<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 22, 1998
REGISTRATION NO. 333-_____
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------------
FORM S-8
REGISTRATION UNDER THE SECURITIES ACT OF 1933
----------------------------------
INTERWEST BANCORP, INC.
(Exact name of registrant as specified in its charter)
WASHINGTON 91-1691216
(State or other jurisdiction (I.R.S. Employer Identification
of incorporation or organization)
275 S.E. PIONEER WAY, OAK HARBOR, WASHINGTON 98277
------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
FIRST NATIONAL BANK OF PORT ORCHARD 1990 EMPLOYEE & DIRECTOR STOCK OPTION PLAN
------------------------------------------------------------------------------
(Full title of plan)
Please send copies of all communications to:
STEPHEN M. WALDEN STEPHEN M. KLEIN
InterWest Bancorp, Inc. Graham & Dunn, P.C.
275 S.E. Pioneer Way 1420 Fifth Avenue, 33rd Floor
Oak Harbor, WA 98277 Seattle, WA 98101
(360) 679-4181 (206) 624-8300
CALCULATION OF REGISTRATION FEE
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Proposed Proposed
maximum maximum
Title of Amount offering aggregate Amount of
securities to to be price offering registration
be registered registered per share(1) price(1) fee
- ------------- ---------- ------------- --------- ---
<S> <C> <C> <C> <C>
Common shares, 8,350(2) $42.81 $357,463.50 105.49
$.20 par value
</TABLE>
- ------------------------------------------------------------------------------
NOTES:
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 ("Securities Act"), the price per share is
estimated to be $42.81 based upon the average of the high ($43.12) and
the low ($42.50) trading prices of the common stock, $.20 par value
per share ("Common Stock") of InterWest Bancorp, Inc. (the
"Registrant") as reported on the Nasdaq Stock Market on April 20,
1998.
2. Shares of Registrant's Common Stock issuable upon exercise of option
outstanding under the First National Bank of Port Orchard 1990
Employee & Director Stock Option Plan (the "Plan"), together with an
indeterminate number of additional shares which may be necessary to
adjust the number of shares reserved for issuance under the Plan as a
result of any future stock split, stock dividend or similar adjustment
of the outstanding Common Stock, as provided in Rule 416(a) under the
Securities Act.
<PAGE>
PART II. INFORMATION REQUIRED IN REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The documents listed below are incorporated by reference in the
Registration Statement. 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, as amended ("Exchange Act") prior to Registrant's 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 into this Registration Statement and to
be a part hereof from the date of filing of such documents.
(a) The Registrant's Annual Report on Form 10-K for the fiscal year ended
September 30, 1997, filed pursuant to Section 13(a) or 15(d) of the Exchange
Act, which contains audited financial statements for the most recent fiscal year
for which such statements have been filed.
(b) All other reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act since the end of the fiscal year covered by the Annual Report on
Form 10-K referred to in (a) above.
(c) The description of the Common Shares contained in the Registrant's
Prospectus/Joint Proxy Statement dated October 31, 1997 and included in the
Registrant's Registration Statement on Form S-4 (Registration No. 333-39329),
including any amendments or reports filed for the purpose of updating such
description.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
The validity of the shares offered pursuant to the Plan will be passed
upon by Graham & Dunn, PC, 1420 Fifth Avenue, 33rd Floor, Seattle, Washington
98101.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Washington Business Corporation Act ("WBCA") sets forth certain
mandatory and permissive provisions which a Washington corporation may utilize
in indemnifying and/or advancing expenses to its directors, officers, employees
and agents. The WBCA also authorizes a corporation to adopt its own provisions
governing indemnification and advancement of expenses. Such provisions must be
contained in the corporation's articles of incorporation, a bylaw adopted or
ratified by shareholders, or a resolution adopted or ratified by shareholders.
In no case, however, may such provisions authorize indemnification or
advancement of expenses to any director, officer, employee or agent for (a) acts
or omissions finally adjudged to be intentional misconduct or a knowing
violation of law, (b) conduct finally adjudged to be in
2
<PAGE>
violation of Section 23B.08.310 of the WBCA (regarding unlawful distributions),
and (c) conduct from which the person received a benefit in money, property or
services to which he or she was adjudged to be not legally entitled.
Pursuant to the Registrant's Articles of Incorporation, the Registrant
will, to the fullest extent permitted by the WBCA, indemnify the officers,
directors, agents and employees of the Registrant with respect to expenses,
settlements, judgments and fines in suits in which such person was made a party
by reason of the fact that he or she is or was an agent of the Registrant. No
such indemnification may be given if the acts or omissions of the person are
adjudged to be in violation of law, if such person is liable to the corporation
for an unlawful distribution, or if such person personally received a benefit to
which he or she was not entitled. In addition, the Registrant's Articles of
Incorporation provide that the directors of the Registrant shall not be
personally liable for monetary damages to the Registrant for certain breaches of
their fiduciary duty as directors, except for liabilities that involve
intentional misconduct by the director, the authorization or illegal
distributions or receipt of an improper personal benefit from their actions as
directors. This provision might, in certain instances, discourage or deter
stockholders or management from bringing a lawsuit against directors for a
breach of their duties even though such an action, if successful, might have
benefited the Registrant.
