REGISTRATION STATEMENT NO. 333-_____
Filed February 2, 1999
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
FIRST WASHINGTON BANCORP, INC.
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(Exact name of registrant as specified in its charter)
Washington 91-1691604
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10 S. 1st Avenue
Walla Walla, Washington 99362
(509) 527-3636
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(Address of principal executive offices)
First Washington Bancorp, Inc. 1998 Stock Option Plan
Whatcom State Bank 1991 Stock Option Plan
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(Full title of the Plan)
Copies to:
Gary L. Sirmon John F. Breyer, Jr., Esquire
President and Chief Executive Officer Breyer & Associates PC
First Washington Bancorp, Inc. 1100 New York Avenue, N.W.
10 S. 1st Avenue Suite 700 East
Walla Walla, Washington 99362 Washington, D.C. 20005
(509) 527-3636 (202) 737-7900
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Name, address and telephone
number of agent for service
Page 1 of 7 Pages
Exhibit Index Appears on Page 4
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Calculation of Registration Fee
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Title of
Securities Amount Proposed Maximum Proposed Maximum Amount of
to be to be Offering Price Aggregate Registration
Registered Registered Per Share(1) Offering Price(1) Fee
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Common Stock,
$.01 par
value 479,723 $22.13(2) $10,616,269 $2,952
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(1) Estimated solely for the purpose of calculating the amount of the
registration fee. Pursuant to Rule 457(c) under the Securities Act of
1933, as amended (the "Securities Act"), the price per share is estimated
to be $22.13, based upon the average of the high and low trading prices of
the common stock, $.01 par value per share (the "Common Stock"), of First
Washington Bancorp, Inc. (the "Registrant"), as reported on the Nasdaq
National Market on February 1, 1999, the last day the stock traded.
(2) Of this number, 440,000 shares are being registered for issuance under the
1998 Stock Option Plan and 39,723 shares are being registered for issuance
under the Whatcom State Bank 1991 Stock Option Plan (collectively
referred to as the "Plans"); together with an indeterminate number of
shares reserved for issuance pursuant to the Plan as a result of any
future stock split, stock dividend or similar adjustment of the
outstanding Common Stock.
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This Registration Statement shall become effective automatically upon the
date of filing in accordance with Section 8(a) of the Securities Act of 1933,
as amended, and 17 C.F.R. Section 230.462.
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PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference
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The following documents filed with the Commission are incorporated in
this Registration Statement by reference:
(1) the Registrant's Annual Report on Form 10-K for the year ended March
31, 1998;
(2) the Registrant's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1998; and
(3) the Registrant's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1998.
All other reports filed by the Registrant pursuant to Section 13(a) or
15(d) of the Exchange Act, after the date of this Registration Statement and
prior to the filing of a post-effective amendment which indicates that all
securities offered hereby have been sold or which deregisters all securities
covered hereby then remaining unsold, shall also be deemed to be incorporated
by reference in this Registration Statement and to be a part hereof commencing
on the respective dates on which such documents are filed.
Any statement contained in this Registration Statement, or in a document
incorporated or deemed to be incorporated by reference herein, shall be deemed
to be modified or superseded for purposes of this Registration Statement to
the extent that a statement contained herein, or in any other subsequently
filed document which also is or is deemed to be incorporated by reference
herein, modifies or supersedes such statement. Any such statement so modified
or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Registration Statement.
Item 4. Description of Securities
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Not Applicable
Item 5. Interests of Named Experts and Counsel
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Not Applicable
Item 6. Indemnification of Directors and Officers
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Article XVII of the Registrant's Certificate of Incorporation requires
indemnification of directors, officers and employees to the fullest extent
permitted by Washington law.
Sections 23B.08.500 through 23B.08.600 of the Washington Business
Corporation Act authorize a court to award, or a corporation's board of
directors to grant, indemnification to directors and officers on terms
sufficiently broad to permit indemnification under certain circumstances for
liabilities arising under the Securities Act of 1933, as amended (the
"Securities Act").
Section 23B.08.320 of the Washington Business Corporation Act authorizes
a corporation to limit a director's liability to the corporation or its
shareholders for monetary damages for acts or omissions as a director, except
in certain circumstances involving intentional misconduct, self-dealing or
illegal corporate loans or distributions, or any transactions from which the
director personally receives a benefit in money, property or services to which
the director is not entitled.
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Item 7. Exemption From Registration Claimed
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Not Applicable
Item 8. Exhibits
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The following exhibits are filed with or incorporated by reference into
this Registration Statement on Form S-8:
No. Exhibit
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5 Opinion of Breyer & Associates PC
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Breyer & Associates PC (see Exhibit 5)
24 Power of attorney (see signature pages)
99.1 First Washington Bancorp, Inc. 1998 Stock Option Plan
99.2 Whatcom State Bank 1991 Stock Option Plan
Item 9. Undertakings
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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, (ii) to reflect
in the prospectus any facts or events arising after the effective date of the
Registration Statement (or most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement, and (iii) to include any
material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change in such
information in the Registration Statement; provided, however, that clauses (i)
and (ii) do not apply if the information required to be included in a post-
effective amendment by those clauses is contained in periodic reports filed by
the Registrant pursuant to Section 13 or Section 15(d) of the Exchange Act
that are incorporated by reference in the Registration Statement.
2. That, for the purposes of determining any liability under the
Securities Act, 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 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.
4. That, for the purposes of determining any liability under the
Securities Act, each filing of the Registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act 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 that
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
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5. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officer and controlling
persons of the registrant pursuant to the foregoing provisions or otherwise,
the Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against liabilities (other than the payment by 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 questions whether such indemnification by it is
against public policy expressed in the Securities Act and will be governed by
the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, First
Washington Bancorp, Inc. 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 Walla Walla, and the
State of Washington the 2nd day of February 1999.
FIRST WASHINGTON BANCORP, INC.
By: /s/ Gary L. Sirmon
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Gary L. Sirmon
President, Chief Executive Officer and
Director
(Principal Executive Officer)
POWER OF ATTORNEY
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 dates indicated. Each person whose signature appears
below hereby makes, constitutes and appoints Gary L. Sirmon his true and
lawful attorney, with full power to sign for such person and in such person's
name and capacity indicated below, and with full power of substitution any and
all amendments to this Registration Statement, hereby ratifying and confirming
such person's signature as it may be signed by said attorney to any and all
amendments.
