<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from..........................
Commission file number 333-16951
BSM BANCORP
(Exact name of registrant as specified in its charter)
CALIFORNIA NO. 77-0442667
(State or other jurisdiction of incorporation) (IRS Employer Identification No.)
2739 Santa Maria Way, Santa Maria, California 93455
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (805) 937-8551
Not applicable
(Former name or former address, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(c) of the Securities Exchange Act of
1934 during the preceding 12 months (of shorter period that the registrant
was required to file such reports) Yes [X], and (2) has been subject to such
filing requirements for the past 90 days. Yes[ ] No[X]
APPLICABLE ONLY TO CORPORATE ISSUERS
On April 30, 1997, there were 2,978,139 shares of BSM Bancorp Common
Stock outstanding.
1
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BSM BANCORP
March 31, 1997
INDEX
PAGE
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Consolidated Balance Sheet at March 31, 1997 and
December 31, 1996 .......................................... 3
Consolidated Statement of Income for the three months ended
March 31, 1997 and 1996 ..................................... 4
Consolidated Statement of Cash Flows for the three months ended
March 31, 1997 and 1996 ..................................... 5
Consolidated Statement of Changes in Capital from January 1, 1996
through March 31, 1997 ....................................... 6
Notes to Consolidated Financial Statements ......................... 7
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations .................................... 8
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders............ 10
Item 5 - Other Information ............................................. 10
Item 6 - Exhibits and Reports on Form 8-K............................... 11
2
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PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
BSM BANCORP AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
MARCH 31, 1997 DECEMBER 31, 1996
-------------- -----------------
<S> <C> <C>
Cash and due from banks $ 17,520,433 $ 17,643,554
Federal funds sold 9,503,000 13,920,000
------------ ------------
Cash and cash equivalents 27,023,433 31,563,554
Investments:
Securities available-for-sale 29,051,455 23,865,611
Securities held-to-maturity (market value of 63,648,380 68,339,127
$63,185,060 and $68,331,524 respectively)
Loans, net of unearned income 173,779,309 179,391,366
Allowance for loan losses (2,678,343) (2,701,876)
------------ ------------
Net loans 171,100,966 176,689,490
Premises and equipment 13,392,852 12,648,207
Accrued interest receivable and other assets 7,303,116 8,291,296
------------ ------------
Total Assets $311,520,202 $321,397,285
------------ ------------
------------ ------------
LIABILITIES
Deposits:
Noninterest-bearing demand $ 58,809,927 $ 67,181,717
Interest-bearing demand 109,065,847 111,528,482
Time deposits under $100,000 73,292,851 70,229,443
Time deposits $100,000 or more 35,472,941 37,338,194
------------ ------------
Total deposits 276,641,566 286,277,836
Accrued interest payable and other liabilities 1,880,927 2,487,932
------------ ------------
Total liabilities 278,522,493 288,765,768
------------ ------------
------------ ------------
Shareholders' equity:
Common stock, 50,000,000 authorized;
Issued and outstanding
2,975,139 as of March 31, 1997
2,973,631 as of December 31, 1996 11,475,388 11,460,488
Undivided profits 21,645,762 21,176,801
Valuation of securities available-for-sale, net of tax (123,441) (5,772)
------------ ------------
Total capital 32,997,709 32,631,517
------------ ------------
Total Liabilities & Capital $311,520,202 $321,397,285
------------ ------------
------------ ------------
</TABLE>
3
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BSM BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
THREE MONTH PERIODS
ENDED MARCH 31,
--------------------------
1997 1996
---------- -----------
INTEREST INCOME:
Interest and fees on loans $4,609,041 $4,131,838
Interest on investment securities-taxable 1,133,586 922,657
Interest on investment securities-nontaxable 164,034 154,502
Other interest income 134,539 168,866
---------- ----------
TOTAL INTEREST INCOME 6,041,200 5,377,863
---------- ----------
INTEREST EXPENSE:
Interest on demand and savings deposits 582,078 612,914
Interest on time deposits 1,430,170 1,239,221
---------- ----------
TOTAL INTEREST EXPENSE 2,012,248 1,852,135
NET INTEREST INCOME BEFORE PROVISION 4,028,952 3,525,728
---------- ----------
Less: Provision for loan losses 30,000 8,500
---------- ----------
NET INTEREST INCOME AFTER PROVISION 3,998,952 3,517,228
OTHER OPERATING INCOME:
Service charges and fees 481,175 443,093
Other fee income 138,540 123,062
Merchant discount fees 129,967 98,560
Other income 86,440 61,053
---------- ----------
TOTAL OTHER OPERATING INCOME 836,122 725,768
---------- ----------
OTHER OPERATING EXPENSES:
Salaries and employee benefits 1,841,442 1,575,747
Occupancy expenses 239,514 214,119
Furniture and equipment 360,306 331,999
Advertising and promotion 152,456 119,887
Professional expenses 80,630 93,331
Office expenses 265,015 177,380
Merchant processing costs 118,588 102,101
Other expenses 309,360 166,384
---------- ----------
TOTAL OTHER OPERATING EXPENSES 3,367,311 2,780,948
---------- ----------
Income before taxes 1,467,763 1,462,048
Provision for income taxes 552,800 553,000
---------- ----------
NET INCOME $ 914,963 $ 909,048
---------- ----------
---------- ----------
EARNING PER SHARE $ .30 $ .30
Number of shares used in computation 3,023,000 2,990,000
---------- ----------
---------- ----------
4
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BSM BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTH PERIODS
ENDED MARCH 31,
---------------------------
1997 1996
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 914,963 $ 909,048
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 294,824 272,241
Provision for credit losses 30,000 8,500
Net amortization of premium/discounts-investments 98,890 93,930
Loans originated for sale (1,320,141) (766,000)
Proceeds from loan sales 1,284,479 825,568
Net loss (gain) from sale of other real estate owned (45,582) (37,722)
Net loss (gain) from sale of fixed assets 48,187 -
Net change in accrued interest, other assets and
other liabilities 72,732 (250,218)
------------ ------------
Net cash provided (used) by operating activities 1,378,352 1,055,247
INVESTING ACTIVITIES
Proceeds from maturities of securities held to maturity 6,458,077 14,186,923
Proceeds from maturities of securities available for sale 2,173,000 0
Purchases of held-to-maturity securities (4,442,359 (16,276,884)
Purchases of available-for-sale securities (4,976,963 (9,605,203)
Net decrease in loans 5,555,661 6,288,019
Purchases of premises and equipment (1,043,272 (98,738)
Proceeds from the sale of other real estate owned 375,215 119,565
Proceeds for the sale of equipment 49,385 49,476
------------ ------------
Net cash provided (used) by investing activities 4,148,744 (5,336,842)
FINANCING ACTIVITIES
Net decrease in demand and savings deposits (10,851,573) (14,161,772)
Net increase in time deposits 1,198,156 7,608,070
Payments for dividends/distributions (446,001) (549,852)
Proceeds from the exercise of stock options 32,201 32,300
------------ ------------
Net cash provided (used) by financing activities (10,067,217) (7,071,254)
------------ ------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (4,540,121) (11,352,749)
------------ ------------
CASH AND CASH EQUIVALENTS , BEGINNING OF YEAR 31,563,554 30,124,894
------------ ------------
------------ ------------
CASH AND CASH EQUIVALENTS, MARCH 31, $ 27,023,433 $ 18,772,145
------------ ------------
------------ ------------
Cash paid during the year for interest $ 2,038,648 $ 1,279,400
Cash paid during the year for income taxes $ 433,100 $ 147,871
</TABLE>
5
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BSM BANCORP
STATEMENT OF CHANGES IN CAPITAL
(Unaudited)
<TABLE>
<CAPTION>
NET
COMMON SHARES UNREALIZED
------------------------ ADJUSTMENT IN
NUMBER OF UNDIVIDED AVAILABLE FOR
SHARES AMOUNT PROFITS SALE SECURITIES TOTAL
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1, 1996 2,950,081 $11,250,288 $18,673,258 $ 51,221 $29,974,767
Proceeds from exercise of
stock options 3,400 32,300 32,300
Dividends paid (549,852) (549,852)
Net income for the period 909,048 909,048
Adjustment in Available for Sale
Securities, Net of Taxes of $66,388 (106,082) (106,082)
------------------------------------------------------------------------
BALANCE AT MARCH 31, 1996 2,953,481 11,282,588 19,032,454 (54,861) 30,260,181
Issuance of organizational stock 150 1,500 1,500
Proceeds from exercise of
stock options 20,000 176,400 176,400
Adjustment in Available for Sale
Securities, Net of Taxes of $(32,210) 49,089 49,089
Net income for the period 2,144,347 2,144,347
------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1996 2,973,631 11,460,488 21,176,801 (5,772) 32,631,517
Retirement of organizational stock (150) (1,500) (1,500)
Proceeds from exercise of
stock options 1,800 18,600 18,600
Partial Distribution-El Camino Merger (142) (2,200) (2,200)
Dividends paid (446,001) (446,001)
Net income for the period 914,962 914,962
Adjustment in Available for Sale
Securities, Net of Taxes of $77,934
(117,669) (117,669)
------------------------------------------------------------------------
BALANCE AT MARCH 31, 1997 2.975,139 $11,475,388 $21,645,762 $(123,441) $32,997,709
------------------------------------------------------------------------
------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements
6
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BSM BANCORP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION AND MANAGEMENT REPRESENTATION
BSM Bancorp (the "Company") was incorporated on November 12, 1996 for the
sole purpose of becoming a bank holding company for Bank of Santa Maria (the
"Bank"). Following regulatory approval and with the approval of the bank's
shareholders, the Bank merged with BSM Merger Company, (a wholly-owned
subsidiary of the Company) as of the close of business on March 11, 1997, and
thereby become a wholly-owned subsidiary of the Company.
As of December 31, 1997, the Company was no more than a shell and, with only
one shareholder, had no SEC nor Federal Reserve Bank reporting requirements.
The Bank, on the other hand, was required to file periodic reports with the
FDIC under section 12(g) of the Exchange Act of 1934. Upon completion of the
merger, the Company is required to file periodic reports under section 15(d)
of the Exchange Act. This Form 10Q is the first of such periodic reports.
As the acquisition of the Bank was treated using the pooling of interest
method, restatement of prior balances were necessary to meet accounting
standards. Accordingly, the financial statements herein contain balances
prior to the actual existence of the Company which reflect what the
"consolidated" entity would have reported as restated for all acquisitions,
either recorded by pooling or purchase accounting.
The unaudited consolidated financial statements has been prepared in
accordance with generally accepted accounting principles and with the
instructions to Form 10-Q. Accordingly, all footnotes normally required for
complete financial disclosure are not required based upon the assumption that
the reader has either read or has access to the audited financial statements
of the Bank for the latest fiscal year. On January 10, 1997, the Bank
acquired El Camino National Bank through an exchange of Bank stock. This
merger was accounted for using the pooling of interest method. The annual
report for Bank of Santa Maria, although disclosing the merger, did not
restate the 1996 financial numbers as the effect on the reported numbers was
not deemed material and the time necessary to fully restate the required
prior period numbers would have seriously delayed the timely release of
year-end results. Concurrently, the Bank was in the process of obtaining
regulatory approval to form the Company. The pending corporate restructuring
would further modify the reported 1996 year-end figures. While the
management of BSM Bancorp believes that the disclosures presented are
sufficient to make the information not misleading, reference should be made
to the Bank's Annual Report for the year ended December 31, 1996. Management
had elected to include a CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS'
EQUITY to assist the reader in the analysis of the two mergers which occurred
during this quarter.
The accompanying consolidated balance sheets, statements of income,
statements of changes in shareholders' equity, and statement of cash flows
(as restated for the merger of Bank of Santa Maria with El Camino National
Bank and the subsequent acquisition of the Bank of Santa Maria by the
Company) reflect all material adjustments necessary for fair presentation for
the Company's financial position of March 31, 1997 and December 31, 1996 and
the results of operations for the three months ended March 31, 1997 and 1996.
All such adjustments were of a normal recurring nature.
NOTE 2 - CAPITAL SECTION OF THE CONSOLIDATED BALANCE SHEET.
As explained in Note 1, BSM Bancorp acquired Bank of Santa Maria on March 11,
1997. Prior to that date there were only 150 shares of BSM Bancorp Common
Stock outstanding. The Bank as of December 31, 1996, as restated for the
acquisition of El Camino, was authorized to issue 25,000,000 shares of Common
Stock and had 2,973,481 outstanding.
NOTE 3 - EARNINGS PER SHARE
Earnings per common share are based upon weighted average number of shares
outstanding during the period plus shares issuable upon the assumed exercise
of outstanding common stock options rounded to the nearest 1,000 shares.
7
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ITEM 2.--MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
For the three months ended March 31, 1997, the Company reported net income of
$915,000, or $.30 per share compared to a net income of $ 909,000, or $.30
per share for the same three month period in 1996. The annualized return on
average assets was 1.20% for the first quarter of 1997 compared to 1.31 for
the first quarter of 1996, as restated for the El Camino merger. Return on
average shareholders' equity for the three month period ended March 31, 1997
and 1996 was 11.68 and 11.13 respectively.
FINANCIAL CONDITION
Total assets as of March 31, 1997, decreased 3.1% to $311.5 million in
comparison to restated total assets of $321.4 million as of December 31,
1996. Historically, the Company has experienced a decline in overall asset
totals with the comparable decline for the first quarter of 1996 recorded at
2.8%. Cash and cash equivalents decreased by $4.5 million with funds
provided by the seasonal reduction in loans used to cover the seasonal
outflow of deposits dollars. Loans declined by $5.6 million during the first
quarter of 1997, compared to a $6.3 million decline during the same period in
1996. The percentage of decline is only 3.2% for 1997, versus 3.9% for 1996
which appears to be attributable to the expanded service area and mix of
loans rather than directly tied to the economy. While total investment
dollars remained essentially constant, the mix between securities held to
maturity and available for sale reflects the Company's policy to have a
larger percentage of security dollars available to meet liquidity needs.
This was accomplished by purchasing "available for sale" securities from the
proceeds of maturing "held to maturity" securities. The increase in premises
and equipment by a net $745,000 included the purchase of land adjacent to the
Bank's main office previously leased for employee parking and cost associated
with the purchase and refurbishing of the building used for the newly opened
Atascadero Branch.
Deposits declined by $9.6 million during the first quarter of 1997, versus a
$6.6 million decline during the same period in 1996. The percentage of
decline was 3.5% for 1997 versus only 2.7% for 1996. The increase in the
percentage of decline appears to attributable to the runoff of deposit
dollars associated with the acquisition of El Camino National Bank, a
condition which was anticipated by Company management.
The Bank, prior to its acquisition by the Company, continued its semiannual
dividend policy, first implemented in 1996, by the declaration and payment of
a $.15 per share cash dividend. During the first quarter of 1996, the
Directors of the Bank paid a $.20 per share annual cash dividend which was
augmented in August of 1996 with the first semiannual dividend of $.15 per
share. The Company was the beneficiary of a organizational dividend of
$150,000 on March 12, 1997 from the Bank. Both the Bank and the Company
maintain strong liquidity positions.
RESULTS OF OPERATIONS
Interest income on loans were up by $477,000 in the first quarter of 1997
compared with the first quarter of 1996. The increase in interest income
was primarily attributable to the increase in average effective yield which
was up approximately 103 basis points . While the average net loan volume
increased by 2.11%, the effect on interest income of approximately $90,000
was less than twice the average daily income on loans for the period. There
was also a difference caused by the number of days during the respective
first quarters which accounts for approximately $45,000.
Interest expense on interest-bearing deposits were up by $160,113 in the
first quarter of 1997 compared with the first quarter of 1996. The increase
in interest expense was primarily attributable to the average effective rate
which was up approximately 26 basis points. While the average interest
bearing deposits increased by 2.26%, the effect on interest expense of
approximately $44,000 was about twice the average daily interest expense on
deposits for the period. There was also a difference caused by the number of
days during the respective first quarters which accounts for approximately
$20,000.
Net interest margin improved from 5.28% for first quarter 1996 to 5.95% for
the same period in 1997. The provision for loan losses is an amount
sufficient to bring the allowance for loan losses to an estimated balance
considered to be adequate to absorb potential losses in the portfolio.
Management's determination of the adequacy of the allowance is based upon a
detailed evaluation of the portfolio, current economic conditions and trends,
historical loan loss experience and other risk factors.
8
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Non interest income increased $110,000 or 15.21% to $836,000 as of March 31,
1997. While the effect of the mergers contributed to the increased service
fee base, income associated with the sale of fixed assets and fees from the
sale of loans into the secondary market also are reflected in the overall
increase in 1997. Non interest expenses increased 586,000 or 21.11% to
$3,367,000 as of March 31, 1997. Approximately 45% of this overall increase
is related to increased salary expense, due directly to the three additional
operating branches reflected in the first quarter of 1997. Two of these
branches (Citizens Bank) were acquired in May of 1996, and accounted for
using purchase accounting along with the newly opened Atascadero branch. The
number of full-time equivalents, as restated for the El Camino merger, grew
from 174 as of March 31, 1996 to 201 as of March 31, 1997. This represents a
15.52% increase. Also during the first quarter of 1997, the Bank absorbed
certain costs associated with the El Camino merger totaling approximately
$56,000, goodwill amortization from the Citizens acquisition totaling
$33,000, increased occupancy costs for the three additional locations of
approximately $54.000, as well as increased promotional expenses associated
with the El Camino merger and the opening of the Atascadero Branch of
approximately $33,000. There was also a writedown of $40,000 to one of the
Bank's OREO properties which occurred during the first quarter. While some
of these aforementioned expenses will be ongoing, approximately $120,000
appear to be of a non-reoccurring nature. Excluding these dollars would
bring the percentage of increase in noninterest expenses for first quarter
1997 (when compared to first quarter 1996), down to 16.77% which is more in
line with the increase in noninterest income.