In addition to the indemnification provisions set forth in the Registrant's
Articles, the Registrant has entered into separate Indemnity Agreements with the
directors of the Registrant and its subsidiaries which provide for the
indemnification of such directors by the Registrant to the fullest extent
allowed by the WBCA. The Indemnity Agreements indemnify each director and hold
such director harmless against any loss arising from a claim or action relating
to his or her services as a director. The Indemnity Agreements further provides
that the Registrant will advance sufficient funds as may be necessary to
investigate or defend claims against a director, and to reimburse funds that may
be incurred by the director, with the proviso that the director will reimburse
the Registrant any expenses paid to such director in the event it is later
determined that the payment of such sums were not allowable under Washington
law.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
3
<PAGE>
ITEM 8. EXHIBITS.
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
5.1 Opinion of Graham & Dunn, P.C., Registrant's legal counsel,
regarding legality of the Common Stock being registered.
23.1 Consent of Graham & Dunn (included in Exhibit 5.1).
23.2 Consent of Ernst & Young LLP.
23.3 Consent of Deloitte & Touche LLP.
24.1 Powers of Attorney (see the Signature Page and certified
resolutions of the Registrant's Board of Directors).
99.1 First National Bank of Port Orchard Employee & Director
Stock Option Plan.
99.2 Form of Option Certificate.
99.3 Agreement and Plan of Merger among Registrant, InterWest
Bank, Puget Sound Bancorp, Inc. and First National Bank of
Port Orchard, dated as of September 18, 1997(1).
</TABLE>
(1) Incorporated by referenced from Exhibit 2.1 to Registrant's Registration
Statement on Form S-4 (Registration No. 333-39329) filed on October 31, 1997.
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;
(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 Registration Statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total 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;
4
<PAGE>
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) of
this section do not apply if the Registration Statement is on Form S-3, Form S-8
or Form F-3, and the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed with or
furnished to the Commission by the Registrant pursuant to Section 13 or Section
15(d) of the Securities Exchange Act that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose 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 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 undertakes that, for 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 (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to 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 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 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 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 of 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.
5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, 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 Oak Harbor, State of Washington, on the 20th day of
April, 1998.
INTERWEST BANCORP, INC.
By: /s/ Stephen M. Walden
-------------------------------------
Stephen M. Walden
President and Chief Executive Officer
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes and
appoints Stephen M. Walden and H. Glenn Mouw, and each of them, with full power
of substitution and full power to act without the other, as his true and lawful
attorney-in-fact and agent to act in his name, place and stead, and to execute
in the name and on behalf of each person, individually and in each capacity
stated below, and to file any and all amendments to this Registration Statement,
including any and all post-effective amendments.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities indicated,
on the 20th day of April, 1998.
Signature Title
--------- -----
/s/ Stephen M. Walden President, Chief Executive Officer and Director
-------------------------- (Principal Executive Officer)
Stephen M. Walden
/s/ H. Glenn Mouw Executive Vice President
-------------------------- (Principal Financial Officer)
H. Glenn Mouw
/s/ Eric D. Jensen Chief Accounting Officer
-------------------------- (Principal Accounting Officer)
Eric D. Jensen
/s/ Barney R. Beeksma Chairman of the Board
--------------------------
Barney R. Beeksma
6
<PAGE>
/s/ Gary M. Bolyard Director
--------------------------
Gary M. Bolyard
/s/ Larry Carlson Director
--------------------------
Larry Carlson
/s/ Michael T. Crawford Director
--------------------------
Michael T. Crawford
/s/ Jean Gorton Director
--------------------------
Jean Gorton
/s/ Henry Koetje Director
--------------------------
Henry Koetje
/s/ Stephen Lewis Director
--------------------------
Stephen Lewis
/s/ Clark H. Mock Director
--------------------------
Clark H. Mock
/s/ Russel E. Olson Director
--------------------------
Russel E. Olson
/s/ Vern Sims Director
--------------------------
Vern Sims
7
<PAGE>
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
5.1 Opinion of Graham & Dunn, P.C., Registrant's
legal counsel, regarding legality of the Common
Stock being registered.
23.1 Consent of Graham & Dunn (included in Exhibit 5.1).
23.2 Consent of Ernst & Young LLP.
23.3 Consent of Deloitte & Touche LLP
24.1 Powers of Attorney (see the Signature Page and
certified resolutions of the Registrant's Board
of Directors).
99.1 First National Bank of Port Orchard Employee &
Director Stock Option Plan.
99.2 Form of Option Certificate.
99.3 Agreement and Plan of Merger among Registrant,
InterWest Bank, Puget Sound Bancorp, Inc. and
First National Bank of Port Orchard, dated as of
September 18, 1997(1).
