vesting triggering the Taxes) with an aggregate Fair Market Value equal to the Taxes calculated using the minimum statutory rates interpreted in accordance with APB 25 and FASB Interpretation No. 44.
16. Effective Date and Term of the Plan. The Plan, as an amendment and restatement of the 2003 Plan, was approved by the Board on February 10, 2016 and shall become effective upon stockholder approval of the Plan at the Companys annual stockholders meeting in 2016. In the event that the Plan is not approved by stockholders at the Companys annual stockholders meeting in 2016, then the PacWest Bancorp 2003 Stock Incentive Plan as Amended and Restated as of January 13, 2014 will remain in effect pursuant to its terms. Unless sooner terminated by the Administrator, the Plan shall continue until the tenth anniversary of the date the Plan was approved by stockholders. When the Plan terminates, no Awards shall be granted under the Plan thereafter. The termination of the Plan shall not affect any Shares previously issued or any Award previously granted under the Plan.
17. Time of Granting Awards. The Date of Grant of an Award shall, for all purposes, be the date on which the Administrator makes the determination to grant such Award, or such other date as determined by the Administrator; provided, however, that any Award granted prior to the date on which the Plan is approved by the Companys stockholders shall be subject to stockholder approval of the Plan. Notice of the determination shall be given to each Service Provider to whom an Award is so granted within a reasonable period of time after the date of such grant.
18. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend, alter, suspend, or discontinue the Plan, but no amendment, alteration, suspension, or discontinuation shall be made which would impair the rights of any Participant under any grant theretofore made without his/her consent. In addition, to the extent necessary and desirable to comply with Section 422 of the Code (or any other applicable law or regulation, including the requirements of any stock exchange or national market system upon which the Common Stock is then listed), the Company shall obtain stockholder approval of any Plan amendment in such a manner and to such a degree as required.
(b) Effect of Amendment and Termination. Any such amendment or termination of the Plan shall not affect Awards already granted, and such Awards shall remain in full force and effect as if this Plan had not been amended or terminated, unless mutually agreed otherwise between the Participant and the Board, which agreement must be in writing and signed by the Participant and the Company.
19. Regulatory Approvals.
(a) The implementation of the Plan, the granting of any Awards and the issuance of any Shares upon the exercise of any granted Awards shall be subject to the Companys procurement of all approvals and permits required by regulatory authorities having jurisdiction over the Plan, the Awards granted under it, and the Shares issued pursuant to it.
(b) No Shares or other assets shall be issued or delivered under the Plan unless and until there shall have been compliance with all applicable requirements of federal and state securities laws, including the filing and effectiveness of the Form S-8 registration statement (if required) for the Shares issuable under the Plan, and all applicable listing requirements of any stock exchange (or the Nasdaq Stock Market, if applicable) on which the Common Stock is then listed for trading (if any).
20. No Employment/Service Rights. Nothing in the Plan shall confer upon the Participant any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Company (or any Affiliate employing or retaining such person) or of the Participant, which rights are hereby expressly reserved by each, to terminate such persons Service at any time for any reason, with or without cause.
21. Governing Law. This Plan shall be governed by California law, applied without regard to conflict of laws principles.
22. Code Section 409A. Awards under this Plan are intended to be exempt from Section 409A of the Code. Notwithstanding foregoing, to the extent (x) an Award constitutes a deferral of compensation within the meaning of Section 409A of the Code, (y) the Grantee or Optionee is a specified employee as determined pursuant to Section 409A of the Code as of the date of his or her separation from service (within the meaning of Treasury Regulation 1.409A-1(h)), and (z) any such Award cannot be settled or paid without subjecting the Grantee or Optionee to additional tax, interest or penalties under Section 409A of the Code, then any such settlement or payment that is payable during the first six months following the Grantees or Optionees separation from service shall be paid or provided to the Grantee or Optionee on the first business day of the seventh calendar month following the month in which his or her separation from service occurs or, if earlier, at his or her death. In addition, any settlement or payment of an Award that is subject to Section 409A of the Code upon a termination of Service that represents a deferral of compensation within the meaning of Section 409A of the Code shall only be settled or paid upon a separation from service.
