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EXHIBIT 99.4
SENTINEL COMMUNITY BANK
1999 STOCK OPTION PLAN
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SENTINEL COMMUNITY BANK
1999 STOCK OPTION PLAN
I. DEFINITIONS.
1.1 DEFINITIONS.
(a) "Board" shall mean the Board of Directors of the Bank.
(b) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(c) "Committee" shall mean the committee appointed by the
Board and consisting of two or more members, the majority of which are
Non-employee directors.
(d) "Common Stock" shall mean the common stock of the Bank,
par value $.001 per share.
(e) "Bank" shall mean Sentinel Community Bank, a
federally-chartered Thrift association, and its successors.
(f) "Director" shall mean a member of the Board.
(g) "Non-employee director" shall be the meaning set forth in
Rule 16b-3 of the Exchange Act.
(h) "Eligible Person" shall mean any Director, officer or
employee of the Bank.
(i) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended
(j) "Fair Market Value" shall mean, with respect to a Share,
the closing bid of the common stock as quoted on the OTC Bulletin Board or, if
not available or deemed not representative as determined by the Board in good
faith, as determined in accordance with a valuation methodology approved by the
Board in good faith.
(k) "Incentive Stock Option" shall mean an option which is
designated as an incentive stock option within the meaning of Section 422 of the
Code, the award of which contains such provisions as are necessary to comply
with that section.
(l) "Nonqualified Stock Option" shall mean an option which is
not designated as an Incentive Stock Option.
(m) "Officer" shall mean an officer of the Bank within the
meaning of Section 16 of the Exchange Act.
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(n) "Option" shall mean an option to purchase Common Stock
under this Plan. An Option shall be designated by the Committee as an Incentive
Stock Option or a Nonqualified Stock Option.
(o) "Optionee" shall mean an Eligible Person, who has been
granted an Option.
(p) "Personal Representative" shall mean the person or persons
who, upon the disability or incompetence of an Optionee, shall have acquired on
behalf of the Optionee, by legal proceeding or otherwise, the power to exercise
the rights and receive the benefits specified in this Plan.
(q) "Plan" shall mean the Sentinel Community Bank 1999 Stock
Option Plan.
(r) "Retirement" shall mean termination of employment with the
Bank pursuant to the Bank's retirement policy, as in effect from time to time.
(s) "Secretary" shall mean the Secretary of the Bank.
(t) "Shares" shall mean, as of the adoption of the Plan by the
Board, the shares of the Bank's Common Stock.
(u) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(v) "Total Disability" shall mean a "permanent and total
disability" within the meaning of Section 22(e)(3) of the Code.
II. THE PLAN.
2.1 PURPOSE
The purpose of the Plan is to promote the success of the Bank by
providing an additional means of attracting, retaining, and motivating
high-quality personnel. This will be accomplished by furnishing long-term
incentives to, and an opportunity to acquire stock by, Eligible Persons for high
levels of performance in order to improve the overall financial performance of
the Bank.
2.2 ADMINISTRATION
(a) This Plan shall be administered by the Committee. Action
of the Committee with respect to the administration of this Plan shall be taken
pursuant to a majority vote or the written consent of a majority of its members.
In the event action by the Committee is taken by written consent, the action
shall be deemed to have been taken at the time specified in the consent or, if
none is specified, at the time of the last signature. The Committee may delegate
administrative functions to individuals who are officers or employees of the
Bank.
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(b) Subject to the express provisions of this Plan, the
Committee shall have the authority to construe and interpret this Plan and any
agreements defining the rights and obligations of the Bank and Optionees under
this Plan, to further define the terms used in this Plan, to prescribe, amend,
and rescind rules and regulations relating to the administration of this Plan,
to determine the duration and purposes of leaves of absence which may be granted
to Optionees without constituting a termination of their employment for purposes
of this Plan, and to make all other determinations necessary or advisable for
the administration of this Plan. The determinations of the Committee on the
foregoing matters shall be conclusive.
(c) Any action taken by, or inaction of, the Bank, the Board,
or the Committee relating to this Plan, shall be within the absolute discretion
of that entity or body and shall be conclusive and binding upon all persons.
Except in circumstances involving bad faith, no member of the Board or
Committee, or officer of the Bank, shall be liable for any such action or
inaction of the entity or body, of another person, or of himself or herself,
and, except for circumstances involving bad faith, all members of the Committee
shall be indemnified by the Bank against, and held harmless from, any loss,
cost, liability, or expense which may be imposed upon or incurred by him in
connection with or resulting from any claim, action, suit, or proceeding in
which such member may be involved by reason of any such action, determination,
or interpretation, and shall be fully reimbursed by the Bank for any and all
amounts paid by such person in satisfaction of judgments against him in any such
action, suit, or proceeding; provided, that such member shall give the Bank an
opportunity, by written notice to the Committee, to defend the same at its own
expense before he undertakes to defend it on his own behalf. Subject only to
compliance with the express provisions hereof, the Board and Committee may act
in their absolute discretion in matters related to this Plan.
