NOTWITHSTANDING ANY OTHER PROVISION OF THIS INCENTIVE STOCK OPTION AGREEMENT, NO
SHARES OF UNITED SECURITY BANK'S COMMON STOCK SHALL BE ISSUED PURSUANT HERETO
UNLESS THE UNITED SECURITY BANK 1995 STOCK OPTION PLAN SHALL HAVE FIRST BEEN
APPROVED BY THE SHAREHOLDERS OF UNITED SECURITY BANK
UNITED SECURITY BANK, N.A.
INCENTIVE STOCK OPTION AGREEMENT
This Incentive Stock Option Agreement ("Agreement") is made and entered into as
of the 10TH day of OCTOBER, 1995, by and between United Security Bank, N.A., a
national banking association (the "Bank"), and RHODLEE X. XXXX ("Optionee");
WHEREAS, pursuant to the United Security Bank 1995 Stock Option Plan (the
"Plan"), a copy of which is attached hereto, the Stock Option Committee of the
Bank has authorized granting to Optionee an incentive stock option to purchase
all or any part of TEN THOUSAND (10,000) authorized but unissued shares of the
Bank's common stock (hereinafter referred to as "stock") at the price of
THIRTY-ONE DOLLARS AND FIFTY CENTS ($31.50) per share, such option to be for the
term and upon the terms and conditions hereinafter stated;
NOW, THEREFORE, it is hereby agreed:
1. GRANT OF OPTION. Pursuant to said action of the Stock Option
Committee and pursuant to authorizations granted by all appropriate regulatory
and governmental agencies, the Bank hereby grants to Optionee the option to
purchase, upon and subject to the terms and conditions of the Plan, which is
incorporated in full herein by this reference, all or any part of TEN THOUSAND
(10,000) shares of the Bank's stock at the price of THIRTY-ONE DOLLARS AND FIFTY
CENTS ($31.50) per share, which price is not less than one hundred percent
(100%) of the fair market value of the stock (or not less than 110% of the fair
market value of the stock for Optionee-shareholders who own securities
possessing more than ten percent (10%) of the total combined voting power of
all classes of securities of the Bank) as of the date of action of the Stock
Option Committee granting this option.
2. EXERCISABILITY. This option shall be exercisable as to 2,000 SHARES ONE YEAR
FROM THE EFFECTIVE DATE; 2,000 SHARES TWO YEARS FROM THE EFFECTIVE DATE; 2,000
SHARES THREE YEARS FROM THE EFFECTIVE DATE; 2,000 SHARES FOUR YEARS FROM THE
EFFECTIVE DATE; 2,000 SHARES FIVE YEARS FROM THE EFFECTIVE DATE. . THIS OPTION
SHALL REMAIN EXERCISABLE AS TO ALL VESTED SHARES UNTIL FIVE YEARS FROM ISSUANCE
OF EACH OPTION. This option shall remain exercisable as to all vested shares
until OCTOBER 10, 2005 (but not later than ten (10) years from the date this
option is granted) unless this option has expired or terminated earlier in
accordance with the provisions hereof or in the Plan. Subject to paragraphs 4
and 5, shares as to which this option becomes exercisable may be purchased at
any time prior to expiration of this option.
3. EXERCISE OF OPTION. This option may be exercised by a written notice
(substantially in the form as that which is attached as Exhibit A) delivered to
the Bank stating the number of shares with respect to which this option is being
exercised, together (a) with cash in the amount of the purchase price of such
shares, or (b) subject to applicable law, with the Bank's stock previously
acquired by Optionee. Notwithstanding the foregoing, in the event Optionee does
exercise the option by utilizing (b) above, Optionee should obtain tax advice as
to the consequences of such action. Not less than ten (10) shares may be
purchased at any one time unless the number purchased is the total number which
may be purchased under this option and in no event may the option be exercised
with respect to fractional shares. Upon exercise, Optionee shall make
appropriate arrangements and shall be responsible for the withholding of any
federal and state taxes then due.
4. CESSATION OF EMPLOYMENT. Except as provided in Paragraphs 2 and 5 hereof, if
Optionee shall cease to be an employee of the Bank or a subsidiary corporation
for any reason other than
Optionee's death or disability [as defined in Section 22(e)(3) of the Internal
Revenue Code of 1986, as amended from time to time (the "Code")], this option
shall expire three (3) months thereafter. During the three (3) month period this
option shall be exercisable only as to those installments, if any, which had
accrued as of the date when Optionee ceased to be an employee of the Bank or a
subsidiary corporation.
5. TERMINATION OF EMPLOYMENT FOR CAUSE. If Optionee's employment with the Bank
or a subsidiary corporation is terminated for cause, this option shall expire
immediately, unless reinstated by the Board of Directors within thirty (30) days
of such termination by giving written notice of such reinstatement to Optionee
at his or her last known address. In the event of such reinstatement, Optionee
may exercise this option only to such extent, for such time, and upon such terms
and conditions as if Optionee had ceased to be an employee of the Bank or a
subsidiary corporation upon the date of such termination for a reason other than
cause, death or disability. Termination for cause shall include, but not be
limited to, termination for malfeasance or gross misfeasance in the performance
of duties or conviction of a crime involving moral turpitude, and, in any event,
the determination of the Board of Directors with respect thereto shall be final
and conclusive.
