6022
88-0365922
(State or other jurisdiction of
incorporation or organization)
(Primary Standard Industrial
Classification Code Number)
(I.R.S. Employer
Identification Number)
Stuart G. Stein, Esq.
Hogan & Hartson L.L.P. 555 13th Street, N.W. Washington, DC 20004 Telephone: (202) 637-8575 Facsimile: (202) 637-5910 |
Gregg A. Noel, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP 300 South Grand Avenue Los Angeles, CA 90071 Telephone: (213) 687-5000 Facsimile: (213) 687-5600 |
Proposed Maximum | |||||||
Title of Each Class of Securities | Aggregate Offering | Amount of | |||||
to be Registered | Price(1) | Registration Fee | |||||
Common Stock, par value $.0001 per share
|
$85,000,000 | $10,004.50 | |||||
(1) | Estimated solely for the purpose of calculating the amount of the registration fee in accordance with Rule 457(o) under the Securities Act of 1933, as amended. |
The information contained in this
prospectus is not complete and may be changed. We may not sell
these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus
is not an offer to sell these securities and we are not
soliciting offers to buy these securities in any jurisdiction
where the offer or sale is not permitted.
|
Per Share | Total | |||||||
Price to public
|
$ | $ | ||||||
Underwriting discounts and commissions
|
$ | $ | ||||||
Proceeds to us(1)
|
$ | $ |
(1) | This amount is the total before deducting legal, accounting, printing, and other offering expenses payable by us, which are estimated at $ . |
Sandler ONeill & Partners, L.P. | Keefe, Bruyette & Woods |
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F-1 | ||||||||
Exhibit 10.3 | ||||||||
Exhibit 10.4 | ||||||||
Exhibit 10.5 | ||||||||
Exhibit 10.6 | ||||||||
Exhibit 10.7 | ||||||||
Exhibit 10.8 | ||||||||
Exhibit 10.9 | ||||||||
Exhibit 10.10 | ||||||||
Exhibit 10.11 | ||||||||
Exhibit 21.1 | ||||||||
Exhibit 23.1 |
1
2
3
total assets from $443.7 million to $2.2 billion, a
four year compound annual growth rate, or CAGR, of 48.8%;
total net loans from $319.6 million to $1.2 billion, a
four year CAGR of 38.4%;
total deposits from $410.2 million to $1.8 billion, a
four year CAGR of 43.8%; and
core deposits (all deposits other than certificates of deposit
greater than $100,000) from $355.8 million to
$1.5 billion, a four year CAGR of 44.2%.
BankWest of Nevada.
BankWest of Nevada is a
Nevada-chartered commercial bank headquartered in Las Vegas,
Nevada. BankWest of Nevada is one of the largest banks
headquartered in Nevada, with $1.6 billion in assets,
$790.3 million in loans and $1.3 billion in deposits
as of December 31, 2004. BankWest of Nevada has three
full-service offices in Las Vegas and two in Henderson. In
addition, BankWest of Nevada expects to open five full-service
offices and a 36,000 square foot service center facility in
the Las Vegas metropolitan area in the next 18 months.
Alliance Bank of Arizona.
Alliance Bank of Arizona is an
Arizona-chartered commercial bank headquartered in Phoenix,
Arizona. As of December 31, 2004, the bank had
$332.8 million in assets,
Table of Contents
$234.1 million in loans and $277.2 million in
deposits. Alliance Bank has two full-service offices in Phoenix,
two in Tucson and one in Scottsdale. In addition, Alliance Bank
expects to open two full-service offices in the Phoenix
metropolitan area and one in Tucson in the next 18 months.
Torrey Pines Bank.
Torrey Pines Bank is a
California-chartered commercial bank headquartered in
San Diego, California. As of December 31, 2004, the
bank had $257.5 million in assets, $164.1 million in
loans and $199.4 million in deposits. Torrey Pines has two
full-service offices in San Diego and one in La Mesa.
In addition, Torrey Pines expects to open one additional
full-service office in the San Diego metropolitan area in
the next 18 months.
Miller/Russell & Associates, Inc.
Miller/Russell & Associates, Inc., a Phoenix-based
investment advisor registered with the Securities and Exchange
Commission, offers investment advisory services to businesses,
individuals and non-profit entities. As of December 31,
2004, Miller/Russell had $829.7 million in assets under
management. Miller/Russell has offices in Phoenix, Tucson,
San Diego and Las Vegas.
Premier Trust, Inc.
Premier Trust, Inc., a
Nevada-chartered trust company, offers clients wealth management
services, including trust administration of personal and
retirement accounts, estate and financial planning, custody
services and investments. As of December 31, 2004, Premier
Trust had $187.5 million in trust assets and
$80.3 million in assets under management. Premier Trust has
offices in Las Vegas and Phoenix.
Leveraging our knowledge and expertise.
Over the past
decade we have assembled an experienced management team and
built a culture committed to credit quality and operational
efficiency. We have also successfully centralized at our holding
company level a significant portion of our operations,
processing, compliance, Community Reinvestment Act
administration and specialty functions. We intend to grow our
franchise and improve our operating efficiencies by continuing
to leverage our managerial expertise and the functions we have
centralized at Western Alliance.
Maintaining a strong credit culture.
We adhere to a
specific set of credit standards across our bank subsidiaries
that ensure the proper management of credit risk. Western
Alliances management team plays an active role in
monitoring compliance with our Banks credit standards.
Western Alliance also continually monitors each of our
subsidiary banks loan portfolios, which enables us to
identify and take prompt corrective action on potentially
problematic loans. As of December 31, 2004, non-performing
assets represented approximately 0.07% of total assets. The
average for similarly sized banks in the United States was 0.52%
as of December 31, 2004.
Attracting seasoned relationship bankers and leveraging our
local market knowledge.
Our success has been the result, in
part, of our ability to attract and retain experienced
relationship bankers that have strong relationships in their
communities. These professionals bring with them valuable
customer relationships, and have been an integral part of our
ability to expand rapidly in our market areas. These
professionals allow us to be responsive to the needs of our
customers and provide a high level of service to local
businesses. We intend to continue to hire experienced
relationship bankers as we expand our franchise.
Offering a broader array of personal financial products and
services.
Part of our growth strategy is to offer a broader
array of personal financial products and services to high net
worth individuals and to senior managers at commercial
enterprises with which we have established relationships. To
this end, we acquired Miller/Russell & Associates, Inc.
in May 2004, and Premier Trust, Inc. in December 2003.
Table of Contents
Focusing on markets with attractive growth prospects.
We
operate in what we believe to be highly attractive markets with
superior growth prospects. Our metropolitan areas have high per
capita income and are expected to experience some of the fastest
population growth in the country. We continuously evaluate new
markets in the Western United States with similar growth
characteristics as targets for expansion. As of
December 31, 2004, we maintained 13 bank branch
offices located throughout our market areas. To accommodate our
growth and enhance efficiency, we intend to expand over the next
18 months to an aggregate of 22 offices, and to open a
service center facility that will provide centralized
back-office services and call center support for all our banking
subsidiaries.
Attracting low cost deposits.
We have been able to
attract a stable base of low-cost deposits from customers who
are attracted to our personalized level of service and local
knowledge. As of December 31, 2004, our deposit base was
comprised of approximately 42.7% non-interest bearing deposits.
Given our current low loan-to-deposit ratio of 67.7%, we expect
to obtain additional value in the future by leveraging our
deposit base.
Nevada.
In Nevada, we operate in Las Vegas and Henderson.
Arizona.
In Arizona, we operate in Phoenix, Scottsdale
and Tucson.
California.
In California, we operate in San Diego and
La Mesa.
Table of Contents
Common stock offered | shares(1) | |
Common stock to be outstanding immediately after this offering | shares(2) | |
Use of proceeds | We estimate that our net proceeds from this offering will be approximately $ million and $ million if the over- allotment is exercised in full by the underwriters. We expect that we will retain approximately $ of the net proceeds, and contribute the remainder to the Banks to increase the Banks capital levels to support growth. The remaining amount will be used for general corporate purposes, including but not limited to the formation of additional de novo banks in new market areas, acquisitions of other commercial banks or financial services companies and the development of additional products or services. We have no present understanding or agreement or definitive plans concerning any specific markets or acquisitions. See Use of Proceeds. | |
Dividend policy | We have never declared nor paid cash dividends on our common stock. The board of directors intends to follow a policy of retaining earnings for the purpose of increasing our capital for the foreseeable future. | |
Proposed New York Stock Exchange symbol | WAL |
(1) | The number of shares offered assumes that the underwriters over-allotment option is not exercised. If the over-allotment option is exercised in full, we will issue and sell shares. |
(2) | Based on shares of common stock outstanding as of , 2005. Unless otherwise indicated, information contained in this prospectus regarding the number of shares of our common stock outstanding after this offering does not include an aggregate of up to shares comprised of: up to shares issuable by us upon exercise of the underwriters over-allotment option; shares issuable upon the exercise of outstanding warrants with an expiration date of June 12, 2010 at an exercise price of $7.62 per share; shares issuable upon the exercise of outstanding stock options with a weighted average exercise price of $ per share; and an aggregate of shares reserved for future issuance under our stock option plan. |
4
As of or for the Years Ended December 31, | |||||||||||||||||||||
2004 | 2003 | 2002 | 2001 | 2000 | |||||||||||||||||
($ in thousands, except per share data) | |||||||||||||||||||||
Selected Balance Sheet Data:
|
|||||||||||||||||||||
Total assets
|
$ | 2,176,849 | $ | 1,576,773 | $ | 872,074 | $ | 602,703 | $ | 443,665 | |||||||||||
Loans receivable (net)
|
1,173,264 | 721,700 | 457,906 | 400,647 | 319,604 | ||||||||||||||||
Securities available for sale
|
659,073 | 583,684 | 227,238 | 73,399 | | ||||||||||||||||
Securities held to maturity
|
129,549 | 132,294 | 5,610 | 6,055 | 7,604 | ||||||||||||||||
Federal funds sold
|
23,115 | 4,015 | 113,789 | 73,099 | 62,100 | ||||||||||||||||
Deposits
|
1,756,036 | 1,094,646 | 720,304 | 549,354 | 410,177 | ||||||||||||||||
Short-term borrowings and long-term debt
|
249,194 | 338,661 | 50,000 | | | ||||||||||||||||
Junior subordinated debt
|
30,928 | 30,928 | 30,928 | 15,464 | | ||||||||||||||||
Stockholders equity
|
133,571 | 97,451 | 67,442 | 35,862 | 32,297 | ||||||||||||||||
Selected Income Statement Data:
|
|||||||||||||||||||||
Interest income
|
$ | 90,855 | $ | 53,823 | $ | 39,117 | $ | 35,713 | $ | 34,032 | |||||||||||
Interest expense
|
19,720 | 12,798 | 9,771 | 9,140 | 8,633 | ||||||||||||||||
Net interest income
|
71,135 | 41,025 | 29,346 | 26,573 | 25,399 | ||||||||||||||||
Provision for loan losses
|
3,914 | 5,145 | 1,587 | 2,800 | 4,299 | ||||||||||||||||
Net interest income after provision for loan losses
|
67,221 | 35,880 | 27,759 | 23,773 | 21,100 | ||||||||||||||||
Noninterest income
|
8,726 | 4,270 | 3,935 | 3,437 | 2,948 | ||||||||||||||||
Noninterest operating expenses
|
44,929 | 27,290 | 19,050 | 18,256 | 16,323 | ||||||||||||||||
Income before income taxes
|
31,018 | 12,860 | 12,644 | 8,954 | 7,725 | ||||||||||||||||
Income taxes
|
10,961 | 4,171 | 4,235 | 3,001 | 2,664 | ||||||||||||||||
Net income
|
$ | 20,057 | $ | 8,689 | $ | 8,409 | $ | 5,953 | $ | 5,061 | |||||||||||
Common Share Data:
|
|||||||||||||||||||||
Net income per share:
|
|||||||||||||||||||||
Basic
|
$ | 1.17 | $ | 0.61 | $ | 0.79 | $ | 0.55 | $ | 0.47 | |||||||||||
Diluted
|
1.09 | 0.59 | 0.78 | 0.54 | 0.46 | ||||||||||||||||
Book value per share
|
7.32 | 5.84 | 4.98 | 3.42 | 3.00 | ||||||||||||||||
Average shares outstanding:
|
|||||||||||||||||||||
Basic
|
17,189,687 | 14,313,611 | 10,677,736 | 10,730,738 | 10,765,985 | ||||||||||||||||
Diluted
|
18,405,120 | 14,613,173 | 10,715,448 | 11,038,275 | 11,023,491 | ||||||||||||||||
Common shares outstanding
|
18,249,554 | 16,681,273 | 13,908,279 | 10,850,787 | 10,779,381 |
5
As of or for the Years Ended December 31, | |||||||||||||||||||||
2004 | 2003 | 2002 | 2001 | 2000 | |||||||||||||||||
Selected Performance Ratios:
|
|||||||||||||||||||||
Return on average assets
|
1.05 | % | 0.76 | % | 1.22 | % | 1.11 | % | 1.21 | % | |||||||||||
Return on average stockholders equity
|
17.48 | 12.19 | 19.39 | 15.04 | 16.95 | ||||||||||||||||
Net interest margin
|
4.00 | 3.83 | 4.57 | 5.50 | 7.93 | ||||||||||||||||
Net interest spread
|
3.43 | 3.27 | 3.72 | 4.39 | 5.53 | ||||||||||||||||
Efficiency ratio
|
56.26 | 60.25 | 57.24 | 60.83 | 57.58 | ||||||||||||||||
Selected Liquidity and Capital Ratios:
|
|||||||||||||||||||||
Loan to deposit ratio
|
67.68 | % | 66.97 | % | 64.47 | % | 74.13 | % | 79.08 | % | |||||||||||
Average earning assets to interest-bearing liabilities
|
151.29 | 147.37 | 155.98 | 163.14 | 156.73 | ||||||||||||||||
Risk based capital:
|
|||||||||||||||||||||
Leverage capital
|
7.7 | 8.9 | 11.2 | 8.5 | 7.2 | ||||||||||||||||
Tier 1
|
10.9 | 13.3 | 15.4 | 10.4 | 9.1 | ||||||||||||||||
Total
|
12.0 | 14.4 | 18.1 | 12.3 | 10.4 | ||||||||||||||||
Asset Quality Ratios:
|
|||||||||||||||||||||
Net charge-offs to average loans outstanding
|
0.00 | % | 0.17 | % | 0.19 | % | 0.27 | % | 1.24 | % | |||||||||||
Non-performing loans to gross loans
|
0.13 | 0.04 | 0.76 | 0.23 | 1.37 | ||||||||||||||||
Non-performing assets to total assets
|
0.07 | 0.02 | 0.41 | 0.17 | 1.00 | ||||||||||||||||
Allowance for loan losses to gross loans
|
1.28 | 1.55 | 1.39 | 1.61 | 1.46 | ||||||||||||||||
Allowance for loan losses to non-performing loans
|
958.63 | 4,137.45 | 181.71 | 711.82 | 106.96 | ||||||||||||||||
Growth Ratios and Other Data:(1)
|
|||||||||||||||||||||
Percentage change in net income
|
130.8 | % | 3.3 | % | 41.3 | % | 17.6 | % | 15.5 | % | |||||||||||
Percentage change in diluted net income per share
|
84.7 | (24.4 | ) | 44.4 | 17.4 | 4.5 | |||||||||||||||
Percentage change in assets
|
38.1 | 81.0 | 44.7 | 35.7 | 20.4 | ||||||||||||||||
Percentage change in gross loans, including deferred fees
|
62.1 | 57.9 | 14.0 | 25.5 | 22.1 | ||||||||||||||||
Percentage change in deposits
|
60.4 | 52.0 | 31.1 | 33.9 | 20.7 | ||||||||||||||||
Percentage change in equity
|
37.1 | 44.5 | 88.1 | 11.0 | 18.8 | ||||||||||||||||
Number of branches
|
13 | 10 | 5 | 5 | 4 |
(1) | Ratios of changes in income are computed based upon the growth over the comparable prior period. Ratios of changes in balance sheet data compare period-end data against the same data from the comparable period-end for the prior year. |
6
7
| difficulty of integrating the operations and personnel; | |
| potential disruption of our ongoing business; and | |
| inability of our management to maximize our financial and strategic position by the successful implementation of uniform product offerings and the incorporation of uniform technology into our product offerings and control systems. |
| the inability to obtain all required regulatory approvals; | |
| significant costs and anticipated operating losses during the application and organizational phases, and the first years of operation of the new bank; | |
| the inability to secure the services of qualified senior management; | |
| the local market may not accept the services of a new bank owned and managed by a bank holding company headquartered outside of the market area of the new bank; | |
| the inability to obtain attractive locations within a new market at a reasonable cost; and | |
| the additional strain on management resources and internal systems and controls. |
8
| commercial real estate loans of $491.9 million, or 41.3% of total loans, | |
| construction and land development loans of $323.1 million, or 27.1% of total loans, | |
| commercial and industrial loans of 241.3 million, or 20.3% of total loans, | |
| residential real estate loans of $116.4 million, or 9.8% of total loans, and | |
| consumer loans of $17.7 million, or 1.5% of total loans. |
9
10
| Loan delinquencies, non-performing assets and foreclosures may increase, which could result in higher operating costs, as well as increases in our loan loss provisions; | |
| Demand for our products and services may decline, including the demand for loans, which would adversely affect our revenues; and |
11
| Collateral for loans made by us may decline in value, reducing a customers borrowing power, and reducing the value of assets and collateral associated with our loans which would cause decreases in net interest income and increasing loan loss provisions. |
| further claims of infringement, including costly litigation; | |
| an injunction prohibiting our proposed use of the mark; and | |
| the need to enter into licensing agreements, which may not be available on terms acceptable to us, if at all. |
12
13
| business combination moratorium provisions that, subject to limitations, prohibit certain business combinations between us and an interested stockholder (defined generally as any person who beneficially owns 10% or more of the voting power of our voting stock) for three years following the date on which the shareholder becomes an interested shareholder; and |
14
| control share provisions that provide that a person who acquires a controlling interest (which, under the definition in the statue, can be as small as 20% of the voting power in the election of directors) in our company will obtain voting rights in the control shares only to the extent such rights are conferred by a vote of the disinterested shareholders. |
15
16
| changes in general economic conditions, either nationally or locally in the areas in which we conduct or will conduct our business; | |
| inflation, interest rate, market and monetary fluctuations; | |
| changes in gaming or tourism in our primary market area; | |
| risks associated with our growth and expansion strategy and related costs; | |
| increased lending risks associated with our high concentration of commercial real estate, construction and land development and commercial, industrial loans; | |
| increases in competitive pressures among financial institutions and businesses offering similar products and services; | |
| higher defaults on our loan portfolio than we expect; | |
| changes in managements estimate of the adequacy of the allowance for loan losses; | |
| legislative or regulatory changes or changes in accounting principles, policies or guidelines; | |
| managements estimates and projections of interest rates and interest rate policy; | |
| the execution of our business plan; and | |
| other factors affecting the financial services industry generally or the banking industry in particular. |
17
18
| the net proceeds to us in this offering, after deducting underwriting discounts and commissions and estimated offering expenses payable by us in this offering of $ ; and | |
| the underwriters over-allotment option is not exercised. |
December 31, 2004 | |||||||||||
Actual | As adjusted | ||||||||||
($ in thousands) | |||||||||||
Junior Subordinated Debt
|
$ | 30,928 | $ | 30,928 | |||||||
Stockholders Equity:
|
|||||||||||
Preferred stock, $.0001 par value; 20,000,000 shares
authorized; none issued or outstanding
|
| | |||||||||
Common stock, $.0001 par value; 100,000,000 shares
authorized; 18,249,554 issued and
outstanding; on
an adjusted basis (1)
|
2 | ||||||||||
Additional paid-in capital
|
80,459 | ||||||||||
Retained earnings
|
58,216 | ||||||||||
Accumulated other comprehensive loss
|
(5,106 | ) | |||||||||
Total Stockholders Equity
|
133,571 | ||||||||||
Total Capitalization
|
$ | 164,499 | $ | ||||||||
Regulatory Capital Ratios: (2)
|
|||||||||||
Leverage capital
|
7.7 | % | % | ||||||||
Tier 1 capital
|
10.9 | ||||||||||
Total capital
|
12.0 |
(1) | The above-table excludes the following: (a) 1,481,568 shares of common stock issuable upon the exercise of outstanding warrants at an exercise price of $7.62 per share; (b) 1,986,008 shares of common stock issuable upon the exercise of outstanding stock options at a weighted average exercise price of $7.96 per share; and (c) 354,600 shares of common stock available for future issuance under our equity compensation plans. |
(2) | The net proceeds from our sale of common stock in this offering are presumed to be invested in 20% risk weighted securities for purposes of as adjusted risk-based capital ratios. If the over-allotment option is exercised in full, net proceeds would be $ million and our leverage capital ratio, Tier 1 capital ratio, and our total capital ratio would have been %, %, and %, respectively. |
19
Initial public offering price per share
|
$ | ||||||||
Net tangible book value per share prior to offering
|
$ | ||||||||
Increase in net tangible book value per share attributable to
new investors
|
|||||||||
Pro forma net tangible book value per share after offering
|
|||||||||
Dilution per share to new investors
|
$ | ||||||||
Shares Purchased | Total Consideration | ||||||||||||||||||||
Average Price | |||||||||||||||||||||
Number | Percent | Amount | Percent | per Share | |||||||||||||||||
($ in thousands) | |||||||||||||||||||||
Existing shareholders
|
% | $ | % | $ | |||||||||||||||||
New investors
|
|||||||||||||||||||||
Total
|
100.0 | % | $ | 100.0 | % | $ | |||||||||||||||
20
21
At or for the Years Ended December 31,
2004
2003
2002
($ in thousands, except per share data)
$
20,057
$
8,689
$
8,409
1.17
0.61
0.79
1.09
0.59
0.78
2,176,849
1,576,773
872,074
1,188,535
733,078
464,355
1,756,036
1,094,646
720,304
4.00
%
3.83
%
4.57
%
56.26
60.25
57.24
1.05
0.76
1.22
17.48
12.19
19.39
| Return on Average Equity, or ROE; | |
| Return on Average Assets, or ROA; | |
| Asset Quality; | |
| Asset and Deposit Growth; and | |
| Operating Efficiency. |
22
23
24
25
Year Ended December 31, 2004 Compared to Year Ended December 31, 2003 |
Years Ended | ||||||||||||
December 31, | ||||||||||||
Increase | ||||||||||||
2004 | 2003 | (Decrease) | ||||||||||
($ in thousands, except | ||||||||||||
per share data) | ||||||||||||
Consolidated Statement of Earnings Data:
|
||||||||||||
Interest income
|
$ | 90,855 | $ | 53,823 | $ | 37,032 | ||||||
Interest expense
|
19,720 | 12,798 | 6,922 | |||||||||
Net interest income
|
71,135 | 41,025 | 30,110 | |||||||||
Provision for loan losses
|
3,914 | 5,145 | (1,231 | ) | ||||||||
Net interest income after provision for loan losses
|
67,221 | 35,880 | 31,341 | |||||||||
Other income
|
8,726 | 4,270 | 4,456 | |||||||||
Other expense
|
44,929 | 27,290 | 17,639 | |||||||||
Net income before income taxes
|
31,018 | 12,860 | 18,158 | |||||||||
Income tax expense
|
10,961 | 4,171 | 6,790 | |||||||||
Net income
|
$ | 20,057 | $ | 8,689 | $ | 11,368 | ||||||
Earnings per share basic
|
$ | 1.17 | $ | 0.61 | $ | 0.56 | ||||||
Earnings per share diluted
|
$ | 1.09 | $ | 0.59 | $ | 0.50 | ||||||
26
27
2004
2003
Interest
Interest
Average
Income/
Average
Average
Income/
Average
Balance
Expense
Yield/Cost
Balance
Expense
Yield/Cost
($ in thousands)
$
781,407
$
30,373
3.89
%
$
432,425
$
15,938
3.69
%
7,198
341
4.74
7,266
346
4.76
788,605
30,714
3.89
439,691
16,284
3.70
25,589
293
1.15
52,735
578
1.10
947,848
59,311
6.26
571,501
36,792
6.44
14,320
537
3.75
6,063
169
2.79
1,776,362
90,855
5.11
1,069,990
53,823
5.03
67,334
41,415
(13,370
)
(8,783
)
25,544
17,934
47,077
28,264
$
1,902,947
$
1,148,820
$
73,029
142
0.19
$
51,723
93
0.18
561,744
7,585
1.35
336,012
4,358
1.30
214,515
4,396
2.05
158,418
3,707
2.34
849,288
12,123
1.43
546,153
8,158
1.49
239,175
4,472
1.87
111,258
1,671
1.50
54,733
1,586
2.90
37,701
1,475
3.91
30,928
1,539
4.98
30,928
1,494
4.83
1,174,124
19,720
1.68
726,040
12,798
1.76
600,790
345,274
13,268
6,230
114,765
71,276
$
1,902,947
$
1,148,820
$
71,135
4.00
%
$
41,025
3.83
%
3.43
%
3.27
%
(1) | Yields on loans and securities have not been adjusted to a tax equivalent basis. |
(2) | Net loan fees of $872,000 and $810,000 are included in the yield computation for 2004 and 2003, respectively. |
