0000950008-01-500080.txt : 20011018 0000950008-01-500080.hdr.sgml : 20011018 ACCESSION NUMBER: 0000950008-01-500080 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20011010 EFFECTIVENESS DATE: 20011010 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SJNB FINANCIAL CORP CENTRAL INDEX KEY: 0000721161 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 770058227 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: 1933 Act SEC FILE NUMBER: 333-71334 FILM NUMBER: 1756260 BUSINESS ADDRESS: STREET 1: ONE N MARKET ST CITY: SAN JOSE STATE: CA ZIP: 95113 BUSINESS PHONE: 4089477562 MAIL ADDRESS: STREET 1: ONE NORTH MARKET STREET CITY: SAN JOSE STATE: CA ZIP: 95113 S-8 1 sf210546192.txt FORM S-8 As filed with the Securities and Exchange Commission on October 10, 2001. Registration No. 333-_______ -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form S-8 REGISTRATION STATEMENT Under THE SECURITIES ACT OF 1933 SJNB FINANCIAL CORP. (Exact name of registrant as specified in its charter) California 77-0058227 ---------------------------------------- ---------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One North Market Street San Jose, California 95113 ---------------------------------------- ---------------------------------- (Address of Principal Executive Offices) (Zip Code) SJNB FINANCIAL CORP. SARATOGA STOCK OPTION PLAN ----------------------------------------------- (Full title of the plan) Copy to: JAMES R. KENNY President and Chief Executive Officer PATRICIA F. YOUNG SJNB Financial Corp. Pillsbury Winthrop LLP One North Market Street 50 Fremont Street San Jose, CA 95113 San Francisco, CA 94105 (408) 947-7562 (415) 983-1000 ------------------------------------------- ------------------------------ (Name, address and telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE ---------------------------------------------------------------------------------------------------------------------- Title of Securities Amount To Proposed Maximum Proposed Maximum To Be Registered Be Registered Offering Price Aggregate Offering Amount of per Share(1) Price(1) Registration Fee(2) ---------------------------------------------------------------------------------------------------------------------- Common Stock 30,000 $37.25 $1,117,500 $279.00 ---------------------------------------------------------------------------------------------------------------------- (1) Estimated solely for the purposes of calculating the amount of the registration fee pursuant to Rule 457(h)(1) under the Securities Act of 1933, as amended. The offering price is based upon the average of the high and low prices as represented on the NASDAQ National Exchange on October 5, 2001. (2) Calculated pursuant to Section 6 and Rule 457(h)(1) under the Securities Act of 1933, as amended.
-------------------- The Registration Statement shall become effective upon filing in accordance with Rule 462 under the Securities Act of 1933. -------------------------------------------------------------------------------- INTRODUCTORY STATEMENT NOT FORMING PART OF REGISTRATION STATEMENT ----------------------------------------------------------------- Saratoga Bancorp was merged into SJNB Financial Corp. (the "Registrant") pursuant to an Agreement and Plan of Merger, dated as of August 27, 1999, among the Registrant, Saratoga Bancorp and Saratoga National Bank. The shares to be registered hereunder are issuable pursuant to options granted by the Registrant under the SJNB Financial Corp. Saratoga Stock Option Plan, as amended. PART I ------ INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS ---------------------------------------------------- Item 1. Plan Information.* ------------------ Item 2. Registrant Information and Employee Plan Annual Information.* ------------------------------------------------------------- *The documents containing the information specified in this Part I of Form S-8 will be provided to participants in accordance with Rule 428(b)(1) of the Securities Act of 1933, as amended (the "Securities Act"). These documents and the documents incorporated herein by reference pursuant to Item 3 of Part II of this Registration Statement, taken together, constitute the Section 10(a) prospectus. Information required by this Part I of Form S-8 to be contained in the Section 10(a) prospectus is omitted from the Registration Statement in accordance with Rule 428 under the Securities Act and the Note to Part I of Form S-8. PART II ------- INFORMATION REQUIRED IN THE REGISTRATION STATEMENT -------------------------------------------------- Item 3. Incorporation of Certain Documents by Reference. ------------------------------------------------ The following documents filed by the Registrant with the Securities and Exchange Commission are incorporated by reference in this Registration Statement: (a) The Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2000 filed on March 5, 2001, as amended on Forms 10-K/A filed on April 16, 2001 and April 24, 2001; (b) The Registrant's Quarterly Reports on Form 10-Q for the quarter ended June 30, 2001 filed on August 13, 2001, as amended on Form 10-Q/A filed on August 14, 2001, and for the quarter ended March 31, 2001, filed on May 