By: /s/ Gary L. Sirmon Date: February 2, 1999
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Gary L. Sirmon
President, Chief Executive Officer and Director
(Principal Executive Officer)
By: /s/ D. Allan Roth Date: February 2, 1999
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D. Allan Roth
Executive Vice President and Chief
Financial Officer and (Principal Financial
and Accounting Officer)
By: /s/ Wilber Pribilisky Date: February 2, 1999
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Wilber Pribilisky
Director
By: /s/ Robert D. Adams Date: February 2, 1999
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Robert D. Adams
Director
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By: /s/ David Casper Date: February 2, 1999
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David Casper
Director
By: /s/ Morris Ganguet Date: February 2, 1999
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Morris Ganguet
Director
By: /s/ S. Rick Meikle Date: February 2, 1999
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S. Rick Meikle
Director
By: /s/ Dean W. Mitchell Date: February 2, 1999
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Dean W. Mitchell
Director
By: /s/ R. R. "Pete" Reid Date: February 2, 1999
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R. R. "Pete" Reid
Director
By: /s/ Marvin Sundquist Date: February 2, 1999
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Marvin Sundquist
Director
By: /s/ Jesse G. Foster Date: February 2, 1999
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Jesse G. Foster
Director
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Exhibit 5
Opinion of Breyer & Associates PC
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[Letterhead of Breyer & Associates PC]
February 2, 1999
Board of Directors
First Washington Bancorp, Inc.
10 S. 1st Avenue
Walla Walla, Washington 99362
Gentlemen:
We have acted as special counsel to First Washington Bancorp, Inc., a
Washington corporation (the "Company"), in connection with the preparation of
the Registration Statement on Form S-8 filed with the Securities and Exchange
Commission ("Registration Statement") under the Securities Act of 1933, as
amended, relating to shares of common stock, par value $.01 per share (the
"Common Stock") of the Company which may be issued pursuant to the terms of
the Company's 1998 Stock Option Plan and Whatcom State Bank's 1991 Stock
Option Plan (the "Plans"), all as more fully described in the Registration
Statement. You have requested the opinion of this firm with respect to
certain legal aspects of the proposed offering.
We have examined such documents, records and matters of law as we have
deemed necessary for purposes of this opinion and based thereon, we are of the
opinion that the Common Stock when issued pursuant to and in accordance with
the terms of the Plans will be duly and validly issued, fully paid, and
nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement on Form S-8.
Sincerely,
/s/ Breyer & Associates PC
BREYER & ASSOCIATES PC
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Exhibit 23.1
Consent of Deloitte & Touche LLP
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INDEPENDENT AUDITORS' CONSENT
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We consent to the incorporation by reference in this Registration Statement of
First Washington Bancorp, Inc. on Form S-8 of our report dated May 22, 1998,
appearing in the Annual Report on Form 10-K of First Washington Bancorp, Inc.
for the year ended March 31, 1998.
/s/Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Seattle, Washington
February 2, 1999
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Exhibit 23.2
Consent of Breyer & Associates PC (see Exhibit 5)
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Exhibit 24
Power of Attorney (see signature page)
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Exhibit 99.1
First Washington Bancorp, Inc. 1998 Stock Option
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FIRST WASHINGTON BANCORP, INC.
1998 STOCK OPTION PLAN
SECTION 1. PURPOSE
The First Washington Bancorp, Inc. 1998 Stock Option Plan (the "Plan") is
hereby established to foster and promote the long-term success of First
Washington Bancorp, Inc. and its shareholders by providing directors, officers
and employees of the Corporation and its subsidiaries with an equity interest
in the Corporation. The Plan will assist the Corporation in attracting and
retaining the highest quality of experienced persons as directors, officers
and employees and in aligning the interests of such persons more closely with
the interests of the Corporation's shareholders by encouraging such parties to
maintain an equity interest in the Corporation.
SECTION 2. DEFINITIONS
For purposes of this Plan, the capitalized terms set forth below shall
have the following meanings:
BOARD means the Board of Directors of the Corporation.
CHANGE IN CONTROL shall mean an event deemed to occur if and when (a) an
offeror other than the Corporation purchases shares of the stock of the
Corporation pursuant to a tender or exchange offer for such shares, (b) any
person (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange
Act) is or becomes the beneficial owner, directly or indirectly, of securities
of the Corporation representing twenty-five percent (25%) or more of the
combined voting power of the Corporation's then outstanding securities, (c)
the membership of the board of directors of the Corporation changes as the
result of a contested election, such that individuals who were directors at
the beginning of any twenty-four (24) month period (whether commencing before
or after the date of adoption of this Plan) do not constitute a majority of
the Board at the end of such period, or (d) shareholders of the Corporation
approve a merger, consolidation, sale or disposition of all or substantially
all of the Corporation's assets, or a plan of partial or complete liquidation.
If any of the events enumerated in clauses (a) - (d) occur, the Board shall
determine the effective date of the change in control resulting therefrom, for
purposes of the Plan.
CODE means the Internal Revenue Code of 1986, as amended from time to
time, and the regulations promulgated thereunder.
CORPORATION means, as appropriate, First Washington Bancorp, Inc., a
Washington corporation (or, with respect to the period prior to the effective
date of the reincorporation transaction approved by the Board on May 21, 1998,
its predecessor, First Savings Bank of Washington Bancorp, Inc., a Delaware
corporation).
DIRECTOR shall mean a director of the Corporation or its subsidiaries who
is not also an employee of the Corporation or its subsidiaries.
DISABILITY means any physical or mental injury or disease of a permanent
nature which renders a Participant incapable of meeting the requirements of
the employment or service performed by such Participant immediately prior to
the commencement of such disability. The determination as to whether a
Participant is disabled shall be made by the Board in its sole and absolute
discretion.
EXCHANGE ACT means the Securities Exchange Act of 1934, as amended from
time to time, and the rules and regulations promulgated thereunder.
FAIR MARKET VALUE shall be determined as follows:
(a) If the Stock is traded or quoted on the Nasdaq Stock Market or other
national securities exchange on any date, then the Fair Market Value shall be
the average of the highest and lowest selling price on such exchange on such
date or, if there were no sales on such date, then on the next prior business
day on which there was a sale.
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(b) If the Stock is not traded or quoted on the Nasdaq Stock Market or
other national securities exchange, then the Fair Market Value shall be a
value determined by the Board in good faith on such basis as it deems
appropriate.
