INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT is made as of January 20, 1998 between CENTENNIAL
BANCORP, an Oregon corporation (the "Company"), and XXXXXXXX (XXX) X. XXXXXXXXX
(the "Optionee").
Pursuant to the Company's Restated 1995 Stock Incentive Plan (the
"Plan"), and Optionee's Employment Agreement with the Company, dated July 29,
1997 (the "Employment Agreement"), the Company has granted Optionee an incentive
stock option to purchase shares of the Company's Common Stock, with par value of
$2.00 per share (the "Common Stock"), in the amount indicated below.
NOW, THEREFORE, in consideration of the promises and the mutual
covenants contained in this Option Agreement, the parties agree as follows:
1. GRANT. The Company grants to Optionee, upon the terms and conditions
set forth below, the right and option (the "Option") to purchase 25,000 shares
of Common Stock at an exercise price of $29.75 per share (the "Exercise Price"),
subject to the terms and conditions of the Plan, which are incorporated herein
by reference. In the event of a conflict between the terms and conditions of the
Plan and the terms and conditions of this Option Agreement, the terms and
conditions of the Plan shall govern. The Option is an Incentive Stock Option and
is intended to qualify as such under Section 422 of the Internal Revenue Code of
1986, as amended (the "Code").
2. TERM OF OPTION. Subject to reductions in the term of the Option as
provided in the Plan and this Option Agreement, the Option shall continue in
effect until 10 years from the date of this Option Agreement and may be
exercised during such term only in accordance with the provisions of the Plan
and this Option Agreement.
3. VESTING.
3.1 TIMING OF EXERCISE. The Option may be exercised in
accordance with the following schedule: (a) on the first anniversary of the date
hereof, one-third of the shares purchasable under the Option may be purchased,
in whole or in part, at any time thereafter until the Option expires; and (b)
continuing on each of the second and third anniversaries of the date hereof, an
additional one-third of the shares purchasable under the Option may be purchased
at any time thereafter until the Option expires.
3.2 SPECIAL VESTING PROVISIONS. Notwithstanding the foregoing,
in the event that Optionee's employment with the Company terminates on account
of (i) death; (ii) Disability; or (iii) termination of the Employment Agreement
by the Company without Cause or by Optionee with Good Reason, Optionee shall
have the right to
purchase all of the shares purchasable under the Option in accordance with
Section 4. Furthermore, in the event that the Company incurs a Change of
Control, Optionee shall have the right to purchase all of the shares purchasable
under the Option. Employment by a parent or subsidiary of the Company shall be
deemed to be employment by the Company. The definitions in the Employment
Agreement apply for purposes of this Section 3.2.
4. EXERCISE OF OPTION.
4.1 RIGHT TO EXERCISE. While Optionee is employed by the
Company, the Option is exercisable during its term in accordance with Section 3
and the applicable provisions of the Plan and this Option Agreement. In the
event that the Optionee's employment with the Company or a parent or subsidiary
of the Company terminates for any reason during the term of the Option, the
Option may be exercised at any time prior to the earlier of the expiration date
of the Option or the expiration of three months after the termination date (or
the earlier of the expiration date of the Option or one year after the
termination date, in the event of Optionee's death or disability), but only to
the extent that the Option was vested and exercisable under Section 3 at the
date of termination. In such event, to the extent that the Option was not
exercised within the applicable period, all further rights to purchase shares
pursuant to the Option shall cease and terminate at the expiration of such
period.
4.2 METHOD OF EXERCISE. The Option is exercisable by delivery
of an exercise notice, which notice shall state the election to exercise the
Option, the number of shares of Common Stock in respect of which the Option is
being exercised (the "Exercised Shares") and such other representations and
agreements as may be required by the Company pursuant to the provisions of the
Plan. In addition, Optionee agrees to execute, as a condition of Option
exercise, such agreements respecting the Exercised Shares as the Committee, in
its reasonable discretion, determines to be required under the terms of
agreements to which the Company is a party or otherwise advisable and in the
best interests of the Company. The exercise notice shall be signed by Optionee
and shall be delivered in person or by certified mail to the Secretary of the
Company. The exercise notice shall be accompanied by payment of the aggregate
Exercise Price as to all the Exercised Shares. The Option shall be deemed to be
exercised upon receipt by the Company of such fully executed exercise notice
accompanied by such aggregate Exercise Price. For income tax purposes the
Exercised Shares shall be considered transferred to Optionee on the date the
Option is exercised with respect to such Exercised Shares.
5. CONDITIONS. The obligations of the Company under this Option
Agreement shall be subject to the approval of such state or federal authorities
or agencies as may have jurisdiction in the matter. The Company will use its
best efforts to take such steps as may be required by state or federal law or
applicable regulations, including rules and regulations of the Securities and
Exchange Commission and any national securities exchange on which the Common
Stock may then be listed, in connection with the issuance or sale of any shares
acquired pursuant to this Option Agreement or the listing of
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such shares on any such exchange. The Company shall not be obligated to issue or
deliver shares of Common Stock under this Option Agreement if, upon advice of
its legal counsel, such issuance or delivery would violate state or federal
securities laws.
