Document:

Exhibit 10.12

 

1ST
CENTURY BANCSHARES, INC.

 

FOUNDER
STOCK OPTION PLAN

 

Adopted
by Board on January 16, 2004

 

Approved
by Shareholders on February 24, 2004

 

1.     PURPOSES.

 

The purpose of the Plan is to promote the interests of
1st Century Bancshares, Inc. (the “Company”)
and its Affiliates and shareholders by enabling the Company to offer certain of
its founders that are not also officers or directors of the Company an
opportunity to acquire an equity interest in the Company as part of the
consideration paid to them for their pre-organizational efforts and for other
paid and valuable consideration.

 

2.     DEFINITIONS.

 

For purposes of this Plan, the following terms shall
have the meanings set forth below.

 

(a)           “Accredited Investor” shall mean (i) a director or executive officer
of the Company, (ii) any natural person whose individual net worth or
joint net worth with that person’s spouse exceeds $1,000,000, (iii) any
natural person who had individual income in excess of $200,000 in each of the
two most recent years or joint income with that person’s spouse in excess of
$300,000 in each of those years and a reasonable expectation of reaching the
same income level in the current year, or (iv) any other “accredited
investor” as defined in Rule 502 under the Securities Act.

 

(b)           “Affiliate” means any parent corporation or subsidiary
corporation of the Company, whether now or hereafter existing, as those terms
are defined in Sections 424(e) and (f), respectively, of the Code.

 

(c)           “Company” is defined in Section 1 above.

 

(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 consisting of one or more members
of the Board that is appointed by the Board (as described in Section 3) to
administer the Plan.

 

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

 

(h)           “Comptroller” means the United States Comptroller of the Currency.

 

(i)            “Covered Employee” means the chief executive officer and the four (4) other
highest compensated officers of the Company for whom total compensation is
required to be reported to shareholders under the Exchange Act, as determined
for purposes of Section 162(m) of the Code.

 

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

 

 

(k)           “Employee” means any person employed by the Company or an
Affiliate.  Mere service as a Director or
payment of a director’s fee by the Company or an Affiliate shall not be
sufficient to constitute “employment” by the Company or an Affiliate.

 

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

 

(m)          “Fair Market Value”  means, as of any date, the value of the Common Stock
determined as follows:

 

(i)          If the Common Stock is listed on any
established national securities exchange or traded on the Nasdaq National
Market or the Nasdaq SmallCap Market, the Fair Market Value of a share of
Common Stock shall be the closing sales price for such stock (or the average of
the closing bid and ask prices, if no sales were reported) as quoted on such
exchange or market (or the exchange or market with the greatest volume of
trading in the Common Stock) on the last market trading day prior to the day of
determination for which such quotation exists, as reported in The Wall Street Journal or such other source as the Board
deems reliable.

 

(ii)         In the absence of such markets for the
Common Stock described in subsection (i) above, Fair Market Value shall be
the average of the closing bid and ask prices of the Common Stock reported by
the Nasdaq Electronic Bulletin Board for the last market trading day prior to
the day of determination for which such quotation exists, or any comparable
system on that day.

 

(iii)       In the absence of such markets for the
Common Stock described in subsections (i) and (ii) above, the Fair
Market Value shall be determined in good faith by the Board using any
reasonable valuation method, including the valuation methods described in
Treasury Regulations Section 20.2031-2.

 

(n)           “Founders” means a person who is not also an officer or director
of the Company and has been involved in promoting the interests of the Company,
providing advice to the executive officers of the Company and/or have provided
funds for pre-opening expenses of the Company.

 

(o)           “Listing Date” means the first date upon which any class of common
equity securities of the Company is required to be registered under section 12
of the Exchange Act.