</TABLE>
(1) Incorporated by referenced from Exhibit 2.1 to Registrant's Registration
Statement on Form S-4 (Registration No. 333-39329) filed on October 31, 1997.
<PAGE>
April 20, 1998
The Board of Directors
InterWest Bancorp, Inc.
275 S.E. Pioneer Way
Oak Harbor, Washington 98277
RE: LEGAL OPINION REGARDING VALIDITY OF SECURITIES OFFERED
Dear Gentlemen:
We have acted as counsel to you in connection with the preparation of a
Registration Statement on Form S-8 (the "Registration Statement") under the
Securities Act of 1933, as amended (the "Act"), which you are filing with the
Securities and Exchange Commission (the "Commission") with respect to 8,350
shares of common stock, $.20 par value per share (the "Shares"), of InterWest
Bancorp, Inc., a Washington corporation ("InterWest") authorized for issuance
under the 1st National Bank of Port Orchard 1990 Employee & Director Stock
Option Plan, as amended (the "Plan").
In connection with the offering of the Shares, we have examined the
following: (i) the Plan, which is filed as Exhibit 99.1 to the Registration
Statement; (ii) the Registration Statement, including the remainder of the
exhibits; (iii) the Agreement and Plan of Merger among InterWest, InterWest
Bank, Puget Sound Bancorp, Inc. and First National Bank of Port Orchard, dated
as of September 18, 1997 (the "Merger Agreement"); and (iv) such other documents
as we have deemed necessary to form the opinions hereinafter expressed. As to
various questions of fact material to such opinions, where relevant facts were
not independently established, we have relied upon statements of officers of
InterWest.
Our opinion assumes that the Shares are issued in accordance with the terms
of the Plan and the Merger Agreement after the Registration Statement has become
effective under the Act.
Based upon and subject to the foregoing, we are of the opinion that the
Shares, or any portion of the Shares, have been duly authorized and that, upon
the due execution by InterWest and the registration by its registrar of the
Shares, issuance by InterWest and receipt of the consideration for the Shares,
consistent with the terms of the Plan and the Merger Agreement, the Shares will
be validly issued, fully paid, and nonassessable.
<PAGE>
InterWest Bancorp, Inc.
April 20, 1998
Page 2
We consent to the filing of this opinion as Exhibit 5.1 to the Registration
Statement. This consent shall not be construed to cause us to be in the
category of persons whose consent is required to be filed pursuant to Section 7
of the Act or the rules and regulations of the Commission promulgated
thereunder.
Very truly yours,
GRAHAM & DUNN
/s/ Graham & Dunn PC
<PAGE>
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement on
Form S-8 dated April 20, 1998 pertaining to the First National Bank of Port
Orchard 1990 Employee & Director Stock Option Plan of our report dated October
30, 1997, with respect to the consolidated financial statements of InterWest
Bancorp, Inc. incorporated by reference in its Annual Report on Form 10-K for
the year ended September 30, 1997, filed with the Securities and Exchange
Commission.
ERNST & YOUNG LLP
/s/ Ernst & Young LLP
Seattle, Washington
April 20, 1998
<PAGE>
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in this Registration Statement of
InterWest Bancorp, Inc. on Form S-8 of our report dated January 19, 1996
(relating to the consolidated statements of operations, stockholders' equity and
cash flows of Central Bancorporation and subsidiaries for the year ended
December 31, 1995, not presented separately herein) appearing in the Annual
Report on Form 10-K of InterWest Bancorp, Inc. for the year ended September 30,
1997.
DELOITTE & TOUCHE LLP
/s/ Deloitte & Touche LLP
Seattle, Washington
April 20, 1998
<PAGE>
SECRETARY'S CERTIFICATE
I certify that I am the Secretary of INTERWEST BANCORP, INC., located in
Oak Harbor, State of Washington ("InterWest"), and that I have been duly elected
and am presently serving in that capacity in accordance with the Bylaws of
InterWest.
I further certify that:
Attached as Exhibit A is a full, true and correct copy of resolutions
passed and adopted by a majority of the Board of Directors of Bancorp at a
meeting of the Board duly held and convened on April 20, 1998.
The attached resolutions are in full force and effect and have not been
revoked or rescinded as of the date hereof.
IN WITNESS WHEREOF, I have affixed my signature as of this 20th day of
April, 1998.
/s/ Margaret Mordhorst
-------------------------------
Margaret Mordhorst, Secretary
<PAGE>
EXHIBIT A
RESOLUTIONS
OF
THE BOARD OF DIRECTORS
OF
INTERWEST BANCORP, INC.
(FOR MEETING OF APRIL 20, 1998)
RECITALS
[PUGET SOUND BANCORP STOCK OPTION PLAN]
(FIRST NATIONAL BANK OF PORT ORCHARD 1990 EMPLOYEE & DIRECTOR
STOCK OPTION PLAN)
1. On January 15, 1998, Puget Sound Bancorp, Inc., a Washington
corporation and bank holding company ("PSB"), merged with and into InterWest
Bancorp, Inc., a Washington corporation and bank holding company ("InterWest"),
under the terms of an Agreement and Plan of Merger (the "Merger Agreement")
among InterWest, InterWest Bank, PSB and First National Bank of Port Orchard
dated as of September 18, 1997.
