# **Capital Corp of the West**

** **

**1992Stock Option Plan**

 

 

Table of Contents

 
| ARTICLE | 1.0    | INTRODUCTION                                       |
|---------|--------|----------------------------------------------------|
|    |   |                                               |
| ARTICLE | 2.0    | ADMINISTRATION                                     |
|    | 2.1    | The Committee                                      |
|    | 2.2    | Disinterested Directors                            |
|    | 2.3    | Committee Responsibilities                         |
|    |   |                                               |
| ARTICLE | 3.0    | LIMITATION ON AWARDS                               |
|    |   |                                               |
| ARTICLE | 4.0    | ELIGIBILITY                                        |
|    | 4.1    | General Rule                                       |
|    | 4.2    | Non-employee Directors                             |
|    | 4.3    | Ten-Percent Shareholders                           |
|    | 4.4    | Attribution Rules                                  |
|    | 4.5    | Outstanding Stock                                  |
|    |   |                                               |
| ARTICLE | 5.0    | TERMS OF OPTIONS                                   |
|    | 5.1    | Stock Option Agreement                             |
|    | 5.2    | Options Non-transferable                           |
|    | 5.3    | Number of Shares; Tax  Status                      |
|    | 5.4    | Exercise Price                                     |
|    | 5.5    | Exercisability and Term                            |
|    | 5.6    | Modification,  Extension and Assumption of Options |
|    |   |                                               |
| ARTICLE | 6.0    | PAYMENT FOR OPTION  SHARES                         |
|    | 6.1    | General Rule                                       |
|    | 6.2    | Surrender by Stock                                 |
|    | 6.3    | Exercise / Sale                                    |
|    | 6.4    | Other Forms of Payment                             |
|    |   |                                               |
| ARTICLE | 7.0    | PROTECTION  AGAINST DILUTION                       |
|    |   |                                               |
|    | 7.1    | General                                            |
|    | 7.2    | Reorganization                                     |
|    | 7.3    | Reservation of Rights                              |
|    |   |                                               |
| ARTICLE | 8.0    | LIMITATION OF RIGHTS                               |
|    | 8.1    | Employment Rights                                  |
|    | 8.2    | Shareholder’s rights                          |
|    | 8.3    | Government Regulations                             |
|    |   |                                               |
| ARTICLE | 9.0    | WITHHOLDING TAXES                                  |
|    | 9.1    | General                                            |
|    | 9.2    | Shares Withholding                                 |
|    |   |                                               |
| ARTICLE | 10.0   | FUTURE OF THE PLAN                                 |
|    | 10.1   | Term of the Plan                                   |
|    | 10.2   | Amendment or Termination                           |
|    |   |                                               |
| ARTICLE | 11.0   | DEFINITION                                         |
|    |   |                                               |
| ARTICLE | 12.0   | EXECUTION                                          |

 

 

### CAPITALCORP OF THE WEST

1992 STOCK OPTION PLAN

 

#### ARTICLE 1. INTRODUCTION

 

                ThePlan was adopted by the Board on march 26, 1992 subject to approval by theCompany’s shareholders at the 1992 annual meeting of shareholders.  The purpose of the Plan is to promote thelong-term success of the Company in the creation of shareholder value by (a)encouraging Nonemployee Directors and Key Employees to focus on criticallong-range objectives, (b) encouraging the attraction and retention ofNon-employee Directors and Key Employees with exceptional qualifications and(c) linking Nonemployee Directors and Key Employees directly to shareholderinterest through increased stock ownership. The Plan seeks to achieve this purpose by providing for awards in theform of Options, which may constitute incentive stock options or non-statutorystock options.

 

                The Plan shall begoverned by, and construed in accordance with, the laws of the State ofCalifornia.

 

 

ARTICLE 2.  ADMINISTRATION.

 

2.1           TheCommittee.  ThePlan shall be administered by the Committee. The Committee shall consist only of two or more disinterested directorsof the Company, who shall be appointed by the Board.

 

2.2           Disinterested Directors.  A person shall be deemed to be“disinterested” even if he or she, during the twelve months before serving onthe Committee, has been granted or awarded equity securities under this Plan orunder any other plan of the Company or an affiliate of the Company.

 

2.3           Committee Responsibilities.  The Committee shall select the Non-employeeDirectors and Key Employees who are to receive Option under the Plan, determinethe number, vesting requirements and other conditions of such Options,interpret the Plan, and make all other decisions related to the operation ofthe Plan.  The committee may adopt suchrules or guidelines as it deems appropriate to implement the Plan.  The Committee’s determinations under thePlan shall be binding on all persons.