 

(p)           “Non-Employee Director” means a Director of the Company who either (i) is
not a current Employee or Officer of the Company or its parent or a subsidiary,
does not receive compensation (directly or indirectly) from the Company or its
parent or a subsidiary for services rendered as a consultant or in any capacity
other than as a Director (except for an amount as to which disclosure would not
be required by the Company under Item 404(a) of Regulation S-K promulgated
pursuant to the Securities Act (“Regulation S-K”)),
does not possess an interest in any other transaction as to which disclosure
would be required by the Company under Item 404(a) of Regulation S-K and
is not engaged in a business relationship as to which disclosure would be
required under Item 404(b) of Regulation S-K; or (ii) is otherwise
considered a “non-employee director” for purposes of Rule 16b-3.

 

(q)           “Option” means an option not intended to qualify as an “incentive
stock option” within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.

 

(r)           “Officer” means (i) before the Listing Date, any person
designated by the Company as an officer and (ii) on and after the Listing
Date, 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.

 

 

(s)           “Option Agreement” means a written agreement between the
Company and a Participant (as defined below) evidencing the terms and
conditions of an individual Option grant. 
Each Option Agreement shall be subject to the terms and conditions of
the Plan.

 

(t)            “Outside Director” means a Director of the Company who
either (i) is not a current employee of the Company or an “affiliated
corporation” (within the meaning of Treasury Regulations promulgated under Section 162(m) of
the Code), is not a former employee of the Company or an “affiliated
corporation” receiving compensation for prior services (other than, benefits
under a tax qualified pension plan), was not an officer of the Company or an “affiliated
corporation” at any time and is not currently receiving direct or indirect
remuneration from the Company or an “affiliated corporation” for services in
any capacity other than as a Director or (ii) is otherwise considered an “outside
director” for purposes of Section 162(m) of the Code.

 

(u)           “Participant” means a person to whom an Option is
granted pursuant to the Plan or, if applicable, such other person who holds an
outstanding Option.

 

(v)           “Plan” means this 1st Century Bancshares, Inc.
Founders Stock Option Plan.

 

(w)          “Rule 16b-3” means Rule 16b-3 promulgated under
the Exchange Act or any successor to Rule 16b-3, as in effect from time to
time.

 

(x)           “Securities Act” means the Securities Act of 1933, as
amended, as made applicable (including the regulations promulgated thereunder)
to national banks by the Comptroller.

 

3.     ADMINISTRATION.

 

(a)           Administration by Committee.  One or more Committees appointed by the Board shall
administer the Plan.  The Board shall
designate one of the members of each Committee as the chairperson of such
Committee.  The term “Committee” shall
apply to any person or persons to who such authority has been delegated.  If no Committee has been appointed, the
entire Board shall constitute the Committee. 
Members of each Committee shall serve for such period of time as the
Board may determine and shall be subject to removal by the Board at any
time.  The Board also may at any time
terminate the functions of any Committee and reassume all powers and authority
previously delegated to such Committee. 
After the Listing Date, a Committee may consist of (i) solely of
two or more Outside Directors in accordance with Section 162(m) of
the Code and (ii) solely of two or more Non-Employee Directors in
accordance with Rule 16b-3.

 

(b)           Authority of Committee.  Subject to the provisions of the Plan, the Committee
shall have full authority and discretion to take any actions it deems necessary
or advisable for the administration of the Plan.  Such actions shall include:  (i) selecting persons who are to receive
Options under the Plan; (ii) determining the number and other features and
conditions of such awards; (iii) interpreting the Plan; and (iv) making
all other decisions relating to the operation of the Plan.  The Committee may adopt such rules and
guidelines as it deems appropriate to implement the Plan.  The Committee’s determinations under the Plan
shall be final and binding on all persons.

