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EXHIBIT 99.2
UNITED BANCORP STOCK OPTION PLAN
(Incentive Stock Options and Nonqualified Stock Options)
1. PURPOSE
1.1 The United Bancorp Stock Option Plan (the "Plan") is
designed to attract and retain key employees of United Bancorp, including
officers and directors. The Plan is intended to encourage capital accumulation
and stock ownership by key employees and outside directors, in order to increase
the proprietary interest of such individuals in the success of United Bancorp.
The term "Company" shall mean United Bancorp and any subsidiary corporation in
which the Company may own, directly or indirectly, a majority of the voting
stock.
2. ADMINISTRATION
The Plan shall be administered by the Executive Committee of
the Board of Directors of the Company (the "Committee"). The Committee of not
less than two members of the Board of Directors of the Company (the "Board")
shall be appointed by the Board, and the Board, from time to time, may remove
members from or name new members to the Committee. Subject to the provisions of
the Plan, the Committee is authorized to grant options under the Plan, including
determining the employees to whom options will be granted and the amount and
terms of such grants, to interpret the Plan and each option granted thereunder,
to prescribe, amend, and rescind rules and regulations relating to the Plan, and
to any options granted thereunder, and to make all other determinations
necessary or advisable for the administration of the Plan; provided, however,
that only the Board may amend or terminate the Plan as provided in Section 11.
3. ELIGIBILITY FOR PARTICIPATION
The committee shall determine and designate, from time to
time, those "eligible individuals" to whom options are to be granted and who
thereby become participants in the Plan. An "eligible individual" means an
employee of the Company, either part-time or full-time (and officers and
directors, including directors who are not otherwise employees by the Company,
who, in the judgment of the Committee, is in a position to contribute
substantially to the success of the Company.
4. STOCK SUBJECT TO THE PLAN
4.1 The stock subject to the options to be granted under the
Plan shall be made available either from the Company's $2.50 par value common
stock (referred to hereinafter) as "stock" or "shares") authorized but unissued
or from shares reacquired by the Company. Subject to the adjustment as provided
in Section 6.11, the total number of shares with respect to which the Committee
may grant stock options under the Plan shall not exceed 92,000 shares, of which
42,000 shares shall be reserved for issuance to the Company's directors and
50,000 shares will be reserved for issuance to key employees.
4.2 If any outstanding stock option granted under the Plan is
terminated or expires unexercised, in whole or in part, for any reason before
the end of the term of the Plan, the shares released from the expired or
terminated option may be made the subject of new additional options granted
under the Plan.
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5. AWARD OF OPTIONS
The Committee, at any time, may authorize the granting of
options under the Plan to any "eligible individual." The options may be (a)
incentive stock options within the meaning of Section 422(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), (b) options which will not be
treated as incentive stock options under Section 422(a) of the Code
("nonqualified stock options"), and (c) any other stock options which are or may
become permitted by any applicable law. The Committee shall have the authority,
subject to the terms of the Plan, to determine the date of grant, the types of
options to be granted, the number of shares, the exercise price, and the other
terms and conditions of each option under the Plan; provided, however, that
directors who are not otherwise employed by the Company are not eligible to
receive incentive stock options under current law.
6. TERMS AND CONDITIONS OF STOCK OPTION AGREEMENTS
Stock options granted under the Plan shall be evidenced by
stock option agreements executed by an authorized representative of the
Committee and signed by the participant. Stock options granted hereunder shall
be subject to the following terms and conditions:
6.1 PAYMENT FOR SHARES. Upon exercise of any option, in whole
or in part, the option price for shares to which the exercise relates shall be
paid in cash or by certified check, bank draft, or money order payable to the
order of the Company (or in property if agreed to in writing by the Committee in
connection with a particular option) at the time of exercise. No shares for
which a purchase price is due shall be issued until full payment has been made,
and a participant shall have none of the rights of a shareholder with respect to
optioned shares until such shares are issued to the participant. Notwithstanding
the foregoing and subject to the provisions of Sections 6.5, 6.8, and 9
(vesting), a participant who is otherwise entitled to exercise an option
hereunder, may elect to receive a cash payment from the Company in exchange for
the cancellation and surrender of the vested option rights. (The canceled option
rights shall then be returned to the share reserve and the employee shall have
no further option rights with respect to those shares.) The election for cash
can be made only by written notice delivered to the Company prior to the end of
each calendar year with the cash amount determined by the difference between the
grant price of the option and the fair market value of the shares as of the last
trading day of the calendar year. The Committee shall have the right to
determine the fair market value for these purposes and it shall take into
account any trades or sales of the stock during the last trading days of the
calendar year.