INCENTIVE STOCK OPTION means an option to purchase shares of Stock granted
to a Participant under the Plan which is intended to meet the requirements of
Section 422 of the Code.
NON-QUALIFIED STOCK OPTION means an option to purchase shares of Stock
granted to a Participant under the Plan which is not intended to be an
Incentive Stock Option.
OPTION means an Incentive Stock Option or a Non-Qualified Stock Option.
PARTICIPANT means a Director, Officer or employee of the Corporation or
its subsidiaries selected by the Board to receive an Option under the Plan.
PLAN means this First Washington Bancorp, Inc. 1998 Stock Option Plan.
STOCK means the common stock, $0.01 par value, of the Corporation.
TERMINATION FOR CAUSE shall mean termination because of a Participant's
personal dishonesty, incompetence, willful misconduct, breach of fiduciary
duty involving personal profit, intentional failure to perform stated duties,
willful violation of any law, rule or regulation (other than traffic
violations or similar offenses) or material breach of any provision of any
employment agreement between the Corporation and/or any subsidiary of the
Corporation and a Participant.
SECTION 3. ADMINISTRATION
(a) The Plan shall be administered by the Board. Among other things, the
Board shall have authority, subject to the terms of the Plan, to grant
Options, to determine the individuals to whom and the time or times at which
Options may be granted, to determine whether such Options are to be Incentive
Stock Options or Non-Qualified Stock Options (subject to the requirements of
the Code), to determine the terms and conditions of any Option granted
hereunder, and the exercise price thereof. The Board may, in its sole
discretion, designate a committee of "disinterested" Board members established
in compliance with Rule 16b-3 under the Exchange Act to administer the Plan.
(b) Subject to the other provisions of the Plan, the Board shall have
authority to adopt, amend, alter and repeal such administrative rules,
guidelines and practices governing the operation of the Plan as it shall from
time to time consider advisable, to interpret the provisions of the Plan and
any Option and to decide all disputes arising in connection with the Plan.
The Board may correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any option agreement in the manner and to the
extent it shall deem appropriate to carry the Plan into effect, in its sole
and absolute discretion. The Board's decision and interpretations shall be
final and binding. Any action of the Board with respect to the administration
of the Plan shall be taken pursuant to a majority vote or by the unanimous
written consent of its members.
SECTION 4. ELIGIBILITY AND PARTICIPATION.
Officers and employees of the Corporation and its subsidiaries and
Directors shall be eligible to participate in the Plan. The Participants
under the Plan shall be selected from time to time by the Board, in its sole
discretion, from among those eligible, and the Board shall determine, in its
sole discretion, the numbers of shares to be covered by the Option or Options
granted to each Participant. Options intended to qualify as Incentive Stock
Options shall be granted only to persons who are eligible to receive such
options under Section 422 of the Code.
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SECTION 5. SHARES OF STOCK AVAILABLE FOR OPTIONS
(a) The maximum number of shares of Stock which may be issued and
purchased pursuant to Options granted under the Plan is 400,000, subject to
the adjustments as provided in Section 5 and Section 9, to the extent
applicable. If an Option granted under this Plan expires or terminates before
exercise or is forfeited for any reason, the shares of Stock subject to such
Option, to the extent of such expiration, termination or forfeiture, shall
again be available for subsequent Option grants under the Plan. Shares of
Stock issued under the Plan may consist in whole or in part of authorized but
unissued (including reacquired) shares.
(b) In the event that the Board determines, in its sole discretion, that
any stock dividend, stock split, reverse stock split or combination,
extraordinary cash dividend, creation of a class of equity securities,
recapitalization, reclassification, reorganization, merger, consolidation,
split-up, spin-off, combination, exchange of shares, or other similar
transaction affects the Stock such that an adjustment is required in order to
preserve the benefits or potential benefits intended to be granted or made
available under the Plan to Participants, the Board shall have the right to
proportionately and appropriately adjust equitably any or all of (i) the
maximum number and kind of shares of Stock in respect of which Options may be
granted under the Plan to Participants, (ii) the number and kind of shares of
Stock subject to outstanding Options held by Participants, and (iii) the
exercise price with respect to any Options held by Participants, without
changing the aggregate purchase price as to which such Options remain
exercisable, provided that no adjustment shall be made pursuant to this
Section if such adjustment would cause the Plan to fail to comply with Section
422 of the Code with regard to any Incentive Stock Options granted hereunder.
No fractional Shares shall be issued on account of any such adjustment.
(c) Any adjustments under this Section will be made by the Board, whose
determination as to what adjustments, if any, will be made and the extent
thereof will be final, binding and conclusive.
SECTION 6. NON-QUALIFIED STOCK OPTIONS
The Board may, from time to time, grant Non-Qualified Stock Options to
Participants upon such terms and conditions as the Board may determine. Non-
Qualified Stock Options granted under this Plan are subject to the following
terms and conditions:
(a) Price. The purchase price per share of Stock deliverable upon the
exercise of each Non-Qualified Stock Option shall be determined by the Board
on the date the option is granted. Such purchase price shall not be less than
one hundred percent (100%) of the Fair Market Value of the Stock on the date
of grant. Shares may be purchased only upon full payment of the purchase
price. Payment of the purchase price may be made, in whole or in part,
through the surrender of shares of the Stock at the Fair Market Value of such
shares on the date of surrender or through a "cashless exercise" involving a
stock brokerage firm.
(b) Terms of Options. The term during which each Non-Qualified Stock
Option may be exercised shall be determined by the Board, but in no event
shall a Non-Qualified Stock Option be exercisable in whole or in part more
than ten (10) years from the date of grant. Except as provided herein, no
Non-Qualified Stock Option granted under this Plan is transferable except by
will or the laws of descent and distribution. The Board shall have
discretionary authority to permit the transfer of any Non-Qualified Stock
Option to members of a Participant's immediate family, including trusts for
the benefit of such family members and partnerships in which such family
members are the only partners; provided, however, that a transferred Non-
Qualified Stock Option may be exercised by the transferee on any date only to
the extent that the Participant would have been entitled to exercise the Non-
Qualified Stock Option on such date had the Non-Qualified Stock Option not
been transferred. Any transferred Non-Qualified Stock Option shall remain
subject to the terms and conditions of the Participant's stock option
agreement.