 

 

ARTICLE 3. LIMITATION ON AWARDS.

 

 

The aggregate number of Options awarded under the Planshall not exceed 597,002.  If anyOptions are forfeited, lapse, or terminate for any reason before beingexercised, then such Options shall again become available for award under thePlan.  The limitation of this Article 3shall be subject to adjustment pursuant to Article 7.

 

ARTICLE 4.ELIGIBILITY.

 

4.1           GeneralRule.  OnlyNon-employee Directors and Key Employees shall be eligible for designation asOptionees by the Committee.  In addition,only Key Employees shall be eligible for the grant of ISOs.

 

4.2           Nonemployee Directors.  Any other provision of the Plannotwithstanding, the participation of Non-employee Directors in the Plan shallbe subject to the following restrictions provided, however, that the Companymay vary any of the following restrictions, either at the time at Option isgranted or subsequently, on a case-by-case basis, as the Committee deemsappropriate in its discretion:

 

(a)           Nonemployee Directors shall receiveno grants other than NSOs described in this Section 4.2.
| (b)    | (i)                                                                                                                                  | Each Nonemployee  Director shall receive an NSO covering 7,000 Common Shares on May 12, 1992,  if he or she is serving as a member of the Board on that date;                                                                                                                                                                                                                                                     |
|--------|--------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (ii)                                                                                                                                 | each Nonemployee  Director who first joins the Board after May 12, 1992, shall receive an NSO  covering 3,000 Common Shares on the first business day after his or her  initial election or appointment to the Board and shall receive an NSO  covering an additional 3,000 Common Shares on the first business day after  the fifth anniversary of his or her initial election or appointment to the  Board; and |
|   | (iii)                                                                                                                                | each Nonemployee  Director shall receive an annual NSO grant covering 3,000 Common Shares each  year beginning in January 2001 and until such time as the Board shall alter  the Board Compensation Plan                                                                                                                                                                                                          |
|   | (The number of  Common Shares included in an NSO granted under this Subsection (b) shall be  subject to adjustment under Artivle 7.) |

(c)           Fifty percent of each NSO grantedunder Subsection (b)  above shall becomeexercisable immediately upon the date of grant and the remaining fifty percentshall become exercisable in equal annual installments on the first and secondanniversaries of the date of grant.

(d)           All NSOs granted to a NonemployeeDirector under this Section 4.2 shall also become exercisable in full in theevent of (i) the termination of such Nonemployee Director’s service because ofdeath, total and permanent disability or retirement at or after age 70 or (ii)a Change in Control with respect to the Company.

(e)           The Exercise Price under all NSOsgranted to all Nonemployee Directors under this Section 4.2 shall be equal to100 percent of the Fair Market Value of a Common Share on the date of grant,payable in cash or in one of the forms described in Sections 6.2 or 6.3.

(f)            All NSOs granted to a NonemployeeDirector under this Section 4.2 shall terminate on the earliest of (i) the 10thanniversary of the date of grant, (ii) the date three months after thetermination of such Nonemployee Director’s service for any reason other thatdeath or total and permanent disability or (iii) the date 12 months after thetermination of such Nonemployee Director’s service because of death or totaland permanent disability.

 

4.3           Ten-Percent Shareholders. A Key Employee who owns more than 10 percent of the total combinedvoting power of all classes of outstanding stock of the Company or any of itsSubsidiaries shall not be eligible for the grant of an ISO unless (a) theExercise Price under such ISO is at least 110 percent of the Fair Market Valueof a Common Share on the date of grant and (b) such ISO by its terms is notexercisable after the expiration of five years from the date of grant.

 

4.4           ArbitrationRules.  For purposes of Section 4.3, in determiningstock ownership, a Key Employee shall be deemed to own the stock (directly orindirectly) by or for his or her brothers, sisters, a spouse, ancestors andlineal descendents.  Stock owned(directly or indirectly) by or for a corporation, partnership, estate or trustshall be deemed to be owned proportionately by or for its shareholders,partners or beneficiaries.  Stock withrespect to which Key Employee holds an option shall not be counted.

 

4.5           OutstandingStock. For purposes of Section 4.3, “outstanding stock” shall include all stockactually issued and outstanding immediately after the grant of the ISO to theKey Employee.  “Outstanding stock” shallnot include shares authorized for issuance under outstanding options held bythe Key Employee or by any other person.

 

ARTICLE 5. TERMS OF OPTIONS.

