NORTH VALLEY BANCORP
880 East Cypress Avenue
Redding, California 96002
August 18, 1998
VIA EDGAR
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: North Valley Bancorp - Direct Transmission of
Form S-8 Registration Statement
Ladies and Gentlemen:
On behalf of North Valley Bancorp (the "Company"), and in
connection with the registration of 306,300 shares of Common
Stock of the Company under the North Valley Bancorp 1998
Employee Stock Incentive Plan, transmitted for filing with the
Securities and Exchange Commission (the "Commission") through
the Commission's electronic filing system ("EDGAR"), is the
Company's registration statement on Form S-8, together with all
exhibits.
Payment of the registration fee in the amount of $2,924.90
was remitted by wire transfer to the Commission's lockbox
account (No. 910-8739) at Mellon Bank in Pittsburgh,
Pennsylvania on August 17, 1998. The Mellon Bank was instructed
to note that the Company's CIK number is 0000353191, and that
the payment related to the above-referenced Registration
Statement.
Should you have any questions concerning this filing,
please call the undersigned at (530) 221-8400.
Very truly yours,
/s/ Martin R. Sorensen
President & C.E.O.
Encs.
cc: Nasdaq National Market
J.M. Wells, Jr., Esq. w/encs.
Jonathan D. Joseph, Esq. w/encs.
As filed with the Securities and Exchange Commission on August 18, 1998.
Registration No. 33-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
NORTH VALLEY BANCORP
(Exact name of registrant as specified in its charter)
California 94-2751350
______________________________ ______________________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
880 East Cypress Avenue
Redding, California 96002
______________________________ ______________________________
(Address of Principal (Zip Code)
Executive Offices)
NORTH VALLEY BANCORP 1998 EMPLOYEE STOCK INCENTIVE PLAN
(Full title of the plan)
Martin R. Sorensen Copy to:
President and Chief Executive Officer JONATHAN D. JOSEPH, ESQ.
North Valley Bancorp Pillsbury Madison & Sutro LLP
880 East Cypress Avenue P.O. Box 7880
Redding, California 96002 San Francisco, CA 94120
(530) 221-8400 (415) 983-1000
______________________________ ______________________________
(Name, address and telephone (Counsel to the Registrant)
number, including area code,
of agent for service)
Title of Securities To
Be Registered.............Common Stock
Amount To Be
Registered(1).............306,300 shares
Proposed Maximum
Offering Price Per
Share(2).................. $32.37
Proposed Maximum
Aggregate Offering
Price(2).................. $ 9,914,931
Amount of Registration
Fee(3).................... $ 2,924.90
(1) 306,300 shares are being registered pursuant to the North Valley
Bancorp 1998 Employee Stock Incentive Plan.
(2) Estimated solely for the purpose of calculating the registration fee
on the basis of the average of the high and low prices as reported on the
Nasdaq National Market System on August 14, 1998.
(3) The registration fee has been calculated pursuant to Rule 457(h) of
the Securities Act of 1933.
_________________
The Registration Statement shall become effective upon filing in
accordance with Rule 462 under the Securities Act of 1933.
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
Item 1. Plan Information.*
Item 2. Registrant Information and Employee Plan Annual
Information.*
* Information required by Part I to be contained in the
Section 10(a) prospectus is omitted from the Registration
Statement in accordance with Rule 428 under the Securities
Act of 1933 and the Note to Part I of Form S-8.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference.
The following documents filed by Registrant with the
Securities and Exchange Commission are incorporated by reference
in this Registration Statement:
(1) The Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1997.
(2) The Registrant's Quarterly Reports on Form 10-Q
for the quarters ended March 31, 1998 and June 30, 1998.
(3) The information with regard to the
Registrant's capital stock contained in a registration
statement filed with the Commission pursuant to
section 12 of the Securities Exchange Act of 1934,
including any subsequent amendment or report filed for
the purpose of updating such information.
In addition, all documents subsequently filed by
Registrant pursuant to Sections 13(a), 13(c), 14 and 15(d) of
the Securities Exchange Act of 1934, prior to the filing of a
post-effective amendment which indicates that all securities
offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by
reference in this Registration Statement and to be a part hereof
from the date of filing of such documents.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
Section 317 of the California Corporations Code authorizes
a court to award, or a corporation's Board of Directors to
grant, indemnity to directors, officers, employees and other
agents of the corporation in terms sufficiently broad to permit
such indemnification under certain circumstances for liabilities
(including reimbursement for expenses incurred) arising under
the Securities Act of 1933, as amended (the "Act").
