Exhibit 10.2
WestCoastCommunityBancorp2024Equity-BasedCompensationPlan
I.THEPLAN
1.1. Purpose. Thepurposeofthis2024Equity-BasedCompensationPlan(the“Plan”)istopromotethe success of the Company by providing an additional means through the grant of Awards to attract, motivate, and retain key employees, including officers, and directors of the Company through the grant of stock-based compensation awards and incentives for high levels of individual performance and improved financial performance of the Company.
1.2. Definitions.
(a) “Award” shall mean an award of any Option, Restricted Stock Award, Restricted Share Unit Award, PerformanceShareAward,DividendEquivalent,oranycombinationthereof(including,butnotlimitedto restrictedunits or other deferred Awards), whether alternative or cumulative, authorizedbyandgranted under this Plan.
(b) “Award Agreement” shall mean a written agreement signed bythe Participant setting forththe terms and conditions of an Award granted to the Participant as determined by the Committee
(c) “Award Date” shall mean the date upon whichthe Committee adopts aresolution granting an Award or such later date as the Committee designates as the Award Date at the time the Committee adopts a resolution granting the Award.
(d) “AwardPeriod”shallmeantheperiodbeginningonanAwardDateandendingontheexpirationdate of such Award.
(e) “Beneficiary”shallmeantheperson,persons,trustortrustsentitled,bywillorthelawsofdescentand distributionorpursuanttoavaliddesignationof abeneficiaryonaformacceptabletotheCommittee,to receivethebenefitsspecifiedintheAwardAgreementandunderthisPlanintheeventofaParticipant's death,andshallmeanthe Participant'sexecutoror administrator ifnoother Beneficiaryisidentified and able to act under the circumstances.
(f) “Board”shallmeantheBoardofDirectorsoftheCompany.
(g) “CashOnlyAward”shallmeanPerformanceShareAwardsorRestrictedShareUnitswhicharepaid in cash.
(h) “ChangeinControlEvent”shallincludeanyofthefollowing(andforthepurposeofthisprovision,the term “corporation” shall mean “Company”):
(A) Change in the Ownership of a Corporation.A change in the ownership of a corporation occurs onthe datethat any one person, or persons acting as a group (asdefined in 409A of the Code), acquires ownership of stock of the corporation that, together with stock held by such person or group, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the stock of such corporation.The acquisition of additional stock by the same person or group is not considered to cause a change in the ownership of the corporation.
(B) Change in the Effective Control of a Corporation.A change in the effective control of a corporationshallbedeemedtooccuroneitherofthefollowingdates:(i)thedateanyoneperson, or persons acting as a group (as defined in 409A of the Code) acquires (or has acquired during thetwelve(12)monthperiodendingonthedateofthemostrecentacquisitionbysuchpersonor group)ownershipof stockofthecorporation
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possessingthirtypercent (30%) ormoreofthetotal voting power of the stock of such corporation; or (ii) the date a majority of members of the corporation’s board of directors is replaced during any twelve (12) month period by directors whoseappointmentorelectionisnotendorsedbyamajorityofthemembersofthecorporation’s board of directors before the date of the appointment or election.
(C) ChangeintheOwnershipofaSubstantialPortionofaCorporation’sAssets.Achangein the ownership of a substantial portion of a corporation’s assets shall be deemed to occur on the date that any one person or group (as defined in 409A of the Code) acquires (or has acquired during the twelve (12) month period ending of the date of the most recent acquisition by such person orpersons)assets fromthecorporationthat have atotalgrossfairmarket value equalto or more than forty percent (40%) of the total gross fair market value of all of the assets of the corporation immediately before such acquisition or acquisitions.No Change in Control Event shall result if the assets are transferred to certain entities controlled directly or indirectly by the shareholders of the transferring corporation, as set forth in 409A of the Code.
In addition, to constitute a change in control event with respect to Participants, the change in control event must relate to (i) the corporation for which Participant is performing services at the time of the ChangeinControlEvent(ii) thecorporationthatisliableforthepaymentoftheamountsdescribedherein (or all corporations liable for the payment if more than one corporation is liable) but only if either the Award is attributable to the performance of services by Executive for such corporation(s) or there is a bona fidebusinesspurposeforsuchcorporation(s)tobeliable forsuchpaymentand, in eithercase,no significant purpose of making such corporation(s) liable for such payment is the avoidance of Federal incometax;or(iii) acorporationthatisamajorityshareholderofacorporationidentifiedin(i)or(ii)above, or any corporation in a chain of corporations in which each corporation is a majority shareholder of another corporation in the chain, ending in a corporation identified in (i) or (ii) above.
(i) “Code”shallmeantheInternalRevenueCodeof1986,asamendedfromtimetotime.
(j) “Commission”shallmeantheSecuritiesandExchangeCommission.
(k) “Committee” shallmeantheCompensation Committeeof theBoard, orother Committee, regardless of name, that acts on matters of compensation for eligible employees, which Committee shall be comprised only of two or more directors or such greater number of directors as may be required under applicable law, each of whom shall be a Disinterested and Outside director.
(l) “Common Stock” shall mean the common stock of the Company, no par value per share, and such other securities or property as may become the subject of Awards, or become subject to Awards, pursuant to an adjustment made under Section 5.2 of this Plan.
(m) “Company”shallmeanWestCoastCommunityBancorporanysubsidiarythereof.
(n) “Director Stock Option” means a Nonqualified Stock Option granted to a Non-Employee Director pursuant to Section 2.1 of this Plan.
(o) “Disinterested and Outside” shall mean a “Non-Employee Director” within the meaning of the SecuritiesandExchangeCommissionRule16b-3, and“outside”withinthemeaningof 26CFR§1.162-27.
(p) “Dividend Equivalent” shall mean an amount equal to the amount of cash dividends or other cash distributions paid (or such portion of such dividend or other distribution as may be
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designated by the Committee) with respect to each Share after the date of an Award of a Dividend Equivalent.
(q) “DRO” shall mean a valid domestic relations order under applicable state law, acceptable to the Company.
(r) “EligibleEmployee”shallmeananofficer(whetherornot adirector)oftheCompanyoraSubsidiary, oranyemployeeoftheCompanyoraSubsidiarywhoperformssubstantialservicesfortheCompanyor a Subsidiary.
(s) “ERISA”shallmeantheEmployeeRetirementIncomeSecurityActof1974,asamended.
(t) “ExchangeAct”shallmeantheSecuritiesExchangeActof1934,asamendedfromtimetotime.
(u) “Executive Officer” shall mean an executive officer as defined in Rule 3b-7 under the ExchangeAct, providedthat,iftheBoardhasdesignatedtheexecutiveofficersoftheCompanyforpurposesofreporting under the Exchange Act, the designation by the Board shall be conclusive for purposes of this Plan.
