Document:

ex4_1.htm

    
      

    

    

    Exhibit
      4.1

     

    BANK
      OF MARIN

    1999
      STOCK OPTION PLAN

     

    PURPOSES
      OF THE PLAN

    

    The
      1999
      Stock Option Plan ("Plan") is intended to promote the interests of the Bank
      of
      Marin ("Corporation”) by providing a method whereby eligible individuals who are
      responsible for the management, growth or financial success of the Corporation
      or its parent or subsidiary corporations may be offered incentives and rewards
      which will encourage them to acquire a proprietary interest, or otherwise
      increase their proprietary interest, in the Corporation and continue to render
      services to the Corporation or its parent or subsidiary
      corporations.

    

    Except
      as
      specifically provided in Section 7, options granted hereunder may be either
      "incentive stock options" as defined in Section 422 of the Internal Revenue
      Code
      of 1986, as amended, or "nonstatutory stock options" at the discretion of the
      Corporation and as reflected in the terms of the written option agreement with
      the holder of an option.

    

    ADMINISTRATION
      OF THE PLAN

    

    The
      Board
      of Directors of the Corporation ("Board") shall administer the Plan. The Board
      may, however, at any time appoint a committee ("Committee") consisting of not
      fewer than three members and delegate to such Committee one or more of the
      administrative powers allocated to the Board under the provisions of the Plan,
      including (without limitation) the power to grant options under the Plan, the
      power to accelerate the exercisability of options granted under the Plan and
      the
      power to administer the option surrender provisions of the Plan. Each member
      of
      the Committee shall be a "disinterested person" within the meaning of FDIC
      Regulation 335.411. Members of the Committee shall serve for such term as the
      Board may determine and shall be subject to removal by the Board at any time.
      The Board may also at any time terminate the functions of the Committee and
      reassume all powers and authority previously delegated to the Committee. No
      person serving as a member of the Board or the Committee shall act on any matter
      relating solely to such person's own interests under the Plan or any option
      thereunder.

    

    Any
      reference to the Board in one or more provisions of the Plan shall, except
      for
      the references in Sections 7, 8, 10 and 11(c), mean the Committee, if the
      Committee is at the time responsible for the administration of either the Plan
      or those particular provisions of the Plan. The Board or the Committee, as
      the
      case may be, is authorized (subject to the provisions of the Plan) to establish
      such rules and regulations as it may deem appropriate for the proper
      administration of the Plan and to make such determinations under, and issue
      such
      interpretations of, the Plan and any outstanding option as it may deem necessary
      or advisable. Decisions of the Board or the Committee, as the case may be,
      shall
      be final and binding on all parties who have an interest in the Plan or any
      outstanding options.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    ELIGIBILITY
      FOR OPTION GRANTS

    

    The
      individuals who shall be eligible to receive options pursuant to the Plan shall
      be those key full-time salaried employees of the Corporation or its parent
      or
      subsidiary corporations (whether or not they are officers or members of the
      Board) and members of the Board (whether or not they are
      employees).

    

    Except
      as
      provided in Section 7, members of the Board who are not also employees of the
      Corporation or its parent or subsidiary corporations shall not be eligible
      to
      receive option grants under the Plan.

    

    Subject
      to subsections (a) and (b) above and to Section 7 below, the Board shall have
      full authority to determine the individuals who are to be granted options under
      the Plan, the number of shares to be covered by each granted option, whether
      each such option is to be an incentive stock option ("Incentive Stock Option")
      under Section 422 of the Internal Revenue Code of 1986, as amended ("Internal
      Revenue Code"), or a non-statutory option not intended to meet the requirements
      of Section 422A, and the time or times at which each such option is to become
      exercisable. In no event may the total number of shares subject to options
      granted to an optionee exceed 10% of the total outstanding shares of the same
      class or series of the Corporation, determined with application of the ownership
      attribution rules of Section 424(d) of the Internal Revenue Code.

    

    For
      the
      purposes of the Plan, the terms "parent corporation" and "subsidiary
      corporation" shall have the meanings specified in Sections 424(e) and (f) of
      the
      Internal Revenue Code.

    

    STOCK
      SUBJECT TO THE PLAN

    

    The
      stock
      issuable under the Plan shall be shares of the Corporation's authorized but
      unissued or reacquired common stock ("Common Stock").  The aggregate
      number of issuable shares shall not exceed 650,000 shares, 95,000 of such shares
      being reserved for issuance only under Section 7, subject to adjustment from
      time to time in accordance with subsection (b).  Should an option be
      terminated for any reason without being exercised in whole or in part, the
      shares subject to the portion of the option not so exercised shall be available
      for subsequent option grants under the Plan.

    

    In
      the
      event any change is made to the Common Stock issuable under the Plan (whether
      by
      reason of merger, consolidation, reorganization, recapitalization, stock
      dividend, stock split, combination of shares, exchange of shares, or other
      change in corporate or capital structure effected without receipt of
      consideration), then, unless such change results in the termination of all
      outstanding options pursuant to the provisions of Section 8, the maximum number
      and/or class of shares issuable under the Plan shall be automatically adjusted
      to reflect the effect of such change upon the Corporation's capital structure,
      and the Board shall make appropriate adjustments to the number and/or class
      of
      shares and the option price per share of the stock subject to each outstanding
      option in order to prevent the dilution or enlargement of benefits thereunder.
      The adjustments determined by the Board shall be final, binding and
      conclusive.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    TERMS
      AND CONDITIONS OF OPTIONS

    

    Options
      granted pursuant to the Plan shall be authorized by action of the Board and
      may
      be either Incentive Stock Options or non-statutory
      options.  Individuals who are not employees of the Corporation or its
      parent or subsidiary corporations may be granted only nonstatutory
      options.  Each option granted shall be evidenced by an instrument in
      such form as the Board shall from time to time approve; provided, however,
      that
      each such instrument shall comply with and incorporate the terms and conditions
      specified by the Plan and shall specify whether it is intended to be an
      Incentive Stock Option or a non-statutory option. Options granted to
      non-employee directors of the Corporation shall only be granted in accordance
      with the terms of Section 7 below.

    

    Option
      Price.

    

    The
      option price per share shall be fixed by the Board, but in no event shall the
      option price per share be less than 100% of the fair market value of a share
      of
      Common Stock on the date of the option grant.

    

    The
      option price shall be immediately due upon exercise of the
      option.  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 Board and may consist entirely of cash, check, or any other consideration
      and method of payment for the issuance of shares permitted under applicable
      law.  In addition, full payment of the purchased shares may be
      effected through a broker-dealer sale and remittance procedure pursuant to
      which
      the optionee (i) shall provide irrevocable written instructions to a designated
      brokerage firm to effect the immediate sale of the purchased shares and remit
      to
      the Bank, out of the sale proceeds available on the settlement date, sufficient
      funds to cover the aggregate exercise price payable for the purchased shares
      plus all applicable federal, state and local income and employment taxes
      required to be withheld by the Bank by reason of such purchase and (ii) shall
      provide written directives to the Bank to deliver the certificates for the
      purchased shares directly to such brokerage firm in order to complete the sale
      transaction.

    

    The
      fair
      market value of a share of Common Stock on any relevant date under the Plan
      shall be determined in accordance with the following provisions:

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    If
      Common
      Stock is not at the time listed or admitted to trading on any stock exchange
      but
      is traded in the over-the counter market or on the NASDAQ National Market System
      or Small Cap Market System, the fair market value shall be the reported bid
      price of one share of Common Stock on the date in question in the
      over-the-counter market.  If there are no reported bid prices on the
      date in question, then the reported bid price on the last preceding date for
      which such quotations exist shall be determinative of fair market
      value.

    

    If
      Common
      Stock is at the time listed or admitted to trading on any stock exchange, then
      the fair market value shall be the mean between the highest and lowest reported
      sale prices of shares of Common Stock on the date in question on the stock
      exchange determined by the Board to be the primary market for Common Stock,
      as
      such price is officially quoted on the composite tape of transactions on such
      exchange. If there is no reported sale of Common Stock on such exchange on
      the
      date in question, then the fair market value shall be the mean between the
      highest and lowest reported sale prices on the exchange on the last preceding
      date for which such quotations exist.

    

    If
      Common
      Stock is at the time neither listed nor admitted to trading on any stock
      exchange nor traded in the over-the counter market, then the fair market value
      shall be determined by the Board in accordance with the guidelines set forth
      in
      Treasury Regulations Section 20.2031-2 after taking into account such factors
      as
      the Board shall deem appropriate.

    

    Term
      and
      Exercise of Options.  Each option granted under the Plan shall be
      exercisable at such time or times, during such period, and for such number
      of
      shares as shall be determined by the Board and set forth in the instrument
      evidencing such option; provided, however, that no option granted under the
      Plan
      shall have a term in excess of ten years from the grant date.  During
      the lifetime of the optionee, each option shall be exercisable only by the
      optionee and shall not be assignable or transferable by the optionee other
      than
      by will or by the laws of descent and distribution.

    

    Effect
      of
      Termination of Employment.