Article Fifth of the Company's Amended and Restated
Articles of Incorporation provides for indemnification of
directors and officers of the Company to the extent permitted by
Section 317(b) and (c) of the California Corporations Code and
for the advancement of expenses to directors and officers of the
Company in all circumstances in which such advancement is
permitted by Section 317(f) of the California Corporations Code,
subject to the applicable limits set forth in Section 204 of the
California Corporations Code with respect to actions for breach
of duty to the Company and its shareholders. In addition,
Article Fifth authorizes the Company to indemnify agents (as
defined in Section 317 of the California Corporations Code),
through bylaw provisions, agreements, votes of shareholders or
disinterested directors or otherwise, in excess of the
indemnification otherwise permitted by Section 317 of the
California Corporations Code, to the fullest extent permissible
under California law. Article Fifth also authorizes the Company
to provide insurance for agents in accordance with and subject
to the provisions of Section 317(i) of the California
Corporations Code. The foregoing discussion is qualified in its
entirety by reference to the Company's Amended and Restated
Articles of Incorporation, filed as exhibit 3(i) to the
Company's Quarterly Report on Form 10-Q for the Quarter Ended
June 30, 1998.
Section 47 of the Company's By-laws, as amended, provides
for mandatory indemnification of directors and officers in
excess of indemnification otherwise permitted by Section 317 of
the California Corporations Code, subject to the applicable
limits set forth in Section 204 of the California Corporations
Code with respect to actions for breach of duty to the Company
and its shareholders and subject further to any express
prohibitions in Section 317 of the California Corporations Code
or any determination by a court of competent jurisdiction that
any indemnification provided under Section 47 of the By-laws is
unlawful. Section 47 of the Company's By-laws, as amended,
provides for indemnification of employees and agents, subject to
the terms of any agreement between the Company and such person,
to the fullest extent permitted by California law and the
Company's Articles of Incorporation. Section 47 of the
Company's By-laws, as amended, also provides that the Company
shall maintain insurance (to the extent reasonably available) to
protect itself and any director, officer, employee or agent
against any expense, liability or loss and allows the Company to
enter into indemnity agreements with any director, officer,
employee or agent providing for indemnification to the fullest
extent permissible under the law and the Company's Articles of
Incorporation. The foregoing discussion is qualified in its
entirety by reference to the Company's By-laws, as amended,
filed as exhibit 3(ii) to the Company's Quarterly Report on Form
10-Q for the Quarter Ended June 30, 1998.
The Company maintains a directors and officers liability
insurance policy that indemnifies the Company's directors and
officers against certain losses in connection with claims made
against them for certain wrongful acts.
In addition, the Company has entered into separate indem-
nification agreements with all of its directors and executive
officers that require the Company, among other things, (i) to
maintain, under certain circumstances, directors' and officers'
insurance in favor of such individuals, (ii) to mandatorily
indemnify them against certain liabilities that may arise by
reason of their status or service as agents of the Company to
the fullest extent permitted by California law and to advance
expenses under certain circumstances, and (iii) upon a Change in
Control, as defined in the indemnification agreement, to obtain
an irrevocable letter of credit in an appropriate amount not
less than $1 million to secure its obligations under the
indemnification agreement, as set forth therein. The foregoing
discussion is qualified in its entirety by reference to the Form
of Indemnification Agreement filed as exhibit 10 to the
Company's Quarterly Report on Form 10-Q for the Quarter Ended
June 30, 1998.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
See Index to Exhibits.
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers
or sales are being made, a post-effective amendment to
this Registration Statement:
(i) To include any prospectus required by
section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts
or events arising after the effective date of the
Registration Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the Regis-
tration Statement. Notwithstanding the
foregoing, any increase or decrease in volume of
securities offered (if the dollar value of
securities offered would not exceed that which
was registered) and any deviation from the low or
high end of the estimated maximum offering range
may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price
represent no more than a 20% change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the
effective Registration Statement;
(iii) To include any material information
with respect to the plan of distribution not
previously disclosed in the Registration State-
ment or any material change to such information
in the Registration Statement;
provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the Registration Statement
is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports
filed by the Registrant pursuant to section 13 or
section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the Registration
Statement.
(2) That, for the purpose of determining any
liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities
offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of
the offering.
(b) The undersigned Registrant hereby further under-
takes that, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's annual
report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by
reference in the Registration Statement shall be deemed to be a
new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities
arising under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securi-
ties and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, the Registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on
Form S-8, and has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Redding, State of California, on
August 17, 1998.
NORTH VALLEY BANCORP
By /s/ Martin R. Sorensen
Martin R. Sorensen
President and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Martin R.