(d) Subject to Section 1.1(c), the Board, at any time it so
desires, may increase or decrease the number of members of the Committee, may
remove from membership on the Committee all or any portion of its members, and
may appoint such person or persons as it desires to fill any vacancy existing on
the Committee, whether caused by removal, resignation, or otherwise.
2.3 STOCK SUBJECT TO THE PLAN
(a) The stock to be offered under this Plan shall be Shares of
the Bank's authorized and unissued Common Stock. The aggregate amount of Common
Stock that may be issued or transferred pursuant to Options granted under this
Plan shall not exceed 37,286 Shares, subject to adjustment as set forth in
Section 4.2. If any Option shall lapse or terminate without having been
exercised in full, the unpurchased Shares subject thereto shall again be
available for purposes of this Plan.
(b) The number of shares subject to outstanding stock Options
held by any single Optionee may not exceed ten percent (10%) of the total
outstanding shares of the same class and series of the Bank.
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2.4 GRANT OF OPTIONS
(a) Subject to the express provisions of the Plan, the
Committee shall determine from the Eligible Persons those individuals to whom
Options under the Plan shall be granted, the terms of Options (which need not be
identical), and the number of Shares of Common Stock subject to each Option.
Each Option shall be subject to the terms and conditions set forth in the Plan
and such other terms and conditions established by the Committee as are not
inconsistent with the purpose and provisions of the Plan. The grant of an Option
is made on the date set forth in the Option Agreement between the Bank and the
Optionee (the "Grant Date").
(b) Each Board member at the time of the adoption of this Plan
who a Board member elected at the 1997 annual meeting shall be granted options
to purchase 4,692 shares of common stock at the Fair Market Value subject to a
three year vesting schedule. The foregoing excludes directors who received
options to purchase 4,692 shares of common stock pursuant to the 1996 Stock
Option Plan.
(c) Each director shall receive options to purchase 200 shares
of common stock at Fair Market Value beginning on the effective date of this
Plan. Further at each annual shareholders' meeting after the adoption of this
Plan, each director shall receive options to purchase 200 shares of common stock
at Fair Market Value, provided that such director served his or her entire term
of office.
2.5 EXERCISE OF OPTIONS
An Option shall be deemed to be exercised when the Secretary of the
Bank receives written notice of such exercise from the Optionee, together with
payment of the purchase price made in accordance with Section 3.2.
Notwithstanding any other provision of this Plan, the Committee may impose, by
rule and in Option Agreements, such conditions upon the exercise of Options
(including, without limitation, conditions limiting the time of exercise to
specified periods) as may be required to satisfy applicable regulatory
requirements, including, without limitation, Rule 16b-3 (or any successor rule)
of the Exchange Act.
III. OPTIONS.
3.1 GRANTS
One or more Options may be granted to any Eligible Person. Each Option
so granted shall be designated by the Committee as either a Nonqualified Stock
Option or an Incentive Stock Option.
3.2 OPTION PRICE
The purchase price per Share of Common Stock covered by each Option
shall be determined by the Committee, but in the case of Incentive Stock Options
shall not be less than 100% (110% in the case of an Optionee who owns more than
10% of the total combined voting power of all classes of stock of the Bank) of
the Fair Market Value of the Common Stock on the date the Incentive Stock
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Option is granted. The purchase price of any Shares purchased shall be paid
in full at the time of each purchase (i) in cash or by check payable to the
order of the Bank or (ii) if authorized by the Committee or specified in the
option being exercised, by a promissory note made by the optionee in favor of
Sentinel, upon the terms and conditions determined by the Committee, but at a
rate of interest at least equal to the imputed interest specified under
Section 483 or Section 1274 of the Code, whichever is applicable, and secured
by the common stock issuable upon exercise in compliance with applicable law
(including, without limitation, state corporate law and federal margin
requirements).
3.3 OPTION PERIOD
Each Option and all rights or obligations thereunder shall expire on
such date as shall be determined by the Committee, but not later than 10 years
after the grant of the Option (5 years in the case of an incentive stock option
when the Optionee who owns more than 10% of the total combined voting power of
all classes of stock of the Bank), and shall be subject to earlier termination
as hereinafter provided.
