Document:

EXHIBIT
10.1

San Diego
Gas & Electric Company Standard Service Agreement for Labor and/or
Services

 

	
  PROJECT:

  	
   

  	
  APPLIANCE RECYCLING

  PROGRAM

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  MAIL ORIGINAL AND DUPLICATE
  INVOICE TO

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   CONTRACTOR:

  	
   

  	
  APPLIANCE

  RECYCLING CENTERS

  OF AMERICA, INC.

  	
   

  	
  San Diego Gas & Electric Company

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  7400 EXCELSIOR BLVD

  	
   

  	
  ACCOUNTS PAYABLE

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MINNEAPOLIS,

  Minnesota 55426

  	
   

  	
  P.O. BOX 129007

  San Diego, CA 92112

  

 

This Standard Service Agreement (this “Agreement”) is
made effective as of 5/24/2006 between SAN DIEGO GAS & ELECTRIC
COMPANY (“Company”) and APPLIANCE RECYCLING CENTERS OF AMERICA, INC. (“Contractor”).

The Parties hereby agree
as follows:

SCOPE

Contractor shall perform,
at its own proper cost and expense, in the most substantial and skillful
manner, to the satisfaction of Company, the following generally described
services:

Contractor shall
recycle the inventory of inefficient refrigerators, freezers and room air
conditioners within Company’s service territory (“Work”) in accordance with the
Appliance Recycling Program described in Schedule D - Concept Papers (“Program”).

The Work, including the
scope of work, specifications, schedule of milestones and deliverables, and
performance standards, is more fully described in Schedule B - 2006-2008
Appliance Recycling Centers of America - Appliance Recycling Program Scope of
Work.

PROJECT LOCATION

San Diego Gas & Electric Company Service
Territory

AUTHORIZED REPRESENTATIVES

Company designates the individual or individuals named
below as Company Representatives for all matters relating to the performance of
the Work. The actions taken by the Company Representatives shall be deemed acts
of the Company. Company may at any time upon written notice to Contractor
change the designated Company Representative.

 

Company Representative:  Kurt Kaufman

Contractor designates the individual or individuals
named below as Contractor Representative for all matters relating to the
performance of Work. The actions taken by Contractor Representative shall be
deemed acts of Contractor. Contractor Representative or designated
superintendent shall be at the jobsite at all times during the Work. Contractor
may at any time upon written notice to Company change the designated Contractor
Representative.

Contractor Representative:  Edward R. (Jack) Cameron

COMPENSATION

In accordance with the Compensation Article,
Contractor shall be compensated up to the total firm-fixed-price of $8,061,195 (“Authorized Budget”) for performance of the Work
in accordance with this Agreement. Contractor shall not be entitled to any
compensation in excess of the Authorized Budget for performance of the Work.

Contractor shall invoice
Company, and Company agrees to pay Contractor, in accordance with Schedule C
-Compensation Schedule. All invoices submitted to Company must report all costs
and expenses incurred by Contractor using the allowable cost elements set forth
in Schedule E - Reporting Requirements/Allowable Costs.

COMMENCEMENT AND COMPLETION OF SERVICES

This Agreement shall commence as of 5/24/2006 and
shall be in full force and effect through 6/30/2009, unless terminated earlier by Company in accordance with
the terms of this Agreement; provided, however that all Work must be completed
by no later than December 31, 2008. Contractor agrees to commence and
perform the Work in accordance with the requests of Company Representative
identified herein. The nature of the Work is such that timely performance is
critical to the orderly progress of related work and to the operating schedule
of Company.

INVOICING INSTRUCTIONS

Contractor shall invoice Company in accordance with
Schedule C - Compensation Schedule. All invoices submitted shall reference the
Standard Service Agreement Number and have complete support documentation of
all charges incurred, including any data required to calculate fees or variable
rate changes, plus support documentation for any authorized reimbursable
expenses by category.