23. Limits on Awards to Non-Employee Directors. No Non-Employee Director may be granted (in any calendar year) compensation with a value in excess of $1,000,000, with the value of any equity-based awards based on the accounting grant date value of such award.
24. Repayment if Conditions Not Met. If the Administrator determines that all terms and conditions of the Plan and a Grantees Stock Award Agreement were not satisfied, and that the failure to satisfy such terms and conditions is material, then the Grantee will be obligated to pay the Company immediately upon demand therefor, (i) with respect to an Option or SAR, an amount equal to the excess of the Fair Market Value (determined at the time of exercise) of the Shares that were delivered in respect of such exercised Option or SAR, as applicable, over the exercise price paid therefor, (ii) with respect to Restricted Stock Awards, an amount equal to the Fair Market Value (determined at the time such shares became vested) of such Restricted Stock Awards, in each case with respect to clauses (i) and (ii) of this Section 24, without reduction for any amount applied to satisfy withholding tax or other obligations in respect of such Award.
25. Right of Offset. The Company will have the right to offset against its obligation to deliver Shares (or other property or cash) under the Plan or any Stock Award Agreement any outstanding amounts (including, without limitation, travel and entertainment or advance account balances, loans, repayment obligations under any Awards, or amounts repayable to the Company pursuant to tax equalization, housing, automobile or other employee programs) that the Grantee then owes to the Company and any amounts the Administrator otherwise deems appropriate pursuant to any tax equalization policy or agreement. Notwithstanding the foregoing, if an Award provides for the deferral of compensation within the meaning of Section 409A of the Code, the Administrator will have no right to offset against its obligation to deliver Shares (or other property or cash) under the Plan or any Stock Award Agreement if such offset could subject the Grantee to the additional tax imposed under Section 409A of the Code in respect of an outstanding Award.
26. Clawback/Recapture Policy. Awards under the Plan will be subject to any clawback or recapture policy that the Company may adopt from time to time to the extent provided in such policy and, in accordance with such policy, may be subject to the requirement that the Awards be repaid to the Company after they have been distributed to the Grantee.
27. No Liability With Respect to Tax Qualification or Adverse Tax Treatment. Notwithstanding anything to the contrary contained herein, in no event will the Company be liable to a Grantee on account of an Awards failure to (a) qualify for favorable United States or foreign tax treatment or (b) avoid adverse tax treatment under United States or foreign law, including, without limitation, Section 409A.
Exhibit 10.2
FORM OF
PACWEST BANCORP
STOCK INCENTIVE PLAN
STOCK UNIT AWARD AGREEMENT
[Date]
1. Definitions. Unless otherwise defined herein, the terms defined in the PacWest Bancorp 2003 Stock Incentive Plan, as amended (the Plan) shall have the same defined meanings in this Stock Unit Award Agreement (Agreement) and the Notice of Stock Unit Award Grant attached hereto as Appendix A.
2. Grant of Stock Unit Award. Pursuant to the terms and conditions set forth in the Notice of Stock Unit Award Grant, this Agreement, and the Plan, PacWest Bancorp (the Company) grants to the grantee named in the Notice of Stock Unit Award Grant (Grantee) on the date of grant set forth in the Notice of Stock Unit Award Grant (Date of Grant) the number of Units set forth in the Notice of Stock Unit Award Grant. This Stock Unit Award is intended to be a Performance Stock Unit Award, and each Unit shall represent an unfunded, unsecure promise by the Company to deliver you one share of Common Stock for each Unit that vests.
3. Vesting. The Grantee shall vest in the Units in accordance with the vesting schedule provided for in the Notice of Stock Unit Award Grant; provided, however, that the Grantee shall cease vesting in the Units on the Grantees Termination Date or the date on which the Compensation Committee of the Companys Board of Directors (the Administrator) determines that the performance goals provided for in the Notice of Stock Unit Award Grant were not satisfied during the designated period of time. Notwithstanding the foregoing, upon the occurrence of a Vesting Event, the Grantee shall become 100% vested in the Units that are outstanding on the date of the Vesting Event, provided, however, that in the event of the death of a Participant, any outstanding Units (1) shall be deemed earned at the target level with respect to all open performance periods if death occurs during the performance period, and (2) shall be deemed earned at the actual performance level achieved if death occurs after the end of the performance period.