10, 2001; (c) The Registrant's Current Reports on Form 8-K filed on July 18, 2001, June 26, 2001, and January 19, 2001; (d) All other reports of the Registrant pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") since December 31, 2000; (e) The description of the Registrant's Common Stock contained in the Registrant's Registration Statement (and past and future amendments thereto) for such stock filed under Section 12 of the Exchange Act. In addition, all documents subsequently filed by the Registrant pursuant to Section 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference in this Registration Statement and to be a part hereof from the date of filing of such documents. -2- Item 4. Description of Securities. -------------------------- Not applicable. Item 5. Interests of Named Experts and Counsel. --------------------------------------- Not applicable. Item 6. Indemnification of Directors and Officers. ------------------------------------------ Section 317 of the California Corporations Code authorizes a court to award, or a corporation's board of directors to grant, indemnity to directors, officers, employees and other agents of the corporation ("Agents") in terms sufficiently broad to permit such indemnification under certain circumstances for liabilities (including reimbursement for expenses incurred) arising under the Securities Act. Article V of the Registrant's Articles of Incorporation, as amended, authorizes the Registrant to indemnify its Agents, through bylaw provisions, agreements, votes of shareholders or disinterested directors or otherwise, in excess of the indemnification otherwise permitted by Section 317 of the California Corporations Code, subject to the applicable limits set forth in Section 204 of the California Corporations Code with respect to actions for breach of duty to the Registrant and its shareholders. Article VI of the Registrant's Bylaws provides for mandatory indemnification of each director to the maximum extent permitted by the California General Corporation Law. The Registrant maintains a directors' and officers' liability insurance policy that indemnifies the Registrant's directors and officers against certain losses in connection with claims made against them for certain wrongful acts. In addition, the Registrant has entered into separate indemnification agreements with its directors and officers that require the Registrant, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as Agents of the Registrant to the maximum extent permitted by the California General Corporation Law. Item 7. Exemptions from Registration Claimed. ------------------------------------- Not applicable. Item 8. Exhibits. --------- 5.1 Opinion of Pillsbury Winthrop LLP. 23.1 Consent of KPMG LLP, Independent Auditors. 23.2 Consent of Pillsbury Winthrop LLP (included in Exhibit 5.1). 24.1 Power of Attorney (see page 5). 99.1 SJNB Financial Corp. Saratoga Stock Option Plan Item 9. Undertakings. ------------- (a) The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: -3- (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective Registration Statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the Registration Statement is on Form S-3 or Form S-8, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. -4- SIGNATURES ---------- Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Jose, State of California, on October 5, 2001. SJNB FINANCIAL CORP. By /s/James R. Kenny ---------------------------------------------------- James R. Kenny President and Chief Executive Officer (Principal Executive Officer) POWER OF ATTORNEY ----------------- KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints James R. Kenny and Eugene E. Blakeslee, and each of them, his true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments, including post-effective amendments, to this Registration Statement, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or his substitute or substitutes, may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
Name Title Date ---- ----- ---- /s/James R. Kenny President and Chief Executive Officer October 5, 2001 ---------------------------------------------- (Principal Executive Officer) and Director James R. Kenny /s/Eugene E. Blakeslee Executive Vice President and Chief Financial October 5, 2001 ---------------------------------------------- Officer (Principal Financial Officer and Eugene E. Blakeslee Principal Accounting Officer) /s/Victor E. Aboukhater Director October 5, 2001 ---------------------------------------------- Victor E. Aboukhater /s/Ray S. Akamine Director October 5, 2001 ---------------------------------------------- Ray S. Akamine /s/Robert A. Archer Chairman and Director October 5, 2001 ---------------------------------------------- Robert A. Archer /s/Albert V. Bruno Director October 5, 2001 ---------------------------------------------- Albert V. Bruno -5- Name Title Date ---- ----- ---- /s/Rod Diridon, Sr. Director October 5, 2001 ---------------------------------------------- Rod Diridon, Sr. /s/Robert G. Egan Director October 5, 2001 ---------------------------------------------- Robert G. Egan /s/F. Jack Gorry Director October 5, 2001 ---------------------------------------------- F. Jack