(3) | Includes average non-accrual loans of $426,000 in 2004 and $393,000 in 2003. |
(4) | Net interest margin is computed by dividing net interest income by total average earning assets. |
(5) | Net interest spread represents average yield earned on interest earning assets less the average rate paid on interest bearing liabilities. |
28
2004 v. 2003 | |||||||||||||
Increase (Decrease) | |||||||||||||
Due to Changes in(1) | |||||||||||||
Volume | Rate | Total | |||||||||||
(In thousands) | |||||||||||||
Interest on securities:
|
|||||||||||||
Taxable
|
$ | 13,565 | $ | 870 | $ | 14,435 | |||||||
Tax-exempt
|
(3 | ) | (2 | ) | (5 | ) | |||||||
Federal funds sold
|
(311 | ) | 26 | (285 | ) | ||||||||
Loans
|
23,550 | (1,031 | ) | 22,519 | |||||||||
Other investment
|
310 | 58 | 368 | ||||||||||
Total interest income
|
37,111 | (79 | ) | 37,032 | |||||||||
Interest expense:
|
|||||||||||||
Interest checking
|
41 | 8 | 49 | ||||||||||
Savings and money market
|
3,048 | 179 | 3,227 | ||||||||||
Time deposits
|
1,150 | (461 | ) | 689 | |||||||||
Short-term borrowings
|
2,392 | 409 | 2,801 | ||||||||||
Long-term debt
|
494 | (383 | ) | 111 | |||||||||
Junior subordinated debt
|
| 45 | 45 | ||||||||||
Total interest expense
|
7,125 | (203 | ) | 6,922 | |||||||||
Net increase (decrease)
|
$ | 29,986 | $ | 124 | $ | 30,110 | |||||||
(1) | Changes due to both volume and rate have been allocated to volume changes. |
| Trust and investment advisory services, | |
| Services provided to deposit customers, and | |
| Services provided to current and potential loan customers. |
29
Years Ended | |||||||||||||
December 31, | |||||||||||||
Increase | |||||||||||||
2004 | 2003 | (Decrease) | |||||||||||
(In thousands) | |||||||||||||
Trust and investment advisory services
|
$ | 2,896 | $ | | $ | 2,896 | |||||||
Service charges
|
2,333 | 1,998 | 335 | ||||||||||
Income from bank owned life insurance
|
1,203 | 967 | 236 | ||||||||||
Mortgage loan pre-underwriting fees
|
435 | 792 | (357 | ) | |||||||||
Investment securities gains (losses), net
|
19 | (265 | ) | 284 | |||||||||
Other
|
1,840 | 778 | 1,062 | ||||||||||
Total non-interest income
|
$ | 8,726 | $ | 4,270 | $ | 4,456 | |||||||
30
Years Ended | |||||||||||||
December 31, | |||||||||||||
Increase | |||||||||||||
2004 | 2003 | (Decrease) | |||||||||||
(In thousands) | |||||||||||||
Salaries and employee benefits
|
$ | 25,590 | $ | 15,615 | $ | 9,975 | |||||||
Occupancy
|
7,309 | 4,820 | 2,489 | ||||||||||
Customer service
|
1,998 | 752 | 1,246 | ||||||||||
Advertising, public relations and business development
|
1,672 | 989 | 683 | ||||||||||
Legal, professional and director fees
|
1,405 | 1,111 | 294 | ||||||||||
Correspondent banking service charges and wire transfer costs
|
1,260 | 512 | 748 | ||||||||||
Audits and exams
|
935 | 435 | 500 | ||||||||||
Supplies
|
838 | 619 | 219 | ||||||||||
Data processing
|
641 | 466 | 175 | ||||||||||
Telephone
|
578 | 424 | 154 | ||||||||||
Insurance
|
540 | 305 | 235 | ||||||||||
Travel and automobile
|
467 | 261 | 206 | ||||||||||
Organizational costs
|
| 604 | (604 | ) | |||||||||
Other
|
1,696 | 377 | 1,319 | ||||||||||
Total non-interest expense
|
$ | 44,929 | $ | 27,290 | $ | 17,639 | |||||||
31
Year Ended December 31, 2003 Compared to Year Ended December 31, 2002 |
Years Ended | ||||||||||||
December 31, | ||||||||||||
Increase | ||||||||||||
2003 | 2002 | (Decrease) | ||||||||||
($ in thousands, except per share data) | ||||||||||||
Consolidated Statement of Earnings Data:
|
||||||||||||
Interest income
|
$ | 53,823 | $ | 39,117 | $ | 14,706 | ||||||
Interest expense
|
12,798 | 9,771 | 3,027 | |||||||||
Net interest income
|
41,025 | 29,346 | 11,679 | |||||||||
Provision for loan losses
|
5,145 | 1,587 | 3,558 | |||||||||
Net interest income after provision for loan losses
|
35,880 | 27,759 | 8,121 | |||||||||
Other income
|
4,270 | 3,935 | 335 | |||||||||
Other expense
|
27,290 | 19,050 | 8,240 | |||||||||
Net income before income taxes
|
12,860 | 12,644 | 216 | |||||||||
Income tax expense
|
4,171 | 4,235 | (64 | ) | ||||||||
Net income
|
$ | 8,689 | $ | 8,409 | $ | 280 | ||||||
Earnings per share basic
|
$ | 0.61 | $ | 0.79 | $ | (0.18 | ) | |||||
Earnings per share diluted
|
$ | 0.59 | $ | 0.78 | $ | (0.19 | ) | |||||
32
Years Ended December 31, | |||||||||||||||||||||||||
2003 | 2002 | ||||||||||||||||||||||||
Interest | Average | Interest | Average | ||||||||||||||||||||||
Average | Income/ | Yield/ | Average | Income/ | Yield/ | ||||||||||||||||||||
Balance | Expense | Cost | Balance | Expense | Cost | ||||||||||||||||||||
($ in thousands) | |||||||||||||||||||||||||
Earning Assets:
|
|||||||||||||||||||||||||
Securities:
|
|||||||||||||||||||||||||
Taxable
|
$ | 432,425 | $ | 15,938 | 3.69 | % | $ | 143,202 | $ | 6,616 | 4.62 | % | |||||||||||||
Tax-exempt(1)
|
7,266 | 346 | 4.76 | 7,419 | 354 | 4.77 | |||||||||||||||||||
Total securities
|
439,691 | 16,284 | 3.70 | 150,621 | 6,970 | 4.63 | |||||||||||||||||||
Federal funds sold
|
52,735 | 578 | 1.10 | 51,358 | 794 | 1.55 | |||||||||||||||||||
Loans(1)(2)(3)
|
571,501 | 36,792 | 6.44 | 439,391 | 31,290 | 7.12 | |||||||||||||||||||
Federal Home Loan Bank stock
|
6,063 | 169 | 2.79 | 1,364 | 63 | 4.62 | |||||||||||||||||||
Total earnings assets
|
1,069,990 | 53,823 | 5.03 | 642,734 | 39,117 | 6.09 | |||||||||||||||||||
Non-earning Assets:
|
|||||||||||||||||||||||||
Cash and due from banks
|
41,415 | 33,324 | |||||||||||||||||||||||
Allowance for loan losses
|
(8,783 | ) | (7,110 | ) | |||||||||||||||||||||
Bank-owned life insurance
|
17,934 | | |||||||||||||||||||||||
Other assets
|
28,264 | 18,979 | |||||||||||||||||||||||
Total assets
|
$ | 1,148,820 | $ | 687,927 | |||||||||||||||||||||
Interest Bearing Liabilities:
|
|||||||||||||||||||||||||
Interest-bearing deposits:
|
|||||||||||||||||||||||||
Interest checking
|
$ | 51,723 | $ | 93 | 0.18 | $ | 43,139 | $ | 102 | 0.24 | |||||||||||||||
Savings and money market
|
336,012 | 4,358 | 1.30 | 198,613 | 3,823 | 1.92 | |||||||||||||||||||
Time deposits
|
158,418 | 3,707 | 2.34 | 112,782 | 3,469 | 3.08 | |||||||||||||||||||
Total interest-bearing deposits
|
546,153 | 8,158 | 1.49 | 354,534 | 7,394 | 2.09 | |||||||||||||||||||
Short-term borrowings
|
111,258 | 1,671 | 1.50 | 14,332 | 354 | 2.47 | |||||||||||||||||||
Long-term debt
|
37,701 | 1,475 | 3.91 | 27,098 | 1,085 | 4.00 | |||||||||||||||||||
Junior subordinated debt
|
30,928 | 1,494 | 4.83 | 16,108 | 938 | 5.82 | |||||||||||||||||||
Total interest-bearing liabilities
|
726,040 | 12,798 | 1.76 | 412,072 | 9,771 | 2.37 | |||||||||||||||||||
Non-interest Bearing Liabilities:
|
|||||||||||||||||||||||||
Noninterest-bearing demand deposits
|
345,274 | 229,843 | |||||||||||||||||||||||
Other liabilities
|
6,230 | 2,642 | |||||||||||||||||||||||
Stockholders equity
|
71,276 | 43,370 | |||||||||||||||||||||||
Total liabilities and stockholders equity
|
$ | 1,148,820 | $ | 687,927 | |||||||||||||||||||||
Net interest income and margin(4)
|
$ | 41,025 | 3.83 | % | $ | 29,346 | 4.57 | % | |||||||||||||||||
Net interest spread(5)
|
3.27 | % | 3.72 | % | |||||||||||||||||||||
(1) | Yields on loans and securities have not been adjusted to a tax equivalent basis. |
(2) | Net loan fees of $810,000 and $674,000 are included in the yield computation for 2003 and 2002, respectively. |
33
(3) | Includes average non-accrual loans of $393,000 in 2003 and $1.3 million in 2002. |
(4) | Net interest margin is computed by dividing net interest income by total average earning assets. |
(5) | Net interest spread represents average yield earned on interest earning assets less the average rate paid on interest bearing liabilities. |
2003 v. 2002 | ||||||||||||||
Increase (Decrease) | ||||||||||||||
Due to Changes in(1) | ||||||||||||||
Volume | Rate | Total | ||||||||||||
(In thousands) | ||||||||||||||
Interest on securities:
|
||||||||||||||
Taxable
|
$ | 10,660 | $ | (1,338 | ) | $ | 9,322 | |||||||
Tax-exempt
|
(7 | ) | (1 | ) | (8 | ) | ||||||||
Federal funds sold
|
15 | (231 | ) | (216 | ) | |||||||||
Loans
|
8,505 | (3,003 | ) | 5,502 | ||||||||||
Other investment
|
131 | (25 | ) | 106 | ||||||||||
Total interest income
|
19,304 | (4,598 | ) | 14,706 | ||||||||||
Interest expense:
|
||||||||||||||
Interest checking
|
15 | (24 | ) | (9 | ) | |||||||||
Savings and money market
|
1,782 | (1,247 | ) | 535 | ||||||||||
Time deposits
|
1,068 | (830 | ) | 238 | ||||||||||
Short-term borrowings
|
1,532 | (215 | ) | 1,317 | ||||||||||
Long-term debt
|
217 | 173 | 390 | |||||||||||
Junior subordinated debt
|
716 | (160 | ) | 556 | ||||||||||
Total interest expense
|
5,330 | (2,303 | ) | 3,027 | ||||||||||
Net increase (decrease)
|
$ | 13,974 | $ | (2,295 | ) | $ | 11,679 | |||||||
(1) | Changes due to both volume and rate have been allocated to volume changes. |
34
Years Ended | |||||||||||||
December 31, | |||||||||||||
Increase | |||||||||||||
2003 | 2002 | (Decrease) | |||||||||||
(In thousands) | |||||||||||||
Service charges
|
$ | 1,998 | $ | 1,644 | $ | 354 | |||||||
Income from bank owned life insurance
|
967 | | 967 | ||||||||||
Mortgage loan pre-underwriting fees
|
792 | 719 | 73 | ||||||||||
Investment securities gains (losses), net
|
(265 | ) | 609 | (874 | ) | ||||||||
Other
|
778 | 963 | (185 | ) | |||||||||
Total non-interest income
|
$ | 4,270 | $ | 3,935 | $ | 335 | |||||||
Years Ended | |||||||||||||
December 31, | |||||||||||||
Increase | |||||||||||||
2003 | 2002 | (Decrease) | |||||||||||
(In thousands) | |||||||||||||
Salaries and employee benefits
|
$ | 15,615 | $ | 9,921 | $ | 5,694 | |||||||
Occupancy
|
4,820 | 3,794 | 1,026 | ||||||||||
Legal, professional and director fees
|
1,111 | 775 | 336 | ||||||||||
Advertising, public relations and business development
|
989 | 687 | 302 | ||||||||||
Customer service
|
752 | 831 | (79 | ) | |||||||||
Supplies
|
619 | 350 | 269 | ||||||||||
Organizational costs
|
604 | 461 | 143 | ||||||||||
Correspondent banking service charges and wire transfer costs
|
512 | 291 | 221 | ||||||||||
Data processing
|
466 | 324 | 142 | ||||||||||
Audits and exams
|
435 | 330 | 105 | ||||||||||
Telephone
|
424 | 191 | 233 | ||||||||||
Insurance
|
305 | 209 | 96 | ||||||||||
Travel and automobile
|
261 | 131 | 130 | ||||||||||
Other
|
377 | 755 | (378 | ) | |||||||||
Total non-interest expense
|
$ | 27,290 | $ | 19,050 | $ | 8,240 | |||||||
35
Total Assets |
Loans |
36
December 31, | |||||||||||||||||||||
2004 | 2003 | 2002 | 2001 | 2000 | |||||||||||||||||
(In thousands) | |||||||||||||||||||||
Construction and land development(1)
|
$ | 323,176 | $ | 195,182 | $ | 127,974 | $ | 82,604 | $ | 37,283 | |||||||||||
Commercial real estate
|
491,949 | 324,702 | 209,834 | 208,683 | 168,314 | ||||||||||||||||
Residential real estate
|
116,360 | 42,773 | 21,893 | 18,067 | 20,043 | ||||||||||||||||
Commercial and industrial
|
241,292 | 159,889 | 94,411 | 85,050 | 84,200 | ||||||||||||||||
Consumer
|
17,682 | 11,802 | 10,281 | 13,156 | 14,561 | ||||||||||||||||
Net deferred loan fees
|
(1,924 | ) | (1,270 | ) | (38 | ) | (350 | ) | (51 | ) | |||||||||||
Gross loans, net of deferred fees
|
1,188,535 | 733,078 | 464,355 | 407,210 | 324,350 | ||||||||||||||||
Less: Allowance for loan losses
|
(15,271 | ) | (11,378 | ) | (6,449 | ) | (6,563 | ) | (4,746 | ) | |||||||||||
$ | 1,173,264 | $ | 721,700 | $ | 457,906 | $ | 400,647 | $ | 319,604 | ||||||||||||
(1) | Includes raw commercial land of approximately $77.3 million for 2004; $42.9 million for 2003; $30.2 million for 2002; $21.4 million for 2001; and $6.1 million for 2000. |
December 31, 2004 | ||||||||||||||||||
Due | ||||||||||||||||||
Within | Due 1-5 | Due Over | ||||||||||||||||
One Year | Years | Five Years | Total | |||||||||||||||
(In thousands) | ||||||||||||||||||
Construction and land development
|
$ | 249,878 | $ | 63,175 | $ | 10,123 | $ | 323,176 | ||||||||||
Commercial real estate
|
54,357 | 153,067 | 284,525 | 491,949 | ||||||||||||||
Residential real estate
|
16,101 | 15,834 | 84,425 | 116,360 | ||||||||||||||
Commercial and industrial
|
138,993 | 90,290 | 12,009 | 241,292 | ||||||||||||||
Consumer
|
13,256 | 4,283 | 143 | 17,682 | ||||||||||||||
Net deferred loan fees
|
(1,924 | ) | ||||||||||||||||
Gross loans, net of deferred fees
|
472,585 | 326,649 | 391,225 | 1,188,535 | ||||||||||||||
Less: Allowance for loan losses
|
(15,271 | ) | ||||||||||||||||
$ | 472,585 | $ | 326,649 | $ | 391,225 | $ | 1,173,264 | |||||||||||
Interest rates:
|
||||||||||||||||||
Fixed
|
$ | 44,341 | $ | 163,644 | $ | 291,742 | $ | 499,727 | ||||||||||
Variable
|
428,244 | 163,005 | 99,483 | 690,732 | ||||||||||||||
Net deferred loan fees
|
(1,924 | ) | ||||||||||||||||
Gross loans, net of deferred fees
|
$ | 472,585 | $ | 326,649 | $ | 391,225 | $ | 1,188,535 | ||||||||||
37
At or for the years ended December 31, | |||||||||||||||||||||
2004 | 2003 | 2002 | 2001 | 2000 | |||||||||||||||||
($ in thousands) | |||||||||||||||||||||
Total nonaccrual loans
|
$ | 1,591 | $ | 210 | $ | 1,039 | $ | 686 | $ | 3,251 | |||||||||||
Loans past due 90 days or more and still accruing
|
2 | 65 | 317 | 236 | 1,186 | ||||||||||||||||
Restructured loans
|
| | 2,193 | | | ||||||||||||||||
Total non-performing loans
|
1,593 | 275 | 3,549 | 922 | 4,437 | ||||||||||||||||
Other real estate owned (OREO)
|
| | | 79 | | ||||||||||||||||
Total non-performing assets
|
1,593 | 275 | 3,549 | 1,001 | 4,437 | ||||||||||||||||
Non-performing loans to gross loans
|
0.13 | % | 0.04 | % | 0.76 | % | 0.23 | % | 1.37 | % | |||||||||||
Non-performing assets to gross loans and OREO
|
0.13 | 0.04 | 0.76 | 0.25 | 1.37 | ||||||||||||||||
Non-performing assets to total assets
|
0.07 | 0.02 | 0.41 | 0.17 | 1.00 | ||||||||||||||||
Interest income received on nonaccrual loans
|
$ | 61 | $ | 6 | $ | 158 | $ | 49 | $ | 430 | |||||||||||
Interest income that would have been recorded under the original
terms of the loans
|
96 | 29 | 242 | 108 | 669 |
38
39
As of or for the Years Ended December 31, | |||||||||||||||||||||
2004 | 2003 | 2002 | 2001 | 2000 | |||||||||||||||||
($ in thousands) | |||||||||||||||||||||
Allowance for loan losses:
|
|||||||||||||||||||||
Balance at beginning of year
|
$ | 11,378 | $ | 6,449 | $ | 6,563 | $ | 4,746 | $ | 4,166 | |||||||||||
Provisions charged to operating expenses
|
3,914 | 5,145 | 1,587 | 2,800 | 4,299 | ||||||||||||||||
Adjustments(1)
|
| 737 | (850 | ) | | | |||||||||||||||
Recoveries of loans previously charged-off:
|
|||||||||||||||||||||
Construction and land development
|
| | | | | ||||||||||||||||
Commercial real estate
|
| 140 | | | | ||||||||||||||||
Residential real estate
|
15 | 1 | | | | ||||||||||||||||
Commercial and industrial
|
132 | 272 | 464 | 921 | 87 | ||||||||||||||||
Consumer
|
10 | 7 | 7 | 32 | | ||||||||||||||||
Total recoveries
|
157 | 420 | 471 | 953 | 87 | ||||||||||||||||
Loans charged-off:
|
|||||||||||||||||||||
Construction and land development
|
| | | | | ||||||||||||||||
Commercial real estate
|
| 140 | | 132 | | ||||||||||||||||
Residential real estate
|
9 | 20 | 60 | | | ||||||||||||||||
Commercial and industrial
|
115 | 1,090 | 1,201 | 1,601 | 3,516 | ||||||||||||||||
Consumer
|
54 | 123 | 61 | 203 | 290 | ||||||||||||||||
Total charged-off
|
178 | 1,373 | 1,322 | 1,936 | 3,806 | ||||||||||||||||
Net charge-offs
|
21 | 953 | 851 | 983 | 3,719 | ||||||||||||||||
Balance at end of year
|
$ | 15,271 | $ | 11,378 | $ | 6,449 | $ | 6,563 | $ | 4,746 | |||||||||||
Net charge-offs (recoveries) to average loans outstanding
|
0.00 | % | 0.17 | % | 0.19 | % | 0.27 | % | 1.24 | % | |||||||||||
Allowance for loan losses to year-end gross loans
|
1.28 | 1.55 | 1.39 | 1.61 | 1.46 |
(1) | In accordance with regulatory reporting requirements and American Institute of Certified Public Accountants Statement of Position 01-06, Accounting by Certain Entities that Lend to or Finance the Activities of Others , we have reclassified the portion of our allowance for loan losses that relates to off-balance sheet risk during the year ended December 31, 2002. During the year ended December 31, 2003, we reevaluated our methodology for calculating this amount and reclassified an amount from other liabilities to the allowance for loan losses. The liability amount was approximately $307,000 and $68,000 as of December 31, 2004 and 2003, respectively. |
40
December 31, | |||||||||||||||||||||||||||||||||||||||||
2004 | 2003 | 2002 | 2001 | 2000 | |||||||||||||||||||||||||||||||||||||
% of Loans | % of Loans | % of Loans | % of Loans | % of Loans | |||||||||||||||||||||||||||||||||||||
in Each | in Each | in Each | in Each | in Each | |||||||||||||||||||||||||||||||||||||
Category to | Category to | Category to | Category to | Category to | |||||||||||||||||||||||||||||||||||||
Amount | Gross Loans | Amount | Gross Loans | Amount | Gross Loans | Amount | Gross Loans | Amount | Gross Loans | ||||||||||||||||||||||||||||||||
($ in thousands) | |||||||||||||||||||||||||||||||||||||||||
Construction and land development
|
$ | 4,920 | 27.1 | % | $ | 3,252 | 26.6 | % | $ | 1,050 | 27.6 | % | $ | 1,462 | 20.3 | % | $ | 493 | 11.4 | % | |||||||||||||||||||||
Commercial real estate
|
2,095 | 41.3 | 1,446 | 44.2 | 2,531 | 45.2 | 1,566 | 51.2 | 1,645 | 51.9 | |||||||||||||||||||||||||||||||
Residential real estate
|
327 | 9.8 | 179 | 5.8 | 282 | 4.7 | 100 | 4.4 | 89 | 6.2 | |||||||||||||||||||||||||||||||
Commercial and industrial
|
7,502 | 20.3 | 6,192 | 21.8 | 2,340 | 20.3 | 3,110 | 20.9 | 2,228 | 26.0 | |||||||||||||||||||||||||||||||
Consumer
|
427 | 1.5 | 309 | 1.6 | 246 | 2.2 | 325 | 3.2 | 291 | 4.5 | |||||||||||||||||||||||||||||||
Total
|
$ | 15,271 | 100.0 | % | $ | 11,378 | 100.0 | % | $ | 6,449 | 100.0 | % | $ | 6,563 | 100.0 | % | $ | 4,746 | 100.0 | % | |||||||||||||||||||||
Investments |
41
December 31, | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
(In thousands) | |||||||||||||
U.S. Treasury Securities
|
$ | 3,501 | $ | 3,014 | $ | 3,040 | |||||||
U.S. Government-sponsored agencies
|
118,348 | 112,537 | 59,651 | ||||||||||
Mortgage-backed obligations
|
648,100 | 581,446 | 156,982 | ||||||||||
SBA Loan Pools
|
625 | 1,142 | 1,779 | ||||||||||
State and Municipal obligations
|
7,290 | 7,563 | 8,109 | ||||||||||
Other
|
10,758 | 10,276 | 3,287 | ||||||||||
Total investment securities
|
$ | 788,622 | $ | 715,978 | $ | 232,848 | |||||||
Securities |
December 31, 2004 | ||||||||||||||||||||||||||||||||||||||||
Due | Due | Due | Due | |||||||||||||||||||||||||||||||||||||
Under 1 Year | 1-5 Years | 5-10 Years | Over 10 Years | Total | ||||||||||||||||||||||||||||||||||||
Amount | Yield | Amount | Yield | Amount | Yield | Amount | Yield | Amount | Yield | |||||||||||||||||||||||||||||||
($ in thousands) | ||||||||||||||||||||||||||||||||||||||||
Available for Sale
|
||||||||||||||||||||||||||||||||||||||||
U.S. Government-sponsored agency obligations
|
$ | | | $ | 66,800 | 2.40 | % | $ | 24,289 | 3.51 | % | $ | 27,709 | 3.59 | % | $ | 118,798 | 2.91 | % | |||||||||||||||||||||
Mortgage-backed obligations
|
| | | | 7,981 | 3.41 | 529,401 | 4.23 | 537,382 | 4.21 | ||||||||||||||||||||||||||||||
Other
|
10,781 | 3.71 | % | | | | | | | 10,781 | 3.71 | |||||||||||||||||||||||||||||
Total available for sale
|
$ | 10,781 | 3.71 | $ | 66,800 | 2.40 | $ | 32,270 | 3.49 | $ | 557,110 | 4.19 | $ | 666,961 | 3.97 | |||||||||||||||||||||||||
Held to Maturity
|
||||||||||||||||||||||||||||||||||||||||
U.S. Treasury Securities
|
$ | 1,000 | 1.37 | $ | 2,501 | 2.47 | $ | | | $ | | | $ | 3,501 | 2.16 | |||||||||||||||||||||||||
State and Municipal obligations
|
| | 100 | 5.04 | 680 | 4.66 | 6,510 | 4.86 | 7,290 | 4.85 | ||||||||||||||||||||||||||||||
Mortgage-backed obligations
|
| | | | | | 118,133 | 4.36 | 118,133 | 4.36 | ||||||||||||||||||||||||||||||
SBA Loan Pools
|
| | | | | | 625 | 2.43 | 625 | 2.43 | ||||||||||||||||||||||||||||||
Total held to maturity
|
$ | 1,000 | 1.37 | % | $ | 2,601 | 2.57 | % | $ | 680 | 4.66 | % | $ | 125,268 | 4.38 | % | $ | 129,549 | 4.32 | % | ||||||||||||||||||||
42
December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
(In thousands) | ||||||||||||
Aggregate carrying value
|
$ | 766,448 | $ | 693,983 | $ | 216,633 | ||||||
Aggregate fair value
|
$ | 765,453 | $ | 693,044 | $ | 216,633 | ||||||
Deposits |
Years Ended December 31, | |||||||||||||||||||||||||
2004 Average | 2003 Average | 2002 Average | |||||||||||||||||||||||
Balance/Rate | Balance/Rate | Balance/Rate | |||||||||||||||||||||||
($ in thousands) | |||||||||||||||||||||||||
Interest checking (NOW)
|
$ | 73,029 | 0.19 | % | $ | 51,723 | 0.18 | % | $ | 43,139 | 0.24 | % | |||||||||||||
Savings and money market
|
561,744 | 1.35 | 336,012 | 1.30 | 198,613 | 1.92 | |||||||||||||||||||
Time
|
214,515 | 2.05 | 158,418 | 2.34 | 112,782 | 3.08 | |||||||||||||||||||
Total interest-bearing deposits
|
849,288 | 1.43 | 546,153 | 1.49 | 354,534 | 2.09 | |||||||||||||||||||
Noninterest-bearing demand deposits
|
600,790 | | 345,274 | | 229,843 | | |||||||||||||||||||
Total deposits
|
$ | 1,450,078 | 0.84 | % | $ | 891,427 | 0.92 | % | $ | 584,377 | 1.27 | % | |||||||||||||
December 31, 2004 | ||||
(In thousands) | ||||
3 months or less
|
$ | 143,147 | ||
3 to 6 months
|
39,869 | |||
6 to 12 months
|
27,778 | |||
Over 12 months
|
8,657 | |||
Total
|
$ | 219,451 | ||
43
Capital Resources |
Adequately- | Minimum for | ||||||||||||||||||||||||
Capitalized | Well-Capitalized | ||||||||||||||||||||||||
Actual | Requirements(1) | Requirements | |||||||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||||||||
($ in thousands) | |||||||||||||||||||||||||
As of December 31, 2004
|
|||||||||||||||||||||||||
Leverage ratio (to Average Assets)
|
|||||||||||||||||||||||||
BankWest of Nevada
|
$95,449 | 6.1 | % | $ | 62,970 | 4.0 | % | $78,713 | 5.0 | % | |||||||||||||||
Alliance Bank of Arizona
|
31,810 | 10.3 | 12,394 | 4.0 | 15,492 | 5.0 | |||||||||||||||||||
Torrey Pines Bank
|
26,774 | 10.9 | 9,830 | 4.0 | 12,288 | 5.0 | |||||||||||||||||||
Western Alliance
|
163,205 | 7.7 | 85,321 | 4.0 | 106,651 | 5.0 | |||||||||||||||||||
Tier 1 Capital (to Risk Weighted Assets)
|
|||||||||||||||||||||||||
BankWest of Nevada
|
95,449 | 9.4 | 40,484 | 4.0 | 60,726 | 6.0 | |||||||||||||||||||
Alliance Bank of Arizona
|
31,810 | 11.3 | 11,214 | 4.0 | 16,821 | 6.0 | |||||||||||||||||||
Torrey Pines Bank
|
26,774 | 13.4 | 8,006 | 4.0 | 12,010 | 6.0 | |||||||||||||||||||
Western Alliance
|
163,205 | 10.9 | 59,816 | 4.0 | 89,724 | 6.0 | |||||||||||||||||||
Total Capital (to Risk Weighted Assets)
|
|||||||||||||||||||||||||
BankWest of Nevada
|
105,544 | 10.4 | 80,968 | 8.0 | 101,210 | 10.0 | |||||||||||||||||||
Alliance Bank of Arizona
|
35,258 | 12.6 | 22,428 | 8.0 | 28,035 | 10.0 | |||||||||||||||||||
Torrey Pines Bank
|
28,809 | 14.4 | 16,013 | 8.0 | 20,016 | 10.0 | |||||||||||||||||||
Western Alliance
|
178,784 | 12.0 | 119,632 | 8.0 | 149,540 | 10.0 | |||||||||||||||||||
As of December 31, 2003
|
|||||||||||||||||||||||||
Leverage ratio (to Average Assets)
|
|||||||||||||||||||||||||
BankWest of Nevada
|
71,107 | 6.1 | 46,510 | 4.0 | 58,137 | 5.0 | |||||||||||||||||||
Alliance Bank of Arizona
|
17,814 | 10.6 | 6,696 | 4.0 | 8,371 | 5.0 | |||||||||||||||||||
Torrey Pines Bank
|
18,755 | 14.3 | 5,234 | 4.0 | 6,542 | 5.0 | |||||||||||||||||||
Western Alliance
|
129,875 | 8.9 | 58,457 | 4.0 | 73,027 | 5.0 | |||||||||||||||||||
Tier 1 Capital (to Risk Weighted Assets)
|
|||||||||||||||||||||||||
BankWest of Nevada
|
71,107 | 9.5 | 29,843 | 4.0 | 44,764 | 6.0 | |||||||||||||||||||
Alliance Bank of Arizona
|
17,814 | 13.0 | 5,494 | 4.0 | 8,241 | 6.0 | |||||||||||||||||||
Torrey Pines Bank
|
18,755 | 19.1 | 3,929 | 4.0 | 5,894 | 6.0 | |||||||||||||||||||
Western Alliance
|
129,875 | 13.3 | 39,190 | 4.0 | 58,785 | 6.0 | |||||||||||||||||||
Total Capital (to Risk Weighted Assets)
|
|||||||||||||||||||||||||
BankWest of Nevada
|
79,604 | 10.7 | 59,686 | 8.0 | 74,607 | 10.0 | |||||||||||||||||||
Alliance Bank of Arizona
|
19,529 | 14.2 | 10,987 | 8.0 | 13,734 | 10.0 | |||||||||||||||||||
Torrey Pines Bank
|
19,877 | 20.2 | 7,859 | 8.0 | 9,823 | 10.0 | |||||||||||||||||||
Western Alliance
|
141,321 | 14.4 | 78,379 | 8.0 | 97,974 | 10.0 |
(1) | Alliance Bank of Arizona and Torrey Pines Bank have agreed to maintain a Tier 1 capital ratio of at least 8% for the first three years of their existence. |
44
Subordinated Debt |
45
Payments Due by Period | ||||||||||||||||||||
Less Than | After | |||||||||||||||||||
Contractual Obligations | Total | 1 Year | 1-3 Years | 3-5 Years | 5 Years | |||||||||||||||
(In thousands) | ||||||||||||||||||||
Long term borrowed funds
|
$ | 63,700 | $ | | $ | 63,700 | $ | | $ | | ||||||||||
Junior subordinated deferrable interest debentures
|
30,928 | | | | 30,928 | |||||||||||||||
Operating lease obligations
|
18,492 | 3,545 | 7,080 | 2,527 | 5,340 | |||||||||||||||
Total
|