CAPITAL RESOURCES
The Company and its bank subsidiary are subject to risk-based capital
regulations adopted by the federal banking regulators. These guidelines are
used to evaluate capital adequacy, and are based upon an institution's assets
risk profile and off-balance sheet exposures, such as unused loan commitments
and letters of credit. The following table sets forth the Company's and the
Bank's leverage and risk-based capital ratios at March 31, 1997:
(IN THOUSANDS) COMPANY BANK
- ------------------------------------------------------------------------------
Amount % Amount %
-------------------- --------------------
LEVERAGE RATIO $ 31,286 10.10% $ 31,125 10.11%
Regulatory minimum 12,394 4.00% 12,390 4.00%
Excess 18,892 6.08% 18,735 6.05%
RISKED-BASED RATIOS
Tier 1 capital $ 31,286 14.89% $ 31,125 14.82%
Tier 1 minimum 8,403 4.00% 8,399 4.00%
Excess 22,883 10.89% 22,726 10.82%
Total capital $ 33,788 16.08% $ 33,750 16.07%
Total capital minimum 16,805 8.00% 16,799 8.00%
Excess 16,983 8.08% 16,951 8.07%
The management of the Company is not aware of any trends, events,
uncertainties or recommendations by regulatory authorities that will have or
that are reasonably likely to have material effect on the liquidity, capital
resources or operations of the Company.
9
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PART II - OTHER INFORMATION
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The shareholders of the Bank of Santa Maria were provided with a Written
Consent Statement/Prospectus in connection with the formation of the Holding
Company and the approval of the BSM Bancorp 1996 Stock Option Plan.
Reference should be made to BSM Bancorp's Registration Statement of Form S-4
which became effective January 29, 1997, and a Current Report on Form 8-K,
filed as of March 26, 1997, which reports the results of that solicitation.
ITEM 5 - OTHER INFORMATION
MODIFICATION OF BSM BANCORP 1996 STOCK OPTION PLAN
The BSM Bancorp 1996 Stock Option Plan as contained in the Company's
Registration Statement on Form S-4 was originally approved by the California
Department of Corporations ("DOC"). The regulations governing stock option
plans were amended in January of 1997 to allow certain alternatives which the
Company's Directors felt would be beneficial if incorporated into the Plan.
There were essentially three changes made to the Plan as originally
incorporated in the S-4 Registration Statement. The first change amended the
language to included a minimum vesting for employees not falling with the
category of directors, officers, or consultants. The second change allowed
for the acceleration of the vesting schedule concurrent with certain
terminating events. The third change modified the language regarding the
establishment of the fair market value where the stock is not actively
traded.
An amended permit to issue options under The BSM Bancorp 1996 Stock Option
Plan was granted by the DOC on May 6, 1997. A copy of that approved plan
with option agreement forms is included as Exhibit 10.2 in this filing.
EMPLOYMENT CONTRACTS WITH EXECUTIVE OFFICERS
In March, 1997, the Board of Directors of both the Bancorp and the Bank
approved severance pay agreements for their executive officers which would be
triggered by a change in control of either the Bancorp or the Bank, resulting
in the termination without cause or the resignation of these executive
officers for valid reasons as defined in the agreements. The principal
purposes of these agreements are to help assure that key executives give
impartial consideration in evaluating and negotiating a potential business
combination which is in the best interest of BSM Bancorp's shareholders, but
which may result in the loss of, or reduction in, the executive's job.
The benefits under these agreements are triggered if, within one year
following a change in control, the executive officer's employment is
terminated without cause or the executive officer resigns for reasons such as
a substantial reduction in the officer's responsibilities, an assignment of
responsibilities inconsistent with the executive officer's former
responsibilities, a reduction in the executive officer's annual salary or
benefits, or a job relocation of more than 50 miles.
Severance benefits payable to executive officers covered by Agreements are
determined by multiplying base monthly salary by a component of 24 months for
the President and by 18 months for the other four executive officers. The
sum is payable in monthly installments, or at the discretion of the executive
officer, in one lump sum. In addition, the executive officers are entitled
to the health and other medical benefits for either the 18 or 24 month
period.
Generally, a "change in control" will be deemed to have occurred in any of
the following circumstances:
- - A merger or consolidation where the Bank and/or the Bancorp is not the
surviving corporation.
- -
- - A transfer of all or substantially all of the assets of the Bank and/or the
Bancorp.
- - An acquisition of more than 25% of the outstanding stock coupled with or
followed by a change in the majority of the directors of either the Bank or
the Bancorp.
A copy of the employment agreements are included as Exhibit 10.8 in this
filing.
10
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ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
A) EXHIBITS
EXHIBIT NO. EXHIBIT
- -------------------------------------------------------------------------------
2.1 Plan of Reorganization and Merger Agreement - Annex I of Written
Consent Statement/Prospectus*
3.1 Articles of Incorporation of Registrant*
3.2 Amendment to Articles of Incorporation of Registrant*
3.3 Amendment to Articles of Incorporation of Registrant*
3.4 Bylaws of the Registrant*
4.1 Specimen Certificate evidencing shares of the Registrant's
Common Stock*
4.2 Stockholders Agreement Covering Issuance and Compulsory
Repurchase of Organizing Shares of Registrant - Annex II of
Written Consent Statement/Prospectus*
5.1 Opinion of Knecht & Hansen*
8.1 Tax Opinion of Vavrinek, Trine Day & Co.*
10.1 Form of Indemnification Agreement*
10.2 BSM Bancorp 1996 Stock Option agreement as approved by California
Department of Corporations. Document replaces earlier filing
10.3 Form of Written Consent*
10.4 Nipomo Branch Land Lease*
10.5 Lompoc Branch Lease*
10.6 Unisys License and Service Agreement*
10.7 Information Technology, Inc.*
10.8 Form of "Change in Control" Employment Contract
27 Financial Data Schedule (for SEC use only)
*All documents listed are incorporated by reference and can be found
in the Registration Statement of the Company filed on Form S-4.
B) Reports on Form 8 - K
An 8-K was filed March 26, 1997, which reported the acquisition of
Bank of Santa Maria by BSM Bancorp. There were no financial
statements filed with the 8-K.
11
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SIGNATURES
Pursuant to the requirement of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BSM Bancorp
(Registrant)
Date: May 14, 1997 /s/ William A. Hares
----------------------------
William A. Hares
President and
Chief Executive Officer
Date: May 14, 1997 /s/ F. Dean Fletcher
----------------------------
F. Dean Fletcher
Executive Vice President
and Chief Financial Officer
12
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BSM BANCORP
1996 STOCK OPTION PLAN
Adopted November 12, 1996
Amended, March 11, 1997
Amended May 13, 1997
1. PURPOSE
The purpose of the BSM Bancorp 1996 Stock Option Plan (the "Plan") is to
strengthen BSM Bancorp (the "Corporation") and those corporations which are
or hereafter become subsidiary corporations by providing additional means of
attracting and retaining competent managerial personnel and by providing to
participating directors, officers, and key employees added incentives for
high levels of performance and for unusual efforts to increase the earnings
of the Corporation and any Subsidiary corporations; and to allow consultants,
business associates and others with business relationships with the
opportunity to participate in the ownership of the Corporation and thereby
have an interest in the success and increased value of the Corporation. The
Plan seeks to accomplish these purposes and achieve these results by
providing a means whereby such directors, officers, key employees,
consultants, business associates and others may purchase shares of Common
Stock of the Corporation pursuant to Stock Options granted in accordance with
this Plan.
Stock Options granted pursuant to this Plan are intended to be
Incentive Stock Options or Non-Qualified Stock Options, as shall be
determined and designated by the Stock Option Committee upon the grant of
each Stock Option hereunder.
2. DEFINITIONS
For the purposes of this Plan, the following terms shall have the following
meanings:
0
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(a) "COMMON STOCK." This term shall mean shares of the
Corporation's no par value common stock, subject to adjustment pursuant to
Paragraph 14 (Adjustment Upon Changes in Capitalization) hereunder.
(b) "CORPORATION." This term shall mean BSM Bancorp, a California
corporation.
(c) "ELIGIBLE PARTICIPANT." This term shall mean: (i) all directors
of the Corporation or any Subsidiary; (ii) all full time officers (whether or
not they are also directors) of the Corporation or any Subsidiary; (iii) all
full time key employees (as such persons may be determined by the Stock
Option Committee from time to time) of the Corporation or any Subsidiary, and
(iv) consultants, business associates or others with important business
relationships with the Corporation.
(d) "EMPLOYER." This term shall mean the Corporation, as defined
herein, or any other Subsidiary of the Corporation, as appropriate, depending
upon which company optionee is employed.
(e) "FAIR MARKET VALUE." This term shall mean the fair market value
of the Corporation's Common Stock as determined by any reasonable valuation
method including the average of the bid price per share for the five (5)
business days prior to the date of grant of the option, or in accordance with
the Commissioner of Corporations Regulation Section 260.140.50, which
generally provides that in determining whether the price is fair, predominant
weight will be given to the following: (a) if securities of the same class
are publicly traded on an active market of substantial depth, the recent
market price of such securities; (b) if the securities of the same class have
not been so publicly traded, the price at which securities of reasonable
comparable corporations (if any) in the same industry are being traded,
subject to appropriate adjustments for the dissimilarities between the
corporations being compared; or (c) in the absence of any reliable indicator
under subsection (a) or (b), the earnings history, book value and prospects
of the issuer in light of market conditions generally.
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(e) "INCENTIVE STOCK OPTION." This term shall mean a Stock Option
which is an "Incentive Stock Option" within the meaning of Section 422A of
the Internal Revenue Code of 1986, as amended.
(f) "NON-QUALIFIED STOCK OPTION." This term shall mean a Stock
Option which is not an Incentive Stock Option.
(g) "OPTION SHARES." This term shall mean shares of Common Stock
which are covered by and subject to any outstanding unexercised Stock Option
granted pursuant to this Plan.
(h) "OPTIONEE." This term shall mean any Eligible Participant to
whom a stock option has been granted pursuant to this Plan, provided that at
least part of the Stock Option is outstanding and unexercised.
(i) "PLAN." This term shall mean the BSM Bancorp 1996 Stock Option
Plan as embodied herein and as may be amended from time to time in accordance
with the terms hereof and applicable law.
(j) "STOCK OPTION." This term shall mean the right to purchase from
the Corporation a specified number of shares of Common Stock under the Plan
at a price and upon terms and conditions determined by the Stock Option
Committee.
(k) "STOCK OPTION COMMITTEE." The Board of Directors of the
Corporation may select and designate a stock option committee consisting of at
least three and not more than five persons, at least two of whom are directors,
having full authority to act in the matters. Regardless of whether a Stock
Option Committee is selected, the Board of Directors may act as the Stock Option
Committee and any action taken by the Board of Directors as such shall be deemed
to be action taken by the Stock Option Committee. All references in the Plan to
the "Stock Option Committee" shall be deemed references to the Board of
Directors acting as a stock option committee and to a duly appointed Stock
Option Committee, if there be one. In the event of any conflict between any
action taken by the Board of Directors acting as a Stock Option Committee and
any
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action taken by a duly appointed Stock Option Committee, the action taken by
the Board of Directors shall be controlling and the action taken by the duly
appointed Stock Option Committee shall be disregarded.
(l) "SUBSIDIARY." This term shall mean any subsidiary corporation
of the Corporation as such term is defined in Section 425(f) of the Internal
Revenue Code of 1986, as amended.
3. ADMINISTRATION
(a) STOCK OPTION COMMITTEE. This Plan shall be administered by the
Stock Option Committee. The Board of Directors of the Corporation shall have
the right, in its sole and absolute discretion, to remove or replace any
person from or on the Stock Option Committee at any time for any reason
whatsoever.
(b) ADMINISTRATION OF THE PLAN. Any action of the Stock Option
Committee with respect to the administration of the Plan shall be taken
pursuant to a majority vote, or pursuant to the unanimous written consent, of
its members.
Any such action taken by the Stock Option Committee in the administration
of this Plan shall be valid and binding, so long as the same is in conformity
with the terms and conditions of this Plan. Subject to compliance with each
of the terms, conditions and restrictions set forth in this Plan, including,
but not limited to, those set forth in Section 6(a)(ii) hereof, the Stock
Option Committee shall have the exclusive right, in its sole and absolute
discretion, to establish the terms and conditions of any Stock Options
granted under the Plan, including, without limitation, the power to: (i)
establish the number of Stock Options, if any, to be granted hereunder, in
the aggregate and with regard to any individual Eligible Participant; (ii)
determine the time or times when such Stock Options, or any parts thereof,
may be exercised; (iii) determine and designate which Stock Options granted
under the Plan shall be Incentive Stock Options and which shall be
Non-Qualified Stock Options; (iv) determine the Eligible Participants, if
any, to whom Stock Options are granted; (v) determine the duration and
purposes, if any, of leaves of absence which
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may be permitted to holders of unexercised, unexpired Stock Options without
such constituting a termination of employment under the Plan; (vi) prescribe
and amend the terms, provisions and form of any instrument or agreement
setting forth the terms and conditions of every Stock Option granted
hereunder; and (vii) make loans to or guarantee any obligations of any
Optionees, except directors, in connection with the exercise of Stock Options
as specified in Section 8(d) hereof, whenever the Stock Option Committee
determines that such loan or guarantee may reasonably be expected to benefit
the corporation, subject to the provisions of Section 315(b) of the
California General Corporations Law of 1977, as amended and subject to
Regulations G, U and T promulgated by the Board of Governors of the Federal
Reserve System pursuant to Section 7 of the Securities Exchange Act of 1934,
if the Option Shares are listed on a stock exchange or are contained in the
list of over-the-counter margin securities published by the Federal Reserve
Board.
(c) DECISIONS AND DETERMINATIONS. Subject to the express provisions
of the Plan, the Stock Option Committee shall have the authority to construe
and interpret the Plan, to define the terms used therein, to prescribe,
amend, and rescind rules and regulations relating to the administration of
the Plan, and to make all other determinations necessary or advisable for
administration of the Plan. Determinations of the Stock Option Committee on
matters referred to in this Section 3 shall be final and conclusive so long
as the same are in conformity with the terms of this Plan.
4. SHARES SUBJECT TO THE PLAN
Subject to adjustments as provided in Section 14 hereof, the maximum number
of shares of Common Stock which may be issued upon exercise of Stock Options
granted under this Plan is limited to 30% of the issued and outstanding shares
of the Corporation up to a maximum of 892,542 shares in the aggregate. If any
Stock Option shall be canceled, surrendered, or expire for any reason without
having been exercised
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in full, the unpurchased Option Shares represented thereby shall again be
available for grants of Stock Options under this Plan.
5. ELIGIBILITY
Only Eligible Participants shall be eligible to receive grants of Stock
Options under this Plan.
6. GRANTS OF STOCK OPTIONS
(a) GRANT. Subject to the express provisions and limitations of the
Plan, the Stock Option Committee, in its sole and absolute discretion, may
grant Stock Options to Eligible Participants of the Corporation, for a number
of Option Shares, at the price(s) and time(s), on the terms and conditions
and to such Eligible Participants as it deems advisable and specifies in the
respective grants.
Subject to the limitations and restrictions set forth in the Plan, an
Eligible Participant who has been granted a Stock Option may, if otherwise
eligible, be granted additional Stock Options if the Stock Option Committee
shall so determine. The Stock Option Committee shall designate in each grant
of a Stock Option whether the Stock Option is an Incentive Stock Option or a
Non-Qualified Stock Option.
(b) DATE OF GRANT AND RIGHTS OF OPTIONEE. The determination of the
Stock Option Committee to grant a Stock Option shall not in any way
constitute or be deemed to constitute an obligation of the Corporation, or a
right of the Eligible Participant who is the proposed subject of the grant,
and shall not constitute or be deemed to constitute the grant of a Stock
Option hereunder unless and until both the Corporation and the Eligible
Participant have executed and delivered the form of stock option agreement
then required by the Stock Option Committee as evidencing the grant of the
Stock Option, together with such other instruments as may be required by the
Stock Option Committee pursuant to this Plan; provided, however, that the
Stock Option Committee may fix the date of grant as any date on or after the
date of its final determination to grant the Stock Option (or if no such date
is fixed, then the date of grant shall be the
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date on which the determination was finally made by the Stock Option
Committee to grant the Stock Option), and such date shall be set forth in the
stock option agreement. The date of grant as so determined shall be deemed
the date of grant of the Stock Option for purposes of this Plan.
(c) SHAREHOLDER-EMPLOYEES. Notwithstanding anything to the
contrary contained elsewhere herein, a Stock Option shall not be granted
hereunder to an Eligible Participant who owns, directly or indirectly, at the
date of the grant of the Stock Option, more than ten percent (10%) of the
total combined voting power of all classes of capital stock of the
Corporation or a Subsidiary corporation, unless the purchase price of the
Option Shares subject to said Stock Option is at least 110% of the Fair
Market Value of the Option Shares, determined as of the date said Stock
Option is granted.
(d) MAXIMUM VALUE OF STOCK OPTIONS. Except as provided in paragraph
(e) of this Section 6, the maximum aggregate Fair Market Value of Option
Shares (determined as of the respective Stock Option grant dates) for which
an Eligible Participant may be granted Incentive Stock Options in any
calendar year shall not exceed $100,000, plus any "unused carryover amount."
The unused carryover amount, determined on a yearly basis, shall be equal to
one-half (1/2) of the difference between $100,000 and the aggregate Fair
Market Value (determined as of the respective Stock Option grant dates) of
all of the Option Shares subject to Incentive Stock Options granted to the
Optionee during the calendar year under the Plan. The provisions of Section
422A(c)(4) of the Internal Revenue Code of 1986, as amended, are incorporated
herein by this reference for the purpose of the determination and application
of the unused carryover amount.
The aggregate fair market value (determined at the time the option is
granted) of the stock with respect to which incentive stock options are
exercisable for the first time by such individual under the terms of the Plan
during any calendar year is
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limited to $100,000, but the value of stock for which options may be granted
to an employee in a given year may exceed $100,000.
(e) SUBSTITUTED STOCK OPTIONS. If all of the outstanding shares of
common stock of another corporation are changed into or exchanged solely for
common stock in a transaction to which Section 425(a) of the internal Revenue
Code of 1986, as amended, applies, then, subject to the approval of the Board
of Directors of the Bank, Stock Options under the Plan may be substituted
("Substituted Options") in exchange for valid, unexercised and unexpired
stock options of such other corporation. Substituted options shall qualify
as Incentive Stock Options under the Plan, provided that (and to the extent)
the stock options exchanged for the Substituted Options were "Incentive Stock
Options" within the meaning of Section 422A of the Internal Revenue Code of
1986, as amended.