Contractor shall submit all final invoices to Company
no later than March 31, 2009.

Company shall make payment Net 30 days after receipt
and approval of an undisputed invoice to the following address or to the
address on each Release, if applicable:

7400 EXCELSIOR BLVD

MINNEAPOLIS, MINNESOTA 55426

 

NOTICES OR DEMANDS

All notices to be given under this Agreement shall be
in writing and either sent by: (1) pre-paid U.S. first class mail, in
which case such notice will be deemed delivered as of two (2) business
days after mailing; (2) a nationally recognized pre-paid overnight courier
service, in which case notice shall be deemed delivered as of the date shown on
the courier’s delivery receipt; or (3) facsimile sent during business
hours, in which case notice shall be deemed delivered when a transmission
report is generated reflecting the accurate transmission of the notice. Notices
shall be addressed as follows:

	
  Company:

  	
   

  	
  San Diego Gas & Electric Company

  Attn: Kurt Kaufman

  8335 Century Park Ct San Diego CA 92123-1569

  Facsimile: 858-636-6803

  
	
   

  	
   

  	
   

  
	
  Contractor:

  	
   

  	
  Appliance Recycling Centers of America, Inc.

  7400 Excelsior Blvd Minneapolis, Minnesota 55426

  Facsimile: 952-930-1800

  Attention: Edward R. (Jack) Cameron

  

 

These addresses may be changed by written notice to
the other party; provided, that no notice of a change of address shall be
effective until actual receipt of such notice.

COMPLETE AGREEMENT

This Agreement, including all Schedules attached
hereto and which are incorporated by reference, constitutes the complete and
entire Agreement between the parties and supersedes any previous
communications, representations or agreements, whether oral or written, with
respect to the subject matter hereof. There are no additions to, or deletions
from, or changes in, any of the provisions hereof, and no understandings,
representations or agreements concerning any of the same, which are not
expressed herein. THE PARTIES HEREBY AGREE
THAT NO TRADE USAGE; PRIOR COURSE OF DEALING OR COURSE OF PERFORMANCE UNDER
THIS AGREEMENT SHALL BE A PART OF THIS AGREEMENT OR SHALL BE USED IN THE
INTERPRETATION OR CONSTRUCTION OF THIS AGREEMENT. The following
Schedules are attached hereto and incorporated herein by this reference:

SCHEDULE A - GENERAL TERMS AND
CONDITIONS

SCHEDULE B - 2006-2008
APPLIANCE RECYCLING CENTERS OF AMERlCA - APPLIANCE RECYCLING PROGRAM SCOPE OF
WORK

SCHEDULE C - COMPENSATION
SCHEDULE

SCHEDULE D - CONCEPT PAPERS

SCHEDULE E - REPORTING
REQUIREMENTS/ALLOWABLE COSTS

SCHEDULE F - EM &
V PLAN

SCHEDULE G - DBE SUBCONTRACTING
PLAN

 

IN WITNESS WHEREOF,
the parties have executed this Agreement as of 5/24/2006.

	
  San Diego Gas & Electric Company

  	
   

  	
  Contractor Name:

  
	
   

  	
   

  	
   

  	
   

  	
  APPLIANCE RECYCLING CENTERS OF

  AMERICA, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  
	
  /s/ Margot Kyd

  	
   

  	
  /s/ Edward R. (Jack) Cameron

  
	
  Name:

  	
  Margot Kyd

  	
   

  	
  Name:

  	
  Edward R. (Jack) Cameron

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Vice-President, Supply Management

  	
   

  	
  Title:

  	
  Chief Executive OfficerEXHIBIT 10.1

CHINO COMMERCIAL BANK, N.A.