 

(c)           Indemnification. 
Each member of a Committee, or of the Board, shall be indemnified and
held harmless by the Company against and from (i) any loss, cost,
liability or expense that may be imposed upon or reasonably incurred by him or
her in connection with or resulting from any claim, action, suit or proceeding
to which he or she may be a party or in which he or she may be involved by
reason of any action taken or failure to act under the Plan or any Option Agreement
or stock purchase agreement entered into in connection with the Plan and (ii) from
any and all amounts paid by him or her 

 

 

in settlement thereof, with the Company’s approval, or
paid by him or her in satisfaction of any judgment in any such claim, action,
suit or proceeding against him or her, provided he or she shall give the
Company an opportunity, at its own expense, to handle and defend the same
before he or she undertakes to handle and defend it on his or her own behalf.  The foregoing right of indemnification shall
not be exclusive of any other rights of indemnification to which such persons
may be entitled under the Company’s Articles of Association or Bylaws, by
contract, as a matter of law, or otherwise, or under any power that the Company
may have to indemnify them or hold them harmless and shall be subject to any
applicable limitations under law.

 

4.     SHARES SUBJECT TO THE PLAN.

 

(a)           Share
Reserve.  Subject to the provisions of Section 10 relating
to adjustments upon changes in stock, the stock that may be issued under this
Plan shall not exceed in the aggregate of Seventy—Five Thousand (75,000) shares
of Common Stock of the Company.

 

(b)           Reversion
of Shares to the Share Reserve.  If any Option shall for any reason expire
or otherwise terminate, in whole or in part, without having been exercised in
full, the shares of Common Stock not acquired under such Option shall revert to
and again become available for issuance under the Plan.

 

(c)           Source
of Shares.  The stock subject to the Plan may be
unissued shares or reacquired shares bought on the market or otherwise.

 

5.     ELIGIBILITY.

 

(a)           Eligibility
for Options.  Options may be granted only to Founders.

 

(b)           Section 162(m) Limitation.  Subject to the provisions of Section 10 relating
to adjustments upon changes in stock, no employee shall be eligible to be
granted Options covering more than Twenty-five Thousand (25,000) shares of the
Common Stock during any calendar year. 
This subsection 5(b) shall not apply prior to the Listing Date and,
following the Listing Date, this subsection 5(b) shall not apply until (i) the
earliest of:  (1) the first material
modification of the Plan (including any increase in the number of shares
reserved for issuance under the Plan in accordance with Section 4); (2) the
issuance of all of the shares of Common Stock reserved for issuance under the
Plan; (3) the expiration of the Plan; or (4) the first meeting of
shareholders at which Directors of the Company are to be elected that occurs
after the close of the third calendar year following the calendar year in which
occurred the first registration of an equity security under Section 12 of
the Exchange Act; or (ii) such other date required by Section 162(m) of
the Code and the rules and regulations promulgated thereunder.

 

6.     OPTION PROVISIONS.

 

Each Option shall be in such form and shall contain
such terms and conditions as the Committee shall deem appropriate.  A separate certificate or certificates will
be issued for shares purchased on exercise of each Option.  The provisions of separate Options need not
be identical, but each Option shall include (through incorporation of
provisions hereof by reference in the Option or otherwise) the substance of
each of the following provisions:

 

(a)           Term.  No Option shall be exercisable after the expiration of
ten (10) years from the date it was granted.

 

 

(b)           Exercise
Price.  The exercise price of each Option grant made under the
Plan shall be not less than one hundred percent (100%) of the Fair Market Value
of the stock subject to the Option on the date the Option is granted.

 

(c)           Consideration.  The purchase price of stock acquired pursuant to an
Option shall be paid in cash at the time the Option is exercised.  No fractional shares shall be issuable upon
exercise of this right, but, in lieu thereof, the Company shall pay to the
Participant an amount in cash equal to the fair market value of the resulting
fractional share on the exercise date.

 

(d)           Transferability
of Option.  An Option shall not be transferable
except by will or by the laws of descent and distribution and shall be
exercisable during the lifetime of the Participant only by the Participant;
provided, however, that, in the sole discretion of the Committee, any Option
may be transferred by a Participant to any member of the Participant’s
immediate family, to a partnership the partners of which are all members of the
Participant’s immediate family, or to a family trust the beneficiaries of which
are all members of the Participant’s immediate family.  Notwithstanding the foregoing provisions of
this subsection 6(d), the Participant may, by delivering written notice to the
Company, in a form satisfactory to the Company, designate a third party who, in
the event of the death of the Participant, shall thereafter be entitled to exercise
the Option.