Sorensen and Sharon L. Benson, and each of them, his or her true
and lawful attorneys-in-fact and agents, each with full power of
substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign any and all
amendments, including post-effective amendments, to this Regis-
tration Statement, and to file the same, with exhibits thereto
and other documents in connection therewith, with the Securities
and Exchange Commission granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to
be done, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents, or his substitute or
substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of
1933, this Registration Statement has been signed by the
following persons in the capacities and on the date indicated:
Signature Title Date
/s/ Martin R. Sorensen President, Chief Executive August 17, 1998
Martin R. Sorensen Officer (Principal Executive
Officer) and Director
/s/ Sharon L. Benson Senior Vice President and August 17, 1998
Sharon L. Benson Chief Financial Officer
(Principal Financial Officer
and Principal Accounting
Officer)
/s/ Rudy V. Balma Chairman of the Board August 17, 1998
Rudy V. Balma
/s/ William W. Cox Director August 17, 1998
William W. Cox
/s/ Dan W. Ghidinelli Director August 17, 1998
Dan W. Ghidinelli
/s/ Thomas J. Ludden Director August 17, 1998
Thomas J. Ludden
/s/ Kelly V. Pierce Director August 17, 1998
Kelly V. Pierce
/s/ Douglas M. Treadway Director August 17, 1998
Douglas M. Treadway
/s/ J. M. Wells, Jr. Director/Secretary August 17, 1998
J. M. ("Mike") Wells, Jr.
INDEX TO EXHIBITS
Exhibit
Number Exhibit
5.1 Opinion regarding legality of
securities to be offered.
23.1 Consent of
Independent Auditors.
23.2 Consent of Pillsbury Madison &
Sutro LLP (included in Exhibit 5.1).
24.1 Power of Attorney (see page 7).
99.1 North Valley Bancorp 1998 Employee Stock Incentive
Plan.
EXHIBIT 5.1
PILLSBURY MADISON & SUTRO LLP
235 Montgomery Street
San Francisco, California 94104
August 18, 1998
North Valley Bancorp
880 East Cypress Avenue
Redding, California 96002
Re: Registration Statement on Form S-8
Ladies and Gentlemen:
With reference to the Registration Statement on Form S-8 to
be filed by North Valley Bancorp, a California corporation (the
"Company"), with the Securities and Exchange Commission under
the Securities Act of 1933, relating to 306,300 shares of the
Company's Common Stock issuable pursuant to the North Valley
Bancorp 1998 Employee Stock Incentive Plan (the "Plan"), it is our opinion
that such shares of the Common Stock of the Company, when issued
and sold in accordance with the Plan, will be legally
issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion with the
Securities and Exchange Commission as Exhibit 5.1 to the Regis-
tration Statement.
Very truly yours,
/s/ Pillsbury Madison & Sutro LLP
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration
Statement of North Valley Bancorp on Form S-8 of our report
dated January 27, 1998, appearing in the Annual Report on Form
10-K of North Valley Bancorp for the year ended December 31,
1997.
/s/ Deloitte & Touche LLP
Sacramento, California
August 17, 1998
EXHIBIT 99.1
NORTH VALLEY BANCORP
1998 EMPLOYEE STOCK INCENTIVE PLAN
TABLE OF CONTENTS
Page
-----
ARTICLE 1. INTRODUCTION ...................................... C-1
ARTICLE 2. ADMINISTRATION .................................... C-1
2.1 Committee Composition ............................. C-1
2.2 Committee Responsibilities ........................ C-1
ARTICLE 3. SHARES AVAILABLE FOR GRANTS ....................... C-1
3.1 Basic Limitation .................................. C-1
3.2 Additional Shares ................................. C-1
ARTICLE 4. ELIGIBILITY ....................................... C-2
4.1 General Rules ..................................... C-2
4.2 Incentive Stock Options ........................... C-2
ARTICLE 5. OPTIONS ........................................... C-2
5.1 Stock Option Agreement ............................ C-2
5.2 Number of Shares .................................. C-2
5.3 Exercise Price .................................... C-2
5.4 Exercisability and Term ........................... C-2
5.5 Effect of Change in Control ....................... C-2
5.6 Modification or Assumption of Options ............. C-2
ARTICLE 6. PAYMENT FOR OPTION SHARES ......................... C-2
6.1 General Rule ...................................... C-2
6.2 Surrender of Stock ................................ C-3
6.3 Exercise/Sale ..................................... C-3
6.4 Exercise/Pledge ................................... C-3
6.5 Promissory Note ................................... C-3
6.6 Other Forms of Payment ............................ C-3
ARTICLE 7. PROTECTION AGAINST DILUTION ....................... C-3
7.1 Adjustments ....................................... C-3