(v) “FairMarketValue”shallmean,asofaspecifieddatewithrespecttoCommonStock:
(i) IftheCommonStockislistedonanationalsecuritiesexchange(includingtheNasdaq NationalMarket)onthedateatwhichFairMarket Valueistobedetermined,thentheFairMarketValue persharewillbetheclosingpriceonsuchexchangeonsuchdate, oriftherewerenoreportedsaleson such date, then the average of the highest bid and lowest asked price, or, if there is no bid and asked price on such date, then the Fair Market Value shall be the closing price on the next preceding day for which there is a reported sale or the next preceding day for which there is a bid and asked price, whichever most recently occurred; or
(ii) IftheCommonStockistradedontheOTCMarkets,theFairMarketValuepershareshall be the average of the highest bid and lowest asked price on such date, or, if there is no bid and asked price on such date, thenon the next prior business day on which there was a bid and asked price. If no suchbidandaskedpriceisavailable,thentheFairMarketValueperShareshallbethefairmarketvalue thereof as determined by the Committee, in its sole and absolute discretion.
(w) “IncentiveStockOption”shallmeananOptionwhichisdesignatedasanincentivestockoptionwithin themeaningofSection422oftheCodeandwhichcontainssuchprovisionsasarenecessarytocomply with that section.AnyOption granted hereunder that is intended as anIncentive StockOptionthat fails to meet the applicable legal requirements thereof initially or upon amendment shall not be nullified because of such failure and shall be deemed a Nonqualified Stock Option.
(x) “Nonqualified Stock Option” shall mean an Option that is designated as a nonqualified stock option andshallincludeanyOptionintendedasanIncentiveStockOptionthatfailstomeettheapplicablelegal requirementsthereof.AnyOptiongrantedhereunderthatisnotdesignatedasanincentivestockoption shallbedeemedtobedesignatedanonqualifiedstockoptionunderthisPlanandnotanincentivestock option under the Code.
(y) “Non-EmployeeDirector”shallmeanamemberoftheBoardwhoisnotanofficeroremployeeofthe Company or a Subsidiary, including, but not limited to, a member of the Board who qualifies as a “Non-Employee Director” within the meaning of Rule 16b-3.
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(z) “Option” shall mean an option to purchase Shares under this Plan.The Committee shall designate anyOptiongrantedtoanEligibleEmployeeasaNonqualifiedStockOptionoranIncentiveStockOption.
(aa) “Participant” shallmean anEligible Employee or Non-EmployeeDirector whohas beengranted an Award under this Plan.
(bb) “PerformanceCriteria”meanstheattainmentofperformancegoalsrelatingtooneormorebusiness criteria within themeaning of 26 CFR § 1.162-27, as determined by the Committee in its sole discretion at the Award Date, including but not limited to: return on average common shareholders’ equity; return onaverageequity;totalshareholderreturn;stockpriceappreciation;efficiencyratio(otherexpenseasa percentageofotherincomeexcludinggainsandlossesplusnetinterestincome);netoperatingexpense (other income less other expense); earnings per diluted share of Common Stock; per share earnings before transaction-related expense; per share earnings after deducting transaction-related expense; return on average assets; ratio of nonperforming to performing assets; return on an investment in an affiliate; net interest income; net interest margin; ratio of common equity to total assets; regulatory compliancemetrics;andcustomerservicemetrics.PerformanceCriteriamaybestatedinabsoluteterms orrelativetocomparisoncompaniesorindicestobeachievedduringaperiodoftime.AnyPerformance Criteria may be used to measure the performance of the Company as a whole or any business unit of the Company.Any Performance Criteria may include or exclude extraordinary items such as extraordinary, unusualand/ornon-recurring items ofgain orloss,gains or lossesonthe disposition ofa business, changes in tax or accounting regulations or laws, or the effects of a merger or acquisition. Performance Criteria generally shall be established by the Committee and shall be derived from the Company’sauditedfinancialstatements,includingfootnotes,theManagement’sDiscussionandAnalysis section of the Company’s annual report, if any,, or any other measure of performance desired by the Committee.The Committee may not in any event increase the amount of compensation payable to a covered employee,as defined in Section 162(m)ofthe Code, uponthesatisfaction ofany Performance Criteria.
(cc) “PerformanceShareAward”shallmeanaCashOnlyAwardintheformofperformancesharesmade pursuant to the provisions, and subject to the terms and conditions, of Article V of the Plan.
(dd) “Personal Representative” shall mean the person or persons who, upon the Total Disability or incompetence of a Participant, shall have acquired on behalf of the Participant, by legal proceeding or otherwise,thepowertoexercisetherightsorreceivebenefitsunderthisPlanandwhoshallhavebecome the legal representative of the Participant.
(ee) “Plan”shallmeanthis2024Equity-BasedCompensationPlan.
(ff) “Restricted Stock” shall mean Shares awarded to a Participant subject to payment of such consideration,ifany,andsuchconditionsonvestingandtransferandotherrestrictionsasareestablished inorpursuanttothisPlan,forsolongassuchsharesremainunvestedunderthetermsoftheapplicable Award Agreement.
(gg) “Restricted Share Unit” shall mean an Award payable in cash or Shares and represented by a bookkeeping credit where the amount represented by the bookkeeping credit for each RestrictedShare UnitequalstheFairMarketValueofaShareontheAwardDateandwhichamountshallbesubsequently increased or decreasedto reflect theFair MarketValue of aShareonanydatefrom theAward Date up to the date the Restricted Share Unit is settled in cash or Shares.
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(hh) “Retirement”shallmeanretirementfromactiveserviceasanemployeeorofficeroftheCompanyin accordance with the Company’s policies or as determined by the Board.
(ii) “Rule 16b-3” shall mean Rule 16b-3, as amended from time to time, as promulgated by the Commission pursuant to the Exchange Act.
(jj) “Section16Person”shallmeanapersonsubjecttoSection16(a)oftheExchangeAct.
(kk) “Securities Act” shall meantheSecurities Actof 1933, asamendedfrom timetotime.
(ll) “Shares” shall mean shares of Common Stock of the Company.
(mm) “Subsidiary” shallmean any company or other entitya majority of whose outstanding votingstock or voting power is beneficially owned directly or indirectly by the Company.
(nn) “TotalDisability”shallmeana“permanentandtotaldisability”withinthemeaningofSection22(e)(3) oftheCodeandsuchotherdisabilities,infirmities,afflictionsorconditionsastheCommitteebyrulemay include.
1.3. AdministrationandAuthorization;PowerandProcedure.
(a) Committee.This Plan shall be administered by, and all Awards to Participants shall be authorized by,theCommittee.ActionoftheCommitteewithrespecttotheadministrationofthisPlanshallbetaken pursuant to a majority vote or by unanimous written consent of its members.
(b) Plan Awards; Interpretation.Powers of Committee.Subject to the express provisions of this Plan, the Committee shall have the authority:
(i) Todetermine,from among those persons eligible, theparticular Eligible Employees and Non-Employee Directors who will receive any Awards;
(ii) To grant Awards to Eligible Employees and Non-Employee Directors, determine the price at whichsecuritieswillbeofferedorawardedandtheamount of securitiestobeofferedorawardedtoany of such persons, and determine the other specific terms and conditions of such Awards consistent with theexpresslimitsofthisPlan,andestablishtheinstallments(ifany)inwhichsuchAwardsshallbecome exercisable or shall vest (including establishing Performance Criteria for vesting of Awards, regardless oftheformoftheAward),ordeterminethatnodelayedexercisabilityorvestingisrequired,andestablish the events of termination or reversion (if any) of such Awards;
(iii) To approve the forms of Award Agreements (which need not be identical either as to type of Award or among Participants);
(iv) ToconstrueandinterpretthisPlanandanyagreementsdefiningtherightsandobligationsof theCompanyandParticipantsunderthisPlan,furtherdefinethetermsusedinthisPlan, andprescribe, amend and rescind rules and regulations relating to the administration of this Plan;
(v) To cancel, modify, or waive the Company's rights with respect to, or modify, discontinue, suspend,orterminate,anyoralloutstandingAwardsheldbyParticipants,subjecttoanyrequiredconsent under Section 5.6;
(vi) To accelerate or extend the exercisability or vesting or extend the term of any or all outstanding Awards within the maximum ten-year term of Awards under Section 1.7; and
(vii) TomakeallotherdeterminationsandtakesuchotheractionascontemplatedbythisPlanor asmaybenecessaryoradvisablefortheadministrationofthisPlanandtheeffectuationofitspurposes.