(c) Termination of Service. Unless otherwise determined by the Board,
upon the termination of a Participant's employment (or, in the case of a
Director, service as a member of the Board) for any reason other than
Disability, death or Termination for Cause, the Participant's Non-Qualified
Stock Options shall be exercisable only as
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to those shares which were immediately exercisable by the Participant at the
date of termination and only for a period of one (1) year following
termination. Notwithstanding any provision set forth herein nor contained in
any Agreement relating to the award of an Option, in the event of Termination
for Cause, all rights under the Participant's Non-Qualified Stock Options
shall expire upon termination. In the event of death or termination as a
result of Disability of any Participant, all Non-Qualified Stock Options held
by the Participant, whether or not exercisable at such time, shall be
exercisable by the Participant or his legal representatives or beneficiaries
of the Participant for two (2) years or such longer period as determined by
the Board following the date of the Participant's death or termination of
service due to Disability, provided that in no event shall the period extend
beyond the expiration of the Non-Qualified Stock Option term.
SECTION 7. INCENTIVE STOCK OPTIONS
The Board may, from time to time, grant Incentive Stock Options to
eligible employees. Incentive Stock Options granted pursuant to the Plan
shall be subject to the following terms and conditions:
(a) Price. The purchase price per share of Stock deliverable upon the
exercise of each Incentive Stock Option shall be not less than one hundred
percent (100%) of the Fair Market Value of the Stock on the date of grant.
However, if a Participant owns (or, under Section 422(d) of the Code, is
deemed to own) stock possessing more than ten percent (10%) of the total
combined voting power of all classes of Stock, the purchase price per share of
Stock deliverable upon the exercise of each Incentive Stock Option shall not
be less than one hundred ten percent (110%) of the Fair Market Value of the
Stock on the date of grant. Shares may be purchased only upon payment of the
full purchase price. Payment of the purchase price may be made, in whole or
in part, through the surrender of shares of the Stock at the Fair Market Value
of such shares on the date of surrender or through a "cashless exercise"
involving a stock brokerage firm.
(b) Amounts of Options. Subject to Sections 4(b) and (c), Incentive
Stock Options may be granted to any eligible employee in such amounts as
determined by the Board. In the case of an option intended to qualify as an
Incentive Stock Option, the aggregate Fair Market Value (determined as of the
time the option is granted) of the Stock with respect to which Incentive Stock
Options granted are exercisable for the first time by the Participant during
any calendar year shall not exceed $100,000. The provisions of this Section
7(b) shall be construed and applied in accordance with Section 422(d) of the
Code and the regulations, if any, promulgated thereunder. To the extent an
award is in excess of such limit, it shall be deemed a Non-Qualified Stock
Option. The Board shall have discretion to redesignate options granted as
Incentive Stock Options as Non-Qualified Stock Options.
(c) Terms of Options. The term during which each Incentive Stock Option
may be exercised shall be determined by the Board, but in no event shall an
Incentive Stock Option be exercisable in whole or in part more than ten (10)
years from the date of grant. If at the time an Incentive Stock Option is
granted to an employee, the employee owns Stock representing more than ten
percent (10%) of the total combined voting power of the Corporation (or, under
Section 422(d) of the Code, is deemed to own Stock representing more than ten
percent (10%) of the total combined voting power of all such classes of Stock,
by reason of the ownership of such classes of Stock, directly or indirectly,
by or for any brother, sister, spouse, ancestor or lineal descendent of such
employee, or by or for any corporation, partnership, estate or trust of which
such employee is a shareholder, partner or beneficiary), the Incentive Stock
Option granted to such employee shall not be exercisable after the expiration
of five (5) years from the date of grant. No Incentive Stock Option granted
under this Plan is transferable except by will or the laws of descent and
distribution.
(d) Termination of Employment. Upon the termination of a Participant's
service for any reason other than Disability, death or Termination for Cause,
the Participant's Incentive Stock Options which are then exercisable at the
date of termination may only be exercised by the Participant for a period of
three (3) months following termination, after which time they shall be void.
Notwithstanding any provisions set forth herein nor contained in any Agreement
relating to an award of an Option, in the event of Termination for Cause, all
rights under the Participant's Incentive Stock Options shall expire
immediately upon termination.
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Unless otherwise determined by the Board, in the event of death or
termination of service as a result of Disability of any Participant, all
Incentive Stock Options held by such Participant, whether or not exercisable
at such time, shall be exercisable by the Participant or the Participant's
legal representatives or the beneficiaries of the Participant for one (1) year
following the date of the Participant's death or termination of employment as
a result of Disability. In no event shall the exercise period extend beyond
the expiration of the Incentive Stock Option term.
(f) Compliance with Code. The options granted under this Section 7 of
the Plan are intended to qualify as incentive stock options within the meaning
of Section 422 of the Code, but the Corporation makes no warranty as to the
qualification of any option as an incentive stock option within the meaning of
Section 422 of the Code. A Participant shall notify the Board in writing in
the event that he disposes of Stock acquired upon exercise of an Incentive
Stock Option within the two-year period following the date the Incentive Stock
Option was granted or within the one-year period following the date he
received Stock upon the exercise of an Incentive Stock Option and shall comply
with any other requirements imposed by the Corporation in order to enable the
Corporation to secure the related income tax deduction to which it will be
entitled in such event under the Code.
SECTION 8. EXTENSION
The Board may, in its sole discretion, extend the dates during which all
or any particular Option or Options granted under the Plan may be exercised;
provided, however, that no such extension shall be permitted without the
Participant's consent if it would cause Incentive Stock Options issued under
the Plan to fail to comply with Section 422 of the Code.
SECTION 9. GENERAL PROVISIONS APPLICABLE TO OPTIONS
(a) Each Option under the Plan shall be evidenced by a writing delivered
to the Participant specifying the terms and conditions thereof and containing
such other terms and conditions not inconsistent with the provisions of the
Plan as the Board considers necessary or advisable to achieve the purposes of
the Plan or comply with applicable tax and regulatory laws and accounting
principles.
(b) Each Option may be granted alone, in addition to or in relation to
any other Option. The terms of each Option need not be identical, and the
Board need not treat Participants uniformly. Except as otherwise provided by
the Plan or a particular Option, any determination with respect to an Option
may be made by the Board at the time of grant or at any time thereafter.