    

    Except
      as
      otherwise provided in this subsection (d), should an optionee cease to be an
      employee of the Corporation or its parent or subsidiary corporations for any
      reason while the holder of one or more outstanding options granted to such
      optionee under the Plan, then such option or options shall in no event remain
      exercisable for more than a ninety (90) day period (12 months in the case of
      termination by reason of death or permanent disability), or such shorter period
      as is determined by the Board and set forth in the option agreement, following
      the date of cessation of employee status (and under no circumstances shall
      any
      such option be exercisable after the specified expiration date of the option
      term), and each such option shall, during such period, be exercisable only
      to
      the extent of the number of shares for which the option is exercisable on the
      date of such cessation of employee status.  Upon the expiration of
      such period or (if earlier) upon the expiration of the option term, the option
      shall terminate and cease to be exercisable.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    If
      the
      optionee's employment is terminated for cause (including, but not limited to,
      any substantial act of dishonesty, willful misconduct, fraud or embezzlement
      or
      any unauthorized disclosure of confidential information or trade secrets),
      then
      any outstanding option granted the optionee under the Plan shall terminate
      and
      cease to be exercisable immediately upon such termination of
      employment.

    

    The
      Board
      shall have discretion, exercisable either at the time the option is granted
      or
      at the time the optionee's employment is terminated, to establish as a provision
      applicable to the exercise of one or more options granted under the Plan that
      during the limited period of exercisability following termination of employment
      as provided in paragraph (1), the option may be exercised not only with respect
      to the number of shares for which it is exercisable at the time of the
      optionee's termination of employment but also with respect to one or more
      installments of purchasable shares for which the option otherwise would have
      become exercisable had such termination of employment not occurred.

    

    Stockholder
      Rights.  An option holder shall have none of the rights of a
      stockholder with respect to any shares covered by the option until such
      individual shall have exercised the option, paid the option price and been
      issued a stock certificate for the purchased shares.

    

    Modification
      of Options.  The Board shall have full power and authority to modify
      or waive any or all of the terms, conditions or restrictions applicable to
      any
      outstanding option, to the extent not inconsistent with the Plan; provided,
      however, that no such modification or waiver shall, without the consent of
      the
      option holder, adversely affect the holder's rights thereunder.

    

    INCENTIVE
      STOCK OPTIONS

    

    General
      Conditions.  The terms and conditions set forth in this Section shall
      apply to all Incentive Stock Options granted under the Plan. Options that are
      specifically, designated as non-statutory options when issued under the Plan
      shall not be subject to such terms and conditions.

    

    Option
      Price.  The option price per share of Common Stock subject to an
      incentive Stock Option shall in no event be less than 100% of the fair market
      value of a share of Common Stock on the date of grant.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    Dollar
      Limitation.  To the extent that the aggregate fair market value
      (determined as of the respective date or dates of grant) of shares with respect
      to which options that would otherwise be Incentive Stock Options are exercisable
      for the first time by any individual during any calendar year under the Plan
      (or
      any other plan of the Corporation, a parent or subsidiary corporation or
      predecessor thereof exceeds the sum of $100,000 (or such greater amount as
      may
      be permitted under the Internal Revenue Code), whether by reason of acceleration
      or otherwise, such options shall be treated as options which are not Incentive
      Stock Options.  Such options shall be taken into account in the order
      in which they were granted.

    

    10%
      Shareholder.  If an employee to whom an Incentive Stock Option is to
      be granted pursuant to the provisions of the Plan is on the date of grant the
      owner of stock (as determined under Section 424(d) of the Internal Revenue
      Code)
      possessing more than 10% of the total combined voting power of all classes
      of
      stock of the Corporation or any one of its parent or subsidiary corporations,
      then the following special provisions shall be applicable to the Incentive
      Stock
      Option granted to such employee:

    

    The
      option price per share of the Common Stock subject to such Incentive Stock
      Option shall not be less than 110 % of the fair market value of one share of
      Common Stock on the date of grant.

    

    The
      option shall not have a term in excess of five years from the date of
      grant.

    

    OPTION
      TO NON-EMPLOYEE DIRECTORS

    

    Notwithstanding
      any other term or provision in this Plan, members of the Board who are not
      also
      employees of the Corporation or its parent or subsidiary corporations shall
      be
      eligible to receive option grants under the Plan but any such options may be
      granted only upon the terms set forth in this Section 7, and other terms of
      the
      Plan not inconsistent with the terms of this paragraph. To the extent that
      any
      other terms or provisions in the Plan conflict with the terms of this Section
      7
      for such non-employee options, the terms of this Section 7 shall
      apply.

    

    Eligibility.  All
      non-employee directors shall receive options pursuant to the terms of this
      Section 7, as of the later of (i) the date of their next election to the Board
      of Directors (after the effective date of the Plan) after they have served
      as a
      director for not less than 12 months and (ii) approval of this Amended and
      Restated Plan by the Department of Financial Institutions and the shareholders
      of the Corporation.

    

    Stock
      Subject to This Section.  The aggregate number of issuable shares for
      nonemployee directors shall not exceed 95,000 of the total number of shares
      authorized for the Plan as set forth in Section 4 subject to adjustment from
      time to time in accordance with Section 4(b).

    

    Terms
      and
      Conditions.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Non-Statutory.  Non-employee
      directors may only be granted non-statutory options.  Each option
      shall be granted on the terms and conditions set forth herein.

    

    Number
      of
      Shares.  As of the date of first eligibility as described in Section
      7(a) each such non-employee director shall be granted options to acquire 5,000
      shares of the Corporation's Common Stock, subject to adjustment as provided
      in
      Section 4(b).  No other options shall be granted to any non-employee
      director.

    

    Option
      Price.  The option price per share shall be 100% of the fair market
      value of a share of Common Stock as of the date of the option
      grants.

    

    Term
      and
      Exercise.  Each option granted to non-employee directors shall vest as
      to 1,000 shares as of the date of grant, and 1,000 shares on each anniversary
      of
      the date of grant through the fourth anniversary. Such options may be exercised
      as to vested options at any time provided that all such options shall have
      a
      term of seven years from the date of grant and any options not exercised on
      or
      before the expiration of the term shall lapse and be of no further force or
      effect. During the lifetime of the non-employee director each option granted
      shall be exercisable only by such person and shall not be assignable or
      transferable other than by will or by intestate succession.

    

    Termination
      of Status as Director.

    

    Except
      as
      otherwise provided in subsection 7(e)(2), in the event of the termination of
      a
      non-employee director optionee as a director of the Corporation for any reason
      prior to the expiration of the option term, then any options granted shall
      remain exercisable for a period of 90 days after termination (but not later
      than
      the expiration of the term), but only to the extent that such options had vested
      as of the date of termination.

    

    In
      the
      event of the termination of a non-employee director optionee as a director
      of
      the Corporation pursuant to applicable law because such director has been
      declared of unsound mind by an order of court or convicted of a felony or has
      been found by a court to have committed fraudulent or dishonest acts or gross
      abuse of authority or discretion with reference to the Corporation, then any
      outstanding options granted the optionee under the Plan shall terminate and
      cease to be exercisable immediately upon such termination.

    

    Modification
      of Options, Amendment of the Plan.  The Board has no power or
      authority to modify or waive any of the terms, conditions or restrictions
      applicable to any options outstanding to non-employee directors, nor has it
      any
      power or authority to amend, modify, suspend or terminate any terms of this
      Section 7, except to the extent that any such modification or amendment is
      for
      the purpose of complying with changes in the Internal Revenue Code of 1986
      or
      changes in ERISA.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Acceleration.  In
      the event, the Corporation or its stockholders enter into an agreement to
      dispose of all or substantially all of the assets or outstanding capital stock
      of the Corporation by means of sale, merger, reorganization or liquidation,
      then
      each option outstanding to non-employee directors shall become exercisable
      immediately prior to the consummation of such sale, merger, reorganization
      or
      liquidation with respect to the full number of shares of Common Stock under
      such
      option.

    

    ACCELERATION
      AND TERMINATION OF OPTIONS

    

    In
      the
      event that the Corporation or its stockholders enter into an agreement to
      dispose of all or substantially all of the assets or outstanding capital stock
      of the Corporation by means of sale, merger, reorganization or liquidation,
      then
      each option outstanding under the Plan shall become exercisable, immediately
      prior to the consummation of such sale, merger, reorganization or liquidation,
      with respect to the full number of shares of Common Stock purchasable under
      such
      option.  Except as provided in Section 7, no such acceleration of the
      exercise date, however, shall occur if the terms of the agreement require as
      a
      prerequisite for the consummation of any such sale, merger, reorganization
      or
      liquidation that each such outstanding option shall either be assumed by the
      successor corporation or parent thereof or options of the successor corporation
      comparable to the options granted under the Plan and to be granted under the
      Plan are to be granted to each optionee hereunder.  The determination
      of such comparability shall be made by the Board, and its determination shall
      be
      final, binding and conclusive.  Upon consummation of the sale, merger,
      reorganization or liquidation contemplated by the agreement, all outstanding
      options, whether or not accelerated, shall terminate and cease to be
      exercisable, unless assumed pursuant to a written agreement by the successor
      corporation or parent thereof.