2. On the effective date of the merger (January 15, 1998), a total of
4,978 shares of PSB common stock, no par value per share, were subject to
outstanding options under PSB's Firstt National Bank of Port Orchard 1990
Employee & Director Stock Option Plan, as amended (the "PSB Plan").
3. Pursuant to Section 2.8 of the Merger Agreement, all 4,978 shares of
PSB common stock subject to unexercised options at the effective time of the
merger were automatically converted into options to purchase up to 8,350 shares
(adjusted to account for rounding), of InterWest common stock, $.20 par value
per share, based on the merger exchange ratio of 1.66797 shares of InterWest
common stock for each share of PSB common stock. No further options will be
granted under the PSB Plan.
4. InterWest now wishes to register the shares of InterWest common stock
issuable upon exercise of outstanding options under the PSB Plan with the
Securities and Exchange Commission (the "SEC"), and to comply with applicable
state blue sky laws. The Board of Directors has reviewed the draft registration
statement on Form S-8 ("Registration Statement") presented at this meeting and
attached as EXHIBIT A to these Resolutions, and deems it appropriate and in the
best interests of InterWest to take the actions necessary to register the shares
of InterWest common stock required to satisfy all converted PSB options
originally issuable under the PSB Plan, and to comply with all state blue sky
laws applicable to the PSB Plan.
<PAGE>
RESOLUTIONS
[SEC REGISTRATION AND BLUE SKY FILINGS]
1. The proper officers of InterWest, with the assistance of counsel, are
hereby authorized to execute and file with the SEC, and any applicable state
securities authorities, the Registration Statement and any necessary amendments
thereto, in substantially the form presented at this meeting, to cause the
shares of InterWest common stock issuable pursuant to the Plan to be properly
registered or otherwise exempt from registration.
[ADDITIONAL LISTING APPLICATION]
2. The Proper Officers of InterWest, with the assistance of counsel, are
authorized to execute and file with The Nasdaq National Market, Inc. ("Nasdaq")
a Notification Form for Listing of Additional Shares ("Notification") and such
other documents, and any necessary amendments thereto, and to take any and all
actions as they deem necessary or appropriate to effect the additional listing
of the Shares with Nasdaq in connection with the issuance of shares in the
Acquisition, including the payment of such filing fees as may be deemed payable
for the filing of the Notification.
[POWER OF ATTORNEY]
3. The proper officers of InterWest are hereby authorized to execute a
Power of Attorney for the Registration Statement appointing Stephen M. Walden
and H. Glenn Mouw, and each of them, to sign the Registration Statement and all
amendments and related documents on behalf of InterWest, and to file the same
with the SEC.
[GENERAL]
4. The proper officers of InterWest are hereby authorized and directed to
do and perform all such other acts and things, to pay all necessary fees, to
sign all such documents and certificates and to take such other steps as may be
necessary, advisable, convenient or proper to carry out the full intent of the
foregoing Resolutions, and to comply fully with all applicable rules and
regulations.
5. For purposes of the foregoing Resolutions, the proper officers of
InterWest are Stephen M. Walden and H. Glenn Mouw, each with full power to act
alone.
<PAGE>
1ST NATIONAL BANK OF PORT ORCHARD
1990
EMPLOYEE & DIRECTOR STOCK OPTION PLAN
(Non-Qualified)
of
February 7, 1990
Amended by the Board of Directors
NOVEMBER 16, 1994
1. PURPOSE
This Stock Option Plan (the "Plan") is intended as an incentive to
encourage stock ownership and stimulate earnings performance by certain
officers and employees of the 1ST NATIONAL BANK OF PORT ORCHARD, WASHINGTON
and its subsidiaries (herein singularly and collectively referred to as the
"Company") so they may acquire or increase their proprietary interest in
the success of the Company and to encourage them to remain in its employ,
and to provide an element of compensation to Directors.
2. DEFINITIONS
Unless the context clearly indicates otherwise, the following terms have
the meanings set forth below.
A. "BOARD OF DIRECTORS" OR "BOARD" means the Board of Directors of the
Company. In the event a "Committee" is appointed, reference to the
Board herein shall mean the Committee.
B. "COMMITTEE" means a Committee of Directors designated by the Board of
Directors as described in Section 3 of the Plan.
C. "COMMON STOCK," "CAPITAL" and "CAPITAL STOCK" means the Common Stock
of the Company, par value $5 per share.
D. "GRANT DATE," as used with respect to a particular Option, means the
date as of which such Option is granted by the Board or Committee
pursuant to this Plan and which date shall be the date shown on the
Stock Option Grant.
E. "EMPLOYEE" shall mean a person employed or controlled by the Company
for compensation for which the Company withholds federal income tax
payments.