 

(e)           Vesting. 
The total number of shares of Common Stock subject to an Option grant to
a Founder shall be fully-vested and not subject to forfeiture in the event of a
termination of a Participant’s termination of employment with the Company or
status as a director or officer of the Company or any of its Affiliates.

 

7.     COVENANTS OF THE COMPANY.

 

(a)           Availability
of Shares.  During the terms of the Options, the
Company shall keep available at all times the number of shares of Common Stock
required to satisfy such Options.

 

(b)           Securities
Law Compliance.  The Company shall seek to obtain from
each regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to grant Options and to issue and sell shares of
Common Stock upon exercise of the Options; provided, however, that this
undertaking shall not require the Company to register under the Securities Act
the Plan, any Option or any stock issued or issuable pursuant to any such
Option.  If, after reasonable efforts,
the Company is unable to obtain from any such regulatory commission or agency
the authority which counsel for the Company deems necessary for the lawful
issuance and sale of stock under the Plan or is otherwise unable to obtain a
valid exemption from registration for purposes of issuing Options under such
Plan, the Company shall be relieved from any liability for failure to issue and
sell stock upon exercise of such Options unless and until such authority is
obtained or a valid exemption from registration is obtained.

 

8.     USE OF PROCEEDS FROM STOCK.

 

Proceeds from the sale of stock pursuant to Options
shall constitute general funds of the Company.

 

9.     EXERCISE OR FORFEITURE.

 

In the event that Company’s capital falls below the
minimum requirements contained in 12 C.F.R. 3 or below a higher requirement as
determined by the Comptroller, the Comptroller may direct the Company to
require Participants who have outstanding Options pursuant to this Plan to
either exercise 

 

 

such Options or to forfeit
all such Options.  The Company will
notify Participants who have outstanding Options pursuant to this Plan within
forty-five (45) days from the date the Comptroller notifies the Company in
writing that such Participants must exercise or forfeit their Options.  Notwithstanding anything in this Plan or an
applicable Option Agreement to the contrary, the Company will cancel
outstanding Options not exercised within twenty-one (21) days of the Company’s
notification.  The Company has agreed to
comply with any request by the Comptroller that the Company invoke its right to
require Participants who have outstanding Options pursuant to this Plan to
exercise or forfeit their options under the previous circumstances.

 

10.  ADJUSTMENTS UPON CHANGES IN COMMON STOCK.

 

(a)           Capitalization
Adjustments.  If any change is made in the stock
subject to the Plan, or subject to any Option, without the receipt of
consideration by the Company (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange
of shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Plan will be appropriately
adjusted in the class(es) and maximum number of securities subject to the Plan
pursuant to subsection 4(a) and the maximum number of securities subject
to award to any person pursuant to subsection 5(b), and the outstanding Options
will be appropriately adjusted in the class(es) and number of securities and
price per share of stock subject to such outstanding Options.  The Board, the determination of which shall
be final, binding and conclusive, shall make such adjustments.  For this purpose, the conversion of any
convertible securities of the Company shall not be treated as a transaction “without
receipt of consideration” by the Company. 

 

(b)           Change in Control—Dissolution or Liquidation.  In the event of a dissolution or liquidation of the
Company, then such Options shall be terminated if not exercised prior to such
event.