2000 STOCK OPTION PLAN

Adopted July 13, 2000

1.             Purpose. The purpose of the 2000 Stock Option Plan (the “Plan”)
is to strengthen CHINO COMMERCIAL BANK, N.A. (the “Bank”) and those
corporations which are or hereafter become sub­sidiary corporations of the
Bank, within the meaning of Section 424(f) of the Internal Revenue
Code of 1986, as amended (the “Code”), by providing to partici­pating employees
and directors added incentive for high lev­els of performance and for unusual
efforts to increase the earn­ings of the Bank and its subsidiary corporations. The
Plan seeks to ac­complish these purposes and results by providing a means
whereby such employees and directors may purchase shares of the common stock of
the Bank pursuant to (a) op­tions granted pursuant to the Incentive Stock
Option Plan (the “Incentive Plan”) (Division A hereof) which will qualify
as incentive stock options under Section 422 of the Code (“Incentive
Options”), or (b) options granted pursuant to the Non­-Qualified Stock
Option Plan (the “Non-Qualified Plan”) (Division B hereof) which are in­tended
to be non-qualified stock options described in Treas. Reg. §1.83-7 to
which Section 421 of the Code does not apply (“Non-Qualified Options”). (Hereinafter,
the term “Op­tions” shall col­lectively refer to Incentive Options and
Non-Qualified Options.)

2.             Administration. This Plan shall be administered by the
Board of Directors of the Bank (the “Board of Directors”). Any action of the
Board of Directors with respect to adminis­tration of the Plan shall be taken
pursuant to a majority vote of its members; 
provided, however, that with respect to action by the Board of Directors
in granting an option to an individual director, such action must be authorized
by the required number of directors without counting the interested director,
who shall abstain as to any vote on his option. An interested director may be
counted in determining the presence of a quorum at a meeting of the Board of
Directors where such action will be taken.

 

The
Board of Directors may, in its sole discre­tion, from time to time, establish a
Stock Option Committee composed of not less than three (3) persons who
must be directors of the Bank and, by appro­priate resolution, delegate to the
Stock Option Committee such power and authority over the administration of the
Plan as the Board of Directors deems appropriate. Nothing contained herein
shall prevent the Board of Directors from delegating to the Stock Option
Committee full power and authority over the administration of the Plan.

Subject
to the express provisions of the Plan, the Board of Directors (or the Stock
Option Committee, if authorized) shall have the authority to construe and
interpret the Plan, and to define the terms used therein, to prescribe, amend,
and rescind rules and regulations rela­ting to administration of the Plan,
to determine the dura­tion and purposes of leaves of absence which may be
granted to participants without constituting a termination of their employment
for purposes of the Plan, and to make all other determinations necessary or
advisable for admin­istration of the Plan. Determinations of the Board of
Directors (or the Stock Option Committee, if authorized) on matters referred to
in this section shall be final and conclusive.

3.             Participation; Limitation on Amount of Outstanding Options.
All salaried officers and employees of the Bank and its subsidiary corporations
shall be eligible for se­lection to receive both Incentive and Non-Qualified
Options. Direc­tors of the Bank and its subsidiary corpo­rations who are not
also salaried officers or employees of the Bank or a subsidiary corpora­tion
shall be eligible to receive only Non-Qualified Options under the Plan. Subject
to the express provisions of the Plan, the Board of Directors (or the Stock
Option Committee, if authorized) shall select from the eligible class and
determine the individ­uals who shall receive Options, whether such Options
shall be Incentive or Non-Qualified Options, and the terms and provisions of the
Options (which need not be identical), and shall grant such Options to such
individuals. An individual who has been granted an Option (an “Optionee”) may,
if such individual is otherwise eligible, be granted additional Options if the
Board of Directors (or the Stock Option Committee, if authorized) shall so
determine.

