Document:

Citizens Bancorp 2006 Stock Plan  (443817).DOC

CITIZENS BANCORP

2006 STOCK PLAN

Adopted by the Board of Directors on March 14, 2006

Approved by the shareholders on May 16, 2006

1.

Purposes of the Plan.  The purposes of this 2006 Stock Plan are to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to Employees and Directors and to promote the success of the Company’s business.  Options granted under the Plan may be Incentive Stock Options or Nonstatutory Stock Options, as determined by the Administrator at the time of grant.  Restricted Stock Awards and other stock-based Awards may also be granted under the Plan.

2.

Definitions.  As used herein, the following definitions shall apply:

(a)

“Administrator” means the Board or any of its Committees as shall administer the Plan in accordance with Section 4 hereof.

(b)

“Applicable Laws” means the requirements relating to the administration of stock option plans under state corporate laws, federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted where Options or Awards are granted under the Plan.

(c)

“Award” includes a Restricted Stock Award, and any other stock-based Award.

(d)

“Board” means the Board of Directors of the Company.

(e)

“Code” means the Internal Revenue Code of 1986, as amended.

(f)

“Committee” means a committee of Directors appointed by the Board in accordance with Section 4 hereof. 

(g)

“Common Stock” means the Common Stock of the Company.

(h)

“Company” means Citizens Bancorp, a California corporation and any Subsidiary thereof.

(i)

“Director” means a member of the Board of Directors of the Company.

(j)

“Employee” means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary of the Company.  A Participant shall 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, its Parent, any Subsidiary, or any successor.  For purposes of Incentive Stock Options, no such leave may exceed ninety 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, on the 181st day of such leave any Incentive Stock Option held by the Participant shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory Stock Option.  Neither service as a Director n
or payment of a director’s fee by the Company shall be sufficient to constitute “employment” by the Company.

(k)

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

 

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(l)

“Fair Market Value” means the market price of the Common Stock, determined by the Committee as follows:

(i)

If the Common Stock was traded over-the-counter on the date in question but was not traded on the Nasdaq system or the Nasdaq National Market System, then the Fair Market Value shall be equal to the mean between the last reported representative bid and asked prices quoted for such date by the principal automated inter-dealer quotation system on which the Common Stock is quoted or, if the Common Stock is not quoted on any such system, by the “Pink Sheets” published by the National Quotation Bureau, Inc.;

(ii)

If the Common Stock was traded over-the-counter on the date in question and was traded on the Nasdaq system or the Nasdaq National Market System, then the Fair Market Value shall be equal to the last-transaction price quoted for such date by the Nasdaq system or the Nasdaq National Market System; 

(iii)

If the Common Stock was traded on a stock exchange on the date in question, then the Fair Market Value shall be equal to the closing price reported by the applicable composite transactions report for such date; or

(iv)

In the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Administrator, in reliance upon Internal Revenue Service Treasury Regulations under the Code, as applicable.      

In all cases, the determination of Fair Market Value by the Committee shall be conclusive and binding on all persons.

(m)

“Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code.

(n)

“Nonstatutory Stock Option” means an Option not intended to qualify as Incentive Stock Option.

(o)

“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.

(p)

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

(q)

“Option Agreement” means an agreement between the Company and a Participant evidencing the terms and conditions of an individual Option grant.  The Option Agreement is subject to the terms and conditions of the Plan.

(r)

“Option Exchange Program” means a program whereby outstanding Options are exchanged for Options with a lower exercise price.

(s)

“Optioned Stock” means the Common Stock subject to an Option.

(t)

“Optionee” means the holder of an outstanding Option granted under the Plan.

(u)

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

 

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(v)

“Participant” means an Employee or Director selected by the Administrator and eligible to receive an Option or an Award under this Plan.

(w)

“Plan” means this 2006 Stock Plan.

(x)

“Restricted Stock” means the actual shares of Common Stock acquired pursuant to a grant of a Restricted Stock Award under Section 8 below.

(y)

“Restricted Stock Award” means an award of Common Stock granted pursuant to Section 8 below.

(z)

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

(aa)

“Share” means a share of the Common Stock, as adjusted in accordance with Section 10 below.

(bb)

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

3.

Stock Subject to the Plan.  Subject to the provisions of Section 10 of the Plan, the maximum aggregate number of Shares which may be subject to Options on Awards and sold under the Plan is 489,185 Shares.  The Shares may be authorized but unissued, or reacquired Common Stock.

If an Option or an Award expires or becomes unexercisable without having been exercised in full, the unpurchased or unvested Shares which were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated).  However, Shares that have actually been issued under the Plan, upon exercise of either an Option or an Award, shall not be returned to the Plan and shall not become available for future distribution under the Plan, except that if Shares of Restricted Stock are repurchased by the Company at their original purchase price, or are forfeited, such Shares shall become available for future grant under the Plan.

4.

Administration of the Plan.

(a)

Administrator.

The Plan shall be administered by the Board or a Committee appointed by Board, which Committee shall be constituted to comply with Applicable Laws.