(c) Notwithstanding anything in this Plan to the contrary, in the event
of a Change in Control, all then outstanding Options shall become one hundred
percent vested and exercisable as of the effective date of the Change in
Control. If, in connection with or as a consequence of a Change in Control,
the Corporation is merged into or consolidated with another corporation, if
the Corporation becomes a subsidiary of another corporation or if the
Corporation sells or otherwise disposes of substantially all of its assets to
another corporation, then unless provisions are made in connection with such
transactions for the continuance of the Plan and/or the assumption or
substitution of then outstanding Options with new options covering the stock
of the successor corporation, or parent or subsidiary thereof, with
appropriate adjustments as to the number and kind of shares and prices, such
Options shall be canceled as of the effective date of the merger,
consolidation, or sale and the Participant shall be paid in cash an amount
equal to the difference between the Fair Market Value of the Stock subject to
the Options on the effective date of such corporate event and the exercise
price of the Options. Notwithstanding anything in this Section 9(c) or any
Option agreement to the contrary, in the event that the consummation of a
Change in Control is contingent on using pooling of interests accounting
methodology, the Board may, in its discretion, take any action necessary to
preserve the use of pooling of interests accounting.
(d) The Corporation shall be entitled to withhold (or secure payment from
the Participant in lieu of withholding) the amount of any withholding or other
tax required by law to be withheld or paid by the Corporation with respect to
any Options exercised under this Plan, and the Corporation may defer issuance
of Stock hereunder until and
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unless indemnified to its satisfaction against any liability for any such tax.
The amount of such withholding or tax payment shall be determined by the Board
or its delegate and shall be payable by the Participant at such time as the
Board determines. To the extent authorized by the Board, such withholding
obligation may also be satisfied by the payment of cash by the Participant to
the Corporation, the tendering of previously acquired shares of Stock of the
Participant or the withholding, at the appropriate time, of shares of Stock
otherwise issuable to the Participant, in a number sufficient, based upon the
Fair Market Value of such Stock, to satisfy such tax withholding requirements.
The Board shall be authorized, in its sole discretion, to establish such rules
and procedures relating to any such withholding methods as it deems necessary
or appropriate, including, without limitation, rules and procedures relating
to elections by Participants who are subject to the provisions of Section 16
of the Exchange Act.
(e) Subject to the terms of the Plan, the Board may at any time, and from
time to time, amend, modify or terminate the Plan or any outstanding Option
held by a Participant, including substituting therefor another Option of the
same or a different type or changing the date of exercise or realization,
provided that the Participant's consent to each action shall be required
unless the Board determines that the action, taking into account any related
action, would not materially and adversely affect the Participant.
SECTION 10. MISCELLANEOUS
(a) No person shall have any claim or right to be granted an Option, and
the grant of an Option shall not be construed as giving a Participant the
right to continued employment or service on the Board. The Corporation
expressly reserves the right at any time to dismiss a Participant free from
any liability or claim under the Plan, except as expressly provided in the
Plan or the applicable Option.
(b) Nothing contained in the Plan shall prevent the Corporation from
adopting other or additional compensation arrangements.
(c) Subject to the provisions of the applicable Option, no Participant
shall have any rights as a shareholder (including, without limitation, any
rights to receive dividends, or non cash distributions with respect to such
shares) with respect to any shares of Stock to be distributed under the Plan
until he or she becomes the holder thereof.
(d) Notwithstanding anything to the contrary expressed in this Plan, any
provisions hereof that vary from or conflict with any applicable Federal or
State securities laws (including any regulations promulgated thereunder) shall
be deemed to be modified to conform to and comply with such laws.
(e) No member of the Board shall be liable for any action or
determination taken or granted in good faith with respect to this Plan nor
shall any member of the Board be liable for any agreement issued pursuant to
this Plan or any grants under it. Each member of the Board shall be
indemnified by the Corporation against any losses incurred in such
administration of the Plan, unless his action constitutes serious and willful
misconduct.
(f) The Plan shall be effective upon approval by the Corporation's
shareholders. The Plan will be so approved if at a meeting of shareholders
held within twelve (12) months of the date of adoption of the Plan by the
Board a quorum is present and the votes of the holders of a majority of the
securities of the Corporation present or represented by proxy and entitled to
vote on such matter shall be cast in favor of its approval.
(g) The Board may amend, suspend or terminate the Plan or any portion
thereof at any time, provided that no amendment shall be made without
shareholder approval if such approval is necessary to comply with any
applicable tax laws or regulatory requirement.
(h) Options may not be granted under the Plan after the tenth anniversary
of the effective date of the Plan, but then outstanding Options may extend
beyond such date.
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(i) To the extent that State laws shall not have been preempted by any
laws of the United States, the Plan shall be construed, regulated, interpreted
and administered according to the other laws of the State of Washington.
7
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Exhibit 99.2
Whatcom State Bank 1991 Stock Option Plan
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AMENDMENT TO WHATCOM STATE BANCORP
1991 STOCK OPTION PLAN
NON-EMPLOYEE DIRECTORS
Pursuant to Section 13 of the Whatcom State Bancorp 1991 Stock Option
Plan for Non-Employee Directors, said Plan is hereby amended as follows:
Section 11.2 is amended and restated as follows:
In the event that the Board approves a proposal for a merger or
consolidation in which the Bank is not the resulting or surviving bank, but
becomes a subsidiary of another bank (or in which the Bank is the resulting or
surviving bank, but becomes a subsidiary of another corporation), or for the
transfer of substantially all of the assets of the Bank, the Committee shall
notify, in writing, each director holding an NSO of the proposed transaction.
Such proposal notice shall be sent to each director at least 30 days prior to
the Effective Date of the proposed transaction and shall advise the director
that he or she has the right to exercise any theretofore unexercised NSO
awarded to the director including those, if any, which, pursuant to the terms
of the Plan or the relevant NSO agreement, have not been otherwise become
exercisable. Each director, by written notice to the Bank, may exercise such
NSO and in so exercising may condition such exercise upon and provide that
such exercise shall become effective immediately prior to the consummation of
the proposed transaction, in which event such director need not make payment
for the stock to be purchased until 5 days after written notice by the Bank to
the director that the transaction has been consummated. Notwithstanding any
other provision in the Plan, if the transaction is consummated, each NSO not
exercised prior to the consummation of the transaction shall continue to be
exercisable to the extent such NSO was exercisable prior to the transaction in
accordance with the other provisions of the Plan and the relevant NSO
agreement. If the transaction is abandoned then any NSO not exercised shall
continue to be exercisable to the extent such NSO was exercisable prior to the
date of the notice of the proposed transaction in accordance with the other
provisions of the Plan and the relevant NSO agreement, and to the extent that
any NSO not exercised prior to such abandonment shall have become exercisable
solely by operation of this section such exercisability shall be deemed
annulled and the exercisability provisions set forth in the Plan and the
relevant NSO agreement shall be reinstated as of the date of such abandonment.