(f) NON-QUALIFIED STOCK OPTIONS. All Stock Options granted by the
Stock Option Committee which: (i) are designated at the time of grant as
Incentive Stock Options but do not so qualify under the provisions of Section
422A of the Code or any regulations or rulings issued by the Internal Revenue
Service for any reason; (ii) are in excess of the fair market value
limitations set forth in Section 6(d); or (iii) are designated at the time of
grant as Non-Qualified Stock Options, shall be deemed Non-Qualified Stock
Options under this Plan. Non-Qualified Stock Options granted or substituted
hereunder shall be so designated in the stock option agreement entered into
between the Corporation and the Optionee.
7. STOCK OPTION EXERCISE PRICE
(a) MINIMUM PRICE. The exercise price of any Option Shares shall be
determined by the Stock Option Committee, in its sole and absolute discretion,
upon the grant of a Stock Option. Except as provided elsewhere herein, said
exercise price shall not be less than one hundred percent (100%) of the Fair
Market Value of the
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Common Stock represented by the Option Share on the date of grant of the
related Stock Option.
(b) EXCHANGED STOCK OPTIONS. Where the outstanding shares of stock
of another corporation are changed into or exchanged for shares of Common
Stock of the Corporation without monetary consideration to that other
corporation, then, subject to the approval of the Board or Directors of the
Corporation, Stock Options may be granted in exchange for unexercised,
unexpired stock options of the other corporation, and the exercise price of
the Option Shares subject to each Stock Option so granted may be fixed at a
price less than one hundred percent (100%) of the Fair Market Value of the
Common Stock at the time such Stock Option is granted if said exercise price
has been computed to be not less than the exercise price set forth in the
stock option of the other corporation, with appropriate adjustment to reflect
the exchange ratio of the shares of stock of the other corporation into the
shares of Common Stock of the Corporation.
(c) SUBSTITUTED OPTIONS. The exercise price of the Option Shares
subject to each Substituted Option may be fixed at a price less than one
hundred percent (100%) of the Fair Market Value of the Common Stock at the
time such Substituted option is granted if said exercise price has been
computed to be not less than the exercise price set forth in the stock option
of the other corporation for which it was exchanged, with appropriate
adjustment to reflect the exchange ratio of the shares of stock of the other
corporation into the shares of Common Stock.
8. EXERCISE OF STOCK OPTIONS.
(a) EXERCISE. Except as otherwise provided elsewhere herein, each
Stock Option shall be exercisable in such increments, which need not be equal,
and upon such contingencies as the Stock Option Committee shall determine at the
time of grant of the Stock Option; provided, however, (i) that if an Optionee
shall not in any given period exercise any part of a Stock Option which has
become exercisable during that
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period, the Optionee's right to exercise such part of the Stock Option shall
continue until expiration of the Stock Option or any part thereof as may be
provided in the related stock option agreement, and (ii) in the case of
options that are not granted to officers, directors or consultants of the
Company, a minimum of 20% of the Stock Option shall be exercisable in each
year over a five year period from the date the option is granted. No Stock
Option or part thereof shall be exercisable except with respect to whole
shares of Common Stock, and fractional share interests shall be disregarded
except that they may be accumulated.
(b) PRIOR OUTSTANDING INCENTIVE STOCK OPTIONS. Incentive Stock
Options granted to an Optionee may be exercisable while such Optionee has
outstanding and unexercised any Incentive Stock Option previously granted (or
substituted) to him or her pursuant to this Plan. The Stock Option Committee
shall determine if such options shall be exercisable if there are any
Incentive Stock Options previously granted (or substituted) to him or her
pursuant to this Plan, and such determination shall be evidenced in the
Agreement executed by the Optionee and Company. An Incentive Stock Option
shall be treated as outstanding until it is exercised in full or expires by
reason of lapse of time.
(c) NOTICE AND PAYMENT. Stock Options granted hereunder shall be
exercised by written notice delivered to the Corporation specifying the
number of Option Shares with respect to which the Stock Option is being
exercised, together with concurrent payment in full of the exercise price as
hereinafter provided in Section 8(d) hereof. If the Stock Option is being
exercised by any person or persons other than the Optionee, said notice shall
be accompanied by proof, satisfactory to counsel for the Corporation, of the
right to such person or persons to exercise the Stock Option. The
Corporation's receipt of a notice of exercise without concurrent receipt of
the full amount of the exercise price shall not be deemed an exercise of a
Stock Option by an Optionee, and the Corporation shall have no obligation to
an Optionee for any Option
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Shares unless and until full payment of the exercise price is received by the
Corporation in accordance with Section 8(d) hereof, and all of the terms and
provisions of the Plan and the related stock option agreement have been
complied with.
(d) PAYMENT OF EXERCISE PRICE. The exercise price of any Option
Shares purchased upon the proper exercise of a Stock Option shall be paid in
full at the time of each exercise of a Stock Option in cash and/or, with the
prior written approval of the Stock Option Committee, in Common Stock of the
Corporation which, when added to the cash payment, if any, has an aggregate
Fair Market Value equal to the full amount of the exercise price of the Stock
Option, or part thereof, then being exercised and/or, with the prior written
approval of the Stock Option Committee, on a deferred basis evidenced by a
promissory note, containing such terms and subject to such security as the
Stock Option Committee shall determine to be fair and reasonable from time to
time, for the total option price for the number of shares so purchased. In
addition, the Optionee shall have the right upon the exercise of a stock
Option in the manner set forth above to surrender for cancellation a portion
of the Stock Option to the Company for the number of shares (the "Surrendered
Shares") specified in the holder's notice of exercise, by delivery to the
Company with such notice written instructions from such holder to apply the
Appreciated Value (as defined below) of the Surrendered Shares to payment of
the exercise price for shares subject to the Stock Options that are being
acquired upon such exercise. The term "Appreciated Value" for each share
subject to this Stock Option shall mean the excess of the Fair Market Value
thereof over the exercise price then in effect. No director, consultant or
business associate may purchase any Stock Option on a deferred basis
evidenced by a promissory note. Unless payment is on a deferred basis,
payment by an Optionee as provided herein shall be made in full concurrently
with the Optionee's notification to the Corporation of his intention to
exercise all or part of a Stock Option. If all or part of payment is made in
shares of Common Stock as heretofore provided, such payment shall be deemed
to
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have been made only upon receipt by the Corporation of all required share
certificates, and all stock powers and other required transfer documents
necessary to transfer the shares of Common Stock to the Corporation.
(e) REORGANIZATION. Notwithstanding any provision in any stock
option agreement pertaining to the time of exercise of a Stock Option, or
part thereof, upon adoption by the requisite holders of the Corporation's
outstanding shares of Common Stock of any plan of dissolution, liquidation,
reorganization, merger, consolidation or sale of all or substantially all of
the assets of the Corporation to another corporation, or the acquisition of
stock representing more than 50% of the voting power of the Corporation then
outstanding, by another corporation or person, which would, upon
consummation, result in termination of a Stock Option in accordance with
Section 15 hereof, the Stock Option shall become immediately exercisable as
to all Option Shares, whether or not vested, for such period of time as may
be determined by the Stock Option Committee, but in any event not less than
30 days prior to the adoption of the plan of dissolution, liquidation,
reorganization, merger, consolidation, sale, or acquisition on the condition
that the terminating event described in Section 15 hereof is consummated.
Any Option Shares not exercised will be terminated. If such Terminating
Event is not consummated, Stock Options granted pursuant to the Plan shall be
exercisable in accordance with their respective terms.
(f) MINIMUM EXERCISE. Not less than ten (10) Option Shares may be
purchased at any one time upon exercise of a Stock Option unless the number
of shares purchased is the total number which remains to be purchased under
the Stock Option.
(g) COMPLIANCE WITH LAW. No shares of Common Stock shall be issued
by the Corporation upon exercise of any Stock Option, and an Optionee shall
have no rights or claim to such shares, unless and until: (a) payment in full
as provided in Section 8(d) hereof has been received by the Corporation; (b)
in the opinion of the
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counsel for the Corporation, all applicable registration requirements of the
Securities Act of 1933, all applicable listing requirements of securities
exchanges or associations on which the Corporation's Common Stock is then
listed or traded, and all other requirements of law and of regulatory bodies
having jurisdiction over such issuance and delivery, have been fully complied
with; and (c) if required by federal or state law or regulation, the Optionee
shall have paid to the Corporation the amount, if any, required to be
withheld on the amount deemed to be compensation to the Optionee as a result
of the exercise of his or her Stock Option, or made other arrangements
satisfactory to the Corporation, in its sole discretion, to satisfy
applicable income tax withholding requirements.
9. NONTRANSFERABILITY OF STOCK OPTIONS.
Each Stock Option shall, by its terms, be nontransferable by the Optionee
other than by will or the laws of descent and distribution, and shall be
exercisable during the Optionee's lifetime only by the Optionee or his or her
guardian or legal representative.
10. CONTINUATION OF EMPLOYMENT
Except for directors, consultants or business advisors with a written
contract for any definite term, this Agreement shall not obligate the
Corporation or a Subsidiary to employ Optionee. Optionee acknowledges that
there is no agreement, express or implied, between Optionee and the
Corporation or other Subsidiary of the Corporation for any specific period of
employment, nor for continuing long-term employment. Optionee and the
Employer each have a right to terminate employment, with or without cause.
Optionee also acknowledges that the Employer retains the right to demote,
transfer, change job duties, and change the compensation at any time with or
without cause in its sole discretion.
11. CESSATION OF EMPLOYMENT
(a) Except as provided in Sections 8(e), 12, 13, 14 or 15 hereof,
except if Optionee is granted an option as a consultant, business associate
or other person or
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entity with important business relationships with the Corporation, if, for
any reason, an Optionee's status as an Eligible Participant is terminated,
the Stock Options granted to such Optionee shall expire on the expiration
dates specified for said Stock Options at the time of their initial grant, or
three (3) months after the Optionee's status as an Eligible Participant is
terminated, whichever is earlier. During such period after Options shall be
exercisable only as to those increments, if any, which had become exercisable
as of the date on which such Optionee's status as an Eligible Participant
terminated, and any Stock Options or increments which had not become
exercisable as of such date shall expire and terminate automatically on such
date. If Optionee is granted an option as a consultant, business associate
or other person or entity with important business relationships with the
Corporation, this Stock Option shall not expire as a result of consultant,
business associate or other person or entity with important business
relationships with the Corporation no longer doing business or otherwise
terminating his or its business relationship with the Corporation.
(b) Except if Optionee is granted an option as a consultant,
business advisor, or other person or entity with important business
relationships with the Corporation, and if Optionee's status as an Eligible
Participant is terminated for violation of the Employer's Standards of
Conduct, the Stock Options granted to such Optionee shall automatically
expire and terminate in their entirety immediately upon such termination;
provided, however, that the Stock Option Committee may, in its sole
discretion, within thirty (30) days of such termination, reinstate such Stock
Options by giving written notice of such reinstatement to the Optionee. In
the event of such reinstatement, the Optionee may exercise the Stock Options
only to such extent, for such time, and upon such terms and conditions as in
the case of an Optionee whose status as an Eligible Participant had been
terminated for a reason other than violation of the Employer's Standards of
Conduct, disability or death. Reasons for termination for violation of the
Employer's Standards of Conduct, shall include, but not be limited to,
termination for malfeasance
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or gross misfeasance in the performance of duties or conviction of illegal
activity in connection therewith, and, in any event, the determination of the
Stock Option Committee with respect thereto shall be final and conclusive.
If Optionee is granted an option as a consultant, business advisor, or other
person or entity with important business relationships with the Corporation,
and are not classified as eligible employees of the Corporation or any
Subsidiary, this Stock Option shall not expire as a result of such Optionee's
termination.
12. DEATH OF OPTIONEE
Except if Optionee is granted an option as a consultant, business
associate or other person or entity with important business relationships
with the Corporation, if an Optionee loses his status as an Eligible
Participant by reason of death, or if an Optionee dies during the three-month
period referred to in Section 11 hereof, the Stock Options granted to such
Optionee shall expire on the expiration dates specified for said Stock
Options at the time of their initial grant, or one (l) year after the date of
such death, whichever is earlier. If Optionee is granted an option as a
consultant, business associate or other person or entity with important
business relationships with the Corporation, this Stock Option shall not
expire as a result of such Optionee's death. After such death but before
such expiration, subject to the terms and provisions of the Plan and the
related stock option agreements, the person or persons to whom such
Optionee's rights under the Stock Options shall have passed by will or by the
applicable laws of descent and distribution, or the executor or administrator
of the Optionee's estate, shall have the right to exercise such Stock Options
to the extent that increments, if any, had become exercisable as of the date
on which the Optionee's status as an Eligible Participant had been lost.
13. DISABILITY OF OPTIONEE
Except if Optionee is granted an option as a consultant, business
associate or other person or entity with important business relationships
with the Corporation, if an
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Optionee is disabled while employed by or while serving as a director of the
Corporation or a Subsidiary or during the three-month period referred to in
Section 11 hereof, the Stock Options granted to such Optionee shall expire on
the expiration dates specified for said Stock Options at the time of their
initial grant, or one (l) year after the date of such disability, whichever
is earlier. If Optionee is granted an option as a consultant, business
associate or other person or entity with important business relationships
with the Corporation, this Stock Option shall not expire as a result of such
Optionee's disability. After such disability but before such expiration, the
Optionee or a guardian or conservator of the Optionee's estate, as duly
appointed by a court of competent jurisdiction, shall have the right to
exercise such Stock Options to the extent that increments, if any, had become
exercisable as of the date on which the Optionee became disabled or ceased to
be employed by the Corporation or a Subsidiary as a result of the disability.
For the purpose of this Section 13, an Optionee shall be deemed to have
become "disabled" if it shall appear to the Stock Option Committee, upon
written certification delivered to the Corporation by a qualified licensed
physician, that the Optionee has become permanently and totally unable to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death, or which has lasted or can be expected to last for a continuous period
of not less than 12 months.
14. ADJUSTMENT UPON CHANGES IN CAPITALIZATION
If the outstanding shares of Common Stock of the Corporation are
increased, decreased, or changed into or exchanged for a different number or
kind of shares or securities of the Corporation, through a reorganization,
merger, recapitalization, reclassification, stock split, stock dividend,
stock consolidation, or otherwise, without consideration to the Corporation,
an appropriate and proportionate adjustment shall be made in the number and
kind of shares as to which Stock Options may be granted. A corresponding
adjustment changing the number or kind of Option Shares and the
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exercise prices per share allocated to unexercised Stock Options, or portions
thereof, which shall have been granted prior to any such change, shall
likewise be made. Any such adjustment, however, in an outstanding Stock
Option shall be made without change in the total price applicable to the
unexercised portion of the Stock Option, but with a corresponding adjustment
in the price for each Option Share subject to the Stock Option. Any
adjustment under this Section shall be made by the Stock Option Committee,
whose determination as to what adjustments shall be made, and the extent
thereof, shall be final and conclusive. No fractional shares of stock shall
be issued or made available under the Plan on account of any such adjustment,
and fractional share interests shall be disregarded and the fractional share
interest shall be rounded down to the nearest whole number.
15. TERMINATING EVENTS
Not less than thirty (30) days prior to consummation of a plan of
dissolution or liquidation of the Corporation, or consummation of a plan of
reorganization, merger or consolidation of the Corporation with one or more
corporations, as a result of which the Corporation is not the surviving
corporation and the outstanding securities of the class then subject to
options hereunder are changed or exchanged for cash or property or securities
not of the Corporation's issue, or upon the sale of all or substantially all
the assets of the Corporation to another corporation, or the acquisition of
stock representing more than fifty percent (50%) of the voting power of the
Corporation then outstanding by another corporation or person (the
"Terminating Event"), the Stock Option Committee or the Board of Directors
shall notify each Optionee of the pendency of the Terminating Event. Upon
the effective date of the Terminating Event, the Plan shall automatically
terminate and all Stock Options theretofore granted shall terminate, unless
provision is made in connection with such transaction for the continuance of
the Plan and/or assumption of Stock Options theretofore granted, or
substitution for such Stock Options with new stock options covering stock of
a successor employer
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corporation, or a parent or subsidiary corporation thereof, solely at the
discretion of such successor corporation, or parent or subsidiary
corporation, with appropriate adjustments as to number and kind of shares and
prices, in which event the Plan and options theretofore granted shall
continue in the manner and under the terms so provided. If the Plan and
unexercised options shall terminate pursuant to the foregoing sentence, all
persons shall have the right to exercise any unexercised portions of options
outstanding and not exercised, shall have the right, at such time prior to
the consummation of the transaction causing such termination as the
Corporation shall designate and for a period of not less than 30 days, to
exercise all unexercised portions of their options, including the portions
which would, but for this paragraph entitled "Terminating Events," not yet be
exercisable.
16. AMENDMENT AND TERMINATION
The Board of Directors of the Corporation may at any time and from
time-to-time suspend, amend, or terminate the Plan and may, with the consent
of Optionee, make such modifications of the terms and conditions of a Stock
Option as it shall deem advisable; provided that, except as permitted under
the provisions of Section 15 hereof, no amendment or modification may be
adopted without the Corporation having first obtained all necessary
regulatory approvals and approval of the holders of a majority of the
Corporation's shares of Common Stock present, or represented, and entitled to
vote at a duly held meeting of shareholders of the Corporation if the
amendment or modification would:
(a) materially increase the benefits accruing to participants under the
Plan;
(b) materially increase the number of securities which may be issued
under the Plan;
(c) materially modify the requirements as to eligibility for
participation in the Plan;
17
<PAGE>
(d) increase or decrease the exercise price of any Stock Options
granted under the Plan;
(e) increase the maximum term of Stock Options provided for herein;
(f) permit Stock Options to be granted to any person who is not an
Eligible Participant; or
(g) change any provision of the Plan which would affect the
qualification as an Incentive Stock Option under the Plan.
