<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 24, 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 Number)
of incorporation or organization)
275 S.E. PIONEER WAY, OAK HARBOR, WASHINGTON 98277
(Address of Principal Executive Offices) (Zip Code)
PACIFIC NORTHWEST BANK 1988 STOCK OPTION PLAN
PIONEER BANCORP, INC. AMENDED AND RESTATED INCENTIVE 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 be to be price offering registration
registered registered per share (1) price (1) fee
- ---------- ---------- ------------- --------- ---
<S> <C> <C> <C> <C>
Common shares, 192,500(2) $43.625 $8,397,812.50 $2,477.35
$.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 $43.625 based upon the average of the high ($44.75)
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 June 22, 1998.
2. Shares of Registrant's Common Stock issuable upon exercise of options
outstanding under the Pacific Northwest Bank 1988 Stock Option Plan
and the Pioneer Bancorp, Inc. Amended and Restated Incentive Stock
Option Plan (collectively, the "Plans"), together with an
indeterminate number of additional shares which may be necessary to
adjust the number of shares reserved for issuance under the Plans 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.
1
<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 April 27, 1998 and included in the
Registrant's Registration Statement on Form S-4 (Registration No. 333-49131),
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 violation of Section
23B.08.310 of the WBCA (regarding unlawful distributions), and (c)
2
<PAGE>
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 Pacific Northwest Bank 1988 Stock Option Plan.
99.2 Pioneer Bancorp, Inc. Amended and Restated Incentive Stock Option
Plan.
99.3 Amended and Restated Agreement and Plan of Merger among
Registrant, Pacific Northwest Bank and New Pacific Northwest
Bank, dated as of January 15, 1998(1).
99.4 Agreement and Plan of Merger among Registrant, InterWest Bank,
Pioneer Bancorp, Inc., and Pioneer National Bank, dated as of
February 4, 1998(1).
</TABLE>
(1) Incorporated by referenced from Exhibits 2.1 and 2.2, respectively, to
Registrant's Registration Statement on Form S-4 (Registration No. 333-49131)
filed on April 1, 1998.
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
4
<PAGE>
may be reflected in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee" table in the effective
Registration Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration 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 16th day of
June, 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 16th day of June, 1998.
Signature Title
--------- -----
/s/ Stephen M. Walden President, Chief Executive Officer
- ----------------------------- and Director
Stephen M. Walden (Principal Executive Officer)
/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/ Patrick M. Fahey Director
- -----------------------------
Patrick M. Fahey
/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 Pacific Northwest Bank 1988 Stock Option Plan.
99.2 Pioneer Bancorp, Inc. Amended and Restated Incentive
Stock Option Plan.
99.3 Amended and Restated Agreement and Plan of Merger among
Registrant, Pacific Northwest Bank and New Pacific
Northwest Bank, dated as of January 15, 1998(1).
99.4 Agreement and Plan of Merger among Registrant,
InterWest Bank, Pioneer Bancorp, Inc., and Pioneer
National Bank, dated as of February 4, 1998(1).
</TABLE>
(1) Incorporated by referenced from Exhibits 2.1 and 2.2, respectively, to
Registrant's Registration Statement on Form S-4 (Registration No. 333-49131)
filed on April 1, 1998.
8
<PAGE>
Exhibit 5.1
June 24, 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 192,500
shares of common stock, $.20 par value per share (the "Shares"), of InterWest
Bancorp, Inc., a Washington corporation ("InterWest") authorized for issuance
under the Pacific Northwest Bank 1988 Stock Option Plan and the Pioneer Bancorp,
Inc. Amended and Restated Incentive Stock Option Plan (collectively, the
"Plans").
In connection with the offering of the Shares, we have examined the
following: (i) the Plans, which are filed as Exhibits 99.1 and 99.2,
respectively, to the Registration Statement; (ii) the Registration Statement,
including the remainder of the exhibits; (iii) the Amended and Restated
Agreement and Plan of Merger among InterWest, Pacific Northwest Bank and New
Pacific Northwest Bank dated as of January 15, 1998; and the Agreement and Plan
of Merger among InterWest, Pioneer Bancorp, Inc. and Pioneer National Bank,
dated as of February 4, 1998 (collectively, the "Merger Agreements"); and
(iv) such other documents as we have deemed necessary to render 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 Plans and the Merger Agreements after the Registration Statement has
become effective under the Act.
Based and relying solely upon the foregoing, we advise you that in our
opinion, the Shares, or any portion thereof, when issued pursuant to the Plans
and Merger Agreements, after the Registration Statement has become effective
under the Act, will be validly issued under the laws of the State of Washington
and will be fully paid and nonassessable.
<PAGE>
InterWest Bancorp, Inc.