6. NONTRANSFERABILITY; DEATH OR DISABILITY OF OPTIONEE. This option shall not be
transferable except by will or the applicable laws of descent and distribution
and shall be exercisable during Optionee's lifetime only by Optionee. If
Optionee dies while serving as an employee of the Bank or a subsidiary
corporation, or during the three (3) month period referred to in Paragraph 4
hereof, this option shall expire one (1) year after the date of termination or
on the day specified in Paragraph 2 hereof, whichever is earlier. After
Optionee's death but before such expiration, the persons to whom Optionee's
rights under this option shall have passed by will or the applicable laws of
descent and distribution or the executor or administrator of Optionee's estate
shall have the right to exercise this option as to those shares for which
installments had accrued under Paragraph 2 hereof as of the date on which
Optionee ceased to be an employee of the Bank or a subsidiary corporation.
If Optionee terminates his or her employment because of disability, (as
defined in Section 22(e)(3) of the Code), Optionee may exercise this option
to the extent he or she is entitled to do so at the date of termination, at
any time within one (1) year of the date of termination, or before the
expiration date specified in Paragraph 2 hereof, whichever is earlier.
7. EMPLOYMENT. This Agreement shall not obligate the Bank or a subsidiary
corporation to employ Optionee for any period, nor shall it interfere
in any way with the right of the Bank or a subsidiary corporation to reduce
Optionee's compensation.
8. PRIVILEGES OF STOCK OWNERSHIP. Optionee shall have no rights as a shareholder
with respect to the Bank's stock subject to this option until the date of
issuance of stock certificates to Optionee. Except as provided in the Plan, no
adjustment will be made for dividends or other rights for which the record date
is prior to the date such stock certificates are issued.
9. MODIFICATION AND TERMINATION. The rights of Optionee are subject to
modification and termination upon the occurrence of certain events as provided
in Sections 13 and 14 of the Plan.
10. NOTIFICATION OF SALE. Optionee agrees that Optionee, or any person acquiring
shares upon exercise of this option, will notify the Bank not more than five (5)
days after any sale or other disposition of such shares.
11. REPRESENTATIONS OF OPTIONEE. Optionee understands that no shares issuable
upon the exercise of this option shall be issued and delivered unless and until
the Bank has complied with all applicable requirements of any regulatory agency
having jurisdiction over the Bank including registration of the stock options
and underlying shares, as necessary, and all applicable requirements of any
exchange upon which stock of the Bank may be listed. Optionee agrees to
ascertain that such requirements shall have been complied with at the time
of any exercise of this option. In addition, if Optionee is an "affiliate"
for purposes of the Securities Act of 1933, there may be additional
restrictions on the resale of stock, and Optionee therefore agrees to
ascertain what those restrictions are and to abide by the restrictions and
other applicable federal securities laws.
Furthermore, the Bank may, if it deems appropriate, issue stop transfer
instructions against any shares of stock purchased upon the exercise of this
option and affix to any certificate representing such shares the legends
which the Bank deems appropriate.
Optionee represents that the Bank, its directors, officers, employees and
agents have not and will not provide tax advice with respect to the option,
and Optionee agrees to consult with his or her own tax advisor as to the
specific tax consequences of the option, including the application and effect
of federal, state, local and other tax laws.
12. NOTICES. Any notice to the Bank provided for in this Agreement shall be
addressed to it in care of its President or Chief Financial Officer at its main
office and any notice to Optionee shall be addressed to Optionee's address on
file with the Bank or a subsidiary corporation, or to such other address as
either may designate to the other in writing. Any notice shall be deemed to be
duly given if and when enclosed in a properly sealed envelope and addressed as
stated above and deposited, postage prepaid, with the United States Postal
Service. In lieu of giving notice by mail as aforesaid, any written notice under
this Agreement may be given to Optionee in person, and to the Bank by personal
delivery to its President or Chief Financial Officer.
13. INCENTIVE STOCK OPTION. This Agreement is intended to be an incentive stock
option agreement as defined in Section 422 of the Code; provided, however, that
if the option shall fail to constitute an incentive stock option for any reason,
the option shall thereafter be governed by the provisions of the Plan regarding
nonqualified stock options.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
OPTIONEE UNITED SECURITY BANK, N.A.
By_______________________ By_________________________
Rhodlee X. Xxxx Xxxxxx X. Xxxxx, President & CEO
EXHIBIT A
NOTICE OF STOCK OPTION EXERCISE
Xx. Xxxxxx X. Xxxxx
President
United Security Bank
0000 Xxxx Xxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Dear Xx. Xxxxx:
Pursuant to my incentive stock option agreement dated _______________, I am
exercising my stock option to acquire ____________ shares of common stock of
United Security Bank. I am also enclosing payment by means of (CASH IN THE
AMOUNT OF $_________, OR ________ SHARES OF UNITED SECURITY BANK HAVING A FAIR
MARKET VALUE) equal to the sum of the option exercise price.
I further acknowledge that the United Security Bank makes no representations as
to federal or state tax matters, and that I am to consult with my own tax
attorney or tax accountant for advice with respect to the exercise of my stock
option and the effect of the sale of the option shares. [(FOR EXECUTIVE OFFICERS
OF THE BANK OR INSIDERS OF THE BANK) I further acknowledge that I am an
affiliate or insider of United Security Bank and that federal securities laws
are applicable to the exercise of the stock option and any subsequent sale of
the option shares including the applicability of the Securities Act of 1933 and
Rule 144 (both dealing with the sale of shares by an affiliate). I agree to
comply with such securities laws and rules.]
Sincerely,
Name of Optionee