7.2 Reorganizations ................................... C-3
ARTICLE 8. PAYMENT OF DIRECTOR'S FEES IN SECURITIES .......... C-3
8.1 Effective Date .................................... C-3
8.2 Receipt of Stock Awards ........................... C-3
8.3 Number of Stock Awards ............................ C-4
ARTICLE 9. LIMITATION ON RIGHTS .............................. C-4
9.1 Retention Rights .................................. C-4
9.2 Stockholders' Rights .............................. C-4
9.3 Regulatory Requirements ........................... C-4
ARTICLE 10. LIMITATION ON PAYMENTS ............................ C-4
10.1 Basic Rule ........................................ C-4
10.2 Reduction of Payments ............................. C-4
10.3 Overpayments and Underpayments .................... C-4
10.4 Related Corporations .............................. C-5
ARTICLE 11. WITHHOLDING TAXES ................................. C-5
11.1 General ........................................... C-5
11.2 Share Withholding ................................. C-5
ARTICLE 12. ASSIGNMENT OR TRANSFER OF AWARDS .................. C-5
12.1 General ........................................... C-5
i
ARTICLE 13. FUTURE OF THE PLAN ............................... C-5
13.1 Term of the Plan ................................. C-5
13.2 Amendment or Termination ......................... C-5
ARTICLE 14. DEFINITIONS ...................................... C-5
ARTICLE 15. EXECUTION ........................................ C-7
ii
NORTH VALLEY BANCORP
1998 EMPLOYEE STOCK INCENTIVE PLAN
ARTICLE 1. INTRODUCTION.
The Plan was adopted by the Board on February 17, 1998, subject to
approval by the Company's stockholders.
The purpose of the Plan is to promote the long-term success of the
Company and the creation of stockholder value by (a) encouraging Key
Employees to focus on critical long-range objectives, (b) encouraging the
attraction and retention of Key Employees with exceptional qualifications
and (c) linking Key Employees directly to stockholder interests through
increased stock ownership. The Plan seeks to achieve this purpose by
providing for Awards in the form of Stock Awards or Options (which may
constitute incentive stock options or nonstatutory stock options).
The Plan shall be governed by, and construed in accordance with, the
laws of the State of California (except their choice-of-law provisions).
ARTICLE 2. ADMINISTRATION.
2.1 Committee Composition. The Plan shall be administered by the
Committee. The Committee shall consist of two or more directors of the
Company who shall satisfy the requirements of Rule 16b-3 (or its successor)
under the Exchange Act with respect to the grant of Awards to persons who
are officers or directors of the Company under Section 16 of the Exchange
Act or the Board itself. The Board may also appoint one or more separate
committees of the Board, each composed of one or more directors of the
Company who need not qualify under Rule 16b-3, who may administer the
Plan with respect to Key Employees who are not considered officers or
directors of the Company under Section 16 of the Exchange Act, may grant
Awards under the Plan to such Key Employees and may determine all terms of
such Awards.
2.2 Committee Responsibilities. The Committee shall:
(a) Select the Key Employees who are to receive Awards under the
Plan;
(b) Determine the type, number, vesting requirements and other
features and conditions of such Awards;
(c) Interpret the Plan; and
(d) Make all other decisions relating to the operation of the Plan.
The Committee may adopt such rules or guidelines as it deems
appropriate to implement the Plan. The Committee's determinations under the
Plan shall be final and binding on all persons.
ARTICLE 3. SHARES AVAILABLE FOR GRANTS.
3.1 Basic Limitation. Common Shares issued pursuant to the Plan
may be authorized but unissued shares or treasury shares. The aggregate
number of Common Shares initially reserved for award as Options under the
Plan shall be 300,000 shares. Effective January 1, 1999 and on each
January 1 thereafter for the remaining term of the Plan, the aggregate
number of Common Shares which may be issued as Options under the Plan to
individuals shall be increased by a number of Common Shares equal to 2%
of the total number of the shares of common stock of the Company
outstanding at the end of the most recently concluded calendar year.
Any Common Shares that have been reserved but not issued as Options
during any calendar year shall remain available for grant during any
subsequent calendar year. Notwithstanding the foregoing, no more than
300,000 Common Shares shall be available for the grant of ISOs for the
remaining term of he Plan. The limitation of this Section 3.1 shall be
subject to adjustment pursuant to Article 7.