June 24, 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>
Exhibit 23.2
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement on
Form S-8 dated June 23, 1998 pertaining to the Pacific Northwest Bank 1988 Stock
Option Plan and the Pioneer Bancorp, Inc. Amended and Restated Incentive 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.
/s/ Ernst & Young LLP
- ---------------------
ERNST & YOUNG LLP
Seattle, Washington
June 23, 1998
<PAGE>
Exhibit 23.3
INDEPENDENT AUDITORS' 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.
/s/ Deloitte & Touche LLP
- -----------------------------
DELOITTE & TOUCHE LLP
Seattle, Washington
June 23, 1998
<PAGE>
Exhibit 24.1
Date: June 24, 1998
I, Margaret Mordhorst, corporate secretary of InterWest Bancorp, Inc. do
hereby certify that the following is a true copy of resolutions adopted at the
monthly meeting of the Board of Directors of InterWest Bancorp, Inc. duly called
and held on the 16th day of June, 1998, at which a quorum was present and voting
throughout:
[KITTITAS VALLEY BANCORP, INC.]
In connection with the acquisition of Kittitas Valley Bancorp, Inc., the
following action was taken:
1. The Board of Directors ("Board") of InterWest Bancorp, Inc.
("InterWest"), at a meeting of the Board held on April 20, 1998, previously
approved the preparation and filing of a Registration Statement on Form S-4
("Registration Statement") in connection with the registration of InterWest
Shares of common stock to be issued in connection with the acquisition of
Kittitas Valley Bancorp, Inc.
2. Each Director has received and had an opportunity to review a draft of
the Registration Statement dated June 12, 1998.
After discussion and upon motion duly made, seconded and passed, the
following resolutions were adopted:
[FILING OF REGISTRATION STATEMENT]
BE IT RESOLVED, That the Registration Statement, substantially in the form
presented to and discussed at this meeting, is hereby approved in all
respects, with such non-material amendments, deletions or additions as are
acceptable to the Proper Officers with the advice of legal counsel;
BE IT FURTHER RESOLVED, That the proper Officers are authorized and
directed to prepare and file, with the assistance of legal counsel and
independent accountants, with the Securities and Exchange Commission, the
Registration Statement, and all exhibits, amendments, supplements, and
other related documents, as shall be necessary to cause the Registration
Statement to become effective;
[MISCELLANEOUS]
BE IT FURTHER RESOLVED, That for the purposes of these Resolutions, the
<PAGE>
Proper Officers of InterWest are Stephen M. Walden, President and Chief
Executive Officer, H. Glenn Mouw, Executive Vice President and Chief
Financial Officer, and Gary M. Bolyard, Vice Chairman of Corporate
Development; and
BE IT FURTHER RESOLVED, That the Proper Officers, or any of them acting
alone, are authorized and directed to take such other actions as may be
necessary, advisable, convenient, or proper to carry out the intent of
these Resolutions.
[PACIFIC NORTHWEST BANK and PIONEER BANCORP, INC.]
In connection with the acquisition of Pacific Northwest Bank and Pioneer
Bancorp, Inc. the following action was taken:
[RECITALS]
A. On June 15, 1998, Pacific Northwest Bank, a Washington banking
corporation ("Pacific") merged (with Pacific as the survivor), with New Pacific
Northwest Bank, an interim bank formed by InterWest Bancorp, Inc. ("InterWest"),
for the purpose of facilitating the merger, under the terms of an Amended and
Restated Agreement and Plan of Merger (the "Pacific Agreement") dated as of
January 15, 1998.
B. On June 16, 1998, Pioneer Bancorp, Inc., a Washington corporation and
bank holding company ("Pioneer"), merged with and into InterWest, under the
terms of an Agreement and Plan of Merger (the "Pioneer Agreement") dated as of
February 4, 1998.
C. On the effective date of the respective mergers, a total of 38,170
shares of Pacific common stock, $1.00 par value per share, were subject to
outstanding options under Pacific's 1988 Stock Option Plan and 1988 Director
Stock Option Plan and 30,800 shares of Pioneer common stock, no par value per
share, were subject to outstanding options under Pioneer's Amended and Restated
Incentive Stock Option Plan (collectively referred to as the "Plans").
D. Pursuant to Section 2.9 of the Pacific Agreement and Section 2.8 of
the Pioneer Agreement, all 38,170 shares of Pacific common stock and all 30,800
shares of Pioneer common stock, subject to unexercised options at the effective
time of the respective mergers were automatically converted into options to
purchase up to an aggregate of approximately 192,058 shares of InterWest common
stock, $0.20 par value per share, based on the respective merger exchange ratios
(3.95 shares of InterWest common stock for each share of Pacific common stock
<PAGE>
and 1.3405 shares of InterWest common stock for each share of Pioneer common
stock). No further options will be granted under the Plans.