(b)

Powers of the Administrator.  Subject to the provisions of the Plan and, in the case of a Committee, the specific duties delegated by the Board to such Committee, and subject to the approval of any relevant authorities, the Administrator shall have the authority in its discretion:

(i)

to determine the Fair Market Value;

(ii)

to select the Participants to whom Options and Awards may from time to time be granted hereunder;

(iii)

to determine the number of Shares to be covered by each such Option or Award granted hereunder;

(iv)

to approve forms of agreement for use under the Plan;

(v)

to determine the terms and conditions of any Option or Award granted hereunder, and amend any outstanding agreement, subject to applicable legal restrictions and to the

 

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consent of the Optionee or Participant who entered into such agreement.  Such terms and conditions include, but are not limited to, the exercise price, the time or times when Options may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions on Options or Restricted Stock Awards, and any restriction or limitation regarding any Option or Award or the Common Stock relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine;

(vi)

to determine whether and under what circumstances an Option may be settled in cash instead of Common Stock;

(vii)

to reduce the exercise price of any Option to the then current Fair Market Value if the Fair Market Value of the Common Stock covered by such Option has declined since the date the Option was granted;

(viii)

to initiate an Option Exchange Program;

(ix)

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 qualifying for preferred tax treatment under any tax laws;

(x)

to allow Participants to satisfy withholding tax obligations by electing to have the Company withhold from the Shares to be issued upon exercise of an Option or grant of an Award that number of Shares having a Fair Market Value equal to the amount required to be withheld.  The Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined.  All elections by Participants to have Shares withheld for this purpose shall be made in such form and under such conditions as the Administrator may deem necessary or advisable; and

(xi)

to construe and interpret the terms of the Plan and Options and Awards granted pursuant to the Plan, and take any other actions deemed necessary or advisable for the administration of the Plan.

(c)

Effect of Administrator’s Decision.  All decisions, determinations and interpretations of the Administrator shall be final and binding on all Participants.

5.

Eligibility.

(a)

Nonstatutory Stock Options and Awards may be granted to Participants.  Incentive Stock Options may be granted only to Employees.

(b)

Neither the Plan nor any Option or Award shall confer upon any Participant any right with respect to continuing the Participant’s relationship with the Company, nor shall it interfere in any way with his or her right or the Company’s right to terminate such relationship at any time, with or without cause.

6.

Term of Plan.  The Plan shall become effective upon its adoption by the Board.  It shall continue in effect for a term of ten (10) years unless sooner terminated under Section 12 of the Plan.

7.

Stock Options.

(a)

Type of Option.

Each Option shall be designated in the Option Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option.  However, notwithstanding such

 

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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 Optionee during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such Options shall be treated as Nonstatutory Stock Options.  The Fair Market Value of the Shares shall be determined as of the time the Option with respect to such Shares is granted.  Each Option shall be evidenced by a written Option Agreement in the form determined by the Administrator that shall specify the terms, conditions, limitations and such other provisions as applicable as determined by the Administrator.

(b)

Term of Option.

The term of each Option shall be stated in the Option Agreement; provided, however, that the term shall be no more than ten (10) years from the date of grant thereof.  In the case of an Incentive Stock Option granted to an Employee who, at the time the 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 term of the Option shall be five (5) years from the date of grant or such shorter term as may be provided in the Option Agreement.

(c)

Option Exercise Price and Consideration.

(i)

The per share exercise price for the Shares to be issued upon exercise of an Option shall be such price as is determined by the Administrator, but shall be subject to the following:

(A)

In the case of an Incentive Stock Option

(1)

granted to an Employee who, at the time of grant of such Option, 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 exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant.

(2)

granted to any other Employee, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant.

(B)

In the case of a Nonstatutory Stock Option

(1)

granted to a Participant who, at the time of grant of such Option, 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 exercise price shall be no less than 110% of the Fair Market Value per Share on the date of the grant.

(2)

granted to any other Participant, the per Share exercise price shall be no less than 85% of the Fair Market Value per Share on the date of grant.

(C)

Notwithstanding the foregoing, Options may be granted with a per Share exercise price other than as required above pursuant to a merger or other corporate transaction.

(ii)

The consideration to be paid for the Shares to be issued upon exercise of an Option, including the method of payment, shall be determined by the Administrator (and,
in the case of an Incentive Stock Option, shall be determined at the time of grant).  Such consideration may consist of (1) cash, (2) check,
(3) promissory note, (4) other Shares which (x) in the case of Shares acquired upon exercise of an Option, have been owned by the Optionee for more
than six months on the date of surrender, and (y) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to
which such Option shall be exercised, (5) consideration received by the Company under a cashless exercise program implemented by the Company in connection
with the Plan, or (6) any combination of the foregoing methods of payment.  In making its determination as to the type of

 

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consideration to accept, the Administrator shall consider if acceptance of
such consideration may be reasonably expected to benefit the Company.

(d)

Exercise of Option.