  
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4.             Stock Subject to the Plan. Subject to
adjustment as provided in Section 13 hereof, the stock to be offered under
the Plan shall be shares of the Bank’s authorized but unissued common stock,
par value $5.00 per share (hereinafter called “stock”), and the aggre­gate
amount of stock to be delivered upon exercise of all Options granted under the
Plan, whether Incentive or Non-Qualified Options, shall not exceed One Hundred
Sixty Three Thousand One Hundred Ninety Five (163,195) shares (30% of the
amount of the Bank’s initial issuance of common stock). Two-thirds (2/3) of
such shares shall be reserved exclu­sively for the grant of options to ­salaried
officers and employ­ees of the Bank. The remaining one-third (1/3) of such
shares may be granted to anyone eligible to participate in the Plan, including
officers, employees and non-employee directors. If any Option shall expire for
any reason without having been exercised in full, the unpurchased shares
subject thereto shall again be avail­able for purposes of the Plan.

5.             Option Price. The purchase price of stock subject to
each Option shall be determined by the Board of Directors (or the Stock Option
Committee, if authorized) but shall not be less than one hundred percent (100%)
of the fair market value of such stock at the time such Option is granted. As
to any Incentive Option granted to an Optionee who, immediately before the
Option is granted, owns beneficially more than ten percent (10%) of the out­standing
stock of the Bank, the purchase price must be at least one hundred ten percent
(110%) of the fair market value of the stock at the time when such Option is
granted. The fair market value of such stock shall be determined in accord­ance
with any reasonable valuation method, including the valuation methods described
in Treas. Reg. § 20.2031-2. The purchase price of any shares
purchased shall be paid in full in cash at the time of each such purchase.

6.             Option Period. Each Option and all rights or obli­gations
there­under shall expire on such date as the Board of Di­rectors (or the Stock
Option Committee, if authorized) may deter­mine, but not later than ten (10) years
from the date such Option is granted, and shall be subject to earlier termina­tion
as provided elsewhere in the Plan. As to any Incentive Option granted to an
Optionee who, immedi­ately before the option is granted, owns bene­ficially
more than ten percent (10%) of the outstanding stock of the Bank (whether
acquired upon exercise of Options or 

  
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otherwise), such option must not be exercisable by its
terms after five (5) years from the date of its grant.

7.             Continuation of Employment. In the case of
employees, nothing contained in the Plan (or in any Option agreement) shall
obligate the Bank or its subsidiary corpora­tions to employ any Optionee for
any period or interfere in any way with the right of the Bank or its subsidiary
corporations to reduce such Optionee’s compen­sation.

8.             Exercise of Options. Each Option shall be
exercisable in such install­ments, which need not be equal, and upon such con­tingencies
as the Board of Directors (or the Stock Option Commit­tee, if authorized) shall
determine; provided, however, that if an optionee shall not in any given
installment period purchase all of the shares which such optionee is entitled
to purchase in such installment period, such optionee’s right to purchase any
shares not purchased in such install­ment period shall continue until the
expiration of such Option. No Option or installment thereof shall be exercis­able
except with respect to whole shares, and fractional share interests shall be
disregarded except that they may be ac­cumulated in accord­ance with the next
preceding sentence. Options may be exercised by ten (10) days written
notice delivered to the Bank stating the number of shares with respect to which
the Option is being exercised, together with cash in the amount of the pur­chase
price for such shares. No fewer than ten (10) shares may be pur­chased at
one time unless the number pur­chased is the total number which may be
purchased under the Option. As a condition to the exercise of a Non-Qualified
Option, in whole or in part, by an Optionee who is an employee of the Bank (or
who was an employee during the term of the option) the Optionee shall be
required to pay to the Bank, in addition to the purchase price for the shares
being exercised, an amount equal to any taxes required to be withheld by the
Bank in order to enable the Bank to claim a deduction in connection with the
exercise of the Option.

