Exhibit
10.35


 


SVB FINANCIAL GROUP


 


2006 EQUITY INCENTIVE PLAN


 


Amended
as of June 29, 2006


 


1.                                       Purposes of the Plan. The purposes of this
Plan are:


 


•                                          to attract and retain the best available
personnel for positions of substantial responsibility,


 


•                                          to provide incentives to individuals who
perform services to the Company, and


 


•                                          to promote the success of the Company’s
business.


 


The
Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options,
Restricted Stock, Restricted Stock Units, Stock Appreciation Rights,
Performance Units, Performance Shares and other stock or cash awards as the
Administrator may determine.


 


2.                                       Definitions. As used herein, the
following definitions will apply:


 


(a)                                  “Administrator” means the Board or any
of its Committees as will be administering the Plan, in accordance with Section
4 of the Plan.


 


(b)                                 “Affiliate” means any corporation or
any other entity (including, but not limited to, partnerships and joint
ventures) controlling, controlled by, or under common control with the Company.


 


(c)                                  “Applicable Laws” means the
requirements relating to the administration of equity-based awards under U.S.
state corporate laws, U.S. federal and state securities laws, the Code, any
stock exchange or quotation system on which the Common Stock is listed or
quoted and the applicable laws of any foreign country or jurisdiction where
Awards are, or will be, granted under the Plan.


 


(d)                                 “Award” means, individually or
collectively, a grant under the Plan of Options, Restricted Stock, Restricted
Stock Units, Stock Appreciation Rights, Performance Units, Performance Shares
and other stock or cash awards as the Administrator may determine.


 


(e)                                  “Award Agreement” means the written or
electronic agreement setting forth the terms and provisions applicable to each
Award granted under the Plan. The Award Agreement is subject to the terms and
conditions of the Plan.


 


(f)                                    “Board” means the Board of Directors
of the Company.


 


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(g)                                 “Cause” means:


 


(i)                                     An act of embezzlement, fraud, dishonesty, or
breach of fiduciary duty to the Company; or


 


(ii)                                  A deliberate disregard of the rules of the
Company which results in loss, damage or injury to the Company, or


 


(iii)                               Any unauthorized disclosure of any of the secrets
or confidential information of the Company, or


 


(iv)                              Inducing any client or customer of the
Company to break any contract with the Company or inducing any principal for
whom the Company acts as agent to terminate such agency relations; or


 


(v)                                 Engaging in any conduct which constitutes
unfair competition with the Company; or


 


(vi)                              Any act which results in the Participant
being removed from any office of the Company by any bank regulatory agency.


 


“Change in Control” means the consummation of any of the
following transactions:


 


A merger or consolidation of the Company with any other corporation,
other than a merger or consolidation which would result in beneficial owners of
the total voting power in the election of directors represented by the voting
securities (“Voting Securities”) of the Company (as the case may be)
outstanding immediately prior thereto continuing to beneficially own securities
representing (either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least fifty percent (50%) of the total
Voting Securities of the Company, or of such surviving entity, outstanding
immediately after such merger or consolidation;


 


The filing of a plan of liquidation or dissolution of the closing of
the sale, lease, exchange or other transfer or disposition by the Company of
all or substantially all of the Company’s assets;


 


Any person (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act, other than (A) a trustee or other fiduciary holding securities
under an employee benefit plan of the Company, or (B) a corporation owned
directly or indirectly by the stockholders of the Company in substantially the
same proportions as their beneficial ownership of stock in the Company, is or
becomes the beneficial owner (within the meaning of Rule 13d-3 under the
Exchange Act), directly or indirectly, of the securities of the Company
representing fifty percent (50%) or more of the Voting Securities; or


 


Any person (as such term is used in Sections 13(d) or 14(d) of the
Exchange Act), other than (A) a trustee or other fiduciary holding securities
under an employee benefit plan of the Company, or (B) a corporation owned
directly or indirectly by the stockholders of the Company in substantially the
same proportions as their ownership of stock in the Company, is or becomes the
beneficial owner (within the meaning or Rule 13d-3 under the Exchange Act),
directly


 


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or indirectly, of the
securities of the Company representing twenty-five percent (25%) or more of the
Voting Securities of such corporation, and within twelve
(12) months of the occurrence of such event, a change in the composition of the
Board occurs as a result of which sixty percent (60%) or fewer of the Directors
are Incumbent Directors. For purposes of this definition, Incumbent Directors
will mean Directors who either (A) are Directors as of the date hereof, (B) are
elected, or nominated for election, to the Board with the affirmative votes of
at least a majority of the Directors who are Incumbent Directors described in
(A) above at the time of such election or nomination, or (C) are elected, or
nominated for election, to the Board with the affirmative votes of at least a
majority of the Directors who are Incumbent Directors described in (A) or (B)
above at the time of such election or nomination. Notwithstanding the
foregoing, “Incumbent Directors” will not include an individual whose election
or nomination to the Board occurs in order to provide representation for a
person or group of related persons who have initiated or encouraged an actual
or threatened proxy contest relating to the election of Directors.


 


(h)                                 “Code” means the Internal Revenue Code
of 1986, as amended. Any reference to a section of the Code herein will be a
reference to any successor or amended section of the Code.


 


(i)                                     “Committee” means a committee of
Directors or of other individuals satisfying Applicable Laws appointed by the
Board in accordance with Section 4 hereof.


 


(j)                                     “Common Stock” means the common stock
of the Company.


 


(k)                                  “Company” means SVB Financial Group, a
Delaware corporation, or any successor thereto.


 


(l)                                     “Consultant” means any person,
including an advisor, engaged by the Company or its Affiliates to render
services to such entity.