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(c) BindingDeterminations.Anyactiontakenby,orinactionof,theCompany,theBoardortheCommittee relating to or pursuant to this Plan shall be withinthe absolute discretion of that entity or body andshall be conclusive and binding upon all persons.No member of the Board or Committee, or officer of the Company,shallbeliableforanysuchactionorinactionoftheentityorbody,ofanotherpersonor,except in circumstances involving bad faith, of himself or herself. Subject only to compliance with the express provisions hereof, the Board and Committee may act in their absolute discretion in matters within their authority related to this Plan.
(d) Reliance on Experts.In making any determination or in taking or not taking any action under this Plan, the Committee or the Board, as the case may be, may obtain and may rely upon the advice of experts, including professional advisors to the Company.No director, officer or agent of the Company shall be liable for any such action or determination taken or made or omitted in good faith.
(e) Delegation.The Committeemaydelegateministerial, non-discretionaryfunctionstoindividuals who are officers or employees of the Company.
(f) Notices; Signature; Delivery.Whenever a signature, notice or delivery of a document is required or appropriate under the Plan or pursuant to an Award Agreement, signature, notice or delivery may be accomplished by paper or written format, or to the extent authorized by the Committee, subject to Section 5.4, by electronic means.In the event the Committee authorizes electronic means for the signature, notice or delivery of a document hereunder, the electronic record or confirmation of that signature,noticeordeliverymaintainedbyoronbehalf oftheCommitteeshallforpurposesofthisPlan and any applicable Award Agreement be treated as if it was a written signature or notice and was delivered in the manner provided herein for a written document.
1.4. Participation.Awards may be granted by the Committee only to those persons that the Committee determinestobeEligibleEmployeesorNon-EmployeeDirectors.AnEligibleEmployeeorNon-Employee Director who has been granted an Award may, if otherwise eligible, be granted additional Awards if the Committeeshallsodetermine.Non-EmployeeDirectorsshallbeeligibletoreceiveallAwardsotherthan Incentive Stock Options under this Plan.
1.5. SharesAvailableforAwards.Subjecttotheprovisionsof Section5.2,thecapitalstockthatmaybe delivered under this Plan shall be Shares of the Company's authorized but unissued Common Stock. The Shares may be issued (subject to Section 5.4) for any lawful consideration.
(a) Number of Shares.The maximum number of Shares of Common Stock that may be delivered pursuanttoAwardsgrantedtoEligibleEmployeesandgrantsofDirectorStockOptionstoNon-Employee Directors under this Plan shall not exceed 1,000,000 Shares, subject tothe reissue of Awards pursuant to Sections 1.5(d), 5.13(b), and the adjustments contemplated by Section 5.2.For every Share of RestrictedStockissuedunderthisPlan,themaximumnumberofSharesthatmaybedeliveredpursuant to Awardshereundershall be reducedby 1Share.Themaximum number of Shares of CommonStock subject to Incentive Stock Options that may be granted pursuant to this Plan is 1,000,000.
(b) ReservationofShares.CommonStocksubjecttooutstandingAwards(otherthanCashOnlyAwards) shall be reserved for issuance. If the Company withholds Shares pursuant to Section 2.2(b) or 5.5, the number of Shares that would have been deliverable with respect to an Award shall be reduced by the numberofShareswithheld,andsuchSharesshallnotbeavailableforadditionalAwardsunderthisPlan.
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(c) CashOnlyAwardLimit.AwardspayablesolelyincashunderthePlanandAwardspayableeitherin cash orSharesthat areactually paid in cash shall constitute andbereferred toas“CashOnlyAwards”. The number of Cash Only Awards shall be determined by reference to the number of Shares by which theAwardismeasured.TheaggregateamountofcompensationtobepaidtoanyParticipantinrespect ofCashOnlyAwardsthataregrantedduringanycalendaryearasPerformanceShareAwardsshallnot exceed $500,000.
(d) Reissuance of Awards.Subject to any restrictions under Rule 16b-3, the Shares which are subject to any unexercised, unvested or undistributed portion of any expired, canceled, terminated or forfeited Award, or any alternative form of consideration under an Award that is not paid in connection with the settlement ofan Awardor anyportion of anAward, shall again beavailable for Awardundersubsection (a) or (c) above, as applicable, provided the Participant has not received dividends or Dividend EquivalentsduringtheperiodinwhichtheParticipant'sownershipwasnotvested.Sharesthatareissued pursuanttoAwardsandsubsequentlyreacquiredbytheCompanypursuanttothetermsandconditions of the Awards also shall be available for reissuance under the Plan.Nothing in this paragraph shall be interpretedtoallowShareswhichareinthepossessionoftheCompanypursuanttoeitherSection2.2(b) or 5.5 to be available for reissuance under the Plan.
(e) Interpretive Issues.Additional rules for determining the number of Shares or Cash Only Awards authorized under the Plan may be adopted by the Committee as it deems necessary or appropriate; provided that such rules are consistent with Rule 16b-3.
1.6. Grant ofAwards.Subjecttotheexpressprovisions ofthis Plan,theCommitteeshall determine the type of Award, the number of Shares subject to each Award, and the price (if any) to be paid for the Shares or the Award and, in the case of Performance Share Awards or, in its discretion, any other Awards,inadditiontomattersaddressedinSection1.3(b),thespecificPerformanceCriteria,thatfurther definethetermsofthePerformanceShareAwardorotherAward.Subjecttotheprovisionsof Section1.3(f), no Award shall be enforceable until the Award Agreement or an acknowledgement of receipt has beensignedbytheParticipant andonbehalf oftheCompanybyanExecutiveOfficer(other than the recipient) or his or her delegate.By executing the Award Agreement or an acknowledgement of receipt, a Participant shall be deemed to have accepted and consented to the terms of this Plan and anyactiontakeningoodfaithunderthisPlanbyandwithinthediscretionoftheCommittee,theBoardof Directors or their delegates.Unless the Award Agreement otherwise expressly provides, there shall be no third party beneficiaries of the obligations of the Company to the Participant under the Award Agreement.
1.7. Award Period.Each Award and all executory rights or obligations under the related Award Agreement shall expire on such date (if any) as shall be determined by the Committee, but, in thecase of Options or other rights to acquire Shares, not later than ten (10) years after the Award Date.
1.8. LimitationsonExerciseandVestingofAwards.
(a) Provisionsfor Exercise.AnAwardshallremainexercisableuntiltheexpirationor earliertermination of the Award, unless the Committee otherwise provides.