$ | 113,120 | $ | 3,545 | $ | 70,780 | $ | 2,527 | $ | 36,268 | ||||||||||
Amount of Commitment Expiration per Period | ||||||||||||||||||||
Total | ||||||||||||||||||||
Amounts | Less Than | After | ||||||||||||||||||
Other Commitments | Committed | 1 Year | 1-3 Years | 3-5 Years | 5 Years | |||||||||||||||
(In thousands) | ||||||||||||||||||||
Commitments to extend credit
|
$ | 423,767 | $ | 292,013 | $ | 78,792 | $ | 8,100 | $ | 44,862 | ||||||||||
Credit card guarantees
|
5,421 | 5,421 | | | | |||||||||||||||
Standby letters of credit
|
5,978 | 3,984 | 1,994 | | | |||||||||||||||
Total
|
$ | 435,166 | $ | 301,418 | $ | 80,786 | $ | 8,100 | $ | 44,862 | ||||||||||
46
As of or for the Years Ended | |||||||||||||
December 31, | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
($ in thousands) | |||||||||||||
FHLB Advances:
|
|||||||||||||
Maximum month-end balance
|
$ | 174,200 | $ | 163,211 | $ | 11,300 | |||||||
Balance at end of year
|
151,900 | 163,211 | 11,300 | ||||||||||
Average balance
|
186,662 | 69,319 | 9,285 | ||||||||||
Other:
|
|||||||||||||
Maximum month-end balance
|
$ | 78,050 | $ | 78,050 | $ | 6,000 | |||||||
Balance at end of year
|
33,594 | 78,050 | 6,000 | ||||||||||
Average balance
|
52,513 | 41,939 | 5,047 | ||||||||||
Total Short-Term Borrowed Funds
|
$ | 185,494 | $ | 241,261 | $ | 17,300 | |||||||
Weighted average interest rate at end of year
|
2.23 | % | 1.31 | % | 2.37 | % | |||||||
Weighted average interest rate during year
|
1.87 | % | 1.50 | % | 2.47 | % |
47
48
Percentage | Percentage | Percentage of | ||||||||||||||
Economic | Change | of Total | Equity Book | |||||||||||||
Interest Rate Scenario | Value | from Base | Assets | Value | ||||||||||||
($ in millions) | ||||||||||||||||
Up 300 basis points
|
$ | 249.4 | (9.0 | )% | 11.5 | % | 186.7 | % | ||||||||
Up 200 basis points
|
255.2 | (6.9 | ) | 11.7 | 191.0 | |||||||||||
BASE
|
274.1 | 12.6 | 205.2 | |||||||||||||
Down 100 basis points
|
260.9 | (4.8 | ) | 12.0 | 195.3 |
49
Percentage | ||||||||
Adjusted Net | Change | |||||||
Interest Rate Scenario | Interest Income | from Base | ||||||
($ in millions) | ||||||||
Up 300 basis points
|
$ | 92.0 | 4.9 | % | ||||
BASE
|
87.7 | |||||||
Down 100 basis points
|
84.2 | (4.0 | ) |
FAS No. 123(R), Shared-Based Payment, Revised December 2004 |
EITF 03-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments |
50
FASB Interpretation (FIN) 46, Consolidation of Variable Interest Entities |
51
| total assets from $443.7 million to $2.2 billion, a four year CAGR of approximately 48.8%; | |
| total net loans from $319.6 million to $1.2 billion, a four year CAGR of approximately 38.4%; | |
| total deposits from $410.2 million to $1.8 billion, a four year CAGR of approximately 43.8%; and | |
| core deposits (all deposits other than certificates of deposit greater than $100,000) from $355.8 million to $1.5 billion, a four year CAGR of 44.2%. |
52
| Leveraging our knowledge and expertise. Over the past decade we have assembled an experienced management team and built a culture committed to credit quality and operational efficiency. We have also successfully centralized at our holding company level a significant portion of our operations, processing, compliance, Community Reinvestment Act administration and specialty functions. We intend to grow our franchise and improve our operating efficiencies by continuing to leverage our managerial expertise and the functions we have centralized at Western Alliance. | |
| Maintaining a strong credit culture. We adhere to a specific set of credit standards across our bank subsidiaries that ensure the proper management of credit risk. Western Alliances management team plays an active role in monitoring compliance with our Banks credit standards. Western Alliance also continually monitors each of our subsidiary banks loan portfolios, which enables us to identify and take prompt corrective action on potentially problematic loans. As of December 31, 2004, non-performing assets represented approximately 0.07% of total assets. The average for similarly sized banks in the United States was 0.52% as of December 31, 2004. | |
| Attracting seasoned relationship bankers and leveraging our local market knowledge. Our success has been the result, in part, of our ability to attract and retain experienced relationship bankers that have strong relationships in their communities. These professionals bring with them valuable customer relationships, and have been an integral part of our ability to expand rapidly in our market areas. These professionals allow us to be responsive to the needs of our customers and provide a high level of service to local businesses. We intend to continue to hire experienced relationship bankers as we expand our franchise. | |
| Offering a broader array of personal financial products and services. Part of our growth strategy is to offer a broader array of personal financial products and services to high net worth individuals and to senior managers at commercial enterprises with which we have established relationships. To this end, |
53
we acquired Miller/ Russell & Associates, Inc. in May 2004, and Premier Trust, Inc. in December 2003. | ||
| Focusing on markets with attractive growth prospects. We operate in what we believe to be highly attractive markets with superior growth prospects. Our metropolitan areas have a high per capita income and are expected to experience some of the fastest population growth in the country. We continuously evaluate new markets in the Western United States with similar growth characteristics as targets for expansion. As of December 31, 2004, we maintained 13 bank branch offices located throughout our market areas. To accommodate our growth and enhance efficiency, we intend to expand over the next 18 months to an aggregate of 22 offices, and to open a service center facility that will provide centralized back-office services and call center support for all our banking subsidiaries. | |
| Attracting low cost deposits. We have been able to attract a stable base of low-cost deposits from customers who are attracted to our personalized level of service and local knowledge. As of December 31, 2004, our deposit base was comprised of approximately 42.7% non-interest bearing deposits, versus 40.3% as of December 31, 2003. Given our current loan-to-deposit ratio of 67.7%, we expect to obtain additional value in the future by leveraging our low-cost deposit base. |
54
Population Growth | Per Capita Income | |||||||||||||||||||
Total | Projected | National | 2004 | National | ||||||||||||||||
Deposits | Growth Rate | Percentile | Per Capita | Percentile | ||||||||||||||||
Metropolitan Area | (12/31/04) | 2004 2009 | Rank | Income | Rank | |||||||||||||||
(In millions) | ||||||||||||||||||||
Las Vegas
|
$ | 1,285.4 | 18.9 | % | 99.5 | % | $ | 23,533 | 84.6 | % | ||||||||||
San Diego
|
199.4 | 6.5 | 84.0 | 26,039 | 93.8 | |||||||||||||||
Phoenix
|
153.2 | 13.8 | 97.9 | 24,499 | 88.9 | |||||||||||||||
Tucson
|
118.0 | 9.6 | 93.4 | 22,021 | 74.4 |
| BankWest of Nevada. BankWest of Nevada is a Nevada-chartered commercial bank headquartered in Las Vegas, Nevada. BankWest of Nevada opened for business in 1994. As of December 31, 2004, the bank had $1.6 billion in assets, $790.3 million in loans and $1.3 billion in deposits. BankWest of Nevada has three full- service offices in Las Vegas and two in Henderson. In addition, BankWest of Nevada expects to open five full-service offices and a 36,000 square foot service center facility in the Las Vegas metropolitan area in the next 18 months. | |
| Alliance Bank of Arizona. Alliance Bank of Arizona is an Arizona-chartered commercial bank headquartered in Phoenix, Arizona. As of December 31, 2004, the bank had $332.8 million in assets, $234.1 million in loans and $277.2 million in deposits. Alliance Bank has two full-service offices in Phoenix, two in Tucson and one in Scottsdale. In addition, Alliance Bank expects to open two additional full-service offices in the Phoenix metropolitan area and one in Tucson in the next 18 months. | |
| Torrey Pines Bank. Torrey Pines Bank is a California-chartered commercial bank headquartered in San Diego, California. As of December 31, 2004, the bank had $257.5 million in assets, $164.1 million in loans and $199.4 million in deposits. Torrey Pines has two full-service offices in San Diego and one in La Mesa. In addition, Torrey Pines expects to open one additional full-service office in the San Diego metropolitan area in the next 18 months. | |
| Miller/Russell & Associates, Inc. Miller/Russell offers investment advisory services to businesses, individuals and non-profit entities. As of December 31, 2004, Miller/Russell had $829.7 million in assets under management. Miller/Russell has offices in Phoenix, Tucson, San Diego and Las Vegas. | |
| Premier Trust, Inc. Premier Trust offers clients wealth management services, including trust administration of personal and retirement accounts, estate and financial planning, custody services and investments. As of December 31, 2004, Premier Trust had $187.5 million in trust assets and $80.3 million in assets under management. Premier Trust has offices in Las Vegas and Phoenix. |
55
| home equity loans and lines of credit; | |
| home improvement loans; | |
| new and used automobile loans; and | |
| personal lines of credit. |
56
Loan Type | Amount | Percent | |||||||
($ in millions) | |||||||||
Commercial Real Estate
|
$ | 491.9 | 41.3 | % | |||||
Construction and Land Development
|
323.1 | 27.1 | |||||||
Commercial and Industrial
|
241.3 | 20.3 | |||||||
Residential Real Estate
|
116.4 | 9.8 | |||||||
Consumer
|
17.7 | 1.5 | |||||||
Total Gross Loans
|
$ | 1,190.4 | 100.0 | % | |||||
Net Deferred Loan Fees
|
(1.9 | ) | (0.2 | ) | |||||
Gross Loans, net of deferred loan fees
|
$ | 1,188.5 | 99.8 | % | |||||
State of Loan Origination | Amount | Percent | ||||||
($ in millions) | ||||||||
Nevada
|
$ | 737.8 | 62.1 | % | ||||
Arizona
|
272.4 | 22.9 | ||||||
California
|
178.3 | 15.0 | ||||||
Total Gross Loans
|
$ | 1,188.5 | 100.0 | % | ||||
General |
57
Loan Approval Procedures and Authority |
| Individual Authorities. The board of directors of each subsidiary bank sets the authorization levels for individual loan officers on a case-by-case basis. Generally, the more experienced a loan officer, the higher the authorization level. The average approval authority for individual loan officers is approximately $521,000 for secured loans and approximately $227,000 for unsecured loans. The maximum approval authority for a loan officer is $1.5 million for secured loans and $750,000 for unsecured loans. | |
| Management Loan Committees. Credits in excess of individual loan limits are submitted to the appropriate banks Management Loan Committee. The Management Loan Committees consist of members of the senior management team of that bank and are chaired by that banks chief credit officer. The Management Loan Committees have approval authority up to $3.0 million at BankWest of Nevada, $5.0 million at Alliance Bank of Arizona and $2.5 million at Torrey Pines Bank. | |
| Credit Administration. Credits in excess of the Management Loan Committee authority are submitted by the bank subsidiary to Western Alliances Credit Administration. Credit Administration consists of the chief credit officers of Western Alliance and BankWest of Nevada. Credit Administration has approval authority up to $18.0 million. |
58
| Board of Director Oversight. The Chairman of the Board of Directors of Western Alliance acting with the Chairman of the Credit Committee has approval authority up to each respective banks legal lending limit (approximately $26.3 million for BankWest of Nevada, $5.3 million for Alliance Bank of Arizona, and $7.2 million for Torrey Pines Bank, each as of December 31, 2004). |
| BankWest of Nevada: $11.3 million, consisting of construction loans to a local developer of shopping centers and custom homes; | |
| Alliance Bank of Arizona: $11.4 million, consisting of a $9.2 million real estate loan to a 60-physician medical clinic, secured by the underlying property, and the remainder for multiple equipment loans, secured by the underlying equipment; and | |
| Torrey Pines Bank: $12.2 million, consisting of lines of credit to a construction contractor for the development of condominium projects. |
Percent of Total Capital | Percent of Total Loans | |||||||||||||||
Policy Limit | Actual | Policy Limit | Actual | |||||||||||||
Commercial Real Estate Term
|
400 | % | 306 | % | 65 | % | 42 | % | ||||||||
Construction
|
250 | 198 | 30 | 27 | ||||||||||||
Commercial and Industrial
|
200 | 146 | 40 | 20 | ||||||||||||
Residential Real Estate
|
300 | 67 | 65 | 9 | ||||||||||||
Consumer
|
75 | 11 | 15 | 2 |
General |
59
Collection Procedure |
Non-performing Loans |
Criticized Assets |
| Watch List/ Special Mention. Generally these are assets that require more than normal management attention. These loans may involve borrowers with adverse financial trends, higher debt/equity ratios, or weaker liquidity positions, but not to the degree of being considered a problem loan where risk of loss may be apparent. Loans in this category are usually performing as agreed, although there may be some minor non-compliance with financial covenants. | |
| Substandard. These assets contain well-defined credit weaknesses and are characterized by the distinct possibility that the bank will sustain some loss if such weakness or deficiency is not corrected. These loans generally are adequately secured and in the event of a foreclosure action or liquidation, the bank should be protected from loss. All loans 90 days or more past due and all loans on non-accrual are considered at least substandard, unless extraordinary circumstances would suggest otherwise. | |
| Doubtful. These assets have an extremely high probability of loss, but because of certain known factors which may work to the advantage and strengthening of the asset (for example, capital injection, perfecting liens on additional collateral and refinancing plans), classification as an estimated loss is deferred until a more precise status may be determined. | |
| Loss. These assets are considered uncollectible, and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value, but rather that it is not practicable or desirable to defer writing off the asset, even though partial recovery may be achieved in the future. |
60
| results of the quarterly credit quality review; | |
| historical loss experience in each segment of the loan portfolio; | |
| general economic and business conditions affecting our key lending areas; | |
| credit quality trends (including trends in non-performing loans expected to result from existing conditions); | |
| collateral values; | |
| loan volumes and concentrations; | |
| age of the loan portfolio; | |
| specific industry conditions within portfolio segments; | |
| duration of the current business cycle; | |
| bank regulatory examination results; and | |
| external loan review results. |
61
Investment Security Type | Amount | Percent | ||||||
(In millions) | ||||||||
Mortgage-backed Securities
|
$ | 648.1 | 82.2 | % | ||||
U.S. Government Sponsored Agencies
|
118.3 | 15.0 | ||||||
Municipal Bonds, U.S. Treasuries & Other
|
22.2 | 2.8 | ||||||
Total Investment Securities
|
$ | 788.6 | 100.0 | % | ||||
62
| Information on current and projected national and local economic conditions and the outlook for interest rates; | |
| The competitive environment in the markets it operates in; | |
| Loan and deposit positions and forecasts, including any concentrations in either; and | |
| FHLB advance rates and rates charged on other sources of funds. |
Deposit Type | Amount | Percent | ||||||
(In millions) | ||||||||
Non-interest Bearing Demand
|
$ | 749.6 | 42.7 | % | ||||
Savings & Money Market
|
665.4 | 37.9 | ||||||
Time, $100k and over
|
219.5 | 12.5 | ||||||
Interest Bearing Demand
|
103.7 | 5.9 | ||||||
Other Time
|
17.8 | 1.0 | ||||||
Total Deposits
|
$ | 1,756.0 | 100.0 | % | ||||
| Internet banking; | |
| Wire transfers; | |
| Electronic bill payment; | |
| Lock box services; | |
| Courier services; | |
| Cash vault; and | |
| Cash management services (including account reconciliation, collections and sweep accounts). |
63
64
Owned or | Original Year | ||||||||
Leased | Acquired/Term of Lease | ||||||||
BankWest of Nevada
|
|||||||||
Southwest Regional Office
|
Owned | 2001 | |||||||
3985 S. Durango Drive | |||||||||
Las Vegas, NV 89147-4131 | |||||||||
Henderson Regional Office
|
Owned | 1997 | |||||||
2890 North Green Valley Parkway | |||||||||
Henderson, NV 89014-0400 | |||||||||
Eastern/ Siena Heights Office
|
Owned | 2001 | |||||||
10199 South Eastern Avenue | |||||||||
Henderson, NV 89052 | |||||||||
Central Regional Office
|
Leased | 1/1/98 - 12/31/07 | |||||||
2700 West Sahara Avenue | |||||||||
Las Vegas, NV 89102-1700 | |||||||||
Northwest Regional Office
|
Leased | 6/1/98 - 5/31/2013 | |||||||
7251 West Lake Mead, Suite 100 | |||||||||
Las Vegas, NV 89128-8351 | |||||||||
Alliance Bank of Arizona
|
|||||||||
Phoenix Regional Office
|
Leased | 2/1/03 - 8/1/2013 | |||||||
4646 E. Van Buren, #100 | |||||||||
Phoenix, AZ 85008 | |||||||||
Scottsdale Office
|
Leased | 10/1/03 - 9/30/08 | |||||||
7373 N. Scottsdale Road, A-195 | |||||||||
Scottsdale, AZ 85253 | |||||||||
Phoenix Plaza
|
Leased | 7/26/04 - 7/31/09 | |||||||
2901 N. Central Avenue, Suite 100 | |||||||||
Phoenix, AZ 85012 | |||||||||
Tucson Regional Office
|
Leased | 11/1/03 - 10/31/2013 | |||||||
4703 E. Camp Lowell Drive | |||||||||
Tucson, AZ 85712 | |||||||||
Tucson Downtown Office
|
Leased | 7/19/04 - 9/30/09 | |||||||
1 South Church Avenue, #950 | |||||||||
Tucson, AZ 85701 | |||||||||
Torrey Pines Bank
|
|||||||||
La Mesa Office
|
Owned | 2004 | |||||||
8379 Center Drive | |||||||||
La Mesa, CA 91942 | |||||||||
Carmel Valley Office
|
Leased | 10/13/03 - 10/12/2013 | |||||||
12220 El Camino Real, Suite 100
|
|||||||||
San Diego, CA 92130 | |||||||||
Downtown San Diego
|
Leased | 5/1/03 - 4/30/08 | |||||||
550 West C Street, Suite 100 | |||||||||
San Diego, CA 92101 | |||||||||
Miller/ Russell & Associates, Inc.
|
|||||||||
Phoenix Office
|
Leased | 10/1/98 - 9/30/06 | |||||||
3131 E. Camelback Road, Suite 230 | |||||||||
Phoenix, AZ 85016 |
65
| Las Vegas, NV (3 branches and a service center facility) | |
| Henderson, NV (1 branch) | |
| North Las Vegas, NV (1 branch) | |
| Mesa, AZ (1 branch) | |
| Phoenix, AZ (1 branch) | |
| Tucson, AZ (1 branch) | |
| San Diego, CA (1 branch) |
66
67
68
69
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Adequate Capital(1) | Well Capitalized | |||||||||||||||||||||||||||||||
Actual | Required | Excess | Required | Excess | ||||||||||||||||||||||||||||
($ in thousands) | ||||||||||||||||||||||||||||||||
Tier 1/Risk-weighted:
|
||||||||||||||||||||||||||||||||
Western Alliance
|
$ | 163,205 | 10.9 | % | $ | 59,816 | 4.0 | % | $ | 103,389 | $ | 89,274 | 6.0 | % | $ | 73,931 | ||||||||||||||||
BankWest of Nevada
|
95,449 | 9.4 | 40,484 | 4.0 | 54,965 | 60,276 | 6.0 | 35,173 | ||||||||||||||||||||||||
Alliance Bank of Arizona
|
31,810 | 11.3 | 11,214 | 4.0 | 20,596 | 16,821 | 6.0 | 14,989 | ||||||||||||||||||||||||
Torrey Pines Bank
|
26,774 | 13.4 | 8,006 | 4.0 | 18,768 | 12,010 | 6.0 | 14,764 | ||||||||||||||||||||||||
Total/Risk-weighted:
|
||||||||||||||||||||||||||||||||
Western Alliance
|
178,784 | 12.0 | 119,632 | 8.0 | 59,152 | 149,540 | 10.0 | 29,244 | ||||||||||||||||||||||||
BankWest of Nevada
|
105,544 | 10.4 | 80,968 | 8.0 | 24,576 | 101,210 | 10.0 | 4,334 | ||||||||||||||||||||||||
Alliance Bank of Arizona
|
35,258 | 12.6 | 22,428 | 8.0 | 12,830 | 28,035 | 10.0 | 7,223 | ||||||||||||||||||||||||
Torrey Pines Bank
|
28,809 | 14.4 | 16,013 | 8.0 | 12,796 | 20,016 | 10.0 | 8,793 | ||||||||||||||||||||||||
Tier 1/Average assets:
|
||||||||||||||||||||||||||||||||
Western Alliance
|
163,205 | 7.7 | 85,231 | 4.0 | 77,974 | 106,651 | 5.0 | 56,554 | ||||||||||||||||||||||||
BankWest of Nevada
|
95,449 | 6.1 | 62,970 | 4.0 | 32,479 | 78,713 | 5.0 | 16,736 | ||||||||||||||||||||||||
Alliance Bank of Arizona
|
31,810 | 10.3 | 12,394 | 4.0 | 19,416 | 15,492 | 5.0 | 16,318 | ||||||||||||||||||||||||
Torrey Pines Bank
|
26,774 | 10.9 | 9,830 | 4.0 | 16,944 | 12,288 | 5.0 | 14,486 |
(1) | Alliance Bank of Arizona and Torrey Pines Bank have agreed to maintain a Tier 1/ Average assets ratio of at least 8% for the first three years of their existence. |
71
| Under sections 661.235 and 661.240 of the Nevada Revised Statutes, BankWest of Nevada may not pay dividends unless the banks surplus fund, not including any initial surplus fund, equals the banks initial stockholders equity, including 10% of the previous years net profits, and the dividend would not reduce the banks stockholders equity below the initial stockholders equity of the bank or 6% of the total deposit liability of the bank. | |
| Under section 6-187 of the Arizona Revised Statutes, Alliance may pay dividends on the same basis as any other Arizona corporation. Under section 10-640 of the Arizona Revised Statutes, a corporation may not make a distribution to shareholders if to do so would render the corporation insolvent or unable to pay its debts as they become due. However, an Arizona bank may not declare a non-stock dividend out of capital surplus without the approval of the Superintendent. | |
| Under section 642 of the California Financial Code, Torrey Pines Bank may not, without the prior approval of the California Commissioner, make a distribution to its shareholders in an amount exceeding the banks retained earnings or its net income during its last three fiscal years, less any previous distributions made during that period by the bank or its subsidiaries, whichever is less. Under section 643 of the California Financial Code, the California Commissioner may approve a larger |
72
distribution, but in no event to exceed the banks net income during the year, net income during the prior fiscal year or retained earnings, whichever is greatest. |
| Broadens the activities that may be conducted by bank holding companies and their subsidiaries and by national banks and their financial subsidiaries. Under parity provisions of the FDI Act and FDIC regulations, as well as state banking laws and regulations, insured state banks may engage in activities that are permissible for national banks, thereby extending the effect of the GLB Act to state banks as well; |
73
| Provides a framework for protecting the privacy of consumer information; | |
| Modifies the laws governing the implementation of the Community Reinvestment Act (CRA); and | |
| Addresses a variety of other legal and regulatory issues affecting both day-to-day operations and long-term activities of financial institutions. |
74
75
| making unaffordable loans based on the borrowers assets rather than the borrowers ability to repay an obligation; | |
| inducing a borrower to refinance a loan repeatedly in order to charge high points and fees each time the loan is refinanced, or loan flipping; and | |
| engaging in fraud or deception to conceal the true nature of the loan obligation from an unsuspecting or unsophisticated borrower. |
| interest rates for first lien mortgage loans more than 8 percentage points above the yield on U.S. Treasury securities having a comparable maturity; | |
| interest rates for subordinate lien mortgage loans more than 10 percentage points above the yield on U.S. Treasury securities having a comparable maturity; or | |
| fees, such as optional insurance and similar debt protection costs paid in connection with the credit transaction that, when combined with points and fees, are deemed to be excessive. |
76
77
78
Name | Age | Position with Western Alliance Bancorporation | ||||
Robert Sarver
|
43 | Chairman of the Board, President and Chief Executive Officer | ||||
Gary Cady
|
51 | Executive Vice President, California Administration | ||||
Duane Froeschle
|
52 | Executive Vice President and Chief Credit Officer | ||||
Dale Gibbons
|
44 | Executive Vice President and Chief Financial Officer | ||||
James Lundy
|
55 | Executive Vice President, Arizona Administration | ||||
Linda Mahan
|
47 | Executive Vice President, Operations | ||||
Merrill Wall
|
57 | Executive Vice President and Chief Administrative Officer | ||||
Larry L. Woodrum
|
67 | Executive Vice President, Nevada Administration and Director | ||||
Paul Baker
|
63 | Director | ||||
Bruce Beach
|
55 | Director | ||||
William S. Boyd
|
73 | Director | ||||
Steven J. Hilton
|
43 | Director | ||||
Marianne Boyd Johnson
|
46 | Director | ||||
Cary Mack
|
45 | Director | ||||
Arthur Marshall
|
75 | Director | ||||
Todd Marshall
|
48 | Director | ||||
M. Nafees Nagy, M.D.
|
62 | Director | ||||
James E. Nave, D.V.M.