E. Consistent with the terms of the respective merger agreements,
InterWest now wishes to register the shares of InterWest common stock issuable
upon exercise of outstanding options under the Plans 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 Pacific and Pioneer
options originally issuable under the Plans, and to comply with all state blue
sky laws applicable to the Plans.
Upon motion duly made, seconded and passed, the following resolutions were
adopted:
[SEC REGISTRATION AND BLUE SKY FILINGS]
BE IT RESOLVED, That 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 Plans to be properly registered or otherwise exempt from registration;
[ADDITIONAL LISTING APPLICATION]
BE IT FURTHER RESOLVED, That 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 mergers,
including the payment of such filing fees as may be deemed payable for the
filing of the Notification;
[POWER OF ATTORNEY]
BE IT FURTHER RESOLVED, That the Proper Officers of InterWest are hereby
<PAGE>
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]
BE IT FURTHER RESOLVED, That 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; and
BE IT FURTHER RESOLVED, That 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.
Note: Exhibit A to these resolutions is filed with the acquisition documents in
the administrative offices of InterWest Bancorp, Inc.
Certified true and correct:
s/ Margaret Mordhorst
- ------------------------------
Margaret Mordhorst, Corporate Secretary
<PAGE>
Exhibit 99.1
PACIFIC NORTHWEST BANK
1988 STOCK OPTION PLAN
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE PAGE
- -------- ----
<S> <C> <C>
I. PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
II. AMOUNT OF STOCK SUBJECT TO THE PLAN . . . . . . . . . . . . . . . . . . . . .1
III. ADMINISTRATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
IV. ELIGIBILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
V. MAXIMUM ALLOTMENT OF INCENTIVE OPTIONS. . . . . . . . . . . . . . . . . . . .3
VI. OPTION PRICE AND PAYMENT. . . . . . . . . . . . . . . . . . . . . . . . . . .3
VII. USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
III. TERM OF OPTION AND LIMITATIONS ON THE RIGHT OF EXERCISE . . . . . . . . . . .4
IX. EXERCISE OF OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
X. NONTRANSFERABILITY OF OPTIONS . . . . . . . . . . . . . . . . . . . . . . . .5
XI. TERMINATION OF EMPLOYMENT . . . . . . . . . . . . . . . . . . . . . . . . . .5
XII. ADJUSTMENT OF SHARES; EFFECT OF CERTAIN TRANSACTIONS. . . . . . . . . . . . .6
XIII. RIGHT TO TERMINATE EMPLOYMENT . . . . . . . . . . . . . . . . . . . . . . . .7
XIV. LISTING OF SHARES AND RELATED MATTERS . . . . . . . . . . . . . . . . . . . .7
XV. AMENDMENT OF THE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
XVI. TERMINATION OR SUSPENSION OF THE PLAN . . . . . . . . . . . . . . . . . . . .8
XVII. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
XVIII. PARTIAL INVALIDITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
XIX. EFFECTIVE DATE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
</TABLE>
i
<PAGE>
PACIFIC NORTHWEST BANK
1988 STOCK OPTION PLAN
I. PURPOSE
Pacific Northwest Bank (the "Bank") desires to afford certain of its key
employees and the key employees of any subsidiary of the Bank or parent of the
Bank now existing or hereafter formed or acquired who are responsible for the
continued growth of the Bank an opportunity to acquire a proprietary interest in
the Bank, and thus to create in such key employees an increased interest in and
a greater concern for the welfare of the Bank.
The stock options ("Options") offered pursuant to this 1988 Stock Option
Plan (the "Plan") are a matter of separate inducement and are not in lieu of any
salary or other compensation for the services of any key employee.
The Bank, by means of the Plan, seeks to retain the services of persons now
holding key positions and to secure the services of persons capable of filling
such positions.
The Options granted under the Plan are intended to be either incentive
stock options ("Incentive Options") within the meaning of Section 422A of the
Internal Revenue Code of 1986 (the "Code"), or options that do not meet the
requirements for Incentive Options ("Non-Qualified Options"), but the Bank makes
no warranty as to the qualifications of any Option as an Incentive Option.
II. AMOUNT OF STOCK SUBJECT TO THE PLAN
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, 33,334 shares of the authorized stock, $12.50 par value per share
(the "Shares").
Shares which 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.
Except as provided in Article XIX, the Bank may, from time to time during
the period beginning November 28, 1988 (the "Effective Date") and ending
November 27, 1998 (the "Termination Date"), grant Options to certain key
employees of the Bank, or of any subsidiary of the Bank or parent of the Bank
now existing or hereafter 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 term "subsidiary corporation" and "parent
corporation" as defined in Sections 425(f) and 425(e), respectively, of the
Code.