6.2 NUMBER OF SHARES. Each stock option agreement shall state
the total number of shares subject to the option. In the case of any incentive
stock option granted hereunder, in no event shall the aggregate "fair market
value" of the stock exercisable for the first time by an employee during any
calendar year exceed $100,000. For purposes hereof, the "fair market value" of
the stock shall be determined by the Committee in good faith at the time of the
grant of the option.
6.3 PURCHASE PRICE. The purchase price (exercise price) for
shares granted hereunder shall be determined by the Committee but, except as
otherwise provided in Section 8, shall in no instance be less than one hundred
percent (100%) of the "fair market value" of the shares on the date the option
is granted, as determined in good faith by the Committee. In the case of an
incentive stock option granted to any participant owning more than ten percent
(10%) of the voting power of all classes of common stock on the date of grant of
the option, the option price per share of the stock subject to option shall be
not less than one hundred ten percent (110%) of the "fair market value" of the
stock on the date the option is granted, as determined in good faith by the
Committee.
6.4 TERM OF OPTIONS. In the case of incentive stock options and
except as otherwise provided in Sections 6.8 and 6.9, any option granted to a
participant then owning more than ten percent (10%) of the voting power of all
classes of common stock shall, by its terms, expire at such time as the
Committee may determine in granting it, but not later than five (5) years from
the date the option is granted. Any other option granted hereunder shall by its
terms expire at such time as the Committee may determine in granting it, but not
later than ten (10) years from the date the option is granted.
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6.5 VESTING SCHEDULES. Subject to the provisions of Section 9
below, in the case of all options hereunder, twenty-five percent (25%) of each
option granted shall be exercisable upon the date of grant; but the remaining
portion of each option hereunder shall be exercisable by the participant at the
rate of twenty-five percent (25%) after each succeeding twelve (12) months of
continuous service to the Company immediately following the date the option is
granted, provided, however, that if a participant dies prior to the completion
of this three-year vesting period, the option may nonetheless be exercised in
full in accordance with Section 6.8 below. Vesting may also be accelerated in
accordance with the provisions of Section 9 below (change of control).
Notwithstanding the foregoing, in the case of options granted to directors
hereunder, directors shall be credited for prior service so that for each twelve
(12) months of service to the Company as a director, the vesting schedule is
accelerated by twenty-five percent (25%) prior to the effective date of the
option grant.
6.6 EMPLOYMENT AS CONDITION TO EXERCISE. No incentive stock
options eligible for exercise hereunder may be exercised, unless the participant
holding such options has been employed by the Company for the entire time from
the effective date of the grant of the option until sixty (60) days before the
date of exercise (or up to ninety (90) days if employment ceases due to death or
disability).
6.7 DIRECTORS WHO RETIRE. Any nonqualified stock option granted
to a participant who is a director of the Company and who retires after reaching
the age of 70 and after not less than three (3) full years of service as a
director, shall have a full ten (10) years from the date of the option grant in
which to exercise such nonqualified option, notwithstanding the provisions of
Section 6.9 below.
6.8 DEATH. Any option granted hereunder which has not expired
and which is held by a participant at the time of death may be exercised by the
person or persons entitled thereto at any time or from time to time within
ninety (90) days after date of death, but in no event later than ten (10) years
from the date the option is granted.
6.9 TERMINATION OF EMPLOYMENT. In all cases of termination of
employment of a participant other than as describe in Section 6.7 and 6.8, the
option shall be exercised within sixty (60) days after the date the participant
ceases to be an employee of the Company, but in no event later than ten (10)
years from the date the option is granted. To the extent set forth in an
agreement entered into under a Prior Plan, express provisions relating to the
exercise of a stock option upon termination of employment shall continue to
apply unless modified by the Committee.
6.10 EXERCISE SUBJECT TO LIMITATIONS. Each option shall be
exercisable for the full amount or for any part thereof, from time to time,
subject to such limitations thereon as may be established by the Plan or by the
Committee at the time the grant is authorized.