    

    CANCELLATION
      AND NEW GRANT OF OPTIONS

    

    The
      Board
      shall have the authority to effect, at any time and from time to time, with
      the
      consent of the affected option holders, the cancellation of any or all
      outstanding options under the Plan and to grant in substitution therefor new
      options under the Plan covering the same or different numbers of shares of
      Common Stock but having an option price per share not less than 100% of fair
      market value (110% of the fair market value if the new option is to be Incentive
      Stock Option subject to Section 6(d)) as of the new grant date.

    

    AMENDMENT
      OF THE PLAN

    

    Except
      as
      provided in Section 7, the Board shall have complete and exclusive power and
      authority to amend, modify, suspend or terminate the Plan in any or all respects
      whatsoever at any time; provided, however, that no such amendment or
      modification shall, without the consent of option holders, adversely affect
      rights and obligations with respect to options at the time outstanding under
      the
      Plan; and provided, further, that the Board shall not, without the approval
      of
      the Corporation's stockholders, (i) increase the maximum number of shares
      issuable under the Plan, except for permissible adjustments under Section 4(b),
      (ii) materially increase the benefits accruing to individuals who participate
      in
      the Plan, or (iii) modify the eligibility requirements for the grant of options
      under the Plan.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Notwithstanding
      the provisions of subsection (a) (other than those provisions which require
      approval of certain amendments by the Corporation's stockholders), the Board
      shall have the right to amend or modify the terms and provisions of the Plan
      and
      of any outstanding options under the Plan, except for any options granted
      pursuant to Section 7, to the extent necessary to qualify any or all options
      under the Plan for such favorable federal income tax treatment as may be
      afforded incentive stock options under Section 422 of the Internal Revenue
      Code
      and regulations promulgated thereunder.

    

    EFFECTIVE
      DATE AND TERM OF PLAN

    

    The
      Plan
      shall become effective on the later of (i) June 30, 1999 or (ii) the day after
      the day as of which the Plan is approved by the Department of Financial
      Institutions of the State of California, but the Plan shall terminate, and
      no
      options granted hereunder shall be exercisable, unless the Plan shall have
      been
      approved by the stockholders of the Corporation holding not less than a majority
      of the shares present or represented at a meeting of shareholders duly called
      within 12 months after the effective date.  Subject to such
      limitation, the Board may grant options under the Plan at any time on or after
      the effective date and before the date fixed herein for termination of the
      Plan.
      As of the effective date the Plan shall be the only stock option plan of the
      Bank and any and all prior plans shall terminate.

    

    Unless
      the Plan is sooner terminated in accordance with Section 8, no options shall
      be
      granted after the earlier of (i) the tenth anniversary of the date of the
      adoption of the Plan by the Board or (ii) the date on which all shares available
      for issuance under the Plan shall have been issued pursuant to the exercise
      of
      options granted hereunder.

    

    Options
      may be granted under this Plan to purchase shares of Common Stock in excess
      of
      the number of shares then available for issuance under the Plan, provided (i)
      an
      amendment to increase the maximum number of shares issuable under the Plan
      is
      adopted by the Board prior to the initial grant of any such option and is
      thereafter submitted to the Corporation's stockholders for approval and (ii)
      each option so granted is not to become exercisable, in whole or in part, at
      any
      time prior to the obtaining of such stockholder approval.

     

    USE
      OF PROCEEDS

     

    The
      cash
      proceeds received by the Corporation from the sale of shares pursuant to options
      granted under the Plan shall be used for general corporate
      purposes.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    WITHHOLDING

    

    In
      the
      event that an optionee is required to pay to the Corporation an amount with
      respect to federal, state or local income and employment tax withholding
      obligations in connection with the exercise of an option, the Board may, in
      its
      discretion and subject to such rules as it may adopt, permit the optionee to
      satisfy the obligations, in whole or in part, by either (i) making an
      irrevocable election that a portion of the total value of the shares of Common
      Stock subject to the option be paid in the form of cash in lieu of the issuance
      of Common Stock and that such cash payment be applied to the satisfaction of
      the
      withholding obligations or (ii) tendering shares previously held by the optionee
      in a number sufficient to satisfy such obligations.

    

    If
      the
      optionee is subject to the trading restrictions of Section 16(b) of the
      Securities Exchange Act of 1934, as amended (" 1934 Act") at the time of
      exercise of an option, any election under this subparagraph (b) by such optionee
      shall be made only in accordance with the applicable requirements of FDIC
      Regulation 335.411.

    

    The
      Corporation's obligation to deliver shares upon the exercise or surrender of
      any
      option granted under the Plan shall be subject to the option holder's
      satisfaction of all applicable federal, state and local income and employment
      tax withholding requirements.

    

    NO
      EMPLOYMENT OR SERVICE OBLIGATION

    

    Neither
      the action of the Corporation in establishing the Plan, nor any action taken
      by
      the Board or the Committee hereunder, nor any provision of the Plan itself
      shall
      be construed so as to grant any individual the right to remain in the employ
      or
      service of the Corporation or its parent corporation or any of its subsidiaries
      for any period of specific duration, and the Corporation (or its parent
      corporation or any subsidiary retaining the services of such individual) may
      terminate such individual's service at any time and for any reason, with or
      without cause.

    

    APPROVALS

    

    The
      implementation of the Plan, the granting of any option hereunder, and the
      issuance of stock upon the exercise or surrender of any such option shall be
      subject to the Corporation's procurement of all approvals and permits required
      by regulatory authorities having jurisdiction over the Plan, the options granted
      under it and the stock issued pursuant to it.  Continuance of the Plan
      is subject to approval by the shareholders of the Corporation within 12 months
      after the Plan is adopted by the Board.  Shareholder approval shall
      consist of approval by the affirmative vote of the holders of a majority of
      shares present or represented and entitled to vote at a meeting duly held and
      by
      a majority of the disinterested shares represented and voting at the meeting
      or
      by the written consent of holders of a majority of the outstanding shares and
      a
      majority of the disinterested shares.

     

    GOVERNING
      LAW

    

    To
      the
      extent not otherwise governed by federal law, the Plan and its implementation
      shall be governed by and construed in accordance with the laws of the State
      of
      California.ex4_1.htm

    
      
        

      

    

    Exhibit
      4.1

    

    

    BANK
      OF MARIN

    

    2007
      Equity Plan

     

    THIS
      2007
      EQUITY PLAN is hereby adopted by the Board of Directors of Bank of Marin, a
      California banking corporation (the “Bank”) on March 8, 2007, subject to
      approval by the shareholders of the Bank below.

    

    ARTICLE
      I

    

    PURPOSE
      AND EFFECTIVE DATE

    

    1.1           Purpose.
      The purpose of the Plan is to provide financial incentives for selected
      Employees, Advisors and Non-Employee Directors, thereby promoting the long-term
      growth and financial success of the Bank by (a) attracting and retaining
      Employees, Advisors and Non-Employee Directors of outstanding ability, (b)
      strengthening the Bank’s capability to develop, maintain, and direct a competent
      management team, (c) providing an effective means for selected Employees,
      Advisors and Non-Employee Directors to acquire and maintain ownership of Bank
      Stock, (d) motivating Employees to achieve long-range Performance Goals and
      objectives, and (e) providing incentive compensation opportunities competitive
      with peer financial institution holding companies.

     

    1.2           Effective
      Date and Expiration of Plan. The Plan will be effective upon its
      adoption by the Board and approval by affirmative vote of the Shareholders
      required under applicable rules and procedures, including those prescribed
      under
      Sections 162(m) and 422 of the Code and applicable NASDAQ rules (the "Effective
      Date").  Unless earlier terminated by the Board pursuant to Section
      12.2, the Plan shall terminate on the tenth anniversary of its Effective
      Date.  No Award shall be made pursuant to the Plan after its
      termination date, but Awards made prior to the termination date may extend
      beyond that date.  Notwithstanding the foregoing, no Incentive Stock
      Options may be granted more than ten years after the earlier of (a) the adoption
      of this Plan by the Board or (b) the Effective Date.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      II

     

    DEFINITIONS

     

    The
      following words and phrases, as used in the Plan, shall have the meanings set
      forth in this section.  When applying these definitions and any other
      word, term or phrase used in this Plan, the form of any word, term or phrase
      will include any and all of its other forms.

     

    2.1           Advisor
      means any advisor who renders bona fide services to the Bank and/or one or
      more
      of the Subsidiaries as an advisory or marketing board member and who is neither
      an Employee nor a director of the Bank or any Subsidiary; provided that the
      services rendered are not in connection with the offer or sale of securities
      in
      a capital-raising transaction and do not directly or indirectly promote or
      maintain a market for the Bank’s securities.

     

    2.2           Award
      means, individually or collectively, any Option, SAR, Restricted Stock,
      Restricted Performance Stock, or unrestricted Bank Stock Award.

     

    2.3           Award
      Agreement means the written agreement between the Bank and each
      Participant that describes the terms and conditions of each Award.  If
      there is a conflict between the terms of the Plan and the Award Agreement,
      the
      terms of the Plan will govern.