 


(m)                               “Determination Date” means the latest
possible date that will not jeopardize the qualification of an Award granted
under the Plan as “performance-based compensation” under Section 162(m) of the
Code.


 


(n)                                 “Director” means a member of the
Board.


 


(o)                                 “Disability” means total and permanent
disability as defined in Section 22(e)(3) of the Code, provided that in the
case of Awards other than Incentive Stock Options, the Administrator in its
discretion may determine whether a permanent and total disability exists in
accordance with uniform and non-discriminatory standards adopted by the
Administrator from time to time.


 


(p)                                 “Employee” means any person, including
Officers and Directors, employed by the Company or its Affiliates. Neither
service as a Director nor payment of a director’s fee by the Company will be
sufficient to constitute “employment” by the Company.


 


(q)                                 “Exchange Act” means the Securities
Exchange Act of 1934, as amended.


 


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(r)                                    “Fair Market Value” means, as of any
date, the value of Common Stock as the Administrator may determine in good
faith by reference to the price of such stock on any established stock exchange
or a national market system on the day of determination if the Common Stock is
so listed on any established stock exchange or a national market system. If the
Common Stock is not listed on any established stock exchange or a national
market system, the value of the Common Stock will be determined by the
Administrator in good faith.


 


(s)                                  “Fiscal Year” means the fiscal year of
the Company.


 


(t)                                    “Incentive Stock Option” means an
Option that by its terms qualifies and is otherwise intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the regulations
promulgated thereunder.


 


(u)                                 “Nonstatutory Stock Option” means an
Option that by its terms does not qualify or is not intended to qualify as an
Incentive Stock Option.


 


(v)                                 “Officer” means a person who is an
officer of the Company within the meaning of Section 16 of the Exchange Act and
the rules and regulations promulgated thereunder.


 


(w)                               “Option” means a stock option granted
pursuant to the Plan.


 


(x)                                   “Parent” means a “parent corporation,”
whether now or hereafter existing, as defined in Section 424(e) of the Code.


 


(y)                                 “Participant” means the holder of an
outstanding Award.


 


(z)                                   “Performance Goals” will have the
meaning set forth in Section 11 of the Plan.


 


(aa)                            “Performance Period” means any Fiscal
Year of the Company or such other period as determined by the Administrator in
its sole discretion.


 


(bb)                          “Performance Share” means an Award
denominated in Shares which may be earned in whole or in part upon attainment
of Performance Goals or other vesting criteria as the Administrator may
determine pursuant to Section 10.


 


(cc)                            “Performance Unit” means an Award
which may be earned in whole or in part upon attainment of Performance Goals or
other vesting criteria as the Administrator may determine and which may be
settled for cash, Shares or other securities or a combination of the foregoing
pursuant to Section 10.


 


(dd)                          “Period of Restriction” means the
period during which the transfer of Shares of Restricted Stock are subject to
restrictions and therefore, the Shares are subject to a substantial risk of
forfeiture. Such restrictions may be based on the passage of time, the
achievement of target levels of performance, or the occurrence of other events
as determined by the Administrator.


 


(ee)                            “Plan” means this 2006 Equity
Incentive Plan.


 


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(ff)                                “Restricted Stock” means Shares issued
pursuant to an Award of Restricted Stock under Section 8 of the Plan, or issued
pursuant to the early exercise of an Option.


 


(gg)                          “Restricted Stock Unit” means a
bookkeeping entry representing an amount equal to the Fair Market Value of one
Share, granted pursuant to Section 9. Each Restricted Stock Unit represents an
unfunded and unsecured obligation of the Company.


 


(hh)                          “Rule 16b-3” means Rule 16b-3 of the
Exchange Act or any successor to Rule 16b-3, as in effect when discretion is
being exercised with respect to the Plan.


 


(ii)                                  “Section 16(b)” means Section 16(b) of
the Exchange Act.


 


(jj)                                  “Service Provider” means an Employee,
Director or Consultant.


 


(kk)                            “Share” means a share of the Common
Stock, as adjusted in accordance with Section 14 of the Plan.


 


(ll)                                  “Stock Appreciation Right” means an
Award, granted alone or in connection with an Option, that pursuant to Section
7 is designated as a Stock Appreciation Right.


 


(mm)                      “Subsidiary” means a “subsidiary
corporation,” whether now or hereafter existing, as defined in Section 424(f)
of the Code.


 


(nn)                          “Successor Corporation” has the
meaning given to such term in Section 14(c) of the Plan.


 


3.                                       Stock Subject to the
Plan.


 


(a)                                  Stock Subject to the Plan. Subject to the provisions of Section 14 of
the Plan, the maximum aggregate number of Shares that may be awarded and sold
under the Plan is 3,000,000 Shares plus (i) any Shares which have been reserved
but not issued under the Company’s 1997 Equity Incentive Plan (the “1997 Plan”)
as of the date of stockholder approval of this Plan and (ii) any Shares subject
to stock options or similar awards granted under the 1997 Plan that expire or
otherwise terminate without having been exercised in full and Shares issued
pursuant to awards granted under the 1997 Plan that are forfeited to or
repurchased by the Company. The Shares may be authorized, but unissued, or
reacquired Common Stock.


 


(b)                                 Full Value Awards. Any Shares subject to Awards granted with
an exercise price less than the Fair Market Value on the date of grant of such
Awards will be counted against the numerical limits of this Section 3 as two
Shares for every one Share subject thereto. Further, if Shares acquired
pursuant to any such Award are forfeited or repurchased by the Company and
would otherwise return to the Plan pursuant to Section 3(c), two times the
number of Shares so forfeited or repurchased will return to the Plan and will
again become available for issuance.