No Stock Option may be granted during any suspension of the Plan or
after termination of the Plan. Amendment, suspension, or termination of the
Plan shall not (except as otherwise provided in Section 16 hereof), without
the consent of the Optionee, alter or impair any rights or obligations under
any Stock Option theretofore granted.
17. RIGHTS OF ELIGIBLE PARTICIPANTS AND OPTIONEES
Neither any Eligible Participant, any Optionee or any other person shall
have any claim or right to be granted any Stock Option under this Plan, and
neither this Plan nor any action taken hereunder shall be deemed or construed
as giving any Eligible Participant, Optionee or any other person any right to
be retained in the employ of the Corporation or any subsidiary of the
Corporation. Without limiting the generality of the foregoing, there is no
vesting of any right in the classification of any person as an Eligible
Participant or Optionee, such classification being used solely to define and
limit those persons who are eligible for consideration of the grant of Stock
Options under the Plan.
18. PRIVILEGES OF STOCK OWNERSHIP; SECURITIES LAW COMPLIANCE; NOTICE OF SALE
No Optionee shall be entitled to the privileges of stock ownership as to
any Option Shares not actually issued and delivered. No Option Shares may be
purchased upon the exercise of a Stock Option unless and until all then
applicable requirements of
18
<PAGE>
all regulatory agencies having jurisdiction and all applicable requirements
of securities exchanges upon which the stock of the Corporation is listed (if
any) shall have been fully complied with. The Corporation will diligently
endeavor to comply with all applicable securities laws before any options are
granted under the Plan and before any stock is issued pursuant to options.
The Optionee shall, not more than five (5) days after each sale or other
disposition of shares of Common Stock acquired pursuant to the exercise of
Stock Options, give the Corporation notice in writing of such sale or other
disposition.
The Corporation will provide to each Optionee its Annual Report as
required by Section 260.140.46 of the regulations of the California
Commissioner of Corporations.
19. EFFECTIVE DATE OF THE PLAN
The Plan shall be deemed adopted as of November 12, 1996, and shall be
effective immediately, subject to approval of the Plan by the holders of at
least a majority of the corporation's outstanding shares of Common Stock and
approval of the Plan by the California Commissioner of Corporations.
20. TERMINATION
Unless previously terminated as aforesaid, the Plan shall terminate ten
(10) years from the earliest date of (i) adoption of the Plan by the Board of
Directors, (ii) approval of the Plan by holders of at least a majority of the
Corporation's outstanding shares of Common Stock, or (iii) approval of the
Plan by the California Commissioner of Corporations. No Stock Options shall
be granted under the Plan thereafter, but such termination shall not affect
any Stock Option theretofore granted.
21. OPTION AGREEMENT
Each Stock Option granted under the Plan shall be evidenced by a written
stock option agreement executed by the Corporation and the Optionee, and
shall contain each of the provisions and agreements herein specifically
required to be contained
19
<PAGE>
therein, and such other terms and conditions as are deemed desirable by the
Stock Option Committee and are not inconsistent with the Plan.
22. STOCK OPTION PERIOD
Each Stock Option and all rights and obligations thereunder shall expire
on such date as the Stock Option Committee may determine, but not later than
ten (10) years from the date such Stock Option is granted, and shall be
subject to earlier termination as provided elsewhere in the Plan.
23. EXCULPATION AND INDEMNIFICATION OF STOCK OPTION COMMITTEE
In addition to such other rights of indemnification which they may have
as directors of the Corporation or as members of the Stock Option Committee,
the present and former members of the Stock Option Committee, and each of
them, shall be indemnified by the Corporation for and against all costs,
judgments, penalties and reasonable expenses, including reasonable attorney's
fees, actually and necessarily incurred by them in connection with any
action, suit or proceeding, or in connection with any appeal thereof, to
which they or any of them may be a party by reason of any act or omission of
any member of the Stock Option Committee under or in connection with the Plan
or any Stock Option granted thereunder; provided, however, that a member of
the Stock Option Committee shall not be entitled to any indemnification
whatsoever pursuant to this Section for or as a result of any act or omission
of such member which was not taken in good faith and which constituted
willful misconduct or gross negligence by such member; provided further, that
any amounts paid by any member of the Stock Option Committee in settlement of
any action, suit or proceeding for which indemnification may be sought
pursuant to this Section shall be first approved in writing by independent
legal counsel selected by the Corporation; and, provided further, that within
thirty (30) days after institution of any action, suit or proceeding against
any member with respect to which such member is entitled to indemnification
hereunder, such member shall, in writing, offer the Corporation the
opportunity, at its own expense,
20
<PAGE>
to handle (including settle) and conduct the defense thereof. The provisions
of this Section shall apply to the estate, executor and administrator of each
member of the Stock Option Committee.
24. AGREEMENT AND REPRESENTATIONS OF OPTIONEE
Unless the shares of Common Stock covered by this Plan have been
registered with the Securities and Exchange Commission pursuant to Section 5
of the Securities Act of 1933, each Optionee shall by and upon accepting a
Stock Option, represent and agree in writing, for himself or herself and his
or her transferees by will or the laws of descent and distribution, that he
or she is a bona fide California resident, that all such Option Shares will
be acquired for investment purposes and not for resale or distribution and
that the optioned stock will not be transferred to a person who is not a
California resident. Upon the exercise of a Stock Option, or a part thereof,
the person entitled to exercise the same shall, unless waived by the
Corporation, furnish evidence satisfactory to the Corporation, including
written and signed representations, to the effect that he or she is a
California resident, that the Option Shares are being acquired for investment
purposes and not for resale or distribution, and that the Option Shares being
acquired shall not be sold or otherwise transferred to any individual or
entity not a resident of the State of California. Furthermore, the
Corporation, at its sole discretion, to assure itself that any sale or
distribution by the Optionee complies with this Plan and any applicable
federal or state securities laws, may take all reasonable steps, including
placing stop transfer instructions with the corporation's transfer agent
prohibiting transfers in violation of the Plan and affixing the following
legend (and/or such other legend or legends as the Stock Option Committee
shall require) on certificates evidencing the shares:
"IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY,
OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR,
WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE
COMMISSIONER'S RULES."
and
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR
OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT WITH RESPECT TO THEM UNDER THE
21
<PAGE>
ACT OR A DETERMINATION BY BSM Bancorp THAT REGISTRATION IS NOT
REQUIRED."
At any time that an Optionee contemplated the disposition of any of the
Option Shares (whether by sale, exchange, gift or other form of transfer) he
or she shall first notify the Corporation of such proposed disposition and
shall thereafter cooperate with the Corporation in complying with all
applicable requirements of law which, in the opinion of counsel for the
Corporation, must be satisfied prior to the making of such disposition.
Before consummating such disposition, BSM Bancorp shall determine that such
disposition will not result in a violation of any state or federal securities
law or regulations. The Corporation shall remove any legend affixed to
certificates for Option Shares pursuant to this Section if and when all of
the restrictions on the transfer of the Option Shares, whether imposed by
this Plan or federal or state law, have terminated. An Optionee who
thereafter sells or disposes of his shares of Common Stock will be required
to notify the Corporation of such sale or disposition within five (5) days
after the sale or disposition.
25. NOTICES
All notices and demands of any kind which the Stock Option Committee,
any Optionee, Eligible Participant, or any other person may be required or
desires to serve under the terms of this Plan shall be in writing and shall
be served by personal service upon the respective person or by leaving a copy
of such notice or demand at the address of such person as may be reflected in
the records of the Corporation, or in the case of the Stock Option Committee,
with the Secretary of the Corporation, or by mailing a copy thereof by
certified or registered mail, postage prepaid, with return receipt requested.
In the case of service by mail, it shall be deemed complete at the
expiration of the third day after the day of mailing, except for notice of
the exercise of any Stock Option and payment of the Stock Option exercise
price, both of which must be actually received by the Corporation.
22
<PAGE>
26. LIMITATION OF OBLIGATIONS OF THE CORPORATION
Any obligation of the Corporation arising under or as a result of this
Plan or any Stock Option granted hereunder shall constitute the general
unsecured obligation of the Corporation, and not of the Board of Directors of
the Corporation, or any members thereof, the Stock Option Committee, or any
member thereof, any officer of the Corporation, or any other person or any
Subsidiary, and none of the foregoing, except the Corporation, shall be
liable for any debt, obligation, cost or expense hereunder.
27. LIMITATION OF RIGHTS
The Stock Option Committee, in its sole and absolute discretion, is
entitled to determine who, if anyone, is an Eligible Participant under this
Plan, and which, if any, Eligible Participant shall receive any grant of a
Stock Option. No oral or written agreement by any person on behalf of the
Corporation relating to this Plan or any Stock Option granted hereunder is
authorized, and such agreement may not bind the Corporation or the Stock
Option Committee to grant any Stock Option to any person.
28. SEVERABILITY
If any provision of this Plan as applied to any person or to any
circumstances shall be adjudged by a court of competent jurisdiction to be
void, invalid, or unenforceable, the same shall in no way effect any other
provision hereof, the application of any such provision in any other
circumstances, or the validity of enforceability hereof.
29. CONSTRUCTION
Where the context or construction requires, all words applied in the
plural shall be deemed to have been used in the singular and vice versa, and
the masculine gender shall include the feminine and the neuter.
30. HEADINGS
23
<PAGE>
The headings of the several paragraphs of this Plan are inserted solely for
convenience of reference and are not intended to form a part of and are not
intended to govern, limit or aid in the construction of any term or provision
hereof.
31. SUCCESSORS
This Plan shall be binding upon the respective successors, assigns,
heirs, executors, administrators, guardians and personal representatives of
the Corporation and any Optionee.
32. GOVERNING LAW
This Plan shall be governed by and construed in accordance with the laws
of the State of California.
33. CONFLICT
In the event of any conflict between the terms and provisions of this
Plan, and any other document, agreement or instrument, including, without
limitation, any stock option agreement, the terms and provisions of this Plan
shall control.
24
<PAGE>
SECRETARY'S CERTIFICATE OF ADOPTION
I, the undersigned, do hereby certify:
1. That I am the duly elected and acting Secretary of BSM Bancorp;
and
2. That the foregoing BSM Bancorp 1996 Stock Option Plan, as
amended, was duly adopted by the Board of Directors of BSM Bancorp as the
Stock Option Plan for the Corporation at a meeting duly called as required
by law and convened on the 13th day of May, 1997.
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed
the seal of the Corporation this 13th day of May, 1997.
/s/ William L. Snelling
---------------------------------------
William L. Snelling, Secretary
[SEAL]
25
<PAGE>
OPTIONEES TO WHOM INCENTIVE STOCK OPTIONS ARE GRANTED MUST MEET CERTAIN
HOLDING PERIOD AND EMPLOYMENT REQUIREMENTS FOR FAVORABLE TAX TREATMENT.
UNLESS OTHERWISE STATED, ALL DEFINED TERMS IN THE PLAN SHALL HAVE THE SAME
MEANING HEREIN AS SET FORTH IN THE PLAN.
BSM BANCORP
STOCK OPTION AGREEMENT
Incentive Stock Option
Non-Qualified Stock Option
THIS AGREEMENT, dated the ____ day of ____________, 19__, by and between
BSM Bancorp, a California corporation (the "Corporation"), and
_____________________ (the "Optionee");
WHEREAS, pursuant to the Corporation's 1996 Stock Option Plan (the
"Plan"), the Stock Option Committee has authorized the grant to Optionee of a
Stock Option to purchase all or any part of _____________________ (______)
authorized but unissued shares of the Corporation's Common Stock at the price
of _________________ Dollars ($_____) per share, such Stock Option to be for
the term and upon the terms and conditions hereinafter stated;
NOW, THEREFORE, it is hereby agreed:
1. GRANT OF STOCK OPTION. Pursuant to said action of the Stock Option
Committee and pursuant to authorizations granted by all appropriate
regulatory and governmental agencies, the Corporation hereby grants to
Optionee a Stock Option to purchase, upon and subject to the terms and
conditions of the Plan, which is incorporated in full herein by this
Reference, all or any part of ________________ (_______) Option Shares of the
Corporation's Common Stock, at the price of ____________________ Dollars
($_____) per share. For purposes of this Agreement
0
<PAGE>
and the Plan, the date of grant shall be _________________, 19__. At the date
of grant, Optionee [DOES] [DOES NOT OWN] stock possessing more than 10% of
the total combined voting power of all classes of capital stock of the
orporation or any Subsidiary.
The Stock Option granted hereunder [IS] [IS NOT] intended to qualify as
an Incentive Stock Option within the meaning of Section 422A of the Internal
Revenue Code of 1986, as amended.
2. EXERCISABILITY. This Stock Option shall be exercisable as to
_________________ Option Shares on ________________, 19__, as to
__________________ Option Shares on ________________, 19__, as to
__________________ Option Shares on ________________, 19__, as to
__________________ Option Shares on ________________, 19__, and as to
_________________ Option Shares on ________________, 19__. This Stock Option
shall remain exercisable as to all of such Option Shares until _______________,
19__ (but not later than ten (10) years from the date hereof), at which time
it shall expire in its entirety, unless this Stock Option has expired or
terminated earlier in accordance with the provisions hereof. Option shares
as to which this Stock Option becomes exercisable may be purchased at any
time prior to expiration of this Stock Option.
3. EXERCISE OF STOCK OPTION. Subject to the provision of Paragraph 4
hereof, this Stock Option may be exercised by written notice delivered to the
Corporation stating the number of Option Shares with respect to which this
Stock Option is being exercised, together with cash and/or, if permitted at
the time of exercise by the Stock Option Committee, shares of Common Stock of
the Corporation which, when added to the cash payment, if any, have an
aggregate Fair Market Value equal to the full amount of the purchase price of
such Option Shares, and/or, if permitted at the time of exercise by the Stock
Option Committee, and if Optionee is not also a director, consultant or
business advisor of the Corporation or any of its subsidiaries, on a
1
<PAGE>
deferred basis evidenced by a promissory note. In addition, the Optionee
shall have the right upon the exercise of this Stock Option in the manner set
forth above to surrender for cancellation a portion of this Stock Option to
the Company for the number of share (the "Surrendered Shares") specified in
the holder's notice of exercise, by delivery to the Company with such notice
written instructions from such holder to apply the Appreciated Value (as
defined below) of the Surrendered Shares to payment of the exercise price for
shares subject to this Stock Option that are being acquired upon such
exercise. The term "Appreciated Value" for each share subject to this Stock
Option shall mean the excess of the Fair Market Value thereof over the
exercise price then in effect. Not less than ten (10) Option shares may be
purchased at any one time unless the number purchased is the total number
which remains to be purchased under this Stock Option and in no event may the
Stock Option be exercised with respect to fractional shares. Upon exercise,
Optionee shall make appropriate arrangements and shall be responsible for the
withholding of any federal and state income taxes then due.
4. PRIOR OUTSTANDING STOCK OPTIONS. Incentive Stock Options granted to
an Optionee may be exercisable while such Optionee has outstanding and
unexercised any Incentive Stock Option previously granted to him or her
pursuant to this Plan. The Stock Option Committee shall determine if such
options shall be exercisable if there are any Incentive Stock Options
previously granted (or substituted) to him or her pursuant to this Plan, and
such determination shall be evidenced in the Agreement executed by the
Optionee and the Corporation. An Incentive Stock Option shall be treated as
outstanding until it is exercised in full or expires by reason of lapse of
time.
5. CESSATION OF EMPLOYMENT. (a) Except as provided in Paragraphs 6, 8
or 10 hereof, except if Optionee is granted an option as a consultant,
business associate or other person or entity with important business
relationships with the Corporation, if Optionee's status as an Eligible
Participant under the Plan is terminated, this Stock Option shall expire
three (3) months thereafter or on the date specified in
2
<PAGE>
Paragraph 2 hereof, whichever is earlier. During such period after
termination of status as an Eligible Participant, except if Optionee is
granted an option as a consultant, business associate or other person or
entity with important business relationships with the Corporation, this Stock
Option shall be exercisable only as to those increments, if any, which had
become exercisable as of the date on which the Optionee's status as an
Eligible Participant was terminated, and any Stock Options or increments
which had not become exercisable as of such date shall expire and terminate
automatically on such date. If Optionee is granted an option as a
consultant, business associate or other person or entity with important
business relationships with the Corporation, this Stock Option shall not
expire as a result of consultant, business associate or other person or
entity with important business relationships with the Corporation no longer
doing business or otherwise terminating his or its business relationship with
the Corporation.
(b) TERMINATION FOR VIOLATION OF STANDARDS OF CONDUCT AS REFERENCED IN
OPTIONEE'S EMPLOYEE HANDBOOK. Except if Optionee is granted an option as a
consultant, business associate or other person or entity with important
business relationships with the Corporation, if Optionee's status as an
Eligible Participant under the Plan is terminated for violation of the
Employer's Standards of Conduct, this Stock Option shall automatically expire
unless reinstated by the Stock Option committee within thirty (30) days of
such termination by giving written notice of such reinstatement to Optionee.
In the event of such reinstatement, Optionee may exercise this Stock Option
only to such extent, for such time, and upon such terms and conditions as in
the case of Optionee's termination as an Eligible Participant under the Plan
for a reason other than violation of the Employer's Standards of Conduct,
disability or death. Termination for violation of the Employer's Standards
of Conduct shall include, but not be limited to, or termination for
malfeasance or gross misfeasance in the performance of duties or conviction
of illegal activity in connection therewith, and, in any event, the
determination of the Stock Option Committee with respect thereto shall be
final and
3
<PAGE>
conclusive. If Optionee is granted an option as a consultant, business
associate or other person or entity with important business relationships
with the Corporation and are not classified as eligible employees of the
Corporation or its subsidiaries, this Stock Option shall not expire as a
result of such Optionee's termination.
6. DISABILITY OR DEATH OF OPTIONEE. Except if Optionee is granted an
option as a consultant, business associate or other person or entity with
important business relationships with the Corporation, if Optionee loses his
or its status as an Eligible Participant under the Plan by reason of death or
if Optionee is disabled while employed by the Corporation or a Subsidiary, or
if Optionee dies or becomes so disabled during the three-month period
referred to in Paragraph 5 hereof, this Stock Option shall automatically
expire and terminate one (l) year after the date of Optionee's disability or
death or on the day specified in Paragraph 2 hereof, whichever is earlier.