     

    2.4           Board
      means the Board of Directors of the Bank.

    

    2.5           Cause
      with respect to any Participant, means: (a) Gross negligence or gross
      neglect of duties; or (b) Commission of a felony or of a gross misdemeanor
      involving moral turpitude in connection with the Participant’s employment or
      service, as the case may be, with the Bank or any of its Subsidiaries; or (c)
      Fraud, disloyalty, dishonesty or willful violation of any law or significant
      Bank policy committed in connection with the Participant’s employment or
      provision of services, as the case may be; or (d) Issuance of an order for
      removal of the Participant by any agency which regulates the activities of
      the
      Bank or any of its Subsidiaries.  Any determination of “Cause” under
      this Plan shall be made by the Committee in its sole discretion.

     

    2.6           Bank
      means Bank of Marin, a California banking corporation.

     

    2.7           Bank
      Director means a non-employee member of the Board.

     

    2.8           Bank
      Stock means the Bank’s common shares, without par value per
      share.

     

    2.9           Code
      means the Internal Revenue Code of 1986, as amended or superseded
      after
      the Effective Date, and any applicable rulings or regulations issued
      thereunder.

     

    2.10         Committee
      means the Compensation Committee of the Board or a subcommittee
      thereof.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    2.11         Disability
      means: (a) with respect to an Incentive Stock Option, “disabled” within the
      meaning of Section 22(e)(3) of the Code; (b) with respect to any Award subject
      to Section 409A of the Code, “disabled” as defined under Section 409A of the
      Code; and (c) with respect to any Award not described in subsections (a) and
      (b)
      of this Section 2.11, a long-term disability as defined by the Bank’s or
      Subsidiary’s group disability insurance plan, or any successor plan that is
      applicable to such Participant at the time of his or her
      Termination.

    

    2.12         Effective
      Date means the date on which the Plan is approved by the Shareholders
      of the Bank, as provided in Section 1.2.

     

    2.13         Employee
      means any person who, on any applicable date, is a common law employee
      of the Bank or any Subsidiary.  A worker who is classified as other
      than a common law employee but who is subsequently reclassified as a common
      law
      employee of the Bank or any Subsidiary for any reason and on any basis will
      be
      treated as a common law employee only from the date that reclassification occurs
      and will not retroactively be reclassified as an Employee for any purpose of
      this Plan.

     

    2.14         Exchange
      Act means the Securities Exchange Act of 1934, as amended.

    

    2.15         Exercise
      Price means the amount, if any, that a Participant must pay to exercise
      an Award (other than an Option).

     

    2.16         Fair
      Market Value means, as of any specified date, an amount equal to the
      reported closing price on the specified date of a share of Bank Stock on NASDAQ
      or any other established stock exchange or quotation system on which the Bank
      Stock is then listed or traded or, if no shares of Bank Stock have been traded
      on such date, the closing price of a share of Bank Stock on NASDAQ or such
      other
      established stock exchange or quotation system as reported on the first day
      prior thereto on which shares of Bank Stock were so traded. If the preceding
      sentence does not apply, Fair Market Value shall be determined in good faith
      by
      the Committee using other reasonable means.

     

    2.17         Fiscal
      Year means the fiscal year of the Bank, which is the 52- or 53-week
      period ending on December 31.

     

    2.18         Incentive
      Stock Option means an option within the meaning of Section 422 of the
      Code.

     

    2.19        
      Non-Employee Director means either a Bank Director or a
      Subsidiary Director who is not also an employee.

     

    2.20         Nonqualified
      Stock Option means an option granted under the Plan other than an
      Incentive Stock Option.

     

    2.21         Option
      means either a Nonqualified Stock Option or an Incentive Stock Option
      to purchase Bank Stock.

     

    2.22         Option
      Price means the price at which Bank Stock may be purchased under an
      Option.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    2.23         Participant
      means an Employee, an Advisor or a Non-Employee Director to whom an
      Award has been made under the Plan.

     

    2.24         Performance
      Goals means goals established by the Committee pursuant to Section
      4.5.

     

    2.25         Performance
      Period means a period of time over which performance is
      measured.

     

    2.26         Personal
      Representative means the person or persons who, upon the death,
      disability, or incompetency of a Participant, shall have acquired, by will
      or by
      the laws of descent and distribution or by other legal proceedings, the right
      to
      exercise an Option or SAR or the right to any Restricted Stock Award theretofore
      granted or made to such Participant.

     

    2.27         Plan
      means the Bank of Marin 2007 Equity Plan.

     

    2.28         Predecessor
      Plan means the Bank of Marin 1999 Stock Option Plan.

     

    2.29         Restricted
      Performance Stock means Bank Stock subject to Performance
      Goals.

     

    2.30         Restricted
      Stock means Bank Stock subject to the terms and conditions provided in
      Article VI and including Restricted Performance Stock.

     

    2.31         Restricted
      Stock Award means an Award granted under Article VI.

    

    2.32         Restriction
      Period means a period of time determined under Section 6.2 during which
      Restricted Stock is subject to the terms and conditions provided in Section
      6.3..

     

    2.33         SAR
      means a stock appreciation right granted under Section
      5.7.

     

    2.34         Shareholders
      mean the shareholders of the Bank.

    

    2.35         Subsidiary
      means a corporation or other entity the majority of the voting stock
      of
      which is owned directly or indirectly by the Bank.

    

    2.36         Subsidiary
      Director means a non-employee member of the board or directors of a
      Subsidiary who is not also a Bank Director.

    

    2.37         Termination
      means (i) in the case of an Employee, a cessation of the employee-employer
      relationship between the Employee and the Bank or a Subsidiary for any reason,
      including, but not by way of limitation, a termination by resignation,
      discharge, death, Disability, retirement, but excluding any such termination
      where there is a simultaneous commencement or continuation of status as an
      Advisor or as a Director; (ii) in the case of an Advisor, a cessation of
      the service relationship between the Advisor and the Bank or a Subsidiary for
      any reason, including, but not by way of limitation, a termination by
      resignation, discharge, death, Disability, but excluding any such termination
      where there is a simultaneous commencement or continuation of status as an
      Employee or as a Director; and (iii) in the case of a Director, a cessation
      of the Director’s service on the Board for any reason, including, but not by way
      of limitation, a termination by resignation, death, Disability, retirement
      or
      non-reelection to the Board, but excluding any such termination where there
      is a
      simultaneous commencement or continuation of status as an Employee or as an
      Advisor.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ARTICLE
      III

    

    ADMINISTRATION

    

    
      	
              3.1

            	
              Committee
                to Administer. The Plan shall be administered by the Committee,
                in accordance with its Charter, as adopted from time to time by the
                Board;
                provided, however, that only the Board has the authority to grant
                Awards
                to Bank Directors.

            

    

     

    
      	
              3.2

            	
              Powers
                of Committee.

            

    

     

    (a)           The
      Committee and the Board shall have full power and authority to interpret and
      administer the Plan and to establish and amend rules and regulations for its
      administration. Any action or decision by the Board or the Committee shall
      be
      final, binding and conclusive with respect to the interpretation of the Plan
      and
      any Award made under it.

     

    (b)           Subject
      to the provisions of the Plan, the Committee or the Board, as the case may
      be,
      shall have authority, in its discretion, to determine those Employees,
      Consultants/Advisors and Non-Employee Directors who shall receive an Award;
      the
      time or times when such Award shall be made; the vesting schedule, if any,
      for
      the Award; and the type of Award to be granted, the number of shares of Bank
      Stock to be subject to each Option and Restricted Stock Award, and all other
      terms and conditions of any Award.

     

    (c)           The
      Committee or the Board, as the case may be, shall determine and set forth in
      an
      Award Agreement the terms of each Award, including such terms, restrictions,
      and
      provisions as shall be necessary to cause certain Options to qualify as
      Incentive Stock Options. The Committee or the Board, as the case may be, may
      correct any defect or supply any omission or reconcile any inconsistency in
      the
      Plan or in any Award Agreement, in such manner and to the extent the Committee
      or the Board, as appropriate, shall determine in order to carry out the purposes
      of the Plan. The Committee or the Board, as the case may be, may, in its
      discretion, accelerate (i) the date on which any Option or SAR may be exercised
      or (ii) the date of termination of the restrictions applicable to a Restricted
      Stock Award, if the Committee or the Board, as appropriate, determines that
      to
      do so will be in the best interests of the Bank and the Participants in the
      Plan.

     

    ARTICLE
      IV

     

    AWARDS

     

    
      	
              4.1

            	
              Awards.  Awards
                under the Plan shall consist of Incentive Stock Options, Nonqualified
                Stock Options, SARs, Restricted Stock, Restricted Performance Stock
                and
                unrestricted Bank Stock. All Awards shall be subject to the terms
                and
                conditions of the Plan and to such other terms and conditions consistent
                with the Plan as the Committee or the Board, as the case may be,
                deems
                appropriate. Awards under a particular section of the Plan need not
                be
                uniform and Awards under two or more sections may be combined in
                one Award
                Agreement. Any combination of Awards may be granted at one time and
                on
                more than one occasion to the same Employee, Advisor or Non-Employee
                Director. Awards of Restricted Performance Stock shall be earned
                solely
                upon attainment of Performance Goals and the Committee shall have
                no
                discretion to increase such Awards.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              4.2

            	
              Eligibility
                for Awards.  An Award may be made to any Employee or
                Advisor selected by the Committee. In making this selection and in
                determining the form and amount of the Award, the Committee may give
                consideration to the functions and responsibilities of the respective
                Employee and/or Advisor, his or her present and potential contributions
                to
                the success of the Bank or any of its Subsidiaries, the value of
                his or
                her services to the Bank or any of its Subsidiaries, and such other
                factors deemed relevant by the Committee. Non-Employee Directors
                are
                eligible to receive Awards pursuant to Article
                VII.