 

5.1           Stock Option Agreement.  Each grant ofan Option under the Plan shall be evidenced by a Stock Option Agreement betweenthe Optionee and the Company.  SuchOption shall be subject to all applicable terms and conditions of the Plan andmay be subject to any other terms and conditions which are not inconsistentwith the Plan and which the Committee deems appropriate for inclusion in aStock Option Agreement.  The Provisionsof the various Stock Option Agreements entered into under the Plan need not beidentical.  If the Optionee is a Keyemployee, the Committee may designate all or any part of the Option as an ISO.

 

5.2           Options Non-transferable.  No Optiongranted under the Plan shall be transferable by the Optionee other than bywill, by a beneficiary designation executed by the Optionee and delivered tothe Company or by the laws of descent and distribution.  An Option may be exercised during thelifetime of the Optionee only by him or her or by his or her legal representative.  No Option or interest therein may betransferred, assigned, pledged or hypothecated by the Optionee during his orher lifetime, whether by operation of law or otherwise, or be made subject toexecution, attachment or similar process.

 

5.3           Number of Shares; Tax Status.  Each StockOption Agreement shall specify the number of Shares subject to the Option andshall provide for the adjustment of such number in accordance with Article7.  The Stock Option Agreement shallalso specify whether the Option is an ISO or an NSO.

 

                5.4           ExercisePrice.  Each Stock OptionAgreement shall specify the Exercise Price. The Exercise Price under an ISO shall not be less than 100 percent ofthe Fair Market Value of a Common Share on the date of grant, except as otherwiseprovided in Section 4.3.  The ExercisePrice under an NSO shall not be less than 100 percent of the Fair Market Valueof a Common Share on the date of grant. Subject to the preceding two sentences, the Exercise Price under anyOption shall be determined by the Committee. The Exercise Price shall be payable in accordance with Article 6.

 

5.5           Exercisablilityand Term. Each Stock Option Agreement shall specify the date when all or anyinstallments of the Option is to become exercisable and shall provide forimmediate exercisability of the entire Option in the event of any Change inControl with respect to the Company. The Stock Option Agreement shall also specify the term of the Option.  The term of an Option shall in no eventexceed 10 years from the date of grant, and Section 4.3 may require a shorterterm for an ISO.  Subject to thisSection 5.5, the Committee shall determine when all or any part of an Option isto become exercisable and when such Option is to expire.  A Stock Option Agreement may provide foraccelerated exercisability upon the Optionee’s death, disability or retirementor other events and may provide for expiration prior to the end of its term inthe event of termination of the Optionee’s service.

 

                5.6           Modification, Extension and Assumption of Options.  Within the limitations of the Plan, theCommittee may modify, extend or assume outstanding options or may accept thecancellation of outstanding options (whether granted by the Company or byanother issuer) in return for the grant of new options for the same or adifferent number of shares and at the same or different exercise price.  The foregoing notwithstanding, nomodification of an Option shall, without the consent of the Optionee, alter orimpair his or her rights or obligations under such Option.

 

ARTICLE 6. PAYMENT FOR SHARES.

 

                6.1           GeneralRule.  The entireExercise Price of Common Shares issued upon exercise of Options shall bepayable in cash at the time when such Common Shares are purchased, except asfollows:

 

                                (a)           In the case of an ISO, granted underthe Plan, payment shall be made only pursuant to the express provisions of theapplicable Stock Option Agreement. However, the Committee may specify in the Stock Option Agreement thatpayment may be made pursuant to Section 6.2, 6.3 or 6.4.

 

(b)           In the case of an NSO, the Committeemay at any time accept payment pursuant to Section 6.2, 6.3 or 6.4.

 

                6.2           Surrenderof Stock.  To the extentthat this Section 6.2 if applicable, payment for all or any part of theExercise Price may be made with Common Shares which have already been owned bythe Optionee for more than six months and which are surrendered to theCompany.  Such Common Shares shall bevalued at  Fair Market Value on the datewhen the new Common Shares are purchased under the Plan.

 

                6.3           Exercise/Sale.  To the extent that this Section 6.3 isapplicable, payment may be made by the delivery (on a form prescribed by theCompany) of an irrevocable direction to a securities broker approved by theCompany to sell Common Shares and to deliver all or part of the sales proceedsto the Company in payment for all or part of the Exercise Price and anywithholding taxes.

 

                6.4           OtherForms of Payment.  To theextent that this Section 6.4 is applicable, payment may be made in any otherform approved by the Committee, consistent with applicable laws, regulationsand rules.