If Optionee is granted an option as a consultant, business associate or other
person or entity with important business relationships with the Corporation,
this Stock Option shall not expire as a result of such Optionee's death or
disability. After Optionee's disability or death but before such expiration,
the person or persons to whom Optionee's rights under this Stock Option shall
have passed by order of a court of competent jurisdiction or by will or the
applicable laws of descent and distribution, or the executor, administrator
or conservator of Optionee's estate, shall have the right to exercise this
Stock Option to the extent that increments, if any, had become exercisable as
of the date on which Optionee's status as an Eligible Participant under the
Plan had been terminated. For purposes hereof, "disability" shall have the
same meaning as set forth in Section 13 of the Plan.
7. NONTRANSFERABILITY. This Stock Option shall not be transferable
except by will or by the laws of descent and distribution, and shall be
exercisable during Optionee's lifetime only by Optionee or his or her
guardian or legal representative.
4
<PAGE>
8. EMPLOYMENT. Except for directors, consultants or business advisors
with a written contract for any definite term, this Agreement shall not
obligate the Corporation or a Subsidiary to employ Optionee. Optionee
acknowledges that there is no agreement, express or implied, between Optionee
and the Corporation or other Subsidiary of the Corporation for any specific
period of employment, nor for continuing long-term employment. Optionee and
the Employer each have a right to terminate employment, with or without
cause. Optionee also acknowledges that the Employer retains the right to
demote, transfer, change job duties, and change the compensation at any time
with or without cause in its sole discretion.
9. PRIVILEGES OF STOCK OWNERSHIP. Optionee shall have no rights as a
stockholder with respect to the Option Shares unless and until said Option
Shares are issued to Optionee as provided in the Plan. Except as provided in
Section 15 of the Plan, no adjustment will be made for dividends or other
rights in respect of which the record date is prior to the date such stock
certificates are issued.
10. MODIFICATION AND TERMINATION BY BOARD OF DIRECTORS. The rights of
Optionee are subject to modification and termination upon the occurrence of
certain events as provided in Sections 12, 13, 14 and 15 of the Plan. Upon
adoption by the requisite holders of the Corporation's outstanding shares of
Common Stock of any plan of dissolution, liquidation, reorganization, merger,
consolidation or sale of all or substantially all of the assets of the
Corporation to, or the acquisition of stock representing more than fifty
percent (50%) of the voting power of the Corporation then outstanding by
another corporation or person which would, upon consummation, result in
termination of this Stock Option in accordance with Section 15 of the Plan,
this Stock Option shall become immediately exercisable as to all unexercised
Option Shares notwithstanding the incremental exercise provisions of
paragraph 2 of this Agreement for a period then specified by the Stock Option
Committee, but in any event not less than 30 days, in accordance with Section
8(e) of the Plan, on the condition that the
5
<PAGE>
terminating event described in Section 15 of the Plan is consummated. If
such terminating event is not consummated, this Stock Option shall be
exercisable in accordance with the terms of the Agreement, excepting this
Paragraph 10.
11. NOTIFICATION OF SALE. Optionee agrees that Optionee, or any person
acquiring Option Shares upon exercise of this Stock Option, will notify the
Corporation in writing not more than five (5) days after any sale or other
disposition of such Shares.
12. REPRESENTATIONS OF OPTIONEE. No Option Shares issuable upon the
exercise of this Stock Option shall be issued and delivered unless and until
all requirements of applicable state and federal law and of the Securities
and Exchange Commission pertaining to the issuance and sale of such Option
Shares, and all applicable listing requirements of the securities exchanges,
if any, on which shares of Common Stock of the Corporation of the same class
are then listed, shall have been complied with. Without limiting the
foregoing, the undersigned Optionee hereby agrees, represents and warrants
that unless and until the shares of Common Stock covered by the Plan and
issued to Optionee have been registered with the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended, Optionee will
acquire all Option Shares upon exercise of this Stock Option for investment
purposes only and not for resale or for distribution, and Optionee hereby
agrees to execute and deliver to the Corporation a representation letter in
the form and substance of Exhibit "A" attached hereto, and to be bound by the
representations, warranties, covenants and promises contained therein.
Optionee further agrees, represents and warrants that upon exercise of all or
part of this Stock Option, Optionee will not transfer any such Option Shares
except in compliance with said registration provisions or an applicable
exemption therefrom. Upon each exercise of any portion of this Stock Option,
the person entitled to exercise same shall, unless waived by the Corporation,
furnish evidence satisfactory to counsel for the Corporation (including
written and signed representations in the form attached hereto as Exhibit
"B") that the Option
6
<PAGE>
Shares are being acquired in good faith for investment purposes only and not
for resale or distribution except in compliance with the state and federal
requirements described above or applicable exemptions therefrom.
Furthermore, the Corporation, may, if it deems appropriate, issue stop
transfer instructions against any Option Shares and affix to any certificate
representing such Shares the legends of the type described in Section 24 of
the Plan.
13. NOTICES. All notices to the Corporation provided for in this
Agreement shall be addressed to it in care of its President or Chief
Financial Officer at its principal office and all notices to Optionee shall
be addressed to Optionee's address on file with the Corporation or a
subsidiary corporation, or to such other address as either may designate to
the other in writing, all in compliance with the notice provisions set forth
in Section 25 of the Plan.
14. INCORPORATION OF PLAN. All of the provisions of the Plan are
incorporated herein by reference as if set forth in full hereat. In the
event of any conflict between the terms of the Plan and any provision
contained herein, the terms of the Plan shall be controlling and the
conflicting provisions herein shall be disregarded.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
BSM Bancorp
By:
----------------------------------
By:
----------------------------------
OPTIONEE
-------------------------------------
8
<PAGE>
EXHIBIT "A"
____________, 19__
Bank of Santa Maria
2739 Santa Maria Way
Santa Maria, California 93456
Gentlemen:
On this ___ day of ________ 19__, the undersigned has been granted
pursuant to the BSM Bancorp 1996 Stock Option Plan (the "Plan") and the Stock
Option Agreement (the "Agreement") by and between BSM Bancorp and the
undersigned, dated ________ _, 19__, an option to purchase _____________
(_____) shares of the no par value Common Stock of BSM Bancorp (the "Stock").
In consideration of the grant of such option by BSM Bancorp:
1. I hereby represent, warrant and certify to you that I am a bona fide
resident and domiciliary of the State of California and that I maintain my
principal residence in the State of California.
2. I hereby represent and warrant to you that the stock to be acquired
pursuant to the option will be acquired by me in good faith and for my own
personal account, and not with a view to distributing the stock to others or
otherwise resell the stock in violation of the Securities Act of 1933, as
amended, or the rules and regulations promulgated thereunder.
3. I hereby acknowledge and agree that (l) the stock to be acquired by
me pursuant to the Plan has not been registered and that there is no
obligation on the part of BSM Bancorp to register such stock under the
Securities Act of 1933, as amended, and the rules and regulations thereunder;
and (2) that the Stock to be acquired by me will not be freely tradeable
unless the Stock is either registered under the Securities Act of 1933, as
amended, or BSM Bancorp determines that the transfer will not violate the
Federal securities laws.
4. I understand that the corporation is relying upon the truth and
accuracy of the representations and agreements contained herein in
determining to grant such options to me and upon subsequently issuing any
stock pursuant to the Plan without first registering the same under the
Securities Act of 1933, as amended.
5. I understand that the certificate evidencing the stock to be issued
pursuant to the Plan will contain a legend upon the face thereof to the
effect that the stock is not registered under the Securities Act of 1933 and
that stop transfer orders will be placed against the shares with BSM
Bancorp's transfer agent.
6. I am registered to vote in California: Yes
No
0
<PAGE>
7. I have been a resident of California for ___ years.
8. My permanent residence address is as follows:
-------------------------------
-------------------------------
-------------------------------
9. I hereby agree to inform the Corporation if, during the term of the
option, I move my principal residence outside of California.
The agreements contained herein shall inure to benefit of and be binding
upon the respective legal representatives, successors and assigns of the
undersigned and BSM Bancorp.
Very truly yours,
---------------------------------------
(Signature)
---------------------------------------
(Type or Print Name)
1
<PAGE>
EXHIBIT "B"
________________, 19__
Bank of Santa Maria
2739 Santa Maria Way
Santa Maria, California 93456
Gentlemen:
On this ____ day of _______________, 19__, the undersigned has acquired,
pursuant to the BSM Bancorp 1996 Stock Option Plan (the "Plan") and the Stock
Option Agreement (the "Agreement") by and between BSM Bancorp and the
undersigned, dated __________, 19__, ___________ (_____) shares of the no par
value Common Stock of BSM Bancorp (the "Stock"). In consideration of the
issuance of BSM Bancorp to the undersigned said shares of its Common Stock:
1. I hereby represent and warrant to you that the Stock will be acquired
by me in good faith for my own personal account, and not with a view to
distributing the Stock to others or otherwise reselling the Stock in
violation of the Securities Act of 1933, as amended, or the rules and
regulations promulgated thereunder.
2. I hereby represent, warrant and certify to you that I am a bona fide
resident and domiciliary of the State of California and that I maintain my
principal residence in the State of California.
3. I hereby acknowledge and agree that (a) the Stock being acquired by
me pursuant to the Plan has not been registered and that there is no
obligation on the part of BSM Bancorp to register such stock under the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder; and (b) the Stock acquired by me is not freely tradeable and must
be held by me unless traded as provided in Paragraph 4 herein or unless the
Stock is either registered under the Securities Act of 1933 or transferred
pursuant to an exemption from such registration, as accorded by the
Securities Act of 1933 or under the rules and regulations promulgated
thereunder. I further represent and acknowledge that I have been informed by
legal counsel in connection with said Plan of the restrictions on my ability
to transfer the Stock to be received by me pursuant to said Plan and
Agreement and that I understand the scope and effect of those restrictions.
4. I hereby represent, warrant, and certify to the Corporation that I
will not sell or otherwise dispose of all or any part of the shares of the
stock being acquired by me pursuant to the Plan or any interest therein to an
non-resident individual, corporation, partnership, or other form of business
organization of the State of California.
5. I hereby represent, warrant and certify to the Corporation that the
information supplied to the Corporation pursuant to Exhibit "l" attached
hereto is true
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<PAGE>
and correct and may be relied upon by the Corporation in connection with the
issuance of the Corporation's Stock to me.
6. I understand that the effects of the above representations are the
following: (i) that the undersigned does not presently intend to sell or
otherwise dispose of all or any part of the shares of the Stock to any person
or entity not a bona fide resident of the State of California; and (ii) that
the Corporation is relying upon the truth and accuracy of the representations
and agreements contained herein in issuing said shares of the Stock to me
without first registering the same under the Securities Act of 1933, as
amended.
7. I hereby agree that the certificate evidencing the Stock may contain
the following legend stamped upon the face thereof to the effect that the
Stock is not registered under the Securities Act of 1933, as amended, and
that the Stock has been acquired pursuant to the representation in this
letter and Exhibit "1" hereto, the Plan and the Agreement:
"IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY
INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR
WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF
CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES."
and
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED OR OFFERED FOR SALE IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT TO THEM UNDER THE ACT OR BY
BSM Bancorp, THAT REGISTRATION IS NOT REQUIRED."
8. I hereby agree and understand that the Corporation will place a stop
transfer notice with its stock transfer agent to ensure that the restrictions
on transfer described herein will be observed.
The agreements contained herein shall inure to benefit of and be binding
upon the respective legal representatives, successors and assigns of the
undersigned and BSM Bancorp.
Very truly yours,
---------------------------------------
(Signature)
---------------------------------------
(Type or Print Name)
1
<PAGE>
AGREEMENT
This AGREEMENT is entered into this 12th day of March, 1997, by and
between BANK OF SANTA MARIA, a California corporation (hereinafter referred
to as the "Bank"), BSM BANCORP, a California corporation (hereinafter
referred to as the "Company") and SUSAN FORGNONE (hereinafter referred to as
the "Executive").
RECITALS
WHEREAS, Executive has been an Executive Officer of the Bank since 1994
and an Executive Officer of the Company since 1996;
WHEREAS, the Bank desires to continue to avail itself of the skill,
knowledge and experience of Executive in order to ensure the successful
operation of the Bank and the Company without distraction should the Bank
and/or the Company be sold, be merged out of existence, or otherwise be
acquired by another financial institution, individuals or others, and
Executive is terminated, or Executive's employment with the Bank and/or the
Company is adversely affected; and
WHEREAS, to induce Executive to remain in the employ of the Bank and the
Company, and to continue as an Executive Officer of the Bank and the Company,
the Bank and the Company are willing to provide benefits to Executive in the
event his or her employment is terminated or adversely affected after such a
change of control;
NOW, THEREFORE, in consideration of the mutual covenants and conditions
hereinafter set forth, the parties hereto covenant and agree as follows:
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<PAGE>
A. TERM OF AGREEMENT.
This Agreement shall terminate upon the first to occur of (i) the
termination of Executive's employment with Bank and/or the Company for cause,
disability or voluntarily by Executive, and shall have occurred between the
date of this Agreement and March 12, 2002 (the "Term of this Agreement"), or
(ii) the termination of, or adverse effect on, Executive's employment with
Bank and/or the Company within twelve (12) months following a change of
control of the Company and/or the Bank, when the benefits provided for in
Paragraph E have been conferred and paid, or (iii) March 12, 2002.
B. EFFECT ON EMPLOYMENT
This Agreement is not intended to alter or otherwise change the current
employment relationship between Executive and the Bank and/or the Company
except as described in the following Paragraphs, and Executive further
acknowledges his employment at-will status with the Bank and the Company as
described under the Bank's Personnel Policy.
C. CHANGE OF CONTROL
No benefits shall be payable hereunder unless there shall have been a
Change of Control of the Bank and/or the Company and Executive's employment
with the Bank shall thereafter have been terminated in the manner set forth
in Paragraph D below, or Executive terminates employment for any of the
reasons set forth in paragraph D.3. below following such change of control.
For purposes of this Agreement, a "Change of Control" of the Bank and/or the
Company shall mean: (i) a merger with any Person (as defined below), where
the Bank and/or the Company is not the surviving corporation; (ii) a
consolidation with any Person, where the Bank and/or the Company is not the
surviving corporation; (iii) a transfer to any Person of all or substantially
all of the assets of the Bank and/or the Company; or (iv) an acquisition by
any Person of beneficial ownership of an aggregate of more than 25% of the
issued and outstanding shares of common stock of the Bank and/or the Company,
whether or not such Person or Persons are current shareholders of the Bank
and/or the Company at the time of such acquisition, coupled with or followed
by the election as directors of the Bank and/or the Company of persons who
were not directors at the time of such acquisition if such
1
<PAGE>
persons shall become a majority of the Board of Directors of the Bank and/or
the Company. As used in this Agreement, the term "Person" shall include any
financial institution, corporation, individual, partnership or association,
and any group formed for the purpose of acquiring, holding or disposing of
the common stock of the Bank and/or the Company, and the term "beneficial
ownership" shall have the same meaning as under Rule 13d-3 of the Securities
and Exchange Commission promulgated under the Securities Exchange Act of
1934, as amended.
D. TERMINATION FOLLOWING CHANGE OF CONTROL
If (i) a Change of Control shall have occurred, and if Executive's
employment with the Bank and/or the Company is terminated within twelve (12)
months after such Change of Control, or Executive terminates employment with
the Bank and/or the Company pursuant to Paragraph D.3. below, and unless such
termination is (a) because of his death, (b) for Cause or Disability (both as
defined below) or (c) by Executive other than for Good Reason (as defined
below), he shall be entitled to the benefits provided in Paragraph E.2.
below.
1. DISABILITY. If, as a result of Executive's incapacity due to
physical or mental illness, he shall have been absent from or unable to
perform his duties with the Bank and/or the Company for a period of three
consecutive months, and if within 30 days after written notice of termination
is given (which notice may not be given prior to the expiration of the
three-month period) he shall not have recommenced the full-time performance
of his duties, the Bank and/or the Company may terminate his employment for
"Disability."
2. CAUSE. Termination of Executive's employment for "Cause" shall mean
termination by the Bank and/or the Company for cause as defined in its
Personnel Policy or by a regulatory authority for any reason within its
purview.
3. GOOD REASON. Termination by Executive of his employment for "Good
Reason" shall mean termination by him after any of the following events
occurs without his express written consent:
(i) a reduction in Executive's annual salary or benefits;
2
<PAGE>
(ii) an adverse change in Executive's duties whereby he is
performing duties of a higher level employee than the duties being performed
by Executive at the time of the Change of Control;
(iii) Executive is required to work more than fifty (50) miles from
the Bank's Santa Maria Way office;
(iv) Executive is transferred to a department or division and is
required to perform duties that Executive is not familiar or knowledgeable.
4. NOTICE OF TERMINATION. Any purported termination by the Bank and/or
the Company, or by Executive, for Good Reason shall be communicated by
written "Notice of Termination" to the other party hereto. A Notice of
Termination shall mean a notice which indicates the specific termination
provision in this Agreement relied upon and sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of
Executive's employment under the provision so indicated.
5. DATE OF TERMINATION. The "Date of Termination" shall mean (i) if
Executive's employment is terminated by death, the date of death, (ii) if
Executive's employment is terminated for Disability, 30 days after Notice of
Termination is given (provided that Executive shall not have recommenced the
full-time performance of his duties during such 30-day period), (iii) if
Executive's employment is terminated pursuant to subparagraph 2 or 3 above,
the date specified in the Notice of Termination, which shall be not less than
30 days after the date such Notice of Termination is given, and (iv) if
Executive voluntarily terminates employment pursuant to Paragraph D.6., the
date specified in the Notice of Termination, which shall be not less than 60
days after the Notice of Termination is given.
6. VOLUNTARY OR INVOLUNTARY TERMINATION. If Executive should
voluntarily or involuntarily terminate employment with the Bank and/or the
Company prior to March 12, 2002, Executive shall not (i) solicit or employ
any of the Bank's employees, or employees formerly employed by the Bank or
the Company for a one hundred eighty (180) day period prior to Executive's
voluntary termination, nor (ii) remove, transfer or otherwise take any loan
or other file at the Bank or the Company during the time from the Notice of
Termination to the effective date of the voluntary termination.