Options
may also be exercised by delivering to the Bank (i) an exercise notice
instructing the Bank to deliver the certificates for the shares purchased to a
designated brokerage firm which shall sell the stock in the market as soon as
the Option is exercised; and (ii) a copy of irrevocable instructions
delivered to the brokerage firm to sell the shares acquired upon exercise of 

  
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the
Option and to deliver to the Bank from the sale proceeds sufficient cash to pay
the exercise price and applicable withholding taxes arising as a result of the
exercise, with the balance of the sales proceeds, if any, after payment of any
broker’s commission, credited to the Optionee’s brokerage account.

The
Bank may require any Optionee, or any per­son to whom an Option is transferred
under Section 9 hereof, as a con­dition of exercising any such Option, to
give written assur­ances satisfactory to the Bank stating that such person is
acquiring the stock subject to the Option for such person’s own account and not
with any present intention of selling or otherwise distributing the stock. The
requirement of providing written assurances, and any assurances given pursuant
to the requirement, shall be inoperative if (i) the shares to be is­sued
upon the exercise of the Option have been registered under a then currently
effective registration statement under the Securities Act of 1933, as amended,
or (ii) a determination is made by counsel for the Bank that such written
assur­ances are not required in the circumstances under the then applicable
federal securities laws.

9.             Nontransferability of Options. Each Option
shall, by its terms, be nontransfer­able by the Optionee, other than by Will or
the laws of descent and distribution, and shall be exercisable during such
Optionee’s lifetime only by the Optionee.

10.           Cessation of Employment; Disability.
Except as provided in Sections 6 and 11 hereof, if an Optionee ceases to
be employed by or to serve as a director of the Bank or a subsidi­ary
corporation for any reason other than death or dis­ability, such Optionee’s
Option shall expire sixty (60) days there­after, and during such period after
such Optionee ceases to be an employee or director, such Option shall be
exercisable only as to those shares with respect to which installments, if any,
had accrued as of the date on which the Optionee ceased to be employed by or
ceased to serve as a director of the Bank or such sub­sidiary corporation. Except
as provided in Sec­tions 6 and 11 hereof, if an Optionee ceases to be employed
by or ceases to serve as a director of the Bank or a subsidiary corporation by
reason of disability (within the meaning of Section 22(e)(3) of the
Code), such Optionee’s Option shall expire not later than one (1) year
thereafter, and during such period after such Optionee ceases to be an employee
or director such Option shall be exercisable only as to

  
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those
shares with respect to which installments, if any, had accrued as of the date
on which the Optionee ceased to be employed by or ceased to serve as a director
of the Bank or such subsidiary corporation.

11.           Termination of Employment for Cause.
If an Op­tionee’s employment by or service as a director of the Bank or a sub­sidiary
corporation is ter­minated for cause, such Op­tionee’s Option shall expire
immediately; provided, however, that the Board of Directors may, in its sole
discretion, within thirty (30) days of such termination, waive the expiration
of the Option by giving written notice of such waiver to the Optionee at such
Optionee’s last known address. In the event of such waiver, the Optionee may
exercise the Option only to such extent, for such time, and upon such terms and
conditions as if such Optionee had ceased to be employed by or ceased to serve
as a director of the Bank or such subsidiary corporation upon the date of such
termination for a reason other than cause, disability, or death. In the case of
an employee, termination for cause shall include termination for malfeasance or
gross misfeasance in the performance of duties, conviction of illegal activity
in connection therewith, any conduct seriously detrimental to the inter­ests of
the Bank or a subsidiary corporation, or removal pursuant to the exercise of
regulatory authority by the Comptroller of the Currency (the “Comptroller”) or
other bank supervisory agency; and, in any event, the determination of the
Board of Directors with respect thereto shall be final and con­clusive. In the
case of a director, termination for cause shall include removal pursuant to
Sections 302 or 304 of the California Corporations Code or removal pursuant to
the exercise of regulatory authority by the Comptroller or other bank
supervisory agency.