|
60 | Director | ||||
Edward Nigro
|
62 | Director | ||||
Donald D. Snyder
|
57 | Director |
79
80
81
| at any time in the last three years, the director is, or has been employed by us, or has an immediate family member that serves or has served as one of our executive officers; | |
| the director or an immediate family member has received more than $100,000 in direct compensation from us over a twelve-month period during the last three years, other than for director or committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service); |
82
| the director is a partner or employee of a firm that is our current internal or external auditor, or the director has an immediate family member who is currently a partner of such firm or who is currently employed by the firm in its audit, assurance, or tax compliance practice, or within the last three years, the director or an immediate family member was a partner or employee in such firm and personally worked on our audit in that time; | |
| in the last three years, the director or an immediate family member is or was employed as an executive officer by another company where, at the same time, any of our present executive officers serve or served on that companys compensation committee; or | |
| the director is currently employed by, or, in the case of an immediate family member, is employed as an executive officer by, another company that has made payments to us, or received payments from us for property or services that, in any of the last three fiscal years, account for more than 2% of such companys consolidated gross revenue or $1,000,000, whichever is greater. |
| Class I, whose term will expire at the annual meeting of shareholders to be held in 2006; | |
| Class II, whose term will expire at the annual meeting of shareholders to be held in 2007; and | |
| Class III whose term will expire at the annual meeting of shareholders to be held in 2008. |
| the Audit Committee; | |
| the Compensation Committee; |
83
| the Nominating and Corporate Governance Committee; and | |
| the Credit Committee. |
Audit Committee |
| serving as an independent and objective body to monitor and assess our compliance with legal and regulatory requirements, our financial reporting processes and related internal control systems and the general creation and performance of our internal audit function; | |
| overseeing the compliance of our internal audit function with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002; | |
| overseeing the audit and other services of our outside auditors and being directly responsible for the appointment, independence, qualifications, compensation and oversight of the outside auditors, who will report directly to the audit committee; | |
| providing an open means of communication among our outside auditors, accountants, financial and senior management, our internal auditors, our corporate compliance department and our board; | |
| resolving any disagreements between our management and the outside auditors regarding our financial reporting; and | |
| preparing the audit committee report for inclusion in our proxy statement for our annual meeting. |
Compensation Committee |
| determining the compensation of our executive officers; | |
| reviewing our executive compensation policies and plans; | |
| administering and implementing our equity compensation plans; | |
| determining the number of shares underlying stock options and restricted common stock awards to be granted to our directors, executive officers and other employees pursuant to these plans; and | |
| preparing a report on executive compensation for inclusion in our proxy statement for our annual meeting. |
84
Nominating and Corporate Governance Committee |
| identifying individuals qualified to become members of our board of directors and recommending director candidates for election or re-election to our board; | |
| considering and making recommendations to our board regarding board size and composition, committee composition and structure and procedures affecting directors; and | |
| monitoring our corporate governance principles and practices. |
Credit Committee |
Annual Retainer | Per In-person Meeting | Per Telephonic Meeting | ||||||||||
BankWest of Nevada
|
$ | 5,000 | $ | 1,500 | $ | 1,500 | ||||||
Alliance Bank
|
| 1,000 | 1,000 | |||||||||
Torrey Pines Bank
|
| 1,000 | 1,000 |
85
Long Term | |||||||||||||||||||||
Annual Compensation | Compensation | ||||||||||||||||||||
Awards | |||||||||||||||||||||
Securities | |||||||||||||||||||||
Underlying | All Other | ||||||||||||||||||||
Name and Principal Position | Year | Salary | Bonus | Options/SARs | Compensation | ||||||||||||||||
Robert Sarver
|
2004 | | | 65,000 | $ | 60,000 | (2) | ||||||||||||||
Chairman, President and Chief | 2003 | | | | 60,000 | (2) | |||||||||||||||
Executive Officer(1) | 2002 | | | | | ||||||||||||||||
Larry Woodrum
|
2004 | $ | 294,840 | $ | 94,666 | | $ | 8,000 | (3) | ||||||||||||
President and Chief Executive Officer, | 2003 | 284,048 | 67,775 | | 7,000 | (3) | |||||||||||||||
BankWest of Nevada | 2002 | 261,250 | 69,806 | 75,000 | 6,000 | (3) | |||||||||||||||
Dale Gibbons
|
2004 | $ | 206,000 | $ | 72,100 | | $ | 6,500 | (3) | ||||||||||||
Executive Vice President and | 2003 | 145,654 | (5) | 58,333 | 50,000 | | |||||||||||||||
Chief Financial Officer(4) | 2002 | | | | | ||||||||||||||||
James Lundy
|
2004 | $ | 206,000 | | | $ | 4,915 | (3) | |||||||||||||
President and Chief Executive Officer, | 2003 | 198,454 | | | 3,000 | (3) | |||||||||||||||
Alliance Bank of Arizona | 2002 | | | 75,000 | | ||||||||||||||||
Linda Mahan
|
2004 | $ | 160,365 | $ | 41,943 | | $ | 4,939 | (3) | ||||||||||||
Executive Vice President and | 2003 | 148,846 | 28,757 | (6) | | 4,567 | (3) | ||||||||||||||
Chief Operations Officer | 2002 | 133,500 | 27,755 | 37,500 | 2,754 | (3) |
(1) | Mr. Sarver did not receive a salary for years 2002 through 2004. Beginning in fiscal year 2005, Mr. Sarver is receiving an annual salary of $500,000. In addition, Mr. Sarver is eligible to receive a discretionary bonus in such amount as our Compensation Committee may determine, which amount is currently targeted to be 100% of his 2005 base salary. |
(2) | Represents amounts paid to SWVP Management Co. Inc. pursuant to a Consulting Agreement dated as of January 1, 2003, by and between Western Alliance and SWVP. SWVP is an entity owned and operated by Mr. Sarver. The Consulting Agreement has since been terminated. |
(3) | Represents amounts contributed to the BankWest 401(k) Plan on behalf of the executive officer. |
(4) | Mr. Gibbons joined Western Alliance in May 2003. |
(5) | Includes $29,500 of consulting payments paid to Mr. Gibbons prior to joining Western Alliance. |
(6) | Includes $1,109 incentive payment for successful completion of outside banking education program. |
86
% of Total | ||||||||||||||||||||
Options/SARs | ||||||||||||||||||||
Number of Securities | Granted to | |||||||||||||||||||
Underlying | Employees in | Exercise or Base | Expiration | Grant Date | ||||||||||||||||
Name | Option/SARs Granted | Fiscal Year | Price ($/Share) | Date | Present Value(2) | |||||||||||||||
Robert Sarver
|
37,500 | (1) | 8.53 | % | $ | 13.20 | 10/27/14 | $ | 67,450 | |||||||||||
27,500 | (1) | 6.26 | % | $ | 12.00 | 10/27/14 | $ | 74,967 | ||||||||||||
Larry Woodrum
|
| | | | | |||||||||||||||
Dale Gibbons
|
| | | | | |||||||||||||||
James Lundy
|
| | | | | |||||||||||||||
Linda Mahan
|
| | | | |
(1) | Options were granted on October 27, 2004 and vest annually beginning on October 27, 2005 in five equal installments. |
(2) | We used the minimum value method to estimate the grant date present value of the options. We are not endorsing the accuracy of this model. All stock option valuation models, including the minimum value method, require a prediction about future stock prices. The assumptions used in calculating the values shown above were a risk-free rate of return of 3.75%, weighted average life of seven years and no cash dividends. The real value of the options will depend upon the actual performance of our common stock during the applicable period. |
Number of Securities | Value of Unexercised | |||||||||||||||||||||||
Underlying Unexercised | In-the-Money Options/ | |||||||||||||||||||||||
Shares | Options/SARs at Year End | SARs at Year End(2) | ||||||||||||||||||||||
Acquired on | Value | |||||||||||||||||||||||
Name | Exercise | Realized(1) | Exercisable | Unexercisable | Exercisable | Unexercisable | ||||||||||||||||||
Robert Sarver
|
| | | 65,000 | | $ | 150,000 | |||||||||||||||||
Larry Woodrum
|
66,000 | (3) | $ | 455,739 | (4) | 36,000 | 45,000 | $ | 329,100 | 358,650 | ||||||||||||||
Dale Gibbons
|
| | 10,000 | 40,000 | 79,700 | 318,800 | ||||||||||||||||||
James Lundy
|
| | 30,000 | 45,000 | 239,100 | 358,650 | ||||||||||||||||||
Linda Mahan
|
33,750 | (3) | $ | 175,037 | (4) | 32,250 | 22,500 | 269,108 | 179,325 |
(1) | Represents the difference between the fair market value of our common stock on the date of exercise as determined by our board of directors less the exercise. |
(2) | The dollar values were calculated by determining the difference between the fair market value of our common stock on December 31, 2004 of $15.00, as determined by our board of directors, and the exercise price of the option. |
(3) | Includes shares with respect to which SARs were exercised as follows: Mr. Woodrum, 36,000; and Ms. Mahan, 27,000. No shares were acquired upon the exercise of SARs. |
(4) | Includes cash received in connection with the exercise of SARs as follows: Mr. Woodrum, $137,439; and Ms. Mahan, $103,419. |
87
2005 Stock Incentive Plan |
| an increase in the number of reserved shares; | |
| the inclusion of individual limits on the awards that an individual may receive in a given year under the 2005 Stock Incentive Plan; and | |
| the inclusion of new types of awards consisting of unrestricted stock, stock units, dividend equivalent rights, and performance and annual incentive awards that are in addition to the stock options (incentive and non-qualified), stock appreciation rights and restricted stock which may have been awarded under one or more of the prior plans. |
| the first shareholders meeting at which directors are to be elected held after the close of the third calendar year following the calendar year in which this offering occurs; or | |
| the time at which the equity incentive plan is materially amended. |
88
| restricted shares of common stock, which are shares of common stock subject to restrictions; | |
| stock units, which are common stock units subject to restrictions; |
89
| unrestricted shares of common stock, which are shares of common stock issued at no cost or for a purchase price determined by the compensation committee which are free from any restrictions under the equity incentive plan; | |
| dividend equivalent rights, which are rights entitling the recipient to receive credits for dividends that would be paid if the recipient had held a specified number of shares of common stock; | |
| stock appreciation rights, which are a right to receive a number of shares or, in the discretion of the committee, an amount in cash or a combination of shares and cash, based on the increase in the fair market value of the shares underlying the right during a stated period specified by the compensation committee; | |
| performance and annual incentive awards, ultimately payable in common stock or cash, as determined by the compensation committee. The compensation committee may grant multi-year and annual incentive awards subject to achievement of specified goals tied to business criteria (described below). The committee may specify the amount of the incentive award as a percentage of these business criteria, a percentage in excess of a threshold amount or as another amount which need not bear a strictly mathematical relationship to these business criteria. The compensation committee may modify, amend or adjust the terms of each award and performance goal. |
| total shareholder return; | |
| total shareholder return as compared to total return of a known index; | |
| net income; | |
| pretax earnings; | |
| earnings before interest expense, taxes, depreciation and amortization; | |
| pretax operating earnings after interest expense and before bonuses, service fees and extraordinary or special items; | |
| operating margin; | |
| earnings per share; | |
| return on equity; | |
| return on capital; | |
| return on investment; | |
| operating earnings; | |
| working capital; |
90
| ratio of debt to shareholders equity; and | |
| revenue. |
401(k) Plan |
Noncompetition Agreement |
91
Indemnification Agreement |
92
93
Percentage of | ||||||||||||||||
Number of | Percentage of Common | Number of Shares | Common Stock | |||||||||||||
Shares Beneficially | Stock Beneficially | Beneficially Owned | Beneficially | |||||||||||||
Owned Prior to the | Owned Prior to the | Following the | Owned Following the | |||||||||||||
Beneficial Owner | Offering(1) | Offering(1) | Offering(1) | Offering(1) | ||||||||||||
Paul Baker
|
239,455 | 1.30 | % | |||||||||||||
Bruce Beach
|
75,568 | * | ||||||||||||||
William S. Boyd
|
4,968,730 | 27.15 | ||||||||||||||
Dale Gibbons
|
79,900 | * | ||||||||||||||
Steve Hilton
|
239,455 | 1.30 | ||||||||||||||
Marianne Boyd Johnson
|
512,246 | 2.80 | ||||||||||||||
James Lundy
|
148,795 | * | ||||||||||||||
Cary Mack
|
89,697 | * | ||||||||||||||
Linda Mahan
|
52,484 | * | ||||||||||||||
Arthur Marshall
|
221,396 | 1.21 | ||||||||||||||
Todd Marshall
|
578,239 | 3.16 | ||||||||||||||
M. Nafees Nagy
|
836,852 | 4.57 | ||||||||||||||
James Nave
|
506,644 | 2.77 | ||||||||||||||
Edward Nigro
|
258,060 | 1.41 | ||||||||||||||
Robert Sarver
|
3,507,021 | 18.15 | ||||||||||||||
Donald Snyder
|
203,771 | 1.11 | ||||||||||||||
Larry Woodrum
|
136,000 | * | ||||||||||||||
All directors and executive officers as a group (20 persons)
|
12,442,341 | 63.12 | % |
* | Less than 1%. |
(1) | In accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended, a person is deemed to be the beneficial owner, for purposes of this table, of any shares of common stock if such person has or shares voting power and/or investment power with respect to the shares, or has a right to acquire beneficial ownership at any time within 60 days from March 31, 2005. As used herein, voting power includes to power to vote or direct the voting of shares and investment power includes the power to dispose or direct the disposition of shares. |
94
The table includes shares owned by spouses, other immediate family members and others over which the persons named in the table possess shared voting and/or shared investment power as follows: Mr. Boyd, 978,883 shares (includes 510,046 shares owned of record by Ms. Johnson over which Mr. Boyd has voting power pursuant to an irrevocable proxy); Ms. Johnson, 510,046 shares (represents shares owned of record by Ms. Johnson over which Mr. Boyd has voting power pursuant an irrevocable proxy); Mr. Sarver, 30,000 shares (represents shares held by Mr. Sarvers spouse over which he disclaims all beneficial ownership). The table also includes the following: 174,650 shares subject to outstanding options exercisable within 60 days after March 31, 2005 and 1,228,946 shares subject to outstanding warrants exercisable within 60 days after March 31, 2005. Shares subject to outstanding stock options and warrants, which an individual has the right to acquire within 60 days after March 31, 2005, are deemed to be outstanding for the purpose of computing the percentage of outstanding securities of the class of stock owned by such individual or any group including such individual only. Beneficial ownership may be disclaimed as to certain of the securities. | |
Outstanding options reflected in the table are held as follows: Mr. Baker, 2,200 shares; Mr. Beach, 1,600 shares; Mr. Boyd, 1,000 shares; Mr. Gibbons, 20,000 shares; Mr. Hilton, 2,200 shares; Ms. Johnson, 2,200 shares; Mr. Lundy, 30,000 shares; Mr. Mack, 1,200 shares; Ms. Mahan, 32,250 shares; Mr. A. Marshall, 2,200 shares; Mr. T. Marshall, 2,200 shares; Dr. Nagy, 1,200 shares; Dr. Nave, 2,200 shares; Mr. Nigro, 2,200 shares; Mr. Snyder 2,200 shares; and Mr. Woodrum, 36,000 shares. Outstanding warrants reflected in the table are as follows: Mr. Baker, 68,274 shares; Mr. Hilton, 68,274 shares; Mr. Lundy, 34,137 shares; and Mr. Sarver, 1,013,880 shares. |
95
96
97
| the effect on employees, suppliers and customers; | |
| the economy of Nevada and the nation; | |
| the effect on the communities in which offices of the corporation are located; and | |
| the long-term as well as short-term interests of the corporation and its stockholders, including the possibility that these interests may be better served by continued independence. |
98
99
100
Number | |||||
Underwriters | of Shares | ||||
Sandler ONeill & Partners, L.P.
|
|||||
Keefe, Bruyette & Woods, Inc.
|
|||||
Total
|
Without | With | |||||||
Over-allotment | Over-allotment | |||||||
Per Share
|
||||||||
Total
|
101
| prevailing market and general economic conditions; | |
| our results of operations, including, but not limited to, our recent financial performance; | |
| our current financial position, including, but not limited to, our stockholders equity and the composition of assets and liabilities reflected on our balance sheet; | |
| our business potential and prospects in our principal market area; | |
| an assessment of our management; and | |
| the present state of our business. |
| Stabilizing transactions permit bids to purchase shares of common stock so long as the stabilizing bids do not exceed a specified maximum, and are engaged in for the purpose of preventing or retarding a decline in the market price of the common stock while the offering is in progress. | |
| Over-allotment transactions involve sales by the underwriters of shares of common stock in excess of the number of shares the underwriters are obligated to purchase. This creates a syndicate short position that may be either a covered short position or a naked short position. In a covered short position, the number of shares over-allotted by the underwriters is not greater than the number of shares that they may purchase in the over-allotment option. In a naked short position, the number of shares involved is greater than the number of shares in the over-allotment option. The underwriters may close out any short position by exercising their over-allotment option and/or purchasing shares in the open market. | |
| Syndicate covering transactions involve purchases of common stock in the open market after the distribution has been completed in order to cover syndicate short positions. In determining the source of shares to close out the short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared with the price at which they may purchase shares through exercise of the over-allotment option. If the underwriters sell more shares than could be covered by exercise of the over-allotment option and, therefore, have a naked short position, the position can be closed out only by buying shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that after pricing there could be downward pressure on the price of the shares in the open market that could adversely affect investors who purchase in the offering. | |
| Penalty bids permit the underwriters to reclaim a selling concession from a syndicate member when the common stock originally sold by that syndicate member is purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions. |
102
103
104
Report of Independent Registered Public Accounting Firm
|
F-2 | |||
Consolidated Balance Sheets at December 31, 2004 and 2003
|
F-3 | |||
Consolidated Statements of Income for the years ended
December 31, 2004, 2003 and 2002
|
F-4 | |||
Consolidated Statements of Stockholders Equity for the
years ended December 31, 2004, 2003 and 2002
|
F-5 | |||
Consolidated Statements of Cash Flows for the years ended
December 31, 2004, 2003 and 2002
|
F-6 | |||
Notes to Consolidated Financial Statements
|
F-7-35 |
F-1
/s/ McGladrey & Pullen, llp | |
McGLADREY & PULLEN, LLP |
F-2
F-3
F-4
F-5
F-6
Table of Contents
2004
2003
2002
($ in thousands, except per
share amounts)
$
59,311
$
36,792
$
31,290
30,373
15,938
6,616
341
346
354
537
169
63
293
578
794
90,855
53,823
39,117
12,123
8,158
7,394
4,472
1,671
354
1,586
1,475
1,085
1,539
1,494
938
19,720
12,798
9,771
71,135
41,025
29,346
3,914
5,145
1,587
67,221
35,880
27,759
2,896
2,333
1,998
1,644
1,203
967
435
792
719
19
(265
)
609
1,840
778
963
8,726
4,270
3,935
25,590
15,615
9,921
7,309
4,820
3,794
1,998
752
831
1,672
989
687
1,405
1,111
775
1,260
512
291
935
435
330
838
619
350
641
466
324
578
424
191
540
305
209
467
261
131
604
461
1,696
377
755
44,929
27,290
19,050
31,018
12,860
12,644
10,961
4,171
4,235
$
20,057
$
8,689
$
8,409
$
1.17
$
0.61
$
0.79
$
1.09
$
0.59
$
0.78
Table of Contents
Accumulated
Other
Common Stock
Additional
Comprehensive
Comprehensive
Paid-In
Treasury
Retained
Income
Description
Income
Shares Issued
Amount
Capital
Stock
Earnings
(Loss)
Total
($ in thousands, except per share amounts)
3,616,929
$
3,617
$
10,621
$
(2,372
)
$
24,111
$
(114
)
$
35,863
17,798
18
75
93
7,269,454
(3,634
)
3,634
3,004,098
21,363
21,363
$
8,409
8,409
8,409
2,116
(402
)
1,714
1,714
1,714
$
10,123
13,908,279
1
35,693
(2,372
)
32,520
1,600
67,442
108,042
434
434
711,310
4,884
4,884
2,297,560
1
20,622
20,623
100,000
900
900
(678
)
(678
)
(443,918
)
3,050
(3,050
)
$
8,689
8,689
8,689
(5,018
)
175
(4,843
)
(4,843
)
(4,843
)
$
3,846
16,681,273
2
62,533
38,159
(3,243
)
97,451
97,800
415
415
20,481
156
156
1,250,000
14,955
14,955
200,000
2,400
2,400
$
20,057
20,057
20,057
(1,850
)
(13
)
(1,863
)
(1,863
)
(1,863
)
$
18,194
18,249,554
$
2
$
80,459
$
$
58,216
$
(5,106
)
$
133,571
Table of Contents
2004
2003
2002
($ in thousands)
$
20,057
$
8,689
$
8,409
2,629
1,804
1,651
3,698
2,937
1,310
256
(536
)
(167
)
(63
)
3,914
5,145
1,587
(69
)
(1,470
)
(223
)
(1,970
)
(2,811
)
(1,316
)
(1,203
)
(967
)
(844
)
(2,732
)
(1,234
)
1,627
1,686
528
(29
)
326
(637
)
27,274
12,696
10,012
(32,706
)
(121,192
)
(4,044
)
35,241
11,416
4,492
(441,986
)
(506,246
)
(249,777
)
305,908
102,051
28,714
41,775
30,051
69,117
(2,177
)
246
(1,933
)
(10,908
)
(737
)
(455,457
)
(268,828
)
(57,997
)
(13,899
)
(7,071
)
(1,605
)
(24,000
)
(565,234
)
(794,481
)
(211,837
)
661,390
374,342
170,950
15,000
(89,467
)
288,661
50,000
571
178
93
14,955
25,507
21,364
(678
)
587,449
688,010
257,407
49,489
(93,775
)
55,582
65,908
159,683
104,101
$
115,397
$
65,908
$
159,683
$
19,601
$
11,675
$
9,391
$
10,129
$
4,855
$
4,416
$
2,400
$
900
$
$
$
16,862
$
$
$
9,750
$
$
$
3,050
$
Table of Contents
Note 1. | Nature of Business and Summary of Significant Accounting Policies |
Nature of business |
Use of estimates in the preparation of financial statements |
Principles of consolidation |
Cash and cash equivalents |
Securities |
F-7
Loans |
F-8
Interest and fees on loans |
Transfers of financial assets |
Federal Home Loan Bank stock |
Premises and equipment |
F-9
Years
31
5-10
6-10
Organization and start-up costs |
Other intangible assets |
Goodwill |
Income taxes |
Stock compensation plans |
F-10
2004
2003
2002
$
20,057
$
8,689
$
8,409
(696
)
(440
)
(87
)
33
9
$
19,394
$
8,258
$
8,322
$
1.17
$
0.61
$
0.79
1.13
0.58
0.78
1.09
0.59
0.78
1.05
0.56
0.77
2004 | 2003 | 2002 | ||||||||||
Expected life in years
|
7 | 7 | 7 | |||||||||
Risk-free interest rate
|
3.93 | % | 3.58 | % | 3.78 | % | ||||||
Dividends rate
|
None | None | None | |||||||||
Fair value per optional share
|
$ | 2.84 | $ | 1.96 | $ | 1.61 |
Off-balance sheet instruments |
Trust assets and investment advisory assets under management |
Fair values of financial instruments |
F-11
Cash and cash equivalents |
The carrying amounts reported in the consolidated balance sheets for cash and due from banks and federal funds sold approximate their fair value. |
Securities |
Fair values for securities are based on quoted market prices where available or on quoted markets for similar securities in the absence of quoted prices on the specific security. |
Federal Home Loan Bank stock |
The Companys subsidiary banks are members of the Federal Home Loan Bank (FHLB) system and maintain an investment in capital stock of the FHLB. No ready market exists for the FHLB stock and it has no quoted market value. |
Loans |
For variable rate loans that reprice frequently and that have experienced no significant change in credit risk, fair values are based on carrying values. Variable rate loans comprised approximately 58% and 54% of the loan portfolio at December 31, 2004 and 2003, respectively. Fair value for all other loans is estimated based on discounted cash flows using interest rates currently being offered for loans with similar terms to borrowers with similar credit quality. Prepayments prior to the repricing date are not expected to be significant. Loans are expected to be held to maturity and any unrealized gains or losses are not expected to be realized. |
Accrued interest receivable and payable |
The carrying amounts reported in the consolidated balance sheets for accrued interest receivable and payable approximate their fair value. |
Deposit liabilities |
The fair value disclosed for demand and savings deposits is by definition equal to the amount payable on demand at their reporting date (that is, their carrying amount). The carrying amount for variable-rate deposit accounts approximates their fair value. Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on |
F-12
certificates to a schedule of aggregated expected monthly maturities on these deposits. Substantially all of the Companys certificates of deposit at December 31, 2004 and 2003 mature in less than one year. Early withdrawals of fixed-rate certificates of deposit are not expected to be significant. |
Federal Home Loan Bank and other borrowings |
The fair values of the Companys borrowings are estimated using discounted cash flow analyses, based on the Companys incremental borrowing rates for similar types of borrowing arrangements. |
Junior subordinated debt |
The carrying amounts reported in the consolidated balance sheets for junior subordinated debt instruments approximate their fair value due to the variable nature of these instruments. |
Off-balance sheet instruments |
Fair values for the Companys off-balance sheet instruments (lending commitments and standby letters of credit) are based on quoted fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties credit standing. |
Earnings per share |
2004 | 2003 | 2002 | |||||||||||
Basic:
|
|||||||||||||
Net income applicable to common stock
|
$ | 20,057 | $ | 8,689 | $ | 8,409 | |||||||
Average common shares outstanding
|
17,189,687 | 14,313,611 | 10,677,736 | ||||||||||
Earnings per share
|
$ | 1.17 | $ | 0.61 | $ | 0.79 | |||||||
Diluted:
|
|||||||||||||
Net income applicable to common stock
|
$ | 20,057 | $ | 8,689 | $ | 8,409 | |||||||
Average common shares outstanding
|
17,189,687 | 14,313,611 | 10,677,736 | ||||||||||
Stock option adjustment
|
694,801 | 254,021 | 37,712 | ||||||||||
Stock warrant adjustment
|
520,632 | 45,541 | | ||||||||||
Average common shares outstanding
|
18,405,120 | 14,613,173 | 10,715,448 | ||||||||||
Earnings per share
|
$ | 1.09 | $ | 0.59 | $ | 0.78 | |||||||
F-13
Reclassifications |
Recent accounting pronouncements |
Note 2. | Mergers and Acquisition Activity |
F-14
Miller/Russell | Premier Trust | ||||||||
Cash
|
$ | 230 | $ | 363 | |||||
Furniture and equipment
|
67 | 18 | |||||||
Customer relationship intangible asset
|
950 | 673 | |||||||
Goodwill
|
3,946 | | |||||||
Other assets
|
463 | 103 | |||||||
Total assets acquired
|
5,656 | 1,157 | |||||||
Other liabilities assumed
|
849 | 140 | |||||||
Net assets acquired
|
$ | 4,807 | $ | 1,017 | |||||
Note 3. | Restrictions on Cash and Due from Banks |
F-15
Note 4.
Securities
2004
Gross
Gross
Amortized
Unrealized
Unrealized
Cost
Gains
(Losses)
Fair Value
$
3,501
$
$
(26
)
$
3,475
625
(8
)
617
7,290
464
7,754
118,133
3
(998
)
117,138
$
129,549
$
467
$
(1,032
)
$
128,984
$
118,798
$
7
$
(457
)
$
118,348
537,382
631
(8,046
)
529,967
10,781
(23
)
10,758
$
666,961
$
638
$
(8,526
)
$
659,073
2003
Gross
Gross
Amortized
Unrealized
Unrealized
Cost
Gains
(Losses)
Fair Value
$
3,014
$
5
$
$
3,019
1,142
4
(4
)
1,142
7,563
212
7,775
120,575
300
(1,239
)
119,636
$
132,294
$
521
$
(1,243
)
$
131,572
$
112,223
$
314
$
$
112,537
466,063
793
(5,985
)
460,871
10,329
(53
)
10,276
$
588,615
$
1,107
$
(6,038
)
$
583,684
F-16
Less Than Twelve
Months
Over Twelve Months
Gross
Gross
Unrealized
Fair
Unrealized
Fair
Losses
Value
Losses
Value
$
26
$
3,475
$
$
4
305
4
312
795
84,144
203
26,050
$
825
$
87,924
$
207
$
26,362
Less Than Twelve
Months
Over Twelve Months
Gross
Gross
Unrealized
Fair
Unrealized
Fair
Losses
Value
Losses
Value
$
457
$
105,589
$
$
4,641
359,352
3,405
99,699
23
10,758
$
5,121
$
475,699
$
3,405
$
99,699
F-17
Amortized
Fair
Cost
Value
$
1,000
$
999
2,601
2,579
680
727
6,510
6,924
625
617
118,133
117,138
$
129,549
$
128,984
$
$
66,800
66,489
24,289
24,191
27,709
27,668
537,382
529,967
10,781
10,758
$
666,961
$
659,073
Note 5. | Loans |
2004 | 2003 | |||||||
Construction and land development, including raw commercial land
of approximately $77,252 for 2004 and $42,872 for 2003
|
$ | 323,176 | $ | 195,182 | ||||
Commercial real estate
|
491,949 | 324,702 | ||||||
Residential real estate
|
116,360 | 42,773 | ||||||
Commercial and industrial
|
241,292 | 159,889 | ||||||
Consumer
|
17,682 | 11,802 | ||||||
Less: net deferred loan fees
|
(1,924 | ) | (1,270 | ) | ||||
1,188,535 | 733,078 | |||||||
Less:
|
||||||||
Allowance for loan losses
|
(15,271 | ) | (11,378 | ) | ||||
$ | 1,173,264 | $ | 721,700 | |||||
F-18
2004
2003
$
1,718
$
333
$
498
$
130
$
1,591
$
210
$
2
$
65
2004
2003
2002
$
1,553
$
434
$
3,289
$
61
$
6
$
158
2004 | 2003 | 2002 | |||||||||||
Balance, beginning
|
$ | 11,378 | $ | 6,449 | $ | 6,563 | |||||||
Provision charged to operating expense
|
3,914 | 5,145 | 1,587 | ||||||||||
Recoveries of amounts charged off
|
157 | 420 | 471 | ||||||||||
Less amounts charged off
|
(178 | ) | (1,373 | ) | (1,322 | ) | |||||||
Reclassification (to) from other liabilities
|
| 737 | (850 | ) | |||||||||
Balance, ending
|
$ | 15,271 | $ | 11,378 | $ | 6,449 | |||||||
F-19
Note 6.