(i)

Procedure for Exercise; Rights as a Shareholder.  Any Option granted hereunder shall be exercisable according to the terms hereof at such times and under such conditions as determined by the Administrator and set forth in the Option Agreement, but in no case at a rate of less than 20% per year over five (5) years from the date the Option is granted.  Unless the Administrator provides otherwise, vesting of Options granted hereunder shall be tolled during any unpaid leave of absence.  An Option may not be exercised for a fraction of a Share.

An Option shall be deemed exercised when the Company receives:  (i) written or electronic notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised.  Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Option Agreement and the Plan.  Shares issued upon exercise of an Option shall be issued in the name of the Optionee or, if requested by the Optionee, in the name of the Optionee and his or her spouse.  Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Shares, notwithstanding the exercise o
f the Option.  The Company shall issue (or cause to be issued) such Shares promptly after the Option is exercised.  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 10 of the Plan.

Exercise of an Option in any manner shall result in a decrease in the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.

(ii)

Termination of Employment.  If an Optionee ceases to be employed by or perform any services for the Company, such Optionee may exercise his or her Option within such period of time as is specified in the Option Agreement (of at least thirty (30) days) 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 the Option as set forth in the Option Agreement).  To the extent that the Optionee is not entitled to exercise the Option on the date of such termination, or if the Optionee does not exercise such Option to the extent so entitled within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

(iii)

Disability of Optionee.  If an Optionee ceases to be employed by or perform any services for the Company as a result of Optionee’s disability, the Optionee may within twelve (12) months from the date of such termination (but in no event later than the expiration date of the term of such Option as set forth in the Option Agreement), exercise an Option to the extent otherwise entitled to exercise it at the date of such termination.  If such disability is not a “disability” as such term is defined in Section 22(e)(3) of the Code, in the case of an Incentive Stock Option such Incentive Stock Option shall automatically cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory Stock Option on the day three months and one day following such termination.  To the extent that the Optionee is not entitled to exercise the Option on
 the date of termination, or if the Optionee does not exercise such Option to the extent so entitled within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

 

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(iv)

Death of Optionee.  If an Optionee dies while employed by or while performing services for the Company, the Option may be exercised at any time within twelve (12) months following the date of death (but in no event later than the expiration of the term of such Option as set forth in the Notice of Grant) to the extent vested on the date of death.  If, at the time of death, the Optionee is not vested as to the entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan.  The Option may be exercised by the executor or administrator of the Optionee’s estate or, if none, by the person(s) entitled to exercise the Option under the Optionee’s will or the laws of descent or distribution.  If the Option is not so exercised within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Pla
n.

(v)

Buyout Provisions.  The Administrator may at any time offer to buy out for a payment in cash or Shares an Option previously granted, based on such terms and conditions as the Administrator shall establish and communicate to the Optionee at the time that such offer is made.

(vi)

Non-Transferability of Options.  Options 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 Optionee, only by the Optionee.

8.

Restricted Stock.

(a)

Restricted Stock Award Agreement. Restricted Stock Awards may be issued to a Participant either alone, in addition to, or in tandem with other Awards granted under the Plan and/or cash awards made outside of the Plan.  Each grant of a Restricted Stock Award under the Plan shall be evidenced by a Restricted Stock Award agreement (the "Restricted Stock Award Agreement") executed by the Participant and the Company in the form determined by the Administrator. Restricted Stock Awards shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions, including any restrictions, which are not inconsistent with the Plan and which the Administrator deems appropriate for inclusion in a Restricted Stock Award Agreement. The Restricted Stock Award Agreement shall specify the purchase price (if any) for the Restricted Stock. The Restricted Stoc
k Agreement shall contain such  other terms, provisions and conditions not inconsistent with the Plan as may be determined by the Administrator in its sole discretion. The provisions of the various Restricted Stock Award Agreements entered into under the Plan need not be identical. The Administrator may amend any Restricted Stock Award to accelerate the dates after which such Restricted Stock Award may be executed in whole or in part.

(b)

Restrictions. Each Restricted Stock Award Agreement shall specify any restrictions on the Restricted Stock Award. Each Restricted Stock Award Agreement shall specify the date(s) ("Vesting Date") when all or any restrictions to the Restricted Stock Award shall lapse. 

(c)

Escrow of Restricted Stock. Until all restrictions have expired or been removed, the Secretary or such other escrow holder as the Board of Directors may appoint shall retain custody of the stock certificates representing the Restricted Stock subject to the Award. In no event shall the Participant retain physical custody of any certificates representing shares of Restricted Stock awarded to him or her.

(d)

Termination of Employment and Forfeiture of Restricted Stock. Each Restricted Stock Award Agreement shall specify the number of shares and the term of the Restricted Stock Award. Subject to the foregoing, the Administrator at its sole discretion shall determine when a Restricted Stock Award is to expire. In the event that the Participant’s service terminates for any reason, including death or disability, the Shares subject to the Restricted Stock Award shall be earned only to the extent such Shares have vested as of the most recent Vesting Date prior to the date of such termination. Accordingly, the

 

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Participant shall forfeit any Restricted Stock subject to the Restricted Stock Award as to which vesting has not yet occurred, and the Restricted Stock so forfeited shall be returned to the Company.