            

    

     

    
      	
              4.3

            	
              Shares
                Available Under the Plan.

            

    

     

    (a)           The
      Bank Stock to be offered under the Plan pursuant to Options, SARs, Restricted
      Performance Stock and Restricted Stock and unrestricted Bank Stock Awards must
      be (i) Bank Stock previously issued and outstanding and reacquired by the Bank
      or (ii) authorized but unissued Bank Stock not reserved for any other purpose.
      Subject to adjustment under Section 12.2, the number of shares of Bank Stock
      that may be issued pursuant to Awards under the Plan (the “Section 4.3
      Limit”) shall not exceed, in the aggregate, 500,000
      shares.

     

    (b)           Any
      shares of Bank Stock subject to Restricted Stock or unrestricted Bank Stock
      Awards shall not exceed Fifty Percent (50%) of the total shares available under
      the Plan and the maximum number of shares of Bank Stock that may be issued
      subject to Incentive Stock Options is 500,000 subject to adjustment under
      Section 12.1.  The Section 4.3 Limit shall not have counted
      against it:  (i) the number of shares of Bank Stock subject to an
      Option or any other Award which is equal to the number of shares of Bank Stock
      tendered by a Participant to the Bank in payment of the Option Price of such
      Option or the Exercise Price of such other Award, as applicable; (ii) shares
      of
      Bank Stock subject to an Award which for any reason terminates by expiration,
      forfeiture, cancellation or otherwise without having been exercised or paid;
      (iii) shares of Bank Stock withheld from any Award to satisfy a Participant’s
      tax withholding obligations or, if applicable, to pay the Option Price of an
      Option or the Exercise Price of any other Award; (iv) if an SAR is settled
      in
      whole or in part by the issuance of shares of Bank Stock, the number of shares
      of Bank Stock which represents the difference between (A) the number of shares
      of Bank Stock which remain subject to such SAR on the date of such settlement
      and (B) the number of shares of Bank Stock actually issued upon settlement
      of
      such SAR; or (v) the number of shares of Bank Stock subject to an Option which
      is equal to the number of shares of Bank Stock acquired by the Bank on the
      open
      market using the cash proceeds received by the Bank from the exercise of such
      Option; provided, however, that such number of shares of Bank Stock shall in
      no
      event be greater than the number which is determined by dividing (A) the amount
      of cash proceeds received by the Bank from the Participant upon the exercise
      of
      such Option by (B) the Fair Market Value of a share of the Bank Stock on the
      date of exercise of such Option.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (c)           No
      awards shall be granted under any Predecessor Plan on and after the date on
      which the Plan is approved by the Shareholders.

     

    4.4           Annual
      Limitation on Awards. The maximum number of shares of Bank Stock
      subject to Restricted Stock awarded to any Employee or Advisor with respect
      to a
      Performance Period or Restriction Period  may not exceed 50,000 shares
      of Bank Stock for each Fiscal Year included in such Performance Period or
      Restriction Period.  The maximum number of shares of Bank Stock for
      which Options or SARs may be granted to any Participant in any one Fiscal Year
      shall not exceed 150,000 subject to adjustment under Section 12.1.

    

    4.5           General
      Performance Goals.

    

    (a)           Performance
      Goals relating to the payment or vesting of an Award that is intended to qualify
      as “performance-based compensation” under Section 162(m) of the Code will be
      comprised of one or more of the following performance criteria as the Committee
      may deem appropriate:

    

    
      	
               

            	
              (i)

            	
              Earnings
                per share (actual or targeted
                growth);

            

    

    
      	
               

            	
              (ii)

            	
              Net
                income after capital costs;

            

    

    
      	
               

            	
              (iii)

            	
              Net
                income (before or after taxes);

            

    

    
      	
               

            	
              (iv)

            	
              Return
                measures (including, but not limited to, return on average assets,
                risk-adjusted return on capital, or return on average
                equity);

            

    

    
      	
               

            	
              (v)

            	
              Efficiency
                ratio;

            

    

    
      	
               

            	
              (vi)

            	
              Full-time
                equivalency control;

            

    

    
      	
               

            	
              (vii)

            	
              Stock
                price (including, but not limited to, growth measures and total
                shareholder return);

            

    

    
      	
               

            	
              (viii)

            	
              Noninterest
                income compared to net interest income
                ratio;

            

    

    
      	
               

            	
              (ix)

            	
              Expense
                targets;

            

    

    
      	
               

            	
              (x)

            	
              Operating
                efficiency;

            

    

    
      	
               

            	
              (xi)

            	
              EVA®;

            

    

    
      	
               

            	
              (xii)

            	
              Credit
                quality measures;

            

    

    
      	
               

            	
              (xiii)

            	
              Customer
                satisfaction measures;

            

    

    
      	
               

            	
              (xiv)

            	
              Loan
                growth;

            

    

    
      	
               

            	
              (xv)

            	
              Deposit
                growth;

            

    

    
      	
               

            	
              (xvi)

            	
              Net
                interest margin;

            

    

    
      	
               

            	
              (xvii)

            	
              Fee
                income; and

            

    

    
      	
               

            	
              (xviii)

            	
              Operating
                expense.

            

    

    

    (b)           For
      any Awards not intended to qualify as “performance-based compensation” under
      Section 162(m) of the Code, the Committee may establish Performance Goals based
      on the performance criteria listed in Section 4.5(a) or other performance
      criteria as it deems appropriate.

    

    (c)           Any
      of the performance criteria listed in Section 4.5(a) may be applied solely
      with
      reference to the Bank and/or any Subsidiary or relatively between the Bank
      and/or any Subsidiary and one or more unrelated entities.  In
      addition, different performance criteria may be applied to individual
      Participants or to groups of Participants and, as specified by the Committee,
      may be based on results achieved (i) separately by the Bank or any Subsidiary,
      (ii) any combination of the Bank and the Subsidiaries or (iii) any combination
      of business units or divisions of the Bank and the Subsidiaries.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (d)           With
      respect to each Performance Period, the Committee will establish the Performance
      Goals in writing no later than the earlier of (i) 90 days after the beginning
      of
      the Performance Period or (ii) expiration of 25 percent of the Performance
      Period.

    

    (e)           Except
      as otherwise provided in the Plan or the Award Agreement, as of the end of
      each
      Performance Period, the Committee will certify in writing the extent to which
      a
      Participant has or has not met the Participant’s Performance Goal.  To
      the extent permitted under Section 162(m) of the Code, if applicable, the
      Committee may disregard or offset the effect of any special charges or gains
      or
      cumulative effect of a change in accounting in determining the attainment of
      Performance Goals.

    

    (f)           To
      the extent permitted under Section 162(m) of the Code, if applicable, the
      Committee shall make (i) appropriate adjustments to performance criteria to
      reflect the effect on any performance criteria of any stock dividend or stock
      split affecting Bank Stock, recapitalization, merger, consolidation,
      combination, spin-off, distribution of assets to Shareholders, exchange of
      shares or similar corporate change and (ii) similar adjustments to any portion
      of performance criteria that is not based on Bank Stock but which is affected
      by
      an event having an effect similar to those just described.

     

    ARTICLE
      V

     

    OPTIONS
      AND STOCK APPRECIATION RIGHTS

     

    5.1           Award
      of Options.  The Committee may, from time to time, and on
      such terms and conditions as the Committee may prescribe, award (a) Incentive
      Stock Options, subject to Section 5.5, to any eligible Employee of the Bank
      or
      any parent or subsidiary corporation (as permitted under Sections 422 and 424
      of
      the Code) and (b) Nonqualified Stock Options to any Employee or
      Advisor.

     

    5.2           Period
      of Option.

     

    (a)           An
      Option granted under the Plan shall be exercisable only in accordance with
      the
      vesting schedule approved by the Committee. The Committee may in its discretion
      prescribe additional conditions, restrictions or terms on the vesting of an
      Option, including the full or partial attainment of Performance Goals pursuant
      to Section 4.5. After the Option vests, the Option may be exercised at any
      time
      during the term of the Option, in whole or in installments, as specified in
      the
      related Award Agreement.  Subject to Article X and except as provided
      in Section 5.5, the duration of each Option shall not be more than ten years
      from the date of grant.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (b)           Except
      as provided in Article X, a Participant may not exercise an Option unless such
      Participant is then, and continually (except for sick leave, military service,
      or other approved leave of absence) after the grant of the Option has been,
      an
      Employee, Advisor, or Non-Employee Director.