Premises and Equipment
2004
2003
$
13,355
$
7,795
6,246
4,092
15,120
10,937
4,306
2,305
39,027
25,129
(9,663
)
(7,091
)
$
29,364
$
18,038
Note 7. | Income Tax Matters |
2004 | 2003 | |||||||||
Deferred tax assets:
|
||||||||||
Allowance for loan losses
|
$ | 5,500 | $ | 3,600 | ||||||
Unrealized loss on available for sale securities
|
2,800 | 1,700 | ||||||||
Organizational costs
|
200 | 300 | ||||||||
Accrual to cash adjustment
|
200 | | ||||||||
Deferred compensation
|
100 | 100 | ||||||||
Other
|
31 | 536 | ||||||||
Total deferred tax assets
|
8,831 | 6,236 | ||||||||
Deferred tax liabilities:
|
||||||||||
Deferred loan costs
|
(800 | ) | (700 | ) | ||||||
Premises and equipment
|
(1,700 | ) | (700 | ) | ||||||
Federal Home Loan Bank dividend
|
(300 | ) | | |||||||
Other
|
(82 | ) | (58 | ) | ||||||
Total deferred tax liabilities
|
(2,882 | ) | (1,458 | ) | ||||||
Net deferred tax asset
|
$ | 5,949 | $ | 4,778 | ||||||
F-20
2004
2003
2002
$
11,030
$
5,641
$
4,458
(69
)
(1,470
)
(223
)
$
10,961
$
4,171
$
4,235
2004 | 2003 | 2002 | |||||||||||
Computed expected tax expense
|
$ | 10,856 | $ | 4,501 | $ | 4,425 | |||||||
Increase (decrease) resulting from:
|
|||||||||||||
State income taxes, net of federal benefits
|
580 | 145 | | ||||||||||
Bank-owned life insurance
|
(420 | ) | (338 | ) | | ||||||||
Tax-exempt income
|
(116 | ) | (116 | ) | (124 | ) | |||||||
Nondeductible expenses
|
100 | 59 | 39 | ||||||||||
Other
|
(39 | ) | (80 | ) | (105 | ) | |||||||
$ | 10,961 | $ | 4,171 | $ | 4,235 | ||||||||
Note 8. | Deposits |
2005
|
$ | 227,854 | ||
2006
|
8,410 | |||
2007
|
1,048 | |||
2008
|
26 | |||
$ | 237,338 | |||
Note 9. | Borrowed Funds |
F-21
2004
2003
$
151,900
$
163,211
33,594
78,050
$
185,494
$
241,261
$
63,700
$
89,400
8,000
$
63,700
$
97,400
Year ending December 31:
|
||||
2005
|
$ | 185,494 | ||
2006
|
34,400 | |||
2007
|
29,300 | |||
$ | 249,194 | |||
Note 10. | Junior Subordinated Debt |
F-22
Note 11. | Commitments and Contingencies |
Contingencies |
Financial instruments with off-balance sheet risk |
2004 | 2003 | |||||||
Commitments to extend credit, including unsecured loan
commitments of $81,606 in 2004 and $66,940 in 2003
|
$ | 423,767 | $ | 262,595 | ||||
Credit card guarantees
|
5,421 | 5,553 | ||||||
Standby letters of credit, including unsecured letters of credit
of $1,264 in 2004 and $448 in 2003
|
5,978 | 3,919 | ||||||
$ | 435,166 | $ | 272,067 | |||||
F-23
Year ending December 31:
|
|||||
2005
|
$ | 3,545 | |||
2006
|
3,560 | ||||
2007
|
3,520 | ||||
2008
|
1,318 | ||||
2009
|
1,209 | ||||
Thereafter
|
5,340 | ||||
$ | 18,492 | ||||
F-24
Stock Options |
2004 | 2003 | 2002 | |||||||||||
Outstanding options, beginning of year
|
1,680,308 | 1,359,850 | 534,744 | ||||||||||
Granted
|
439,500 | 442,000 | 887,500 | ||||||||||
Exercised
|
(97,800 | ) | (108,042 | ) | (53,394 | ) | |||||||
Forfeited
|
(36,000 | ) | (13,500 | ) | (9,000 | ) | |||||||
Outstanding options, end of year
|
1,986,008 | 1,680,308 | 1,359,850 | ||||||||||
Options exercisable, end of year
|
642,908 | 450,208 | 370,450 | ||||||||||
Available to grant, end of year
|
354,600 | 258,100 | 686,600 | ||||||||||
Weighted-average exercise price:
|
|||||||||||||
Outstanding options, beginning of year
|
$ | 6.70 | $ | 5.87 | $ | 3.08 | |||||||
Options granted, during the year
|
$ | 12.17 | $ | 7.85 | $ | 7.03 | |||||||
Options exercised, during the year
|
$ | 4.24 | $ | 1.64 | $ | 1.74 | |||||||
Options outstanding, end of year
|
$ | 7.96 | $ | 6.70 | $ | 5.87 | |||||||
Options forfeited, during the year
|
$ | 3.79 | $ | 7.03 | $ | 1.39 | |||||||
Options exercisable, end of year
|
$ | 6.04 | $ | 4.90 | $ | 2.90 | |||||||
Weighted-average expiration (in years)
|
8.03 | 8.43 | 8.68 |
Outstanding Options | ||||||||||||
Weighted Average | Exercisable Options | |||||||||||
Remaining Contractual | ||||||||||||
Exercise Price | Number of Shares | Life (Years) | Number of Shares | |||||||||
$ 1.39
|
97,050 | 2.85 | 97,050 | |||||||||
$ 3.79
|
22,500 | 5.25 | 22,500 | |||||||||
$ 6.33
|
137,458 | 6.74 | 121,158 | |||||||||
$ 7.03
|
1,100,500 | 7.98 | 369,200 | |||||||||
$ 9.00
|
189,000 | 8.81 | 33,000 | |||||||||
$12.00
|
392,000 | 9.48 | | |||||||||
$13.20
|
37,500 | 9.83 | | |||||||||
$15.00
|
10,000 | 9.98 | |
F-25
2004 | 2003 | 2002 | |||||||||||
Rights outstanding, beginning of year
|
216,000 | 72,000 | 72,000 | ||||||||||
Granted
|
| | | ||||||||||
Forfeited
|
| | | ||||||||||
Exercised
|
(216,000 | ) | | | |||||||||
Shares granted through amendment of plan
|
| 144,000 | | ||||||||||
Rights outstanding, end of year
|
| 216,000 | 72,000 | ||||||||||
Rights exercisable, end of year
|
| 216,000 | 54,000 | ||||||||||
Available to grant, end of year
|
234,000 | 234,000 | 78,000 |
F-26
Note 13. | Regulatory Capital |
For Capital | ||||||||||||||||||||||||||
Adequacy | To Be | |||||||||||||||||||||||||
Actual | Purposes | Well Capitalized | ||||||||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||||||||||
As of December 31, 2004:
|
||||||||||||||||||||||||||
Total Capital (to Risk Weighted Assets)
|
||||||||||||||||||||||||||
BankWest of Nevada
|
$ | 105,544 | 10.4 | % | $ | 80,968 | 8.0 | % | $ | 101,210 | 10.0 | % | ||||||||||||||
Alliance Bank of Arizona
|
35,258 | 12.6 | % | 22,428 | 8.0 | % | 28,035 | 10.0 | % | |||||||||||||||||
Torrey Pines Bank
|
28,809 | 14.4 | % | 16,013 | 8.0 | % | 20,016 | 10.0 | % | |||||||||||||||||
Company
|
178,784 | 12.0 | % | 119,632 | 8.0 | % | 149,540 | 10.0 | % | |||||||||||||||||
Tier I Capital (to Risk Weighted Assets)
|
||||||||||||||||||||||||||
BankWest of Nevada
|
95,449 | 9.4 | % | 40,484 | 4.0 | % | 60,726 | 6.0 | % | |||||||||||||||||
Alliance Bank of Arizona
|
31,810 | 11.3 | % | 11,214 | 4.0 | % | 16,821 | 6.0 | % | |||||||||||||||||
Torrey Pines Bank
|
26,774 | 13.4 | % | 8,006 | 4.0 | % | 12,010 | 6.0 | % | |||||||||||||||||
Company
|
163,205 | 10.9 | % | 59,816 | 4.0 | % | 89,724 | 6.0 | % | |||||||||||||||||
Tier I Capital (to Average Assets)
|
||||||||||||||||||||||||||
BankWest of Nevada
|
95,449 | 6.1 | % | 62,970 | 4.0 | % | 78,713 | 5.0 | % | |||||||||||||||||
Alliance Bank of Arizona
|
31,810 | 10.3 | % | 12,394 | 4.0 | % | 15,492 | 5.0 | % | |||||||||||||||||
Torrey Pines Bank
|
26,774 | 10.9 | % | 9,830 | 4.0 | % | 12,288 | 5.0 | % | |||||||||||||||||
Company
|
163,205 | 7.7 | % | 85,321 | 4.0 | % | 106,651 | 5.0 | % |
F-27
For Capital
Adequacy
To Be
Actual
Purposes
Well Capitalized
Amount
Ratio
Amount
Ratio
Amount
Ratio
$
79,604
10.7
%
$
59,686
8.0
%
$
74,607
10.0
%
19,529
14.2
%
10,987
8.0
%
13,734
10.0
%
19,877
20.2
%
7,859
8.0
%
9,823
10.0
%
141,321
14.4
%
78,379
8.0
%
97,974
10.0
%
71,107
9.5
%
29,843
4.0
%
44,764
6.0
%
17,814
13.0
%
5,494
4.0
%
8,241
6.0
%
18,755
19.1
%
3,929
4.0
%
5,894
6.0
%
129,875
13.3
%
39,190
4.0
%
58,785
6.0
%
71,107
6.1
%
46,510
4.0
%
58,137
5.0
%
17,814
10.6
%
6,696
4.0
%
8,371
5.0
%
18,755
14.3
%
5,234
4.0
%
6,542
5.0
%
129,875
8.9
%
58,457
4.0
%
73,027
5.0
%
Note 14. | Employee Benefit Plan |
Note 15. | Transactions with Related Parties |
F-28
Loan transactions
2004
2003
$
18,222
$
8,500
44,380
21,351
(35,515
)
(11,629
)
$
27,087
$
18,222
Other transactions |
Note 16. | Fair Value of Financial Instruments |
2004 | 2003 | ||||||||||||||||
Carrying | Carrying | ||||||||||||||||
Amount | Fair Value | Amount | Fair Value | ||||||||||||||
Financial assets:
|
|||||||||||||||||
Cash and due from banks
|
$ | 92,282 | $ | 92,282 | $ | 61,893 | $ | 61,893 | |||||||||
Federal funds sold
|
23,115 | 23,115 | 4,015 | 4,015 | |||||||||||||
Securities held to maturity
|
129,549 | 128,984 | 132,294 | 131,572 | |||||||||||||
Securities available for sale
|
659,073 | 659,073 | 583,684 | 583,684 | |||||||||||||
Federal Home Loan Bank stock
|
15,097 | 15,097 | 12,628 | 12,628 | |||||||||||||
Loans, net
|
1,173,264 | 1,170,202 | 721,700 | 723,572 | |||||||||||||
Accrued interest receivable
|
8,359 | 8,359 | 6,389 | 6,389 | |||||||||||||
Financial liabilities:
|
|||||||||||||||||
Deposits
|
1,756,036 | 1,756,297 | 1,094,646 | 1,095,036 | |||||||||||||
Accrued interest payable
|
2,439 | 2,439 | 2,320 | 2,320 | |||||||||||||
Other borrowed funds
|
249,194 | 248,048 | 338,661 | 339,462 | |||||||||||||
Junior subordinated debt
|
30,928 | 30,928 | 30,928 | 30,928 |
Interest rate risk |
F-29
Fair value of commitments |
Note 17. | Parent Company Financial Information |
F-30
2004
2003
2002
$
97
$
$
1,539
1,494
938
(1,442
)
(1,494
)
(938
)
22,096
10,102
9,366
330
212
383
218
512
713
430
512
19,941
8,178
7,916
116
511
493
$
20,057
$
8,689
$
8,409
F-31
2004
2003
2002
$
20,057
$
8,689
$
8,409
(22,096
)
(10,102
)
(9,366
)
(92
)
336
(1,324
)
129
436
(104
)
(2,002
)
(641
)
(2,385
)
(27,623
)
(39,309
)
(27,623
)
(39,309
)
15,000
571
178
93
14,955
25,507
21,364
(678
)
15,526
25,007
36,457
(14,099
)
(14,943
)
34,072
21,284
36,227
2,155
$
7,185
$
21,284
$
36,227
Note 18. | Segment Information |
F-32
BankWest
Alliance Bank
Torrey Pines
Intersegment
Consolidated
of Nevada
of Arizona
Bank
Other
Eliminations
Company
$
1,578,332
$
332,805
$
257,516
$
173,748
$
(165,552
)
$
2,176,849
790,312
234,141
164,082
1,188,535
(9,857
)
(3,416
)
(1,998
)
(15,271
)
780,455
230,725
162,084
1,173,264
1,287,615
277,231
199,382
(8,192
)
1,756,036
91,361
31,189
26,405
140,634
(156,018
)
133,571
5
5
3
13
$
54,215
$
10,225
$
8,141
$
(1,444
)
$
(2
)
$
71,135
1,417
1,657
840
3,914
52,798
8,568
7,301
(1,444
)
(2
)
67,221
4,851
774
604
25,149
(22,652
)
8,726
(27,286
)
(8,074
)
(6,301
)
(3,705
)
437
(44,929
)
30,363
1,268
1,604
20,000
(22,217
)
31,018
10,033
422
584
(78
)
10,961
$
20,330
$
846
$
1,020
$
20,078
$
(22,217
)
$
20,057
F-33
BankWest
Alliance Bank
Torrey Pines
Intersegment
Consolidated
of Nevada
of Arizona
Bank
Other
Eliminations
Company
$
1,244,549
$
187,314
$
157,156
$
130,953
$
(143,199
)
$
1,576,773
557,868
106,239
68,971
733,078
(8,460
)
(1,759
)
(1,159
)
(11,378
)
549,408
104,480
67,812
721,700
917,983
115,726
82,265
(21,328
)
1,094,646
69,114
17,117
18,394
98,353
(105,527
)
97,451
5
3
2
10
$
37,615
$
3,137
$
1,768
$
(1,494
)
$
(1
)
$
41,025
2,227
1,759
1,159
5,145
35,388
1,378
609
(1,494
)
(1
)
35,880
4,043
245
102
10,102
(10,222
)
4,270
(20,016
)
(4,319
)
(2,645
)
(430
)
120
(27,290
)
19,415
(2,696
)
(1,934
)
8,178
(10,103
)
12,860
6,352
(981
)
(689
)
(511
)
4,171
$
13,063
$
(1,715
)
$
(1,245
)
$
8,689
$
(10,103
)
$
8,689
$
869,186
$
$
$
99,723
$
(96,835
)
$
872,074
464,355
464,355
(6,449
)
(6,449
)
457,906
457,906
756,531
(36,227
)
720,304
59,680
67,442
(59,680
)
67,442
5
5
$
30,284
$
$
$
(938
)
$
$
29,346
1,587
1,587
28,697
(938
)
27,759
3,935
9,366
(9,366
)
3,935
(18,538
)
(512
)
(19,050
)
14,094
7,916
(9,366
)
12,644
4,728
(493
)
4,235
$
9,366
$
$
$
8,409
$
(9,366
)
$
8,409
F-34
Note 19.
Quarterly Data (Unaudited)
Years Ended December 31,
2004
2003
Fourth
Third
Second
First
Fourth
Third
Second
First
Quarter
Quarter
Quarter
Quarter
Quarter
Quarter
Quarter
Quarter
$
27,075
$
24,145
$
20,758
$
18,877
$
16,925
$
14,396
$
11,992
$
10,510
5,936
5,148
4,458
4,178
3,937
3,329
2,893
2,639
21,139
18,997
16,300
14,699
12,988
11,067
9,099
7,871
751
1,256
415
1,492
1,281
1,813
1,184
867
20,388
17,741
15,885
13,207
11,707
9,254
7,915
7,004
2,552
2,619
1,991
1,564
1,097
1,210
1,062
901
(12,873
)
(11,740
)
(10,624
)
(9,692
)
(9,169
)
(6,425
)
(6,277
)
(5,419
)
10,067
8,620
7,252
5,079
3,635
4,039
2,700
2,486
3,638
3,071
2,602
1,650
1,268
1,252
816
835
$
6,429
$
5,549
$
4,650
$
3,429
$
2,367
$
2,787
$
1,884
$
1,651
$
0.35
$
0.33
$
0.28
$
0.21
$
0.16
$
0.20
$
0.13
$
0.12
$
0.33
$
0.31
$
0.26
$
0.19
$
0.15
$
0.19
$
0.13
$
0.12
Note 20. | Subsequent Events |
F-35
II-1
II-2
II-3
II-4
II-5
Item 13.
Other Expenses of Issuance And Distribution.
$
$
$
$
$
$
$
$
$
$
Item 14.
Indemnification of Directors and Officers
Table of Contents
Item 15.
Recent Sales of Unregistered Securities
Total
Date
Options
Option
Purchase
Name
Exercised
Exercised
Price
Price
2/28/2002
2,250
$
1.39
$
3,128
7/31/2002
1,500
1.39
2,085
7/31/2002
9,000
1.39
12,510
8/31/2002
18,000
1.39
25,020
4/30/2002
15,000
1.39
20,850
4/30/2002
150
1.39
209
4/30/2002
3,744
1.39
5,204
7/31/2002
3,750
6.33
23,738
11/3/2003
9,000
1.39
12,510
11/3/2003
90,000
1.39
125,100
9/5/2003
1,800
6.33
11,394
5/1/2003
3,242
6.33
20,522
9/2/2003
500
1.39
695
5/1/2003
3,000
1.39
4,170
12/26/2003
500
6.33
3,165
12/22/2004
1,000
7.03
7,030
5/18/2004
600
7.03
4,218
4/14/2004
15,000
1.39
20,850
6/17/2004
15,000
1.39
20,850
4/29/2004
1,800
6.33
11,394
5/4/2004
6,750
1.39
9,383
2/20/2004
2,500
6.33
15,825
6/2/2004
8,000
6.33
50,640
8/9/2004
2,900
6.33
18,357
4/23/2004
7,500
7.03
52,725
10/28/2004
7,500
7.03
52,725
9/15/2004
2,000
1.39
2,780
9/13/2004
3,400
1.39
4,726
4/9/2004
3,000
1.39
4,170
12/17/2004
1,000
1.39
1,390
4/20/2004
500
6.33
3,165
8/6/2004
750
6.33
4,748
8/13/2004
1,200
6.33
7,596
10/25/2004
1,800
7.03
12,654
12/13/2004
600
7.03
4,218
2/20/2004
15,000
7.03
105,450
1/3/2005
200
7.03
1,406
2/14/2005
600
7.03
4,218
1/11/2005
1,800
6.33
11,394
1/31/2005
5,108
6.33
32,334
Table of Contents
Total
Date
Options
Option
Purchase
Name
Exercised
Exercised
Price
Price
1/31/2005
2,250
$
6.33
$
14,243
2/24/2005
15,750
1.39
21,893
2/24/2005
1,500
6.33
9,495
2/24/2005
2,400
7.03
16,872
1/3/2005
10,000
1.39
13,900
3/10/2005
1,000
6.33
6,330
1/24/2005
2,500
9.00
22,500
3/16/2005
15,000
7.03
105,450
3/31/2005
1,656
7.03
11,642
Total
Date
Warrants
Warrant
Purchase
Name
Exercised
Exercised
Price
Price
6/23/2004
20,481.00
$
7.62
$
156,065
1/31/2005
6,828.00
7.62
52,029
1/31/2005
6,828.00
7.62
52,029
3/7/2005
23,893.00
7.62
182,065
Table of Contents
Item 16.
Exhibits and Financial Statement Schedules.
1
.1
Form of Underwriting Agreement.*
3
.1
Amended and Restated Articles of Incorporation.*
3
.2
Amended and Restated By-Laws.*
4
.1
Form of common stock certificate.*
5
.1
Opinion of Hogan & Hartson L.L.P.*
9
.1
Voting Agreement by and among Western Alliance Bancorporation,
William S. Boyd, as trustee of the William S. Boyd
Trust and the stockholders of Western Alliance Bancorporation
who are signatories thereto.*
10
.1
Western Alliance Bancorporation 2005 Stock Incentive Plan.*
10
.2
Form of Western Alliance Bancorporation 2005 Stock Incentive
Plan Agreement.*
10
.3
Form of BankWest of Nevada Incentive Stock Option Plan Agreement.
10
.4
Form of Western Alliance Incentive Stock Option Plan Agreement.
10
.5
Form of Western Alliance 2002 Stock Option Plan Agreement.
10
.6
Form of Western Alliance 2002 Stock Option Plan Agreement (with
double trigger acceleration clause)
10
.7
Form of Indemnification Agreement by and between Western
Alliance Bancorporation and the following directors and
officers: Messrs. Boyd, Froeschle, Lundy, A. Marshall,
Nagy, Sarver, Snyder and Woodrum, Drs. Nagy and Nave, and Mses.
Boyd Johnson and Mahan.
10
.8
Form of Non-Competition Agreement by and between Western
Alliance Bancorporation and the following directors and
officers: Messrs. Froeschle, Sarver, Lundy, Snyder and
Woodrum.
10
.9
Form of Warrant to purchase shares of Western Alliance
Bancorporation common stock, dated December 12, 2002,
together with a schedule of warrantholders.
10
.10
Directors Fee Schedule.
10
.11
Summary of Compensation Arrangements with Named Executive
Officers.
21
.1
List of Subsidiaries of Western Alliance Bancorporation.
23
.1
Consent of McGladrey & Pullen, LLP.
23
.2
Consent of Hogan & Hartson L.L.P. (included in
Exhibit 5).*
24
.1
Power of Attorney (included on Signature Page).
*
To be filed by amendment.
(b)
Financial Statement Schedules
All schedules for which provision is made in the applicable
accounting regulation of the SEC are not required under the
related instructions or are inapplicable and therefore have been
omitted.
Item 17.
Undertakings.
Table of Contents
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities
Act shall be deemed to be part of this registration statement as
of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at the time shall
be deemed to be the initial
bona fide
offering thereof.
Table of Contents
II-6
II-7
WESTERN ALLIANCE
BANCORPORATION
By: /s/
Robert Sarver
Robert Sarver
Chairman of the Board; President and
Chief Executive Officer
Name
Title
Date
/s/
Robert Sarver
Chairman of the Board; President and Chief Executive Officer
(Principal Executive Officer)
April 27, 2005
/s/
Dale Gibbons
Executive Vice President and Chief Financial Officer (Principal
Financial Officer)
April 27, 2005
/s/
Terry A. Shirey
Vice President and Controller
(Principal Accounting Officer)
April 27, 2005
/s/
Paul Baker
Director
April 27, 2005
/s/
Bruce Beach
Director
April 27, 2005
/s/
William S. Boyd
Director
April 27, 2005
Table of Contents
Name
Title
Date
/s/
Steve Hilton
Director
April 27, 2005
/s/
Marianne Boyd
Johnson
Director
April 27, 2005
/s/
Cary Mack
Director
April 27, 2005
/s/
Arthur Marshall
Director
April 27, 2005
/s/
Todd Marshall
Director
April 27, 2005
/s/
M. Nafees Nagy,
M.D.
Director
April 27, 2005
/s/
James Nave, D.V.M
Director
April 27, 2005
/s/
Edward Nigro
Director
April 27, 2005
/s/
Donald Snyder
Director
April 27, 2005
/s/
Larry Woodrum
Director
April 27, 2005
Table of Contents
1
.1
Form of Underwriting Agreement.*
3
.1
Amended and Restated Articles of Incorporation.*
3
.2
Amended and Restated By-Laws.*
4
.1
Form of common stock certificate.*
5
.1
Opinion of Hogan & Hartson L.L.P.*
9
.1
Voting Agreement by and among Western Alliance Bancorporation,
William S. Boyd, as trustee of the William S. Boyd
Trust and the stockholders of Western Alliance Bancorporation
who are signatories thereto.*
10
.1
Western Alliance Bancorporation 2005 Stock Incentive Plan.*
10
.2
Form of Western Alliance Bancorporation 2005 Stock Incentive
Plan Agreement.*
10
.3
Form of BankWest of Nevada Incentive Stock Option Plan Agreement.
10
.4
Form of Western Alliance Incentive Stock Option Plan Agreement.
10
.5
Form of Western Alliance 2002 Stock Option Plan Agreement.
10
.6
Form of Western Alliance 2002 Stock Option Plan Agreement (with
double trigger acceleration clause)
10
.7
Form of Indemnification Agreement by and between Western
Alliance Bancorporation and the following directors and
officers: Messrs. Boyd, Froeschle, Lundy, A. Marshall,
Nigro, Sarver, Snyder and Woodrum, Drs. Nagy and Nave, and Mses.
Boyd Johnson and Mahan.
10
.8
Form of Non-Competition Agreement by and between Western
Alliance Bancorporation and the following directors and
officers: Messrs. Froeschle, Sarver, Lundy, Snyder and
Woodrum.
10
.9
Form of Warrant to purchase shares of Western Alliance
Bancorporation common stock, dated December 12, 2002,
together with a schedule of warrantholders.
10
.10
Directors Fee Schedule.
10
.11
Summary of Compensation Arrangements with Named Executive
Officers.
21
.1
List of Subsidiaries of Western Alliance Bancorporation.
23
.1
Consent of McGladrey & Pullen, LLP.
23
.2
Consent of Hogan & Hartson L.L.P. (included in
Exhibit 5).*
24
.1
Power of Attorney (included on Signature Page).
*
To be filed by amendment.
Exhibit 10.3
BANKWEST NEVADA CORPORATION INCENTIVE STOCK OPTION PLAN
GRANT OF INCENTIVE STOCK OPTION
Date of Grant: , 19
THIS GRANT, dated as of the date of grant first stated above (the Date of Grant), is delivered by BANKWEST NEVADA CORPORATION, a Nevada banking corporation (BANKWEST ) to (the Grantee), who is an employee and/or officer of BANKWEST or one of its subsidiaries (the Grantees employer is sometimes referred to herein as the Employer).
WHEREAS, the Board of Directors of BANKWEST (the Board) on , 1997, adopted, with subsequent stockholder approval, THE BANKWEST NEVADA CORPORATION INCENTIVE STOCK OPTION PLAN (the Plan);
WHEREAS, the Plan provides for the granting of incentive stock options by a committee to be appointed by the Board (the Committee) to officers and other key employees of BANKWEST or any subsidiary of BANKWEST (excluding all persons who are not employees of BANKWEST) to purchase, or to exercise certain rights with respect to, shares of the Common Stock of BANKWEST, par value $ per share (the Stock), in accordance with the terms and provisions thereof; and
WHEREAS, the Committee considers the Grantee to be a person who is eligible for a grant of incentive stock options under the Plan, and has determined that it would be in the best interest of BANKWEST to grant the incentive stock options documented herein.
NOW, THEREFORE, the parties hereto, in consideration of the rights and obligations hereunder and other good and valuable consideration, the receipt of which is hereby acknowledged, and intending to be legally bound hereby, agree as follows:
I. GRANT OF OPTION
Subject to the terms and conditions hereinafter set forth, BANKWEST, with the approval and at the direction of the Committee, hereby grants to the Grantee, as of the Date of Grant, an option to purchase up to shares of Stock at a price of $ per share, the fair market value. Such option is hereinafter referred to as the Option and the shares of stock purchasable upon exercise of the Option are hereinafter sometimes referred to as the Option Shares. The Option is intended by the parties hereto to be, and shall be treated as, an incentive stock option (as such term is defined under Section 422 of the Internal Revenue Code of 1986).
II. INSTALLMENT EXERCISE
Subject to such further limitations as are provided herein, the Option shall become exercisable in three (3) installments, the Grantee having the right hereunder to purchase from BANKWEST the following number of Option Shares upon exercise of the Option, on and after the following dates, in cumulative fashion:
(a) | on and after the second anniversary of the Date of Grant, up to one-third (ignoring fractional shares) of the total number of Option Shares; | |||
(b) | on and after the third anniversary of the Date of Grant, up to an additional one-third (ignoring fractional shares) of the total number of Option Shares; and | |||
(c) | on and after the fourth anniversary of the Date of Grant, the remaining Option Shares. |
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III. TERMINATION OF OPTION
A. The Option and all rights hereunder with respect thereto, to the extent such rights shall not have been exercised, shall terminate and become null and void after the expiration of ten (10) years from the Date of Grant (the Option Term).
B. Upon the occurrence of the Grantees ceasing for any reason to be employed by the Employer (such occurrence being a termination of the Grantees employment), the Option, to the extent not previously exercised, shall terminate and become null and void following the expiration of ninety (90) days from the date of such termination of the Grantees employment, except in a case where the termination of the Grantees employment is by reason of retirement, disability or death. Upon a termination of the Grantees employment by reason of retirement, disability or death, the Option may be exercised during the following periods, but only to the extent that the Option was outstanding and exercisable on any such date of retirement, disability or death: (i) the one-year period following the date of such termination of the Grantees employment in the case of a disability [within the meaning of Section 22 (e) (3) of the Code], (ii) the six-month period following the date of issuance of letter testamentary or letters of administration to the executor or administrator of a deceased Grantee, in the case of the Grantees death during his employment by the Employer, but not later than one year after the Grantees death, and (iii) the three-month period following the date of such termination in the case of retirement on or after attainment of age 65, or in the case of disability other than as described in (i) above. In no event, however, shall any such period extend beyond the Option Term.
3
C. In the event of the death of the Grantee, the Option may be exercised by the Grantees legal representative(s), but only to the extent that the Option would otherwise have been exercisable by the Grantee.
D. A transfer of the Grantees employment between BANKWEST and any subsidiary of BANKWEST, or between any subsidiaries of BANKWEST, shall not be deemed to be a termination of the Grantees employment.
E. Notwithstanding any other provisions set forth herein or in the Plan, if the Grantee shall (i) commit any act of malfeasance or wrongdoing affecting BANKWEST or any subsidiary of BANKWEST, (ii) breach any covenant not to compete, or employment contract, with BANKWEST or any subsidiary of BANKWEST, or (iii) engage in conduct that would warrant the Grantees discharge for cause (excluding general dissatisfaction with the performance of the Grantees duties, but including any act of disloyalty or any conduct clearly tending to bring discredit upon BANKWEST or any subsidiary of BANKWEST), any unexercised portion of the Option shall immediately terminate and be void.
IV. EXERCISE OF OPTIONS
A. The Grantee may exercise the Option with respect to all or any part of the number of Option Shares then exercisable hereunder by giving the Secretary of BANKWEST written notice of intent to exercise. The notice of exercise shall specify the number of Option Shares as to which the Option is to be exercised and the date of exercise thereof, which date shall be at least five days after the giving of such notice unless an earlier time shall have been mutually agreed upon.
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B. Full payment (in U.S. dollars) by the Grantee of the option price for the Option Shares purchased shall be made on or before the exercise date specified in the notice of exercise in cash, or, with prior written consent of the Committee, in whole or in part through the surrender of previously acquired shares of Stock at their fair market value on the exercise date.
On the exercise date specified in the Grantees notice or as soon thereafter as is practicable, BANKWEST shall cause to be delivered to the Grantee, a certificate or certificates for the Option Shares then being purchased (out of theretofore unissued Stock or reacquired Stock, as BANKWEST may elect) upon full payment for such Option Shares. The obligation of BANKWEST to deliver Stock shall, however, be subject to the condition that if at any time the Committee shall determine in its discretion that the listing, registration or qualification of the Option or the Option Shares upon any securities 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 Option or the issuance or purchase of Stock thereunder, the Option may not be exercised in whole or in part unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Committee.
C. If the Grantee fails to pay for any of the Option Shares specified in such notice or fails to accept delivery thereof, the Grantees right to purchase such Option Shares may be terminated by BANKWEST. The date specified in the Grantees notice as the date of exercise shall be deemed the date of exercise of the Option, provided that payment in full for the Option Shares to be purchased upon such exercise shall have been received by such date.
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V. ADJUSTMENT OF AND CHANGES IN STOCK OF BANKWEST
In the event of a reorganization, recapitalization, change of shares, stock split, spin-off, stock dividend, reclassification, subdivision or combination of shares, merger, consolidation, rights offering, or any other change in the corporate structure or shares of capital stock of BANKWEST, the Committee shall make such adjustment as it deems appropriate in the number and kind of shares of Stock subject to the Option or in the option price; provided, however, that no such adjustment shall give the Grantee any additional benefits under the Option.
VI. FAIR MARKET VALUE
As used herein, the fair market value of a share of Stock shall be the average of the high and low sale prices per share of Stock on any national stock exchange, composite tape or other recognized market source, as determined by the Committee, on applicable date of reference hereunder, or if there is no sale on such date, then the average of such high and low sale prices on the last previous day on which a sale is reported. In the absence of an established market of the type described above for the Common Stock, the Fair Market Value thereof shall be determined by the committee in good faith.
VII. NO RIGHTS OF STOCKHOLDERS
During the Grantees lifetime, the Option hereunder shall be exercisable only by the Grantee or any guardian or legal representative of the Grantee, and the Option shall not be transferable except, in case of the death of the Grantee, by will or the laws of descent and distribution, nor shall the Option be subject to attachment, execution or other similar process. In the event of (a) any attempt by the Grantee to alienate, assign, pledge, hypothecate or otherwise dispose of the Option, except as provided for herein, or (b) the levy of any attachment, execution or similar process upon
6
the rights or interest hereby conferred, BANKWEST may terminate the Option by notice to the Grantee and it shall thereupon become null and void.
IX. EMPLOYMENT NOT AFFECTED
The granting of the Option or its exercise shall not be construed as granting to the Grantee any right with respect to continuance of employment of the Employer. Except as may otherwise be limited by a written agreement between the Employer and the Grantee, the right of the Employer to terminate at will the Grantees employment with it at any time (whether by dismissal, discharge, retirement or otherwise) is specifically reserved by BANKWEST, as the Employer or on behalf of the Employer (whichever the case may be), and acknowledged by the Grantee.
X. AMENDMENT OF OPTION
The Option may be amended by the Board or the Committee at any time (i) if the Board or the Committee determines, in its sole discretion, that amendment is necessary or advisable in the light of any addition to or change in the Internal Revenue Code of 1986 or in the regulations issued thereunder, or any federal or state securities law or other law or regulation, which change occurs after the Date of Grant and by its terms applies to the Option; or (ii) other than in the circumstances described in clause (i), with the consent of the Grantee.
XI. NOTICE
Any notice to BANKWEST provided for in this instrument shall be addressed to in care of its Secretary at its executive office at 3500 West Sahara Avenue, Las Vegas, Nevada 89102, and any notice to the Grantee shall be addressed to the Grantee at the current address shown on the payroll records of the Employer. Any notice shall be deemed to be duly given if and when properly addressed and posted by registered or certified mail, postage prepaid.