(b) Procedure.Any exercisable Award shall be deemed to be exercised when the Secretary of the Company receives written notice of such exercise from the Participant, together with any required payment made in accordance with Section 2.2(b).
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(c) Fractional Shares/Minimum Issue.Fractional share interests shall be disregarded, but may be accumulated.TheCommittee,however,maydeterminethatcash,othersecuritiesorotherpropertywill be paid or transferred in lieu of any fractional share interests.No fewer than 100 Shares may be purchasedonexerciseofanyAwardatonetimeunlessthenumberpurchasedisthetotalnumberatthe time available for purchase under the Award.
1.9. Non-Transferability.
(a) Awards may be exercised only by the Participant or, if the Participant has died, the Participant's Beneficiary or, if the Participant has suffered a Total Disability and the Participant is incapacitated, the Participant's Personal Representative, if any, or if there is none, (to the extent permitted by applicable law and Rule 16b-3) a third party pursuant to such conditions and procedures as the Committee may establish.Other than upon death or pursuant toa DRO or other exception totransfer restrictionsunder Rule16b-3(excepttotheextentnotpermittedinthecaseofanIncentiveStockOption),norightorbenefit underthisPlanoranyAwardshallbetransferablebytheParticipantorshallbesubjectinanymannerto anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge (other than to the Company), and any such attempted action shall be void.The Company shall disregard any attempt at transfer, assignment or other alienation prohibited by the preceding sentences and shall pay or deliver such cash or Shares in accordance with the provisions of this Plan.The terms of an Award Agreement shall be final, binding and conclusive upon the beneficiaries, executors, administrators, heirs and successors of the grantee.
(b) The restrictions on exercise and transfer above shall not be deemed to prohibit the authorization by theCommitteeof“cashlessexercise”procedureswithunaffiliatedthirdpartieswhoprovidefinancingfor the purpose of (or who otherwise facilitate) the exercise of Awards consistent with applicable legal restrictions and Rule 16b-3, nor, to the extent permitted by the Committee, transfers for estate and financialplanningpurposes,notwithstandingthattheinclusionofsuchfeaturesmayrendertheparticular Awards ineligible for the benefits of Rule 16b-3, nor, in the case of Participants who are not Section 16 Persons, transfers to such other persons or in such other circumstances as the Committee may in the Award Agreement or other writing expressly permit.
1.10. Deferred Payments.The Committee may authorize for the benefit of any Eligible Employee the deferralofanypaymentofcashorSharesthatmaybecomedueorofcashotherwisepayableunderthis Plan, and provide for accreted benefits thereon based upon such deferment, at the election or at the requestofsuchParticipant,subjecttotheothertermsofthisPlan.Suchdeferralshallbesubjecttosuch furtherconditions,restrictionsorrequirementsastheCommitteemayimpose,subjecttoanythenvested rightsofParticipants.Anysuchdeferralofpaymentshallcomplyinallrespectswiththerequirementsof Code Section 409A, including with respect to the timing of election and timing of distribution, so as to avoid the imposition of any tax in addition to ordinary income tax or capital gains tax, as applicable.
1.11. Special Performance-Based Awards.Without limiting the generality of the foregoing, any of the types of Awards listed in Section 1.2(a) may be granted as awards that satisfy the requirements for “qualified performance-based compensation” within the meaning of 26 CFR Section 1.162-27(e) (“Performance-Based Awards”), the grant, vesting, exercisability or payment of which depends on the degree of achievement of the Performance Criteria relative to pre-established targeted levels for the Company on a consolidated basis.Notwithstanding anything contained in this Section 1.11 to the contrary,anyOptionshallbesubjectonlytotherequirementsof(a)belowandSection1.5aboveinorder forsuchAwardstosatisfytherequirementsforPerformance-BasedAwardsunderthisSection1.11(with such Awards
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hereinafter referred to as a “Qualifying Option”).With the exception of any Qualifying Option,anAwardthatisintendedtosatisfytherequirementsof thisSection 1.11shallbedesignatedas a Performance-Based Award at the time of grant.Nothing in this Plan shall limit the ability of the CommitteetograntOptions withanexercisepriceorabasepricegreaterthanFairMarketValueonthe Date of Grant or to make the vesting of the Options subject to Performance Goals or other business objectives.
(a) Eligible Class.The eligible class of persons for Awards under this Section 1.11 shall be all Eligible Employees and Non-Employee Directors.
(b) Performance Goals.The performance goals for any Awards under this Section 1.11 (other than Qualifying Options) shall be, on an absolute or relative basis, one or more of the Performance Criteria.
(c) Committee Certification.Before any Performance-Based Award under this Section 1.11 (other than Qualifying Options) is paid, the Committee must certify in writing (by resolution or otherwise) that the applicable Performance Criteria and any other material terms of the Performance-Based Award were satisfied; provided, however, that a Performance-Based Award may be paid without regard to the satisfaction of the applicable Performance Criteria in the event of a Change in Control as provided in Section 5.2(b).
(d) Terms and Conditions of Awards; Committee Discretion to Reduce Performance Awards.The Committee shall have discretion to determine the conditions, restrictions or other limitations, in accordance with and subject tothe termsof this Plan, on the payment of individual Performance-Based Awards under this Section 1.11.To the extent set forth in an Award Agreement, the Committee may reservethe right to reduce the amount payable in accordance with any standards or on any other basis (includingtheCommittee’sdiscretion),astheCommitteemaydetermine.
(e) AdjustmentsforMaterialChanges.Intheeventof(i)achangeincorporatecapitalization,acorporate transaction or a complete or partial corporate liquidation, or (ii) any extraordinary gain or loss or other event that is treated for accounting purposes as an extraordinary item under generally accepted accounting principles, or (iii) any material change in accounting policies or practices affecting the Company and/or the Performance Criteria or targets, then, to the extent any of the foregoing events (or a material effect thereof)was not anticipatedat the timethetargets were set, theCommitteemaymake adjustments to the Performance Criteria and/or targets, applied as of the date of the event, and based solely on objective criteria, so as to neutralize, in the Committee’s judgment, the effect of the event on the applicable Performance-Based Award.
(f) IndividualLimits.
(i) Share-BasedAwards.ThemaximumnumberofSharesthat areissuableunderthePlan pursuanttoOptions,RestrictedStockorStockUnitspayableinSharesthataregrantedasPerformance-Based Awards during any calendar year to any Participant shall not exceed 100,000, subject to adjustment as provided in Section 5.2(a).Awards that are canceled during the year shall be counted against this limit.
(ii) Cash-Based Awards.The aggregate amount of compensation to be paid to any Participant in respect of those Cash-Only Awards that are granted during any calendar year as Performance-Based Awards shall not exceed $500,000.
(g) Non-Employee Director Limits.The maximum number of Shares that are issuable under the Plan pursuanttoOptions,RestrictedStockorStockUnitspayableinSharesthataregrantedas
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Performance-Based Awardsduringany calendaryeartoNon-Employee Directorsshallnot exceed 25,000,subjectto adjustment as provided in Section 5.2(a).Awards that are canceled during the year shall be counted against this limit.