12.           Death of Optionee.
Except as provided in Section 6 hereof, if any Optionee dies while
employed by or serving as a director of the Bank or a subsidiary corpora­tion
or during the 60-day or one-year period referred to in Section 10
hereof, such Optionee’s Option shall expire one (1) year after the date of
such death. After such death but before such expiration, the persons to whom
the Op­tionee’s rights under the Option shall have passed by Will or by the
applicable laws of descent and distribution shall have the right to exercise
such Option to the extent that installments, if any, had accrued as of the date
on which the Optionee ceased to be employed by or ceased to serve as a director
of the Bank or such subsidiary corpora­tion.

  
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13.           Adjustments Upon Changes in Capitalization.
If the outstand­ing shares of the stock of the Bank are in­creased, decreased,
or changed into, or exchanged for a different number or class of shares or
securities of the Bank, without receipt of consideration by the Bank, through
reorganization, merger, recapitalization, reclassi­fication, stock split-up,
stock dividend, stock consolidation, or otherwise, an appropriate and
proportionate adjust­ment shall be made in the number and class of shares as to
which Options may be granted. A corresponding adjustment cha­nging the number
or class of shares and the exercise price per share allocated to unexercised
Options, or portions there­of, which shall have been granted prior to any such
change shall like­wise be made. Any such adjust­ment, however, in an outstand­ing
Option shall be made without change in the total price applicable to the unexer­cised
portion of the Option but with a corresponding adjustment in the price for each
share sub­ject to the Option. No frac­tional shares of stock shall be issued
under the Plan on account of any such adjustment.

14.           Terminating Events.
Not less than thirty (30) days prior to a “Terminating Event” as defined below,
the Board of Directors (or the Stock Option Committee, if authorized) shall
notify each Optionee of the pendency of the Terminating Event. Upon delivery of
said notice, any Option granted prior to the Terminating Event shall be,
notwithstanding the pro­visions of Section 8 hereof, exer­cisable in full
and not only as to those shares with respect to which install­ments, if any,
have then accrued, subject, however, to earlier expiration or termi­nation as
provided elsewhere in the Plan, and further subject to the condition that the
Terminating Event in fact occurs. Optionees shall then be entitled to exercise
any Options or portions thereof commencing on the tenth (10th) day, and
ending on the third (3rd)
day, prior to the Terminating Event, or at such other times as may be specified
by the Board of Directors in connection with the Terminating Event. Upon the
effec­tive date of the Termin­ating Event, the Plan and any Options granted
thereunder shall terminate, unless (i) provi­sion is made in connection
with the Terminating Event for assumption of Options theretofore granted, or
substitu­tion for such Options of new options covering stock of a successor
employer corp­oration, or a parent or subsidiary corporation thereof, with
appropriate adjustments as to the number and class of shares and prices, or (ii) in
the case of a “change in control” as defined below, the Board of Directors in
its sole discretion determines prior to the effective date of the Terminating
Event that all outstanding Options and the Plan itself should continue in full
force and 

  
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effect. In
the case of such a determination by the Board of Directors, or in the event
that any pending Terminating Event does not occur, the Plan and all outstanding
Options thereunder shall continue in force with all original vesting schedules
in effect.

For
purposes of this Section 14, a “Terminating Event” shall include: (i) a
reorganiza­tion, merger, or consolidation of the Bank with one or more corporations
as a result of which the Bank will not be the surviving corporation, (ii) a
sale of substantially all the assets and property of the Bank to another
person, corporation or entity, or (iii) a “change in control”, i.e., any
other single transac­tion involving the Bank (such as a tender offer) where
there is a change in ownership of at least twenty-five percent (25%) of the
Bank’s outstanding shares, unless such change in ownership results from (i) a
transfer of shares to another corporation in exchange for at least eighty
percent (80%) control of that corporation, (ii) the issuance of additional
shares of stock by the Bank in a secondary stock offering, private placement or
similar transaction, or (iii) any acquisition in which the Bank will be
the surviving entity.