     

    
      	
              5.3

            	
              Award
                Agreement. Each Option shall be evidenced by an Award Agreement.
                The Award Agreement shall specify whether the Option is intended
                to be an
                Incentive Stock Option or a Nonqualified Stock
                Option.

            

    

     

    
      	
              5.4

            	
              Option
                Price, Exercise and
                Payment.

            

    

     

    (a)           Except
      as provided in Section 5.5, the Option Price of Bank Stock under each Option
      shall be determined by the Committee but shall be a price not less than 100
      percent of the Fair Market Value of Bank Stock at the close of business on
      the
      date such Option is granted.

     

    (b)           Subject
      to Section 12.2, the Committee may not (i) amend an Option to reduce its Option
      Price, (ii) cancel an Option and regrant an Option with a lower Option Price
      than the original Option Price of the cancelled Option, or (iii) take any other
      action (whether in the form of an amendment, cancellation or replacement grant)
      that has the effect of “repricing” an Option, as defined under applicable NASDAQ
      rules or the rules of the established stock exchange or quotation system on
      which the Bank Stock  is then listed or traded.

    

    (c)           Vested
      Options may be exercised from time to time by giving written notice to the
      Chief
      Financial Officer of the Bank or the Secretary of the Committee, or his or
      her
      designee, specifying the number of shares to be purchased. The notice of
      exercise shall be accompanied by payment in full of the Option Price in cash
      or
      the Option Price may be paid in whole or in part through the transfer to the
      Bank of shares of Bank Stock in accordance with procedures established by the
      Committee from time to time.  In addition, full payment of the
      purchased shares may be effected through a broker-dealer sale and remittance
      procedure pursuant to which the Participant (i) shall provide irrevocable
      written instructions to a designated brokerage firm to effect the immediate
      sale
      of the purchased shares and remit to the Bank, out of the sale proceeds
      available on the settlement date, sufficient funds to cover the aggregate
      exercise price payable for the purchased shares plus all applicable federal,
      state and local income and employment taxes required to be withheld by the
      Bank
      by reason of such purchase and (ii) shall provide written directives to the
      Bank
      to deliver the certificates for the purchased sales directly to such brokerage
      firm in order to complete the sale transaction.

     

    (d)           In
      the event such Option Price is paid, in whole or in part, with shares of Bank
      Stock, the portion of the Option Price so paid shall be equal to the value,
      as
      of the date of exercise of the Option, of such shares. The value of such shares
      shall be equal to the number of such shares multiplied by the Fair Market Value
      of such shares on the trading day coincident with the date of exercise of such
      Option (or the immediately preceding trading day if the date of exercise is
      not
      a trading day). The Bank shall not issue or transfer Bank Stock upon exercise
      of
      an Option until the Option Price is fully paid.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              5.5

            	
              Limitations
                on Incentive Stock Options.  Each provision of the Plan
                and each Award Agreement relating to an Incentive Stock Option shall
                be
                construed so that each Incentive Stock Option shall be an incentive
                stock
                option as defined in Section 422 of the Code, and any provisions
                of the
                Award Agreement thereof that cannot be so construed shall be
                disregarded.  No Incentive Stock Option may be granted to any
                Employee who, at the time of such grant, owns stock possessing more
                than
                10 percent of the total combined voting power of all classes of stock
                of
                the Bank or of its parent or subsidiary corporation (as determined
                under
                Sections 422 and 424 of the Code), unless (a) the Option Price for
                such
                Incentive Stock Option is at least 110 percent of the Fair Market
                Value of
                a share of Bank Stock on the date the Incentive Stock Option is granted
                and (b) such Incentive Stock Option may not be exercised more than
                five
                years after it is granted.  Notwithstanding anything in the Plan
                to the contrary, to the extent required by the Code, the exercise
                of
                Incentive Stock Options granted under the Plan shall be subject to
                the
                $100,000 calendar year limit as set forth in Section 422 of the Code;
                provided that, to the extent any grant exceeds such $100,000 calendar
                year
                limit, the portion of such granted Option shall be deemed a Nonqualified
                Stock Option in accordance with Section 422 of the
                Code.

            

    

     

    
      	
              5.6

            	
              Rights
                and Privileges. A Participant shall have no rights as a
                Shareholder with respect to any shares of Bank Stock covered by an
                Option
                until the issuance of such shares to the
                Participant.

            

    

     

    
      	
              5.7

            	
              Award
                of SARs.

            

    

     

    (a)           The
      Committee may, from time to time, and on such terms and conditions as the
      Committee may prescribe, award SARs to any Employee and/or Advisor.

     

    (b)           A
      SAR shall represent the right to receive payment of an amount equal to (i)
      the
      amount by which the Fair Market Value of one share of Bank Stock on the trading
      day immediately preceding the date of exercise of the SAR exceeds the Exercise
      Price multiplied by (ii) the number of shares covered by the
      SAR.  Payment of the amount to which a Participant is entitled upon
      the exercise of a SAR shall be made in cash, Bank Stock, or partly in cash
      and
      partly in Bank Stock at the discretion of the Committee.  The shares
      shall be valued at their Fair Market Value on the date of exercise.

     

    (c)           SARs
      awarded under the Plan shall be evidenced by an Award Agreement between the
      Bank
      and the Participant.

     

    (d)           The
      Committee may prescribe conditions and limitations on the exercise of any SAR.
      SARs may be exercised only when the Fair Market Value of a share of Bank Stock
      exceeds the Exercise Price.

    

    (e)           A
      SAR shall be exercisable only by written notice to the Chief Financial Officer
      of the Bank or the Secretary of the Committee, or his or her
      designee.

     

    (f)           To
      the extent not previously exercised, all SARs shall automatically be exercised
      on the last trading day prior to their expiration, so long as the Fair Market
      Value of a share of Bank Stock exceeds the Exercise Price, unless prior to
      such
      day the holder instructs the Chief Financial Officer or Corporate Secretary
      otherwise in writing.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (g)           Subject
      to Article X, each SAR shall expire on a date determined by the Committee at
      the
      time of grant.

     

    ARTICLE
      VI

     

    RESTRICTED
      STOCK

     

    6.1           Award
      of Restricted Stock. The Committee may make a Restricted Stock Award to
      any Employee and/or Advisor, subject to this Article VI and to such other terms
      and conditions as the Committee may prescribe.

     

    6.2           Restriction
      Period. At the time of making a Restricted Stock Award, the Committee
      shall establish the Restriction Period applicable to such Award. The Committee
      may establish different Restriction Periods from time to time and each
      Restricted Stock Award may have a different Restriction Period, in the
      discretion of the Committee. Restriction Periods, when established for a
      Restricted Stock Award, shall not be changed except as permitted by Section
      6.3.

     

    6.3           Other
      Terms and Conditions. Bank Stock, when awarded pursuant to a Restricted
      Stock Award, will be represented in a book entry account in the name of the
      Participant who receives the Restricted Stock Award. The Participant shall
      be
      entitled to receive dividends during the Restriction Period and shall have
      the
      right to vote such Restricted Stock and shall have all other
      Shareholder  rights, with the exception that (i) unless otherwise
      provided by the Committee, if any dividends are paid in shares of Bank Stock,
      those shares will be subject to the same restrictions as the shares of
      Restricted Stock with respect to which they were issued, (ii) the Participant
      will not be entitled to delivery of any stock certificate evidencing the Bank
      Stock underlying the Restricted Stock Award during the Restriction Period,
      (iii)
      the Bank will retain custody of the Restricted Stock during the Restriction
      Period, and (iv) a breach of a restriction or a breach of the terms and
      conditions established by the Committee pursuant to the Restricted Stock Award
      will cause a forfeiture of the Restricted Stock Award. The Committee may, in
      addition, prescribe additional restrictions, terms, or conditions upon or to
      the
      Restricted Stock Award including the attainment of Performance Goals in
      accordance with Section 4.5.

     

    6.4           Restricted
      Stock Award Agreement. Each Restricted Stock Award shall be evidenced
      by an Award Agreement.

    

    6.5           Payment
      for Restricted Stock. Restricted Stock Awards may be made by the
      Committee under which the Participant shall not be required to make any payment
      for the Bank Stock or, in the alternative, under which the Participant, as
      a
      condition to the Restricted Stock Award, shall pay all (or any lesser amount
      than all) of the Fair Market Value of the Bank Stock, determined as of the
      date
      the Restricted Stock Award is made. If the latter, such purchase price shall
      be
      paid in cash as provided in the Award Agreement.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      VII

     

    AWARDS
      FOR NON-EMPLOYEE DIRECTORS

     

    7.1           Awards
      to Non-Employee Directors. The Board shall determine all Awards to Bank
      Directors. The Board or the Committee, as the case may be, retains the
      discretionary authority to make Awards to Non-Employee Directors and any type
      of
      Award (other than Incentive Stock Options) may be granted to Non-Employee
      Directors under this Plan. All such Awards shall be subject to the terms and
      conditions of the Plan and to such other terms and conditions consistent with
      the Plan as the Board or the Committee, as the case may be, deems
      appropriate.