1.12. Exercise or Forfeiture of Awards in Certain Circumstances.In accordance with the Federal Deposit InsuranceCorporation’s (the“FDIC”)StatementofPolicy and notwithstanding anything herein contained to the contrary, the FDIC shall have the authority to direct the Company, and the Company shall have the authority, to require Participants to exercise or forfeit their Awards if the Company’s capitalfallsbelowtheminimumrequirements,asdeterminedbytheCaliforniaDepartmentofFinancial Protection and Innovation or the FDIC.
II. OPTIONS
2.1. Grants.One or more Options may be granted under this Article to any Eligible Employee, or Non-EmployeeDirectorsubjecttotheprovisionsofSection1.5.EachOptiongrantedmaybeeitheranOption intendedtobeanIncentiveStockOptionoranOptionnotsointended,andsuchintentshallbeindicated in the applicable AwardAgreement.However, Non-Employee Directors shall only be eligible toreceive Director Stock Options, which shall be Non-Qualified Options.
2.2. OptionPrice.
(a) Pricing Limits.Subject to Section 2.4, the purchase price per Share of the Common Stock covered by eachOptionshall bedetermined bytheCommitteeat thetimetheOption isgranted, but shallnot be less than 100% of the Fair Market Value of the Common Stock on the date of grant.
(b) PaymentProvisions.ThepurchasepriceofanySharespurchasedonexerciseofanOptiongranted underthisArticleshallbepaidinfullatthetimeofeachpurchaseinoneoracombinationofthefollowing methods:(i) in cash or byelectronic fundstransfer;(ii)by check payable to the order ofthe Company; (iii) by notice and third party payment in such manner as may be authorized by the Committee; (iv) by the delivery of Shares already owned by the Participant which have been held for at least six months, provided, however, that the Committee may in its absolute discretion limit the Participant's ability to exercise an Award by delivering such Shares; or (v) if authorized by the Committee or specified in the applicableAwardAgreement,byreductioninthenumberofSharesotherwisedeliverableuponexercise bythatnumberofShareswhichhaveathenFairMarketValueequaltosuchpurchaseprice.Previously owned Shares used to satisfy the exercise price of an Option under clause (iv) shall be valued at their FairMarketValueonthedateofexercise.
2.3. LimitationsonGrantandTermsofIncentiveStockOptions
(a) $100,000 Limit.To the extent that the aggregate “fair market value” of Common Stock with respect towhichIncentiveStockOptionsfirstbecomeexercisablebyaParticipantinanycalendaryearexceeds $100,000, taking into account both Common Stock subject to Incentive Stock Options under this Plan andstocksubjecttoincentivestockoptionsunderallotherplansoftheCompany,suchoptionsshallbe treated as Nonqualified Stock Options.For this purpose, the “fair market value” of the Common Stock subjecttoOptionsshallbedeterminedasofthedatetheOptionswereawarded.Inreducingthenumber of Options treated as Incentive Stock Options to meet the $100,000 limit, the most recently granted Optionsshallbereducedfirst.TotheextentareductionofsimultaneouslygrantedOptionsisnecessary to meet the $100,000 limit, the Committee may, in the manner and to the extent permitted by law, designatewhichSharesofCommonStockaretobetreatedasSharesacquiredpursuanttotheexercise of an Incentive Stock Option.To the extent permitted under applicable regulations, as a method of
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causinganOptionintendedtobeanIncentiveStockOptiontomeettherequirementsthereofwhichfails to doso byreasonof the$100,000 limit, the Committeeshall havethe discretionto amendtheterms of such Option to delay the exercisability of the Option provided such amendment is made in the same calendar year of grant.
(b) OptionPeriod.SubjecttoSection2.4,eachOptionandallrightsthereundershallexpirenolaterthan ten years after the Award Date.
(c) Other Code Limits.There shall be imposed in any Award Agreement relating to Incentive Stock Options such terms and conditions as from time to time are required in order that the Option be an “incentive stock option” as that term is defined in Section 422 of the Code.
2.4. Limits on 10% Holders.No Incentive Stock Option may be granted to any person who, at the time the Option is granted, owns (or is deemed to own under Section 424(d) of the Code) Shares of outstandingCommonStockpossessingmorethan10%ofthetotalcombinedvotingpowerofallclasses of stock of the Company, unless the exercise price of such Option with respect to the Common Stock covered by the Option is at least 110% of the Fair Market Value of the Common Stock subject to the Option and such Option by its terms is not exercisable after the expiration of five years from the date such Option is granted.
2.5. NoOption Repricing.SubjecttoSection5.2and Section5.6 andthespecific limitations onAwards grantedinthisPlan,theCommitteemaynotreducetheexercisepriceofanyOptiongrantedpursuantto thePlanfollowingthedateoftheAwardoracceptthesurrenderofoutstandingOptionsasconsideration for the grant of a new Award with a lower per-share exercise price, or for cash.
2.6. SurrenderofStockOptions.TheCommittee,initssolediscretion,shallhavetheauthorityunderthe circumstancessetforthhereintoagreemutuallywitha Participanttogrant suchParticipanttheright,on such terms and conditions as the Committee may prescribe, to surrender such Participant's Options to the Company for cancellation and to receive upon such surrender a cash payment equal to the Spread applicabletosuchsurrenderedOptions.SuchrightshallbemadeavailableonlyintheeventofanOffer (as defined in the following paragraph).
Theterm“Offer”asusedinthisSectionmeansanytenderofferorexchangeofferforShares,otherthan onemadebytheCompany,providedthatthecompany,personorotherentitymakingtheOfferacquires Shares pursuant to such Offer.
The term “Offer Priceper Share” asusedinthisSectionmeansthehighest priceper Sharepaid onany Offer which is in effect at any time during the period beginning on the sixtieth day prior to the date on which the Option is surrendered pursuant to this Section and ending on such date of surrender.Any securitiesorpropertywhicharepartoralloftheconsiderationpaidforSharesintheOffershallbevalued in determining the Offer Price per Share at the higher of (a) the valuation placed on such securities or property by any other company, person or entity making the Offer or (b) the valuation placed on such securities or property by the Committee.
Theterm“Spread”asusedinthisSectionmeanswithrespecttoanysurrenderedOptionandassociated right,ifany,anamountequaltotheproductcomputedbymultiplying(i) theexcessof(A)theOfferPrice per Share or the highest market price per Share of the Company's Common Stock during the period beginning on thesixtiethday priortothe dateonwhich the StockOption is surrenderedpursuant to this Section and ending on such date of surrender over (B) the purchase price per Share at which the surrenderedOptionisthenexercisable,by(ii) thenumberofSharessubjecttosuchOptionwithrespect to which it has not theretofore been exercised.
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III. RESTRICTEDSTOCKAWARDS
3.1. RestrictedStock.TheCommitteemay,initsdiscretion,grantoneormoreRestrictedStockAwards to any Eligible Employee or Non-Employee Director.Each Restricted Stock Award Agreement shall specifythenumberofSharestobeissued,thedateofsuchissuance,theconsiderationforsuchShares (butnotlessthantheminimumlawfulconsideration,thevalueofwhichequalstheparvalueoftheShares orsuchgreaterorlesservalueastheCommittee,consistentwithSection5.4,mayrequire)tobepaid,if any, by the Participant and the restrictions imposed on such Shares, including but not limited to, any Performance Criteria and the conditions of release or lapse of such restrictions.Stock certificates evidencingsharesofRestrictedStockpendingthelapseoftherestrictions(“restrictedshares”)shallbear a legend making appropriate reference to the restrictions imposed hereunder and shall be held by the CompanyorbyathirdpartydesignatedbytheCommitteeuntiltherestrictionsonsuchsharesshallhave lapsedandthesharesshallhavevestedinaccordancewiththeprovisionsoftheAwardandSection1.8. Upon issuance of the Restricted Stock Award, the Participant may be required to provide such further assurance and documents as the Committee may require to enforce the restrictions.