 


(c)                                  Lapsed Awards. If an Award expires or becomes
unexercisable without having been exercised in full, or, with respect to
Restricted Stock, Restricted Stock Units, Performance Shares or Performance
Units, is forfeited to or repurchased by the Company, the unpurchased Shares
(or for Awards other than Options and Stock Appreciation Rights, the forfeited


 


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or repurchased Shares) which
were subject thereto will become available for future grant or sale under the
Plan (unless the Plan has terminated). With respect to Stock Appreciation
Rights, all of the Shares covered by the Award (that is, Shares actually issued
pursuant to a Stock Appreciation Right, as well as the Shares that represent
payment of the exercise price) will cease to be available under the Plan. However,
Shares that have actually been issued under the Plan under any Award will not
be returned to the Plan and will not become available for future distribution
under the Plan; provided, however, that if unvested Shares of Restricted Stock,
Restricted Stock Units, Performance Shares or Performance Units are repurchased
by the Company or are forfeited to the Company, such Shares will become
available for future grant under the Plan. Shares used to pay the tax and
exercise price of an Award will not become available for future grant or sale
under the Plan. To the extent an Award under the Plan is paid out in cash
rather than Shares, such cash payment will not result in reducing the number of
Shares available for issuance under the Plan. Notwithstanding the foregoing
and, subject to adjustment provided in Section 14, the maximum number of Shares
that may be issued upon the exercise of Incentive Stock Options will equal the
aggregate Share number stated in Section 3(a), plus, to the extent allowable
under Section 422 of the Code, any Shares that become available for issuance
under the Plan under this Section 3(c).


 


4.                                       Administration of the
Plan.


 


(a)                                  Procedure.


 


(i)                                     Multiple Administrative Bodies. Different Committees with respect to
different groups of Service Providers may administer the Plan.


 


(ii)                                  Section 162(m). To the extent that the Administrator
determines it to be desirable to qualify Awards granted hereunder as “performance-based
compensation” within the meaning of Section 162(m) of the Code, the Plan will
be administered by a Committee of two or more “outside directors” within the
meaning of Section 162(m) of the Code.


 


(iii)                               Rule 16b-3. To the extent desirable to qualify transactions hereunder as exempt under
Rule 16b-3, the transactions contemplated hereunder will be structured to
satisfy the requirements for exemption under Rule 16b-3.


 


(iv)                              Other Administration. Other than as provided above, the Plan will
be administered by (A) the Board or (B) a Committee, which committee will be
constituted to satisfy Applicable Laws.


 


(b)                                 Powers of the Administrator. Subject to the provisions of the Plan, and
in the case of a Committee, subject to the specific duties delegated by the
Board to such Committee, the Administrator will have the authority, in its
discretion:


 


(i)                                     to determine the Fair Market Value;


 


(ii)                                  to select the Service Providers to whom
Awards may be granted hereunder;


 


(iii)                               to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any Award granted hereunder;


 


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(iv)                              to construe and interpret the terms of the
Plan and Awards granted pursuant to the Plan;


 


(v)                                 to prescribe, amend and rescind rules and
regulations relating to the Plan, including rules and regulations relating to
sub-plans established for the purpose of satisfying applicable foreign laws;


 


(vi)                              to modify or amend each Award (subject to
Section 19(c) of the Plan). Notwithstanding the previous sentence, the Administrator
may not: (A) modify or amend an Option or Stock Appreciation Right to reduce
the exercise price of such Option or Stock Appreciation Right after it has been
granted (except for adjustments made pursuant to Section 14), (B) cancel any
outstanding Option or Stock Appreciation Right and immediately replace it with
a new Option or Stock Appreciation Right with a lower exercise price, or (C)
accelerate the vesting provisions contained in Sections 8(e), 9(b), or 10(c)
other than upon or in connection with a Change in Control or upon or in
connection with a Participant’s termination of service due to death, Disability
or retirement;


 


(vii)                           to authorize any person to execute on behalf
of the Company any instrument required to effect the grant of an Award previously
granted by the Administrator;


 


(viii)                        to allow a Participant to defer the receipt
of the payment of cash or the delivery of Shares that would otherwise be due to
such Participant under an Award pursuant to such procedures as the
Administrator may determine; and


 


(ix)                                to make all other determinations deemed
necessary or advisable for administering the Plan.


 


(c)                                  Effect of Administrator’s Decision. The Administrator’s decisions,
determinations and interpretations will be final and binding on all Participants
and any other holders of Awards.


 


5.                                       Eligibility. Nonstatutory Stock
Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights,
Performance Units, Performance Shares and such other cash or stock awards as
the Administrator determines may be granted to Service Providers. Incentive
Stock Options may be granted only to employees of the Company or any Parent or
Subsidiary of the Company.


 


6.                                       Stock Options.


 


(a)                                  Limitations.


 


(i)                                     Each Option will be designated in the Award
Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Participant during any calendar year
(under all plans of the Company and any Parent or Subsidiary) exceeds $100,000,
such Options will be treated as Nonstatutory Stock Options. For purposes of
this Section 6(a), Incentive Stock Options


 


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will be taken into account
in the order in which they were granted. The Fair Market Value of the Shares
will be determined as of the time the Option with respect to such Shares is
granted.


 


(ii)                                  The following limitations will apply to
grants of Options:


 


(1)                                  No Service Provider will be granted, in any
Fiscal Year, Options to purchase more than 250,000 Shares.


 


(2)                                  In connection with his or her initial
service, a Service Provider may be granted Options to purchase up to an
additional 500,000 Shares, which will not count against the limit set forth in
Section 6(a)(2)(ii)(1) above.


 


(3)                                  The foregoing limitations will be adjusted
proportionately in connection with any change in the Company’s capitalization
as described in Section 14.