(e)

Transferability. A Participant’s Restricted Stock Award shall not be transferable during the Participant’s lifetime, except to the extent otherwise permitted in the Participant’s Restricted Stock Award Agreement. 

(f)

Rights as a Shareholder.  Once the Restricted Stock Awards is granted, the Participant shall have rights equivalent to those of a shareholder and shall be a shareholder when his or her purchase is entered upon the records of the duly authorized transfer agent of the Company.  No adjustment shall be made for a dividend or other right for which the record date is prior to the date the Restricted Stock Awards is granted, except as provided in Section 10 of the Plan. 

(g)

Taxes. The Company shall have the right to require any person entitled to receive Shares pursuant to a Restricted Stock Award to pay the amount of any tax which is required to be withheld with respect to such Shares, or, in lieu thereof, to retain, or to sell without notice, a sufficient number of Shares to cover the amount required to be withheld.

9.

Other Stock-Based Awards.

(a)

The Administrator shall have complete discretion in determining the number of Shares subject to other stock-based Awards, the consideration for such Awards and the terms, conditions and limitations pertaining to same including, without limitation, restrictions based upon the achievement of specific business objectives, tenure, and other measurements of individual or business performance, and/or restrictions under applicable federal or state securities laws, and conditions under which such Awards will lapse.

(b)

Payment of other stock-based Awards may be in the form of cash, shares, other Awards, or in such combinations thereof as the Committee shall determine at the time of grant, and with such restrictions as it may impose. Payment may be made in a lump sum or in installments as prescribed by the Administrator. The Administrator may also require or permit Participants to elect to defer the issuance of Shares or the settlement of Awards in cash under such rules and procedures as it may establish under the Plan. The Administrator may also provide that deferred settlements include the payment or crediting of interest on the deferred amounts or the payment or crediting of dividend equivalent to deferred amounts denominated in Shares.

(c)

The Administrator may, at its sole discretion, direct the Company to issue Shares subject to such restrictive legends and/or stop transfer instructions as the Administrator deems appropriate.

10.

Adjustments Upon Changes in Capitalization Merger or Asset Sale.

(a)

Changes in Capitalization.  Subject to any required action by the shareholders of the Company, the number of shares of Common Stock covered by each outstanding
Option or Award, and the number of shares of Common Stock which have been authorized for issuance under the Plan but as to which no Options or Awards have yet been
granted or which have been returned to the Plan upon cancellation or expiration of an Option or an Award, as well as the price per share of Common Stock covered by
each such outstanding Option or Award, shall be proportionately adjusted, as applicable, for any increase or decrease in the number of issued shares of Common Stock
resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number
of issued shares of Common Stock effected without receipt of consideration by the Company.  The conversion of any convertible securities of the Company shall not be

 

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deemed to have been “effected without receipt of consideration.”  Such adjustment shall be made by the Board, whose determination in that respect shall be final, binding
and conclusive.  Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common
Stock subject to an Option or an Award.

(b)

Dissolution or Liquidation.  In the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify the Participant at least fifteen (15) days prior to such proposed action.  To the extent it has not been previously exercised, the Option or Award shall terminate immediately prior to the consummation of such proposed action.

(c)

Merger or Asset Sale.  In the event of a merger of the Company with or into another corporation, or the sale of substantially all of the assets of the Company, each outstanding Option and Award shall be assumed or an equivalent option or right substituted by the successor corporation or a Parent or Subsidiary of the successor corporation.  In the event that the successor corporation refuses to assume or substitute for the Option or Award, the Participant shall fully vest in and have the right to exercise the Option or Award as to all of the Optioned Stock or other Shares granted pursuant to the Option or Award, including Shares as to which it would not otherwise be vested or exercisable.  If an Option or Award becomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger or sale of assets, the Administrator shall notify the Participant in writing o
r electronically that the Option or Award shall be fully exercisable for a period of fifteen (15) days from the date of such notice, and the Option or Award shall terminate upon the expiration of such period.  For the purposes of this paragraph, the Option or Award shall be considered assumed if, following the merger or sale of assets, the option or right confers the right to purchase or receive, for each Share subject to the Option or Award immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets 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).

11.

Time of Granting Options and Awards.  The date of grant of an Option or an Award shall, for all purposes, be the date on which the Administrator makes the determination granting such Option or Award, or such other date as is determined by the Administrator.  Notice of the determination shall be given to each Participant to whom an Option or Award is so granted within a reasonable time after the date of such grant.

12.

Amendment and Termination of the Plan.

(a)

Amendment and Termination.  The Board may at any time amend, alter, suspend or terminate the Plan.

(b)

Shareholder Approval.  The Board shall obtain shareholder 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 shall 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 shall not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Options or Awards granted under the Plan prior to the date of such termination.

13.

Conditions Upon Issuance of Shares.

 

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(a)

Legal Compliance. Options, Awards and Shares shall not be issued under the Plan unless their issuance and delivery shall comply with Applicable Laws and shall 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 Option or issuance of Restricted Stock or grant of an Award, the Administrator may require the intended recipient to represent and warrant that the intended recipient has investment intent and does not have any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required.