3.2. Restrictions.
(a) Pre-VestingRestraints.Except asprovidedinSection1.9and3.1,restrictedsharescomprisingany Restricted Stock Award may not be sold, assigned, transferred, pledged or otherwise disposed of or encumbered either voluntarily or involuntarily, until such shares have vested.
(b) Dividend and Voting Rights.Unless otherwise provided in the applicable Award Agreement, a Participantreceiving a Restricted StockAward shall be entitled to cash dividend and voting rightsfor all sharesissuedeventhoughtheyarenotvested,providedthatsuchrightsshallterminateimmediatelyas to any restricted shares which cease to be eligible for vesting.
(c) Cash Payments.If the Participant shall have paid or received cash (including any dividends) in connection with the Restricted Stock Award, the Award Agreement shall specify whether and to what extentsuchcashshall be returned(withorwithout anearningsfactor) asto anyrestrictedshareswhich cease to be eligible for vesting.
(d) Conditions of Release or Lapse of Restrictions.The restrictions imposed on Restricted Stock as providedforintheRestrictedStockAwardAgreementsshallmeet suchstandardsasdeterminedbythe Committee or Board in its sole discretion.
3.3. Return to the Company.Unless the Committee otherwise expresslyprovides, sharesof Restricted Stock that are subject to restrictions at the time of termination of employment or are subject to other conditions to vest that have not been satisfied by the time specified in the applicable Award Agreement shallnotvestandshallbereturnedtotheCompanyinsuchmannerandonsuchtermsastheCommittee shall therein provide.
3.4RestrictedShareUnits.TheCommitteemay,initsdiscretion,granttoanyEligibleEmployeeorNon-EmployeeDirectoraRestrictedShareUnit AwardwhichwillbepayableinSharesofCommonStock(a “Share Award”) and/or in CashOnly Awards onsuch terms as the Committeemay determine in its sole discretion (including but not limited to Performance Criteria), but subject to the vesting restrictions containedinSection3.2(d)inthecaseofrestrictedunitswhichwillbepayableinShares,andsubject to the requirements of Code Section 409A where applicable.Such Awards may be made as additional compensationforservicesormaybeinlieuofothercompensationwhichtheEligibleEmployeeisentitled toreceivefromtheCompany.All
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suchShareAwardsandCashOnlyAwardsshallconstituteAwardsfor allpurposesofthePlan,andshallbesubjecttothelimitsonAwardswhicharepayableinSharesandin cash which are contained in the Plan. Restricted Share Units shall not entitle a Participant to voting or otherrightswithrespecttoShares,provided,however,thattheCommitteemayalsograntDividend Equivalents in connection with any Restricted Share Unit Award which is made under the Plan on such terms as the Committee may determine in its sole discretion.
IV. PERFORMANCESHARECASHONLYAWARDS
4.1.GrantsofPerformanceShareCashOnlyAwards.TheCommitteemay,initsdiscretion,grantCash OnlyAwardsintheformofPerformanceShareAwardstoanyEligibleEmployeebaseduponsuchfactors as the Committee shall deem relevant in light of the specific type and terms of the Award.An Award Agreement shall specify the maximum number of Shares (if any) subject to the Performance Share Award,thedurationoftheAwardandtheconditionsuponwhichpaymentoftheAwardtotheParticipant shall be based, and the terms thereof shall comply with the requirements of Code Section 409A where applicable.The cash amount that may be deliverable pursuant to such Award shall be based upon the fair market value of the number of Shares of Common Stock specified in the Award, subject to any maximumdeterminedbytheCommittee, andthedegreeof attainment of anyPerformanceCriteriaover a specified period (a “performance cycle”) as may be established by the Committee.The Committee may provide for full or partial credit, prior to completion of such performance cycle or the attainment of theperformanceachievementspecifiedintheAward,intheeventoftheParticipant'sdeath,Retirement, or Total Disability, a Change in Control Event or in such other circumstances as the Committee may determine.
V. OTHERPROVISIONS
5.1. RightsofEligibleEmployees,ParticipantsandBeneficiaries.
(a) Employment Status.Status as an Eligible Employee shall not be construed as a commitment that any Award will be made under this Plan to an Eligible Employee or to Eligible Employees generally.
(b) No Employment Contract.Nothing contained in this Plan (or in any other documents related to this Planor toanyAward)shallconfer uponanyEligibleEmployeeorParticipant anyrighttocontinueinthe employorotherserviceoftheCompanyorconstituteanycontractoragreementofemploymentorother service, nor shall interfere in any way with the right of the Company to change such person's compensation or other benefits or to terminate the employment of such person, with or without cause, butnothingcontainedinthisPlanoranydocumentrelatedheretoshalladverselyaffectanyindependent contractual right of such person without his or her consent thereto.
(c) Plan Not Funded.Awards payable under this Plan shall be payable in Shares or from the general assets of the Company, and no special or separate reserve, fund or deposit shall be made to assure paymentofsuchAwards.NoParticipant,Beneficiaryorotherpersonshallhaveanyright,titleorinterest in any fund or in any specific asset (including Shares of Common Stock except as expressly otherwise provided) of the Company by reason of any Award hereunder.Neither the provisions of this Plan (or of any related documents), nor the creation or adoption of this Plan, nor any action taken pursuant to the provisionsofthisPlanshallcreate,orbeconstruedtocreate,atrustofanykindorafiduciaryrelationship betweentheCompanyandanyParticipant,Beneficiaryorotherperson.TotheextentthataParticipant, Beneficiary orother person acquires aright toreceive payment pursuantto any Awardhereunder,such right shall be no greater than the right of any unsecured general creditor of the Company.
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5.2. Adjustments;Accelerations.