 

(c)            Change
in Control—Asset Sale, Merger, Consolidation or Reverse Merger.  In the event of (i) a sale of all or
substantially all of the assets of the Company, (ii) a merger or
consolidation in which the Company is not the surviving corporation or (iii) a
reverse merger in which the Company is the surviving corporation but (A) the
shares of Common Stock outstanding immediately preceding the merger are
converted by virtue of the merger into other property (whether in the form of
securities, cash or otherwise) or (B) the voting securities of the Company
outstanding immediately preceding the merger represent less than fifty percent
(50%) of the total voting power represented by the voting securities of the
Company surviving such merger (other than, with respect to events otherwise
described in items (i) through (iii) above, the formation of a
holding company by the Company, a merger or consolidation with a wholly-owned
subsidiary, a reincorporation of the Company in a different jurisdiction, or
other transaction in which there is no substantial change in the shareholders
of the Company or their relative stock holdings and the Options granted under
this Plan are assumed, converted or replaced by the successor corporation,
which assumption will be binding on all Participants), then any surviving
corporation or acquiring corporation shall assume any Options outstanding under
the Plan or shall substitute similar Options (including an award to acquire the
same consideration paid to the shareholders in the transaction described in
this subsection 10(c) for those outstanding under the Plan).  In the event any surviving corporation or
acquiring corporation refuses to assume such Options or to substitute similar
options for those outstanding under the Plan, the Options shall terminate if
not exercised at or prior to such event and the Plan shall terminate. 

 

11.  DURATION AND AMENDMENTS.

 

(a)           Term of Plan.  The Plan, as
set forth herein, shall become effective on the date of its adoption by the
Board, subject to the approval of the Company’s shareholders.  In the event that the 

 

 

shareholders fail to approve the Plan within twelve
(12) months after its adoption by the Board, any Options already made shall be
null and void, and no additional Options shall be made after such date.  The Plan shall terminate automatically ten (10) years
after its adoption by the Board and may be terminated on any earlier date
pursuant to subsection (b) below.

 

(b)           Right
to Amend or Terminate Plan.  The Board may
amend or terminate the Plan at any time. 
Rights under any Option granted before amendment of the Plan shall not
be materially altered, or impaired adversely, by such amendment without the
Participant’s consent.

 

(c)           Effect
of Amendment or Termination.  No Common
Stock shall be issued or sold under the Plan after the termination thereof,
except upon the exercise of an Option granted prior to such termination.  The termination of the Plan, or any amendment
thereof, shall not affect any Common Stock previously issued or Option
previously granted under the Plan.

 

12.  MISCELLANEOUS.

 

(a)           Shareholder
Rights.  No Participant shall be deemed to be the holder of, or
to have any of the rights of a holder with respect to, any shares subject to
such Option unless and until such Participant has satisfied all requirements
for exercise of the Option pursuant to its terms.

 

(b)           No
Employment or other Service Rights.  Nothing in the Plan or any instrument
executed or Option granted pursuant thereto shall confer upon any Participant
or other holder of Options any right to continue to serve the Company or an
Affiliate in the capacity in effect at the time the Option was granted or shall
affect the right of the Company or an Affiliate to terminate (i) the
employment of an Employee with or without notice and with or without cause or (ii) the
service of a Director pursuant to the Bylaws of the Company or an Affiliate,
and any applicable provisions of the corporate law of the state in which the
Company or the Affiliate is incorporated, as the case may be.

 

(c)           Investment
Assurances.  The Company may require a Participant, as
a condition of exercising or acquiring any Option or stock under any Option, (i) to
give written assurances satisfactory to the Company as to the Participant’s
Accredited Investor status, knowledge and experience in financial and business
matters and/or to employ a purchaser representative reasonably satisfactory to
the Company who is knowledgeable and experienced in financial and business
matters and that he or she is capable of evaluating, alone or together with the
purchaser representative, the merits and risks of exercising the Option; and (ii) to
give written assurances satisfactory to the Company stating that the
Participant is acquiring the Option or the stock subject to the Option for the
Participant’s own account and not with any present intention of selling or
otherwise distributing the stock or Option.  The foregoing requirements, and
any assurances given pursuant to such requirements, shall be inoperative if a
determination is made by counsel for the Company that such requirement need not
be met in the circumstances under the then applicable securities laws.  The Company may, upon advice of counsel to
the Company, place legends on stock certificates issued under the Plan as such
counsel deems necessary or appropriate in order to comply with applicable
securities laws, including, but not limited to, legends restricting the
transfer of the Options or the stock.