The effective date of this Amendment shall be June 26, 1998
--------
Amendment to the 1991 Whatcom State Bancorp
Stock Option Plan for Non-Employee Directors
<PAGE>
<PAGE>
Adopted by the Board of Directors on June 10, 1998
Whatcom State Bancorp, Inc.
/s/ Phil Stephenson Date: June 26, 1998
- ------------------------------ ---------------------------
Amendment to the 1991 Whatcom State Bancorp
Stock Option Plan for Non-Employee Directors
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Amendment to Whatcom
State Bank 1991 Stock Option Plan
Pursuant to Section 13 of the Whatcom State Bank 1991 Stock Option Plan, said
plan is hereby amended, as follows:
Section 2.1 - The number 30,000 shall be changed to 60,000.
Section 6.1 - The word "Option" shall be changed to "ISO".
A new Section 6.3 shall be added as follows:
6.3 The price for each share purchasable under any
NQG granted hereunder shall be such amount as the
Board or Committee shall in its best judgement
determine.
A new Section 7.4 shall be added as follows:
6.4 Upon a change of control any Option granted
hereunder shall immediately become exercisable by and
vested in Key Employee. All other terms of any
Option granted shall remain unchanged by such a
change in control. Change in control shall be
defined as a cumulative transfer of more than 50% of
the outstanding stock from the date of this
amendment. For this purpose, all transfers shall be
included except transfers upon death and any transfer
classified as a gift for gift tax purposes.
The effective date of this amendment shall be November 17, 1993.
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Adopted by the Board of Directors
<PAGE>
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WHATCOM STATE BANK
1991 STOCK OPTION PLAN
1. PURPOSE
1.1. The purpose of the Whatcom State Bank ("the Bank") Stock
Option Plan ("the Plan") is to encourage the long-term success of the Bank or
any subsidiary or parent of the Bank now existing, hereinafter formed, or
acquired by: (1) providing a means through which the Bank can attract,
motivate and retain officers and other key employees who can contribute
materially to that success; (2) encouraging stock ownership by these employees
so that they have a proprietary interest in the Bank's growth and success.
1.2. This purpose shall be accomplished under the grant of Incentive
Stock Options ("ISO's") within the meaning of The Internal Revenue Code of
1986 ("the Code"), Non-Qualified Stock Grants ("NQG's") or a combination
thereof. The Bank makes no warranty as to the qualifications of any Option
granted hereunder as an ISO.
1.3. The stock Options ("the Options") offered pursuant to this Plan
are a matter of separate inducement and are not in lieu of any salary or other
compensation for services of any key employee.
2. STOCK SUBJECT TO THE PLAN
2.1. Amount - the total number of Shares of stock of the Bank which
may be purchased pursuant to the exercise of Options granted under the Plan
shall not exceed in the aggregate 30,000 Shares of the authorized stock $1 par
value per Share ("the Shares").
2.2. Shares that may be acquired under the Plan may be either
authorized but unissued Shares, Shares of issued stock held in the Bank's
treasury, or both, at the discretion of the Bank. If, and to the extent that,
Options granted under the Plan expire or terminate without having been
exercised, new Options may be granted with respect to the Shares covered by
such expired or terminated Options, provided that the grant and the terms of
such new Options shall in all respects comply with the provisions of the Plan.
2.3. Except as provided in paragraph 17, the Bank may from time to
time during the period beginning May 1, 1991 ("The Effective Date") and ending
April 30, 2001 ("The Termination Date") grant Options to certain key employees
of the Bank or any other subsidiary or parent of the Bank now existing or
hereinafter formed or acquired under the terms hereinafter set forth. The
terms subsidiary of the Bank and parent of the Bank as used herein shall have
the same meaning as the terms subsidiary corporation and parent corporation as
defined in Sections 425(f) and (e) of the code.
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3. ADMINISTRATION
3.1. The Board of directors of the Bank ("the Board") shall
designate from among it's members a committee ("the Committee") who shall
consist of no fewer than three members of the Board each of whom shall be a
disinterested person within the meaning of Rule 16b-3 promulgated under the
Securities Exchange Act of 1934 as amended (the "Exchange Act") to administer
the Plan. A majority of the members of the Committee shall constitute a
quorum and the act of the majority of the members shall be the act of the
Committee. Any member of the Committee may be removed at any time, either
with or without cause, by resolution adopted by the Board and any vacancy on
the Committee may at any time be filled by resolution adopted by the Board.
3.2. Any or all powers and functions of the Committee may at any
time, and from time to time, be exercised by the Board; provided, however,
that with respect to the participation in the Plan by employees who are
members of the Board, as the case may be, such powers and functions of the
Committee may be exercised by the Board only if, at the time of such exercise,
a majority of the directors of the Board and a majority of directors acting in
the particular matter are disinterested persons within the meaning of Rule
16b-3 under the Exchange Act.
3.3. Subject to the express provisions of the Plan, the Board of
directors or the Committee shall have authority in it's discretion to
determine the employees to whom Options will be granted, the time when such
Options shall be granted to the employee, number of Shares which shall be
subject to each Option, the purchase price for each Share which shall be
subject to each Option, the period during which such Option shall be
exercisable (whether in whole or in part) and the other terms and provisions
thereof.
3.4. Subject to the express provisions of the Plan, the Board or
the Committee also shall have authority to construe the Options granted
thereunder, to amend the Plan and the Options granted thereunder, to
prescribe, amend and rescind rules and regulations relating to the Plan, to
determine the terms and provisions of the respective Options (which need not
be identical) and to make all other determinations necessary or advisable for
administering the Plan.
3.5. The determination of the Board or the Committee on matters
referred to in this paragraph 3 shall be conclusive.
3.6. The Board or the Committee may employ such legal counsel,
consultants and agents as it may deem desirable for the administration of
the Plan and may rely upon any opinion received from such counsel or
consultant and any computation received from any such consultant or agent.
Expenses incurred by the Board or the Committee in the engagement of such
counsel, consultant or
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agent shall be paid by the Bank. No member or former member of the Committee
or Board shall be liable for any action or determination made in good faith
with respect to the Plan or any Option granted hereunder.