Gorry /s/William D. Kron Director October 5, 2001 ---------------------------------------------- William D. Kron /s/Arthur K. Lund Director October 5, 2001 ---------------------------------------------- Arthur K. Lund /s/V. Ronald Mancuso Director October 5, 2001 ---------------------------------------------- V. Ronald Mancuso /s/Richard L. Mount Director October 5, 2001 ---------------------------------------------- Richard L. Mount /s/Louis Oneal Director October 5, 2001 ---------------------------------------------- Louis Oneal /s/Diane P. Rubino Director October 5, 2001 ---------------------------------------------- Diane P. Rubino /s/Douglas L. Shen Director October 5, 2001 ---------------------------------------------- Douglas L. Shen /s/Gary S. Vandeweghe Director October 5, 2001 ---------------------------------------------- Gary S. Vandeweghe -6-
INDEX TO EXHIBITS ----------------- 5.1 Opinion of Pillsbury Winthrop LLP. 23.1 Consent of KPMG LLP, Independent Auditors. 23.2 Consent of Pillsbury Winthrop LLP (included in Exhibit 5.1). 24.1 Power of Attorney (see page 5). 99.1 SJNB Financial Corp. Saratoga Stock Option Plan -7- EX-5.1 3 sf210546192ex51.txt EXHIBIT 5.1 EXHIBIT 5.1 PILLSBURY WINTHROP LLP 50 Fremont Street San Francisco, CA 94105 (415) 983-1000 October 10, 2001 SJNB Financial Corp. One North Market Street San Jose, CA 95113 Re: Registration Statement on Form S-8 Ladies and Gentlemen: We refer to the Registration Statement on Form S-8 (the "Registration Statement") to be filed by SJNB Financial Corp., a California corporation (the "Company"), with the Securities and Exchange Commission under the Securities Act of 1933, as amended, relating to 30,000 shares of Common Stock of the Company (the "Shares") issuable upon the exercise of options granted by the Company under the SJNB Financial Corp. Saratoga Stock Option Plan, as amended (the "Stock Plan"). We advise you that, in our opinion, the Shares have been duly authorized and, when issued and sold in accordance with the Stock Plan and, where applicable, with stock option agreements duly authorized under the Stock Plan and in accordance with the Registration Statement, will be validly issued, fully paid and nonassessable. We hereby consent to the filing of this opinion with the Securities and Exchange Commission as Exhibit 5.1 to the Registration Statement. This opinion letter is rendered as of the date first written above and we disclaim any obligation to advise you of facts, circumstances, events or developments which hereafter may be brought to our attention and which may alter, affect or modify the opinion expressed herein. Our opinion is expressly limited to the matters set forth above and we render no opinion, whether by implication or otherwise, as to any other matters relating to the Company, the Shares, or the Stock Plan. Sincerely yours, /s/ PILLSBURY WINTHROP LLP EX-23.1 4 sf210546192ex231.txt EXHIBIT 23.1 EXHIBIT 23.1 CONSENT OF KPMG LLP, INDEPENDENT AUDITORS ----------------------------------------- The Board of Directors SJNB Financial Corp.: We consent to the incorporation by reference in the registration statement on Form S-8 of SJNB Financial Corp. of our report dated January 17, 2001, relating to the consolidated balance sheets of SJNB Financial Corp. and subsidiary as of December 31, 2000 and 1999, and the related consolidated statements of income, shareholders' equity and comprehensive income, and cash flows for each of the years in the three-year period ended December 31, 2000, which report appears in the December 31, 2000 annual report on Form 10-K/A of SJNB Financial Corp. /s/ KPMG LLP San Francisco, California October 9, 2001 EX-99.1 5 sf210546192ex991.txt EXHIBIT 99.1 EXHIBIT 99.1 SJNB FINANCIAL CORP. SARATOGA STOCK OPTION PLAN (AMENDED) 1. PURPOSE. The purpose of this SJNB Financial Corp. Saratoga Stock Option Plan (the "Plan") is to provide a method whereby those key employees, directors and consultants of Saratoga Bancorp and its affiliates (hereinafter collectively referred to as the "Company"), who are primarily responsible for the management and growth of the Company's business and who are presently making and are expected to make substantial contributions to the Company's future management and growth, may be offered incentives in addition to those presently available, and may be stimulated by increased personal involvement in the fortunes and success of the Company to continue in its service, thereby advancing the interests of the Company and its shareholders. The word "affiliate," as used in the Plan, means any bank or corporation in any unbroken chain of banks or corporations beginning or ending with the Company, if at the time of the granting of an option, each such bank or corporation other than the last in that chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other banks or corporations in the chain. 