3.2 Additional Shares. If Options terminate for any other reason
before being exercised, then the corresponding Common Shares shall
again become available for Award under the Plan.
-1-
ARTICLE 4. ELIGIBILITY.
4.1 General Rules. Only Key Employees (including, without limitation,
independent contractors who are not members of the Board) shall be eligible
for designation as Participants by the Committee. All Outside
Directors shall also be eligible to receive Stock Awards described in
Article 8.
4.2 Incentive Stock Options. Only Key Employees who are
common-law employees of the Company, a Parent or a Subsidiary shall be
eligible for the grant of ISOs. In addition, a Key Employee who owns more
than ten percent (10%) of the total combined voting power of all classes of
outstanding stock of the Company or any of its Parents or Subsidiaries
shall not be eligible for the grant of an ISO unless the requirements
set forth in section 422(c)(5) of the Code are satisfied.
ARTICLE 5. OPTIONS.
5.1 Stock Option Agreement. Each grant of an Option under the Plan
shall be evidenced by a Stock Option Agreement between the Optionee and the
Company. Such Option shall be subject to all applicable terms of the Plan
and may be subject to any other terms that are not inconsistent with the
Plan, including but not limited to rights of repurchase and rights of
first refusal. The Stock Option Agreement shall specify whether the
Option is an ISO or an NSO. The provisions of the various Stock Option
Agreements entered into under the Plan need not be identical. Options may
be granted in consideration of a cash payment or in consideration of a
reduction in the Optionee's other compensation. A Stock Option
Agreement may provide that new Options will be granted automatically to
the Optionee when he or she exercises the prior Options.
5.2 Number of Shares. Each Stock Option Agreement shall specify the
number of Common Shares subject to the Option and shall provide for the
adjustment of such number in accordance with Article 7.
5.3 Exercise Price. Each Stock Option Agreement shall specify the
Exercise Price; provided that the Exercise Price of an ISO shall in no event
be less than one hundred percent (100%) of the Fair Market Value of a
Common Share on the date of grant. In the case of an NSO, a Stock Option
Agreement may specify an Exercise Price that varies in accordance with a
predetermined formula while the NSO is outstanding.
5.4 Exercisability and Term. Each Stock Option Agreement shall specify
the date when all or any installment of the Option is to become
exercisable. The Stock Option Agreement shall also specify the term of the
Option; provided that the term of an ISO shall in no event exceed ten
(10) years from the date of grant. A Stock Option Agreement may provide
for accelerated exercisability in the event of the Optionee's death,
disability or retirement or other events and may provide for expiration
prior to the end of its term in the event of the termination of the
Optionee's service.
5.5 Effect of Change in Control. The Committee may determine, at the
time of granting an Option or thereafter, that such Option shall become
fully exercisable as to all Common Shares subject to such Option
in the event that a Change in Control occurs with respect to the Company.
5.6 Modification or Assumption of Options. Within the limitations of
the Plan, the Committee may modify, extend or assume outstanding
options or may accept the cancellation of outstanding options (whether
granted by the Company or by another issuer) in return for the grant of new
options for the same or a different number of shares and at the same or a
different exercise price. The foregoing notwithstanding, no modification of
an Option shall, without the consent of the Optionee, alter or impair his
or her rights or obligations under such Option.
ARTICLE 6. PAYMENT FOR OPTION SHARES.
6.1 General Rule. The entire Exercise Price for the Common Shares
issued upon exercise of Options shall be payable in cash at the time when
such Common Shares are purchased, except as follows:
(a) In the case of an ISO granted under the Plan, payment shall be
made only pursuant to the express provisions of the applicable Stock
Option Agreement. The Stock Option Agreement may specify that payment may
be made in any form(s) described in this Article 6.
-2-
(b) In the case of an NSO, the Committee may at any time accept
payment in any form(s) described in this Article 6.
6.2 Surrender of Stock. To the extent that this Section 6.2 is
applicable, payment for all or any part of the Exercise Price may be made
with Common Shares which have already been owned by the Optionee for
such duration as shall be specified by the Committee. Such Common
Shares shall be valued at their Fair Market Value on the date when the new
Common Shares are purchased under the Plan.
6.3 Exercise/Sale. To the extent that this Section 6.3 is
applicable, payment may be made by the delivery (on a form prescribed by
the Company) of an irrevocable direction to a securities broker approved
by the Company to sell Common Shares and to deliver all or part of the sales
proceeds to the Company in payment of all or part of the Exercise Price and
any withholding taxes.