6.11 EFFECT OF CHANGE IN SHARES SUBJECT TO THE PLAN. In the
event there is any change in the shares of the Company through the declaration
of stock dividends or through merger, consolidation, or recapitalization
resulting in stock split-ups or combinations or exchanges of shares or
otherwise, the Committee shall appropriately adjust the number of shares
available for the granting of stock options under the Plan, the number of shares
subject to each outstanding stock option, and the exercise price of each stock
option. No adjustment to the exercise price of any stock option under the Plan
may reduce the exercise price to an amount less than the par value of the shares
subject to the options. If the Company is the surviving or resulting corporation
in any merger, consolidation or share exchange, any outstanding option granted
under the Plan shall apply to those securities to which a holder of the number
of shares of common stock subject to the stock option would have been entitled
under the merger or consolidation. If the Company is not the surviving or
resulting corporation in any merger, consolidation or share exchange, the
surviving or resulting corporation shall tender stock options to purchase its
shares on terms and conditions that substantially preserve the rights and
benefits of any stock option outstanding under the Plan at the time of the
merger or consolidation. The term "common stock" as used in the Plan shall
include the shares resulting from any change in the Company's common stock,
limited to a change in its designation
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to "capital stock" or other similar designation, a change in the par value of
the common stock, or a change from par value to no par value, in each case
without any increase in the number of issued shares.
6.12 NONTRANSFERABILITY. No stock option granted under the Plan
shall be assignable or transferable except by will or by the laws of descent and
distribution. During a participant's lifetime, any stock option shall be
exercisable only by the participant.
6.13 RESALE OF SHARES. In the event that a participant desires
to dispose of shares issued pursuant to options, any resales of such shares
shall be made by a participant only in compliance with applicable securities
laws and regulations.
6.14 RIGHTS AS A SHAREHOLDER. A participant shall have no rights
as a shareholder with respect to shares covered by his or her stock options
until the date of issuance of the shares to the participant and the payment by
the participant to the Company of the full purchase price for the shares. No
adjustment will be made for dividends or other rights for which the record date
is prior to the date of issuance of the shares.
6.15 OTHER PROVISIONS. The stock option agreements authorized
under the Plan may contain such other and additional provisions, not
inconsistent with the terms of the Plan, which the Committee or legal counsel to
the Company deems necessary or advisable.
7. STOCK RESERVE
The Company shall, at all times during the term of the Plan, reserve
and keep available such number of shares of its common stock as will be
sufficient to satisfy the requirements of the Plan, and shall pay all
administrative fees and expenses necessarily incurred by the Company in
connection with the exercise of options granted hereunder.
8. SUBSTITUTION OF STOCK OPTIONS OF ACQUIRED CORPORATIONS
Notwithstanding any other contrary or inconsistent provision of the
Plan, the Company may, subject to the provisions of Section 4, substitute an
option issued under the Plan for an option issued under another plan, or assume
under the Plan an option issued under another plan, if the other plan was the
plan of another corporation (the "acquired corporation") (or the parent of the
acquired corporation) and the new option is substituted, or the old option is
assumed, by reason of a corporate merger, consolidation, acquisition of property
or of stock, reorganization or liquidation within the meaning of Section 424(a)
of the Code, as amended, and provided that the requirements of Code Sections
424(a)(1) and (2) are complied with. In the event that a written agreement
pursuant to which the acquisition transaction is completed is approved by the
Board, and said agreement sets forth the terms and conditions of the
substitution for, or assumption of, outstanding stock options of the acquired
corporation, said terms and conditions shall be deemed to be the action of the
Committee hereunder without any further action by the Committee, and the persons
holding said option shall be deemed to meet the eligibility requirements under
the Plan. The terms and conditions of any substituted or assumed options may
vary from the terms and conditions set forth in the Plan to the extent that the
Board or Committee deems appropriate.
9. CHANGE OF CONTROL
9.1 In the event of a "change of control" of the Company, any
and all stock options (both incentive stock options and nonqualified stock
options) granted by the Company prior to such change of control shall be fully
vested and may be exercised in whole or in part immediately prior to and after
the following: (i) the Company terminates the participant's employment
relationship with the Company. (ii) the Company reduces the participant's annual
compensation (including base salary, bonuses, and incentive compensation
programs) from the participant's annual compensation for the calendar year ended
prior to the change of control, (iii) the Company requires the participant to
transfer to a new job location which necessitates a change in residence or
increased travel,
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(iv) the Company materially alters the participant's responsibilities to the
Company, including a change in title, status, or job description, or (v) any of
the Company's shareholders are entitled under Oregon law (ORS 60.554) to dissent
from and obtain payment of the fair value of any of the Company's common shares.