F. "OPTION" means an option, granted pursuant to Section 5 of the Plan,
to purchase shares of Common Stock.
<PAGE>
G. "OPTIONEE" means an individual to whom an Option is granted pursuant
to the Plan.
H. "PLAN" means this "1st National Bank of Port Orchard 1990 Employee &
Director Stock Option Plan" as set forth herein and as may be amended
from time to time.
I. "SUBSIDIARY" means any stock corporation of which a majority of the
voting common or capital stock is owned, directly or indirectly, by
the Company and any other Company designated as such by the Board but
only during the period of such ownership or designation.
3. ADMINISTRATION
The Plan shall be administered by the Board of Directors of the Company or
a Committee of Directors appointed by the Board. The Board shall select
one of its non-employee members as Chairman for purposes of its meetings
administering the Plan. The Board shall hold meetings at such times and
places as it may determine, subject to such rules as to procedures not
inconsistent with the provisions of the Plan as it prescribes. A majority
of the members of the Board authorized to act by this Plan shall constitute
a quorum for the transaction of business. Acts reduced to or approved in
writing by all of the members of the Board then serving shall be the valid
acts of the Board.
The Board shall be vested with full authority to make such rules and
regulations as it deems necessary or desirable to administer the Plan and
to interpret the provisions of the Plan. Any determination, decision, or
action of the Board in connection with the construction, interpretation,
administration, or application of the Plan shall be final, conclusive, and
binding upon all Optionees and any person claiming under or through an
Optionee unless otherwise determined by the Board. No member of the Board
of Directors, including employee Directors, shall be liable for any action
or determination made in good faith with respect to the Plan or any Option
granted under it.
The fact that a member of the Board who is not then a member of the Board
shall at any time be or have been or may be a person who has received or is
eligible to receive an Option shall not disqualify him or her from taking
part in and voting at any time as a member of the Board in favor of or
against any amendment or repeal of the Plan, provided that such vote shall
be in accordance with the recommendations of the Board.
Subject to the terms, provisions, and conditions of the Plan and subject to
review by the Board, the Board shall have exclusive jurisdiction to:
1. Select the Optionees to be granted Options (it being understood
that more than one Option may be granted to the same person)
2. Determine the number of shares subject to each Option
<PAGE>
3. Determine the date or dates when the Options will be granted
4. Prescribe the form, which shall be consistent with the Plan, or
the documents evidencing any Options granted under the Plan.
Neither anything contained in the Plan nor in any document under the Plan
nor the grant of any Option under the Plan shall confer upon any Optionee
any right to continue in the employ of 1st National Bank of Port Orchard or
of any Subsidiary or limit in any respect the right of 1st National Bank of
Port Orchard or of any Subsidiary to terminate the Optionee's employment at
any time and for any reason.
4. STOCK
The stock subject to the Options shall be shares of the Company's
authorized but unissued or reacquired Common Stock. There is hereby
allocated and reserved for issuance pursuant to Options granted under this
plan, 50,000 shares of the Company's Common Stock including the number of
such shares granted but which subsequently lapse or are unexercised for any
reason under this Plan. The number of shares issued under this Plan shall
not exceed the number of shares granted in Options by the Board.
The limitations established by each of the preceding sentences shall be
subject to adjustment as provided in Section 12 of the Plan. In the event
that any outstanding Option under this Plan for any reason expires or is
terminated, the shares of Common Stock allocable to the unexercised portion
of such Option may again be subjected to an Option under this Plan, except
that the maximum number of shares which may be subject to an Option for any
eligible employee may not exceed the specified limits.
5. ELIGIBILITY & GRANT OF OPTIONS
The persons who shall be eligible to receive Options shall be duly elected
and qualified Directors not including officers of the Company for director
Options and such key employees, including officers of the Company
regardless of whether or not they are also Directors, as this Plan and the
Board of Directors shall select. An Optionee may hold more than one
Option, but only on the terms and subject to the restrictions hereinafter
set forth. No person shall be eligible to receive an Option for a larger
number of shares than is recommended for him by the Board of Directors.
The Board may from time to time, subject to the provisions of the Plan,
grant Options to key employees of the Company to purchase shares of Common
Stock allotted in accordance with this Section of the Plan.
Except as otherwise provided herein no employee Option shall be granted
under this Plan until the calendar year in which the Company's balance
sheet reflects Shareholder Equity has exceeded the sum of $1,416,689. Any
Option granted in the year Shareholder's Equity exceeds such sum shall be
contingent on confirmation thereof by the Company's year-end audited
financial statements for that year.
<PAGE>
In addition to the foregoing and except as otherwise provided herein, no
employee Stock Options shall be granted hereunder unless the Company's
year-end average return on equity, as determined by the Company's
independent certified public accountants in associations consistently
applied and based on the company's year-end audited financial statements,
is equal to: the average of the average return on equity of other local
Washington commercial banks within the Company's peer group as determined
and reported for that same year by Knight, Vale & Gregory (or similar
reliable source) rounded shall constitute the base at which Options for
an aggregate of 1400 shares of the Capital Stock of the Company may be
issued. For each full percentage point (100 basis points) that the
Company's average return on equity exceeds the Adjusted ROE, the aggregate
shares available for Options in that year shall increase by 200.