6.4 Exercise/Pledge. To the extent that this Section 6.4 is
applicable, payment may be made by the delivery (on a form prescribed by
the Company) of an irrevocable direction to pledge Common Shares to a
securities broker or lender approved by the Company, as security for a
loan, and to deliver all or part of the loan proceeds to the Company in
payment of all or part of the Exercise Price and any withholding taxes.
6.5 Promissory Note. To the extent that this Section 6.5 is
applicable, payment may be made with a full-recourse promissory note;
provided that to the extent required by applicable law, the par value of
the Common Shares shall be paid in cash.
6.6 Other Forms of Payment. To the extent that this Section
6.6 is applicable, payment may be made in any other form that is
consistent with applicable laws, regulations and rules.
ARTICLE 7. PROTECTION AGAINST DILUTION.
7.1 Adjustments. In the event of a subdivision of the outstanding
Common Shares, a declaration of a dividend payable in Common Shares, a
declaration of a dividend payable in a form other than Common Shares in
an amount that has a material effect on the price of Common Shares, a
combination or consolidation of the outstanding Common Shares (by
reclassification or otherwise) into a lesser number of Common Shares, a
recapitalization, a spinoff or a similar occurrence, the Committee shall
make such adjustments as it, in its sole discretion, deems appropriate in
one or more of:
(a) The number of Options available for future Awards under Article 3;
(b) The number of Common Shares covered by each outstanding Option; or
(c) The Exercise Price under each outstanding Option.
Except as provided in this Article 7, a Participant shall have no rights by
reason of any issue by the Company of stock of any class or securities
convertible into stock of any class, any subdivision or consolidation of
shares of stock of any class, the payment of any stock or other dividend
or any other increase or decrease in the number of shares of stock of any
class.
7.2 Reorganizations. In the event that the Company is a party to a
merger or other reorganization, outstanding Options and Stock Awards shall
be subject to the agreement of merger or reorganization. Such agreement
may provide, without limitation, for the assumption of outstanding
Awards by the surviving corporation or its parent, for their continuation by
the Company (if the Company is a surviving corporation), for accelerated
vesting and accelerated expiration, or for settlement in cash.
ARTICLE 8. PAYMENT OF DIRECTOR'S FEES IN SECURITIES.
8.1 Effective Date. No provision of this Article 8 shall be
effective unless and until the Board has determined to implement such
provision.
8.2 Receipt of Stock Awards. An Outside Director shall receive a
Stock Award of 300 shares of Common Stock as part of his or her annual
retainer payment from the Company. Such Stock Awards shall be issued under
the Plan. Such an Award shall be fully vested when granted to the Outside
Director.
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8.3 Number of Stock Awards. The number of Common Shares available
to be granted to Outside Directors as Stock Awards shall equal the number
of Common Shares to be issued to such Outside Directors.
ARTICLE 9. LIMITATION ON RIGHTS.
9.1 Retention Rights. Neither the Plan nor any Award granted under the
Plan shall be deemed to give any individual a right to remain an employee,
consultant or director of the Company, a Parent or a Subsidiary. The
Company and its Parents and Subsidiaries reserve the right to terminate
the service of any employee, consultant or director at any time, and for
any reason, subject to applicable laws, the Company's certificate of
incorporation and by-laws and a written employment agreement (if any).
9.2 Stockholders' Rights. A Participant shall have no dividend
rights, voting rights or other rights as a stockholder with respect to any
Common Shares covered by his or her Award prior to the issuance of a stock
certificate for such Common Shares.
9.3 Regulatory Requirements. Any other provision of the Plan
notwithstanding, the obligation of the Company to issue Common Shares
under the Plan shall be subject to all applicable laws, rules and
regulations and such approval by any regulatory body as may be required.
The Company reserves the right to restrict, in whole or in part, the
delivery of Common Shares pursuant to any Award prior to the satisfaction
of all legal requirements relating to the issuance of such Common Shares, to
their registration, qualification or listing or to an exemption from
registration, qualification or listing.
ARTICLE 10. LIMITATION ON PAYMENTS.
10.1 Basic Rule. Any provision of the Plan to the contrary
notwithstanding, in the event that the independent auditors most recently
selected by the Board (the "Auditors") determine that any payment or
transfer by the Company under the Plan to or for the benefit of a
Participant (a "Payment") would be nondeductible by the Company for
federal income tax purposes because of the provisions concerning
"excess parachute payments" in section 280G of the Code, then the
aggregate present value of all Payments shall be reduced (but not below
zero) to the Reduced Amount; provided that the Committee, at the time of
making an Award under this Plan or at any time thereafter, may specify
in writing that such Award shall not be so reduced and shall not be
subject to this Article 10. For purposes of this Article 10, the "Reduced
Amount" shall be the amount, expressed as a present value, which maximizes
the aggregate present value of the Payments without causing any Payment
to be nondeductible by the Company because of section 280G of the Code.