     

    7.2           No
      Right to Continuance as a Director. None of the actions of the Bank in
      establishing the Plan, the actions taken by the Bank, the Board, or the
      Committee under the Plan, or the granting of any Award under the Plan shall
      be
      deemed (i) to create any obligation on the part of the Board or the board of
      directors of the applicable Subsidiary to nominate any Non-Employee Director
      for
      reelection or (ii) to be evidence of any agreement or understanding, express
      or
      implied, that the Non-Employee Director has a right to continue as a
      Non-Employee Director for any period of time or at any particular rate of
      compensation.

     

    ARTICLE
      VIII

     

    UNRESTRICTED
      BANK STOCK AWARDS FOR EMPLOYEES AND/OR ADVISORS

     

    8.1           The
      Committee may make awards of unrestricted Bank Stock to Employees and/or
      Consultants/Advisors on such terms and conditions as the Committee may
      prescribe.

     

    ARTICLE
      IX

     

    [Intentionally
      Omitted]

     

    ARTICLE
      X

     

    GENERAL
      TERMINATION PROVISIONS

     

    10.1         Termination.
      Subject to Article XI and unless otherwise specified in the applicable
      Award Agreement, the following provisions will govern the treatment of a
      Participant’s outstanding Awards following a Participant’s
      Termination.

    

    (a)           Upon
      the Participant's Termination, any Awards that are not vested and/or exercisable
      on the date of such Termination will immediately terminate and be of no further
      force and effect.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b)           If
      the Participant Terminates for any reason other than (i) death, (ii) Disability,
      or (iii) discharge for Cause, such Participant’s outstanding SARs or Options may
      be exercised at any time within three months after such Termination, to the
      extent of the number of shares covered by such Options or SARs which are
      exercisable at the date of such Termination; except that an Option or SAR shall
      not be exercisable on any date beyond the expiration date of such Option or
      SAR.

     

    (c)           Upon
      a Termination for Cause, any Options or SARs held by the Participant (whether
      or
      not then exercisable) shall expire and any rights thereunder shall terminate
      immediately.  Any non-vested Restricted Stock Awards of such
      Participant shall immediately be forfeited and any rights thereunder shall
      terminate.

     

    (d)           Upon
      a Termination due to the Participant’s death, any SARs or Options that are then
      exercisable may be exercised by the Participant’s Personal Representative at any
      time before the earlier of (i) one year after the Participant’s death or (ii)
      the expiration date of the Award.

    

    (e)           Upon
      a Termination due to the Participant’s Disability, any SARs or Options that are
      then exercisable may be exercised by the Participant at any time before the
      earlier of (i) one year after the date of such Termination or (ii) the
      expiration date of the Award; provided, however, that an Option which is
      intended to qualify as an Incentive Stock Option will only be treated as such
      to
      the extent it complies with the requirements of Section 422 of the
      Code.

    

     

    ARTICLE
      XI

     

    CHANGE
      IN CONTROL OF THE BANK

     

    11.1         Contrary
      Provisions.  Notwithstanding anything contained in the Plan
      to the contrary, the provisions of this Article XI shall govern and supersede
      any inconsistent terms or provisions of the Plan.

    

    11.2         Definitions

    

    (a)           Change
      in Control.  For purposes of this Plan, Change in Control
      shall mean a change in the ownership or effective control of the Bank or in
      the
      ownership of a substantial portion of the assets of the Bank (within the meaning
      of Section 409A of the Code.

    

    (i)           Change
      in Actual Control shall mean the acquisition by any one person, or more
      than one person acting as a group (as defined in Section 11.2(a)(iv), below)
      of
      ownership of stock of the Bank that, together with stock held by such person
      or
      group, constitutes more than 50 percent of the total fair market value or total
      voting power of the stock of the Bank.  However, if any one person, or
      more than one person acting as a group, is considered to own more than 50
      percent of the total fair market value or total voting power of the stock of
      the
      Bank, the acquisition of additional stock by the same person or persons is
      not
      considered to cause a Change in Actual Control of the Bank (or to cause a Change
      in Effective Control of the Bank (within the meaning of Section 11.2(a)(ii)).
      An
      increase in the percentage of stock owned by any one person, or persons acting
      as a group, as a result of a transaction in which the Bank acquires its stock
      in
      exchange for property will be treated as an acquisition of stock for purposes
      of
      this Section 11.2(a)(i).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (ii)           Change
      in Effective Control shall mean:

    

    (A)           The
      acquisition by any one person, or more than one person acting as a group (as
      defined in Section 11.2(a)(iv), below), during any 12-month period of ownership
      of stock of the Bank possessing 35 percent or more of the total voting power
      of
      the stock of the Bank; or

    

    (B)           The
      replacement of a majority of members of the Board during any 12-month period
      by
      directors whose appointment or election is not endorsed by a majority of the
      members of the Board prior to the date of the appointment or election in
      accordance with Treasury Regulation § 1.409A-1(g)(5)(vi)(A)(2).

    

    Notwithstanding
      the foregoing, if any one person, or more than one person acting as a group,
      is
      considered to effectively control the Bank (within the meaning of this Section
      11.2(a)(ii)), the acquisition of additional control of the Bank by the same
      person or persons is not considered to cause a Change in Control.

    

    (iii)           Change
      in the Ownership of the Bank’s Assets shall mean the acquisition by any
      one person, or more than one person acting as a group (as defined in Section
      11.2(a)(iv), below), during any 12-month period of assets from the Bank that
      have a total gross fair market value equal to or more than 40 percent of the
      total gross fair market value of all of the assets of the Bank immediately
      prior
      to such acquisition or acquisitions.

    

    Notwithstanding
      the foregoing, there is no change in control event under this Section 11.2(a)
      when there is a transfer to an entity that is controlled by the Shareholders
      immediately after the transfer.

    

    (iv)          Persons
      acting as a group. For purposes of this Section 11.2(a), persons will
      not be considered to be acting as a group solely because they purchase or own
      stock of the same corporation at the same time, or as a result of the same
      public offering. However, persons will be considered to be acting as a group
      if
      they are owners of a corporation that enters into a merger, consolidation,
      purchase or acquisition of stock, or similar business transaction with the
      corporation. If a person, including an entity, owns stock in both corporations
      that enter into a merger, consolidation, purchase or acquisition of stock,
      or
      similar transaction, such shareholder is considered to be acting as a group
      with
      other shareholders in a corporation only with respect to the ownership in that
      corporation prior to the transaction giving rise to the change and not with
      respect to the ownership interest in the other corporation.

     

    11.3          Effect
      of Change in Control on Certain Awards.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (a)           If
      the Bank is not the surviving corporation following a Change in Control, and
      the
      surviving corporation following such Change in Control or the acquiring
      corporation (such surviving corporation or acquiring corporation is hereinafter
      referred to as the “Acquiror”) does not assume the outstanding Options, SARs,
      Restricted Stock, or Restricted Performance Stock or does not substitute
      equivalent equity awards relating to the securities of such Acquiror or its
      affiliates for such Awards, then all such Awards shall become immediately and
      fully exercisable (or in the case of Restricted Stock, fully vested and all
      restrictions will immediately lapse). In the case of Restricted Performance
      Stock, the target payout opportunities under all outstanding Awards of
      Restricted Performance Stock shall be deemed to have been fully earned based
      on
      targeted performance being attained as of the effective date of the Change
      in
      Control.  In addition, the Board or its designee may, in its sole
      discretion, provide for a cash payment to be made to each Participant for the
      outstanding Options, Restricted Stock, Restricted Performance Stock, or SARs
      upon the consummation of the Change in Control, determined on the basis of
      the
      fair market value that would be received in such Change in Control by the
      holders of the Bank’s securities relating to such Awards. Notwithstanding the
      foregoing, any Option intended to be an Incentive Stock Option under Section
      422
      of the Code shall be adjusted in a manner to preserve such status.

    

    (b)           If
      the Bank is the surviving corporation following a Change in Control, or the
      Acquiror assumes the outstanding Options, SARs, Restricted Stock, or Restricted
      Performance Stock or substitutes equivalent equity awards relating to the
      securities of such Acquiror or its affiliates for such Awards, then all such
      Awards or such substitutes therefor shall remain outstanding and be governed
      by
      their respective terms and the provisions of the Plan.

     

    (c)           If
      (i) a Participant Terminates without Cause within twenty-four (24) months
      following a Change in Control, and (ii) the Bank is the surviving corporation
      following such Change in Control, or the Acquiror assumes the outstanding
      Options, SARs, Restricted Stock, or Restricted Performance Stock or substitutes
      equivalent equity awards relating to the securities of such Acquiror or its
      affiliates for such Awards, then all outstanding Options, SARs, Restricted
      Stock, or Restricted Performance Stock shall become immediately and fully
      exercisable (or in the case of Restricted Stock, fully vested and all
      restrictions will immediately lapse). In the case of Restricted Performance
      Stock, the target payout opportunities under all outstanding Awards of
      Restricted Performance Stock shall be deemed to have been fully earned based
      on
      targeted performance being attained.