9.2 For purposes hereof, a "change of control" shall be defined
as any event or circumstance whereby an entity, an individual, or an affiliated
group acquires control, directly or indirectly, of fifty percent (50%) or more
of the Company's common stock.
9.3 In the event of any accelerated vesting hereunder, all
options granted to the participant may be exercised only in accordance with
Sections 6.1-6.4 and 6.6-6.15 of the Plan.
10. TERM OF PLAN AND EFFECTIVE DATE
The Effective Date of this Plan shall be April 1, 1996, and no further
options shall be granted under the Plan commencing on March 31, 2006.
11. AMENDMENTS AND DISCONTINUANCE
The Board, at any time, may alter, amend, suspend, discontinue, or
terminate the Plan and may alter or amend any stock option agreement executed
under the Plan, including a Prior Plan. Additionally, the Board may amend the
Plan or any agreement under the Plan to provide for any amendment or revision of
any possible securities laws. The Board may not, however, without shareholder
approval, alter the provisions of the Plan so as to (i) materially alter terms
relating to the option price, (ii) materially increase the number of shares
which may be issued under the Plan, (iii) materially modify the requirements as
to eligibility for participation in the Plan, or (iv) extend beyond ten (10)
years the maximum term of stock options under the Plan or the term of the Plan.
12. APPLICATION OF FUNDS
The proceeds received by the Company from the sale of shares to
participants under the Plan will be used for general corporate purposes.
13. CERTAIN TAX MATTERS
13.1 NOTIFICATION OF CERTAIN EVENTS. The stock option agreements
executed under the Plan shall require the holder of an option to notify the
Company within ten (10) days of the occurrence of either of the following
events' (i) the making of an election under Section 83(b) of the Code to include
in gross income in the year of transfer the amount specified in Section 83(b);
or (ii) the disposition of any stock issued on the exercise of an incentive
stock option within two (2) years of the granting of the incentive stock option
or within one (1) year of its exercise, and the amount that the participant will
recognize as compensation income due to the disqualifying disposition of the
underlying shares. Participants, at their option, may convert an incentive stock
option to a nonqualified stock option by disposing of their stock within two (2)
years from the date of grant or within one (1) year after the option is
exercised.
13.2 WITHHOLDING. Whenever, under the Plan, the exercise of a
stock option will result in the recognition of taxable income by the
participant, the Company shall be entitled to require, as a condition of
delivery to the participant of the certificate representing the shares, that the
participant remit to the Company an amount sufficient to satisfy all applicable
tax requirements, including, but not limited to , all federal, state, and other
withholding tax requirements related to the income recognized by the
participant. If a participant makes a disqualifying disposition of stock
acquired upon the exercise of an incentive stock option as described in Section
13.1, subsection (ii), the participant shall remit to the Company an amount
sufficient to satisfy all federal, state, and other withholding tax requirements
related to the compensation income realized by the participant on the
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disqualifying disposition. In any case under this Section 13.2 where withholding
by the Company is required, the Company shall have the right to withhold any
such amounts from compensation otherwise due to the participant.
14. MISCELLANEOUS PROVISIONS
14.1 NO OBLIGATION TO EXERCISE. Participants shall have no
obligation to exercise any stock option granted to them under the Plan.
14.2 NO ALIENATION OF BENEFITS. No benefit provided to
participants under the Plan shall be subject to alienation, assignment,
attachment, or other legal process. Any attempted alienation, assignment, or
attachment of benefits under the Plan shall be void. Stock certificates and cash
payments shall be delivered only to the participants entitled to receive them or
to their authorized legal representatives.
14.3 NO EMPLOYMENT RIGHT. Participation in the Plan shall not
confer any right of continuation of employment with the Company.
14.4 FRACTIONAL SHARES. Any fractional shares resulting from the
exercise of stock options under the Plan shall be eliminated at the time of
exercise by rounding down for fractions less than one-half (1/2) and rounding up
for fractions equal to or greater than one-half (1/2). No cash settlements shall
be made with respect to fractional shares eliminated by rounding.