4. ELIGIBILITY
4.1. Participants in the Plan shall be those salaried key employees
and officers of the Bank or of any subsidiary or parent of the Bank including
officers/employees who are also directors of the Bank or any subsidiary or
parent of the Bank who are selected by the Committee from time to time. A
director of the Bank who is not also a regular salaried employee of the Bank
will not be eligible to receive an Option. Any person who shall have retired
from active employment by the Bank, although such person shall have entered
into a consulting contract with the Bank, shall also not be eligible to
receive an Option.
4.2. No ISO's shall be granted to an employee who, at the time the
Option is granted, owns stock possessing more than 10% of the total combined
voting power of all classes of capital stock of the Bank or any subsidiary or
parent of the Bank; provided however, that an ISO may be granted to such
employee if, at the time such ISO is granted, the Option price is no less than
the greater of either the par value of the stock, or 110% of the fair market
value of the stock subject to the Option at the time the Option is granted and
provided further that such Option is, by it's terms, not exercisable after an
expiration of 5 years from the date such Option is granted.
5. MAXIMUM ALLOTMENT
5.1. No employee shall be granted an ISO to purchase Shares of
stock of the Bank or of any subsidiary of the Bank or parent of the Bank or
any combination thereof, if the aggregate fair market value of the stock with
respect to which ISO's are exercisable for the first time by such employee
during any calendar year (under all stock Option Plans of the Bank and any
subsidiary or parent of the Bank) exceeds $100,000. For purposes of this
limitation, the fair market value of the stock is determined as of the time
the Option is granted.
6. OPTION PRICE AND PAYMENT
6.1. The price for each Share purchasable under any Option granted
hereunder shall be such amount as the Board or Committee shall in it's best
judgement determine on the basis of the facts and circumstances to be not less
than the greater of either the par value of the stock or 100% of the fair
market value of the stock at the date the Option is granted (or 110% of the
fair market value of the stock if required for issuance of an ISO to a 10%
Shareholder). For purposes of this Plan the determination of the Board or the
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Committee of the fair market value of the Shares shall be conclusive.
6.2. Upon the exercise of an Option granted hereunder, the Bank
shall cause the purchased Shares to be issued only when it shall have received
the full purchase price for the Shares in cash; provided however, that in lieu
of cash and within the limitations of Rule 16b-3 under the Exchange Act, the
holder of an Option may, if and to the extent that such Options so provide,
and to the extent permitted by applicable law, exercise an Option, in whole or
in part, by delivering to the Bank Shares of stock of the Bank owned by such
holder, having a fair market value equal to the cash exercise price applicable
to that portion of the Option being exercised by the delivery of such Shares.
The fair market value of the stock so delivered shall be determined as of the
date immediately preceding the date on which the Option is exercised or as may
be required in order to comply or to conform to the requirements of any
applicable law or regulation.
7. TERM OF OPTION AND EXERCISE RIGHTS
7.1. Unless the Board or the Committee shall determine otherwise,
any ISO granted hereunder shall be exercisable during a period of not less
than 6 months nor more than 10 years from the date of grant of such Option (5
years in the case of a more than 10% Shareholder) at such times and in such
amounts as the Board or the Committee shall determine at such date of grant.
7.2. Any NQG granted hereunder shall be exercisable at such time in
such amounts and during such period or periods as the Board or the Committee
shall determine at the date of the grant of such Option.
7.3. To the extent an Option is not exercised within the period
specified therein, it shall expire as to any unexercised part. If any Option
granted hereunder shall terminate prior to the Termination Date, the Board or
the Committee, as the case may be, shall have the right to use the Shares as
to which such Options shall not have been exercised to grant one or more
additional Options to any eligible employee, but any such grant of an
additional Option shall be made prior to the close of business on Termination
Date. In no event shall an Option granted hereunder be exercised for a
fraction of the Share.
8. EXERCISE OF OPTIONS
8.1. Options granted under the Plan shall be exercised by the
Optionee as to all or part of the Shares covered thereby by the giving of
written notice of the exercise thereof to the corporate secretary of the Bank,
at the principal business office of the Bank, specifying the number of Shares
to be purchased and specifying a business day, not more than 15 days from
the date such
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notice is given, for the payment of the purchase price against delivery of the
Shares being purchased.
9. NON-TRANSFERABILITY OF OPTIONS
9.1. No Option granted hereunder shall be transferable whether by
operation of law or otherwise, other than by will or the laws of descent and
distribution and any Option granted hereunder shall be exercisable during the
lifetime the holder only by such holder.
10. TERMINATION OF EMPLOYMENTS
10.1. Upon the termination of employment of any employee with the
Bank and any subsidiary or parent of the Bank, any Option previously granted
to the employee, unless otherwise specified by the Board or the Committee, in
the Option, shall, to the extent not theretofore exercised, terminate and
become null and void, provided that:
a) if the employee shall die while in employ of the Bank or during
the one year period specified in clause (b) below, all Options granted to such
employee and outstanding on the date of the employee's death shall become
immediately exercisable by the estate, or the personal representative of such
employee, or such person who acquired such Option by bequest or inheritance or
by reason of the death of the employee, at any time prior to the expiration
date of any such Option; and
b) if the employment of any employee to whom such Option shall have
been granted shall Terminate by reason of the employee's retirement,
disability (as described in section 22(e) (3) of the Code), voluntary
Termination or dismissal by the Bank, and while such employee is entitled to
exercise such Option as herein provided, such employee shall have the right to
exercise such Option so granted in respect of any or all of such number of
Shares as specified by the Board or the Committee in such Options at any time
up to and including 3 months after the date of such Termination of employment
in the case of Termination by reason of retirement, voluntary termination, or
dismissal or 1 year after the date of Termination of employment in the case of
Termination of employment by reason of disability.
In no event however, shall any such person be entitle to exercise any
such Option after the Expiration of the period of exercisability of such
Option as specified therein.
10.2. If an Option granted hereunder shall be exercised by the
estate or by the legal representative of a deceased employee or former
employee, or by a person who acquired an Option granted hereunder by bequest
or inheritance or by reason of the death of any employee or former employee,
written notice of such exercise shall be accompanied by certified copies of
letters testamentary or
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equivalent proof of the right of such legal representative or other person to
exercise such Option.