     

    (d)           If
      (i) the employment of a Participant with the Bank and its Subsidiaries is
      terminated for Cause within twenty-four (24) months following a Change in
      Control and (ii) the Bank is the surviving corporation following such Change
      in
      Control, or the Acquiror assumes the outstanding Options, SARs, Restricted
      Stock, or Restricted Performance Stock or substitutes equivalent equity awards
      relating to the securities of such Acquiror or its affiliates for such Awards,
      then any Options or SARs of such Participant shall expire, and any non-vested
      Restricted Stock or Restricted Performance Stock shall be forfeited, and any
      rights under such Awards shall terminate immediately.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (e)           Outstanding
      Options or SARs which vest in accordance with Section 11.3, may be exercised
      by
      the Participant in accordance with Article X; provided, however, that a
      Participant whose Options or SARs become exercisable in accordance with Section
      11.3(c) may exercise such Options or SARs at any time within one year after
      such
      Termination, except that an Option or SAR shall not be exercisable on any date
      beyond the expiration date of such Option or SAR.  In the event of a
      Participant’s death after such Termination, such Options or SARs may be
      exercised by the Participant’s Personal Representative at any time before the
      earlier of (i) one year after the Participant’s death or (ii) the expiration
      date of the Award; provided, however, that, an Option which is intended to
      qualify as an Incentive Stock Option will only be treated as such to the extent
      it complies with the requirements of Section 422 of the Code.

     

    
      	
              11.4

            	
              Amendment
                or Termination.  This Article XI shall not be amended
                or terminated at any time if any such amendment or termination would
                adversely affect the rights of any Participant under the
                Plan.

            

    

     

    ARTICLE
      XII

     

    MISCELLANEOUS
      PROVISIONS

     

    12.1          Adjustments
      Upon Changes in Stock. In case of any reorganization, recapitalization,
      reclassification, stock split, stock dividend, distribution, combination of
      shares, merger, consolidation, rights offering, or any other changes in the
      corporate structure or shares of the Bank, appropriate adjustments may be made
      by the Committee or the Board, as the case may be, (or if the Bank is not the
      surviving corporation in any such transaction, the board of directors of the
      surviving corporation) in the aggregate number and kind of shares subject to
      the
      Plan, and the number and kind of shares and the Option Price per share subject
      to outstanding Options or which may be issued under outstanding Restricted
      Stock
      Awards or pursuant to unrestricted Bank Stock Awards. Appropriate adjustments
      may also be made by the Committee or the Board, as the case may be, in the
      terms
      of any Awards under the Plan, subject to Article XI, to reflect such changes
      and
      to modify any other terms of outstanding Awards on an equitable basis. Any
      such
      adjustments made by the Committee or the Board pursuant to this Section 12.1
      shall be conclusive and binding for all purposes under the Plan.

    

    12.2          Amendment,
      Suspension, and Termination of Plan.

     

    (a)           The
      Board may suspend or terminate the Plan or any portion thereof at any time,
      and
      may amend the Plan from time to time in such respects as the Board may deem
      advisable in order that any Awards thereunder shall conform to any change in
      applicable laws or regulations or in any other respect the Board may deem to
      be
      in the best interests of the Bank; provided, however, that no such amendment
      shall, without  approval, (i) except as provided in Section 12.1,
      increase the number of shares of Bank Stock which may be issued under the Plan,
      (ii) expand the types of awards available to Participants under the Plan, (iii)
      materially expand the class of employees and/or Advisors eligible to participate
      in the Plan, (iv) materially change the method of determining the Option Price
      of Options; (v) delete or limit the provision in Section 5.4 prohibiting the
      repricing of Options; (vi) extend the termination date of the Plan or (vii)
      be
      made to the extent that Shareholder approval is required to satisfy applicable
      law, regulation or any securities stock exchange, market or other quotation
      system on or through which the Bank Stock is listed or traded. No such
      amendment, suspension, or termination shall materially adversely alter or impair
      any outstanding Options, SARs or shares of Restricted Stock without the consent
      of the Participant affected thereby.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (b)           The
      Committee may amend or modify any outstanding Options, SARs, or Restricted
      Stock
      Awards in any manner to the extent that the Committee would have had the
      authority under the Plan initially to award such Options, SARs, or Restricted
      Stock Awards, as so modified or amended, including without limitation, to change
      the date or dates as of which such Options or SARs may be exercised, or to
      remove the restrictions on shares of Restricted Stock.

     

    (c)           Notwithstanding
      the foregoing, the Plan and any Award Agreements may be amended without any
      additional consideration to affected Participants to the extent necessary to
      comply with, or avoid penalties under, Section 409A of the Code, even if those
      amendments reduce, restrict or eliminate rights granted prior to such
      amendments.

     

    12.3         Nonuniform
      Determinations. The Committee’s (or, if applicable, the Board’s)
      determinations under the Plan, including without limitation, (a) the
      determination of the Employees, Advisors and Non-Employee Directors to receive
      Awards, (b) the form, amount, and timing of any Awards, (c) the terms and
      provisions of any Awards and (d) the Award Agreements evidencing the same,
      need
      not be uniform and may be made by it selectively among Employees, Advisors
      and/or Non-Employee Directors who receive, or who are eligible to receive,
      Awards under the Plan, whether or not such Employees, Consultants/Advisors
      and/or Non-Employee Directors are similarly situated.

     

    12.4        
      General Restriction. Each Award under the Plan shall be subject
      to the condition that, if at any time the Committee shall determine that (a)
      the
      listing, registration, or qualification of the shares of Bank Stock subject
      or
      related thereto upon NASDAQ or any other established stock exchange, market
      or
      quotation system or under any state or federal law, (b) the consent or approval
      of any government or regulatory body, or (c) an agreement by the Participant
      with respect thereto, is necessary or desirable, then such Award shall not
      become exercisable in whole or in part unless such listing, registration,
      qualification, consent, approval, or agreement shall have been effected or
      obtained free of any conditions not acceptable to the Committee.

     

    12.5         No
      Right To Employment. None of the actions of the Bank in establishing
      the Plan, the actions taken by the Bank, the Board or the Committee under the
      Plan, or the granting of any Award under the Plan shall be deemed (a) to create
      any obligation on the part of the Bank or any Subsidiary to retain any person
      in
      the employ of, or continue the provision of services to, the Bank or any
      Subsidiary, or (b) to be evidence of any agreement or understanding, express
      or
      implied, that the person has a right to continue as an employee, consultant,
      or
      advisor for any period of time or at any particular rate of
      compensation.

    

    12.6         Governing
      Law. The provisions of the Plan shall take precedence over any
      conflicting provision contained in an Award Agreement. All matters relating
      to
      the Plan or to Awards granted hereunder shall be governed by and construed
      in
      accordance with the laws of the State of California without regard to the
      principles of conflict of laws.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    12.7         Trust
      Arrangement. All benefits under the Plan represent an unsecured promise
      to pay by the Bank. The Plan shall be unfunded and the benefits hereunder shall
      be paid only from the general assets of the Bank resulting in the Participants
      having no greater rights than the Bank's general creditors; provided, however,
      nothing herein shall prevent or prohibit the Bank from establishing a trust
      or
      other arrangement for the purpose of providing for the payment of the benefits
      payable under the Plan.

     

    12.8         Indemnification
      of Board and Committee. Indemnification of the members of the Board
      and/or the members of the Committee shall be in accordance with the charter
      documents of the Bank, as amended by the Shareholders from time to time, and
      any
      agreements issued consistent therewith.

     

    12.9         No
      Impact on Benefits.  Awards are not compensation for purposes
      of calculating a Participant’s rights under any employee benefit plan that does
      not specifically require the inclusion of Awards in calculating
      benefits.

     

    12.10       Beneficiary
      Designation.  Each Participant may name a beneficiary or
      beneficiaries to receive or exercise any vested Award that is unpaid or
      unexercised at the Participant’s death.  Unless otherwise provided in
      the beneficiary designation, each designation will revoke all prior designations
      made by the same Participant, must be made on a form prescribed by the Committee
      and will be effective only when filed in writing with the
      Committee.  If a Participant has not made an effective beneficiary
      designation, the deceased Participant’s beneficiary will be the Participant’s
      surviving spouse or, if none, the deceased Participant’s estate.  The
      identity of a Participant’s designated beneficiary will be based only on the
      information included in the latest beneficiary designation form completed by
      the
      Participant and will not be inferred from any other evidence.

     

    12.11        Tax
      Withholding.  The Bank shall have the power and the right to
      deduct or withhold, or require a Participant to remit to the Bank, the minimum
      statutory amount to satisfy federal, state and local taxes required by law
      or
      regulation to be withheld with respect to any taxable event arising as a result
      of the Plan.  With respect to withholding required upon any taxable
      event arising as a result of an Award granted hereunder, a Participant may
      elect, subject to the approval of the Committee, to satisfy the withholding
      requirement, in whole or in part, by having the Bank withhold shares of Bank
      Stock having a Fair Market Value on the date the tax is to be determined equal
      to the minimum statutory total tax that could be imposed on the
      transaction.  All such elections shall be irrevocable, made in writing
      and signed by the Participant, and shall be subject to any restrictions or
      limitations that the Committee, in its sole discretion, deems
      appropriate.

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