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XII. INCORPORATION OF PLAN BY REFERENCE
The Option is granted pursuant to the terms of the Plan, the terms of which are incorporated herein by reference, and the Option shall in all respects be interpreted in accordance with the Plan. The Committee shall interpret and construe the Plan and this instrument, and its interpretations and determinations shall be conclusive and binding on the parties hereto and any other person claiming an interested hereunder, with respect to any issue arising hereunder or thereunder.
XIII. GOVERNING LAW
The validity, construction, interpretation and effect of this instrument shall exclusively be governed by and determined in accordance with the laws of the State of Nevada, except to the extent preempted by federal law, which shall to such extent govern.
IN WITNESS WHEREOF, BANKWEST has caused its duly authorized officers to execute and attest this Grant of Incentive Stock Option, and to apply the corporate seal hereto, and the Grantee has placed his or her signature hereon, effective as of the Date of Grant.
BANKWEST NEVADA CORPORATION, a Nevada | ||||
banking corporation | ||||
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By | |||
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LARRY L. WOODRUM, President | |||
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By | |||
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ROBERT E. CLARK, Secretary |
ACCEPTED AND AGREED TO: | ||||
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By
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Grantee |
8
Exhibit 10.4
WESTERN ALLIANCE BANCORPORATION INCENTIVE STOCK OPTION PLAN
GRANT OF INCENTIVE STOCK OPTION
Date of Grant: , 2004
THIS GRANT, dated as of the date of grant first stated above (the Date of Grant), is delivered by WESTERN ALLIANCE BANCORPORATION, a Nevada banking corporation (WESTERN ALLIANCE) to (the Grantee), who is an employee and/or officer of WESTERN ALLIANCE or one of its subsidiaries (the Grantees employer is sometimes referred to herein as the Employer).
WHEREAS, the Board of Directors of WESTERN ALLIANCE (the Board) on March 19, 1997, adopted, with subsequent stockholder approval, THE WESTERN ALLIANCE BANCORPORATION INCENTIVE STOCK OPTION PLAN (the Plan);
WHEREAS, the Plan provides for the granting of incentive stock options by a committee to be appointed by the Board (the Committee) to officers and other key employees of WESTERN ALLIANCE or any subsidiary of WESTERN ALLIANCE (excluding all persons who are not employees of WESTERN ALLIANCE) to purchase, or to exercise certain rights with respect to, shares of the Common Stock of WESTERN ALLIANCE, par value $.001 per share (the Stock), in accordance with the terms and provisions thereof; and
WHEREAS, the Committee considers the Grantee to be a person who is eligible for a grant of incentive stock options under the Plan, and has determined that it would be in the best interest of WESTERN ALLIANCE to grant the incentive stock options documented herein.
1
NOW, THEREFORE, the parties hereto, in consideration of the rights and obligations hereunder and other good and valuable consideration, the receipt of which is hereby acknowledged, and intending to be legally bound hereby, agree as follows:
I. GRANT OF OPTION
Subject to the terms and conditions hereinafter set forth, WESTERN ALLIANCE, with the approval and at the direction of the Committee, hereby grants to the Grantee, as of the Date of Grant, an option to purchase up to shares of Stock at a price of $ per share, the fair market value. Such option is hereinafter referred to as the Option and the shares of stock purchasable upon exercise of the Option are hereinafter sometimes referred to as the Option Shares. The Option is intended by the parties hereto to be, and shall be treated as, an incentive stock option (as such term is defined under Section 422 of the Internal Revenue Code of 1986).
II. INSTALLMENT EXERCISE
Subject to such further limitations as are provided herein, the Option shall become exercisable in five (5) installments, the Grantee having the right hereunder to purchase from WESTERN ALLIANCE the following number of Option Shares upon exercise of the Option, on and after the following dates:
(a) | on and after the first anniversary of the Date of Grant, up to 20% (ignoring fractional shares) of the total number of Option Shares; | |||
(b) | on and after the second anniversary of the Date of Grant, up to an additional 20% of the total number of Option Shares; and | |||
(c) | on and after the third anniversary of the Date of Grant, up to an additional 20% of the total number of Option Shares; and |
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(d) | on and after the fifth anniversary of the Date of Grant, the remaining Option Shares. |
III. TERMINATION OF OPTION
A. The Option and all rights hereunder with respect thereto, to the extent such rights shall not have been exercised, shall terminate and become null and void after the expiration of ten (10) years from the Date of Grant (the Option Term).
B. Upon the occurrence of the Grantees ceasing for any reason to be employed by the Employer (such occurrence being a termination of the Grantees employment), the Option, to the extent not previously exercised, shall terminate and become null and void following the expiration of ninety (90) days from the date of such termination of the Grantees employment, except in a case where the termination of the Grantees employment is by reason of retirement, disability or death. Upon a termination of the Grantees employment by reason of retirement, disability or death, the Option may be exercised during the following periods, but only to the extent that the Option was outstanding and exercisable on any such date of retirement, disability or death: (i) the one-year period following the date of such termination of the Grantees employment in the case of a disability [within the meaning of Section 22 (e) (3) of the Code], (ii) the six-month period following the date of issuance of letter testamentary or letters of administration to the executor or administrator of a deceased Grantee, in the case of the Grantees death during his employment by the
3
Employer, but not later than one year after the Grantees death, and (iii) the three-month period following the date of such termination in the case of retirement on or after attainment of age 65, or in the case of disability other than as described in (i) above. In no event, however, shall any such period extend beyond the Option Term.
C. In the event of the death of the Grantee, the Option may be exercised by the Grantees legal representative(s), but only to the extent that the Option would otherwise have been exercisable by the Grantee.
D. A transfer of the Grantees employment between WESTERN ALLIANCE and any subsidiary of WESTERN ALLIANCE, or between any subsidiaries of WESTERN ALLIANCE, shall not be deemed to be a termination of the Grantees employment.
E. Notwithstanding any other provisions set forth herein or in the Plan, if the Grantee shall (i) commit any act of malfeasance or wrongdoing affecting WESTERN ALLIANCE or any subsidiary of WESTERN ALLIANCE, (ii) breach any covenant not to compete, or employment contract, with WESTERN ALLIANCE or any subsidiary of WESTERN ALLIANCE, or (iii) engage in conduct that would warrant the Grantees discharge for cause (excluding general dissatisfaction with the performance of the Grantees duties, but including any act of disloyalty or any conduct clearly tending to bring discredit upon WESTERN ALLIANCE or any subsidiary of WESTERN ALLIANCE), any unexercised portion of the Option shall immediately terminate and be void.
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IV. EXERCISE OF OPTIONS
A. The Grantee may exercise the Option with respect to all or any part of the number of Option Shares then exercisable hereunder by giving the Secretary of WESTERN ALLIANCE written notice of intent to exercise. The notice of exercise shall specify the number of Option Shares as to which the Option is to be exercised and the date of exercise thereof, which date shall be at least five days after the giving of such notice unless an earlier time shall have been mutually agreed upon.
B. Full payment (in U.S. dollars) by the Grantee of the option price for the Option Shares purchased shall be made on or before the exercise date specified in the notice of exercise in cash, or, with prior written consent of the Committee, in whole or in part through the surrender of previously acquired shares of Stock at their fair market value on the exercise date.
On the exercise date specified in the Grantees notice or as soon thereafter as is practicable, WESTERN ALLIANCE shall cause to be delivered to the Grantee, a certificate or certificates for the Option Shares then being purchased (out of theretofore unissued Stock or reacquired Stock, as WESTERN ALLIANCE may elect) upon full payment for such Option Shares. The obligation of WESTERN ALLIANCE to deliver Stock shall, however, be subject to the condition that if at any time the Committee shall determine in its discretion that the listing, registration or qualification of the Option or the Option Shares upon any securities 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 Option or the issuance or purchase of Stock thereunder, the Option may not be
5
exercised in whole or in part unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Committee.
C. If the Grantee fails to pay for any of the Option Shares specified in such notice or fails to accept delivery thereof, the Grantees right to purchase such Option Shares may be terminated by WESTERN ALLIANCE. The date specified in the Grantees notice as the date of exercise shall be deemed the date of exercise of the Option, provided that payment in full for the Option Shares to be purchased upon such exercise shall have been received by such date.
V. ADJUSTMENT OF AND CHANGES IN STOCK OF WESTERN ALLIANCE
In the event of a reorganization, recapitalization, change of shares, stock split, spin-off, stock dividend, reclassification, subdivision or combination of shares, merger, consolidation, rights offering, or any other change in the corporate structure or shares of capital stock of WESTERN ALLIANCE, the Committee shall make such adjustment as it deems appropriate in the number and kind of shares of Stock subject to the Option or in the option price; provided, however, that no such adjustment shall give the Grantee any additional benefits under the Option.
VI. FAIR MARKET VALUE
As used herein, the fair market value of a share of Stock shall be the average of the high and low sale prices per share of Stock on any national stock exchange, composite tape or other recognized market source, as determined by the Committee, on applicable date of reference hereunder, or if there is no sale on such date, then the average of such high and low sale prices on the
6
last previous day on which a sale is reported. In the absence of an established market of the type described above for the Common Stock, the Fair Market Value thereof shall be determined by the committee in good faith.
VII. NO RIGHTS OF STOCKHOLDERS
During the Grantees lifetime, the Option hereunder shall be exercisable only by the Grantee or any guardian or legal representative of the Grantee, and the Option shall not be transferable except, in case of the death of the Grantee, by will or the laws of descent and distribution, nor shall the Option be subject to attachment, execution or other similar process. In the event of (a) any attempt by the Grantee to alienate, assign, pledge, hypothecate or otherwise dispose of the Option, except as provided for herein, or (b) the levy of any attachment, execution or similar process upon the rights or interest hereby conferred, WESTERN ALLIANCE may terminate the Option by notice to the Grantee and it shall thereupon become null and void.
IX. EMPLOYMENT NOT AFFECTED
The granting of the Option or its exercise shall not be construed as granting to the Grantee any right with respect to continuance of employment of the Employer. Except as may otherwise be limited by a written agreement between the Employer and the Grantee, the right of the Employer to terminate at will the Grantees employment with it at any time (whether by dismissal, discharge, retirement or otherwise) is specifically reserved by WESTERN ALLIANCE, as the Employer or on behalf of the Employer (whichever the case may be), and acknowledged by the Grantee.
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X. AMENDMENT OF OPTION
The Option may be amended by the Board or the Committee at anytime (i) if the Board or the Committee determines, in its sole discretion, that amendment is necessary or advisable in the light of any addition to or change in the Internal Revenue Code of 1986 or in the regulations issued thereunder, or any federal or state securities law or other law or regulation, which change occurs after the Date of Grant and by its terms applies to the Option; or (ii) other than in the circumstances described in clause (i), with the consent of the Grantee.
XI. NOTICE
Any notice to WESTERN ALLIANCE provided for in this instrument shall be addressed to in care of its Secretary at its executive office at 2700 West Sahara Avenue, Las Vegas, Nevada 89102, and any notice to the Grantee shall be addressed to the Grantee at the current address shown on the payroll records of the Employer. Any notice shall be deemed to be duly given if and when properly addressed and posted by registered or certified mail, postage prepaid.
XII. INCORPORATION OF PLAN BY REFERENCE
The Option is granted pursuant to the terms of the Plan, the terms of which are incorporated herein by reference, and the Option shall in all respects be interpreted in accordance with the Plan. The Committee shall interpret and construe the Plan and this instrument, and its interpretations and determinations shall be conclusive and binding on the parties hereto and any other person claiming an interested hereunder, with respect to any issue arising hereunder or thereunder.
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XIII. GOVERNING LAW
The validity, construction, interpretation and effect of this instrument shall exclusively be governed by and determined in accordance with the laws of the State of Nevada, except to the extent preempted by federal law, which shall to such extent govern.
IN WITNESS WHEREOF, WESTERN ALLIANCE has caused its duly authorized officers to execute and attest this Grant of Incentive Stock Option, and to apply the corporate seal hereto, and the Grantee has placed his or her signature hereon, effective as of the Date of Grant.
WESTERN ALLIANCE BANCORPORATION, a | ||||
Nevada banking corporation | ||||
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By | |||
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ROBERT SARVER, President | |||
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By | |||
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LINDA MAHAN, Assistant Secretary |
ACCEPTED AND AGREED TO: | ||||
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By
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Grantee |
9
Exhibit 10.5
WESTERN ALLIANCE BANCORPORATION 2002 STOCK OPTION PLAN
STOCK OPTION AWARD AGREEMENT
Grantees Name and Address:
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Award Number
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Date of Award
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Vesting Commencement Date
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Exercise Price per Share
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$
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Total Number of Shares Subject
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to the Option
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Total Exercise Price
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$
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Type of Option:
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Incentive Stock Option | |
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Non-Qualified Stock Option | |
Expiration Date:
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Post-Termination Exercise Period:
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Three (3) Months |
1. Grant of Option . You (the Grantee) have been granted an option (the Option) to purchase the Total Number of Shares of Common Stock subject to the Option (the Shares) at the Exercise Price per Share (the Exercise Price) set forth above, subject to the terms and conditions of this Stock Option Award Agreement (the Option Agreement) and terms and conditions of the Western Alliance Bancorporation 2002 Stock Option Plan, as amended from time to time (the Plan), which are incorporated herein by reference. Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Option Agreement.
If designated above as an Incentive Stock Option, the Option is intended to qualify as an Incentive Stock Option as defined in Section 422 of the Code. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of Shares subject to Options designated as Incentive Stock Options which become exercisable for the first time by the Grantee during any calendar year (under all plans of the Company or any Parent or Subsidiary of the Company) exceeds $100,000, such excess Options, to the extent of the Shares covered thereby in excess of the foregoing limitation, shall be treated as Non-Qualified Stock Options. For this purpose, Incentive Stock Options shall be taken into account in the order in which they were
1
granted, and the Fair Market Value of the Shares shall be determined as of the date the Option with respect to such Shares is awarded.
2. Vesting .
(a) Vesting Schedule . Subject to the Grantees Continuous Service and other limitations set forth in this Option Agreement and the Plan, the Option may be exercised, in whole or in part, in accordance with the following schedule: 20% of the Shares subject to the Option shall vest twelve (12) months after the Vesting Commencement Date, and an additional 20% of the Shares subject to the Option shall vest on each anniversary of the Vesting Commencement Date thereafter.
(b) Leave of Absence . During any authorized leave of absence, the vesting of the Option as provided in Section 2(a) of this Option Agreement shall be suspended after the leave of absence exceeds a period of ninety (90) days. Vesting of the Option shall resume upon the Grantees termination of the leave of absence and return to service to the Company or a Related Entity. The Vesting Schedule of the Option shall be extended by the length of the suspension.
(c) Termination for Cause . In the event of termination of the Grantees Continuous Service for Cause, the Grantees right to exercise the Option shall terminate concurrently with the termination of the Grantees Continuous Service, except as otherwise determined by the Administrator.
(d) Change in Status . In the event of the Grantees change in status from an Employee whose customary employment is 20 hours or more per week to an Employee whose customary employment is fewer than 20 hours per week, vesting of the Option shall continue only to the extent determined by the Administrator as of such change in status consistent with any minimum vesting requirements set forth in the Plan. In the event of the Grantees change in status from Employee to Consultant, vesting of the Option shall cease as of such change in status unless otherwise determined by the Administrator.
3. Exercise of Option .
(a) Right to Exercise . The Option shall be exercisable during its term in accordance with the Vesting Schedule set out in Section 2(a) of this Option Agreement and with the applicable provisions of the Plan and this Option Agreement. The Option shall be subject to the provisions of Section 11 of the Plan relating to the exercisability or termination of the Option in the event of a Corporate Transaction or Change in Control. The Grantee shall be subject to reasonable limitations on the number of requested exercises during any monthly or weekly period as determined by the Administrator. In no event shall the Company issue fractional Shares.
(b) Method of Exercise . The Option shall be exercisable by delivery of an exercise notice (a form of which is attached as Exhibit A) or by such other procedure as specified from time to time by the Administrator which shall state the election to exercise the Option, the whole number of Shares in respect of which the Option is being exercised, and such other provisions as may be required by the Administrator. The exercise notice shall be delivered in
2
person, by certified mail, or by such other method (including electronic transmission) as determined from time to time by the Administrator to the Company accompanied by payment of the Exercise Price. The Option shall be deemed to be exercised upon receipt by the Company of such notice accompanied by the Exercise Price, which, to the extent selected, shall be deemed to be satisfied by use of the broker-dealer sale and remittance procedure to pay the Exercise Price provided in Section 5(d), below.
(c) Taxes . No Shares will be delivered to the Grantee or other person pursuant to the exercise of the Option until the Grantee or other person has made arrangements acceptable to the Administrator for the satisfaction of applicable income tax and employment tax withholding obligations, including, without limitation, such other tax obligations of the Grantee incident to the receipt of Shares or the disqualifying disposition of Shares received on exercise of an Incentive Stock Option. Upon exercise of the Option, the Company or the Grantees employer may offset or withhold (from any amount owed by the Company or the Grantees employer to the Grantee) or collect from the Grantee or other person an amount sufficient to satisfy such tax obligations and/or the employers withholding obligations. In the case of an Incentive Stock Option, the Grantee agrees, as partial consideration for the designation of the Option as an Incentive Stock Option, to notify the Company in writing within thirty (30) days of any disposition of any shares acquired by exercise of the Option if such disposition occurs within two (2) years from the Date of Award or within one (1) year from the date the Shares were transferred to the Grantee. If the Company is required to satisfy any federal, state or local income or employment tax withholding obligations as a result of such an early disposition, the Grantee agrees to satisfy the amount of such withholding in a manner that the Administrator prescribes.
4. Grantees Representations . The Grantee understands that neither the Option nor the Shares exercisable pursuant to the Option have been registered under the Securities Act of 1933, as amended or any United States securities laws. In the event the Shares purchasable pursuant to the exercise of the Option have not been registered under the Securities Act of 1933, as amended, at the time the Option is exercised, the Grantee shall, if requested by the Company, concurrently with the exercise of all or any portion of the Option, deliver to the Company an investment representation statement in a form determined by the Administrator.
5. Method of Payment . Payment of the Exercise Price shall be made by any of the following, or a combination thereof, at the election of the Grantee; provided, however, that such exercise method does not then violate any Applicable Law:
(a) cash;
(b) check;
(c) if the exercise occurs on or after the Registration Date, surrender of Shares or delivery of a properly executed form of attestation of ownership of Shares as the Administrator may require (including withholding of Shares otherwise deliverable upon exercise of the Option) which have a Fair Market Value on the date of surrender or attestation equal to the aggregate Exercise Price of the Shares as to which the Option is being exercised (but only to the extent that
3
such exercise of the Option would not result in an accounting compensation charge with respect to the Shares used to pay the exercise price); or
(d) if the exercise occurs on or after the Registration Date, payment through a broker-dealer sale and remittance procedure pursuant to which the Grantee (i) shall provide written instructions to a Company-designated brokerage firm to effect the immediate sale of some or all of the purchased Shares and remit to the Company, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate exercise price payable for the purchased Shares and (ii) shall provide written directives to the Company to deliver the certificates for the purchased Shares directly to such brokerage firm in order to complete the sale transaction.
6. Restrictions on Exercise . The Option may not be exercised if the issuance of the Shares subject to the Option upon such exercise would constitute a violation of any Applicable Laws.
7. Termination or Change of Continuous Service . In the event the Grantees Continuous Service terminates, other than for Cause, the Grantee may, but only during the Post-Termination Exercise Period, exercise the portion of the Option that was vested at the date of such termination (the Termination Date). In the event of termination of the Grantees Continuous Service for Cause, the Grantees right to exercise the Option shall, except as otherwise determined by the Administrator, terminate concurrently with the termination of the Grantees Continuous Service (also the Termination Date). In no event shall the Option be exercised later than the Expiration Date set forth in this Option Agreement. In the event of the Grantees change in status from Employee or Director to any other status of Employee, Director or Consultant, the Option shall remain in effect and vesting of the Option shall cease as of such change in status unless otherwise determined by the Administrator or dictated by any minimum vesting requirements set forth in the Plan; provided, however, with respect to any Incentive Stock Option that shall remain in effect after a change in status from Employee to Director, such Incentive Stock Option shall cease to be treated as an Incentive Stock Option and shall be treated as a Non-Qualified Stock Option on the day three (3) months and one (1) day following such change in status. Except as provided in Sections 8 and 9 below, to the extent that the Option was unvested on the Termination Date, or if the Grantee does not exercise the vested portion of the Option within the Post-Termination Exercise Period, the Option shall terminate.
8. Disability of Grantee . In the event the Grantees Continuous Service terminates as a result of his or her Disability, the Grantee may, but only within six (6) months from the Termination Date (and in no event later than the Expiration Date), exercise the portion of the Option that was vested on the Termination Date; provided, however, that if such Disability is not a disability as such term is defined in Section 22(e)(3) of the Code and the Option is an Incentive Stock Option, such Incentive Stock Option shall cease to be treated as an Incentive Stock Option and shall be treated as a Non-Qualified Stock Option on the day three (3) months and one (1) day following the Termination Date. To the extent that the Option was unvested on the Termination Date, or if the Grantee does not exercise the vested portion of the Option within the time specified herein, the Option shall terminate. Section 22(e)(3) of the Code provides that an individual is permanently and totally disabled if he or she is unable to engage in any
4
substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve (12) months.
9. Death of Grantee . In the event of the termination of the Grantees Continuous Service as a result of his or her death, or in the event of the Grantees death during the Post-Termination Exercise Period or during the six (6) month period following the Grantees termination of Continuous Service as a result of his or her Disability, the Grantees estate, or a person who acquired the right to exercise the Option by bequest or inheritance, may exercise the portion of the Option that was vested at the date of termination, within twelve (12) months from the date of death (but in no event later than the Expiration Date). To the extent that the Option was unvested on the date of death, or if the vested portion of the Option is not exercised within the time specified herein, the Option shall terminate.
10. Transferability of Option . The Option may not be transferred in any manner other than by will or by the laws of descent and distribution and may be exercised during the lifetime of the Grantee only by the Grantee. The terms of the Option shall be binding upon the executors, administrators, heirs and successors of the Grantee.
11. Term of Option . The Option must be exercised no later than the Expiration Date set forth in this Option Agreement or such earlier date as otherwise provided herein. After the Expiration Date or such earlier date, the Option shall be of no further force or effect and may not be exercised.
12. Companys Right of First Refusal .
(a) Transfer Notice . Neither the Grantee nor a transferee (either being sometimes referred to herein as the Holder) shall sell, hypothecate, encumber or otherwise transfer any Shares or any right or interest therein without first complying with the provisions of this Section 12 or obtaining the prior written consent of the Company. In the event the Holder desires to accept a bona fide third-party offer for any or all of the Shares, the Holder shall provide the Company with written notice (the Transfer Notice) of:
(i) The Holders intention to transfer;
(ii) The name of the proposed transferee;
(iii) The number of Shares to be transferred; and
(iv) The proposed transfer price or value and terms thereof.
(b) First Refusal Exercise Notice . The Company shall have the right to purchase (the Right of First Refusal) all but not less than all, of the Shares which are described in the Transfer Notice (the Offered Shares) at any time during the period commencing upon receipt of the Transfer Notice and ending twenty (20) days after the first date on which the Company determines that the Right of First Refusal may be exercised without incurring an accounting expense with respect to such exercise (the Option Period) at (i) the per share price or value and
5
in accordance with the terms stated in the Transfer Notice (subject to Section 12(c) below) or (ii) the Fair Market Value of the Shares on the date on which the purchase is to be effected if no consideration is paid pursuant to the terms stated in the Transfer Notice, which Right of First Refusal shall be exercised by written notice (the First Refusal Exercise Notice) to the Holder.
(c) Payment Terms . The Company shall consummate the purchase of the Offered Shares on the terms set forth in the Transfer Notice within 30 days after delivery of the First Refusal Exercise Notice; provided, however, that in the event the Transfer Notice provides for the payment for the Offered Shares other than in cash, the Company and/or its assigns shall have the right to pay for the Offered Shares by the discounted cash equivalent of the consideration described in the Transfer Notice as reasonably determined by the Administrator. Upon payment for the Offered Shares to the Holder or into escrow for the benefit of the Holder, the Company or its assigns shall become the legal and beneficial owner of the Offered Shares and all rights and interest therein or related thereto, and the Company shall have the right to transfer the Offered Shares to its own name or its assigns without further action by the Holder.
(d) Assignment . Whenever the Company shall have the right to purchase Shares under this Right of First Refusal, the Company may designate and assign one or more employees, officers, directors or stockholders of the Company or other persons or organizations, to exercise all or a part of the Companys Right of First Refusal.
(e) Non-Exercise . If the Company and/or its assigns do not collectively elect to exercise the Right of First Refusal within the Option Period or such earlier time if the Company and/or its assigns notifies the Holder that it will not exercise the Right of First Refusal, then the Holder may transfer the Shares upon the terms and conditions stated in the Transfer Notice, provided that:
(i) The transfer is made within 90 days of the earlier of (A) the date the Company and/or its assigns notify the Holder that the Right of First Refusal will not be exercised or (B) the expiration of the Option Period; and
(ii) The transferee agrees in writing that such Shares shall be held subject to the provisions of this Option Agreement.
(f) Expiration of Transfer Period . Following such 90-day period, no transfer of the Offered Shares and no change in the terms of the transfer as stated in the Transfer Notice (including the name of the proposed transferee) shall be permitted without a new written Transfer Notice prepared and submitted in accordance with the requirements of this Right of First Refusal.
(g) Termination of Right of First Refusal . The provisions of this Right of First Refusal shall terminate as to all Shares upon the Registration Date.
(h) Additional Shares or Substituted Securities . In the event of any transaction described in Sections 10 or 11 of the Plan, any new, substituted or additional securities or other property which is by reason of any such transaction distributed with respect to the Shares shall be
6
immediately subject to the Right of First Refusal, but only to the extent the Shares are at the time covered by such right.
13. Stop-Transfer Notices . In order to ensure compliance with the restrictions on transfer set forth in this Option Agreement or the Plan, the Company may issue appropriate stop transfer instructions to its transfer agent, if any, and, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.
14. Refusal to Transfer . The Company shall not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of this Option Agreement or (ii) to treat as owner of such Shares or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such Shares shall have been so transferred.
15. Tax Consequences . Set forth below is a brief summary as of the date of this Option Agreement of some of the federal tax consequences of exercise of the Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE GRANTEE UNDERSTANDS THAT THE GRANTEE MAY SUFFER ADVERSE TAX CONSEQUENCES AS A RESULT OF THE GRANTEES PURCHASE OR DISPOSITION OF THE SHARES. THE GRANTEE REPRESENTS THAT THE GRANTEE HAS CONSULTED WITH ANY TAX CONSULTANTS THE GRANTEE DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE OR DISPOSITION OF THE SHARES AND THAT THE GRANTEE IS NOT RELYING ON THE COMPANY FOR ANY TAX ADVICE.
(a) Exercise of Incentive Stock Option . If the Option qualifies as an Incentive Stock Option, there will be no regular federal income tax liability upon the exercise of the Option, although the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price will be treated as income for purposes of the alternative minimum tax for federal tax purposes and may subject the Grantee to the alternative minimum tax in the year of exercise. However, the Internal Revenue Service issued proposed regulations which would subject the Grantee to withholding at the time the Grantee exercises an Incentive Stock Option for Social Security and Medicare based upon the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price. These proposed regulations are subject to further modification by the Internal Revenue Service and, if adopted, would be effective only for the exercise of an Incentive Stock Option that occurs two years after the regulations are issued in final form.
(b) Exercise of Incentive Stock Option Following Disability . If the Grantees Continuous Service terminates as a result of Disability that is not permanent and total disability as such term is defined in Section 22(e)(3) of the Code, to the extent permitted on the date of termination, the Grantee must exercise an Incentive Stock Option within three (3) months of such termination for the Incentive Stock Option to be qualified as an Incentive Stock Option. Section 22(e)(3) of the Code provides that an individual is permanently and totally disabled if he or she is unable to engage in any substantial gainful activity by reason of any medically
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determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve (12) months.
(c) Exercise of Non-Qualified Stock Option . On exercise of a Non-Qualified Stock Option, the Grantee will be treated as having received compensation income (taxable at ordinary income tax rates) equal to the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price. If the Grantee is an Employee or a former Employee, the Company will be required to withhold from the Grantees compensation or collect from the Grantee and pay to the applicable taxing authorities an amount in cash equal to a percentage of this compensation income at the time of exercise, and may refuse to honor the exercise and refuse to deliver Shares if such withholding amounts are not delivered at the time of exercise.
(d) Disposition of Shares . In the case of a Non-Qualified Stock Option, if Shares are held for more than one year, any gain realized on disposition of the Shares will be treated as long-term capital gain for federal income tax purposes. In the case of an Incentive Stock Option, if Shares transferred pursuant to the Option are held for more than one year after receipt of the Shares and are disposed more than two years after the Date of Award, any gain realized on disposition of the Shares also will be treated as capital gain for federal income tax purposes and subject to the same tax rates and holding periods that apply to Shares acquired upon exercise of a Non-Qualified Stock Option. If Shares purchased under an Incentive Stock Option are disposed of prior to the expiration of such one-year or two-year periods, any gain realized on such disposition will be treated as compensation income (taxable at ordinary income rates) to the extent of the difference between the Exercise Price and the lesser of (i) the Fair Market Value of the Shares on the date of exercise, or (ii) the sale price of the Shares.