2. ADMINISTRATION. The following provisions shall govern the administration of the Plan: (a) Subject to paragraphs (b) and (c) below, the Plan shall be administered by the Board of Directors or a duly appointed committee of the Board consisting of Non-Employee Directors. The term "Non-Employee Director" as used in the Plan shall have the meaning set forth in Rule 16b-3 as promulgated by the Securities and Exchange Commission ("SEC") under Section 16(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as such rule may be amended from time to time, and as interpreted by the SEC ("Rule 16b-3"). The committee required by this paragraph shall consist of the minimum number of Non-Employee Directors from time to time required by Rule 16b-3. (b) The Board and any such committee is referred to hereinafter as the "Committee," except where otherwise expressly provided or where the context requires otherwise. The Board of Directors may from time to time remove members from or add members to the Committee. Vacancies on the Committee, however caused, shall be filled by the Board of Directors. The Board of Directors may designate a Chairman and Vice-Chairman of the Committee from among the Committee members. Acts of the Committee (i) at a meeting, held at a time and place and in accordance with rules adopted by the Committee, at which a quorum of the Committee is present and acting, or (ii) reduced to and approved in writing by all members of the Committee, shall be the valid acts of the Committee. (c) Options granted to employees or directors of the Company subject to Section 16(b) of the Exchange Act shall be approved by the Committee or shall be approved or ratified, in compliance with Section 14 of the Exchange Act, by the affirmative votes of the holders of a majority of the voting securities of the Company present or represented and entitled to vote at a meeting of shareholders duly called and hold pursuant to law, provided that any such ratification shall occur not later than the date of the next annual meeting of shareholders following the grant. (d) The grant of options under the Plan shall be affected by execution of instruments in writing in a form approved by the Committee. Subject to the express terms and conditions of the Plan, the Committee shall have full power to construe the Plan and the terms of any option granted under the Plan, to prescribe, amend and rescind rules and regulations relating to the Plan or such options and to make all other determinations necessary or advisable for the Plan's administration, including, without limitation, the power to (i) determine which persons meet the -1- requirements of Section 3 hereof for selection as participants in the Plan; (ii) determine to whom of the eligible persons, if any, options shall be granted under the Plan; (iii) establish the terms and conditions required or permitted to be included in every option agreement or any amendments thereto, including whether options to be granted thereunder shall be "incentive stock options," as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the "Code") or nonstatutory stock options not described in Section 422; (iv) specify the number of shares to be covered by each option; (v) determine the fair market value of shares of the Company's common stock for any purpose under this Plan; (vi) grant options in exchange for cancellation of options granted earlier at different exercise prices; (vii) take appropriate action to amend any option hereunder, provided that no such action may be taken without the written consent of the affected optionee; and (viii)make all other determinations deemed necessary or advisable for administering the Plan. The Committee's determination on the foregoing matters shall be conclusive. 3. ELIGIBILITY. The persons who shall be eligible to receive the discretionary grant of options under this Plan shall be those key employees and officers of the Company (including officers who may also be directors of the Company), persons who became employees of the Company within thirty days of the date of grant of an option, consultants of the Company who render bona fide services to the Company other than in connection with the offer or sale of securities in a capital raising transaction ("Consultants"), and directors. Notwithstanding any other provision of this Plan no person shall be granted options to purchase more than an aggregate of 100,000 shares under this Plan. 4. THE SHARES. The shares of stock subject to options authorized to be granted under the Plan shall consist of three hundred twenty-eight thousand five hundred eighty-two (328,582) shares of the Company's no par value common stock (the "Shares"), or the number and kind of shares of stock or other securities which shall be substituted for such Shares or to which such Shares shall be adjusted as provided in Section 7 hereof, provided that, such number of Shares shall be adjusted downward to the extent necessary to conform to the requirements of Section 260.140.45 of the Rules of the California Commissioner of Corporations, so that at no time shall the total number of shares issuable upon exercise of all outstanding options and the total number of shares provided for under any stock bonus or similar plan of the Company exceed the applicable percentage as calculated in accordance with the conditions and exclusions of such Rule. Upon the expiration or termination for any reason of an outstanding option under the Plan (or under the Company's expired 1982 Amended Stock Option Plan) which has not been