(a) Adjustments.If the outstanding Shares of Common Stock are changed into or exchanged for cash, otherpropertyoradifferentnumberorkindofsharesorsecuritiesoftheCompany,orifadditionalshares or new or different securities are distributed with respect to the outstanding Shares of Common Stock, through a reorganization or merger in which the Company is the surviving entity, or through a combination, consolidation, recapitalization, reclassification, stock split, stock dividend, reverse stock split, stock consolidation,without consideration, orif there shalloccuranyother extraordinarycorporate transaction or event in respect of the Common Stock or a sale of substantially all the assets of the Company as an entirety which in the judgment of the Committee materially affects the Common Stock, then (1)the numberofShares available forAwards, and any limit onthenumberof Sharesthat may be subject to Awards to an Eligible Employee in a calendar year, as set forth in Section 1.5(a), shall be adjusted proportionately, and (2)the Committee shall, in such manner and to such extent (if any) as it deemsappropriateandequitable,proportionatelyadjustanyoralltermsofoutstandingAwardsincluding, but not limited to, (A) the number and kind of shares of Common Stock or other consideration that is subjecttoormaybedeliveredunderthisPlanandpursuanttooutstandingAwards,(B)theconsideration payablewithrespecttoAwardsgrantedpriortoanysuchchangeandtheprices,ifany,paidinconnection withRestrictedStockAwards,or(C)theperformancestandardsappropriatetoanyoutstandingAwards. In the case of an extraordinary dividend or other distribution, merger, reorganization, consolidation, combination, sale of assets, split up, exchange, or spin off, the Committee shall, in such manner and to suchextent(ifany)asitdeemsappropriateandequitable,makeprovisionforacashpaymentorforthe substitution or exchangeof any orall outstandingAwards orthe cash, securities or property deliverable to the holder of any or all outstanding Awards based upon the distribution or consideration payable to holders of Common Stock upon or in respect of such event; provided, however, in each case, that with respecttoAwardsofIncentiveStockOptions,nosuchadjustmentshallbemadewhichwouldcausethe Plan to violate Section 422 or 424(a) of the Code or any successor provisions thereto.In any of such events, the Committee may take such action sufficiently prior to such event if necessary to permit the Participant to realize the benefits intended to be conveyed with respect to the underlying Shares in the same manner as is available to shareholders generally.
(b) EffectofChangeinControl.AssoonaspossibleaftertheBoardofDirectorshasapprovedaChange inControlEventdescribedinSection1.2(h),theBoardshallsendnotice(the“Notice”)toeachParticipant thereof.Noticeshall bedeemed given on thedate it is personally delivered tothe Participant, or on the third business day after it is mailed, with first-class postage prepaid, to the Participant’s last known address.
Except as otherwise determined by the Committee at the time of grant of an Award and specified in the applicableAwardAgreement,unlessthecontinuingorsurvivorcorporation,orthepurchaserofassetsof the Company (the “successor”) agrees to assume the obligations of the Company with respect to all outstanding Awards or to substitute such Awards with equivalent awards with respect to the common stockofthesuccessor,notwithstandinganylanguagetothecontraryinthisPlanoranAwardAgreement, upon thegiving ofNoticeand immediately priortotheclosing oftherelevanttransaction(i) eachOption shall become immediately exercisable, (ii) eachRestricted StockAward(including restrictedunits) shall immediatelyvestfreeofrestrictions,and(iii) allPerformanceCriteriawithrespecttoanyAward(including each Performance Share Award) shall be deemed achieved at target levels and all other terms and conditions met, and such Award shall become immediately payable to the
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Participant. Any acceleration of Awards shallcomply with applicable regulatory requirements, includingwithout limitation Section422 of the Code.
No Awards may be made after the Board of Directors has approved a Change in Control, unless the ChangeinControliscancelledorterminatedbeforebecomingeffective,inwhicheventthePlanshallnot terminate, and Awards not exercised while the Change in Control was pending shall resume the status they had prior to the announcement of the Change in Control and delivery of the Notice.
The provisions of this subsection (b) shall not apply if the Company is the surviving entity in any such Change in Control.
(c) Possible Early Termination of Awards.If any Option or other right to acquire Shares or cash under thisPlanhasnotbeenexercisedpriortoaChangeofControleventdescribedinSection1.2(h)approved bytheBoardandnoprovisionhasbeenmadeforthesurvival,substitution,exchangeorothersettlement of such Option or right, such Option or right shall thereupon terminate.
5.3. Effect of Termination of Employment.The Committee shall establish in respect of each Award grantedtoanEligibleEmployeeorNon-EmployeeDirectortheeffectofaterminationofemployment,or cessation of service as a director, as the case may be, on the rights and benefits thereunder and in so doing may make distinctions based upon the cause of termination, e.g., retirement, early retirement, termination for cause, disability or death. Notwithstanding any terms to the contrary in an Award Agreement or this Plan, the Committee may decide in its complete discretion to extend the exercise periodofanAward(althoughnotbeyondtheperioddescribedinSection2.3(b))andtoacceleratevesting with respect to some or all of the number of Shares covered by the Award with respect to which the Award is not then exercisable or vested, provided, however, that for the portion of any vested and exercisableAward,aParticipantmustexercisesuchAwardwithin90daysafterterminationof employment or service on the Board (but not later than the date on which the Award would otherwise expire), except as follows:
(1)IftheParticipantisterminatedforcause,theParticipant’srighttoexerciseanyAwardshallexpire on the date of termination.
(2)If the Participant’s employment or service as a director terminates by reason of his or her death, then the Award of the deceased Participant shall be exercisable only as to that portion of an Award vested at the time of the Participant’s death, and may be exercised with respect thereto within one year from the date of death (but not later than the date on which the Award would otherwiseexpire)bytheParticipant’sexecutororadministratororthepersonorpersonstowhom the Participant’srights under such Award shall have passed by will or by laws of descent and distribution.
(3)If the Participant’s employment or service as a director terminates by reason of Total Disability, thentheAwardofthedisabledParticipantshallbeexercisableonlyastothatportionoftheAward vestedatthetimeoftheParticipant’sTotalDisability,andmaybeexercisedwithinoneyearfrom the dateofsuch TotalDisability, but not laterthan the date on which theAward would otherwise expire.
5.4. CompliancewithLaws.ThisPlan,thegrantingandvestingofAwardsunderthisPlanandtheoffer, issuance anddeliveryofShares and/orthepayment of money underthisPlan orunderAwardsgranted hereunder are subject to compliance with all applicable federal and state laws,
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rules and regulations (including, but not limited to, state and federal securities laws and federal margin requirements) and to such approvals by any listing, regulatoryorgovernmentalauthorityasmay, inthe opinion of counselfor the Company, be necessary or advisable in connection therewith.Any securities delivered under this Plan shall besubject tosuch restrictions, andthepersonacquiring suchsecuritiesshall, ifrequested by theCompany,providesuchassurancesandrepresentationstotheCompanyastheCompanymaydeem necessary or desirable to assure compliance with all applicable legal requirements.The administration of the Plan and all determinations and discretionary actions by the Committee shall comply with all applicablefederalandstatelaws,rulesandregulations(including,butnotlimitedto,theSarbanes-Oxley Actof2002)and,totheextentapplicable,withtheNasdaqMarketplaceRulesandotherapplicablelisting standards.
5.5. Tax Withholding.Upon any exercise, vesting, or payment of any Award, the Company shall have therightatitsoptionto(i) requiretheParticipant(orPersonalRepresentativeorBeneficiary,asthecase may be) to pay or provide for payment of the amount of any taxes which the Companymay be required to withhold with respect to such transaction or (ii) deduct from any amount payable in cash the amount of anytaxeswhichtheCompanymayberequiredtowithholdwithrespecttosuchcashamount.Inany casewhereataxisrequiredtobewithheldinconnectionwiththedeliveryofSharesunderthisPlan,the Committeemaygrant(eitheratthetimeoftheAwardorthereafter)totheParticipanttherighttoelect,or the Committee may require (either at the time of the Award or thereafter), pursuant to such rules and subjecttosuchconditions astheCommitteemayestablish,tohavetheCompanyreducethenumber of Shares to be delivered by the appropriate number of Shares valued at their then Fair Market Value, to satisfy the minimum withholding obligation.The Committee may require a Participant to pay or make arrangements for payment of any applicable tax withholding as a condition to the exercise of an Award and as a condition to the delivery of any Shares or payment of any amount with respect to the exercise of an Award, and shall not be obligated to deliver any Shares or make any payment with respect to exercise of an Award until the Committee is satisfied that the Participant has done so.