14.

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 shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

15.

Reservation of Shares.  The Company, during the term of this Plan and for so long as Options or Awards are outstanding under the Plan, shall at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.

16.

Shareholder Approval.  The Plan shall be subject to approval by the shareholders of the Company within twelve (12) months after the date the Plan is adopted.  Such shareholder approval shall be obtained in the degree and manner required under Applicable Laws.

17.

Information to Participants and Purchasers.  The Company shall provide to each Participant and to each individual who acquires Shares pursuant to the Plan, not less frequently than annually during the period such Participant or purchaser has one or more Options or Awards outstanding, and, in the case of an individual who acquires Shares pursuant to the Plan, during the period such individual owns such Shares, copies of annual financial statements.  The Company shall not be required to provide such statements to key employees whose duties in connection with the Company assure their access to equivalent information.

20.

Limitations on Number of Shares.  The total number of Shares issuable upon exercise of all outstanding Options and the total number of Shares called for under any stock bonus or similar plan or agreement, including Restricted Stock Awards, shall not exceed a number of Shares which is equal to 30% of the then outstanding Shares of the Company as calculated in accordance with the conditions and exclusions of Section 260.140.45 of Title 10 of the California Code of Regulations.

 

10Amended and Restated  CBONC 1995 Stock Option Plan  (301185.DOC;5)

ADOPTED AMENDED AND RESTATED

CITIZENS BANK OF NEVADA COUNTY

1995 STOCK OPTION PLAN

As adopted by Citizens Bancorp as of June 1, 2003

1.

Purpose.

The purpose of the 1995 Stock Option Plan (the "Plan") is to provide a means whereby selected officers, directors, and key, full-time, salaried employees of Citizens Bank of Nevada County (hereinafter called the "Bank") may be given an opportunity to purchase the Common Stock, no par value, of the Bank (the "Common Stock").

2.

Stock Options.

The Plan provides for Incentive Stock Options ("ISOs") and Nonqualified Stock Options ("NSOs").  ISOs are intended to be qualified stock options under the Internal Revenue Code of 1986, as amended ("the Code").  Generally, no tax is imposed on the recipient of an ISO at the time the option is granted or exercised by the employee.  The recipient is taxed on the difference between the sales price and the exercise price when the shares are later sold.  Under the Plan, ISO shall mean an option described in Section 422 of the Code.  NSOs are not intended to meet the requirements of the Code, and if they have a readily ascertainable fair market value, the difference between the fair market value and the exercise price may be taxed as income to the recipient at the time they are granted.  NSO shall mean an option not governed by the rules of Sections 421 through 424 of
the Code.  Except as provided in Section 4(b) of the Plan, no option may be granted alternatively as an ISO and as a NSO.

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3.

Administration.

(a)

The Board of Directors (the "Board"), whose authority shall be plenary, shall administer the Plan unless and until such time as the Board delegates administration of the Plan pursuant to subsection 3(c).

(b)

The Board, whose determinations shall be conclusive, shall have the power, subject to and within the limits of the express provisions of the Plan:

(1)

To grant options pursuant to the Plan.

(2)

To determine from time to time which of the eligible persons shall be granted options under the Plan, the number of shares for which each option shall be granted, the term of each granted option and the time or times during the term of each option within which all or portions of each option may be exercised (which at the Board's discretion may be accelerated).

(3)

To construe and interpret the Plan and options granted under it, and to establish, amend, and revoke rules and regulations for its administration.  The Board, in the exercise of this power, shall generally determine all questions of policy and expediency that may arise and may correct any defect, omission, or inconsistency in the Plan or in any option agreement in a manner and to the extent it shall deem necessary or expedient to make the Plan fully effective.

(4)

To grant options in exchange for cancellation of options granted earlier at different exercise prices, provided, however, nothing contained herein shall empower the Board to grant an ISO under conditions or pursuant to terms that are inconsistent with the requirements of Section 4(b) hereinbelow.

(5)

To prescribe the terms and provisions of each option granted (which need not be identical) and the form of written instrument that shall constitute the option agreement.

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(6)

To amend the Plan as provided in Section 11.

(7)

Generally, to exercise each powers and to perform such acts as are deemed necessary or expedient to promote the best interest of the Bank.

(8)

To take appropriate action to cause any option granted hereunder to cease to be an ISO, provided, however, no such action may be taken by the Board without the prior written consent of the affected optionee.

(c)

For grants of options to any person eligible under the Plan, the Board may, by resolution, delegate administration of the Plan (including, without limitation, the Board's powers under subsection 3(b) hereinabove) to an existing committee acting under the authority of the Board.  The Board shall have complete discretion to determine the composition, structure, form, term and operation of any committee established to administer the Plan (the "Committee").  If administration is delegated to a committee, unless the Board otherwise provides, the Committee, shall have, in connection with the administration of the Plan, the powers theretofore possessed by the Board, subject, however, to such constraints, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board.  The Board at any time may revest in the Board the administration of the Plan.

4.

Shares Subject to Plan and to Options.