6. METHOD OF PAYMENT. Payment of the aggregate Exercise Price
shall be by any of the following, or a combination thereof, at the election of
Optionee:
(a) cash; or
(b) check; or
(c) delivery of such documentation as the Committee and
Optionee's broker shall require to effect an exercise of the
Option and delivery to the Company of the sale or margin loan
proceeds required to pay the aggregate Exercise Price of the
Exercised Shares; or
(d) surrender of other shares of Common Stock which have a
Fair Market Value on the date of surrender equal to the
aggregate Exercise Price of the Exercised Shares.
No shares shall be issued until full payment has been made, and the Optionee
shall have none of the rights of a shareholder until shares are issued. Upon
notification of the amount due and prior to or concurrently with delivery of the
certificate representing the shares, the Optionee shall pay to the Company any
amounts necessary to satisfy applicable federal, state, and local withholding
tax requirements.
7. RESTRICTION ON TRANSFER.
7.1 RESTRICTION. The Option is not transferable by Optionee
other than by testamentary disposition or the laws of descent and distribution
and, during Optionee's lifetime, may be exercised only by Optionee.
7.2 EXERCISE BY LEGAL REPRESENTATIVE OR SUCCESSOR. Whenever
the word "Optionee" is used in any provision of this Agreement under
circumstances when the provision should logically be construed to apply to the
Optionee's guardian, legal representative, executor, administrator, or the
person or persons to whom the Option may be transferred by testamentary
disposition or by the laws of descent and distribution, the word "Optionee"
shall be deemed to include such person or persons.
8. ADJUSTMENT IN OPTION SHARES. In the event any change is made to the
Company's outstanding Common Stock by reason of any stock split, stock dividend,
combination of shares, exchange of shares, or other change affecting the
outstanding Common Stock as a class without receipt of consideration, then
appropriate adjustments shall be made to (i) the total number of Option Shares
subject to this Option and (ii) the
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Exercise Price payable per share in order to reflect such change and thereby
preclude a dilution or enlargement of benefits hereunder. Any such adjustment
made by the Committee shall be conclusive. In the event of the dissolution of
the Company or a merger, consolidation, plan of exchange or similar transaction
affecting the Company, in lieu of adjusting the Option as described above or in
lieu of having the Option continue unchanged, the Committee may, in its sole
discretion, provide a 30-day period immediately prior to such event during which
the Optionee shall have the right to exercise the Option in whole or in part
without any limitation on exercisability.
9. LEGENDS. Certificates representing the shares subject to this
Option Agreement shall bear such legends as the Company shall deem appropriate
to reflect any restrictions on transfer imposed by federal or applicable state
securities laws.
10. EMPLOYMENT. Nothing in the Plan or in this Option Agreement
shall (i) confer upon the Optionee any right with respect to employment with the
Company or any affiliate of the Company or (ii) interfere in any way with the
right of the Company or any affiliate of the Company to terminate the Optionee's
employment. In all matters with respect to Optionee's employment, the terms and
conditions of the Employment Agreement shall control.
11. THE PLAN. The Option is subject to the terms and conditions
of the Plan.
12. DEFINITIONS. Any capitalized term in this Option Agreement
which is not defined herein and which is defined in the Plan shall have the same
definition as in the Plan.
13. GOVERNING LAW. To the extent that federal laws (such as the
Code and the federal securities laws) do not otherwise control, the Plan and
this Option Agreement shall be construed in accordance with the laws of the
state of Oregon.
14. HEADINGS. Headings contained in this Option Agreement are for
reference purposes and shall not affect the meaning or interpretation of this
Option Agreement.
15. GENERAL. Optionee and the Company agree that the Option is
granted under and governed by the terms and conditions of the Plan and this
Option Agreement. Optionee has reviewed the Plan and this Option Agreement in
their entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Option Agreement and
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fully understands all provisions of the Plan and Option Agreement. Optionee
hereby agrees to accept as binding, conclusive and final all decisions or
interpretations of the Committee upon any questions relating to the Plan and
Option Agreement.
OPTIONEE: CENTENNIAL BANCORP
/s/ Xxxxxxxx X. Xxxxxxxxx By /s/ Xxxxx X. Xxxxxx
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Xxxxxxxx X. Xxxxxxxxx Title Secretary
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CONSENT OF SPOUSE
The undersigned spouse of Optionee has read and hereby
approves the terms and conditions of the Plan and this Option Agreement. In
consideration of the Company's granting his or her spouse the right to purchase
shares of Common Stock as set forth in the Plan and this Option Agreement, the
undersigned hereby agrees to be irrevocably bound by the terms and conditions of
the Plan and this Option Agreement, and further agrees that any joint or
community property interest shall be similarly bound. The undersigned hereby
appoints the undersigned's spouse as attorney-in-fact for the undersigned with
respect to any amendment or exercise of rights under the Plan or this Option
Agreement.
/s/ Xxxxxx Xxxxxxxxx
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Spouse of Optionee
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