3.4 EXERCISE OF OPTIONS
Except as otherwise provided in Section 4.3, an Option may become
exercisable, in whole or in part, on the date or dates specified in the Option
Agreement and thereafter shall remain exercisable until the expiration or
earlier termination of the Option. No Option shall be exercisable except in
respect of whole Shares, and fractional share interests shall be disregarded.
3.5 LIMITATIONS ON GRANT OF INCENTIVE STOCK OPTIONS
(a) The aggregate Fair Market Value (determined as of the
Grant Date) of the Common Stock for which Incentive Stock Options may first
become exercisable by any Optionee during any calendar year under this Plan,
together with that of Common Stock subject to Incentive Stock Options first
exercisable (other than as a result of acceleration pursuant to Section 4.3) by
such Optionee under any other plan of the Bank, shall not exceed $100,000.
(b) There shall be imposed in the Option Agreement relating to
Incentive Stock Options such terms and conditions as are required in order that
the Option be an "incentive stock option" as that term is defined in Section 422
of the Code.
(c) No Incentive Stock Option may be granted to any person
who, at the time the Incentive Stock Option is granted, owns Shares of
outstanding Common Stock possessing more than 10% of the total combined voting
power of all classes of stock of the Bank, unless the exercise price of such
Option is at least 110% of the Fair Market Value of the stock subject to the
Option and such Option by its terms is not exercisable after the expiration of
five (5) years from the Grant Date.
(d) No Incentive Stock Option may be granted to any person who
is not an officer or employee of the Bank.
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IV. OTHER PROVISIONS.
4.1 RIGHTS OF ELIGIBLE PERSONS AND OPTIONEES
(a) Status as an Eligible Person shall not be construed as a
commitment that any Option will be made under this Plan to an Eligible Person or
to Eligible Persons generally.
(b) Nothing contained in this Plan (or in Option Agreements or
in any other documents related to this Plan) shall confer upon any Eligible
Person or Optionee any right to continue in the employ of the Bank or constitute
any contract or agreement of employment, or interfere in any way with the right
of the Bank to reduce such person's compensation or to terminate the employment
of such Eligible Person or Optionee, with or without cause, but nothing
contained in this Plan or any document related thereto shall affect any other
contractual right of any Eligible Person or Optionee.
(c) Amounts payable pursuant to an Option shall be paid only
to the Optionee or, in the event of the Optionee's death, to the Optionee's
beneficiary or, in the event of the Optionee's Total Disability, to the
Optionee's Personal Representative or, if there is none, to the Optionee. Other
than by will or the laws of descent and distribution, no benefit payable under,
or interest in, this Plan or in any Option shall be subject in any manner to
alienation, sale, transfer, assignment, pledge, encumbrance, or charge, and any
such attempted action shall be void and no such benefit or interest shall be, in
any manner, subject to debts, contracts, liabilities, engagements, or torts of
any Eligible Person or Optionee. The Committee shall disregard any attempted
transfer, assignment, or other alienation prohibited by the preceding sentence
and shall pay or deliver such cash or Shares of Common Stock in accordance with
the provisions of this Plan.
(d) No Optionee or other person shall have any right, title,
or interest in any fund or in any specific asset (including Shares of Common
Stock) of the Bank by reason of any Option granted hereunder. Neither the
provisions of this Plan (or of any documents related hereto), nor the creation
or adoption of this Plan, nor any action taken pursuant to the provisions of
this Plan shall create, or be construed to create, a trust of any kind or a
fiduciary relationship between the Bank and any Optionee or other person.
4.2 ADJUSTMENTS UPON CHANGES IN CAPITALIZATION; REORGANIZATION;
CHANGE IN CONTROL
(a) If the outstanding Shares of Common Stock are increased,
decreased, or changed into, or exchanged for, a different number or kind of
Shares or securities of the Bank through a reorganization or merger in which the
Bank is the surviving entity, or through a combination, recapitalization,
reclassification, stock split, stock dividend, stock consolidation, or
otherwise, an appropriate adjustment shall be made in the number and kind of
Shares that may be issued pursuant to the Options. A corresponding adjustment to
the consideration payable with respect to Options granted prior to any such
change shall also be made.
(b) In adjusting Options to reflect the changes described in
this Section 4.2, or in determining that no such adjustment is necessary, the
Board may rely upon the advice of independent counsel and accountants of the
Bank, and the determination of the Board shall be
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conclusive. No fractional Shares of stock shall be issued under this Plan on
account of any such adjustment.