E. BENEFITS UPON TERMINATION
3
<PAGE>
1. REGULAR COMPENSATION. If Executive's employment shall be terminated
by the Bank and/or the Company for Disability or for Cause, or because of his
death, or by a regulatory authority or by Executive other than for Good
Reason, within twelve (12) months after a Change of Control, or by the
Executive for Good Reason, the Bank and/or the Company shall pay him the full
accrued base salary and accrued incentive bonus through the Date of
Termination, less withholding required by law, at the rate in effect at the
time Notice of Termination is given or death occurs and the Bank and/or the
Company shall have no further obligation to him under this Agreement.
2. SEVERANCE BENEFITS. If Executive's employment shall be terminated
by the Bank and/or the Company other than for Disability, Cause or his death,
or by Executive for Good Reason within twelve (12) months of a Change of
Control, Executive shall be entitled to receive an amount equal to
Executive's base salary paid by the Bank and/or the Company to Executive for
the previous eighteen (18) months. Such amount shall be payable to Executive
in eighteen (18) equal monthly installments commencing the first of the month
following the Date of Termination or in a lump sum, as determined in the sole
discretion of Executive, less withholding as required by law. In addition,
the Bank and/or the Company shall continue payment of all of Executive's
benefits in effect on the date of Executive's termination including health
and other medical benefits for a period of eighteen (18) months from the Date
of Termination. Payment of the foregoing amounts shall discharge the Bank
and the Company from any further obligation and liability to Executive under
this Agreement.
Notwithstanding the foregoing, in the event that any payment or
benefit received or to be received by Executive in connection with the
termination of employment pursuant to the terms of this Agreement would not
be deductible (in whole or in part) by the Bank and/or the Company as a
result of Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code"), the amount of the payment shall be reduced until no portion is not
deductible as a result of Section 280G of the Code.
F. GENERAL PROVISIONS
1. RETURN OF DOCUMENTS. Executive expressly agrees that all manuals,
documents, files, reports, studies, instruments or other materials used
and/or developed by Executive related to banking or of a banking nature
during the term of his
4
<PAGE>
employment are solely the property of the Bank and/or the Company, and that
Executive has no right, title or interest therein. Upon termination of
Executive's employment, Executive shall promptly deliver possession of all of
said property to the Bank and/or the Company in good condition.
2. NOTICES. Any notice, request, demand or other communication
required or permitted hereunder shall be in writing and shall be deemed to be
properly given when personally served or forty-eight hours after deposit in
the United States mail, postage prepaid, in each case addressed to the Bank
and/or the Company as its head office location or to Executive at his last
residence address on the Bank or the Company's records. Either party may
change its address by written notice in accordance with this subparagraph.
3. BINDING EFFECT; SUCCESSORS. Except to the extent otherwise provided
herein, this Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective executors, administrators, successors and
assigns. The Bank and/or the Company will require any successor to all or
substantially all of its assets (other than by way of merger) to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Bank and/or the Company would be required to perform it if no
such succession had taken place. Failure of the Bank and/or the Company to
obtain such assumption and agreement prior to the effectiveness of any such
succession shall entitle Executive to the benefits from the Bank and/or the
Company in the same amount and on the same terms as he would be entitled to
hereunder if he terminated his employment for Good Reason, except that for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination.
4. APPLICABLE LAW. Except to the extent governed by the laws of the
United States, this Agreement is to be governed by and construed under the
laws of the State of California.
5. CAPTIONS AND PARAGRAPH HEADINGS. Captions and paragraph headings
used herein are for convenience only and are not part of this Agreement and
shall not be used in construing it.
5
<PAGE>
6. SEVERABILITY. Should any provision of this Agreement for any reason
be declared invalid, void or unenforceable by a court of competent
jurisdiction, the validly and binding effect of any remaining portion shall
not be affected, and the remaining portions of this Agreement shall remain in
full force and effect as if this Agreement had been executed with said
provision eliminated.
7. ENTIRE AGREEMENT. This Agreement contains the entire agreement of
the parties relating to termination of employment after a Change of Control
as provided herein. It supersedes any and all other agreements, either oral
or in writing, between the parties hereto with respect to such subject
matter, and does not otherwise modify, alter or change the employment
relationship of Executive with the Bank and/or the Company. Each party to
this Agreement acknowledges that no representations, inducements, promises or
agreements, oral or otherwise, have been made by any party, or anyone acting
on behalf of any party, which are not embodied herein, and that no other
agreement, statement or promise not contained in this Agreement concerning
its subject matter shall be valid or binding.
8. MODIFICATION; WAIVER. No provision of this Agreement may be
modified, waived or discharged unless such modification, waiver or discharge
is agreed to in writing and signed by Executive and such officer of the Bank
and/or the Company as may be specifically designated or authorized by the
Board of Directors or by the Chief Executive Officer. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.
9. ARBITRATION. In the event that any dispute shall arise between the
parties concerning the provisions of this Agreement or the performance of any
part of their obligations hereunder, or in the event of an alleged breach of
this Agreement by either of the parties hereto, and the parties are unable to
mutually adjust and settle same, such dispute or disputes shall be submitted
to binding arbitration pursuant to the applicable rules of the American
Arbitration Association, and the decision and determination of the
arbitrators shall be final and conclusive.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
BANK OF SANTA MARIA
By:
----------------------------------------
A.J. Diani, Chairman of the Board
By:
----------------------------------------
William L. Snelling, Secretary
BSM BANCORP
By:
----------------------------------------
A.J. Diani, Chairman of the Board
By:
----------------------------------------
William L. Snelling, Secretary
EXECUTIVE
-------------------------------------------
Susan Forgnone
7
<PAGE>
AGREEMENT
This AGREEMENT is entered into this 12th day of March, 1997, by and
between BANK OF SANTA MARIA, a California corporation (hereinafter referred
to as the "Bank"), BSM BANCORP, a California corporation (hereinafter
referred to as the "Company") and F. DEAN FLETCHER (hereinafter referred to
as the "Executive").
RECITALS
WHEREAS, Executive has been an Executive Officer of the Bank since 1991
and an Executive Officer of the Company since 1996;
WHEREAS, the Bank desires to continue to avail itself of the skill,
knowledge and experience of Executive in order to ensure the successful
operation of the Bank and the Company without distraction should the Bank
and/or the Company be sold, be merged out of existence, or otherwise be
acquired by another financial institution, individuals or others, and
Executive is terminated, or Executive's employment with the Bank and/or the
Company is adversely affected; and
WHEREAS, to induce Executive to remain in the employ of the Bank and the
Company, and to continue as an Executive Officer of the Bank and the Company,
the Bank and the Company are willing to provide benefits to Executive in the
event his or her employment is terminated or adversely affected after such a
change of control;
NOW, THEREFORE, in consideration of the mutual covenants and conditions
hereinafter set forth, the parties hereto covenant and agree as follows:
0
<PAGE>
A. TERM OF AGREEMENT.
This Agreement shall terminate upon the first to occur of (i) the
termination of Executive's employment with Bank and/or the Company for cause,
disability or voluntarily by Executive, and shall have occurred between the
date of this Agreement and March 12, 2002 (the "Term of this Agreement"), or
(ii) the termination of, or adverse effect on, Executive's employment with
Bank and/or the Company within twelve (12) months following a change of
control of the Company and/or the Bank, when the benefits provided for in
Paragraph E have been conferred and paid, or (iii) March 12, 2002.
B. EFFECT ON EMPLOYMENT
This Agreement is not intended to alter or otherwise change the current
employment relationship between Executive and the Bank and/or the Company
except as described in the following Paragraphs, and Executive further
acknowledges his employment at-will status with the Bank and the Company as
described under the Bank's Personnel Policy.
C. CHANGE OF CONTROL
No benefits shall be payable hereunder unless there shall have been a
Change of Control of the Bank and/or the Company and Executive's employment
with the Bank shall thereafter have been terminated in the manner set forth
in Paragraph D below, or Executive terminates employment for any of the
reasons set forth in paragraph D.3. below following such change of control.
For purposes of this Agreement, a "Change of Control" of the Bank and/or the
Company shall mean: (i) a merger with any Person (as defined below), where
the Bank and/or the Company is not the surviving corporation; (ii) a
consolidation with any Person, where the Bank and/or the Company is not the
surviving corporation; (iii) a transfer to any Person of all or substantially
all of the assets of the Bank and/or the Company; or (iv) an acquisition by
any Person of beneficial ownership of an aggregate of more than 25% of the
issued and outstanding shares of common stock of the Bank and/or the Company,
whether or not such Person or Persons are current shareholders of the Bank
and/or the Company at the time of such acquisition, coupled with or followed
by the election as directors of the Bank and/or the Company of persons who
were not directors at the time of such acquisition if such
1
<PAGE>
persons shall become a majority of the Board of Directors of the Bank and/or
the Company. As used in this Agreement, the term "Person" shall include any
financial institution, corporation, individual, partnership or association,
and any group formed for the purpose of acquiring, holding or disposing of
the common stock of the Bank and/or the Company, and the term "beneficial
ownership" shall have the same meaning as under Rule 13d-3 of the Securities
and Exchange Commission promulgated under the Securities Exchange Act of
1934, as amended.
D. TERMINATION FOLLOWING CHANGE OF CONTROL
If (i) a Change of Control shall have occurred, and if Executive's
employment with the Bank and/or the Company is terminated within twelve (12)
months after such Change of Control, or Executive terminates employment with
the Bank and/or the Company pursuant to Paragraph D.3. below, and unless such
termination is (a) because of his death, (b) for Cause or Disability (both as
defined below) or (c) by Executive other than for Good Reason (as defined
below), he shall be entitled to the benefits provided in Paragraph E.2.
below.
1. DISABILITY. If, as a result of Executive's incapacity due to
physical or mental illness, he shall have been absent from or unable to
perform his duties with the Bank and/or the Company for a period of three
consecutive months, and if within 30 days after written notice of termination
is given (which notice may not be given prior to the expiration of the
three-month period) he shall not have recommenced the full-time performance
of his duties, the Bank and/or the Company may terminate his employment for
"Disability."
2. CAUSE. Termination of Executive's employment for "Cause" shall mean
termination by the Bank and/or the Company for cause as defined in its
Personnel Policy or by a regulatory authority for any reason within its
purview.
3. GOOD REASON. Termination by Executive of his employment for "Good
Reason" shall mean termination by him after any of the following events
occurs without his express written consent:
(i) a reduction in Executive's annual salary or benefits;
2
<PAGE>
(ii) an adverse change in Executive's duties whereby he is
performing duties of a higher level employee than the duties being performed
by Executive at the time of the Change of Control;
(iii) Executive is required to work more than fifty (50) miles from
the Bank's Santa Maria Way office;
(iv) Executive is transferred to a department or division and is
required to perform duties that Executive is not familiar or knowledgeable.
4. NOTICE OF TERMINATION. Any purported termination by the Bank and/or
the Company, or by Executive, for Good Reason shall be communicated by
written "Notice of Termination" to the other party hereto. A Notice of
Termination shall mean a notice which indicates the specific termination
provision in this Agreement relied upon and sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of
Executive's employment under the provision so indicated.
5. DATE OF TERMINATION. The "Date of Termination" shall mean (i) if
Executive's employment is terminated by death, the date of death, (ii) if
Executive's employment is terminated for Disability, 30 days after Notice of
Termination is given (provided that Executive shall not have recommenced the
full-time performance of his duties during such 30-day period), (iii) if
Executive's employment is terminated pursuant to subparagraph 2 or 3 above,
the date specified in the Notice of Termination, which shall be not less than
30 days after the date such Notice of Termination is given, and (iv) if
Executive voluntarily terminates employment pursuant to Paragraph D.6., the
date specified in the Notice of Termination, which shall be not less than 60
days after the Notice of Termination is given.
6. VOLUNTARY OR INVOLUNTARY TERMINATION. If Executive should
voluntarily or involuntarily terminate employment with the Bank and/or the
Company prior to March 12, 2002, Executive shall not (i) solicit or employ
any of the Bank's employees, or employees formerly employed by the Bank or
the Company for a one hundred eighty (180) day period prior to Executive's
voluntary termination, nor (ii) remove, transfer or otherwise take any loan
or other file at the Bank or the Company during the time from the Notice of
Termination to the effective date of the voluntary termination.
E. BENEFITS UPON TERMINATION
3
<PAGE>
1. REGULAR COMPENSATION. If Executive's employment shall be terminated
by the Bank and/or the Company for Disability or for Cause, or because of his
death, or by a regulatory authority or by Executive other than for Good
Reason, within twelve (12) months after a Change of Control, or by the
Executive for Good Reason, the Bank and/or the Company shall pay him the full
accrued base salary and accrued incentive bonus through the Date of
Termination, less withholding required by law, at the rate in effect at the
time Notice of Termination is given or death occurs and the Bank and/or the
Company shall have no further obligation to him under this Agreement.
2. SEVERANCE BENEFITS. If Executive's employment shall be terminated
by the Bank and/or the Company other than for Disability, Cause or his death,
or by Executive for Good Reason within twelve (12) months of a Change of
Control, Executive shall be entitled to receive an amount equal to
Executive's base salary paid by the Bank and/or the Company to Executive for
the previous eighteen (18) months. Such amount shall be payable to Executive
in eighteen (18) equal monthly installments commencing the first of the month
following the Date of Termination or in a lump sum, as determined in the sole
discretion of Executive, less withholding as required by law. In addition,
the Bank and/or the Company shall continue payment of all of Executive's
benefits in effect on the date of Executive's termination including health
and other medical benefits for a period of eighteen (18) months from the Date
of Termination. Payment of the foregoing amounts shall discharge the Bank
and the Company from any further obligation and liability to Executive under
this Agreement.
Notwithstanding the foregoing, in the event that any payment or
benefit received or to be received by Executive in connection with the
termination of employment pursuant to the terms of this Agreement would not
be deductible (in whole or in part) by the Bank and/or the Company as a
result of Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code"), the amount of the payment shall be reduced until no portion is not
deductible as a result of Section 280G of the Code.
F. GENERAL PROVISIONS
1. RETURN OF DOCUMENTS. Executive expressly agrees that all manuals,
documents, files, reports, studies, instruments or other materials used
and/or developed by Executive related to banking or of a banking nature
during the term of his
4
<PAGE>
employment are solely the property of the Bank and/or the Company, and that
Executive has no right, title or interest therein. Upon termination of
Executive's employment, Executive shall promptly deliver possession of all of
said property to the Bank and/or the Company in good condition.
2. NOTICES. Any notice, request, demand or other communication
required or permitted hereunder shall be in writing and shall be deemed to be
properly given when personally served or forty-eight hours after deposit in
the United States mail, postage prepaid, in each case addressed to the Bank
and/or the Company as its head office location or to Executive at his last
residence address on the Bank or the Company's records. Either party may
change its address by written notice in accordance with this subparagraph.
3. BINDING EFFECT; SUCCESSORS. Except to the extent otherwise provided
herein, this Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective executors, administrators, successors and
assigns. The Bank and/or the Company will require any successor to all or
substantially all of its assets (other than by way of merger) to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Bank and/or the Company would be required to perform it if no
such succession had taken place. Failure of the Bank and/or the Company to
obtain such assumption and agreement prior to the effectiveness of any such
succession shall entitle Executive to the benefits from the Bank and/or the
Company in the same amount and on the same terms as he would be entitled to
hereunder if he terminated his employment for Good Reason, except that for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination.
4. APPLICABLE LAW. Except to the extent governed by the laws of the
United States, this Agreement is to be governed by and construed under the
laws of the State of California.
5. CAPTIONS AND PARAGRAPH HEADINGS. Captions and paragraph headings
used herein are for convenience only and are not part of this Agreement and
shall not be used in construing it.
5
<PAGE>
6. SEVERABILITY. Should any provision of this Agreement for any reason
be declared invalid, void or unenforceable by a court of competent
jurisdiction, the validly and binding effect of any remaining portion shall
not be affected, and the remaining portions of this Agreement shall remain in
full force and effect as if this Agreement had been executed with said
provision eliminated.
7. ENTIRE AGREEMENT. This Agreement contains the entire agreement of
the parties relating to termination of employment after a Change of Control
as provided herein. It supersedes any and all other agreements, either oral
or in writing, between the parties hereto with respect to such subject
matter, and does not otherwise modify, alter or change the employment
relationship of Executive with the Bank and/or the Company. Each party to
this Agreement acknowledges that no representations, inducements, promises or
agreements, oral or otherwise, have been made by any party, or anyone acting
on behalf of any party, which are not embodied herein, and that no other
agreement, statement or promise not contained in this Agreement concerning
its subject matter shall be valid or binding.
8. MODIFICATION; WAIVER. No provision of this Agreement may be
modified, waived or discharged unless such modification, waiver or discharge
is agreed to in writing and signed by Executive and such officer of the Bank
and/or the Company as may be specifically designated or authorized by the
Board of Directors or by the Chief Executive Officer. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.
9. ARBITRATION. In the event that any dispute shall arise between the
parties concerning the provisions of this Agreement or the performance of any
part of their obligations hereunder, or in the event of an alleged breach of
this Agreement by either of the parties hereto, and the parties are unable to
mutually adjust and settle same, such dispute or disputes shall be submitted
to binding arbitration pursuant to the applicable rules of the American
Arbitration Association, and the decision and determination of the
arbitrators shall be final and conclusive.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
BANK OF SANTA MARIA
By:
------------------------------------
A.J. Diani, Chairman of the Board
By:
------------------------------------
William L. Snelling, Secretary
BSM BANCORP
By:
------------------------------------
A.J. Diani, Chairman of the Board
By:
------------------------------------
William L. Snelling, Secretary
EXECUTIVE
---------------------------------------
F. Dean Fletcher
7
<PAGE>
AGREEMENT
This AGREEMENT is entered into this 12th day of March, 1997, by and
between BANK OF SANTA MARIA, a California corporation (hereinafter referred
to as the "Bank"), BSM BANCORP, a California corporation (hereinafter
referred to as the "Company") and JAMES D. GLINES (hereinafter referred to as
the "Executive").