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III. ADMINISTRATION
The board of directors of the Bank (the "Board of Directors") shall
designate from among its members a committee (the "Committee"), which shall
consist of no fewer than three members of the Board of Directors, each of whom
shall be a "disinterested person" within the meaning of Rule 16b-3 (or any
successor rule or regulation) 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 a
majority of the members of the Committee 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 of Directors, and any vacancy on the
Committee may at any time be filled by resolution adopted by the Board of
Directors.
Any or all powers and functions of the Committee may at any time and from
time to time be exercised by the Board of Directors; provided, however, that,
with respect to the participation in the Plan by employees who are members of
the Board of Directors, as the case may be, such powers and functions of the
Committee may be exercised by the Board of Directors only if, at the time of
such exercise, a majority of the members of the Board of Directors and a
majority of the directors acting in the particular matter, are "disinterested
persons" within the meaning of Rule 16b-3 (or any successor rule or regulation)
promulgated under the Exchange Act.
Subject to the express provisions of the Plan, the Board of Directors or
the Committee, as the case may be, shall have authority, in its discretion, to
determine the employees to whom Options shall be granted, the time when such
Options shall be granted to employees, the number of Shares which shall be
subject to each Option, the purchase price of each Share which shall be subject
to each Option, the period(s) during which such Options shall be exercisable
(whether in whole or in part), and the other terms and provisions thereof.
Subject to the express provisions of the Plan, the Board of Directors or
the Committee, as the case may be, also shall have authority to construe the
Plan Options granted thereunder, to amend the Plan and 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.
The determination of the Board of Directors or the Committee, as the case
may be, on matters referred to in this Article III shall be conclusive.
The Board of Directors or the Committee, as the case may be, 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 any such
counsel or consultant and any computation received from any such consultant or
agent. Expenses incurred by the Board of Directors or the Committee in the
engagement of such counsel, consultant or agent shall be paid by the Bank. No
member or former member of the Committee or of the Board of Directors shall be
liable for any action or determination made in good faith with respect to the
Plan or any Option granted hereunder.
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IV. ELIGIBILITY
Participants in the Plan shall be those salaried key employees and officers
of the Bank or of any subsidiary of the Bank or parent of the Bank (including
officers and employees who are also directors of the Bank or any subsidiary of
the Bank 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 the 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.
No incentive stock option shall be granted to an employee who, at the time
the option is granted, owns stock possessing more than ten percent (10%) of the
total combined voting power of all classes of capital stock of the Bank or any
subsidiary of the Bank or parent of the Bank; provided, however, that an
incentive option may be granted to such an employee if, at the time such
incentive stock option is granted, the option exercise price is no less than the
greater of either: (a) the par value of the stock, or (b) one hundred ten
percent (110%) of the fair market value of the stock subject to the option at
the time the option is granted, and provided such option is by its terms not
exercisable after the expiration of five (5) years from the date such option is
granted.
V. MAXIMUM ALLOTMENT OF INCENTIVE OPTIONS
No employee shall be granted Incentive Options 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 stock with respect to
which Incentive Options are exercisable for the first time by such employee
during any calendar year (under all stock option plans of the Bank and any
parent of the Bank or subsidiary of the Bank) exceeds $100,000. For purposes of
this limitation, the fair market value of stock is determined as of the time the
Option is granted.
VI. OPTION PRICE AND PAYMENT
The price for each Share purchasable under any Option granted hereunder
shall be such amount as the Board of Directors or the Committee, as the case may
be, shall, in its best judgment, determine on the basis of facts and
circumstances to be not less than the greater of either: (a) the par value of
the stock, or (b) one hundred percent (100%) of the fair market value per Share
at the date the Option is granted, or one hundred ten percent (110%) of the fair
market value per share if required for issuance of an Incentive Stock Option to
a ten percent (10%) shareholder, as provided in Article IV.
If the Shares are listed on a national securities exchange in the United
States on the date any Option is granted, the fair market value per Share shall
be deemed to be the average of the high and low quotations at which such Shares
are sold on such national securities exchange on the date such Option is
granted. If the Shares are listed on a national securities exchange in the
United States on such date but the Shares are not traded on such date, or such
national securities exchange is not open for business on such date, the fair
market value per Share shall be determined as of the closest preceding date on
which such exchange shall have been open for
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business and the Shares were traded. If the Shares are listed on more than
one national securities exchange in the United States on the date any such
Option is granted, the Committee shall determine which national securities
exchange shall be used for the purpose of determining the fair market value
per Share. If the Shares are not so listed or quoted, the fair market value
shall be determined in accordance with a method approved by the Board of
Directors or the Committee.