 

ARTICLE 7. PROTECTION AGAINST DILUTION.

 

7.1           General.    In the event of a subdivision of theoutstanding Common Shares, the declaration of a dividend payable in CommonShares, the declaration of a dividend payable in a form other than CommonShares in an amount that has a material effect on the price of the CommonShares, a combination or consolidation of the outstanding Common Shares (byreclassification or otherwise) into a lesser number of Common Shares, therecapitalization, a spinoff or a similar occurrence, the Committee shall makeappropriate adjustments in one or more of (a) the number of Options availablefor future awards under Article 3, (b) the number of Options included in awardsto Non-employee Directors under Section 4.2, (c) the number of Common Sharescovered by each outstanding Option or, (d) the Exercise Price under eachoutstanding Option.

 

                7.2           Reorganizations.  In the event that the Company is a party toa merger or other reorganization, outstanding Options shall be subject to theagreement of merger or reorganization. Such agreement may provide, without limitation, for the assumption ofthe outstanding Options by the surviving corporation or its parent, for theircontinuation by the Company (if the Company is a surviving corporation), foraccelerated vesting or for settlement in cash.

 

7.3           Reservationof Rights.  Exceptas provided in this Article 7, a Participant shall have no rights by reason ofany subdivision or consolidation of shares of stock of any class, the paymentof any stock dividend or any other increase or decrease in the number of sharesof stock of any class.  Any issue by theCompany of shares of stock of any class, or securities convertible into sharesof stock of any class, shall not affect, and no adjustment by reason thereofshall be made with respect to, the number or Exercise Price of Common Sharessubject to an Option.  The grant of anOption pursuant to the Plan shall not affect in any way the right or power ofthe Company to make adjustments, reclassifications, reorganizations or changesof its capital or business structure, to merge or consolidate or to dissolve,liquidate, sell or transfer all or any part of its business or assets.

 

ARTICLE 8. LIMITATION OF RIGHTS.

 

                8.1           EmploymentRights.  Neither the Plan norany Option granted under the Plan shall be deemed to give any individual aright to remain an employee or director of the Company or a Subsidiary.  The Company and its Subsidiaries reserve theright to terminate the service of any employee or director at any time, with orwithout cause, subject only to a written employment agreement (if any).

 

8.2           Shareholders’Rights.  AnOptionee shall have no dividend rights, voting rights or other rights as ashareholder with respect to any Common Shares covered by his or her Optionprior to the issuance of a stock certificate for such Common Shares.  No adjustment shall be made for cashdividends or other rights for which the record date is prior to the date whensuch certificate is issued, except as expressly provided in Article 7.

 

8.3           GovernmentRegulations.  Any other provision of the Plan notwithstanding, the   obligations of the Company with respect toCommon Shares to be issued pursuant to the Plan shall be subject to allapplicable laws, rules and regulations and such approvals by any governmentalagencies or stock exchanges as may be required.  The Company reserves the right to restrict, in whole or in part, thedelivery of Common Shares pursuant to any Option until such time as any legalrequirements or regulations have been met relating to the issuance of suchCommon Shares, to their registration or qualification (or exemption fromregistration or qualification) under the Securities Act, 1933, as amended, orany applicable state securities laws, or to their listing on any stockexchange.

 

ARTICLE 9. WITHHOLDING TAXES.

 

                9.1            General.  To the extent required by applicablefederal, state, local or foreign law, an Optionee shall make arrangementssatisfactory to the Company for the satisfaction of any withholding taxobligations that arise by reason of an Option. The Company shall not be required to issue any Common Shares under thePlan until such obligations are satisfied.

 

                9.2            SharesWithholding.   The Committee may permit an Optionee to satisfy all or part of his orher withholding tax obligations by having the Company withhold a portion of anyCommon Shares that otherwise would be issued to him or her by surrendering aportion of any Common Shares that previously were issued to him or her.  Such Common Shares shall be valued at theirFair Market Value on the date when taxes otherwise would be withheld in cash.  The payment of withholding taxes by assigningCommon Shares to the Company, if permitted by the Committee, shall be subjectto such restrictions as the Committee may impose.

 

ARTICLE 10. FUTURE OF THE PLAN.

 

                10.1          Termof the Plan.  The Plan, as setforth herein, shall become effective on March 26, 1992, subject to the approvalof the Company’s shareholders.  In theevent that the shareholders failed to approve the Plan at the 1992 annualmeeting, or any adjournment thereof, any Options granted prior to such meetingshall be null and void, and no additional Options shall be granted after suchmeeting.  Any other provision of thePlan notwithstanding, no Option shall be exercisable prior to suchmeeting.  The Plan shall remain ineffect until it is terminated under Section 10.2, except that no new Optionsshall be granted after March 25, 2002.