 

(d)           Withholding
Obligations.  To the extent provided by the terms of an
Option Agreement, the Participant may satisfy any federal, state or local tax
withholding obligation relating to the exercise or acquisition of stock under a
Option by any of the following means (in addition to the Company’s right to
withhold from any compensation paid to the Participant by the Company) or by a
combination of such means: (i) tendering a cash payment; (ii) authorizing
the Company to withhold shares from the shares of the Common Stock otherwise
issuable to the participant as a result of the exercise or acquisition of stock

 

 

under the Option; of (iii) delivering to the
Company owned and unencumbered shares of the Common Stock.

 

(e)           Governing
Law.  This Plan and all actions taken thereunder
shall be governed by and construed in accordance with the laws of the State of
California, except in the event the provisions of federal law are mandatorily
applicable.Exhibit 10.13

 

Grant No.               

 

1ST CENTURY BANCSHARES, INC. 

FOUNDER STOCK OPTION PLAN

 

FOUNDER STOCK OPTION AGREEMENT

 

1st Century Bancshares, Inc. (the “Company”) hereby grants to the
Optionholder named below an option to purchase the number of shares of the
Company’s common stock set forth below (the “Common
Stock”).  The terms and
conditions of the Option are set forth in this Founder Stock Option Agreement
(the “Agreement”) and in the 1st
Century Bancshares, Inc.’s Founder Stock Option Plan (the “Plan”) and the Notice of Exercise,
all of which are enclosed herewith and incorporated herein in their
entirety.  Capitalized terms not defined
herein shall have the meanings assigned to them in the Plan.

 

	
  Optionholder:

  	
   

  	
   

  
	
  Date of Grant:

  	
   

  	
                              ,
  20

  
	
  Number of Shares
  Subject to Option:

  	
   

  	
   

  
	
  Exercise Price Per
  Share:

  	
   

  	
  $

  
	
  Expiration Date:

  	
   

  	
                              ,
  20

  
	
   

  	
   

  	
   

  

Payment:                              By
cash or check

 

Acknowledgements:  By signing this cover sheet, you acknowledge
receipt of, and understand and agree to, all of the terms and conditions
described in this Agreement and in the Plan and Notice of Exercise, copies of
which are also enclosed.  Further, you
acknowledge that as of the Date of Grant, this Agreement and the Plan and
Notice of Exercise set forth the entire understanding between you and the
Company regarding the acquisition of stock in the Company and supersede all
prior oral and written agreements (including, without
limitation, any employment agreement with the Company) on that
subject.  You further acknowledge that
you are an Accredited Investor (as such term is defined in the Plan).

 

	
  1ST CENTURY BANCSHARES, INC.

  	
   

  	
  OPTIONHOLDER:

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   Signature

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  
							

 

ENCLOSURES:  Copy of the Founder Stock Option Plan and
Notice of Founder Stock Option Exercise

 

 

1ST CENTURY BANCSHARES, INC. 

FOUNDER STOCK OPTION PLAN

 

FOUNDER STOCK OPTION AGREEMENT

 

The details of your Option are as follows:

 

1.                                      Vesting. 
Your Option is fully-vested.

 

2.                                      Number of Shares and Exercise
Price.  The number of shares subject to your Option and your
exercise price per share referenced in the cover sheet of this Agreement may be
adjusted from time to time for capitalization adjustments, as provided in the
Plan.

 

3.                                      Method of Payment.  Payment of the exercise price is due in full upon
exercise of all or any part of your Option. 
You may elect to make payment of the exercise price in cash or by check.