 


(4)                                  If an Option is cancelled in the same Fiscal
Year in which it was granted (other than in connection with a transaction
described in Section 14), the cancelled Option, as applicable, will be counted
against the limits set forth in subsections (1) and (2) above.


 


(5)                                  The exercise price for an Option may not be
reduced. This will include, without limitation, a repricing of the Option as
well as an Option exchange program whereby the Participant agrees to cancel an
existing Option in exchange for an Option, Stock Appreciation Right or other
Award.


 


(b)                                 Term of Option. The Administrator will determine the term
of each Option in its sole discretion. Any Option granted under the Plan will
not be exercisable after the expiration of seven (7) years from the date of
grant or such shorter term as may be provided in the Award Agreement. Moreover,
in the case of an Incentive Stock Option granted to a Participant who, at the
time the Incentive Stock Option is granted, owns stock representing more than
ten percent (10%) of the total combined voting power of all classes of stock of
the Company or any Parent or Subsidiary, the term of the Incentive Stock Option
will be five (5) years from the date of grant or such shorter term as may be
provided in the Award Agreement.


 


(c)                                  Option Exercise Price and Consideration.


 


(i)                                     Exercise Price. The per share exercise price for the Shares
to be issued pursuant to exercise of an Option will be determined by the
Administrator, but will be no less than 100% of the Fair Market Value per Share
on the date of grant. In addition, in the case of an Incentive Stock Option
granted to an Employee who, at the time the Incentive Stock Option is granted,
owns stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the per Share
exercise price will be no less than 110% of the Fair Market Value per Share on
the date of grant. Notwithstanding the foregoing provisions of this Section
6(c), Options may be granted with a per Share exercise price of less than 100%
of the Fair Market Value per Share on the date of grant pursuant to a
transaction described in, and in a manner consistent with, Section 424(a) of
the Code.


 


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(ii)                                  Waiting Period and Exercise Dates. At the time an Option is granted, the
Administrator will fix the period within which the Option may be exercised and
will determine any conditions that must be satisfied before the Option may be
exercised.


 


(iii)                               Form of Consideration. The Administrator will determine the
acceptable form(s) of consideration for exercising an Option, including the
method of payment, to the extent permitted by Applicable Laws.


 


(d)                                 Exercise of Option.


 


(i)                                     Procedure for Exercise; Rights as a
Stockholder. Any Option
granted hereunder will be exercisable according to the terms of the Plan and at
such times and under such conditions as determined by the Administrator and set
forth in the Award Agreement. An Option may not be exercised for a fraction of
a Share.


 


An Option will be deemed
exercised when the Company receives: (i) notice of exercise (in such form as
the Administrator specify from time to time) from the person entitled to
exercise the Option, and (ii) full payment for the Shares with respect to which
the Option is exercised (together with an applicable withholding taxes). No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the Shares are issued, except as provided in Section 14 of
the Plan.


 


(ii)                                  Termination of Relationship as a Service
Provider. If a Participant
ceases to be a Service Provider, other than upon the Participant’s termination
for Cause or as the result of the Participant’s death or Disability, the
Participant may exercise his or her Option within such period of time as is
specified in the Award Agreement to the extent that the Option is vested on the
date of termination (but in no event later than the expiration of the term of
such Option as set forth in the Award Agreement). In the absence of a specified
time in the Award Agreement, the Option will remain exercisable for three (3)
months following the Participant’s termination. Unless otherwise provided by
the Administrator, if on the date of termination the Participant is not vested
as to his or her entire Option, the Shares covered by the unvested portion of
the Option will revert to the Plan. If after termination the Participant does
not exercise his or her Option within the time specified by the Administrator,
the Option will terminate, and the Shares covered by such Option will revert to
the Plan.


 


(iii)                               Disability of Participant. If a Participant ceases to be a Service
Provider as a result of the Participant’s Disability, the Participant may
exercise his or her Option within such period of time as is specified in the
Award Agreement to the extent the Option is vested on the date of termination
(but in no event later than the expiration of the term of such Option as set
forth in the Award Agreement). In the absence of a specified time in the Award
Agreement, the Option will remain exercisable for twelve (12) months following
the Participant’s termination. Unless otherwise provided by the Administrator,
if on the date of termination the Participant is not vested as to his or her
entire Option, the Shares covered by the unvested portion of the Option will
revert to the Plan. If after termination the Participant does not exercise his
or her Option within the time specified herein, the Option will terminate, and
the Shares covered by such Option will revert to the Plan.


 


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(iv)                              Death of Participant. If a Participant dies while a Service
Provider, the Option may be exercised following the Participant’s death within
such period of time as is specified in the Award Agreement to the extent that
the Option is vested on the date of death (but in no event may the option be
exercised later than the expiration of the term of such Option as set forth in
the Award Agreement), by the Participant’s designated beneficiary, provided
such beneficiary has been designated prior to Participant’s death in a form
acceptable to the Administrator. If no such beneficiary has been designated by
the Participant, then such Option may be exercised by the personal
representative of the Participant’s estate or by the person(s) to whom the
Option is transferred pursuant to the Participant’s will or in accordance with
the laws of descent and distribution. In the absence of a specified time in the
Award Agreement, the Option will remain exercisable for twelve (12) months
following Participant’s death. Unless otherwise provided by the Administrator,
if at the time of death Participant is not vested as to his or her entire
Option, the Shares covered by the unvested portion of the Option will
immediately revert to the Plan. If the Option is not so exercised within the
time specified herein, the Option will terminate, and the Shares covered by
such Option will revert to the Plan.