(c) In the event of a dissolution or liquidation of
the Bank, a merger, consolidation, combination, or reorganization in which
the Bank is not the surviving corporation, a sale of substantially all of the
assets of the Bank, or a Change in Control (as defined below) of the Bank,
any outstanding Option shall become fully vested immediately upon the Bank's
public announcement of any one of the foregoing. The Committee shall
determine, in its sole and absolute discretion, when the Bank shall be deemed
to survive for purposes of this paragraph. If the Optionee does not exercise
the entire Option within ninety (90) days, the Committee, in its sole and
absolute discretion, may, with respect to the unexercised portion of the
Option:
(1) cancel the Option upon payment to the Optionee in
an amount equal to the difference between the closing price of the stock
underlying the Option quoted the day before such liquidation, dissolution,
merger, consolidation, combination, reorganization, or Change in Control, and
the exercise price of the Option; or
(2) assign the Option and all rights and obligations
under it to the successor entity, with all such rights and obligations being
assumed by the successor entity.
The Committee shall determine the appropriate adjustment of the number
and kind of securities with respect to which outstanding Options may be
exercised. The Committee shall determine, in its sole and absolute discretion,
when the Bank shall be deemed to survive for the purposes of this Plan. In
addition, the term "Change in Control" for purposes of this Section 4.2(c) shall
mean shall be deemed to have occurred if (A) any "persons" (as such term is used
in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Bank representing 20% or more of the combined
voting power of the Bank's then outstanding securities; or (B) during any period
of two consecutive years, individuals who at the beginning of such period
constitute the Board cease for any reason to constitute at least a majority
thereof, unless the election, or the nomination for election by the Bank's
shareholders, of each new Board member was approved by a vote of at least
three-fourths of the Board members then still in office who were Board members
at the beginning of such period.
4.3 TERMINATION OF EMPLOYMENT.
(a) If the Optionee's employment by the Bank terminates for
any reason other than death or Total Disability, the Optionee shall have ninety
(90) days from the date of termination of employment (but in no event after the
earlier of (i) the expiration date of the Options as set forth in the Option
Agreement and (ii) ten (10) years from Grant Date) to exercise any Option to the
extent it shall have become exercisable on that date, and any Option not
exercisable on that date shall expire. Notwithstanding the preceding sentence,
in the event the Optionee is discharged for cause as determined by the Committee
in its sole discretion, all Options shall lapse immediately upon such
termination of employment.
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(b) If the Optionee's employment by the Bank terminates as a
result of Total Disability, the Optionee or Optionee's Personal Representative,
as the case may be, shall have twelve (12) months from the date of termination
of employment (but in no event after the earlier of (i) the expiration date of
the Options as set forth in the Option Agreement and (ii) ten (10) years from
Grant Date) to exercise any Option to the extent it shall have become
exercisable by that date, and any Option not exercisable on that date shall
terminate.
(c) If the Optionee's employment by the Bank terminates as a
result of death while the Optionee is employed by the Bank or during the twelve
(12) month period referred to in subsection 4.3(b) above, the Option shall be
exercisable by the Optionee's beneficiary twelve (12) months from the date of
death (but in no event after the earlier of (i) the expiration date of the
Options as set forth in the Option Agreement and (ii) ten years from Grant
Date), as to all or any part of the Shares of Common Stock covered thereby ,
including all Shares as to which the Option would not otherwise be exercisable.
(d) In the event of termination of employment with the Bank
for any reason, other than discharge for cause, the Committee may, in its
discretion, increase the portion of the option available to the optionee, or
optionee's beneficiary or personal representative, as the case may be, upon such
terms as the Committee shall determine.
(e) If agreed to by the Optionee and the Committee, Eligible
Person may continue to serve as a consultant to Sentinel in which the right to
exercise such options may be for a period to be determined by the Optionee and
the Committee (but not for a term exceeding the original termination date). In
the event a consulting relationship occurs, such options extended will be
non-incentive stock options.
4.4 GOVERNMENT REGULATIONS.
This Plan, the granting of Options under this Plan, and the issuance or
transfer of Shares of Common Stock (and/or the payment of money) pursuant
thereto, are subject to all applicable federal and state laws, rules, and
regulations, and to such approvals by any regulatory or governmental agency
which may, in the opinion of counsel for the Bank, be necessary or advisable in
connection therewith. Without limiting the generality of the foregoing, no
Options may be granted under this Plan, and no Shares shall be issued by the
Bank, pursuant to or in connection with any such Option, unless and until, in
each such case, all legal requirements applicable to the issuance or payment
have, in the opinion of counsel to the Bank, been complied with. In connection
with any stock issuance or transfer, the person acquiring the Shares shall, if
requested by the Bank, give assurances satisfactory to counsel to the Bank in
respect of such matters as the Bank may deem desirable to assure compliance with
all applicable legal requirements.