10.2 Reduction of Payments. If the Auditors determine that any
Payment would be nondeductible by the Company because of section 280G of
the Code, then the Company shall promptly give the Participant notice to
that effect and a copy of the detailed calculation thereof and of the
Reduced Amount, and the Participant may then elect, in his or her sole
discretion, which and how much of the Payments shall be eliminated or
reduced (as long as after such election the aggregate present value of the
Payments equals the Reduced Amount) and shall advise the Company in
writing of his or her election within ten (10) days of receipt of notice.
If no such election is made by the Participant within such ten (10) day
period, then the Company may elect which and how much of the Payments
shall be eliminated or reduced (as long as after such election the
aggregate present value of the Payments equals the Reduced Amount) and
shall notify the Participant promptly of such election. For purposes of
this Article 10, present value shall be determined in accordance with
section 280G(d)(4) of the Code. All determinations made by the Auditors
under this Article 10 shall be binding upon the Company and the Participant
and shall be made within sixty (60) days of the date when a Payment becomes
payable or transferable. As promptly as practicable following such
determination and the elections hereunder, the Company shall pay or
transfer to or for the benefit of the Participant such amounts as are
then due to him or her under the Plan and shall promptly pay or transfer
to or for the benefit of the Participant in the future such amounts as
become due to him or her under the Plan.
10.3 Overpayments and Underpayments. As a result of uncertainty in
the application of section 280G of the Code at the time of an initial
determination by the Auditors hereunder, it is possible that
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Payments will have been made by the Company which should not have been made
(an "Overpayment") or that additional Payments which will not have been
made by the Company could have been made (an "Underpayment"), consistent
in each case with the calculation of the Reduced Amount hereunder. In the
event that the Auditors, based upon the assertion of a deficiency by the
Internal Revenue Service against the Company or the Participant which the
Auditors believe has a high probability of success, determine that an
Overpayment has been made, such Overpayment shall be treated for all
purposes as a loan to the Participant which he or she shall repay to the
Company, together with interest at the applicable federal rate provided in
section 7872(f)(2) of the Code; provided, however, that no amount shall be
payable by the Participant to the Company if and to the extent that such
payment would not reduce the amount which is subject to taxation under
section 4999 of the Code. In the event that the Auditors determine that an
Underpayment has occurred, such Underpayment shall promptly be paid or
transferred by the Company to or for the benefit of the Participant,
together with interest at the applicable federal rate provided in section
7872(f)(2) of the Code.
10.4 Related Corporations. For purposes of this Article 10, the
term "Company" shall include affiliated corporations to the extent
determined by the Auditors in accordance with section 280G(d)(5) of the
Code.
ARTICLE 11. WITHHOLDING TAXES.
11.1 General. To the extent required by applicable federal, state,
local or foreign law, a Participant or his or her successor shall make
arrangements satisfactory to the Company for the satisfaction of any
withholding tax obligations that arise in connection with the Plan. The
Company shall not be required to issue any Common Shares or make any cash
payment under the Plan until such obligations are satisfied.
11.2 Share Withholding. A Participant may satisfy all or part of his or
her withholding or income tax obligations by having the Company withhold
all or a portion of any Common Shares that otherwise would be issued to him
or her or by surrendering all or a portion of any Common Shares that he
or she previously acquired. Such Common Shares shall be valued at their
Fair Market Value on the date when taxes otherwise would be withheld in
cash. Any payment of taxes by assigning Common Shares to the Company may be
subject to restrictions.
ARTICLE 12. ASSIGNMENT OR TRANSFER OF AWARDS.
12.1 General. Except as provided in Article 11 or the Award agreement,
an Award granted under the Plan shall not be anticipated, assigned,
attached, garnished, optioned, transferred or made subject to any
creditor's process, whether voluntarily, involuntarily or by operation of
law. Except as provided in the Award agreement, an Option may be exercised
during the lifetime of the Optionee only by him or her or by his or her
guardian or legal representative. This Article 12 shall not preclude a
Participant from designating a beneficiary who will receive any outstanding
Awards in the event of the Participant's death, nor shall it preclude a
transfer of Awards by will or by the laws of descent and distribution.
ARTICLE 13. FUTURE OF THE PLAN.
13.1 Term of the Plan. The Plan, as originally adopted, shall
become effective on February 17, 1998. The Plan shall remain in effect
until it is terminated under Section 13.2, except that no ISOs shall be
granted after February 19, 2008.
