EXHIBIT
4.2
WASHINGTON
COMMERCIAL BANCORP
EMPLOYEE STOCK OPTION
PLAN
1. Purpose of the Plan. The purpose
of this Employee Stock Option Plan ("Plan") is to provide
additional incentives to key employees of WASHINGTON COMMERCIAL
BANCORP, a Washington corporation ("Bancorp") and any of its
existing or future Subsidiaries, thereby helping to attract and
retain the best available personnel for positions of responsibility
with said corporations and otherwise promoting the success of the
business activities of Bancorp. Bancorp intends that Options issued
pursuant to this Plan shall constitute either Incentive Stock
Options within the meaning of Section 422 of the Code or
Nonqualified Stock Options
2. Definitions. As used in this
Plan, the following definitions apply:
| a. |
"Bancorp" has the
meaning set forth in paragraph 1 of this Plan. |
| b. |
"Board" means the Board
of Directors of Bancorp. |
| c. |
"Code" means the
Internal Revenue Code of 1986, as amended. |
| d. |
"Common Stock" means
Bancorp's common stock, no par value. |
| e. |
"Committee" has the
meaning set forth in subparagraph 4(a) of this Plan. |
| f. |
"Continuous Status as
Employee" means the absence of any interruption or termination of
service
as an Employee. Continuous Status as an Employee shall not be
considered interrupted in the case of sick
leave, military leave or any other approved leave of
absence. |
| g. |
"Date of Grant" of an
Option means the date on which the Committee makes the
determination
granting such Option, or such later date as the Committee may
designate. The Date of Grant shall be
specified in the Option agreement. |
| h. |
"Employee" means any
person employed by Bancorp, or a Subsidiary of Bancorp which is
currently in existence or is hereafter organized or is acquired by
Bancorp. |
| i. |
"Exercise Price" has
the meaning set forth in subparagraph 4(b)(2) of this
Plan. |
| j. |
"Option" means a stock
option granted under this Plan. Options shall include both
Incentive
Stock Options as defined under Section 422 of the Code and
Nonqualified Stock Options, which refer to
all stock options other than Incentive Stock Options. |
| k. |
"Optionee" means an
Employee who receives an Option. |
| l. |
"Plan" has the meaning
set forth in paragraph 1 of this Plan. |
| m. |
"Parent" means any
corporation owning at least eighty percent (80%) of the total
voting power
of the issued and outstanding
stock of Bancorp, and eighty percent (80%) of the total value of
the issued and outstanding stock of Bancorp. |
| n. |
"Shareholder-Employee"
means an Employee who owns stock representing more than ten
percent
(10%) of the total combined voting power of all classes of stock of
Bancorp or of any Subsidiary or
parent company. For this purpose, the attribution of stock
ownership rules provided in Section 424(d) of
the Code shall apply. |
| o. |
"Subsidiary"
means any corporation of which not less than fifty percent (50%) of
the voting
shares are held by Bancorp or a Subsidiary, whether or not such
corporation now exists or is hereafter
organized or acquired by Bancorp or a Subsidiary. |
3. Stock Subject to
Options.
a. Number
of Shares Reserved. The maximum number of shares which may be
optioned and sold under this Plan is
__________ shares of the Common Stock of Bancorp (subject to
adjustment as provided in subparagraph 6(j) of this Plan). During
the term of this Plan, Bancorp will at all times reserve and keep
available a sufficient number of shares of its Common Stock to
satisfy the requirements of this Plan.
b. Expired
Options. If any outstanding Option expires or becomes unexercisable
for any reason without having been exercised in full, the shares of
Common Stock allocable to the unexercised portion of such Option
will again become available for other Options.
4.
Administration of the Plan.
a. The
Committee. The Board will administer this Plan directly, acting as
a Committee of the whole, or if the Board elects, by a separate
Committee appointed by the Board for that purpose and consisting of
at least three Board members. All references in the Plan to the
"Committee" refers to this separate Committee, if any is
established, or if none is then in existence, refers to the Board
as a whole. Once appointed, any Committee will continue to serve
until otherwise directed by the Board. From time to time, the Board
may increase the size of the Committee and appoint additional
members, remove members (with or without cause), appoint new
members in substitution, and fill vacancies however caused. The
Committee will select one of its members as chairman, and will hold
meetings at such times and places as the chairman or a majority of
the Committee may determine. At all times, the Board will have the
power to remove all members of the Committee and thereafter to
directly administer this Plan as a Committee of the
whole.
(1) Members
of the Committee who are eligible for Options or who have been
granted Options will be counted for all purposes in determining the
existence of a quorum at any meeting of the Committee and will be
eligible to vote on all matters before the Committee respecting the
granting of Options or administration of this Plan.
(2) At
least annually, the Committee must present a written report to the
Board indicating the persons to whom Options have been granted
since the date of the last such report, and in each case the Date
of Grant, the number of shares optioned, and the per-share Exercise
Price.
b. Powers
of the Committee. All actions of the Committee must be either (i)
by a majority vote of the members of the full Committee at a
meeting of the Committee, or (ii) by unanimous written consent of
all members of the full Committee without a meeting. All decisions,
determinations and interpretations of the Committee will be final
and binding on all persons, including all Optionees and any other
holders or persons interested in any Options, unless otherwise
expressly determined by a vote of the majority of the entire Board.
No member of the Committee or of the Board will be liable for any
action or determination made in good faith with respect to the Plan
or any Option. Subject to all provisions and limitations of the
Plan, the Committee will have the authority and
discretion:
(1) to
determine the persons to whom Options are to be granted, the Dates
of Grant, and the number of shares to be represented by each
Option;
(2) to
determine the price at which shares of Common Stock are to be
issued under an Option, subject to subparagraph 6(b) of this Plan
("Exercise Price");
(3) to
determine all other terms and conditions of each Option granted
under this Plan (including specification of the dates upon which
Options become exercisable, and whether conditioned on performance
standards, periods of service or otherwise), which terms and
conditions can vary between Options;
(4) to
modify or amend the terms of any Option previously granted, or to
grant substitute Options, subject to subparagraphs 6(l) and 6(m) of
this Plan;
(5) to
authorize any person or persons to execute and deliver Option
agreements or to take any other actions deemed by the Committee to
be necessary or appropriate to effect the grant of Options by the
Committee;
(6) to
interpret this Plan and to make all other determinations and take
all other actions which the Committee deems necessary or
appropriate to administer this Plan in accordance with its terms
and conditions.
5.
Eligibility. Options may be granted only to Employees. Granting of
Options under this Plan will be entirely discretionary with the
Committee. Adoption of this Plan will not confer on any Employee
any right to receive any Option or Options under this Plan unless
and until said Options are granted by the Committee in its sole
discretion. Neither the adoption of this Plan nor the granting of
any Options under this Plan will confer upon any Employee or
Optionee any right with respect to continuation of employment, nor
will the same interfere in any way with his or her right or with
the right of the shareholders of Bancorp or any Subsidiary to
terminate his or her employment at any time.
6. Terms and
Conditions of Options. All Options granted under this Plan must be
authorized by the Committee, and must be documented in written
Option agreements in such form as the Committee will approve from
time to time, which agreements must comply with and be subject to
all of the following terms and conditions:
a. Number
of Shares; Annual Limitation. Each Option agreement must state
whether the Option is intended to be an Incentive Stock Option or a
Nonqualified Stock Option and the number of shares subject to
Option. Any number of Options may be granted to an
Employ
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