5.6. PlanAmendment,TerminationandSuspension.
(a) Board Authorization.The Boardmay, at any time, terminate or, from time totime, amend, modify or suspendthisPlan,inwholeorinpart.NoAwardsmaybegrantedduringanysuspensionofthisPlanor afterterminationofthisPlan,buttheCommitteeshallretainjurisdictionastoAwardsthenoutstandingin accordancewiththetermsofthisPlan.AnysuspensionwillnotaffecttheexpirationofthePlansetforth in Section 5.9.
(b) ShareholderApproval.IfanyamendmentwouldmateriallyincreasetheaggregatenumberofShares orothersecuritiesthatmaybeissuedunderthisPlanormateriallymodifytherequirementsastoeligibility for participation in this Plan or would otherwise require shareholder approval to comply with any applicable federalorstate lawor applicable exchangelistingstandard (includinglistingstandards of the NYSE and/or Nasdaq), then to the extent then required by Rule 16b-3 to secure benefits thereunder or toavoidliabilityunderSection16oftheExchangeAct(andRulesthereunder)orrequiredundertheCode or any other applicable law or listing standard, or deemed necessary or advisable by the Board, such amendment shall be subject to shareholder approval.
(c) Amendments to Awards.Without limiting any other express authority of the Committee under, but subjecttotheexpresslimitsof,thisPlan,theCommitteebyagreementorresolutionmaywaiveconditions oforlimitationsonAwardsthattheCommitteeinthepriorexerciseofitsdiscretionhasimposed,without the consent of theParticipant, andmaymakeother changesto
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thetermsand conditions of Awards that do not affect in any manner materially adverse to the Participant his or her rights and benefits under an Award.
(d) Limitations on Amendments to Plan and Awards.No amendment, suspension or termination of the Plan or change of or affecting any outstanding Award shall, without written consent of the Participant, affect in any manner materially adverse to the Participant any rights or benefits of the Participant or obligations of the Company under any Award granted under this Plan prior to the effective date of such change.Changes contemplated by Section 5.2 shall not be deemed to constitute changes or amendmentsforpurposesofthisSection5.6.Notwithstandingtheforegoing,theCommitteeshallhave the right to amend any Award without the consent of the Participant and notwithstanding any adverse effect to the rights or benefits of the Participant if the Committee determines that such amendment is necessarytoavoidadverseaccountingconsequencestotheCompanynotanticipatedatthetimeofthe granting of the Award.
5.7. Privileges of StockOwnership.Except as otherwise expressly authorizedby theCommitteeor this Plan, aParticipantshallnot beentitledtoanyprivilege ofstockownership asto anySharesnot actually delivered to and held of record by him or her.No adjustment will be made for dividends or other rights as a shareholder for which a record date is prior to such date of delivery.
5.8. EffectiveDateofthePlan.ThisPlanshallbeeffectiveasofMarch20,2024,subjecttoshareholder approval within 12 months thereafter effected by the affirmative vote of the holders of a majority of the CommonStockoftheCompanyrepresentedatashareholdersmeetingatwhichaquorumispresent.If shareholder approval for this Plan is not obtained prior to March 20, 2025, this Plan shall have no force or effect.No Award granted under the Plan shall become exercisable until the Plan receives such shareholderapprovalandallAwardsgrantedunderthePlanpriortosuchshareholderapprovalshallbe conditioned on and subject to such shareholder approval.
5.9. Term of thePlan.The Plan shall continue ineffect until all Shares available for issuance under the PlanhavebeenissuedandallrestrictionsonsuchShareshavelapsedoruntilMarch20,2034,ifearlier. Notwithstanding any language in this Plan to the contrary, no Incentive Stock Option shall be granted under this Plan more than ten years after the date the Plan is approved by the shareholders of the Company.TheBoardofDirectorsmaysuspendorterminatethePlanatanytimeexceptwithrespectto OptionsandSharessubjecttorestrictionsthenoutstandingunderthePlan.Terminationshallnotaffect any outstanding Options, any right of the Company to repurchase Shares or the forfeitability of Shares issued under the Plan.
5.10. GoverningLaw;Construction;Severability.
(a) Choice of Law.This Plan, the Awards, all documents evidencing Awards and all other related documents shall be governed by and construed in accordance with the laws of the State of California applicable to contractsmade and performedwithin such State, except assuch laws may be supplanted by the laws of the United States of America, which laws shall then govern its effect and its construction to the extent they supplant California law.
(b) Severability.If any provision shall be held by a court of competent jurisdiction to be invalid and unenforceable, the remaining provisions of this Plan shall continue in effect.
(c) PlanConstruction.
(i) It istheintent oftheCompanythat thisPlan and Awards hereunder satisfyandbe interpreted inamannerthatinthecaseofParticipantswhoareormaybesubjecttoSection16oftheExchangeAct satisfies the applicable requirements of Rule 16b-3, so that such persons
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will be entitled to the benefits of Rule 16b-3 or other exemptive rules under Section 16 of the Exchange Act and will not be subjected to avoidable liability thereunder.If any provision of this Plan or of any Award or any prior action by the Committee would otherwise frustrate or conflict with the intent expressed above, that provision to the extent possibleshall beinterpretedanddeemedamendedsoastoavoidsuch conflict, but totheextent of any remaining irreconcilable conflict with such intent as to such persons in the circumstances, such provision shall be deemed void.
5.11. Captions.Captions andheadings are given to thesections andsubsections ofthis Plan solely as aconveniencetofacilitatereference.Suchheadingsshallnotbedeemedinanywaymaterialorrelevant to the construction or interpretation of the Plan or any provision thereof.
5.12. Non-Exclusivity of Plan.Nothing in this Plan shall limit or be deemed to limit the authority of the BoardortheCommitteetogrant awardsorauthorizeanyothercompensation, withor withoutreference to the Common Stock, under any other plan or authority, except as provided in Sections 5.13.
5.13. Relation to Santa Cruz County Bank 2014 Omnibus PlanNo New Awards.Notwithstanding any other provisions to the contrary in this Plan, no new awards of Shares will be granted under the Santa Cruz County Bank 2014 Omnibus Plan as assumed by the Company.
5.14. Substitute Awards.Notwithstanding any other provisions of this Plan to the contrary, where the outstanding shares of another corporation are changed into or exchanged for shares of CommonStock of the Company in a merger, consolidation, reorganization or similar transaction, then, subject to the approval of the Board, Awards may be granted in exchange for unexercised, unexpired similar equity-based awards of the other corporation, and the exercise price of the Shares subject to any Option so grantedmaybefixed ata price lessthan onehundred percent of the Fair Market Value of the Common Stock at the time such Award is granted if said exercise price or grant price has been determined to be not less than the exercise price or grant 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.The number of shares of the awards of the other corporation shall also be adjusted in accordance with the exchange ratio so that any substituted Award shall reflect such adjustment.Substitute awards granted pursuant to this Section 5.14 shall not count against the Shares allocated to the Plan.
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