15.           Termination
of Options in the Event of Order to Increase Capital. Notwith­standing
any other provision of any Option granted hereunder, if the Bank becomes
subject to any written order or directive by the Comptroller or the FDIC
requiring the Bank to increase capital, all outstanding Options under the Plan
shall thereupon terminate and be of no further force and effect.

16.           Acceleration
of Options. Notwithstanding the provisions of Section 8
hereof or any provision to the contrary contained in any Option agreement, the
Board of Directors (or the Stock Option Committee, if authorized), in its sole
discretion, may accelerate the vesting of all or any Option then outstanding. The
decision by the Board of Directors to accelerate an Option or to decline to
accelerate an Option shall be final. In the event of the acceleration of the
exercisability of Options as the result of a decision by the Board of Directors
pursuant to this Section 16, each outstanding Option so accelerated shall
be exercisable for a period from and after the date of such acceleration and
upon such other terms and conditions as the Board of Directors may determine in
its sole discretion, provided that such terms and conditions (other than terms
and conditions relating 

  
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solely
to the acceleration of exercisability and the related termination of an Option)
may not adversely affect the rights of any Participant without the consent of
the Participant so adversely affected. Any outstanding Option which has not
been exercised by the holder at the end of such period shall terminate
automatically at that time.

17.           Amendment and Termination by Board of Directors.
The Board of Directors may at any time suspend, amend, or terminate the Plan
and may, with the consent of an Op­tionee, make such modification of the terms
and conditions of such Optionee’s Option as it shall deem advisable; pro­vided
that, except as permitted under the provisions of Section 13 hereof, any
amendment or modifica­tion which would:

(A)          increase the maximum number of shares
which may be purchased pursuant to Options granted under the Plan;

(B)           change the minimum option price;

(C)           increase the maximum term of Options
provided for herein; or

(D)          permit Options to be granted to anyone
other than a director or a salaried officer or employee of the Bank or a
subsidiary corporation, shall be deemed adopted as of the date of the action of
the Board of Directors effecting such amendment or modification and shall be
effective immediately, unless otherwise provided therein, subject to approval
thereof within twelve (12) months  before
or after the effective date by shareholders of the Bank holding not less than a
majority of the voting power of the Bank; provided, however, that the Board of
Directors may amend the Plan in  toto without shareholder approval
if the Plan has not yet been approved by the shareholders.

Notwithstanding
the above, the Board of Directors (or the Stock Option Committee, if authorized
to do so) may grant to an Optionee, if such Optionee is otherwise eligi­ble,
addi­tional Options or, with the consent of the Optionee, grant a new Option in
lieu of an outstanding Option for a number of shares, at a purchase price and
for a term which in any respect is greater or less than that of the earlier
Option, subject to the limitations of Sections 5, 6 and A-2
hereof.

  
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No
Option may be granted during any suspension of the Plan or after termination of
the Plan. Amendment, sus­pension, or termination of the Plan shall not, without
the consent of the Optionee, alter or impair any rights or obli­gations under
any Option outstanding prior to such amendment, suspension or termination of
the Plan.

18.           Time of Granting Options.
The time an Option is granted, sometimes referred to as the date of grant,
shall be the day of the action of the Board of Directors (or action of the
Stock Option Committee, if authorized to take such action) described in the
second sentence of Section 2 hereof; pro­vided, however, that if
appropriate resolutions of the Board of Directors (or the Stock Option
Committee, if authorized to grant options) indicate that an Option is to be
granted as of and on some future date, the time such Option is granted shall be
such future date. If action by the Board of Directors (or the Stock Option
Committee, if autho­rized to take such action) is taken by the unanimous
written consent of its members, the action of the Board of Directors (or the
Stock Option Commit­tee) shall be deemed to be at the time the last Board (or
Stock Option Com­mittee) member signs the consent.