(a)

Subject to the provisions of Section 9 (relating to adjustments upon changes in stock), the stock which may be sold pursuant to options granted under the Plan shall not exceed in the aggregate a number of shares equal to thirty percent (30%) of the Bank's issued and outstanding Common Stock.  Notwithstanding any other provision of this Plan, as of April 18, 2001, the stock which may be sold pursuant to options granted under the Plan was increased by 50,000 shares, resulting in a total of 72,264 shares of Common Stock reserved under this Plan as 

3

of such date.  If any options granted under the Plan shall for any reason terminate or expire without having been exercised in full, the stock not purchased under such options shall be available again for the purposes of the Plan.

(b)

The aggregate fair market value of the stock (determined at the time of the grant of the option) for which any employee may exercise ISOs for the first time in any calendar year under all plans of the Bank and its parent and subsidiary shall not exceed $100,000 plus any unused limit carryover (as defined in the Code) to such year or any other maximum aggregate fair market value to be established in the future under the Code.  Should it be determined that any ISO granted under the Plan inadvertently exceeds such maximum, such ISO grant shall be deemed to be a grant of a NSO to the extent, but only to the extent, of such excess.

5.

Eligibility.

Persons eligible for participation in the Plan (the "Participants") shall be selected by the Board of Directors or the Committee.  Directors of the Bank who are not also employees of the Bank shall not be eligible for an ISO.  No ISO may be granted to a person who, at the time of grant, owns stock possessing more than 10% of the total combined voting power of the Bank or its parent or any subsidiary unless the option price is at least 110% of the fair market value of the stock subject to the option and the term of the option does not exceed five (5) years from the date such ISO is granted.  Any employee may hold more than one option at any time.

6.

Terms of Option Agreement.

Each option agreement shall be in such form and shall contain such terms and conditions as the Board or its delegate from time to time deem appropriate, subject to the following limitations:

4

(a)

The term of any ISO shall not be greater than ten (10) years from the date it was granted.

(b)

The purchase price of each ISO and NSO shall be not less than the fair market value of the stock subject to the ISO or NSO on the date the ISO or NSO is granted.

(c)

An ISO by its terms shall not be transferable otherwise than by will or the laws of descent and distribution and may be exercisable during the lifetime of the option holder only by the option holder.

(d)

The option shall vest upon such vesting schedule as the Board in its sole discretion may fix.

(e)

Reserved.

(f)

Upon the termination of Participant's employment or Board Membership the right to exercise an option then held shall be limited to the following:

DEATH OR DISABILITY:  If a Participant's employment or Board Membership is terminated by death or disability, he or his estate, as the case may be, shall have the right for a period of twelve (12) months following the date of death or disability to exercise the option to the extent the Participant was entitled to exercise such option on the date of his death or disability, or to the extent otherwise specified by the Board, which may so specify, at a time that is subsequent to the date of his death or disability, provided the actual date of exercise is in no event after the expiration of the term of the option.  A Participant's estate shall mean his legal representative or any person who acquires the right to exercise an option by reason of the Participant's death or disability.

MISCONDUCT:  If a Participant is determined by the Board of Directors or the Committee to have committed an act of theft, embezzlement, fraud, dishonesty, a breach 

5

of fiduciary duty to the Bank, or deliberately disregarded the rules of the Bank, or if a Participant makes any unauthorized disclosure or use of any of the trade secrets or confidential information of the Bank, engages in any conduct which constitutes unfair competition with the Bank, induces any customer or employee of the Bank to breach any contract with or duty to the Bank or induces any principal for whom the Bank acts as agent to terminate such agency relationship, neither the Participant nor the Participant's estate shall be entitled to exercise any option with respect to any shares whatsoever, whether prior to or after termination of employment.  In making such determination, the Board of Directors shall give the Participant an opportunity to present to the Board or the Committee evidence on the Participant's behalf.

OTHER REASONS:  If a Participant's employment or Board Membership is terminated for any reason other than those mentioned above under "Death or Disability" or "Misconduct", the Participant or the Participant's estate may, within three (3) months of such termination, exercise the option to the extent such option was exercisable by the Participant on the date of termination of his employment, or to the extent otherwise specified by the Board, which may so specify at a time that is subsequent to the date of the termination of his employment, provided the date of exercise is in no event after the expiration of the term of the option.

(g)

In the event of sale, dissolution or liquidation of the Bank or a merger or consolidation in which the Bank is not the surviving or resulting corporation, the Board of Directors shall have the power to cause the termination of every option outstanding hereunder, except that the surviving or resulting corporation may, in its absolute and uncontrolled discretion, tender an option or options to purchase its shares and otherwise; provided, however, 

6

that in all events the optionee shall have the right immediately prior to such sale, dissolution, liquidation, merger or consolidation in which the Bank is not the surviving or resulting corporation, to exercise his option and purchase shares subject thereto to the extent of any unexercised portion of his option, regardless of any contrary vesting provisions.  This right of exercise shall be conditioned upon the completion of such dissolution or liquidation or merger or consolidation.