For purposes of this Plan, the determination by the Board of Directors or
the Committee, as the case may be, of the fair market value of a Share shall be
conclusive.
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, the
holder of an option may, if and to the extent the terms of such Option 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 with or to conform to the requirements of
any applicable laws or regulations.
VII. USE OF PROCEEDS
The cash proceeds of the sale of Shares subject to the Options granted
hereunder are to be added to the general funds of the Bank and used for its
general corporate purposes as the Board of Directors shall determine.
VIII. TERM OF OPTION AND LIMITATIONS
ON THE RIGHT OF EXERCISE
Unless the Board of Directors or the Committee, as the case may be, shall
determine otherwise (in which event the instrument evidencing the option granted
hereunder shall so specify), any Incentive Option granted hereunder shall be
exercisable during a period of not more than ten (10) years from the date of
grant of such Option (five (5) years in the case of a more than ten percent
(10%) shareholder) at such times and in such amounts as the Board of Directors
or the Committee shall determine at such date of grant.
Any Non-Qualified Option granted hereunder shall be exercisable at such
time, in such amounts and during such period or periods as the Board of
Directors or the Committee, as the case may be, shall determine at the date of
the grant of such Option.
The Board of Directors or the Committee shall have the right to accelerate,
in whole or in part, from time to time, conditionally or unconditionally, rights
to exercise any Option granted hereunder.
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To the extent that an Option is not exercised within the period of
exercisability specified therein, it shall expire as to the then unexercised
part. If any Option granted hereunder shall terminate prior to the Termination
Date, the Board of Directors or the Committee, as the case may be, shall have
the right to use the Shares as to which such Option 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 the Termination Date.
In no event shall an Option granted hereunder be exercised for a fraction
of a share.
IX. EXERCISE OF OPTIONS
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 fifteen (15) days from the date such
notice is given, for the payment of the purchase price against delivery of the
Shares being purchased. Subject to the terms of Articles XIX, the Bank shall
cause certificates for the Shares so purchased to be delivered to the optionee
at the principal business office of the Bank, against payment of the full
purchase price, on the date specified in the notice of exercise.
X. NONTRANSFERABILITY OF OPTIONS
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 of
the holder, only by such holder.
XI. TERMINATION OF EMPLOYMENT
Upon termination of employment of any employee with the Bank and any
subsidiary of the Bank or parent of the Bank, any Option previously granted to
the employee, unless otherwise specified by the Board of Directors or the
Committee, as the case may be, 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 the employ of such corporation or
during the one (1) 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 by 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 employer, and while such employee is
entitled to exercise such Option as herein provided, such employee
shall have the right to exercise such Option
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<PAGE>
so granted, to the extent not theretofore exercised, in respect of
any or all of such number of Shares as specified by the Board of
Directors or the Committee, as the case may be, in such Option, at
any time up to and including (i) three (3) months after the date of
such termination of employment in the case of termination by reason
of retirement, voluntary termination or dismissal and (ii) one (1)
year after the date of termination of employment in the case of
termination by reason of disability.
In no event, however, shall any person be entitled to exercise any Option
after the expiration of the period of exercisability of such option as specified
therein.
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 a certified copy of letters
testamentary or equivalent proof of the right of such legal representative or
other person to exercise such option.
For the purposes of the Plan, an employment relationship shall be deemed
to exist between an individual and a corporation if, at the time of the
determination, the individual was an "employee" of such corporation 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 if the period of such
leave does not exceed 90 days, or, if longer, so long as the individual's
right to reemployment with the corporation granting the option (or a related
corporation) is guaranteed either by statute or by contract. If the period
of leave exceeds ninety (90) days, the employment relationship shall be
deemed to have terminated on the ninety-first (91st) day of such leave,
unless the individual's right to reemployment is guaranteed by statute or
contract.
A termination of employment shall not be deemed to occur by reason of
(i) the transfer of an employee from employment by the Bank to employment by
a subsidiary of the Bank or parent of the Bank or (ii) the transfer of an
employee from employment by a subsidiary of the Bank or a parent of the Bank
to employment by the Bank or by another subsidiary or parent of the Bank.
XII. ADJUSTMENT OF SHARES; EFFECT OF CERTAIN TRANSACTIONS
In the event of any change in the outstanding Shares through merger,
consolidation, reorganization, recapitalization, stock dividend, 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 property 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 successively 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
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<PAGE>
event of any such change, the Board of Directors or the Committee, as the
case may be, shall make any 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 of Directors or the Committee, as the case
may be, as to these matters shall be conclusive. Notwithstanding the
foregoing, (i) each such adjustment with respect to an Incentive Option shall
comply with the rules of Section 425(a) of the Code, and (ii) in no event
shall any adjustment be made which would render any Incentive Option granted
hereunder other than an incentive stock option for purposes of Section 422A
of the Code.