 


(v)                                 Termination for Cause. If a Participant’s status as a Service
Provider is terminated for Cause, then the Option will immediately terminate,
and the Shares covered by such Option will revert to and again become available
for issuance under the Plan.


 


(vi)                              Other Termination. A Participant’s Award Agreement may also
provide that if the exercise of the Option following the termination of
Participant’s status as a Service Provider (other than upon the Participant’s
death or Disability) would result in liability under Section 16(b), then the
Option will terminate on the earlier of (A) the expiration of the term of the
Option set forth in the Award Agreement, or (B) the 10th day after the last
date on which such exercise would result in such liability under Section 16(b).
Finally, a Participant’s Award Agreement may also provide that if the exercise
of the Option following the termination of the Participant’s status as a
Service Provider (other than upon the Participant’s death or disability) would
be prohibited at any time solely because the issuance of Shares would violate
the registration requirements under the Securities Act, then the Option will
terminate on the earlier of (A) the expiration of the term of the Option, or
(B) the expiration of a period of three (3) months after the termination of the
Participant’s status as a Service Provider during which the exercise of the
Option would not be in violation of such registration requirements.


 


7.                                       Stock Appreciation
Rights.


 


(a)                                  Grant of Stock Appreciation Rights. Subject to the terms and conditions of the
Plan, a Stock Appreciation Right may be granted to Service Providers at any
time and from time to time as will be determined by the Administrator, in its
sole discretion.


 


(b)                                 Number of Shares. The Administrator will have complete
discretion to determine the number of Stock Appreciation Rights granted to any
Participant, provided that during any Fiscal Year, no Participant will be
granted Stock Appreciation Rights covering more than 250,000 Shares. Notwithstanding
the foregoing limitation, in connection with a Participant’s initial service as
an Employee, an Employee may be granted Stock Appreciation Rights covering up
to an additional 500,000 Shares.


 


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(c)                                  Exercise Price and Other Terms. The Administrator, subject to the
provisions of the Plan, will have complete discretion to determine the terms
and conditions of Stock Appreciation Rights granted under the Plan, provided,
however, that the exercise price will be not less than 100% of the Fair Market
Value of a Share on the date of grant.


 


(d)                                 Stock Appreciation Right Agreement. Each Stock Appreciation Right grant will be
evidenced by an Award Agreement that will specify the exercise price, the term
of the Stock Appreciation Right, the conditions of exercise, and such other
terms and conditions as the Administrator, in its sole discretion, will
determine.


 


(e)                                  Expiration of Stock Appreciation Rights. A Stock Appreciation Right granted under
the Plan will expire upon the date determined by the Administrator, in its sole
discretion, and set forth in the Award Agreement. Notwithstanding the
foregoing, the rules of Section 6(d) also will apply to Stock Appreciation
Rights.


 


(f)                                    Payment of Stock Appreciation Right Amount. Upon exercise of a Stock Appreciation
Right, a Participant will be entitled to receive payment from the Company in an
amount determined by multiplying:


 


(i)                                     The difference between the Fair Market Value
of a Share on the date of exercise over the exercise price; times


 


(ii)                                  The number of Shares with respect to which
the Stock Appreciation Right is exercised.


 


At the discretion of the Administrator, the
payment upon Stock Appreciation Right exercise may be in cash, in Shares of
equivalent value, or in some combination thereof.


 


8.                                       Restricted Stock.


 


(a)                                  Grant of Restricted Stock. Subject to the terms and provisions of the
Plan, the Administrator, at any time and from time to time, may grant Shares of
Restricted Stock to Service Providers in such amounts as the Administrator, in
its sole discretion, will determine.


 


(b)                                 Restricted Stock Agreement. Each Award of Restricted Stock will be
evidenced by an Award Agreement that will specify the Period of Restriction,
the number of Shares granted, and such other terms and conditions as the
Administrator, in its sole discretion, will determine. Notwithstanding the
foregoing sentence, during any Fiscal Year no Participant will receive more
than an aggregate of 125,000 Shares of Restricted Stock; provided, however,
that in connection with a Participant’s initial service as an Employee, an
Employee may be granted an aggregate of up to an additional 250,000 Shares of
Restricted Stock. Unless the Administrator determines otherwise, Shares of
Restricted Stock will be held by the Company as escrow agent until the
restrictions on such Shares have lapsed.


 


(c)                                  Transferability. Except as provided in this Section 8,
Shares of Restricted Stock may not be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated until the end of the applicable Period of
Restriction.


 


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(d)                                 Other Restrictions. The Administrator, in its sole discretion,
may impose such other restrictions on Shares of Restricted Stock as it may deem
advisable or appropriate.


 


(e)                                  Removal of Restrictions. Except as otherwise provided in this
Section 8, Shares of Restricted Stock covered by each Restricted Stock grant
made under the Plan will be released from escrow as soon as practicable after
the last day of the Period of Restriction. The restrictions will lapse at a
rate determined by the Administrator; provided, however, that, except as
otherwise provided in Section 14(c), Shares of Restricted Stock will not vest
more rapidly than one-third (1/3rd) of the total number of Shares of
Restricted Stock subject to an Award each year from the date of grant (or, if
applicable, the date a Participant begins providing services to the Company or
any Parent or Subsidiary of the Company), unless the Administrator determines
that the Award is to vest upon the achievement of performance criteria and the
period for measuring such performance will cover at least twelve (12) months.
Notwithstanding the foregoing sentence, the Administrator, in its sole
discretion, may provide at the time of or following the date of grant for
accelerated vesting for an Award of Restricted Stock upon or in connection with
a Change in Control or upon or in connection with a Participant’s termination
of service due to death, Disability or retirement.