In the event of an offer by any person or entity to all shareholders of the Bank to purchase any or all shares of Common Stock of the Bank (or shares of stock or other securities which shall be substituted for such shares or to which such shares shall be adjusted as provided in Section 9 hereof), any Participant under this Plan shall have the right upon receipt of such offer to exercise his or her option and purchase shares subject thereto to the extent of any unexercised or unvested portion of such option.

The grant of an option pursuant to the Plan shall not affect in any way the right or power of the Bank to make adjustments, reclassifications, reorganizations or changes or its capital or business structure or to merge or to consolidate or to dissolve, liquidate or sell, or transfer all or any part of its business or assets.

(h)

Options may also contain such other provisions, which shall not be inconsistent with any of the foregoing terms, as the Board of Directors shall deem appropriate.  No option, however, nor anything contained in the Plan, shall confer upon any employee any right to continue in the employ of the Bank nor limit in any way the right of the Bank to terminate his employment at any time.

7

7.

Payments.

(a)

To the extent the right to purchase shares has vested under a Participant's stock option agreement, options may be exercised at the time set forth in the option agreement by (i) delivering payment in full at the option price for the number of shares being purchased by cash, certified check, official bank check or the equivalent thereof acceptable to the Bank; (ii) surrendering, or attesting to the ownership of, shares of the Bank that are already owned by the Participant.  If shares are to be used to pay all or any part of the purchase price, such shares shall be surrendered to the Bank in good form for transfer and shall be valued at their fair market value on the date when the option is exercised.  The fair market value of such shares shall be equal to the weighted average trading price of Bank’s Common Stock over a 90-day period immediately preceding the date the option is exercised.  The
Participant shall not surrender, or attest to the ownership of, such shares in payment of the purchase price if such action would cause the Bank to recognize compensation expense (or additional compensation expense) with respect to the option for financial reporting purposes.  Such payment shall be accompanied by written notice to the Secretary of the Bank identifying the option or part thereof being exercised and specifying the number of shares for which payment is being tendered on a form provided by the Bank.  The Bank shall deliver or cause to be delivered to the optionee, which delivery shall be not less than fifteen (15) days and not more than sixty (60) days after the giving of such notice, without transfer or issue tax to the optionee (or other person entitled to exercise the option) at the principal office of the Bank, or such other place as shall be mutually acceptable, a certificate or certificates for such shares dated the date the options were validly exercised; provided, however, that
 the time of such delivery may be postponed by the Bank for such period as may be required for it with reasonable diligence to comply with any requirements of law.  If 

8

an option covers incentive and nonstatutory stock options, separate stock certificates shall be issued; one or more for stock acquired upon exercise of the ISOs and one or more for the stock acquired upon exercise of the NSOs.

(b)

Where in the opinion of counsel to the Bank, the Bank has or will have a legal obligation to withhold taxes relating to the exercise of any stock option, such option may not be exercised, in whole or in part, unless such tax obligation is first satisfied in a manner satisfactory to the Bank.

8.

Use of Proceeds from Stock.

Proceeds from the sale of stock pursuant to options granted under the Plan shall be used for general corporate purposes.

9.

Adjustments of and Changes in the Stock.

In the event that the shares of Common Stock of the Bank, as presently constituted, shall be changed into or exchanged for a different number or kind of shares of stock or other securities of the Bank or of another corporation (whether by reason of merger, consolidation, recapitalization, reclassification, split-up, combination of shares, or otherwise), or if the number of shares of Common Stock of the Bank shall be increased through the payment of a stock dividend, or a stock split, then there shall be substituted for or added to each share of Common Stock of the Bank theretofore appropriated or thereafter subject or which may become subject to an option under the Plan, the number and kind of shares of stock or other securities into which each outstanding share of Common Stock of the Bank shall be so changed, or for which each such share shall be exchanged or to which each such share shall be entitled, as the case may be
..  Outstanding options shall also be amended as to price and other terms if necessary to reflect the foregoing events.  In the event there shall be any other change in the number or kind of the 

9

outstanding shares of Common Stock of the Bank, or of any stock or other securities into which such Common Stock of the Bank, or of any stock or other securities into which such Common Stock shall have changed, or for which it shall have been exchanged, then if the Board of Directors shall, in its sole discretion, determine that such change equitably requires an adjustment in any option theretofore granted or which may be granted under the Plan, such adjustment shall be made in accordance with such determination.  No right to purchase fractional shares shall result from any adjustment in options pursuant to this Section 9.  In case of any such adjustment, the shares subject to the option shall be rounded down to the nearest whole share.  Notice of any adjustment shall be given by the Bank to each holder of an option which shall have been so adjusted and such adjustment (whether or not such notice is
 given) shall be effective and binding for all purposes of the Plan.

10.

Amendment of the Plan.

The Board at any time, and from time to time, may amend the Plan, subject to approval by the vote or written consent of a majority of the outstanding shares of the Bank entitled to vote, within twelve (12) months before or after the date of such amendment's adoption, where such amendment will:

(a)

increase the number of shares reserved for options under the Plan;

(b)

materially increase the benefits accruing to Participants under the Plan; or

(c)

materially modify the requirements of Section 5 as to eligibility for participation in the Plan.