In the event of a change in control of the Bank, all then outstanding
Options shall immediately become exercisable. For purposes of the Plan, a
"change in control" of the Bank occurs if:
(a) any "person" (defined as such term is used in Sections 13(d) and
14(d)(2) of the Exchange Act, as amended) is or becomes the beneficial
owner, directly or indirectly, of securities of the Bank representing
twenty percent or more of the combined voting power of the Bank's
outstanding securities then entitled to vote for the election of
directors; or
(b) a majority of the members of the Bank's Board of Directors become
individuals other than Continuing Directors. A "Continuing Director"
means any original member and any later appointed or elected member of
the Board of Directors specifically designated as a Continuing
Director at a meeting of the Board of Directors at which a majority of
the votes cast in favor of such person being designated a Continuing
Director were cast by Continuing Directors; or
(c) the Board of Directors shall approve the sale of all or substantially
all of the assets of the Bank; or
(d) the Board of Directors shall approve any merger, consolidation,
issuance of securities or purchase of assets, the result of which
would be the occurrence of any event described in clause (a) or (b).
XIII. RIGHT TO TERMINATE EMPLOYMENT
The Plan shall not impose any obligation on the Bank or on any subsidiary
of the Bank 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 an
Option to remain in the employ of the Bank or of any subsidiary of the Bank or
parent of the Bank.
XIV. LISTING OF SHARES AND RELATED MATTERS
If at any time the Board of Directors shall determine in its discretion
that the listing, registration or qualification of the Shares covered by the
Plan upon any national securities
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exchange or under any state or federal law, or the consent or approval of any
governmental regulatory body, is necessary or desirable as a condition of, or
in connection with, the sale or purchase of Shares under the Plan, no Shares
shall be issued unless and until such listing, registration, qualification,
consent or approval shall have been effected or obtained, or otherwise
provided for, free of any conditions not acceptable to the Board of Directors.
XV. AMENDMENT OF THE PLAN
The Board of Directors 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 (i) increase the total number of Shares reserved for Options
under the Plan (other than an increase resulting from an adjustment provided for
in Article XII), (ii) reduce the exercise price of any Incentive Option granted
hereunder below the price required by Article VI, (iii) modify the provisions of
the Plan relating to eligibility, or (iv) materially increase the benefits
accruing to participants under the Plan. The Board of Directors or the
Committee, as the case may be, shall be authorized to amend the Plan and the
Options granted thereunder to permit the Incentive Options granted thereunder to
qualify as incentive stock options 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 Option shall not be adversely
affected by amendment of the Plan or the Option without the consent of the
holder of the Option.
XVI. TERMINATION OR SUSPENSION OF THE PLAN
The Board of Directors may at any time suspend or terminate the Plan.
The Plan, unless sooner terminated under Article XIX or by action of the
Board of Directors, 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 of Directors or the Committee, as
the case may be, to construe and administer any Options granted prior to the
termination or suspension of the Plan under Article III nevertheless shall
continue after such termination or during such suspension.
XVII. GOVERNING LAW
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.
XVIII. PARTIAL INVALIDITY
The invalidity or illegality of any provision herein shall not be deemed to
affect the validity of any other provision.
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XIX. EFFECTIVE DATE
The Effective Date of the Plan shall be November 9, 1988, the date on which
the Plan was adopted by the Board of Directors; 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 twelve (12) months before or after the
Effective Date, the Plan and any Options granted thereunder shall terminate.
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Exhibit 99.2
PIONEER BANCORP, INC.,
a Washington corporation
(formerly Centennial Bancshares, Inc.)
AMENDED AND RESTATED
INCENTIVE STOCK OPTION PLAN
February 1, 1996
1. PURPOSE OF PLAN. This Amended and Restated Incentive Stock Option
Plan (the "Plan") is intended to encourage ownership of shares of Pioneer
Bancorp, Inc. (the "Corporation") by key employees of the Corporation and its
subsidiaries and to provide additional incentive for them to promote the
success of the business.
2. SHARES SUBJECT TO PLAN. There will be reserved for use upon the
exercise of options to be granted from time to time under the Plan
(hereinafter called "Options") an aggregate of 50,000 Common Shares, no par
value (hereinafter called the "Common Shares"), of the Corporation, which
shares may be in whole or in part, as the Board of Directors of the
Corporation (hereinafter called the "Board of Directors") shall from time to
time determine, from the authorized but unissued Common Shares or issued
Common Shares which shall have been reacquired by the Corporation. If an
Option shall expire or terminate for any reason without having been exercised
in full, the unpurchased shares covered thereby shall (unless the Plan shall
have been terminated) be added to the shares otherwise available for Options
which may be granted in accordance with the terms of the Plan.