16. Lock-Up Agreement .
(a) Agreement . The Grantee, if requested by the Company and the lead underwriter of any public offering of the Common Stock (the Lead Underwriter), hereby irrevocably agrees not to sell, contract to sell, grant any option to purchase, transfer the economic risk of ownership in, make any short sale of, pledge or otherwise transfer or dispose of any interest in any Common Stock or any securities convertible into or exchangeable or exercisable for or any other rights to purchase or acquire Common Stock (except Common Stock included in such public offering or acquired on the public market after such offering) during the 180-day period following the effective date of a registration statement of the Company filed under the Securities Act of 1933, as amended, or such shorter period of time as the Lead Underwriter shall specify. The Grantee further agrees to sign such documents as may be requested by the Lead Underwriter to effect the foregoing and agrees that the Company may impose stop-transfer instructions with respect to such Common Stock subject to the lock-up period until the end of such period. The Company and the Grantee acknowledge that each Lead Underwriter of a public offering of the Companys stock, during the period of such offering and for the 180-day period thereafter, is an intended beneficiary of this Section 16.
(b) No Amendment Without Consent of Underwriter . During the period from identification of a Lead Underwriter in connection with any public offering of the Companys
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Common Stock until the earlier of (i) the expiration of the lock-up period specified in Section 16(a) in connection with such offering or (ii) the abandonment of such offering by the Company and the Lead Underwriter, the provisions of this Section 16 may not be amended or waived except with the consent of the Lead Underwriter.
17. Entire Agreement: Governing Law . The Plan and this Option Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Grantee with respect to the subject matter hereof, and may not be modified adversely to the Grantees interest except by means of a writing signed by the Company and the Grantee. Nothing in the Plan and this Option Agreement (except as expressly provided therein) is intended to confer any rights or remedies on any persons other than the parties. The Plan and this Option Agreement are to be construed in accordance with and governed by the internal laws of the State of Nevada without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the State of Nevada to the rights and duties of the parties. Should any provision of the Plan or this Option Agreement be determined by a court of law to be illegal or unenforceable, such provision shall be enforced to the fullest extent allowed by law and the other provisions shall nevertheless remain effective and shall remain enforceable.
18. Headings . The captions used in this Option Agreement are inserted for convenience and shall not be deemed a part of the Option for construction or interpretation.
19. Dispute Resolution. The provisions of this Section 19 shall be the exclusive means of resolving disputes arising out of or relating to the Plan and this Option Agreement. The Company, the Grantee, and the Grantees assignees (the parties) shall attempt in good faith to resolve any disputes arising out of or relating to the Plan and this Option Agreement by negotiation between individuals who have authority to settle the controversy. Negotiations shall be commenced by either party by notice of a written statement of the partys position and the name and title of the individual who will represent the party. Within thirty (30) days of the written notification, the parties shall meet at a mutually acceptable time and place, and thereafter as often as they reasonably deem necessary, to resolve the dispute. If the dispute has not been resolved by negotiation, the parties agree that any suit, action, or proceeding arising out of or relating to the Plan or this Option Agreement shall be brought in the United States District Court for the District of Nevada (or should such court lack jurisdiction to hear such action, suit or proceeding, in a Nevada state court in the County of Clark) and that the parties shall submit to the jurisdiction of such court. The parties irrevocably waive, to the fullest extent permitted by law, any objection the party may have to the laying of venue for any such suit, action or proceeding brought in such court. THE PARTIES ALSO EXPRESSLY WAIVE ANY RIGHT THEY HAVE OR MAY HAVE TO A JURY TRIAL OF ANY SUCH SUIT, ACTION OR PROCEEDING. If any one or more provisions of this Section 19 shall for any reason be held invalid or unenforceable, it is the specific intent of the parties that such provisions shall be modified to the minimum extent necessary to make it or its application valid and enforceable.
20. Notices . Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery, upon deposit for delivery by an internationally recognized express mail courier service or upon deposit in the United States mail
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by certified mail (if the parties are within the United States), with postage and fees prepaid, addressed to the other party at its address as shown in this Option Agreement, or to such other address as such party may designate in writing from time to time to the other party.
21. Confidentiality . The Company shall provide to the Grantee, during the period the Option is outstanding, copies of financial statements of the Company at least annually. The Grantee understands and agrees that such financial statements are confidential and shall not be disclosed by the Grantee, to any entity or person, for any reason, at any time, without the prior written consent of the Company, unless required by law. If disclosure of such financial statements is required by law, whether through subpoena, request for production, deposition, or otherwise, the Grantee promptly shall provide written notice to Company, including copies of the subpoena, request for production, deposition, or otherwise, within five (5) business days of their receipt by the Grantee and prior to any disclosure so as to provide Company an opportunity to move to quash or otherwise to oppose the disclosure. Notwithstanding the foregoing, the Grantee may disclose the terms of such financial statements to his or her spouse or domestic partner, and for legitimate business reasons, to legal, financial, and tax advisors.
22. Rights as Stockholder . Until the stock certificate evidencing the Shares is issued following the exercise of the Option (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Shares, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such stock certificate promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in Section 10 of the Plan. The Grantee shall enjoy rights as a stockholder until such time as the Grantee disposes of the Shares or the Company and/or its assignee(s) exercises the Right of First Refusal. Upon such exercise, the Grantee shall have no further rights as a holder of the Shares so purchased except the right to receive payment for the Shares so purchased in accordance with the provisions of this Option Agreement, and the Grantee shall forthwith cause the certificate(s) evidencing the Shares so purchased to be surrendered to the Company for transfer or cancellation.
23. Restrictive Legends . The Grantee understands and agrees that the Company shall cause the legends set forth below or legends substantially equivalent thereto, to be placed upon any certificate(s) evidencing ownership of the Shares together with any other legends that may be required by the Company or by state or federal securities laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE ACT) OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR
10
TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND A RIGHT OF FIRST REFUSAL HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN THE OPTION AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES OF THESE SHARES.
IN WITNESS WHEREOF, the Company and the Grantee have executed this Option Agreement and agree that the Option is to be governed by the terms and conditions of this Option Agreement and the Plan.
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Western Alliance Bancorporation | |
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a Nevada corporation | |
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By: | |
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Title: |
THE GRANTEE ACKNOWLEDGES AND AGREES THAT THE SHARES SUBJECT TO THE OPTION SHALL VEST, IF AT ALL, ONLY DURING THE PERIOD OF THE GRANTEES CONTINUOUS SERVICE (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THE OPTION OR ACQUIRING SHARES HEREUNDER). THE GRANTEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS OPTION AGREEMENT OR THE PLAN SHALL CONFER UPON THE GRANTEE ANY RIGHT WITH RESPECT TO FUTURE AWARDS OR CONTINUATION OF THE GRANTEES CONTINUOUS SERVICE, NOR SHALL IT INTERFERE IN ANY WAY WITH THE GRANTEES RIGHT OR THE RIGHT OF THE COMPANY OR RELATED ENTITY TO WHICH THE GRANTEE PROVIDES SERVICES TO TERMINATE THE GRANTEES CONTINUOUS SERVICE, WITH OR WITHOUT CAUSE, AND WITH OR WITHOUT NOTICE. THE GRANTEE ACKNOWLEDGES THAT UNLESS THE GRANTEE HAS A WRITTEN EMPLOYMENT AGREEMENT WITH THE COMPANY TO THE CONTRARY, THE GRANTEES STATUS IS AT WILL.
The Grantee acknowledges receipt of a copy of this Option Agreement and the Plan, and represents that he or she is familiar with the terms and provisions thereof, and hereby accepts the Option subject to all of the terms and provisions hereof and thereof. The Grantee has reviewed this Option Agreement and the Plan in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Option Agreement, and fully understands all provisions of this Option Agreement and the Plan. The Grantee hereby agrees that all disputes arising out of or
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relating to this Option Agreement and the Plan shall be resolved in accordance with Section 19 of this Option Agreement. The Grantee further agrees to notify the Company upon any change in the residence address indicated in this Option Agreement.
Dated:
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Signed: | |||||
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Grantee |
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EXHIBIT A
WESTERN ALLIANCE BANCORPORATION 2002 STOCK OPTION PLAN
EXERCISE NOTICE
___
Attention: Chief Financial Officer
1. Effective as of today, ___, the undersigned (the Grantee) hereby elects to exercise the Grantees option to purchase ___shares of the Common Stock (the Shares) of Western Alliance Bancorporation, (the Company) under and pursuant to the Companys 2002 Stock Option Plan, as amended from time to time (the Plan) and the [ ] Incentive [ ] Non-Qualified Stock Option Award Agreement (the Option Agreement) dated ___, ___. Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Exercise Notice.
2. Representations of the Grantee . The Grantee acknowledges that the Grantee has received, read and understood the Plan and the Option Agreement and agrees to abide by and be bound by their terms and conditions. In the event the Shares purchased hereunder have not been registered under the Securities Act of 1933, as amended, the Grantee shall, if requested by the Company, deliver to the Company his or her Investment Representation Statement in the form attached hereto as Exhibit 1.
3. Delivery of Payment . The Grantee herewith delivers to the Company the full Exercise Price for the Shares, which, to the extent selected, shall be deemed to be satisfied by use of the broker-dealer sale and remittance procedure to pay the Exercise Price provided in Section 5(d) of the Option Agreement.
4. Successors and Assigns . The Company may assign any of its rights under this Exercise Notice to single or multiple assignees, and this agreement shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, this Exercise Notice shall be binding upon the Grantee and his or her heirs, executors, administrators, successors and assigns.
5. Headings . The captions used in this Exercise Notice are inserted for convenience and shall not be deemed a part of this agreement for construction or interpretation.
6. Further Instruments . The parties agree to execute such further instruments and to take such further action as may be reasonably necessary to carry out the purposes and intent of this Exercise Notice.
7. Entire Agreement . The Plan and the Option Agreement are incorporated herein by reference and together with this Exercise Notice constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Grantee with respect to the subject matter hereof, and may
1
not be modified adversely to the Grantees interest except by means of a writing signed by the Company and the Grantee. Nothing in the Plan, the Option Agreement and this Exercise Notice (except as expressly provided therein) is intended to confer any rights or remedies on any persons other than the parties.
Submitted by: | Accepted by: | |||
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GRANTEE: | WESTERN ALLIANCE BANCORPORATION | |||
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EXHIBIT 1
WESTERN ALLIANCE BANCORPORATION 2002 STOCK OPTION PLAN
INVESTMENT REPRESENTATION STATEMENT
GRANTEE:
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COMPANY:
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WESTERN ALLIANCE BANCORPORATION | |
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SECURITY:
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COMMON STOCK | |
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AMOUNT:
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DATE:
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In connection with the purchase of the above-listed Securities, the undersigned Grantee represents to the Company the following:
(a) Grantee is aware of the Companys business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Securities. Grantee is acquiring these Securities for investment for Grantees own account only and not with a view to, or for resale in connection with, any distribution thereof within the meaning of the Securities Act of 1933, as amended (the Securities Act).
(b) Grantee acknowledges and understands that the Securities constitute restricted securities under the Securities Act and have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon among other things, the bona fide nature of Grantees investment intent as expressed herein. Grantee further understands that the Securities must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. Grantee further acknowledges and understands that the Company is under no obligation to register the Securities. Grantee understands that the certificate evidencing the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not required in the opinion of counsel satisfactory to the Company.
(c) Grantee is familiar with the provisions of Rule 701 and Rule 144, each promulgated under the Securities Act, which, in substance, permit limited public resale of restricted securities acquired, directly or indirectly from the issuer thereof, in a non-public offering subject to the satisfaction of certain conditions. Rule 701 provides that if the issuer qualifies under Rule 701 at the time of the grant of the Option to the Grantee, the exercise will be exempt from registration under the Securities Act. In the event the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, ninety (90) days thereafter (or such longer period as any market stand-off agreement may require) the Securities exempt under Rule 701 may be resold, subject to the satisfaction of certain of the conditions specified by Rule 144, including: (1) the resale being made through a broker in an unsolicited brokers transaction or in transactions directly with a market maker (as said term is defined under the Securities Exchange Act of 1934); and, in the case of an affiliate, (2) the
3
availability of certain public information about the Company, (3) the amount of Securities being sold during any three month period not exceeding the limitations specified in Rule 144(e), and (4) the timely filing of a Form 144, if applicable.
In the event that the Company does not qualify under Rule 701 at the time of grant of the Option, then the Securities may be resold in certain limited circumstances subject to the provisions of Rule 144, which requires the resale to occur not less than one year after the later of the date the Securities were sold by the Company or the date the Securities were sold by an affiliate of the Company, within the meaning of Rule 144; and, in the case of acquisition of the Securities by an affiliate, or by a non-affiliate who subsequently holds the Securities less than two (2) years, the satisfaction of the conditions set forth in sections (1), (2), (3) and (4) of the paragraph immediately above.
(d) Grantee further understands that in the event all of the applicable requirements of Rule 701 or 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rules 144 and 701 are not exclusive, the Staff of the Securities and Exchange Commission has expressed its opinion that persons proposing to sell private placement securities other than in a registered offering and otherwise than pursuant to Rules 144 or 701 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk. Grantee understands that no assurances can be given that any such other registration exemption will be available in such event.
(e) Grantee represents that Grantee is a resident of the state of ___.
Signature of Grantee:
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Date:
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4
Exhibit 10.6
WESTERN ALLIANCE BANCORPORATION 2002 STOCK OPTION PLAN
STOCK OPTION AWARD AGREEMENT
[DOUBLE TRIGGER ACCELERATION REMOVE HEADING BEFORE ISSUANCE]
$
$
Incentive Stock Option
Non-Qualified Stock Option
Three (3) Months
1. Grant of Option . You (the Grantee) have been granted an option (the Option) to purchase the Total Number of Shares of Common Stock subject to the Option (the Shares) at the Exercise Price per Share (the Exercise Price) set forth above, subject to the terms and conditions of this Stock Option Award Agreement (the Option Agreement) and terms and conditions of the Western Alliance Bancorporation 2002 Stock Option Plan, as amended from time to time (the Plan), which are incorporated herein by reference. Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Option Agreement.
If designated above as an Incentive Stock Option, the Option is intended to qualify as an Incentive Stock Option as defined in Section 422 of the Code. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of Shares subject to Options designated as Incentive Stock Options which become exercisable for the first time by the Grantee
1
during any calendar year (under all plans of the Company or any Parent or Subsidiary of the Company) exceeds $100,000, such excess Options, to the extent of the Shares covered thereby in excess of the foregoing limitation, shall be treated as Non-Qualified Stock Options. For this purpose, Incentive Stock Options shall be taken into account in the order in which they were granted, and the Fair Market Value of the Shares shall be determined as of the date the Option with respect to such Shares is awarded.
2. Vesting .
(a) Vesting Schedule . Subject to the Grantees Continuous Service and other limitations set forth in this Option Agreement and the Plan, the Option may be exercised, in whole or in part, in accordance with the following schedule: 20% of the Shares subject to the Option shall vest twelve (12) months after the Vesting Commencement Date, and an additional 20% of the Shares subject to the Option shall vest on each anniversary of the Vesting Commencement Date thereafter.
(b) Leave of Absence . During any authorized leave of absence, the vesting of the Option as provided in Section 2(a) of this Option Agreement shall be suspended after the leave of absence exceeds a period of ninety (90) days. Vesting of the Option shall resume upon the Grantees termination of the leave of absence and return to service to the Company or a Related Entity. The Vesting Schedule of the Option shall be extended by the length of the suspension.
(c) Termination for Cause . In the event of termination of the Grantees Continuous Service for Cause, the Grantees right to exercise the Option shall terminate concurrently with the termination of the Grantees Continuous Service, except as otherwise determined by the Administrator.
(d) Change in Status . In the event of the Grantees change in status from an Employee whose customary employment is 20 hours or more per week to an Employee whose customary employment is fewer than 20 hours per week, vesting of the Option shall continue only to the extent determined by the Administrator as of such change in status consistent with any minimum vesting requirements set forth in the Plan. In the event of the Grantees change in status from Employee to Consultant, vesting of the Option shall cease as of such change in status unless otherwise determined by the Administrator.
3. Exercise of Option .
(a) Right to Exercise . The Option shall be exercisable during its term in accordance with the Vesting Schedule set out in Section 2(a) of this Option Agreement and with the applicable provisions of the Plan and this Option Agreement. The Option shall be subject to the provisions of Section 11 of the Plan and Section 4 of this Option Agreement relating to the exercisability or termination of the Option in the event of a Corporate Transaction or Change in Control. The Grantee shall be subject to reasonable limitations on the number of requested exercises during any monthly or weekly period as determined by the Administrator. In no event shall the Company issue fractional Shares.
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(b) Method of Exercise . The Option shall be exercisable by delivery of an exercise notice (a form of which is attached as Exhibit A) or by such other procedure as specified from time to time by the Administrator which shall state the election to exercise the Option, the whole number of Shares in respect of which the Option is being exercised, and such other provisions as may be required by the Administrator. The exercise notice shall be delivered in person, by certified mail, or by such other method (including electronic transmission) as determined from time to time by the Administrator to the Company accompanied by payment of the Exercise Price. The Option shall be deemed to be exercised upon receipt by the Company of such notice accompanied by the Exercise Price, which, to the extent selected, shall be deemed to be satisfied by use of the broker-dealer sale and remittance procedure to pay the Exercise Price provided in Section 6(d), below.
(c) Taxes . No Shares will be delivered to the Grantee or other person pursuant to the exercise of the Option until the Grantee or other person has made arrangements acceptable to the Administrator for the satisfaction of applicable income tax and employment tax withholding obligations, including, without limitation, such other tax obligations of the Grantee incident to the receipt of Shares or the disqualifying disposition of Shares received on exercise of an Incentive Stock Option. Upon exercise of the Option, the Company or the Grantees employer may offset or withhold (from any amount owed by the Company or the Grantees employer to the Grantee) or collect from the Grantee or other person an amount sufficient to satisfy such tax obligations and/or the employers withholding obligations. In the case of an Incentive Stock Option, the Grantee agrees, as partial consideration for the designation of the Option as an Incentive Stock Option, to notify the Company in writing within thirty (30) days of any disposition of any shares acquired by exercise of the Option if such disposition occurs within two (2) years from the Date of Award or within one (1) year from the date the Shares were transferred to the Grantee. If the Company is required to satisfy any federal, state or local income or employment tax withholding obligations as a result of such an early disposition, the Grantee agrees to satisfy the amount of such withholding in a manner that the Administrator prescribes.
4. Acceleration of Vesting .
(a) Termination of Option to Extent Not Assumed in Corporate Transaction . Effective upon the consummation of a Corporate Transaction, the Option shall terminate. However, the Option shall not terminate to the extent it is Assumed in connection with the Corporate Transaction.
(b) Acceleration of Option Upon Corporate Transaction or Change in Control .
(i) Corporate Transaction . In the event of a Corporate Transaction and:
(A) for the portion of the Option that is Assumed or Replaced, then the Option (if Assumed), the replacement award (if Replaced), or the cash incentive program (if Replaced) automatically shall become fully vested, exercisable and payable and be released from any repurchase or forfeiture rights (other than repurchase rights exercisable at Fair Market
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Value) for all of the Shares at the time represented by such Assumed or Replaced portion of the Option, immediately upon termination of the Grantees Continuous Service if such Continuous Service is terminated by the successor company or the Company without Cause or voluntarily by the Grantee with Good Reason within twelve (12) months of the Corporate Transaction; and
(B) for the portion of the Option that is neither Assumed nor Replaced, such portion of the Option shall automatically become fully vested and exercisable and be released from any repurchase or forfeiture rights (other than repurchase rights exercisable at Fair Market Value) for all of the Shares at the time represented by such portion of the Option, immediately prior to the specified effective date of such Corporate Transaction.
(ii) Change in Control . In the event of a Change in Control (other than a Change in Control which also is a Corporate Transaction), the Option shall become fully vested and exercisable and be released from any repurchase or forfeiture rights (other than repurchase rights exercisable at Fair Market Value), immediately prior to the specified effective date of such Change in Control, for all of the Shares at the time represented by the Option.
(c) Effect of Acceleration on Incentive Stock Options . If the Option is an Incentive Stock Option, the portion of the Option accelerated under this Section 4 in connection with a Corporate Transaction or Change in Control shall remain exercisable as an Incentive Stock Option under the Code only to the extent the $100,000 dollar limitation of Section 422(d) of the Code is not exceeded. To the extent such dollar limitation is exceeded, the accelerated excess portion of the Option shall be exercisable as a Non-Qualified Stock Option.
(d) Definition of Good Reason . Good Reason means the occurrence after a Corporate Transaction of any of the following events or conditions unless consented to by the Grantee (and the Grantee shall be deemed to have consented to any such event or condition unless the Grantee provides written notice of the Grantees non-acquiescence within 30 days of the effective time of such event or condition):
(i) a change in the Grantees responsibilities or duties which represents a material and substantial diminution in the Grantees responsibilities or duties as in effect immediately preceding the consummation of a Corporate Transaction;
(ii) a reduction in the Grantees base salary to a level below that in effect at any time within six (6) months preceding the consummation of a Corporate Transaction or at any time thereafter; or
(iii) requiring the Grantee to be based at any place outside a 50-mile radius from the Grantees job location or residence prior to the Corporate Transaction except for reasonably required travel on business which is not materially greater than such travel requirements prior to the Corporate Transaction.
5. Grantees Representations . The Grantee understands that neither the Option nor the Shares exercisable pursuant to the Option have been registered under the Securities Act of 1933, as amended or any United States securities laws. In the event the Shares purchasable pursuant to the exercise of the Option have not been registered under the Securities Act of 1933, as amended,
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at the time the Option is exercised, the Grantee shall, if requested by the Company, concurrently with the exercise of all or any portion of the Option, deliver to the Company an investment representation statement in a form determined by the Administrator.
6. Method of Payment . Payment of the Exercise Price shall be made by any of the following, or a combination thereof, at the election of the Grantee; provided, however, that such exercise method does not then violate any Applicable Law:
(a) cash;
(b) check;
(c) if the exercise occurs on or after the Registration Date, surrender of Shares or delivery of a properly executed form of attestation of ownership of Shares as the Administrator may require (including withholding of Shares otherwise deliverable upon exercise of the Option) which have a Fair Market Value on the date of surrender or attestation equal to the aggregate Exercise Price of the Shares as to which the Option is being exercised (but only to the extent that such exercise of the Option would not result in an accounting compensation charge with respect to the Shares used to pay the exercise price); or
(d) if the exercise occurs on or after the Registration Date, payment through a broker-dealer sale and remittance procedure pursuant to which the Grantee (i) shall provide written instructions to a Company-designated brokerage firm to effect the immediate sale of some or all of the purchased Shares and remit to the Company, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate exercise price payable for the purchased Shares and (ii) shall provide written directives to the Company to deliver the certificates for the purchased Shares directly to such brokerage firm in order to complete the sale transaction.
7. Restrictions on Exercise . The Option may not be exercised if the issuance of the Shares subject to the Option upon such exercise would constitute a violation of any Applicable Laws.
8. Termination or Change of Continuous Service . In the event the Grantees Continuous Service terminates, other than for Cause, the Grantee may, but only during the Post-Termination Exercise Period, exercise the portion of the Option that was vested at the date of such termination (the Termination Date). In the event of termination of the Grantees Continuous Service for Cause, the Grantees right to exercise the Option shall, except as otherwise determined by the Administrator, terminate concurrently with the termination of the Grantees Continuous Service (also the Termination Date). In no event shall the Option be exercised later than the Expiration Date set forth in this Option Agreement. In the event of the Grantees change in status from Employee or Director to any other status of Employee, Director or Consultant, the Option shall remain in effect and vesting of the Option shall cease as of such change in status unless otherwise determined by the Administrator or dictated by any minimum vesting requirements set forth in the Plan; provided, however, with respect to any Incentive Stock Option that shall remain in effect after a change in status from Employee to Director, such
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Incentive Stock Option shall cease to be treated as an Incentive Stock Option and shall be treated as a Non-Qualified Stock Option on the day three (3) months and one (1) day following such change in status. Except as provided in Sections 9 and 10 below, to the extent that the Option was unvested on the Termination Date, or if the Grantee does not exercise the vested portion of the Option within the Post-Termination Exercise Period, the Option shall terminate.
9. Disability of Grantee . In the event the Grantees Continuous Service terminates as a result of his or her Disability, the Grantee may, but only within six (6) months from the Termination Date (and in no event later than the Expiration Date), exercise the portion of the Option that was vested on the Termination Date; provided, however, that if such Disability is not a disability as such term is defined in Section 22(e)(3) of the Code and the Option is an Incentive Stock Option, such Incentive Stock Option shall cease to be treated as an Incentive Stock Option and shall be treated as a Non-Qualified Stock Option on the day three (3) months and one (1) day following the Termination Date. To the extent that the Option was unvested on the Termination Date, or if the Grantee does not exercise the vested portion of the Option within the time specified herein, the Option shall terminate. Section 22(e)(3) of the Code provides that an individual is permanently and totally disabled if he or she is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve (12) months.
10. Death of Grantee . In the event of the termination of the Grantees Continuous Service as a result of his or her death, or in the event of the Grantees death during the Post-Termination Exercise Period or during the six (6) month period following the Grantees termination of Continuous Service as a result of his or her Disability, the Grantees estate, or a person who acquired the right to exercise the Option by bequest or inheritance, may exercise the portion of the Option that was vested at the date of termination, within twelve (12) months from the date of death (but in no event later than the Expiration Date). To the extent that the Option was unvested on the date of death, or if the vested portion of the Option is not exercised within the time specified herein, the Option shall terminate.
11. Transferability of Option . The Option may not be transferred in any manner other than by will or by the laws of descent and distribution and may be exercised during the lifetime of the Grantee only by the Grantee. The terms of the Option shall be binding upon the executors, administrators, heirs and successors of the Grantee.
12. Term of Option . The Option must be exercised no later than the Expiration Date set forth in this Option Agreement or such earlier date as otherwise provided herein. After the Expiration Date or such earlier date, the Option shall be of no further force or effect and may not be exercised.
13. Companys Right of First Refusal .
(a) Transfer Notice . Neither the Grantee nor a transferee (either being sometimes referred to herein as the Holder) shall sell, hypothecate, encumber or otherwise transfer any Shares or any right or interest therein without first complying with the provisions of this
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Section 13 or obtaining the prior written consent of the Company. In the event the Holder desires to accept a bona fide third-party offer for any or all of the Shares, the Holder shall provide the Company with written notice (the Transfer Notice) of:
(i) The Holders intention to transfer;
(ii) The name of the proposed transferee;
(iii) The number of Shares to be transferred; and
(iv) The proposed transfer price or value and terms thereof.
(b) First Refusal Exercise Notice . The Company shall have the right to purchase (the Right of First Refusal) all but not less than all, of the Shares which are described in the Transfer Notice (the Offered Shares) at any time during the period commencing upon receipt of the Transfer Notice and ending twenty (20) days after the first date on which the Company determines that the Right of First Refusal may be exercised without incurring an accounting expense with respect to such exercise (the Option Period) at (i) the per share price or value and in accordance with the terms stated in the Transfer Notice (subject to Section 13(c) below) or (ii) the Fair Market Value of the Shares on the date on which the purchase is to be effected if no consideration is paid pursuant to the terms stated in the Transfer Notice, which Right of First Refusal shall be exercised by written notice (the First Refusal Exercise Notice) to the Holder.
(c) Payment Terms . The Company shall consummate the purchase of the Offered Shares on the terms set forth in the Transfer Notice within 30 days after delivery of the First Refusal Exercise Notice; provided, however, that in the event the Transfer Notice provides for the payment for the Offered Shares other than in cash, the Company and/or its assigns shall have the right to pay for the Offered Shares by the discounted cash equivalent of the consideration described in the Transfer Notice as reasonably determined by the Administrator. Upon payment for the Offered Shares to the Holder or into escrow for the benefit of the Holder, the Company or its assigns shall become the legal and beneficial owner of the Offered Shares and all rights and interest therein or related thereto, and the Company shall have the right to transfer the Offered Shares to its own name or its assigns without further action by the Holder.
(d) Assignment . Whenever the Company shall have the right to purchase Shares under this Right of First Refusal, the Company may designate and assign one or more employees, officers, directors or stockholders of the Company or other persons or organizations, to exercise all or a part of the Companys Right of First Refusal.
(e) Non-Exercise . If the Company and/or its assigns do not collectively elect to exercise the Right of First Refusal within the Option Period or such earlier time if the Company and/or its assigns notifies the Holder that it will not exercise the Right of First Refusal, then the Holder may transfer the Shares upon the terms and conditions stated in the Transfer Notice, provided that:
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(i) The transfer is made within 90 days of the earlier of (A) the date the Company and/or its assigns notify the Holder that the Right of First Refusal will not be exercised or (B) the expiration of the Option Period; and
(ii) The transferee agrees in writing that such Shares shall be held subject to the provisions of this Option Agreement.
(f) Expiration of Transfer Period . Following such 90-day period, no transfer of the Offered Shares and no change in the terms of the transfer as stated in the Transfer Notice (including the name of the proposed transferee) shall be permitted without a new written Transfer Notice prepared and submitted in accordance with the requirements of this Right of First Refusal.
(g) Termination of Right of First Refusal . The provisions of this Right of First Refusal shall terminate as to all Shares upon the Registration Date.
(h) Additional Shares or Substituted Securities . In the event of any transaction described in Sections 10 or 11 of the Plan, any new, substituted or additional securities or other property which is by reason of any such transaction distributed with respect to the Shares shall be immediately subject to the Right of First Refusal, but only to the extent the Shares are at the time covered by such right.
14. Stop-Transfer Notices . In order to ensure compliance with the restrictions on transfer set forth in this Option Agreement or the Plan, the Company may issue appropriate stop transfer instructions to its transfer agent, if any, and, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.
15. Refusal to Transfer . The Company shall not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of this Option Agreement or (ii) to treat as owner of such Shares or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such Shares shall have been so transferred.