exercised in full, all unissued Shares thereunder shall again become available for the grant of options under the Plan. Shares of the Company's common stock which are (i) delivered by an optionee in payment of the exercise price of an option pursuant to Section 7(a), or (ii) delivered by an optionee, or withheld by the Company from the shares otherwise due upon exercise of a nonstatutory stock option, in satisfaction of applicable withholding taxes as permitted by Section 7(c) shall again become available for the grant of options under the Plan only to those eligible participants who are not subject to Section 16 of the Exchange Act. The aggregate amount of Shares subject to options granted to all Non- Employee Directors as a group (not including such options which terminate unexercised) shall not exceed fifty percent (50%) of the Shares, as adjusted pursuant to Section 7. 5. OPTION GRANTS. Options, in the discretion of the Committee, may be granted at any time prior to the termination of the Plan to persons who are employees of the Company, including employees who are also directors of the Company, to Consultants of the Company or to Non-Employee Directors. Options granted by the Committee shall be subject to the following terms and conditions: (a) Grant of Options. Options granted to employees pursuant to the Plan may ---------------- be either incentive stock options or nonstatutory stock options. If the aggregate fair market value of the shares issuable upon exercise -2- of incentive stock options which are exercisable for the first time during any one calendar year under all incentive stock options held by an optionee exceeds $100,000 (determined at the time of the grant of the options), such options shall be treated as nonstatutory stock options to the extent of such excess. Options granted to Non-Employee Directors and to Consultants shall be nonstatutory stock options. (b) Option Price. The purchase price under each option shall not be less ------------ than one hundred percent of the fair market value of the Shares subject thereto on the date the option is granted; provided, however, that the purchase price of an option granted to an individual who owns stock possessing more than ten percent of the total combined voting power of all classes of stock of the Company shall not be less than one hundred ten percent of the fair market value of the Shares subject thereto on the date the option is granted. For any purposes under this Plan, fair market value per share shall mean, where there is a public market for the Company's common stock, the mean of the bid and asked prices (or the closing price if listed on a stock exchange or the Nasdaq National Market) of the Company's common stock for the date of grant, as reported in the Wall Street Journal (or, if not so reported, as otherwise reported by the Nasdaq Stock Market or the National Quotation Bureau). If such information is not available for the date of grant, then such information for the last preceding date for which such information is available shall be considered as the fair market value. (c) Duration of Options. Each option shall be for a term determined by the ------------------- Committee; provided, however, that the term of any option may not exceed ten years and, provided further, that the term of any incentive stock option granted to an individual who owns stock possessing more than ten percent of the total combined voting power of all classes of stock of the Company shall not exceed five years. Each option shall vest in such manner and at such time as the Committee shall determine and the Committee may accelerate the time of exercise of any option; provided, however, that no option shall vest for exercise at a rate of less than twenty percent per year during the five year period following the date of grant of an option. (d) Termination of Director, Employment or Consultant Status. Upon the -------------------------------------------------------- termination of an optionee's status as an employee or Consultant or member of the Board of Directors of the Company, his or her rights to exercise an option then held shall be only as follows: DEATH OR DISABILITY: If an optionee's employment or consulting relationship or tenure on the Board of Directors is terminated by death or disability, such optionee or such optionee's qualified representative (in the event of the optionee's mental disability) or the optionee's estate (in the event of optionee's death) shall have the right for a period of twelve (12) months (or such longer period as the Committee may determine at the date of grant or during the term of the option) following the date of such death or disability to exercise the option to the extent the optionee was entitled to exercise such option on the date of the optionee's death or disability; provided the actual date of exercise is in no event after the expiration of the term of the option. To the extent the option is not exercised within such period the option will terminate. An optionee's "estate" shall mean the optionee's legal representative or any person who acquires the right to exercise an option by reason of the optionee's death. CAUSE: If an optionee's employment