 


(f)                                    Voting Rights. During the Period of Restriction, Service
Providers holding Shares of Restricted Stock granted hereunder may exercise
full voting rights with respect to those Shares, unless the Administrator
determines otherwise.


 


(g)                                 Dividends and Other Distributions. During the Period of Restriction, Service
Providers holding Shares of Restricted Stock will be entitled to receive all
dividends and other distributions paid with respect to such Shares unless
otherwise provided in the Award Agreement. If any such dividends or distributions
are paid in Shares, the Shares will be subject to the same restrictions on
transferability and forfeitability as the Shares of Restricted Stock with
respect to which they were paid.


 


(h)                                 Return of Restricted Stock to Company. On the date set forth in the Award
Agreement, the Restricted Stock for which restrictions have not lapsed will
revert to the Company and again will become available for grant under the Plan.


 


9.                                       Restricted Stock Units.


 


(a)                                  Grant. Restricted Stock Units may be granted at any time and from time to
time as determined by the Administrator. Each Restricted Stock Unit grant will
be evidenced by an Award Agreement that will specify such other terms and
conditions as the Administrator, in its sole discretion, will determine,
including all terms, conditions, and restrictions related to the grant, the
number of Restricted Stock Units and the form of payout, which, subject to
Section 9(d), may be left to the discretion of the Administrator. Notwithstanding
the anything to the contrary in this subsection (a), during any Fiscal Year of
the Company, no Participant will receive more than an aggregate of 125,000
Restricted Stock Units; provided, however, that in connection with a
Participant’s initial service as an Employee, an Employee may be granted an
aggregate of up to an additional 250,000 Restricted Stock Units.


 


(b)                                 Vesting Criteria and Other Terms. The Administrator will set vesting criteria
in its discretion, which, depending on the extent to which the criteria are
met, will determine the


 


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number of Restricted Stock
Units that will be paid out to the Participant. Each Award of Restricted Stock
Units will be evidenced by an Award Agreement that will specify the vesting
criteria, and such other terms and conditions as the Administrator, in its sole
discretion, will determine; provided, however, that, except as otherwise
provided in Section 14(c), an Award of Restricted Stock Units will not vest
more rapidly than one-third (1/3rd) of the total number of Restricted Stock
Units subject to an Award each year from the date of grant (or, if applicable,
the date a Participant begins providing services to the Company or any Parent
or Subsidiary of the Company), unless the Administrator determines that the
Award is to vest upon the achievement of performance criteria and the period
for measuring such performance will cover at least twelve (12) months.
Notwithstanding the foregoing sentence, the Administrator, in its sole
discretion, may provide at the time of or following the date of grant for
accelerated vesting for an Award of Restricted Stock Units upon or in
connection with a Change in Control or upon or in connection with a
Participant’s termination of service due to death, Disability or retirement.


 


(c)                                  Earning Restricted Stock Units. Upon meeting the applicable vesting
criteria, the Participant will be entitled to receive a payout as specified in
the Award Agreement.


 


(d)                                 Form and Timing of Payment. Payment of earned Restricted Stock Units
will be made as soon as practicable after the date(s) set forth in the Award
Agreement. The Administrator, in its sole discretion, may pay earned Restricted
Stock Units in cash, Shares, or a combination thereof. Shares represented by
Restricted Stock Units that are fully paid in cash again will be available for
grant under the Plan.


 


(e)                                  Cancellation. On the date set forth in the Award
Agreement, all unearned Restricted Stock Units will be forfeited to the
Company.


 


10.                                 Performance Units and
Performance Shares.


 


(a)                                  Grant of Performance Units/Shares. Performance Units and Performance Shares
may be granted to Service Providers at any time and from time to time, as will
be determined by the Administrator, in its sole discretion. The Administrator
will have complete discretion in determining the number of Performance
Units/Shares granted to each Participant provided that during any Fiscal Year,
(a) no Participant will receive Performance Units having an initial value
greater than $1,000,000, and (b) no Participant will receive more than 125,000
Performance Shares. Notwithstanding the foregoing limitation, in connection
with a Participant’s initial service as an Employee, an Employee may be granted
up to an additional 250,000 Performance Shares.


 


(b)                                 Value of Performance Units/Shares. Each Performance Unit will have an initial
value that is established by the Administrator on or before the date of grant. Each
Performance Share will have an initial value equal to the Fair Market Value of
a Share on the date of grant.


 


(c)                                  Performance Objectives and Other Terms. The Administrator will set performance
objectives or other vesting provisions (including, without limitation,
continued status as a Service Provider) in its discretion which, depending on
the extent to which they are met, will determine the number or value of
Performance Units/Shares that will be paid out to the Participant. The
Administrator may set performance objectives based upon the achievement of
Company-wide,


 


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divisional, or individual
goals, or any other basis determined by the Administrator in its discretion.
Each Award of Performance Units/Shares will be evidenced by an Award Agreement
that will specify the Performance Period, and such other terms and conditions
as the Administrator, in its sole discretion, will determine; provided,
however, that, except as otherwise provided in Section 14(c), Performance
Units/Shares will not vest more rapidly than one-third (1/3rd) of
the total number of Performance Units/Shares subject to an Award each year from
the date of grant (or, if applicable, the date a Participant begins providing
services to the Company or any Parent or Subsidiary of the Company), unless the
Administrator determines that the Award is to vest upon the achievement of
performance criteria and the period for measuring such performance will cover
at least twelve (12) months. Notwithstanding the foregoing sentence, the
Administrator, in its sole discretion, may provide at the time of or following
the date of grant for accelerated vesting for an Award of Performance
Units/Shares upon or in connection with a Change in Control or upon or in
connection with a Participant’s termination of service due to death, Disability
or retirement.