10.3. For purposes of the Plan an employment relationship shall be
deemed to exist between an individual and the Bank if, at the time of the
determination, the individual was an "employee" of the Bank for purposes of
section 422(a) of the Code. If an individual is on military sick leave or
other bona fide leave of absence such individual shall be considered an
employee for purposes of the exercise of an Option and shall be entitled to
exercise such Option during such leave or if the period of such leave does not
exceed 90 days, or if longer, so long as the individuals right to re-
employment with the Bank granting the Option is guaranteed either by statute
or by contract. If the period of leave exceeds 90 days, the employment
relationship shall be deemed to have Terminated on the 91st day of such leave
unless the individuals right to a reemployment is guaranteed by statute or
contract.
11. ADJUSTMENT OF SHARES; EFFECT OF CERTAIN TRANSACTIONS
11.1. In the event of any change in the outstanding Shares through
merger, consolidation, reorganization, recapitalization, stock dividends,
stock split, split up, split off, spin off, combination of Shares, exchange of
Shares or other like change in capital structure of the Bank, an adjustment
shall be made to each outstanding Option such that each such Option shall
thereafter be exercisable for such securities, cash and/or other properties as
would have been received in respect of the Shares subject to such Option had
such Option been exercised in full immediately prior to such change, and such
an adjustment shall be made successfully each time any such change shall
occur. The term Shares shall after any such change refer to the securities,
cash and/or property then receivable upon exercise of an Option. In addition,
in the event of any such change, the Board or the Committee shall make further
adjustment as may be appropriate to the maximum number of Shares subject to
the Plan, the maximum number of Shares for which Options may be granted to any
one employee, and the number of Shares and price per Share subject to
outstanding Options as shall be equitable to prevent dilution or enlargement
of rights under such Options, and the determination of the Board or the
Committee as to these matters shall be conclusive. Not withstanding the
foregoing, each such adjustment with respect to an ISO shall comply with the
rules of Section 425(a) of the Code, and in no event shall any adjustment be
made which would render any ISO granted hereunder other than an ISO for
purposes of Section 422A of the Code.
11.2. In the event that the Board approves a proposal for a merger
or consolidation in which the Bank is not the resulting or surviving Bank, but
becomes a subsidiary of another Bank, (or in which the Bank is the resulting
or surviving Bank, but becomes a subsidiary of another corporation) or for the
transfer of
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substantially all of the assets of the Bank, the Committee shall notify, in
writing, each employee holding an ISO of the proposed transaction. Such
proposal notice shall be sent to each employee at least 30 days prior to the
Effective Date of the proposed transaction and shall advise the employee that
he or she has the right to exercise any theretofore unexercised ISO awarded to
the employee including those, if any, which pursuant to the terms of the Plan
or the relevant ISO agreement have not been otherwise become exercisable.
Each employee, by written notice to the Bank, may exercise such ISO and in so
exercising may condition such exercise upon and provide that such exercise
shall become effective immediately prior to the consummation of the proposed
transaction, in which event such employee need not make payment for the stock
to be purchase until 5 days after written notice by the Bank to the employee
that the transaction has been consummated. If the transaction is consummated
each ISO to the extent not previously exercised prior to the consummation of
the transaction shall terminate and cease being exercisable as of the
effective date of the transaction. If the transaction is abandoned then any
ISO not exercised shall continue to be exercisable to the extent such ISO was
exercisable prior to the date of the notice of the proposed transaction in
accordance with the other provisions of the Plan and the relevant ISO
agreement, and to the extent that any ISO not exercised prior to such
abandonment shall have become exercisable solely by operation of this section
such exercisability shall be deemed annulled and the exercisability provisions
set forth in the Plan and the relevant ISO agreement shall be reinstated as of
the date of such abandonment. Any NQG agreement in effect immediately prior
to the transaction shall carry forward as an obligation of the surviving Bank
to the same extent as if the transaction had not taken place.
12. RIGHT TO TERMINATE EMPLOYMENT
12.1. The Plan shall not impose any obligation on the Bank or any
subsidiary or parent of the Bank to continue the employment of any holder of
an Option; and it shall not impose any obligation on the part of any holder of
any Option to remain in the employ of the Bank or any subsidiary or parent of
the Bank.
13. AMENDMENT OF THE PLAN
13.1. The Board may from time to time amend the Plan, provided that
no amendment shall be made without the approval of the Shareholders of the
Bank that will increase the number of Shares reserved for Options under the
Plan (other than an increase resulting from an adjustment provided for in
paragraph 11), or reduce the exercise price of any ISO granted hereunder below
the price required by Article 6, or modify the provisions of the Plan relating
to eligibility, or materially increase the benefits accruing to participants
under the Plan. The Board or the Committee shall be
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<PAGE>
authorized to amend the Plan and the Options granted thereunder to permit the
ISO's granted thereunder to qualify as ISO's within the meaning of Section
422A of the Code. The rights and obligations under any Option granted before
amendment of the Plan or any unexercised portion of such Options shall not be
adversely affected by an amendment to the Plan or the Option without the
consent of the holder of the Option.
14. TERMINATION OR SUSPENSION OF THE PLAN
14.1. The Board may at any time suspend or Terminate the Plan. The
Plan, unless Terminated under Article 17, or by action of the Board, shall
Terminate at the close of business on the Termination Date. An Option may not
be granted while the Plan is suspended or after it is Terminated. Rights and
obligations under any Option granted while the Plan is in effect shall not be
altered or impaired by suspension or Termination of the Plan, except upon the
consent of the person to whom the Option was granted. The power of the Board
or the Committee to construe and administer any Options granted prior to the
Termination or suspension of the Plan nevertheless shall continue after such
Termination or during such suspension.
15. GOVERNING LAW
15.1. The Plan, such Options as may be granted thereunder and all
related matters shall be governed by and construed and enforced in accordance
with the laws of the State of Washington.
16. PARTIAL INVALIDITY
16.1. The invalidity or illegality of any provision herein shall not
be deemed to affect the validity of any other provision.
17. EFFECTIVE DATE
17.1. The Effective Date of the Plan shall be May 1, 1991 the date
on which the Plan was adopted by the Board; provided however that if the Plan
is not approved by a vote of the Shareholders of the Bank at an annual meeting
or any special meeting within 12 months before or after the Effective Date the
Plan and any Options granted thereunder shall Terminate.
Adopted by the Board of Directors APRIL 17, 1991
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Approved by the Shareholders MAY 8, 1991
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