The distribution schedule is as follows:
<TABLE>
<S> <C>
Peer's average ROE MET equals 1400 shares
+1 1600
+2 1800
+3 2000
+4 2200
+5 2400
+6 2600
+7 2800
</TABLE>
Share allocation shall be as follows:
<TABLE>
<S> <C>
CEO 40%
CFO 25%
VP. Sr. Loan 20%
Employees 15%
----
100%
</TABLE>
Each Director who is not an employee shall be granted such Options each
year as may be voted by the Board to purchase an aggregate of twenty (20)
(effective 1-1-95 ) shares of Common Stock for each meeting of the Board
and Board Committee attended (provided the latter is not on the same day as
the meeting of the Board) during that year. This paragraph shall apply and
be effective retroactively to the date the Company first opened for
business. Notwithstanding anything in this Plan to the contrary, except
for qualification as a director and attendance at meetings, there shall be
no other condition precedent to the grant of Options to directors. The
date of grant each calendar year shall be the date of the regular Board
meeting in December of that year.
Notwithstanding anything herein to the contrary, for each calendar year of
employment as an employee, the Chief Executive Officer shall be granted an
Option at
<PAGE>
the time set for granting Director Options for 100 shares of Capital Stock
in addition to the shares which may be granted pursuant to this Section.
Said additional grant to the Chief Executive Officer shall be made without
regard to nor contingent upon the level of shareholder equity or the
Company's return on average equity. All other provisions and conditions of
the Plan shall, however, apply to said grant.
6. OPTION PRICE
The purchase price per share for initial Options granted under the plan
shall be fifty dollars ($50.00) per share, or appropriate pro-rata split
price. See section 12.0 on November 11, 1993 the Board of Directors set
the price per share of future options at $20.00 per share.
7. MEDIUM AND TIME OF PAYMENT
The Option price shall be payable either in United States dollars or the
surrender and transfer to the Company of such number of unencumbered shares
of the Company's Capital Stock with an aggregate fair market value equal to
the Option price of the shares exercised or a combination of U.S. dollars
and such Company stock, upon the exercise of the Option.
For purposes of this Section, the determination of fair market value by the
Board of Directors shall be final, binding and conclusive. At such time as
the Capital Stock is not yet listed upon an established stock exchange or
in the over-the-counter market, the fair market value of the shares of
Capital Stock shall be determined by the Board of Directors upon the advice
of the Company's independent certified public accountants. The Board of
Directors shall use their best judgment in making such determination and
shall take into consideration all relevant business and economic factors
including, but not limited to, the current price, if any, at which the
Company's Capital Stock, not subject to Options, may be subscribed and sold
to the public.
During the time as the Capital Stock is not listed upon an established
stock exchange but is quoted in the over-the-counter market, the fair
market value per share shall be the mean between dealer "bid" and "ask"
prices of the Capital Stock in the over-the-counter market on the date of
exercise as reported by such dealers as are engaged in making the market in
the Capital Stock of the Company. If the Capital Stock is listed upon an
established stock exchange or exchanges such fair market value shall be
deemed to be the highest closing price of the Capital Stock on such stock
exchange or exchanges on the date of exercise or if no sale of the
Company's Capital Stock shall have been made on any stock exchange on that
day, on the next preceding day on which there was a sale of such Capital
Stock.
Subject to the foregoing the Board of Directors shall have full authority
and discretion and be fully protected in determining fair market value.
8. TERM AND EXERCISE OF OPTIONS
<PAGE>
Initially, Options granted hereunder shall terminate within and no Option
shall be exercisable after the expiration of three years from the date of
grant. Beginning, January 1, 1993, options granted hereunder shall
terminate within and no Option shall be exercisable after the expiration of
ten (10) years from the date of grant. Options may be exercised in whole
or in part but not less than ten shares may be purchased at any one time
unless the number purchased is the total number available at the time under
the Option.
During the lifetime of the Optionee, the Option shall be exercisable only
by the employee. Options granted hereunder shall not be assignable or
transferable in any manner by the Optionee other than by will or the laws
of descent and distribution, and no other person shall acquire any rights
therein.
A person electing to exercise an Option shall give written notice to the
Company, in such form as the Board shall have prescribed or approved, of
such election and of the number of shares he or she has elected to purchase
and shall at the time of exercise tender the full purchase price of any
shares elected to be purchased. The purchase price upon the exercise of an
Option shall be paid in full in cash, provided, however, that in lieu of
cash an Optionee may exercise his or her Option by tendering to the Company
shares of Common Stock owned by him or her and having a fair market value
equal to the cash exercise price applicable to his or her Option, with the
then fair market value of such stock to be determined in the manner
provided in Section 7 or the Plan.