3. ADMINISTRATION OF THE PLAN. The Board of Directors shall appoint a
Stock Option Plan Committee (the "Committee"), which shall consist of not
less than three (3) members of the Board of Directors. Subject to the
Provisions of the Plan, the Committee shall have plenary authority in its
discretion to determine the employees of the Corporation and its subsidiaries
to whom Options shall be granted, the number of shares to be covered by each
of the Options, and the time or times at which Options shall be granted; to
interpret the Plan; and to prescribe, amend, and rescind rules and
regulations relating to it. Any Option to be granted to an employee who is a
member of the Board of Directors serving on the Committee must, before it is
granted, be approved by majority vote of the Board of Directors. The Board
of Directors may from time to time appoint members of the Committee in
substitution for or in addition to members previously appointed and may fill
vacancies, however caused, in the Committee. The Committee shall select one
of its members as its chairman and shall hold its meetings at such times and
places as it shall deem advisable. A majority of its members shall
constitute a quorum. All action of the Committee shall be taken by a majority
of its members. Any action may be taken by a written instrument signed by
a majority of the members and action so taken shall be fully as effective as
if it has been taken by a vote of a majority of the members at a meeting duly
called and held. The Committee may appoint a secretary, shall keep minutes of
its meetings, and shall make such rules and regulations for the conduct of
its business as it shall deem advisable.
4. EMPLOYEES TO WHOM OPTIONS SHALL BE GRANTED. An Option may be
granted to each person who shall be in the employ of the Corporation as an
officer or in the employ as an officer of one or more of its present or
future subsidiary corporations as defined in Section 425 of the Internal
Revenue Code of 1986 (the "Code"), herein called subsidiaries, who shall be
selected by the Committee whether or not in any case the grantee shall have
received one or more Options hereunder at any previous time. In no event
shall an Option which is exercisable more than five years from the date of
the grant thereof be granted to any person who, immediately after such Option
is granted, owns (as defined in Sections 422A and 425 of the Code) shares
possessing more than ten percent (10%) of the total combined voting power or
value of all classes of shares of the Corporation or of its parent or
subsidiary corporation.
5. NUMBER OF SHARES COVERED BY OPTIONS GRANTED TO INDIVIDUAL
EMPLOYEES. The number of shares of Common Stock covered by the Option or
Options that shall be granted to any individual employee pursuant to this
Plan shall be as directed by the Committee.
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6. FACTORS CONSIDERED IN GRANTING OPTIONS. In making any
determination as to employees to whom Options shall be granted and as to the
number of shares to be covered by such Options, the Committee shall take into
account the duties of the respective employees, their present and potential
contributions to the success of the Corporation, and such other factors as
the Committee shall deem relevant in connection with accomplishing the
purpose of the Plan.
7. OPTION PRICES. The purchase price of the Common Shares which shall
be covered by each Option shall be not less than one hundred percent (100%)
of the fair market value of the Common Shares at the time of granting the
Option. Such fair market value shall determine what the purchase price will
be, which determination shall be conclusive. Notwithstanding the foregoing,
the purchase price for Common Shares under an option or Options granted to
any person then owning more than ten percent (10%) of the total combined
voting power of all classes of shares of the Corporation, or of its parent or
subsidiary corporation, shall be not less than one hundred ten percent (110%)
of the fair market value of the Common Shares at the time of grant of the
Option.
8. TERMS OF OPTIONS. Each Option must be exercised within a time
period as selected by the Committee, which time period must be within ten
(10) years from the date of the grant thereof; but any Option granted to any
person then owning more than ten percent (10%) of the total combined voting
power of all classes of shares of the Corporation, or of its parent or
subsidiary corporation, must be exercised within five (5) years from the date
of the grant thereof. The option term may be subject to termination prior to
the expiration of the period mentioned above, as provided hereinafter.
9. EXERCISE OF OPTIONS. An Option may be exercised in increments
after each of the first three (3) years of continuous employment after the
date of the grant thereof, according to the following table:
<TABLE>
<CAPTION>
Required Number of
Years of Continuous Number of Shares as to All or Part of Which
Employment After the the Option May be Exercised after Such
Date of the Grant Period of Continuous Employment
-------------------- -------------------------------------------
<S> <C>
1 33% of the total covered by the option
2 33% of the total covered by the option
3 33% of the total covered by the option
</TABLE>
If the Corporation, or any of its subsidiaries, is sold to or merged into any
other corporation or business, or if there is a 25% or greater change in
ownership in Corporation or any of its subsidiaries within any 12 consecutive
month period, then the preceding table shall not apply and the option may be
exercised in full at any time.