 

4.                                      Whole Shares.  Your Option may only be exercised for whole shares.

 

5.                                      Securities Law Compliance. 
Notwithstanding anything to the contrary contained herein, your Option
may not be exercised unless the shares issuable upon exercise of your Option
are then registered under the Securities Act or, if such shares are not then so
registered, the Company has determined that such exercise and issuance would be
exempt from the registration requirements of the Securities Act.  The exercise of your Option must also comply
with other applicable laws and regulations governing the Option, and the Option
may not be exercised if the Company determines that the exercise would not be
in material compliance with such laws and regulations.

 

6.                                      Term.  The term of your Option commences on the Date of Grant
and expires upon the tenth (10th) anniversary of the Date of Grant.

 

7.                                      Exercise.

 

(a)                                  You may exercise your Option during its
term by delivering a Notice of Exercise (in a form designated by the Company)
together with the exercise price to the Secretary of the Company, or to such
other person as the Company may designate, during regular business hours,
together with such additional documents as the Company may then require.

 

(b)                                  By exercising your Option you agree that,
as a condition to any exercise of your Option, the Company may require you to
enter an arrangement providing for the payment by you to the Company of any tax
withholding obligation of the Company arising by reason of (1) the
exercise of your Option, (2) the lapse of any substantial risk of
forfeiture to which the shares are subject at the time of exercise or (3) the
disposition of shares acquired upon such exercise.

 

(c)                                  By exercising your Option you agree that
the Company (or a representative of the underwriters) may, in connection with
the first underwritten registration of the offering of any securities of the
Company under the Securities Act, as applicable to national banks, require that
you not sell, dispose of, transfer, make any short sale of, grant any option
for the purchase of, or enter into any hedging or similar transaction with the
same economic effect as a sale, any shares of Common Stock or other securities
of the Company held by you, for a period of time specified by the underwriter(s) following
the effective date of the registration statement of the Company filed under the
Securities Act, as applicable to national banks.  You further agree to execute and deliver such
other agreements as may be reasonably requested by the Company and/or the
underwriter(s) which are consistent with the foregoing or which are
necessary to give further effect thereto. 
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to your Common Stock until the end of
such period.

 

 

8.                                      Transferability.  Your Option is not transferable, except by will or by
the laws of descent and distribution, and is exercisable during your life only
by you; provided, however, and to the extent
permitted by applicable law and regulation, Options may be transferred for no
value to any inter vivos or terminating trust, which shall agree in writing to
be bound by the terms of this Agreement and the Plan, established for estate
planning purposes for the sole and exclusive benefit of such owner of the
Option, one or more members of such owners’ family that are related to such
owner (which member shall include, without limitation, the spouse, adopted
children and stepchildren of such owner) and/or any other lineal descendants of
such owner and in which such owner is a trustee thereof.  Notwithstanding anything to the contrary, by
delivering written notice to the Company, in a form satisfactory to the
Company, you may designate a third party who, in the event of your death, shall
thereafter be entitled to exercise your Option.

 

9.                                      Option Not a Service Contract. 
Your Option is not an employment or service contract, and nothing in
your Option shall be deemed to create in any way whatsoever any obligation on
your part to continue in the employ of the Company or an Affiliate, or of the
Company or an Affiliate to continue your employment.  In addition, nothing in your Option shall
obligate the Company or an Affiliate, their respective shareholders, Boards of
Directors, Officers or Employees to continue any relationship that you might
have as a Director for the Company or an Affiliate.

 

10.                               Withholding Obligations.

 

(a)                                  At the time your Option is exercised, in
whole or in part, or at any time thereafter as requested by the Company, you
hereby authorize withholding from payroll and any other amounts payable to you,
and otherwise agree to make adequate provision for, any sums required to
satisfy the federal, state, local and foreign tax withholding obligations of
the Company or an Affiliate, if any, which arise in connection with your Option.

 

(b)                                  Your Option is not exercisable unless the
tax withholding obligations of the Company and/or any Affiliate are
satisfied.  Accordingly, you may not be
able to exercise your Option when desired even though your Option is vested,
and the Company shall have no obligation to issue a certificate for such shares
or release such shares from any escrow provided for herein.