 


(d)                                 Earning of Performance Units/Shares. After the applicable Performance Period has
ended, the holder of Performance Units/Shares will be entitled to receive a
payout of the number of Performance Units/Shares earned by the Participant over
the Performance Period, to be determined as a function of the extent to which
the corresponding performance objectives or other vesting provisions have been
achieved.


 


(e)                                  Form and Timing of Payment of Performance
Units/Shares. Payment of
earned Performance Units/Shares will be made as soon as practicable after the
expiration of the applicable Performance Period. The Administrator, in its sole
discretion, may pay earned Performance Units/Shares in the form of cash, in
Shares (which have an aggregate Fair Market Value equal to the value of the
earned Performance Units/Shares at the close of the applicable Performance
Period) or in a combination thereof.


 


(f)                                    Cancellation of Performance Units/Shares. On the date set forth in the Award
Agreement, all unearned or unvested Performance Units/Shares will be forfeited
to the Company, and again will be available for grant under the Plan.


 


11.                                 Performance Goals. Awards of Restricted
Stock, Restricted Stock Units, Performance Shares and Performance Units and
other incentives under the Plan may be made subject to the attainment of
performance goals relating to one or more business criteria within the meaning
of Section 162(m) of the Code and may provide for a targeted level or levels of
achievement (“Performance Goals”) including assets; bond rating; cash flow;
cash position; earnings before interest and taxes; earnings before interest,
taxes, depreciation and amortization; earnings per Share; economic profit;
economic value added; equity or stockholder’s equity; growth in earnings;
growth in revenue; market share; net income; net profit; net sales; noninterest
income as percent of total income; operating earnings; operating income; profit
before tax; ratio of debt to debt plus equity; ratio of operating earnings to
capital spending; results of regulatory reviews and examinations; return on
equity; return on net assets; return on sales; revenue; sales growth; or total
return to stockholders. Any Performance Goals may be used to measure the
performance of the Company as a whole or a business unit of the Company and may
be measured relative to a peer group or index. The Performance Goals may differ
from Participant to Participant and from Award to Award. Prior to the
Determination Date, the Administrator will determine whether any significant
element(s) will be included in or excluded from the calculation of any
Performance Goal with respect to any


 


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Participant.
In all other respects, Performance Goals will be calculated in accordance with
the Company’s financial statements, generally accepted accounting principles,
or under a methodology established by the Administrator prior to the issuance
of an Award, which is consistently applied and identified in the financial
statements, including footnotes, or the management discussion and analysis
section of the Company’s annual report.


 


12.                                 Leaves of Absence. Unless the
Administrator provides otherwise, vesting of Awards granted hereunder will be
suspended during any unpaid leave of absence. A Service Provider will not cease
to be an Employee in the case of (i) any leave of absence approved by the
Company or (ii) transfers between locations of the Company or between the
Company and its Affiliates. For purposes of Incentive Stock Options, no such
leave may exceed ninety (90) days, unless reemployment upon expiration of such
leave is guaranteed by statute or contract. If reemployment upon expiration of
a leave of absence approved by the Company is not so guaranteed, then three (3)
months following the 91st day of such leave any Incentive Stock Option held by
the Participant will cease to be treated as an Incentive Stock Option and will
be treated for tax purposes as a Nonstatutory Stock Option.


 


13.                                 Transferability of
Awards.
Unless determined otherwise by the Administrator, an Award may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner
other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Participant, only by the Participant. If
the Administrator makes an Award transferable, such Award will contain such
additional terms and conditions as the Administrator deems appropriate.


 


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14.                                 Adjustments; Dissolution
or Liquidation; Merger or Change in Control.


 


(a)                                  Adjustments. In the event that any dividend or other distribution (whether in the
form of cash, Shares, other securities, or other property), recapitalization,
stock split, reverse stock split, reorganization, merger, consolidation, split-up,
spin-off, combination, repurchase, or exchange of Shares or other securities of
the Company, or other change in the corporate structure of the Company
affecting the Shares occurs, the Administrator, in order to prevent diminution
or enlargement of the benefits or potential benefits intended to be made
available under the Plan, may (in its sole discretion) adjust the number and
class of Shares that may be delivered under the Plan and/or the number, class,
and price of Shares covered by each outstanding Award, and the numerical Share
limits set forth in Sections 3, 6, 7, 8, 9 and 10.


 


(b)                                 Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, the Administrator will notify each Participant as
soon as practicable prior to the effective date of such proposed transaction. To
the extent it has not been previously exercised, an Award will terminate
immediately prior to the consummation of such proposed action.


 


(c)                                  Change in Control. In the event of a Change in Control, each
outstanding Award will be assumed or an equivalent option or right substituted
by the successor corporation or a Parent or Subsidiary of the successor
corporation (the “Successor Corporation”). In the event that the Successor
Corporation refuses to assume or substitute for the Award, the Participant will
fully vest in and have the right to exercise all of his or her outstanding
Options and Stock Appreciation Rights, including Shares as to which such Awards
would not otherwise be vested or exercisable, all restrictions on Restricted
Stock will lapse, and, with respect to Restricted Stock Units, Performance
Shares and Performance Units, all Performance Goals or other vesting criteria
will be deemed achieved at target levels and all other terms and conditions met.
In addition, if an Option or Stock Appreciation Right becomes fully vested and
exercisable in lieu of assumption or substitution in the event of a Change in
Control, the Administrator will notify the Participant in writing or
electronically that the Option or Stock Appreciation Right will be fully vested
and exercisable for a period of time determined by the Administrator in its
sole discretion, and the Option or Stock Appreciation Right will terminate upon
the expiration of such period.