RECITALS
WHEREAS, Executive has been an Executive Officer of the Bank since 1992
and an Executive Officer of the Company since 1996;
WHEREAS, the Bank desires to continue to avail itself of the skill,
knowledge and experience of Executive in order to ensure the successful
operation of the Bank and the Company without distraction should the Bank
and/or the Company be sold, be merged out of existence, or otherwise be
acquired by another financial institution, individuals or others, and
Executive is terminated, or Executive's employment with the Bank and/or the
Company is adversely affected; and
WHEREAS, to induce Executive to remain in the employ of the Bank and the
Company, and to continue as an Executive Officer of the Bank and the Company,
the Bank and the Company are willing to provide benefits to Executive in the
event his or her employment is terminated or adversely affected after such a
change of control;
NOW, THEREFORE, in consideration of the mutual covenants and conditions
hereinafter set forth, the parties hereto covenant and agree as follows:
0
<PAGE>
A. TERM OF AGREEMENT.
This Agreement shall terminate upon the first to occur of (i) the
termination of Executive's employment with Bank and/or the Company for cause,
disability or voluntarily by Executive, and shall have occurred between the
date of this Agreement and March 12, 2002 (the "Term of this Agreement"), or
(ii) the termination of, or adverse effect on, Executive's employment with
Bank and/or the Company within twelve (12) months following a change of
control of the Company and/or the Bank, when the benefits provided for in
Paragraph E have been conferred and paid, or (iii) March 12, 2002.
B. EFFECT ON EMPLOYMENT
This Agreement is not intended to alter or otherwise change the current
employment relationship between Executive and the Bank and/or the Company
except as described in the following Paragraphs, and Executive further
acknowledges his employment at-will status with the Bank and the Company as
described under the Bank's Personnel Policy.
C. CHANGE OF CONTROL
No benefits shall be payable hereunder unless there shall have been a
Change of Control of the Bank and/or the Company and Executive's employment
with the Bank shall thereafter have been terminated in the manner set forth
in Paragraph D below, or Executive terminates employment for any of the
reasons set forth in paragraph D.3. below following such change of control.
For purposes of this Agreement, a "Change of Control" of the Bank and/or the
Company shall mean: (i) a merger with any Person (as defined below), where
the Bank and/or the Company is not the surviving corporation; (ii) a
consolidation with any Person, where the Bank and/or the Company is not the
surviving corporation; (iii) a transfer to any Person of all or substantially
all of the assets of the Bank and/or the Company; or (iv) an acquisition by
any Person of beneficial ownership of an aggregate of more than 25% of the
issued and outstanding shares of common stock of the Bank and/or the Company,
whether or not such Person or Persons are current shareholders of the Bank
and/or the Company at the time of such acquisition, coupled with or followed
by the election as directors of the Bank and/or the Company of persons who
were not directors at the time of such acquisition if such
1
<PAGE>
persons shall become a majority of the Board of Directors of the Bank and/or
the Company. As used in this Agreement, the term "Person" shall include any
financial institution, corporation, individual, partnership or association,
and any group formed for the purpose of acquiring, holding or disposing of
the common stock of the Bank and/or the Company, and the term "beneficial
ownership" shall have the same meaning as under Rule 13d-3 of the Securities
and Exchange Commission promulgated under the Securities Exchange Act of
1934, as amended.
D. TERMINATION FOLLOWING CHANGE OF CONTROL
If (i) a Change of Control shall have occurred, and if Executive's
employment with the Bank and/or the Company is terminated within twelve (12)
months after such Change of Control, or Executive terminates employment with
the Bank and/or the Company pursuant to Paragraph D.3. below, and unless such
termination is (a) because of his death, (b) for Cause or Disability (both as
defined below) or (c) by Executive other than for Good Reason (as defined
below), he shall be entitled to the benefits provided in Paragraph E.2.
below.
1. DISABILITY. If, as a result of Executive's incapacity due to
physical or mental illness, he shall have been absent from or unable to
perform his duties with the Bank and/or the Company for a period of three
consecutive months, and if within 30 days after written notice of termination
is given (which notice may not be given prior to the expiration of the
three-month period) he shall not have recommenced the full-time performance
of his duties, the Bank and/or the Company may terminate his employment for
"Disability."
2. CAUSE. Termination of Executive's employment for "Cause" shall mean
termination by the Bank and/or the Company for cause as defined in its
Personnel Policy or by a regulatory authority for any reason within its
purview.
3. GOOD REASON. Termination by Executive of his employment for "Good
Reason" shall mean termination by him after any of the following events
occurs without his express written consent:
(i) a reduction in Executive's annual salary or benefits;
2
<PAGE>
(ii) an adverse change in Executive's duties whereby he is
performing duties of a higher level employee than the duties being performed
by Executive at the time of the Change of Control;
(iii) Executive is required to work more than fifty (50) miles from
the Bank's Santa Maria Way office;
(iv) Executive is transferred to a department or division and is
required to perform duties that Executive is not familiar or knowledgeable.
4. NOTICE OF TERMINATION. Any purported termination by the Bank and/or
the Company, or by Executive, for Good Reason shall be communicated by
written "Notice of Termination" to the other party hereto. A Notice of
Termination shall mean a notice which indicates the specific termination
provision in this Agreement relied upon and sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of
Executive's employment under the provision so indicated.
5. DATE OF TERMINATION. The "Date of Termination" shall mean (i) if
Executive's employment is terminated by death, the date of death, (ii) if
Executive's employment is terminated for Disability, 30 days after Notice of
Termination is given (provided that Executive shall not have recommenced the
full-time performance of his duties during such 30-day period), (iii) if
Executive's employment is terminated pursuant to subparagraph 2 or 3 above,
the date specified in the Notice of Termination, which shall be not less than
30 days after the date such Notice of Termination is given, and (iv) if
Executive voluntarily terminates employment pursuant to Paragraph D.6., the
date specified in the Notice of Termination, which shall be not less than 60
days after the Notice of Termination is given.
6. VOLUNTARY OR INVOLUNTARY TERMINATION. If Executive should
voluntarily or involuntarily terminate employment with the Bank and/or the
Company prior to March 12, 2002, Executive shall not (i) solicit or employ
any of the Bank's employees, or employees formerly employed by the Bank or
the Company for a one hundred eighty (180) day period prior to Executive's
voluntary termination, nor (ii) remove, transfer or otherwise take any loan
or other file at the Bank or the Company during the time from the Notice of
Termination to the effective date of the voluntary termination.
E. BENEFITS UPON TERMINATION
3
<PAGE>
1. REGULAR COMPENSATION. If Executive's employment shall be terminated
by the Bank and/or the Company for Disability or for Cause, or because of his
death, or by a regulatory authority or by Executive other than for Good
Reason, within twelve (12) months after a Change of Control, or by the
Executive for Good Reason, the Bank and/or the Company shall pay him the full
accrued base salary and accrued incentive bonus through the Date of
Termination, less withholding required by law, at the rate in effect at the
time Notice of Termination is given or death occurs and the Bank and/or the
Company shall have no further obligation to him under this Agreement.
2. SEVERANCE BENEFITS. If Executive's employment shall be terminated
by the Bank and/or the Company other than for Disability, Cause or his death,
or by Executive for Good Reason within twelve (12) months of a Change of
Control, Executive shall be entitled to receive an amount equal to
Executive's base salary paid by the Bank and/or the Company to Executive for
the previous eighteen (18) months. Such amount shall be payable to Executive
in eighteen (18) equal monthly installments commencing the first of the month
following the Date of Termination or in a lump sum, as determined in the sole
discretion of Executive, less withholding as required by law. In addition,
the Bank and/or the Company shall continue payment of all of Executive's
benefits in effect on the date of Executive's termination including health
and other medical benefits for a period of eighteen (18) months from the Date
of Termination. Payment of the foregoing amounts shall discharge the Bank
and the Company from any further obligation and liability to Executive under
this Agreement.
Notwithstanding the foregoing, in the event that any payment or
benefit received or to be received by Executive in connection with the
termination of employment pursuant to the terms of this Agreement would not
be deductible (in whole or in part) by the Bank and/or the Company as a
result of Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code"), the amount of the payment shall be reduced until no portion is not
deductible as a result of Section 280G of the Code.
F. GENERAL PROVISIONS
1. RETURN OF DOCUMENTS. Executive expressly agrees that all manuals,
documents, files, reports, studies, instruments or other materials used
and/or developed by Executive related to banking or of a banking nature
during the term of his
4
<PAGE>
employment are solely the property of the Bank and/or the Company, and that
Executive has no right, title or interest therein. Upon termination of
Executive's employment, Executive shall promptly deliver possession of all of
said property to the Bank and/or the Company in good condition.
2. NOTICES. Any notice, request, demand or other communication
required or permitted hereunder shall be in writing and shall be deemed to be
properly given when personally served or forty-eight hours after deposit in
the United States mail, postage prepaid, in each case addressed to the Bank
and/or the Company as its head office location or to Executive at his last
residence address on the Bank or the Company's records. Either party may
change its address by written notice in accordance with this subparagraph.
3. BINDING EFFECT; SUCCESSORS. Except to the extent otherwise provided
herein, this Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective executors, administrators, successors and
assigns. The Bank and/or the Company will require any successor to all or
substantially all of its assets (other than by way of merger) to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Bank and/or the Company would be required to perform it if no
such succession had taken place. Failure of the Bank and/or the Company to
obtain such assumption and agreement prior to the effectiveness of any such
succession shall entitle Executive to the benefits from the Bank and/or the
Company in the same amount and on the same terms as he would be entitled to
hereunder if he terminated his employment for Good Reason, except that for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination.
4. APPLICABLE LAW. Except to the extent governed by the laws of the
United States, this Agreement is to be governed by and construed under the
laws of the State of California.
5. CAPTIONS AND PARAGRAPH HEADINGS. Captions and paragraph headings
used herein are for convenience only and are not part of this Agreement and
shall not be used in construing it.
5
<PAGE>
6. SEVERABILITY. Should any provision of this Agreement for any reason
be declared invalid, void or unenforceable by a court of competent
jurisdiction, the validly and binding effect of any remaining portion shall
not be affected, and the remaining portions of this Agreement shall remain in
full force and effect as if this Agreement had been executed with said
provision eliminated.
7. ENTIRE AGREEMENT. This Agreement contains the entire agreement of
the parties relating to termination of employment after a Change of Control
as provided herein. It supersedes any and all other agreements, either oral
or in writing, between the parties hereto with respect to such subject
matter, and does not otherwise modify, alter or change the employment
relationship of Executive with the Bank and/or the Company. Each party to
this Agreement acknowledges that no representations, inducements, promises or
agreements, oral or otherwise, have been made by any party, or anyone acting
on behalf of any party, which are not embodied herein, and that no other
agreement, statement or promise not contained in this Agreement concerning
its subject matter shall be valid or binding.
8. MODIFICATION; WAIVER. No provision of this Agreement may be
modified, waived or discharged unless such modification, waiver or discharge
is agreed to in writing and signed by Executive and such officer of the Bank
and/or the Company as may be specifically designated or authorized by the
Board of Directors or by the Chief Executive Officer. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.
9. ARBITRATION. In the event that any dispute shall arise between the
parties concerning the provisions of this Agreement or the performance of any
part of their obligations hereunder, or in the event of an alleged breach of
this Agreement by either of the parties hereto, and the parties are unable to
mutually adjust and settle same, such dispute or disputes shall be submitted
to binding arbitration pursuant to the applicable rules of the American
Arbitration Association, and the decision and determination of the
arbitrators shall be final and conclusive.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
BANK OF SANTA MARIA
By:
----------------------------------------
A.J. Diani, Chairman of the Board
By:
----------------------------------------
William L. Snelling, Secretary
BSM BANCORP
By:
----------------------------------------
A.J. Diani, Chairman of the Board
By:
----------------------------------------
William L. Snelling, Secretary
EXECUTIVE
-------------------------------------------
James D. Glines
7
<PAGE>
AGREEMENT
This AGREEMENT is entered into this 12th day of March, 1997, by and
between BANK OF SANTA MARIA, a California corporation (hereinafter referred
to as the "Bank"), BSM BANCORP, a California corporation (hereinafter
referred to as the "Company") and WILLIAM A. HARES (hereinafter referred to
as the "Executive").
RECITALS
WHEREAS, Executive has been an Executive Officer of the Bank since 1978
and an Executive Officer of the Company since 1996;
WHEREAS, the Bank desires to continue to avail itself of the skill,
knowledge and experience of Executive in order to ensure the successful
operation of the Bank and the Company without distraction should the Bank
and/or the Company be sold, be merged out of existence, or otherwise be
acquired by another financial institution, individuals or others, and
Executive is terminated, or Executive's employment with the Bank and/or the
Company is adversely affected; and
WHEREAS, to induce Executive to remain in the employ of the Bank and the
Company, and to continue as an Executive Officer of the Bank and the Company,
the Bank and the Company are willing to provide benefits to Executive in the
event his or her employment is terminated or adversely affected after such a
change of control;
NOW, THEREFORE, in consideration of the mutual covenants and conditions
hereinafter set forth, the parties hereto covenant and agree as follows:
0
<PAGE>
A. TERM OF AGREEMENT.
This Agreement shall terminate upon the first to occur of (i) the
termination of Executive's employment with Bank and/or the Company for cause,
disability or voluntarily by Executive, and shall have occurred between the
date of this Agreement and March 12, 2002 (the "Term of this Agreement"), or
(ii) the termination of, or adverse effect on, Executive's employment with
Bank and/or the Company within twelve (12) months following a change of
control of the Company and/or the Bank, when the benefits provided for in
Paragraph E have been conferred and paid, or (iii) March 12, 2002.
B. EFFECT ON EMPLOYMENT
This Agreement is not intended to alter or otherwise change the current
employment relationship between Executive and the Bank and/or the Company
except as described in the following Paragraphs, and Executive further
acknowledges his employment at-will status with the Bank and the Company as
described under the Bank's Personnel Policy.
C. CHANGE OF CONTROL
No benefits shall be payable hereunder unless there shall have been a
Change of Control of the Bank and/or the Company and Executive's employment
with the Bank shall thereafter have been terminated in the manner set forth
in Paragraph D below, or Executive terminates employment for any of the
reasons set forth in paragraph D.3. below following such change of control.
For purposes of this Agreement, a "Change of Control" of the Bank and/or the
Company shall mean: (i) a merger with any Person (as defined below), where
the Bank and/or the Company is not the surviving corporation; (ii) a
consolidation with any Person, where the Bank and/or the Company is not the
surviving corporation; (iii) a transfer to any Person of all or substantially
all of the assets of the Bank and/or the Company; or (iv) an acquisition by
any Person of beneficial ownership of an aggregate of more than 25% of the
issued and outstanding shares of common stock of the Bank and/or the Company,
whether or not such Person or Persons are current shareholders of the Bank
and/or the Company at the time of such acquisition, coupled with or followed
by the election as directors of the Bank and/or the Company of persons who
were not directors at the time of such acquisition if such
1
<PAGE>
persons shall become a majority of the Board of Directors of the Bank and/or
the Company. As used in this Agreement, the term "Person" shall include any
financial institution, corporation, individual, partnership or association,
and any group formed for the purpose of acquiring, holding or disposing of
the common stock of the Bank and/or the Company, and the term "beneficial
ownership" shall have the same meaning as under Rule 13d-3 of the Securities
and Exchange Commission promulgated under the Securities Exchange Act of
1934, as amended.
D. TERMINATION FOLLOWING CHANGE OF CONTROL
If (i) a Change of Control shall have occurred, and if Executive's
employment with the Bank and/or the Company is terminated within twenty-four
(24) months after such Change of Control, or Executive terminates employment
with the Bank and/or the Company pursuant to Paragraph D.3. below, and unless
such termination is (a) because of his death, (b) for Cause or Disability
(both as defined below) or (c) by Executive other than for Good Reason (as
defined below), he shall be entitled to the benefits provided in Paragraph
E.2. below.
1. DISABILITY. If, as a result of Executive's incapacity due to
physical or mental illness, he shall have been absent from or unable to
perform his duties with the Bank and/or the Company for a period of three
consecutive months, and if within 30 days after written notice of termination
is given (which notice may not be given prior to the expiration of the
three-month period) he shall not have recommenced the full-time performance
of his duties, the Bank and/or the Company may terminate his employment for
"Disability."
2. CAUSE. Termination of Executive's employment for "Cause" shall mean
termination by the Bank and/or the Company for cause as defined in its
Personnel Policy or by a regulatory authority for any reason within its
purview.
3. GOOD REASON. Termination by Executive of his employment for "Good
Reason" shall mean termination by him after any of the following events
occurs without his express written consent:
(i) a reduction in Executive's annual salary or benefits;
2
<PAGE>
(ii) an adverse change in Executive's duties whereby he is
performing duties of a higher level employee than the duties being performed
by Executive at the time of the Change of Control;
(iii) Executive is required to work more than fifty (50) miles from
the Bank's Santa Maria Way office;
(iv) Executive is transferred to a department or division and is
required to perform duties that Executive is not familiar or knowledgeable.
4. NOTICE OF TERMINATION. Any purported termination by the Bank and/or
the Company, or by Executive, for Good Reason shall be communicated by
written "Notice of Termination" to the other party hereto. A Notice of
Termination shall mean a notice which indicates the specific termination
provision in this Agreement relied upon and sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of
Executive's employment under the provision so indicated.
5. DATE OF TERMINATION. The "Date of Termination" shall mean (i) if
Executive's employment is terminated by death, the date of death, (ii) if
Executive's employment is terminated for Disability, 30 days after Notice of
Termination is given (provided that Executive shall not have recommenced the
full-time performance of his duties during such 30-day period), (iii) if
Executive's employment is terminated pursuant to subparagraph 2 or 3 above,
the date specified in the Notice of Termination, which shall be not less than
30 days after the date such Notice of Termination is given, and (iv) if
Executive voluntarily terminates employment pursuant to Paragraph D.6., the
date specified in the Notice of Termination, which shall be not less than 60
days after the Notice of Termination is given.
6. VOLUNTARY OR INVOLUNTARY TERMINATION. If Executive should
voluntarily or involuntarily terminate employment with the Bank and/or the
Company prior to March 12, 2002, Executive shall not (i) solicit or employ
any of the Bank's employees, or employees formerly employed by the Bank or
the Company for a one hundred eighty (180) day period prior to Executive's
voluntary termination, nor (ii) remove, transfer or otherwise take any loan
or other file at the Bank or the Company during the time from the Notice of
Termination to the effective date of the voluntary termination.