A person may, in accordance with the other provisions of the Plan, elect to
exercise Options in any order, notwithstanding the fact that Options
granted to him or her prior to the grant of the Options selected for
exercise are unexpired.
9. TERMINATION OF EMPLOYMENT OR SERVICE AS DIRECTOR EXCEPT DEATH
Options not exercised shall immediately and automatically terminate if an
Optionee, during the course of his employment or service as a Director
shall be found by the Board of Directors to have committed fraud, criminal
acts, gross malfeasance or acts involving dishonesty against the Company,
its officers, directors, employees, customers, correspondent banks,
participants, governmental regulatory agencies or vendors during the course
of the Optionee's employment or service as a Director.
Except as otherwise provided, termination of employment or service as a
Director alone or for any other reason or no reason shall not be cause for
termination or expiration of Options previously granted or earned and the
same may be exercised at any time during the term of the Option.
10. TERMINATION OF EMPLOYMENT INCLUDING DEATH
<PAGE>
In the event that an Optionee shall cease to be a Director of or be
employed by the Company, for any reason, including death, subject to the
condition that no Option shall be exercisable after the time limits
provided for in Section 8, the Optionee or his successor may exercise the
Option at any time within the term of the Option.
11. DEATH OF OPTIONEE AND TRANSFER OF OPTION
If the Optionee shall die during the term of the Option and shall not have
fully exercised any Option, an Option may be exercised, subject to the
condition that no Option shall be exercisable after the expiration of the
time limitations provided in Section 8 from the date it is granted, at any
time during the term of Option by the executors or administrators of the
Optionee or by any person or persons who shall have acquired the Option
directly from the Optionee by bequest or inheritance.
No Option shall be transferable by the Optionee otherwise than by will or
the laws of descent and distribution.
12. RECAPITALIZATION
In the event that the shares of the Company as presently constituted, shall
be changed into or exchanged for a different number of kind of shares of
stock or other securities of the Company or of another corporation (whether
by reason of merger, consolidation, recapitalization, reclassification,
split-up, combination of shares, or otherwise), or if the number of such
shares of stock shall be increased through the payment of a stock dividend,
then, subject to the other provisions in this paragraph, the number of
shares of Capital Stock covered by each outstanding Option, and the price
per share thereof in each such Option, shall be proportionately exchanged
and/or proportionately adjusted for any different kind or increase or
decrease in the number of issued shares of Capital Stock of the Company
resulting from such change or stock dividend.
Upon dissolution or liquidation of the Company or if the Company shall
merge or consolidate and not be the surviving corporation, each outstanding
Option shall terminate except to the extent assumed and continued by the
surviving corporation, but the right to exercise may be thereupon
accelerated by the Board.
In the event of a change in the capital Stock of the Company as presently
constituted which is limited to a change of all of its authorized shares
with no par value into the same number of shares with a different par
value, the shares resulting from any such change shall be deemed to be the
Capital Stock within the meaning of the Plan.
If there shall be any other change in the number or kind of outstanding
shares of stock of the company or of any stock or other securities into
which such stock shall have been changed or for which it shall have been
exchanged and, if the Board shall, in its sole discretion, determine that
such change equitably requires an adjustment in any
<PAGE>
Option which was theretofore granted or which may thereafter be granted
under the Plan, then such adjustment shall be made in accordance with such
determination.
To the extent that the foregoing adjustments related to stock or securities
of the Company, such adjustments shall be made by the Board of Directors,
including settlement for fractional shares which shall not be issued, whose
determination in that respect shall be final, binding and conclusive.
Except as hereinbefore expressly provided in this Section, the Optionee
shall have no right, by reason or any subdivisions or consolidation of
shares of stock of any class or the payment of any stock dividend or any
other increase or decrease in the number of shares of stock of any class or
by reason of any dissolution, liquidation, merger or consolidation or
spin-off of assets or stock of another corporation, or any issue by the
Company of shares of stock or any class or securities convertible into
shares of stock of any class to any adjustment or modification by reason
thereof with respect to the number or price of shares of Capital Stock
subject to the Option.
The grant of an Option pursuant to the Plan shall not affect in any way the
right or power of the Company to make adjustment, reclassifications,
reorganizations or changes of its capital or business structure or to merge
or to consolidate or to dissolve, liquidate or sell, or transfer all or any
part of its business or assets.
13. RIGHTS AS A STOCKHOLDER
An Optionee or a transferee of an Optionee shall have no rights as a
stockholder with respect to any shares covered by an Option until the date
of the issuance of a stock certificate evidencing ownership of the shares.
No adjustment shall be made for dividends (ordinary or extraordinary)
whether in cash, securities or other property or distribution or other
rights for which the record date is prior to the date such stock
certificate is issued, except as provided in Section 12 of this Plan.
14. MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS
Except as otherwise provided in Section 12 and subject to the terms and
conditions and within the limitations of the Plan, the Board of Directors
may modify, extend or renew outstanding Options granted under the Plan or
accept the surrender of outstanding Options in substitution therefor (to
the extent not theretofore exercised) subject to the provisions stated in
Section 12. The Board of Directors shall not, however, modify any
outstanding Options so as to specify a lower price or accept the surrender
of outstanding Options and authorize the granting of new Options in
substitution therefor specifying a lower price. Notwithstanding the
foregoing, however, no modification of an Option shall, without the consent
of the Optionee, alter or impair any rights or obligations under any Option
theretofore granted under the Plan.
<PAGE>
To the extent that the foregoing adjustments relate to stock or securities
of the Company, such adjustments shall be made by the Board, whose
determination in that respect shall be final, binding, and conclusive.
Notice of any adjustment shall be given by the company to each holder of an
Option which shall have been so adjusted.
15. INVESTMENT PURPOSE
Each Option under the Plan shall be granted on the condition and in a form
and substance satisfactory to the Board, that the purchases of stock
thereunder is an acquisition for the Optionee's account and shall be for
investment purposes, and not with a view to resale or distribution except
that in the event the stock subject to such Option is registered under the
Securities Act of 1933, as amended, or in the event a resale of such stock
without such registration would be otherwise be permissible, such condition
shall be inoperative or if in the opinion of counsel for the Company such
condition is not required under the Securities Act of 1933 or any other
applicable law, regulation, or rule of any governmental agency.
The Company may place upon any Stock Certificate for shares issuable upon
exercise of such Option such legend as the Board may prescribe to prevent
disposition of the shares in violation of the Securities Act of 1933 or any
other applicable law.
16. OTHER PROVISIONS
The Option agreements authorized under the Plan shall contain such other
provisions, including, without limitation, restrictions upon the exercise
of the Option, as the Board of Directors of the Company shall deem
advisable.
17. TERM OF PLAN
The Board of Directors may terminate this Plan at any time, provided, that
no Options previously granted under the Plan shall be terminated except
pursuant to the provisions of this Plan which shall survive and apply to
all outstanding Options granted hereunder. The date of this Plan is the
earlier of the date adopted or the date the Plan is approved by the
Company's Shareholders.
18. INDEMNIFICATION OF BOARD
In addition to such other rights of indemnification as they may have as
Directors, the Board of Directors shall be indemnified by the company
against the reasonable expenses, including attorney's fees actually and
necessarily incurred in connection with the defense of any action, suit or
proceeding, or in connection with any appeal therein, to which they or any
of them may be a party by reason of any action taken or failure to act
under or in connection with the Plan or any Option granted thereunder, and
against all amounts paid by them in settlement thereof (provided such
settlement is approved by independent legal counsel selected by the
Company), or paid by them in satisfaction of a judgment in any such action,
suit or proceeding, except in relation
<PAGE>
to matters as to which it shall be adjudged in such action, suit or
proceeding that such Director is liable for gross negligence or misconduct
in the performance of his duties; provided that within 60 days after
institution of any such action, suit or proceeding a Director shall in
writing offer the opportunity, at its own expense to handle and defend the
same.
19. AMENDMENT OR TERMINATION OF THE PLAN
The Board of Directors of the Company may, insofar as permitted by the law,
from time to time, with respect to any shares at the time not subject to
Options, suspend or discontinue the Plan or revise or amend it in any
respect whatsoever except that no such amendment shall decrease the price
at which Options may be granted or remove the administration of the Plan
from the Board of Directors.
20. APPLICATION OF FUNDS
The cash proceeds received by the Company from the sale of Capital Stock
pursuant to Options will be used for general corporate purposes and any
excess over $5.00 per share may be allocated to the Company's capital
accounts as the Board may direct.
21. NO OBLIGATION TO EXERCISE OPTION
The granting of an Option shall impose no obligation upon the Optionee to
exercise such Option.
22. OPTION AGREEMENTS
Stock Options granted pursuant to the Plan shall be authorized by the Board
of Directors and shall be evidenced by agreements in such form as the Board
of Directors shall from time to time approve but which shall conform to, be
consistent with and be subject to terms and conditions provided in this
Plan.
Plan Adopted by the Board of Directors: February 7, 1990
Approved by the Shareholders: April 5, 1990
Amended by the Board of Directors: November 16, 1994
<PAGE>
OPTION CERTIFICATE
The following option for First National Bank of Port Orchard, common stock, is
hereby granted pursuant to the Officers, Employees and Directors Stock Option
Plan, as adopted by the shareholders of First National Bank of Port Orchard, at
the April 5, 1990 meeting, as amended.
DATE OF OPTION______ _____, 199__
FOR PERIOD OF OPTION_____Year 199_______
OPTION (EE) __________________________________________
NUMBER OF SHARES OPTIONED_____________________________
OPTION EXPIRES_____December 31, 20__
SIGNED____________________________________________
FOR THE BOARD OF DIRECTORS
DATED______, 199__
OPTION PRICE IS AT $____.00 PER SHARE