It is expressly contemplated that the Board may amend the Plan in any respect necessary to provide the Bank's employee Participants with the maximum benefits provided or to be provided under Section 422 of the Code and the regulations promulgated thereunder relating to 

10

employee incentive stock options and/or to bring the Plan or options granted under it into compliance therewith.

Rights and obligations under any option granted before any amendment of the Plan shall not be altered or impaired by amendment of the Plan, except with the consent, which may be obtained in any manner deemed by the Board to be appropriate, of the person to whom the option was granted.

11.

Termination or Suspension of the Plan.

The Board at any time may suspend or terminate the Plan.  The Plan, unless sooner terminated, shall terminate at the end of ten (10) years from the date the Plan is adopted by the Board or approved by the stockholders of the Bank, whichever is earlier.  An option may not be granted under the Plan while the Plan is suspended or after it is terminated.

Rights and obligations under any option granted while the Plan is in effect shall not be altered or impaired by suspension or termination of the Plan, except with the consent of the person to whom the option was granted, which may be obtained in any manner that the Board deems appropriate.

12.

Listing, Qualification or Approval of Stock, Approval of Options.

All options granted under the Plan are subject to the requirement that if at any time the Board of Directors shall determine in its discretion that the listing or qualification of the shares of stock subject thereto on any securities exchange or under any applicable law, or the consent or approval by any governmental regulatory body or the shareholders of the Bank, is necessary or desirable as a condition of or in connection with the issuance of shares under the option, the option may not be exercised in whole or in part unless such listing, qualification, consent or 

11

approval shall have been effected or obtained free of any condition not acceptable to the Board of Directors.

13.

Binding Effect of Conditions.

The conditions and stipulations hereinabove contained or in any option granted pursuant to the Plan shall be and constitute a covenant running with all of the shares of the Bank owned by the Participant at any time, directly or indirectly whether the same have been issued or not, and those shares of the Bank owned by the Participant shall not be sold, assigned or transferred by any persons save and except in accordance with the terms and conditions herein provided, and the Participant shall agree to use his best efforts to cause the officers of the Bank to refuse to record on the books of the Bank any assignments or transfer made or attempted to be made except as provided in the Plan and to cause said officers to refuse to cancel old certificates or to issue or deliver new certificates therefor where the purchaser or assignee has acquired certificates for the stock represented thereby, except strictly in accordance with t
he provisions of this Plan.

14.

Effective Date of Plan.

The Plan shall become effective as determined by the Board but no options granted under it shall be exercisable until the Plan has been approved by the vote or written consent of the holders of a majority of the outstanding shares of the Bank entitled to vote.

15.

Privileges of Stock Ownership; Securities Law Compliance; Notice of Sale.

No optionee shall be entitled to the privileges of stock ownership as to any shares not actually issued and delivered to the optionee.  No shares shall be purchased upon the exercise of any option unless and until any then applicable requirements of any regulatory agencies having jurisdiction and of any exchanges upon which the Common Stock of the Bank may be listed shall 

12

have been fully complied with.  The Bank shall diligently endeavor to comply with all applicable securities laws before any options are granted under the Plan and before shares are issued pursuant to the exercise of such options.

16.

Indemnification.

To the extent permitted by applicable law in effect from time to time, no member of the Board of Directors or the Committee shall be liable for any action or omission of any other member of the Board of Directors or Committee nor for any act or omission on the member's own part, excepting only the member's own willful misconduct or gross negligence.  The Bank shall pay expenses incurred by, and satisfy a judgment or fine rendered or levied against, a present or former director or member of the Committee in any action against such person (whether or not the Bank is joined as a party defendant) to impose a liability or penalty on such person for an act alleged to have been committed by such person while a director or member of the Committee arising with respect to the Plan or administration thereof or out of membership on the Committee or by the Bank, or all or any combination of the preceding so long as the Director o
r Committee member was acting in good faith, within what such director or Committee member reasonably believed to have been within the scope of his or her employment or authority and for a purpose which he or she reasonably believed to be in the best interests of the Bank or its shareholders.  Payments authorized hereunder include amounts paid and expenses incurred in settling any such action or threatened action.  This section does not apply to any action instituted or maintained in the right of the Bank by a shareholder or holder of a voting trust certificate representing shares of the Bank.  The provisions of this section shall apply to the estate, executor, administrator, heirs, legatees or devises of a director or Committee member, and the 

13

term "person" as used in this section shall include the estate, executor, administrator, heirs, legatees, or devises of such person.

17.

Miscellaneous.

The use of any masculine pronoun or similar term is intended to be without legal significance as to gender and the use of he or his shall also mean she and hers.

END OF PLAN

The undersigned, being the Secretary of Citizens Bancorp and Citizens Bank of Nevada County, hereby certifies on June ___, 2003 that this Adopted Amended and Restated 1995 Stock Option Plan was originally adopted by the Board of Directors of Citizens Bank of Nevada County on May 25, 1995, it was amended and restated as of December 20, 2001, and it was adopted by Citizens Bancorp as of June 1, 2003.

__________________________

Secretary                  

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