14.5 GOVERNING LAW. All matters relating to the Plan or to stock
options granted under the Plan shall be governed by the laws of the State of
Oregon, without regard to the principles of conflict of laws adopted by Oregon
courts.
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EXHIBIT A
First Amendment to
UNITED BANCORP STOCK OPTION PLAN
January 28, 1997
The United Bancorp Stock Option Plan, originally effective April 23, 1996 by
shareholder approval, is amended as follows:
6.5 VESTING SCHEDULES. Subject to the provisions of Section 9 below, in the case
of all options hereunder, sixteen point six seven percent (16.67%) of each
option granted shall be exercisable upon the date of grant but the remaining
portion of each option hereunder shall be exercisable by the participant at the
rate of sixteen point six seven percent (16.67%) after each succeeding twelve
(12) months of continuous service to the Company immediately following the date
the option is granted, provided, however, that if a participant dies prior to
the completion of this 5 year vesting period, the option may nonetheless be
exercised in full in accordance with Section 6.8 below. Vesting may also be
accelerated in accordance with the provisions of Section 9 below (change in
control). Notwithstanding the foregoing, in the case of options granted to
directors hereunder, directors shall be credited for prior service so that for
each twelve (12) months of service to the Company as a director, the vesting
schedule is accelerated by sixteen point six seven percent (16.67%) prior to the
effective date of the option grant.
Article 13 paragraph 1 is changed to read as follows:
13.1 NOTIFICATION OF CERTAIN EVENTS. The stock option agreements executed under
the plan shall require the holder of an option to notify the Company within ten
(10) days of the occurrence of the following event. The disposition of any stock
issued on the exercise of an incentive stock option within two (2) years of the
granting of the incentive stock option or within one (1) year of its exercise,
and the amount that the participant will recognize as compensation income due to
the disqualifying disposition of the underlying shares. Participants, at their
option, may convert as incentive stock option to a nonqualified stock option by
disposing of their stock within two (2) years from the date of grant or within
one (1) year after the option is exercised.
ADOPTED January 28, 1997
EXECUTIVE COMMITTEE
By: /s/ John Loosley
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John Loosley Chairman
Approved by the Board of Directors
January 28, 1996
UNITED BANCORP
By:/s/ David Jackson
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Chairman
By:/s/ Peter Nilsen
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Secretary
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EXHIBIT A
SECOND AMENDMENT TO
UNITED BANCORP STOCK OPTION PLAN
EFFECTIVE NOVEMBER 24, 1998
The United Bancorp Stock Option Plan dated April 1, 1996, as amended by
First Amendment date January 28, 1997 (collectively, the "Plan"), is hereby
amended further so that the cash payment election is deleted in its entirety
from Section 6.1 of the Plan. Section 6.1 shall read as follows:
PAYMENT FOR SHARES. Upon exercise of any option in whole or in
part the option price for shares to which the exercise relates
shall be paid in cash or by certified check, bank draft, or money
order payable to the order of the Company (or in property if
agreed to in writing by the Committee in connection with a
particular option) at the time of exercise. No shares for which a
purchase price is due shall be issued until full payment has been
made, and a participant shall have none of the rights of a
shareholder with respect to optioned shares until such shares are
issued to the participant.
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THIRD AMENDMENT TO
UNITED BANCORP STOCK OPTION PLAN
United Bancorp Stock Option Plan dated April 1, 1996, as amended by the
First Amendment dated January 28, 1997, and by the Second Amendment dated
November 24, 1998, (collectively, the "Plan") is hereby amended to add to
Section 6.5 the following provisions:
"Notwithstanding the foregoing, the Committee may specify a different
vesting schedule pursuant to which the right of a participant to exercise the
option shall be contingent upon the passage of a specified period of time
following the date of grant or based on criteria other than the passage of a
specified period of time such as the profitability of the Company or such other
criteria that the a Committee may determine in its complete discretion with
respect to the vesting schedule; provided, however, that the vesting schedule
shall not permit vesting at a more accelerated rate than sixteen and twp-thirds
percent (16 2/3%) each year (except as set forth in Section 9 of the Plan)."
Approved by the board of Directors of
United Bancorp on July 27, 1999.
/s/ Peter Nilsen
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Secretary
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