or consulting relationship is terminated because such optionee is determined by the Board to have committed an act of embezzlement, fraud, dishonesty, breach of fiduciary duty to the Company, or to have deliberately disregarded the rules of the Company which resulted in loss, damage or injury to the Company, or if an optionee makes any unauthorized disclosure of any of the secrets or confidential information of the Company, induces any client or customer of the Company to break any contract with the Company or induces any principal for whom the Company acts as agent to terminate such agency relations, or engages in any conduct which constitutes unfair competition with the Company, or if an optionee is removed from any office of the Company by any bank regulatory agency, the optionee shall have the right for a period of thirty days to exercise the option to the extent the option was exercisable on the date of termination; provided that the date of exercise is -3- in no event after the expiration of the term of the option. To the extent the option is not exercised within such period the option will terminate. In making the determination pursuant to this paragraph, the Board shall act fairly and shall give the optionee whose employment or Consultant status has been terminated an opportunity to appear and be heard at a hearing before the full Board and present evidence on the optionee's behalf. For the purpose of this paragraph, termination of employment or Consultant status shall be deemed to occur when the Company dispatches notice or advice to the optionee that the optionee's employment or status as a Consultant is terminated, and not at the time of optionee's receipt thereof. OTHER REASONS: If an optionee's employment or consulting relationship or tenure on the Board of Directors is terminated for any reason other than those mentioned above under "Death or Disability" and "Cause," the optionee may, within three months (or such longer period as the Committee may determine at the date of grant or during the term of the option) following such termination, exercise the option to the extent such option was exercisable on the date of termination of the optionee's employment or status as a Consultant; provided the date of exercise is in no event after the expiration of the term of the option and provided further that any option which is exercised more than three months following termination shall be treated as a nonstatutory option whether or not it was designated as such at the time it was granted. To the extent the option is not exercised within such period the option will terminate. 6. TERMS AND CONDITIONS APPLICABLE TO ALL OPTIONS. The following terms and conditions shall apply to all options granted pursuant to the Plan: (a) Exercise of Options. To the extent the right to purchase Shares has ------------------- vested under an optionee's stock option agreement, options may be exercised from time to time by delivering payment therefor in cash, certified check, official bank check, or the equivalent thereof acceptable to the Company, together with written notice to the Secretary of the Company, identifying the option or part thereof being exercised and specifying the number of Shares for which payment is being tendered. An optionee may also exercise an option by the delivery and surrender of shares of Company Common Stock which (a) have been owned by the optionee for at least six months or such other period as the Committee may require; and (b) have an aggregate fair market value on the date of surrender equal to the exercise price. In addition, an option may be exercised by delivering to the Company (i) an exercise notice instructing the Company to deliver the certificates for the Shares purchased to a designated brokerage firm and (ii) a copy of irrevocable instructions delivered to the brokerage firm to sell the Shares acquired upon exercise of the option and to deliver to the Company from the sale proceeds sufficient cash to pay the exercise price and applicable withholding taxes arising as a result of the exercise. The Company shall deliver to the optionee, which delivery shall be not less than fifteen (15) days and not more than thirty (30) days after the giving of such notice, without transfer or issue tax to the optionee (or other person entitled to exercise the option), at the principal office of the Company, or such other place as shall be mutually acceptable, a certificate or certificates for such Shares dated the date the options were validly exercised; provided, however, that the time of such delivery may be postponed by the Company for such period as may be required for it with reasonable diligence to comply with any requirements of law. (b) Transferability of Option and Shares. Each option shall be ------------------------------------ transferrable only by will or the laws of descent and distribution and shall be exercisable during the optionee's lifetime only by the optionee, or in the event of disability, the optionee's qualified representative. In addition, in order for Shares acquired upon exercise of incentive stock options to receive the tax treatment afforded such Shares, the Shares may not be disposed of within two years