E. BENEFITS UPON TERMINATION
3
<PAGE>
1. REGULAR COMPENSATION. If Executive's employment shall be terminated
by the Bank and/or the Company for Disability or for Cause, or because of his
death, or by a regulatory authority or by Executive other than for Good
Reason, within twenty-four (24) months after a Change of Control, or by the
Executive for Good Reason, the Bank and/or the Company shall pay him the full
accrued base salary and accrued incentive bonus through the Date of
Termination, less withholding required by law, at the rate in effect at the
time Notice of Termination is given or death occurs and the Bank and/or the
Company shall have no further obligation to him under this Agreement.
2. SEVERANCE BENEFITS. If Executive's employment shall be terminated
by the Bank and/or the Company other than for Disability, Cause or his death,
or by Executive for Good Reason within twenty-four (24) months of a Change of
Control, Executive shall be entitled to receive an amount equal to
Executive's base salary paid by the Bank and/or the Company to Executive for
the previous twenty-four (24) months. Such amount shall be payable to
Executive in twenty-four (24) equal monthly installments commencing the first
of the month following the Date of Termination or in a lump sum, as
determined in the sole discretion of Executive, less withholding as required
by law. In addition, the Bank and/or the Company shall continue payment of
all of Executive's benefits in effect on the date of Executive's termination
including health and other medical benefits for a period of twenty-four (24)
months from the Date of Termination. Payment of the foregoing amounts shall
discharge the Bank and the Company from any further obligation and liability
to Executive under this Agreement.
Notwithstanding the foregoing, in the event that any payment or
benefit received or to be received by Executive in connection with the
termination of employment pursuant to the terms of this Agreement would not
be deductible (in whole or in part) by the Bank and/or the Company as a
result of Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code"), the amount of the payment shall be reduced until no portion is not
deductible as a result of Section 280G of the Code.
F. GENERAL PROVISIONS
1. RETURN OF DOCUMENTS. Executive expressly agrees that all manuals,
documents, files, reports, studies, instruments or other materials used
and/or developed by Executive related to banking or of a banking nature
during the term of his employment are solely the property of the Bank and/or
the Company, and that
4
<PAGE>
Executive has no right, title or interest therein. Upon termination of
Executive's employment, Executive shall promptly deliver possession of all of
said property to the Bank and/or the Company in good condition.
2. NOTICES. Any notice, request, demand or other communication
required or permitted hereunder shall be in writing and shall be deemed to be
properly given when personally served or forty-eight hours after deposit in
the United States mail, postage prepaid, in each case addressed to the Bank
and/or the Company as its head office location or to Executive at his last
residence address on the Bank or the Company's records. Either party may
change its address by written notice in accordance with this subparagraph.
3. BINDING EFFECT; SUCCESSORS. Except to the extent otherwise provided
herein, this Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective executors, administrators, successors and
assigns. The Bank and/or the Company will require any successor to all or
substantially all of its assets (other than by way of merger) to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Bank and/or the Company would be required to perform it if no
such succession had taken place. Failure of the Bank and/or the Company to
obtain such assumption and agreement prior to the effectiveness of any such
succession shall entitle Executive to the benefits from the Bank and/or the
Company in the same amount and on the same terms as he would be entitled to
hereunder if he terminated his employment for Good Reason, except that for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination.
4. APPLICABLE LAW. Except to the extent governed by the laws of the
United States, this Agreement is to be governed by and construed under the
laws of the State of California.
5. CAPTIONS AND PARAGRAPH HEADINGS. Captions and paragraph headings
used herein are for convenience only and are not part of this Agreement and
shall not be used in construing it.
6. SEVERABILITY. Should any provision of this Agreement for any reason
be declared invalid, void or unenforceable by a court of competent
jurisdiction, the validly
5
<PAGE>
and binding effect of any remaining portion shall not be affected, and the
remaining portions of this Agreement shall remain in full force and effect as
if this Agreement had been executed with said provision eliminated.
7. ENTIRE AGREEMENT. This Agreement contains the entire agreement of
the parties relating to termination of employment after a Change of Control
as provided herein. It supersedes any and all other agreements, either oral
or in writing, between the parties hereto with respect to such subject
matter, and does not otherwise modify, alter or change the employment
relationship of Executive with the Bank and/or the Company. Each party to
this Agreement acknowledges that no representations, inducements, promises or
agreements, oral or otherwise, have been made by any party, or anyone acting
on behalf of any party, which are not embodied herein, and that no other
agreement, statement or promise not contained in this Agreement concerning
its subject matter shall be valid or binding.
8. MODIFICATION; WAIVER. No provision of this Agreement may be
modified, waived or discharged unless such modification, waiver or discharge
is agreed to in writing and signed by Executive and such officer of the Bank
and/or the Company as may be specifically designated or authorized by the
Board of Directors or by the Chief Executive Officer. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.
9. ARBITRATION. In the event that any dispute shall arise between the
parties concerning the provisions of this Agreement or the performance of any
part of their obligations hereunder, or in the event of an alleged breach of
this Agreement by either of the parties hereto, and the parties are unable to
mutually adjust and settle same, such dispute or disputes shall be submitted
to binding arbitration pursuant to the applicable rules of the American
Arbitration Association, and the decision and determination of the
arbitrators shall be final and conclusive.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
BANK OF SANTA MARIA
By:
----------------------------------------
A.J. Diani, Chairman of the Board
By:
----------------------------------------
William L. Snelling, Secretary
BSM BANCORP
By:
----------------------------------------
A.J. Diani, Chairman of the Board
By:
----------------------------------------
William L. Snelling, Secretary
EXECUTIVE
-------------------------------------------
William A. Hares
7
<PAGE>
AGREEMENT
This AGREEMENT is entered into this 12th day of March, 1997, by and
between BANK OF SANTA MARIA, a California corporation (hereinafter referred
to as the "Bank"), BSM BANCORP, a California corporation (hereinafter
referred to as the "Company") and CAROL BRADFIELD (hereinafter referred to as
the "Executive").
RECITALS
WHEREAS, Executive has been an Executive Officer of the Bank since 1996
and an Executive Officer of the Company since 1996;
WHEREAS, the Bank desires to continue to avail itself of the skill,
knowledge and experience of Executive in order to ensure the successful
operation of the Bank and the Company without distraction should the Bank
and/or the Company be sold, be merged out of existence, or otherwise be
acquired by another financial institution, individuals or others, and
Executive is terminated, or Executive's employment with the Bank and/or the
Company is adversely affected; and
WHEREAS, to induce Executive to remain in the employ of the Bank and the
Company, and to continue as an Executive Officer of the Bank and the Company,
the Bank and the Company are willing to provide benefits to Executive in the
event his or her employment is terminated or adversely affected after such a
change of control;
NOW, THEREFORE, in consideration of the mutual covenants and conditions
hereinafter set forth, the parties hereto covenant and agree as follows:
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<PAGE>
A. TERM OF AGREEMENT.
This Agreement shall terminate upon the first to occur of (i) the
termination of Executive's employment with Bank and/or the Company for cause,
disability or voluntarily by Executive, and shall have occurred between the
date of this Agreement and March 12, 2002 (the "Term of this Agreement"), or
(ii) the termination of, or adverse effect on, Executive's employment with
Bank and/or the Company within twelve (12) months following a change of
control of the Company and/or the Bank, when the benefits provided for in
Paragraph E have been conferred and paid, or (iii) March 12, 2002.
B. EFFECT ON EMPLOYMENT
This Agreement is not intended to alter or otherwise change the current
employment relationship between Executive and the Bank and/or the Company
except as described in the following Paragraphs, and Executive further
acknowledges his employment at-will status with the Bank and the Company as
described under the Bank's Personnel Policy.
C. CHANGE OF CONTROL
No benefits shall be payable hereunder unless there shall have been a
Change of Control of the Bank and/or the Company and Executive's employment
with the Bank shall thereafter have been terminated in the manner set forth
in Paragraph D below, or Executive terminates employment for any of the
reasons set forth in paragraph D.3. below following such change of control.
For purposes of this Agreement, a "Change of Control" of the Bank and/or the
Company shall mean: (i) a merger with any Person (as defined below), where
the Bank and/or the Company is not the surviving corporation; (ii) a
consolidation with any Person, where the Bank and/or the Company is not the
surviving corporation; (iii) a transfer to any Person of all or substantially
all of the assets of the Bank and/or the Company; or (iv) an acquisition by
any Person of beneficial ownership of an aggregate of more than 25% of the
issued and outstanding shares of common stock of the Bank and/or the Company,
whether or not such Person or Persons are current shareholders of the Bank
and/or the Company at the time of such acquisition, coupled with or followed
by the election as directors of the Bank and/or the Company of persons who
were not directors at the time of such acquisition if such
1
<PAGE>
persons shall become a majority of the Board of Directors of the Bank and/or
the Company. As used in this Agreement, the term "Person" shall include any
financial institution, corporation, individual, partnership or association,
and any group formed for the purpose of acquiring, holding or disposing of
the common stock of the Bank and/or the Company, and the term "beneficial
ownership" shall have the same meaning as under Rule 13d-3 of the Securities
and Exchange Commission promulgated under the Securities Exchange Act of
1934, as amended.
D. TERMINATION FOLLOWING CHANGE OF CONTROL
If (i) a Change of Control shall have occurred, and if Executive's
employment with the Bank and/or the Company is terminated within twelve (12)
months after such Change of Control, or Executive terminates employment with
the Bank and/or the Company pursuant to Paragraph D.3. below, and unless such
termination is (a) because of his death, (b) for Cause or Disability (both as
defined below) or (c) by Executive other than for Good Reason (as defined
below), he shall be entitled to the benefits provided in Paragraph E.2.
below.
1. DISABILITY. If, as a result of Executive's incapacity due to
physical or mental illness, he shall have been absent from or unable to
perform his duties with the Bank and/or the Company for a period of three
consecutive months, and if within 30 days after written notice of termination
is given (which notice may not be given prior to the expiration of the
three-month period) he shall not have recommenced the full-time performance
of his duties, the Bank and/or the Company may terminate his employment for
"Disability."
2. CAUSE. Termination of Executive's employment for "Cause" shall mean
termination by the Bank and/or the Company for cause as defined in its
Personnel Policy or by a regulatory authority for any reason within its
purview.
3. GOOD REASON. Termination by Executive of his employment for "Good
Reason" shall mean termination by him after any of the following events
occurs without his express written consent:
(i) a reduction in Executive's annual salary or benefits;
2
<PAGE>
(ii) an adverse change in Executive's duties whereby he is
performing duties of a higher level employee than the duties being performed
by Executive at the time of the Change of Control;
(iii) Executive is required to work more than fifty (50) miles from
the Bank's Santa Maria Way office;
(iv) Executive is transferred to a department or division and is
required to perform duties that Executive is not familiar or knowledgeable.
4. NOTICE OF TERMINATION. Any purported termination by the Bank and/or
the Company, or by Executive, for Good Reason shall be communicated by
written "Notice of Termination" to the other party hereto. A Notice of
Termination shall mean a notice which indicates the specific termination
provision in this Agreement relied upon and sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of
Executive's employment under the provision so indicated.
5. DATE OF TERMINATION. The "Date of Termination" shall mean (i) if
Executive's employment is terminated by death, the date of death, (ii) if
Executive's employment is terminated for Disability, 30 days after Notice of
Termination is given (provided that Executive shall not have recommenced the
full-time performance of his duties during such 30-day period), (iii) if
Executive's employment is terminated pursuant to subparagraph 2 or 3 above,
the date specified in the Notice of Termination, which shall be not less than
30 days after the date such Notice of Termination is given, and (iv) if
Executive voluntarily terminates employment pursuant to Paragraph D.6., the
date specified in the Notice of Termination, which shall be not less than 60
days after the Notice of Termination is given.
6. VOLUNTARY OR INVOLUNTARY TERMINATION. If Executive should
voluntarily or involuntarily terminate employment with the Bank and/or the
Company prior to March 12, 2002, Executive shall not (i) solicit or employ
any of the Bank's employees, or employees formerly employed by the Bank or
the Company for a one hundred eighty (180) day period prior to Executive's
voluntary termination, nor (ii) remove, transfer or otherwise take any loan
or other file at the Bank or the Company during the time from the Notice of
Termination to the effective date of the voluntary termination.
E. BENEFITS UPON TERMINATION
3
<PAGE>
1. REGULAR COMPENSATION. If Executive's employment shall be terminated
by the Bank and/or the Company for Disability or for Cause, or because of his
death, or by a regulatory authority or by Executive other than for Good
Reason, within twelve (12) months after a Change of Control, or by the
Executive for Good Reason, the Bank and/or the Company shall pay him the full
accrued base salary and accrued incentive bonus through the Date of
Termination, less withholding required by law, at the rate in effect at the
time Notice of Termination is given or death occurs and the Bank and/or the
Company shall have no further obligation to him under this Agreement.
2. SEVERANCE BENEFITS. If Executive's employment shall be terminated
by the Bank and/or the Company other than for Disability, Cause or his death,
or by Executive for Good Reason within twelve (12) months of a Change of
Control, Executive shall be entitled to receive an amount equal to
Executive's base salary paid by the Bank and/or the Company to Executive for
the previous eighteen (18) months. Such amount shall be payable to Executive
in eighteen (18) equal monthly installments commencing the first of the month
following the Date of Termination or in a lump sum, as determined in the sole
discretion of Executive, less withholding as required by law. In addition,
the Bank and/or the Company shall continue payment of all of Executive's
benefits in effect on the date of Executive's termination including health
and other medical benefits for a period of eighteen (18) months from the Date
of Termination. Payment of the foregoing amounts shall discharge the Bank
and the Company from any further obligation and liability to Executive under
this Agreement.
Notwithstanding the foregoing, in the event that any payment or
benefit received or to be received by Executive in connection with the
termination of employment pursuant to the terms of this Agreement would not
be deductible (in whole or in part) by the Bank and/or the Company as a
result of Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code"), the amount of the payment shall be reduced until no portion is not
deductible as a result of Section 280G of the Code.
F. GENERAL PROVISIONS
1. RETURN OF DOCUMENTS. Executive expressly agrees that all manuals,
documents, files, reports, studies, instruments or other materials used
and/or developed by Executive related to banking or of a banking nature
during the term of his
4
<PAGE>
employment are solely the property of the Bank and/or the Company, and that
Executive has no right, title or interest therein. Upon termination of
Executive's employment, Executive shall promptly deliver possession of all of
said property to the Bank and/or the Company in good condition.
2. NOTICES. Any notice, request, demand or other communication
required or permitted hereunder shall be in writing and shall be deemed to be
properly given when personally served or forty-eight hours after deposit in
the United States mail, postage prepaid, in each case addressed to the Bank
and/or the Company as its head office location or to Executive at his last
residence address on the Bank or the Company's records. Either party may
change its address by written notice in accordance with this subparagraph.
3. BINDING EFFECT; SUCCESSORS. Except to the extent otherwise provided
herein, this Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective executors, administrators, successors and
assigns. The Bank and/or the Company will require any successor to all or
substantially all of its assets (other than by way of merger) to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Bank and/or the Company would be required to perform it if no
such succession had taken place. Failure of the Bank and/or the Company to
obtain such assumption and agreement prior to the effectiveness of any such
succession shall entitle Executive to the benefits from the Bank and/or the
Company in the same amount and on the same terms as he would be entitled to
hereunder if he terminated his employment for Good Reason, except that for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination.
4. APPLICABLE LAW. Except to the extent governed by the laws of the
United States, this Agreement is to be governed by and construed under the
laws of the State of California.
5. CAPTIONS AND PARAGRAPH HEADINGS. Captions and paragraph headings
used herein are for convenience only and are not part of this Agreement and
shall not be used in construing it.
5
<PAGE>
6. SEVERABILITY. Should any provision of this Agreement for any reason
be declared invalid, void or unenforceable by a court of competent
jurisdiction, the validly and binding effect of any remaining portion shall
not be affected, and the remaining portions of this Agreement shall remain in
full force and effect as if this Agreement had been executed with said
provision eliminated.
7. ENTIRE AGREEMENT. This Agreement contains the entire agreement of
the parties relating to termination of employment after a Change of Control
as provided herein. It supersedes any and all other agreements, either oral
or in writing, between the parties hereto with respect to such subject
matter, and does not otherwise modify, alter or change the employment
relationship of Executive with the Bank and/or the Company. Each party to
this Agreement acknowledges that no representations, inducements, promises or
agreements, oral or otherwise, have been made by any party, or anyone acting
on behalf of any party, which are not embodied herein, and that no other
agreement, statement or promise not contained in this Agreement concerning
its subject matter shall be valid or binding.
8. MODIFICATION; WAIVER. No provision of this Agreement may be
modified, waived or discharged unless such modification, waiver or discharge
is agreed to in writing and signed by Executive and such officer of the Bank
and/or the Company as may be specifically designated or authorized by the
Board of Directors or by the Chief Executive Officer. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.
9. ARBITRATION. In the event that any dispute shall arise between the
parties concerning the provisions of this Agreement or the performance of any
part of their obligations hereunder, or in the event of an alleged breach of
this Agreement by either of the parties hereto, and the parties are unable to
mutually adjust and settle same, such dispute or disputes shall be submitted
to binding arbitration pursuant to the applicable rules of the American
Arbitration Association, and the decision and determination of the
arbitrators shall be final and conclusive.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
BANK OF SANTA MARIA
By:
------------------------------------
A.J. Diani, Chairman of the Board
By:
------------------------------------
William L. Snelling, Secretary
BSM BANCORP
By:
------------------------------------
A.J. Diani, Chairman of the Board
By:
------------------------------------
William L. Snelling, Secretary
EXECUTIVE
---------------------------------------
Carol Bradfield
7
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<PAGE>
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<PERIOD-START> JAN-01-1997
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<INT-BEARING-DEPOSITS> 217,831,639
<FED-FUNDS-SOLD> 9,503,000
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<ALLOWANCE> (2,678,343)
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0
0
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