19.           Privileges
of Stock Ownership; Securities Laws Com­pliance; Notice of Sale.
No Optionee shall be entitled to the privileges of stock ownership as to any
shares of stock not actually issued and delivered. No shares shall be issued
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 stock of the Bank may be listed, shall have been complied
with fully. The Bank will diligently endeavor to comply with all applicable
securi­ties laws before any Options are granted under the Plan and before any
stock is issued pursuant to Options. The Bank intends to register the
underlying shares of common stock under the Securities Act of 1933, as amended,
within one year of the date the Plan is adopted. All Optionees shall agree to
comply with all applicable federal and state securities laws in connection with
any sale or other disposition of such common stock. Additionally, all Optionees
shall give the Bank notice of any sale or other disposition of any such shares
not more than five (5) days after such sale or other disposition.

  
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20.           Effective Date of the Plan.
The Plan shall be deemed adopted as of the date first shown herein and shall be
effective immediately, subject to approval hereof within twelve (12) months
before or after said date by shareholders holding not less than a majority of
the voting power of the Bank.

21.           Termination.
Unless previously terminated by the Board of Directors or as provided in Section 14
hereof, the Plan shall terminate at the close of business on July 13, 2010
and no Options shall be granted under it there­after, but such termination
shall not affect any Option theretofore granted.

22.           Option Agreement.
Each Option shall be evidenced by a written stock option agreement executed by
the Bank and the Optionee and shall contain each of the provisions and
agreements herein specifically required to be contained therein, including
whether the Option is an Incentive Option or Non-Qualified Option, and such
other terms and conditions as are deemed desirable and are not inconsistent
with the Plan.

23.           Exculpation and Indemnification.
The Bank shall indemnify and hold harmless a member or members of the Board of
Directors (or the Stock Option Committee), in any action brought against such
member or members to the maximum extent permitted by then applicable law and
the Articles of Association and Bylaws of the Bank and any amendments thereto.

DIVISION A

INCENTIVE STOCK OPTION PLAN

1-1.          Eligible
Persons. All salaried offi­cers and employees of the Bank and
its subsidiary corpora­tions shall be eligible for selection to participate in
the Incentive Plan. Notwithstanding any other pro­visions of the Plan to the
contrary, no director of the Bank or a subsidiary corporation who is not a
salaried employee of the Bank or a subsidiary corporation and no member of the
Stock Option Committee may be granted options under the Incentive Plan.

  
                                                                                                       11
 

 

1-2.          Limit on Exercisability
of Options. The aggregate fair market value (determined as of
the time the Option is granted) of the stock for which any salaried officer or
employee may be granted Incentive Options which are first  exercisable
during any one calendar year (under all Incentive Stock Option Plans of such
employee’s em­ployer and its parent and subsidiary corpora­tions) shall not
exceed One Hundred Thousand Dollars ($100,000).

1-3.          Incorporation
by Reference. The provisions of Sections 5, 6, 9, 10, 12,
17  and 21 of the Plan are hereby
incorporated by this reference into this Incentive Stock Option Plan.

1-4.          Interpretation of Plan.
Options granted pursuant to the Incentive Plan are intended to be “incentive
stock options” within the meaning of Section 422 of the Code, and the
Incentive Plan shall be construed to implement that intent. If all or any part
of an Incentive Option shall not be deemed an “incen­tive stock option” within
the meaning of Section 422 of the Code, said Option shall nevertheless be
valid and carried into effect as a Non-Qualified Option.

DIVISION B

NON-QUALIFIED STOCK OPTION PLAN

B-1.         Eligible
Persons. All salaried officers and employees and all directors
of the Bank and its subsidiary corporations shall be eligible for selection to
participate in the Non-Qualified Plan.

B-2.         Interpretation of Plan.
Options granted pursuant to the Non-Qualified Plan are intended to be non-quali­fied
stock options described in Treas. Reg. § 1.83-7 to which Section 421
of the Code does not apply, and the Non­-Qualified Plan shall be construed to
implement that intent.

  
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