from the date of the option grant nor within one year after the date of transfer of such Shares to the optionee. -4- (c) Withholding. The Company shall have the right to condition the issuance ----------- of Shares upon exercise of an option upon payment by the optionee of any applicable taxes required to be withheld under federal, state or local tax laws or regulations in connection with such exercise. An optionee may elect to pay such tax by (i) requesting the Company to withhold a sufficient number of Shares from the total number of Shares issuable upon exercise of the option or (ii) delivering a sufficient number of shares of Company common stock which have been held by the optionee for at least six months (or such other period as the Committee may require) to the Company. The value of shares withheld or delivered shall be the fair market value of such shares on the date the exercise becomes taxable as determined by the Committee. Such an election is subject to approval or disapproval by the Committee, and if the optionee is subject to Section 16 of the Exchange Act, the timing of the election must satisfy the requirements of Rule 16b-3. (d) Other Terms and Conditions. Options may also contain such other -------------------------- provisions, which shall not be inconsistent with any of the foregoing terms, as the Committee shall deem appropriate. No option, however, nor anything contained in the Plan, shall confer upon any optionee any right to continue in the employ or in the status as a director or Consultant of the Company, nor limit in any way the right of the Company to terminate an optionee's employment or status as a Consultant at any time. 7. ADJUSTMENT OF, AND CHANGES IN, THE SHARES. (a) Changes in Capitalization. In the event the shares of Common Stock of ------------------------- the Company, as presently constituted, shall be changed into or exchanged for a different number or kind of shares of stock or other securities of the Company or of another corporation (whether by reason of reorganization, merger, consolidation, recapitalization, reclassification, stock split, reverse stock split, combination of shares, or otherwise), or if the number of Shares of common stock of the Company shall be increased through the payment of a stock dividend, there shall be substituted for or added to each Share of common stock of the Company theretofore appropriated or thereafter subject or which may become subject to an option under the Plan, the number and kind of shares of stock or other securities into which each outstanding share of common stock of the Company shall be so changed, or for which each share shall be exchanged, or to which each such share shall be entitled, as the case may be. In addition, appropriate adjustment shall be made in the number and kind of Shares as to which outstanding options, or portions thereof then unexercised, shall be exercisable, so that any optionee's proportionate interest in the Company by reason of his or her rights under unexercised portions of such options shall be maintained as before the occurrence of such event. Such adjustment in outstanding options shall be made without change in the total price to the unexercised portion of the option and with a corresponding adjustment in the option price per share. (b) Dissolution, Liquidation, Sale or Merger. In the event of a proposed ---------------------------------------- dissolution or liquidation of the Company, options outstanding under the Plan shall terminate immediately before the consummation of such proposed action. The Board will, in such circumstances, provide written notice to the optionees of the expected dates of termination of outstanding options and consummation of the proposed dissolution or liquidation. In the event of a proposed sale of all or substantially all of the assets of the Company, or the merger of the Company with or into another corporation in a transaction in which the Company is not the surviving corporation, outstanding options may be assumed or equivalent options may be substituted by the successor corporation (or a parent or subsidiary of the successor corporation), unless the successor corporation does not agree to assume the options or to substitute equivalent options. If outstanding options are not assumed or substituted by equivalent options, all outstanding options shall terminate immediately before the consummation of such sale or merger (subject to the actual consummation of the sale or merger) and the Company shall provide written notice to the optionees of the expected dates of termination of the options and consummation of such transaction. If the transaction is not consummated, unexercised options shall continue in accordance with their original terms. (c) Notice of Adjustments, Fractional Shares. To the extent the foregoing ---------------------------------------- adjustments relate to stock or securities of the Company, such adjustments shall be made by the Committee, whose determination in that respect shall be final, binding and conclusive. No right to purchase fractional shares shall result from any adjustment in options pursuant to this Section 8. In case of any such adjustment, the shares subject