An Option (or increment) may not be exercised as to less than 100 shares at any
one time (or the remaining shares then purchasable under the Option [or
increment] if less than 100 shares). The purchase price of the shares as to
which an Option shall be exercised shall be paid in full in cash at the time of
exercise. Except as provided in Sections 11 and 12, an Option may not be
exercised at any time unless the holder thereof shall have been in the
continuous employ of the Corporation or of one of its subsidiaries, or of the
Corporation and one or more of its subsidiaries, from the date of the granting
of the Option to the date of its exercise. The holder of an Option shall not
have any of the rights of a shareholder with respect to the shares covered by
his Option, except to the extent that one or more certificates for such shares
shall be delivered to him upon the due exercise of the Option.
10. NONTRANSFERABILITY. An Option shall not be transferable otherwise
than by will or the laws of descent and distribution, and an Option may be
exercised, during the lifetime of the employee, only by him.
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<PAGE>
11. TERMINATION OF EMPLOYMENT. If the employment of an employee to
whom an Option shall have been granted shall be terminated (otherwise than by
reason of death), such Option may be exercised (to the extent that the
employee shall have been entitled to do so at the termination of his
employment) at any time within three (3) months after such termination, but
not later than the latest date such Option could have been exercised had his
employment not been terminated. So long as the holder of an Option shall
continue to be an employee of the Corporation or one or more of its
subsidiaries, his Option shall not be affected by any change of duties or
position. Nothing in the Plan or in any option agreement shall confer upon
any employee any right to continue in the employ of the Corporation or any of
its subsidiaries, or interfere in any way with the right of the Corporation
or any such subsidiary to terminate his employment at any time.
12. DEATH OF EMPLOYEE. If an employee to whom an Option shall have
been granted shall die while he shall be employed by the Corporation or one
or more of its subsidiaries or within three (3) months after the termination
of his employment, such Option may be exercised (to the extent that the
employee shall have been entitled to do so at the date of his death) by a
legatee or legatees of the employee under his last will, or by his personal
representatives or distributees, at any time within three (3) years after his
death (but not later than the latest date such Option could have been
exercised had the employee not died).
13. ADJUSTMENT UPON CHANGES IN CAPITALIZATION. In the event of changes
in the outstanding Common Shares of the Corporation by reason of share
dividends, split-ups, recapitalizations, mergers, consolidations,
combinations, or exchanges of shares, separations, reorganizations, or
liquidations, the number and class of shares available under the Plan and the
maximum number of shares as to which Options may be granted to any employee
shall be correspondingly adjusted by the Committee. No adjustment shall be
made in the minimum number of shares which may be purchased at any time.
14. EFFECTIVENESS OF PLAN. The Plan shall become effective on such
date as the Board of Directors shall determine, but only after: (a) the
shareholders of the Corporation shall, by the affirmative vote of a majority
in interest of the Common Shares, in addition to the affirmative vote of a
majority in interest of all the shares of the Corporation, have approved the
Plan; and (b) the Board of Directors shall have been advised by counsel that
all applicable legal requirements have been complied with.
15. TIME OF GRANTING OPTIONS. Neither anything contained in the Plan
or in any resolution adopted or to be adopted by the Board of Directors or
the stockholders of the Corporation nor any action taken by the Committee
shall constitute the granting of any Option. The granting of an Option shall
take place only when a written option agreement substantially in the form of
the option agreement which is attached as Exhibit A shall have been duly
executed and delivered by or on behalf of the Corporation and the employee to
whom such Option shall be granted.
16. LIMITATION. The value of shares of the Corporation's stock that
can be exercised for the first time by an employee in any one year cannot
exceed $100,000, based on the fair market value of the stock at the date the
option was granted. The year during which an option to acquire shares first
becomes exercisable is determined under Section 9 above. This does not mean
that only $100,000 worth of stock can be received in any one year. Rather,
the limitation applies to the amount of stock that could be acquired in a
given year assuming that all options are exercised on the date they first
becomes exercisable. This limitation is determined at the time the stock
option is granted, and, once an option is issued, the employee can exercise
as many stock options as he or she has available for exercise without concern
for an annual exercise limit. This limitation is intended to ensure that all
options issued under this Plan qualify as Incentive Stock Options under the
applicable provisions of the Internal Revenue Code of 1986, as amended. This
limitation is intended to embody the restrictions codified in Section 422(d)
of the Internal Revenue Code of 1986, as amended, and shall be construed in
such a manner as to comply with said restrictions. Options issued in excess
of this limitation will be effective, subject to taxation under applicable
rules and regulations.
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