4. Risk of Forfeiture.
(a) General Rule. The Units shall initially be subject to a Risk of Forfeiture. The Units subject to a Risk of Forfeiture shall be referred to herein as Restricted Share Units.
(b) Lapse of Risk of Forfeiture. The Risk of Forfeiture shall lapse as the Grantee vests in the Units.
(c) Forfeiture of Units. The Restricted Share Units shall automatically be forfeited without payment or consideration on the Grantees Termination Date or the date on which the Administrator determines that the performance goals provided for in the Notice of Stock Unit Award Grant were not satisfied during the designated period of time.
(d) Adjustments. The Units will be subject to adjustment in accordance with the terms of Section 11(a) of the Plan.
(e) Clawback. In consideration of this grant of Units, the Grantee agrees that the Agreement and any Units hereunder (and/or other consideration awarded in settlement of the Units) will be subject to forfeiture and/or repayment to the extent provided for in the PacWest Bancorp Clawback Policy, as in effect from time to time, if it is determined in accordance with the policy that a Clawback Event (as defined in such policy) has occurred.
5. Rights as a Stockholder. The Grantee will not be paid any dividends during the performance period and instead any dividends paid by the Company during the performance period that would have been paid upon any Shares in respect of your Stock Unit Award had such Shares been issued at the time dividends were paid will be paid out at the time the Shares are delivered based on the actual number of Shares delivered. Grantee shall not be deemed to be the holder of Shares underlying the Stock Unit Award, and shall not have any of the rights of a stockholders with respect to such Shares underlying the Stock Unit Award unless and until the Company shall have issued and delivered Shares to the Grantee and the Grantees name shall have been entered as a stockholder of record on the books of the Company.
6. Non-transferability of Stock Unit Award. Except as otherwise provided for in the Plan, this Stock Unit Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent and distribution and any Stock Unit Award rights may be exercised, during the lifetime of the Grantee, only by the Grantee. If the Grantee transfers all or part of this Stock Unit Award pursuant to the previous sentence, then the terms of this Agreement, the Plan and the Notice of Stock Unit Award shall apply to the transferee to the same extent as to the Grantee.
7. Regulatory Compliance. The issuance of Common Stock pursuant to this Agreement shall be subject to full compliance with all then applicable requirements of law and the requirements of any stock exchange or interdealer quotation system upon which the Common Stock may be listed or traded.
8. Modification and Termination. The rights of the Grantee are subject to modification and termination in certain events, as provided in the Plan.
9. Withholding Tax. The Companys obligation to deliver Shares under the Plan shall be subject to the satisfaction of all applicable federal, state and local income and employment tax withholding requirements. The Grantee shall pay to the Company an amount equal to the withholding amount (or the Company may withhold such amount from the Grantees salary) in cash. In the Administrators sole discretion, the Grantee may pay the withholding amount with Shares (including previously vested stock); provided, however, that payment in Shares shall be limited to the withholding amount calculated using the minimum statutory withholding rates, in accordance with applicable withholding requirements.
10. Nondisclosure. Grantee acknowledges that the grant and terms of this Stock Unit Award are confidential and may not be disclosed by Grantee to any other person, including other employees
of the Company and other participants in the Plan, without the express written consent of the Companys Chief Executive Officer. Notwithstanding the foregoing, the Grantee may disclose the grant and terms of this Stock Unit Award to the Grantees family member, financial advisor, and attorney and as may be required by law or regulation. Any breach of this provision will be deemed to be a material breach of this Agreement.
11. Governing Law. This Agreement shall be governed by and interpreted in accordance with the internal laws of the State of California without regard to principles of conflict of laws.
12. Successors. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their legal representatives, heirs, and permitted transferees, successors and assigns.