to the option shall be rounded down to the nearest whole share. Notice of any adjustment shall be given by the Company to each holder of an option which was in fact so adjusted and such adjustment (whether or not such notice is given) shall be effective and binding for all purposes of the Plan. -5- No adjustment shall be made for dividends or other rights for which the record date is prior to the date of such issuance, except as provided in this Section. Any issue by the Company of shares of stock of any class, or securities convertible into shares of any class, shall not affect the number or price of shares of common stock subject to the option, and no adjustment by reason thereof shall be made. The grant of an option pursuant to the Plan shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure or to merge or to consolidate or to dissolve, liquidate or sell, or transfer all or any part of its business or assets. 8. AMENDMENT, EFFECTIVENESS AND TERMINATION OF THE PLAN. The Board shall have complete power and authority to terminate or amend the Plan; provided, however, that the Board shall not, without the approval of the shareholders of the Company, amend the Plan in a manner that requires shareholder approval for continued compliance with the terms of Rule 16b-3, as promulgated under the Exchange Act, Section 422 of the Code, any successor rules, or other regulatory authority. Except as provided in Section 8, no termination, modification or amendment of the Plan may, without the consent of the optionee to whom such option was previously granted under the Plan, adversely affect the rights of such optionee. Any consent required by the preceding sentence may be obtained in any manner deemed appropriate by the Committee. The Plan became effective upon adoption by the Board of Directors and approval by the shareholders of the Company at the Company's 1994 annual meeting of shareholders. The Plan, unless sooner terminated, shall terminate on March 18, 2004, ten years from the date the Plan was originally adopted by the Board. An option may not be granted under the Plan after the Plan is terminated. 9. INFORMATION TO OPTIONEES. The Company shall provide to each optionee, during the period for which he or she has one or more outstanding options, copies of all annual reports and all other information which is provided to shareholders of the Company. The Company shall not be required to provide such information to key employees whose duties in connection with the Company assure their access to equivalent information. 10. PRIVILEGES OF STOCK OWNERSHIP, SECURITIES LAW COMPLIANCE AND NOTICE OF SALE. No optionee shall be entitled to the privileges of stock ownership as to any Shares not actually issued and delivered to the optionee. The exercise of any option under the Plan shall be conditioned upon the registration of the Shares with the SEC and qualification of the options and underlying Shares under the California securities laws, unless in the opinion of counsel to the Company such registration or qualification is not necessary. The Company shall diligently endeavor to comply with all applicable securities laws applicable to the Plan. 11. NOTICE OF SALE. The optionee shall give the Company notice of any sale or other disposition of any Shares acquired upon exercise of an incentive stock option not more than five days after such sale or disposition. 12. INDEMNIFICATION. To the extent permitted by applicable law in effect from time to time, no member of the Board or the Committee shall be liable for any action or omission of any other member of the Board or Committee nor for any act or omission on the member's own part, excepting only the member's own willful misconduct or gross negligence. The Company shall pay expenses incurred by, and satisfy a judgment or fine rendered or levied against, a present or former director or member of the Committee in any action against such person (whether or not the Company is joined as a party defendant) to impose liability or a penalty on such person for an act alleged to have been committed by such person while a director or member of the Committee arising with respect to the Plan or -6- administration thereof or out of membership on the Committee or by the Company, or all or any combination of the preceding; provided the director or Committee member was acting in good faith, within what such director or Committee member reasonably believed to have been within the scope of his or her employment or authority and for a purpose which he or she reasonably believed to be in the best interests of the Company or its shareholders. Payments authorized hereunder include amounts paid and expenses incurred in settling any such action or threatened action. This section does not apply to any action instituted or maintained in the right of the Company by a shareholder or holder of a voting trust certificate representing shares of the Company. The provisions of this section shall apply to the estate, executor, administrator, heirs, legatees or devisees of a director or Committee member, and the term "person" as used in this section shall include the estate, executor, administrator, heirs, legatees or devisees of such person. -7-