4.5 TAX WITHHOLDING.
(a) Upon the disposition by an Optionee or other person of
Shares of an Option prior to satisfaction of the holding period requirements of
Section 422 of the Code, or upon the exercise of a Nonqualified Stock Option,
the Bank shall have the right to require such Optionee or
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such other person to pay by cash, or check payable to the Bank, the amount of
any taxes which the Bank may be required to withhold with respect to such
transaction(s).
(b) The Committee may, in its discretion, permit a loan from
the Bank to an Optionee in the amount of any taxes which the Bank may be
required to withhold with respect to Shares of Common Stock received pursuant to
a transaction described in subsection (a) above. Such a loan will be for a term,
at a rate of interest, and pursuant to such other terms and rules, as the
Committee may establish.
4.6 AMENDMENT, TERMINATION, AND SUSPENSION.
(a) The Board may, at any time, terminate or, from time to
time, amend, modify, or suspend this Plan (or any part hereof). In addition, the
Committee may, from time to time, amend or modify any provision of this Plan
and, with the consent of the Optionee, make such modifications of the terms and
conditions of such Option as it shall deem advisable. No Options may be granted
during any suspension of this Plan or after its termination.
(b) If an amendment would (i) materially increase the benefits
accruing to Optionees, (ii) increase the aggregate number of Shares which may be
issued under this Plan, or (iii) modify the requirements of eligibility for
participation in this Plan, the amendment shall be approved by the Board or the
Committee and by a majority of all Shares represented and voting at the meeting
at which such matter is submitted to a vote, and by a majority of the
disinterested Shares representing and voting at the meeting.
(c) In the case of Options issued before the effective date of
any amendment, suspension, or termination of this Plan, such amendment,
suspension, or termination of the Plan shall not, without specific action of the
Board or the Committee and the consent of the Optionee, in any way modify,
amend, alter, or impair any rights or obligations under any Option previously
granted under the Plan.
4.7 PRIVILEGES OF STOCK OWNERSHIP; NONDISTRIBUTIVE INTENT.
An Optionee shall not be entitled to the privilege of stock ownership
as to any Shares of Common Stock not actually issued to him.
4.8 EFFECTIVE DATE OF THE PLAN.
This Plan shall be effective upon its approval by the Board subject to
approval by the shareholders of the Bank within twelve (12) months from the date
of such Board approval. The Plan will be submitted to shareholders for approval
at the annual meeting of shareholders. The Plan must be approved by a majority
of all the Shares represented and voting at the meeting.
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4.9 TERM OF THE PLAN.
Unless previously terminated by the Board, this Plan shall terminate at
the close of business on August 26, 2009, and no Options shall be granted under
it thereafter, but such termination shall not affect any Option theretofore
granted.
4.10 EFFECT OF PLAN UPON OTHER COMPENSATION PLANS.
(a) Nothing in the Plan shall be construed to limit the
right of the Bank:
(i) to establish any other forms of incentives or
compensation for employees of the Bank; or
(ii) to issue restricted or unrestricted stock
otherwise than under the Plan in connection with any proper corporate purpose,
including, but not by limited to, the grant or assumption of Options or stock
appreciation rights or the issuance of restricted or unrestricted stock in
connection with the acquisition of the business, stock, or assets of any
corporation, firm, or association.
(b) Any contributions, benefits, grants, or other awards under
any other compensation or incentive plan of the Bank shall be determined without
regard to any issuance of Common Stock to any employee under the Plan, unless
specifically provided otherwise in such plan.
4.11 NOTICE.
All notices provided for in this Plan shall be directed to the
Secretary of the Bank. Notices shall be deemed given upon personal delivery or
upon mailing to the Bank by first class mail, postage prepaid.
4.12 GOVERNING LAW.
This Plan and the documents evidencing Options and all other related
documents shall be governed by, and construed in accordance with, the laws of
the State of California. If any provision shall be held by a court of competent
jurisdiction to be invalid and unenforceable, the remaining provisions of this
Plan shall continue to be fully effective.
4.13 TITLES.
Titles are provided herein for convenience only and are not to serve as
a basis for interpretation or construction of the Plan.
4.14 GENDER NEUTRAL.
The masculine pronouns "he," "him," or "his" herein shall also include
the feminine "she" or "her" and the neutral "it" or "its," and vice versa.
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I hereby certify that the foregoing Plan was duly approved by the
holders of a majority of the Common Stock of Sentinel Community Bank present at
a shareholders' meeting on August 26, 1999.
Executed this 26th day of August, 1999.
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Gary P. Dambacher, Secretary
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