13. Plan. This Agreement and the Notice of Stock Unit Award Grant are subject to all of the terms and provisions of the Plan, receipt of a copy of which is hereby acknowledged by the Grantee. The Grantee hereby agrees to accept as binding, conclusive, and final all decisions and interpretations of the Administrator upon any questions arising under the Plan, this Agreement, and the Notice of Stock Unit Award Grant.
14. Rights to Future Employment. This Stock Unit Award does not confer upon the Grantee any right to continue in the Service of the Company or any Affiliate, nor does it limit the right of the Company to terminate the Service of the Grantee at any time.
15. Entire Agreement. The Notice of Stock Unit Award Grant, this Agreement, and the Plan constitute the entire contract between the parties hereto with regard to the subject matter hereof. They supersede any other agreements, representations or understandings (whether oral or written and whether express or implied) between the parties which relate to the subject matter hereof.
By your signature and the signature of the Companys representative below, you and the Company agree that this Stock Unit Award is granted under and governed by the terms and conditions of this Agreement and the Plan and the Notice of Stock Unit Award Grant, both of which are attached and incorporated herein by reference. This Stock Unit Award is of no force and effect until this Agreement is signed by you and the Companys representative, the Notice of Stock Unit Award Grant is signed by you[ and the Spousal Consent form (attached hereto as Appendix B and incorporated herein by reference) is signed by your spouse, if any].
GRANTEE: |
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PACWEST BANCORP | ||
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By: |
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By: |
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Name: |
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Christopher D. Blake | ||
APPENDIX B
SPOUSAL OR REGISTERED DOMESTIC PARTNER CONSENT
The undersigned, the spouse or registered domestic partner of (Grantee), (i) acknowledges that s/he has read the foregoing Stock Unit Award Agreement (the Agreement) and Notice of Stock Unit Award Grant and the PacWest Bancorp 2003 Stock Incentive Plan, as amended (collectively, the Stock Unit Award Documents), (ii) agrees that any interest that he/she now has or may hereafter acquire in the shares of stock of PacWest Bancorp now owned or hereafter acquired by Grantee pursuant to the terms of this Agreement shall be bound by the terms and provisions contained in the Stock Unit Award Documents, and (iii) agrees to be bound by the terms and provisions of the Stock Unit Award Documents, as fully as Grantee.
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Dated: |
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By: |
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Print Name: |
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Exhibit 10.3
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STOCK OWNERSHIP GUIDELINES
EFFECTIVE DATE: FEBRUARY 10, 2016 LAST REVIEWED: NOVEMBER 4, 2015 |
The Board of Directors (the Board) of PacWest Bancorp (the Company) believes that significant stock ownership by the Companys senior officers and directors will further align their interests with those of the Companys stockholders and will promote our long-term business objectives. Therefore, the Board has adopted the following common stock ownership guidelines.
OFFICERS
Officers will be expected to own Company common stock having a value equal to at least five times base salary in the case of our CEO and three times base salary in the case of our other officers who are direct reports to the CEO.
Officers will be expected to meet the applicable ownership threshold within five years of the later of December 11, 2014 or the date of their appointment to the applicable position.
NON-EMPLOYEE DIRECTORS
Non-employee directors will be expected to own Company common stock having a value equal to at least five times their annual cash retainer.
Non-employee directors will be expected to meet the applicable ownership threshold within five years of the later of May 16, 2016 or the date of their election or appointment to the Board.
APPROVAL AND ADMINISTRATION
The level of compliance with these guidelines will be determined on an annual basis by the Compensation, Nominating and Corporate Governance Committee (the CNG Committee) and reported to the Board. For purposes of such determination, stock ownership will be determined from the totals on Table 1 of an SEC Form 4 other than unvested time-based restricted stock awards, and which excludes outstanding stock options and stock appreciation rights (whether or not vested). To calculate the value of an officers or directors shares of common stock, this total shall be multiplied by the highest share price in the preceding 52 week period.
These guidelines may be waived at the discretion of the CNG Committee with respect to any particular officer or director or based on bona fide personal financial need or hardship, other special circumstances or if compliance would prevent an officer or director from complying with law, regulation or a court order, as in the case of a divorce settlement.
The CNG Committee shall review these Stock Ownership Guidelines no less than annually.