13.2 Amendment or Termination. The Board may, at any time and for
any reason, amend or terminate the Plan. An amendment of the Plan shall be
subject to the approval of the Company's stockholders only to the extent
required by applicable laws, regulations or rules. No Awards shall be
granted under the Plan after the termination thereof. The termination of
the Plan, or any amendment thereof, shall not affect any Award previously
granted under the Plan.
ARTICLE 14. DEFINITIONS.
14.1 "Award" means any award of an Option or a Stock Award under the
Plan.
14.2 "Board" means the Company's Board of Directors, as constituted
from time to time.
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14.3 "Change in Control" shall be deemed to occur upon any "person"
(as defined in Section 13(d) of the Exchange Act), other than the Company,
its Parent or Subsidiary or employee benefit plan or trust maintained by the
Company, its Parent or Subsidiary, becoming the "beneficial owner" (as
defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of more
than 50% of the total combined voting power of the common stock of the
Company outstanding at such time, without the prior approval of the Board.
14.4 "Code" means the Internal Revenue Code of 1986, as amended.
14.5 "Committee" means a committee of the Board, as described in
Article 2.
14.6 "Common Share" means one share of the no par value common stock of
the Company.
14.7 "Company" means North Valley Bancorp, or its successor.
14.8 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
14.9 "Exercise Price," in the case of an Option, means the amount for
which one Common Share may be purchased upon exercise of such Option, as
specified in the applicable Stock Option Agreement.
14.10 "Fair Market Value" means the market price of Common
Shares, determined by the Committee as follows:
(a) If the Common Shares were traded over-the-counter on the
date in question but were not classified as a national market issue, then
the Fair Market Value shall be equal to the mean between the last reported
representative bid and asked prices quoted by the Nasdaq system for such
date;
(b) If the Common Shares were traded over-the-counter on the
date in question and were classified as a national market issue, then
the Fair Market Value shall be equal to the last-transaction price
quoted by the Nasdaq system for such date;
(c) If the Common Shares were traded on a stock exchange on the
date in question, then the Fair Market Value shall be equal to the closing
price reported by the applicable composite transactions report for such
date; and
(d) If none of the foregoing provisions is applicable, then the
Fair Market Value shall be determined by independent appraisals or as
otherwise determined by the Committee in good faith on such basis as
it deems appropriate.
Whenever possible, the determination of Fair Market Value by the Committee
shall be based on the prices reported in the Western Edition of The
Wall Street Journal. Such determination shall be conclusive and binding on
all persons.
14.11 "ISO" means an incentive stock option described in section
422(b) of the Code.
14.12 "Key Employee" means (a) a common-law employee of the
Company, a Parent or a Subsidiary, (b) an Outside Director and (c) a
consultant or adviser who provides services to the Company, a Parent or a
Subsidiary as an independent contractor.
14.13 "NSO" means a stock option not described in sections 422 or
423 of the Code.
14.14 "Option" means an ISO or NSO granted under the Plan and entitling
the holder to purchase one Common Share.
14.15 "Optionee" means an individual or estate who holds an Option or
SAR.
14.16 "Outside Director" shall mean a member of the Board who is
not a common-law employee of the Company, a Parent or a Subsidiary.
14.17 "Parent" means any corporation (other than the Company)
in an unbroken chain of corporations ending with the Company, if
each of the corporations other than the Company owns stock possessing fifty
percent (50%) or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain. A corporation
that attains the status of a Parent on a date after the adoption of the
Plan shall be considered a Parent commencing as of such date.
14.18 "Participant" means an individual or estate who holds an Award.
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14.19 "Plan" means the North Valley Bancorp 1998 Employee Stock
Incentive Plan, as amended from time to time.
14.20 "Stock Award" means the award of a Common Share to an
Outside Director.
14.21 "Stock Option Agreement" means the agreement between the Company
and an Optionee which contains the terms, conditions and restrictions
pertaining to his or her Option.
14.22 "Subsidiary" means any corporation (other than the Company)
in an unbroken chain of corporations beginning with the Company, if
each of the corporations other than the last corporation in the unbroken
chain owns stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other
corporations in such chain. A corporation that attains the status of a
Subsidiary on a date after the adoption of the Plan shall be considered a
Subsidiary commencing as of such date.
ARTICLE 15. EXECUTION.
To record the adoption of the Plan by the Board, the Company has caused
its duly authorized officer to affix the corporate name and seal hereto.
NORTH VALLEY BANCORP
By__________________________________
Its_________________________________
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