 

11.                               Notices.  Any notices provided for in your Option or the Plan
shall be given in writing and shall be deemed effectively given upon receipt
or, in the case of notices delivered by the Company to you, five (5) days
after deposit in the United States mail, postage prepaid, addressed to you at
the last address you provided to the Company.

 

12.                               Governing Plan Document.  Your Option is subject to all the provisions of the
Plan, the provisions of which are hereby made a part of your Option, and is
further subject to all interpretations, amendments, rules and regulations
which may from time to time be promulgated and adopted pursuant to the
Plan.  In the event of any conflict
between the provisions of your Option and those of the Plan, the provisions of
the Plan shall control.

 

By signing the cover sheet of this Agreement, you agree to all of the
term and conditions described above and in the Plan.

 

 

NOTICE OF FOUNDER STOCK OPTION EXERCISE

 

FOUNDER STOCK OPTION PLAN (THE “PLAN”)

 

[Name], Inc.

 

 

	
                    ,
  CA 9

  	
   

  	
  Date of Exercise:                        

  

 

Ladies and Gentlemen:

 

This constitutes notice under my Option that I elect to
purchase the number of shares for the price set forth below.

 

	
  Stock option dated:

  	
   

  
	
   

  	
   

  
	
  Number of shares as to
  which option is exercised:

  	
   

  
	
   

  	
   

  
	
  Certificates to be
  issued in name of:

  	
   

  
	
   

  	
   

  
	
  Total exercise price:

  	
   

  
	
   

  	
   

  
	
  Cash payment delivered
  herewith:

  	
   

  

 

By this exercise, I agree (a) to provide such
additional documents as you may require pursuant to the terms of the 1st
Century Bancshares, Inc. Founder Stock Option Plan and (b) to provide
for the payment by me to you (in the manner designated by you) of your withholding
obligation, if any, relating to the exercise of this option.

 

I hereby make the following certifications and
representations with respect to the number of shares of Common Stock of the
Company listed above (the “Shares”),
which are being acquired by me for my own account upon exercise of the Option
as set forth above:

 

I acknowledge that the Shares have not been registered
under the Securities Act of 1933, as amended (the “Securities
Act”), and are deemed to constitute “restricted securities” under
the Securities Act, and, if I am an “affiliate” of the Company (as such term is
defined in Rule 144 of the Securities Act) control securities” under Rule 144.  I warrant and represent to the Company that I
have no present intention of distributing or selling said Shares, except as
permitted under the Securities Act and any applicable state securities laws.

 

I further acknowledge that I am an Accredited Investor
as such term is defined in the Plan.

 

I further acknowledge that all certificates
representing any of the Shares subject to the provisions of the Option shall
have endorsed thereon appropriate legends reflecting the foregoing limitations,
as well as any legends reflecting restrictions pursuant to the Company’s
Articles of Association, Bylaws and/or applicable securities laws.

 

 

I further acknowledge that there may be tax
consequences as a result of the purchase or disposition of the Shares, and I
have consulted with any tax consultants I wished to consult and I am not
relying on the Company for any tax advise.

 

I further agree that, if required by the Company (or a
representative of the underwriters) in connection with the first underwritten
registration of the offering of any securities of the Company under the
Securities Act, I will not sell, dispose of, transfer, make any short sale of,
grant any option for the purchase of, or enter into any hedging or similar
transaction with the same economic effect as a sale of any shares of Common
Stock or other securities of the Company during such period following the
effective date of the registration statement of the Company filed under the
Securities Act as may be requested by the Company or the representative of the
underwriters.  I further agree to execute
and deliver such other agreements as may be reasonably requested by the Company
and/or the underwriters which are consistent with the foregoing or which are
necessary to give further effect thereto and that the Company may impose
stop-transfer instructions with respect to securities subject to the foregoing
restrictions until the end of such period.

 

	
   

  	
  Very truly yours,

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