 


For the purposes of this
subsection (c), an Award will be considered assumed if, following the Change in
Control, the Award confers the right to purchase or receive, for each Share
subject to the Award immediately prior to the Change in Control, the consideration
(whether stock, cash, or other securities or property) or, in the case of a
Stock Appreciation Right upon the exercise of which the Administrator
determines to pay cash or a Performance Share or Performance Unit which the
Administrator can determine to pay in cash, the fair market value of the
consideration received in the merger or Change in Control by holders of Common
Stock for each Share held on the effective date of the transaction (and if
holders were offered a choice of consideration, the type of consideration
chosen by the holders of a majority of the outstanding Shares); provided,
however, that if such consideration received in the Change in Control is not
solely common stock of the Successor Corporation, the Administrator may, with
the consent of the Successor Corporation, provide for the consideration to be
received upon the exercise of an Option or Stock Appreciation Right or upon the
payout of a Performance Share or Performance Unit, for each Share subject to
such Award (or in the case of Performance Units, the number of implied shares
determined by dividing the value of the


 


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Performance
Units by the per share consideration received by holders of Common Stock in the
Change in Control), to be solely common stock of the Successor Corporation
equal in fair market value to the per share consideration received by holders
of Common Stock in the Change in Control.


 


Notwithstanding anything in
this Section 14(c) to the contrary, an Award that vests, is earned or paid-out
upon the satisfaction of one or more Performance Goals will not be considered
assumed if the Company or its successor modifies any of such Performance Goals
without the Participant’s consent; provided, however, a modification to such Performance
Goals only to reflect the Successor Corporation’s post-Change in Control
corporate structure will not be deemed to invalidate an otherwise valid Award
assumption.


 


15.                                 Tax Withholding


 


(a)                                  Withholding Requirements. Prior to the delivery of any Shares or cash
pursuant to an Award (or exercise thereof), the Company will have the power and
the right to deduct or withhold, or require a Participant to remit to the
Company, an amount sufficient to satisfy federal, state, local, foreign or
other taxes (including the Participant’s FICA obligation) required to be
withheld with respect to such Award (or exercise thereof).


 


(b)                                 Withholding Arrangements. The Administrator, in its sole discretion
and pursuant to such procedures as it may specify from time to time, may permit
a Participant to satisfy such tax withholding obligation, in whole or in part
by (a) paying cash, (b) electing to have the Company withhold otherwise
deliverable cash or Shares having a Fair Market Value equal to the amount
required to be withheld, (c) delivering to the Company already-owned Shares
having a Fair Market Value equal to the amount required to be withheld, or (d)
selling a sufficient number of Shares otherwise deliverable to the Participant
through such means as the Administrator may determine in its sole discretion
(whether through a broker or otherwise) equal to the amount required to be
withheld. The amount of the withholding requirement will be deemed to include
any amount which the Administrator agrees may be withheld at the time the
election is made, not to exceed the amount determined by using the maximum
federal, state or local marginal income tax rates applicable to the Participant
with respect to the Award on the date that the amount of tax to be withheld is
to be determined. The Fair Market Value of the Shares to be withheld or
delivered will be determined as of the date that the taxes are required to be
withheld.


 


16.                                 No Effect on Employment
or Service. Neither the Plan nor any Award will confer upon a Participant any right
with respect to continuing the Participant’s relationship as a Service Provider
with the Company, nor will they interfere in any way with the Participant’s
right or the Company’s right to terminate such relationship at any time, with
or without cause, to the extent permitted by Applicable Laws.


 


17.                                 Date of Grant. The date of grant of
an Award will be, for all purposes, the date on which the Administrator makes
the determination granting such Award, or such other later date as is
determined by the Administrator. Notice of the determination will be provided
to each Participant within a reasonable time after the date of such grant.


 


17

















 


18.                                 Term of Plan. Subject to Section 22 of the Plan, the Plan will become
effective upon its adoption by the Board. It will continue in effect for a term
of ten (10) years unless terminated earlier under Section 19 of the Plan.


 


19.                                 Amendment and
Termination of the Plan.


 


(a)                                  Amendment and Termination. The Administrator may at any time amend,
alter, suspend or terminate the Plan.


 


(b)                                 Stockholder Approval. The Company will obtain stockholder
approval of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.


 


(c)                                  Effect of Amendment or Termination. No amendment, alteration, suspension or
termination of the Plan will impair the rights of any Participant, unless
mutually agreed otherwise between the Participant and the Administrator, which
agreement must be in writing and signed by the Participant and the Company. Termination
of the Plan will not affect the Administrator’s ability to exercise the powers
granted to it hereunder with respect to Awards granted under the Plan prior to
the date of such termination.


 


20.                                 Conditions Upon Issuance
of Shares.


 


(a)                                  Legal Compliance. Shares will not be issued pursuant to the
exercise of an Award unless the exercise of such Award and the issuance and
delivery of such Shares will comply with Applicable Laws and will be further
subject to the approval of counsel for the Company with respect to such
compliance.


 


(b)                                 Investment Representations. As a condition to the exercise of an Award,
the Company may require the person exercising such Award to represent and
warrant at the time of any such exercise that the Shares are being purchased
only for investment and without any present intention to sell or distribute
such Shares if, in the opinion of counsel for the Company, such a
representation is required.


 


21.                                 Inability to Obtain
Authority. The inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company’s counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, will
relieve the Company of any liability in respect of the failure to issue or sell
such Shares as to which such requisite authority will not have been obtained.


 


22.                                 Stockholder Approval. The Plan will be
subject to approval by the stockholders of the Company within twelve (12)
months after the date the Plan is adopted. Such stockholder approval will be
obtained in the manner and to the degree required under Applicable Laws.


 


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