 

10.2         Amendmentor Termination.  The Board may, at any time and for any reason, amend or terminate thePlan, except that the provisions of Section 4.2 relating to the amount, Priceand timing of Option grants to Non-employee Directors shall not be amended morethan once in any six-month period. An amendment of the Plan shall be subject tothe approval of the Company’s shareholders only to the extent required byapplicable laws, regulations or rules.

 

                10.3         Effectof Amendment or Termination. No Options shall be granted under the Plan after the terminationthereof.  The termination of the Plan,or any amendment thereof, shall not affect any Option previously granted underthe Plan.

 

ARTICLE 11.  DEFINITIONS.

 

                11.1          “Board” means the Company’s Board of Directors, asconstituted from time to time.

 

                11.2         "Change in Control” meansthe occurrence of either of the following events:

 

(a)           A change in thecomposition of the Board, as a result of which fewer than  one- half of the incumbent directors aredirectors who either:

 
|   | (i)  | Had been  directors of the Company twenty-four months prior to the change; or                                                                                                                                                                                                       |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (ii) | Were elected, or  nominated for election, to the Board with the affirmative  votes of at least a majority of the  directors who had been directors of the Company 24 months prior to such  change and who were still in office at the time of the election or  nominations; or |

 

(b)           Any “person” (as such term is used inSection 13 (d) and 14 (d) of the Securities Exchange Act of 1934, as amended) by the acquisition oraggregation of securities is or become the beneficial owner, directly orindirectly, of securities of the Company representing 20 percent or more of thecombined voting power of the Company’s then outstanding securities ordinarily(and apart from rights accruing under special circumstances) having the rightto vote at elections of directors (the “Base Capital Stock”); except that anychange in the relative beneficial ownership of the Company’s securities by anyperson resulting solely from a reduction in the aggregate number of outstandingshares of Base Capital Stock, and any decrease thereafter in such person’sownership of securities, shall be disregarded until such person increases inany manner, directly or indirectly, such person’s beneficial ownership of anysecurities of the Company.

 

                11.3          “Code” means the Internal Revenue Code of 1986, asamended.

 

                11.4          “Committee” means a committee of the Board, asdescribed in Article 2.

 

                11.5         “Common Share” means one share of the common stock ofthe Company.

 

                11.6          “Company” means Capital Corp of the West/County Banka California banking corporation.

 

                11.7          “ Exercise in Price” means the amount for which oneCommon Share may be purchased upon exercise of an Option, as specified by theCommittee in the applicable Stock Option Agreement.

 

                11.8          “Fair Market Value” shall mean the fair market valueof a Common Share, as determined by the Committee in good faith.

 

                11.9         “ISO” means an incentive stockoption described in Section 422 (b) of the Code.

 

                11.10        “Key Employee” means a key common-law employee of theCompany or of a Subsidiary, as determined by the Committee.

 

                11.11        “Non-employee Director” means a member of the Boardwho is not a common-law employee of the Company or of a Subsidiary.

 

                11.12        “NSO” means an employee stock option not described inSection 422 or 423 of the Code.

 

                11.13        “Option” means an ISO or NSOgranted under the Plan and entitling the holder to purchase one Common Share.

 

                11.14        “Optionee” means an individual or estate who holds anOption.

 

                11.15       “Plan” means this Capital Corp of the West/County Bank1992 Stock Option Plan, as it may be amended from time to time.

 

                11.16        “Stock Option Agreement” means the agreement betweenthe Company and an Optionee which contains the terms, conditions andrestrictions pertaining to his or her Option.

 

                11.17        “Subsidiary” means any corporation, if the Companyand/or one or more other Subsidiaries own not less than 50 percent of the totalcombined voting power of all classes of outstanding stock of suchcorporation.  A corporation that attainsthe status of a Subsidiary on a date after the adoption of the Plan shall beconsidered a Subsidiary commencing as of such date.

 

ARTICLE 12.  EXECUTION.

 

                 To record the adoption of the Plan by theBoard, the Company has caused its duly authorized officer to affix thecorporate name and seal hereto.

 

 

 
| CAPITAL CORP OF THE WEST/ COUNTY BANK |
|---------------------------------------|
|                                  |
|                                  |
| By                                    |   |
|                                  |
| As its Corporate Secretary            |