16. Tax Consequences . Set forth below is a brief summary as of the date of this Option Agreement of some of the federal tax consequences of exercise of the Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE GRANTEE UNDERSTANDS THAT THE GRANTEE MAY SUFFER ADVERSE TAX CONSEQUENCES AS A RESULT OF THE GRANTEES PURCHASE OR DISPOSITION OF THE SHARES. THE GRANTEE REPRESENTS THAT THE GRANTEE HAS CONSULTED WITH ANY TAX CONSULTANTS THE GRANTEE DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE OR DISPOSITION OF THE SHARES AND THAT THE GRANTEE IS NOT RELYING ON THE COMPANY FOR ANY TAX ADVICE.
(a) Exercise of Incentive Stock Option . If the Option qualifies as an Incentive Stock Option, there will be no regular federal income tax liability upon the exercise of the Option, although the excess, if any, of the Fair Market Value of the Shares on the date of
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exercise over the Exercise Price will be treated as income for purposes of the alternative minimum tax for federal tax purposes and may subject the Grantee to the alternative minimum tax in the year of exercise. However, the Internal Revenue Service issued proposed regulations which would subject the Grantee to withholding at the time the Grantee exercises an Incentive Stock Option for Social Security and Medicare based upon the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price. These proposed regulations are subject to further modification by the Internal Revenue Service and, if adopted, would be effective only for the exercise of an Incentive Stock Option that occurs two years after the regulations are issued in final form.
(b) Exercise of Incentive Stock Option Following Disability . If the Grantees Continuous Service terminates as a result of Disability that is not permanent and total disability as such term is defined in Section 22(e)(3) of the Code, to the extent permitted on the date of termination, the Grantee must exercise an Incentive Stock Option within three (3) months of such termination for the Incentive Stock Option to be qualified as an Incentive Stock Option. Section 22(e)(3) of the Code provides that an individual is permanently and totally disabled if he or she is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve (12) months.
(c) Exercise of Non-Qualified Stock Option . On exercise of a Non-Qualified Stock Option, the Grantee will be treated as having received compensation income (taxable at ordinary income tax rates) equal to the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price. If the Grantee is an Employee or a former Employee, the Company will be required to withhold from the Grantees compensation or collect from the Grantee and pay to the applicable taxing authorities an amount in cash equal to a percentage of this compensation income at the time of exercise, and may refuse to honor the exercise and refuse to deliver Shares if such withholding amounts are not delivered at the time of exercise.
(d) Disposition of Shares . In the case of a Non-Qualified Stock Option, if Shares are held for more than one year, any gain realized on disposition of the Shares will be treated as long-term capital gain for federal income tax purposes. In the case of an Incentive Stock Option, if Shares transferred pursuant to the Option are held for more than one year after receipt of the Shares and are disposed more than two years after the Date of Award, any gain realized on disposition of the Shares also will be treated as capital gain for federal income tax purposes and subject to the same tax rates and holding periods that apply to Shares acquired upon exercise of a Non-Qualified Stock Option. If Shares purchased under an Incentive Stock Option are disposed of prior to the expiration of such one-year or two-year periods, any gain realized on such disposition will be treated as compensation income (taxable at ordinary income rates) to the extent of the difference between the Exercise Price and the lesser of (i) the Fair Market Value of the Shares on the date of exercise, or (ii) the sale price of the Shares.
17. Lock-Up Agreement .
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(a) Agreement . The Grantee, if requested by the Company and the lead underwriter of any public offering of the Common Stock (the Lead Underwriter), hereby irrevocably agrees not to sell, contract to sell, grant any option to purchase, transfer the economic risk of ownership in, make any short sale of, pledge or otherwise transfer or dispose of any interest in any Common Stock or any securities convertible into or exchangeable or exercisable for or any other rights to purchase or acquire Common Stock (except Common Stock included in such public offering or acquired on the public market after such offering) during the 180-day period following the effective date of a registration statement of the Company filed under the Securities Act of 1933, as amended, or such shorter period of time as the Lead Underwriter shall specify. The Grantee further agrees to sign such documents as may be requested by the Lead Underwriter to effect the foregoing and agrees that the Company may impose stop-transfer instructions with respect to such Common Stock subject to the lock-up period until the end of such period. The Company and the Grantee acknowledge that each Lead Underwriter of a public offering of the Companys stock, during the period of such offering and for the 180-day period thereafter, is an intended beneficiary of this Section 17.
(b) No Amendment Without Consent of Underwriter . During the period from identification of a Lead Underwriter in connection with any public offering of the Companys Common Stock until the earlier of (i) the expiration of the lock-up period specified in Section 17(a) in connection with such offering or (ii) the abandonment of such offering by the Company and the Lead Underwriter, the provisions of this Section 17 may not be amended or waived except with the consent of the Lead Underwriter.
18. Entire Agreement: Governing Law . The Plan and this Option Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Grantee with respect to the subject matter hereof, and may not be modified adversely to the Grantees interest except by means of a writing signed by the Company and the Grantee. Nothing in the Plan and this Option Agreement (except as expressly provided therein) is intended to confer any rights or remedies on any persons other than the parties. The Plan and this Option Agreement are to be construed in accordance with and governed by the internal laws of the State of Nevada without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the State of Nevada to the rights and duties of the parties. Should any provision of the Plan or this Option Agreement be determined by a court of law to be illegal or unenforceable, such provision shall be enforced to the fullest extent allowed by law and the other provisions shall nevertheless remain effective and shall remain enforceable.
19. Headings . The captions used in this Option Agreement are inserted for convenience and shall not be deemed a part of the Option for construction or interpretation.
20. Dispute Resolution. The provisions of this Section 20 shall be the exclusive means of resolving disputes arising out of or relating to the Plan and this Option Agreement. The Company, the Grantee, and the Grantees assignees (the parties) shall attempt in good faith to resolve any disputes arising out of or relating to the Plan and this Option Agreement by negotiation between individuals who have authority to settle the controversy. Negotiations shall be commenced by either party by notice of a written statement of the partys position and the
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name and title of the individual who will represent the party. Within thirty (30) days of the written notification, the parties shall meet at a mutually acceptable time and place, and thereafter as often as they reasonably deem necessary, to resolve the dispute. If the dispute has not been resolved by negotiation, the parties agree that any suit, action, or proceeding arising out of or relating to the Plan or this Option Agreement shall be brought in the United States District Court for the District of Nevada (or should such court lack jurisdiction to hear such action, suit or proceeding, in a Nevada state court in the County of Clark) and that the parties shall submit to the jurisdiction of such court. The parties irrevocably waive, to the fullest extent permitted by law, any objection the party may have to the laying of venue for any such suit, action or proceeding brought in such court. THE PARTIES ALSO EXPRESSLY WAIVE ANY RIGHT THEY HAVE OR MAY HAVE TO A JURY TRIAL OF ANY SUCH SUIT, ACTION OR PROCEEDING. If any one or more provisions of this Section 20 shall for any reason be held invalid or unenforceable, it is the specific intent of the parties that such provisions shall be modified to the minimum extent necessary to make it or its application valid and enforceable.
21. Notices . Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery, upon deposit for delivery by an internationally recognized express mail courier service or upon deposit in the United States mail by certified mail (if the parties are within the United States), with postage and fees prepaid, addressed to the other party at its address as shown in this Option Agreement, or to such other address as such party may designate in writing from time to time to the other party.
22. Confidentiality . The Company shall provide to the Grantee, during the period the Option is outstanding, copies of financial statements of the Company at least annually. The Grantee understands and agrees that such financial statements are confidential and shall not be disclosed by the Grantee, to any entity or person, for any reason, at any time, without the prior written consent of the Company, unless required by law. If disclosure of such financial statements is required by law, whether through subpoena, request for production, deposition, or otherwise, the Grantee promptly shall provide written notice to Company, including copies of the subpoena, request for production, deposition, or otherwise, within five (5) business days of their receipt by the Grantee and prior to any disclosure so as to provide Company an opportunity to move to quash or otherwise to oppose the disclosure. Notwithstanding the foregoing, the Grantee may disclose the terms of such financial statements to his or her spouse or domestic partner, and for legitimate business reasons, to legal, financial, and tax advisors.
23. Rights as Stockholder . Until the stock certificate evidencing the Shares is issued following the exercise of the Option (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Shares, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such stock certificate promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in Section 10 of the Plan. The Grantee shall enjoy rights as a stockholder until such time as the Grantee disposes of the Shares or the Company and/or its assignee(s) exercises the Right of First Refusal. Upon such exercise, the Grantee shall have no further rights as a holder of the Shares so purchased except the right to receive payment for the Shares so
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purchased in accordance with the provisions of this Option Agreement, and the Grantee shall forthwith cause the certificate(s) evidencing the Shares so purchased to be surrendered to the Company for transfer or cancellation.
24. Restrictive Legends . The Grantee understands and agrees that the Company shall cause the legends set forth below or legends substantially equivalent thereto, to be placed upon any certificate(s) evidencing ownership of the Shares together with any other legends that may be required by the Company or by state or federal securities laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE ACT) OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND A RIGHT OF FIRST REFUSAL HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN THE OPTION AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES OF THESE SHARES.
IN WITNESS WHEREOF, the Company and the Grantee have executed this Option Agreement and agree that the Option is to be governed by the terms and conditions of this Option Agreement and the Plan.
Western Alliance Bancorporation
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THE GRANTEE ACKNOWLEDGES AND AGREES THAT THE SHARES SUBJECT TO THE OPTION SHALL VEST, IF AT ALL, ONLY DURING THE PERIOD OF THE GRANTEES CONTINUOUS SERVICE (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THE OPTION OR ACQUIRING SHARES HEREUNDER). THE GRANTEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS
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OPTION AGREEMENT OR THE PLAN SHALL CONFER UPON THE GRANTEE ANY RIGHT WITH RESPECT TO FUTURE AWARDS OR CONTINUATION OF THE GRANTEES CONTINUOUS SERVICE, NOR SHALL IT INTERFERE IN ANY WAY WITH THE GRANTEES RIGHT OR THE RIGHT OF THE COMPANY OR RELATED ENTITY TO WHICH THE GRANTEE PROVIDES SERVICES TO TERMINATE THE GRANTEES CONTINUOUS SERVICE, WITH OR WITHOUT CAUSE, AND WITH OR WITHOUT NOTICE. THE GRANTEE ACKNOWLEDGES THAT UNLESS THE GRANTEE HAS A WRITTEN EMPLOYMENT AGREEMENT WITH THE COMPANY TO THE CONTRARY, THE GRANTEES STATUS IS AT WILL.
The Grantee acknowledges receipt of a copy of this Option Agreement and the Plan, and represents that he or she is familiar with the terms and provisions thereof, and hereby accepts the Option subject to all of the terms and provisions hereof and thereof. The Grantee has reviewed this Option Agreement and the Plan in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Option Agreement, and fully understands all provisions of this Option Agreement and the Plan. The Grantee hereby agrees that all disputes arising out of or relating to this Option Agreement and the Plan shall be resolved in accordance with Section 20 of this Option Agreement. The Grantee further agrees to notify the Company upon any change in the residence address indicated in this Option Agreement.
Dated:
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Grantee |
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EXHIBIT A
WESTERN ALLIANCE BANCORPORATION 2002 STOCK OPTION PLAN
EXERCISE NOTICE
____________________
Attention: Chief Financial Officer
1. Effective as of today, ___, the undersigned (the Grantee) hereby elects to exercise the Grantees option to purchase ___shares of the Common Stock (the Shares) of Western Alliance Bancorporation, (the Company) under and pursuant to the Companys 2002 Stock Option Plan, as amended from time to time (the Plan) and the [ ] Incentive [ ] Non-Qualified Stock Option Award Agreement (the Option Agreement) dated ___, ___. Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Exercise Notice.
2. Representations of the Grantee . The Grantee acknowledges that the Grantee has received, read and understood the Plan and the Option Agreement and agrees to abide by and be bound by their terms and conditions. In the event the Shares purchased hereunder have not been registered under the Securities Act of 1933, as amended, the Grantee shall, if requested by the Company, deliver to the Company his or her Investment Representation Statement in the form attached hereto as Exhibit 1.
3. Delivery of Payment . The Grantee herewith delivers to the Company the full Exercise Price for the Shares, which, to the extent selected, shall be deemed to be satisfied by use of the broker-dealer sale and remittance procedure to pay the Exercise Price provided in Section 6(d) of the Option Agreement.
4. Successors and Assigns . The Company may assign any of its rights under this Exercise Notice to single or multiple assignees, and this agreement shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, this Exercise Notice shall be binding upon the Grantee and his or her heirs, executors, administrators, successors and assigns.
5. Headings . The captions used in this Exercise Notice are inserted for convenience and shall not be deemed a part of this agreement for construction or interpretation.
6. Further Instruments . The parties agree to execute such further instruments and to take such further action as may be reasonably necessary to carry out the purposes and intent of this Exercise Notice.
7. Entire Agreement . The Plan and the Option Agreement are incorporated herein by reference and together with this Exercise Notice constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Grantee with respect to the subject matter hereof, and may
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not be modified adversely to the Grantees interest except by means of a writing signed by the Company and the Grantee. Nothing in the Plan, the Option Agreement and this Exercise Notice (except as expressly provided therein) is intended to confer any rights or remedies on any persons other than the parties.
Submitted by: | Accepted by: | |||||
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GRANTEE: | WESTERN ALLIANCE BANCORPORATION | |||||
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By: | |||||
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Title: | |||||
(Signature)
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Address:
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Address: | |||||
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EXHIBIT 1
WESTERN ALLIANCE BANCORPORATION 2002 STOCK OPTION PLAN
INVESTMENT REPRESENTATION STATEMENT
GRANTEE:
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COMPANY:
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WESTERN ALLIANCE BANCORPORATION | |||
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SECURITY:
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COMMON STOCK | |||
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AMOUNT:
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DATE:
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In connection with the purchase of the above-listed Securities, the undersigned Grantee represents to the Company the following:
(a) Grantee is aware of the Companys business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Securities. Grantee is acquiring these Securities for investment for Grantees own account only and not with a view to, or for resale in connection with, any distribution thereof within the meaning of the Securities Act of 1933, as amended (the Securities Act).
(b) Grantee acknowledges and understands that the Securities constitute restricted securities under the Securities Act and have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon among other things, the bona fide nature of Grantees investment intent as expressed herein. Grantee further understands that the Securities must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. Grantee further acknowledges and understands that the Company is under no obligation to register the Securities. Grantee understands that the certificate evidencing the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not required in the opinion of counsel satisfactory to the Company.
(c) Grantee is familiar with the provisions of Rule 701 and Rule 144, each promulgated under the Securities Act, which, in substance, permit limited public resale of restricted securities acquired, directly or indirectly from the issuer thereof, in a non-public offering subject to the satisfaction of certain conditions. Rule 701 provides that if the issuer qualifies under Rule 701 at the time of the grant of the Option to the Grantee, the exercise will be exempt from registration under the Securities Act. In the event the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, ninety (90) days thereafter (or such longer period as any market stand-off agreement may require) the Securities exempt under Rule 701 may be resold, subject to the satisfaction of certain of the conditions specified by Rule 144, including: (1) the resale being made through a broker in an unsolicited brokers transaction or in transactions directly with a market maker (as said term is defined under the Securities Exchange Act of 1934); and, in the case of an affiliate, (2) the
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availability of certain public information about the Company, (3) the amount of Securities being sold during any three month period not exceeding the limitations specified in Rule 144(e), and (4) the timely filing of a Form 144, if applicable.
In the event that the Company does not qualify under Rule 701 at the time of grant of the Option, then the Securities may be resold in certain limited circumstances subject to the provisions of Rule 144, which requires the resale to occur not less than one year after the later of the date the Securities were sold by the Company or the date the Securities were sold by an affiliate of the Company, within the meaning of Rule 144; and, in the case of acquisition of the Securities by an affiliate, or by a non-affiliate who subsequently holds the Securities less than two (2) years, the satisfaction of the conditions set forth in sections (1), (2), (3) and (4) of the paragraph immediately above.
(d) Grantee further understands that in the event all of the applicable requirements of Rule 701 or 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rules 144 and 701 are not exclusive, the Staff of the Securities and Exchange Commission has expressed its opinion that persons proposing to sell private placement securities other than in a registered offering and otherwise than pursuant to Rules 144 or 701 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk. Grantee understands that no assurances can be given that any such other registration exemption will be available in such event.
(e) Grantee represents that Grantee is a resident of the state of ____________.
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Signature of Grantee: | |
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Date:___, ___ |
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Exhibit 10.7
WESTERN ALLIANCE BANCORPORATION 2002 STOCK OPTION PLAN
STOCK OPTION AWARD AGREEMENT
Grantees Name and Address:
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Award Number
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Date of Award
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Vesting Commencement Date
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Exercise Price per Share
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$ | |
Total Number of Shares Subject
to the Option
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Total Exercise Price
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$ | |
Type of Option:
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Incentive Stock Option | |
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Non-Qualified Stock Option | |
Expiration Date:
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Post-Termination Exercise Period:
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Three (3) Months |
1. Grant of Option . You (the Grantee) have been granted an option (the Option) to purchase the Total Number of Shares of Common Stock subject to the Option (the Shares) at the Exercise Price per Share (the Exercise Price) set forth above, subject to the terms and conditions of this Stock Option Award Agreement (the Option Agreement) and terms and conditions of the Western Alliance Bancorporation 2002 Stock Option Plan, as amended from time to time (the Plan), which are incorporated herein by reference. Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Option Agreement.
If designated above as an Incentive Stock Option, the Option is intended to qualify as an Incentive Stock Option as defined in Section 422 of the Code. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of Shares subject to Options designated as Incentive Stock Options which become exercisable for the first time by the Grantee during any calendar year (under all plans of the Company or any Parent or Subsidiary of the Company) exceeds $100,000, such excess Options, to the extent of the Shares covered thereby in excess of the foregoing limitation, shall be treated as Non-Qualified Stock Options. For this purpose, Incentive Stock Options shall be taken into account in the order in which they were
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granted, and the Fair Market Value of the Shares shall be determined as of the date the Option with respect to such Shares is awarded.
2. Vesting .
(a) Vesting Schedule . Subject to the Grantees Continuous Service and other limitations set forth in this Option Agreement and the Plan, the Option may be exercised, in whole or in part, in accordance with the following schedule: 20% of the Shares subject to the Option shall vest twelve (12) months after the Vesting Commencement Date, and an additional 20% of the Shares subject to the Option shall vest on each anniversary of the Vesting Commencement Date thereafter.
(b) Leave of Absence . During any authorized leave of absence, the vesting of the Option as provided in Section 2(a) of this Option Agreement shall be suspended after the leave of absence exceeds a period of ninety (90) days. Vesting of the Option shall resume upon the Grantees termination of the leave of absence and return to service to the Company or a Related Entity. The Vesting Schedule of the Option shall be extended by the length of the suspension.
(c) Termination for Cause . In the event of termination of the Grantees Continuous Service for Cause, the Grantees right to exercise the Option shall terminate concurrently with the termination of the Grantees Continuous Service, except as otherwise determined by the Administrator.
(d) Change in Status . In the event of the Grantees change in status from an Employee whose customary employment is 20 hours or more per week to an Employee whose customary employment is fewer than 20 hours per week, vesting of the Option shall continue only to the extent determined by the Administrator as of such change in status consistent with any minimum vesting requirements set forth in the Plan. In the event of the Grantees change in status from Employee to Consultant, vesting of the Option shall cease as of such change in status unless otherwise determined by the Administrator.
3. Exercise of Option .
(a) Right to Exercise . The Option shall be exercisable during its term in accordance with the Vesting Schedule set out in Section 2(a) of this Option Agreement and with the applicable provisions of the Plan and this Option Agreement. The Option shall be subject to the provisions of Section 11 of the Plan relating to the exercisability or termination of the Option in the event of a Corporate Transaction or Change in Control. The Grantee shall be subject to reasonable limitations on the number of requested exercises during any monthly or weekly period as determined by the Administrator. In no event shall the Company issue fractional Shares.
(b) Method of Exercise . The Option shall be exercisable by delivery of an exercise notice (a form of which is attached as Exhibit A) or by such other procedure as specified from time to time by the Administrator which shall state the election to exercise the Option, the whole number of Shares in respect of which the Option is being exercised, and such other provisions as may be required by the Administrator. The exercise notice shall be delivered in
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person, by certified mail, or by such other method (including electronic transmission) as determined from time to time by the Administrator to the Company accompanied by payment of the Exercise Price. The Option shall be deemed to be exercised upon receipt by the Company of such notice accompanied by the Exercise Price, which, to the extent selected, shall be deemed to be satisfied by use of the broker-dealer sale and remittance procedure to pay the Exercise Price provided in Section 5(d), below.
(c) Taxes . No Shares will be delivered to the Grantee or other person pursuant to the exercise of the Option until the Grantee or other person has made arrangements acceptable to the Administrator for the satisfaction of applicable income tax and employment tax withholding obligations, including, without limitation, such other tax obligations of the Grantee incident to the receipt of Shares or the disqualifying disposition of Shares received on exercise of an Incentive Stock Option. Upon exercise of the Option, the Company or the Grantees employer may offset or withhold (from any amount owed by the Company or the Grantees employer to the Grantee) or collect from the Grantee or other person an amount sufficient to satisfy such tax obligations and/or the employers withholding obligations. In the case of an Incentive Stock Option, the Grantee agrees, as partial consideration for the designation of the Option as an Incentive Stock Option, to notify the Company in writing within thirty (30) days of any disposition of any shares acquired by exercise of the Option if such disposition occurs within two (2) years from the Date of Award or within one (1) year from the date the Shares were transferred to the Grantee. If the Company is required to satisfy any federal, state or local income or employment tax withholding obligations as a result of such an early disposition, the Grantee agrees to satisfy the amount of such withholding in a manner that the Administrator prescribes.
4. Grantees Representations . The Grantee understands that neither the Option nor the Shares exercisable pursuant to the Option have been registered under the Securities Act of 1933, as amended or any United States securities laws. In the event the Shares purchasable pursuant to the exercise of the Option have not been registered under the Securities Act of 1933, as amended, at the time the Option is exercised, the Grantee shall, if requested by the Company, concurrently with the exercise of all or any portion of the Option, deliver to the Company an investment representation statement in a form determined by the Administrator.
5. Method of Payment . Payment of the Exercise Price shall be made by any of the following, or a combination thereof, at the election of the Grantee; provided, however, that such exercise method does not then violate any Applicable Law:
(a) cash;
(b) check;
(c) if the exercise occurs on or after the Registration Date, surrender of Shares or delivery of a properly executed form of attestation of ownership of Shares as the Administrator may require (including withholding of Shares otherwise deliverable upon exercise of the Option) which have a Fair Market Value on the date of surrender or attestation equal to the aggregate Exercise Price of the Shares as to which the Option is being exercised (but only to the extent that
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such exercise of the Option would not result in an accounting compensation charge with respect to the Shares used to pay the exercise price); or
(d) if the exercise occurs on or after the Registration Date, payment through a broker-dealer sale and remittance procedure pursuant to which the Grantee (i) shall provide written instructions to a Company-designated brokerage firm to effect the immediate sale of some or all of the purchased Shares and remit to the Company, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate exercise price payable for the purchased Shares and (ii) shall provide written directives to the Company to deliver the certificates for the purchased Shares directly to such brokerage firm in order to complete the sale transaction.
6. Restrictions on Exercise . The Option may not be exercised if the issuance of the Shares subject to the Option upon such exercise would constitute a violation of any Applicable Laws.
7. Termination or Change of Continuous Service . In the event the Grantees Continuous Service terminates, other than for Cause, the Grantee may, but only during the Post-Termination Exercise Period, exercise the portion of the Option that was vested at the date of such termination (the Termination Date). In the event of termination of the Grantees Continuous Service for Cause, the Grantees right to exercise the Option shall, except as otherwise determined by the Administrator, terminate concurrently with the termination of the Grantees Continuous Service (also the Termination Date). In no event shall the Option be exercised later than the Expiration Date set forth in this Option Agreement. In the event of the Grantees change in status from Employee or Director to any other status of Employee, Director or Consultant, the Option shall remain in effect and vesting of the Option shall cease as of such change in status unless otherwise determined by the Administrator or dictated by any minimum vesting requirements set forth in the Plan; provided, however, with respect to any Incentive Stock Option that shall remain in effect after a change in status from Employee to Director, such Incentive Stock Option shall cease to be treated as an Incentive Stock Option and shall be treated as a Non-Qualified Stock Option on the day three (3) months and one (1) day following such change in status. Except as provided in Sections 8 and 9 below, to the extent that the Option was unvested on the Termination Date, or if the Grantee does not exercise the vested portion of the Option within the Post-Termination Exercise Period, the Option shall terminate.
8. Disability of Grantee . In the event the Grantees Continuous Service terminates as a result of his or her Disability, the Grantee may, but only within six (6) months from the Termination Date (and in no event later than the Expiration Date), exercise the portion of the Option that was vested on the Termination Date; provided, however, that if such Disability is not a disability as such term is defined in Section 22(e)(3) of the Code and the Option is an Incentive Stock Option, such Incentive Stock Option shall cease to be treated as an Incentive Stock Option and shall be treated as a Non-Qualified Stock Option on the day three (3) months and one (1) day following the Termination Date. To the extent that the Option was unvested on the Termination Date, or if the Grantee does not exercise the vested portion of the Option within the time specified herein, the Option shall terminate. Section 22(e)(3) of the Code provides that an individual is permanently and totally disabled if he or she is unable to engage in any
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substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve (12) months.
9. Death of Grantee . In the event of the termination of the Grantees Continuous Service as a result of his or her death, or in the event of the Grantees death during the Post-Termination Exercise Period or during the six (6) month period following the Grantees termination of Continuous Service as a result of his or her Disability, the Grantees estate, or a person who acquired the right to exercise the Option by bequest or inheritance, may exercise the portion of the Option that was vested at the date of termination, within twelve (12) months from the date of death (but in no event later than the Expiration Date). To the extent that the Option was unvested on the date of death, or if the vested portion of the Option is not exercised within the time specified herein, the Option shall terminate.
10. Transferability of Option . The Option may not be transferred in any manner other than by will or by the laws of descent and distribution and may be exercised during the lifetime of the Grantee only by the Grantee. The terms of the Option shall be binding upon the executors, administrators, heirs and successors of the Grantee.
11. Term of Option . The Option must be exercised no later than the Expiration Date set forth in this Option Agreement or such earlier date as otherwise provided herein. After the Expiration Date or such earlier date, the Option shall be of no further force or effect and may not be exercised.
12. Companys Right of First Refusal .
(a) Transfer Notice . Neither the Grantee nor a transferee (either being sometimes referred to herein as the Holder) shall sell, hypothecate, encumber or otherwise transfer any Shares or any right or interest therein without first complying with the provisions of this Section 12 or obtaining the prior written consent of the Company. In the event the Holder desires to accept a bona fide third-party offer for any or all of the Shares, the Holder shall provide the Company with written notice (the Transfer Notice) of:
(i) | The Holders intention to transfer; | |||
(ii) | The name of the proposed transferee; | |||
(iii) | The number of Shares to be transferred; and | |||
(iv) | The proposed transfer price or value and terms thereof. |
(b) First Refusal Exercise Notice . The Company shall have the right to purchase (the Right of First Refusal) all but not less than all, of the Shares which are described in the Transfer Notice (the Offered Shares) at any time during the period commencing upon receipt of the Transfer Notice and ending twenty (20) days after the first date on which the Company determines that the Right of First Refusal may be exercised without incurring an accounting expense with respect to such exercise (the Option Period) at (i) the per share price or value and
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in accordance with the terms stated in the Transfer Notice (subject to Section 12(c) below) or (ii) the Fair Market Value of the Shares on the date on which the purchase is to be effected if no consideration is paid pursuant to the terms stated in the Transfer Notice, which Right of First Refusal shall be exercised by written notice (the First Refusal Exercise Notice) to the Holder.
(c) Payment Terms . The Company shall consummate the purchase of the Offered Shares on the terms set forth in the Transfer Notice within 30 days after delivery of the First Refusal Exercise Notice; provided, however, that in the event the Transfer Notice provides for the payment for the Offered Shares other than in cash, the Company and/or its assigns shall have the right to pay for the Offered Shares by the discounted cash equivalent of the consideration described in the Transfer Notice as reasonably determined by the Administrator. Upon payment for the Offered Shares to the Holder or into escrow for the benefit of the Holder, the Company or its assigns shall become the legal and beneficial owner of the Offered Shares and all rights and interest therein or related thereto, and the Company shall have the right to transfer the Offered Shares to its own name or its assigns without further action by the Holder.
(d) Assignment . Whenever the Company shall have the right to purchase Shares under this Right of First Refusal, the Company may designate and assign one or more employees, officers, directors or stockholders of the Company or other persons or organizations, to exercise all or a part of the Companys Right of First Refusal.
(e) Non-Exercise . If the Company and/or its assigns do not collectively elect to exercise the Right of First Refusal within the Option Period or such earlier time if the Company and/or its assigns notifies the Holder that it will not exercise the Right of First Refusal, then the Holder may transfer the Shares upon the terms and conditions stated in the Transfer Notice, provided that:
(i) The transfer is made within 90 days of the earlier of (A) the date the Company and/or its assigns notify the Holder that the Right of First Refusal will not be exercised or (B) the expiration of the Option Period; and
(ii) The transferee agrees in writing that such Shares shall be held subject to the provisions of this Option Agreement.
(f) Expiration of Transfer Period . Following such 90-day period, no transfer of the Offered Shares and no change in the terms of the transfer as stated in the Transfer Notice (including the name of the proposed transferee) shall be permitted without a new written Transfer Notice prepared and submitted in accordance with the requirements of this Right of First Refusal.
(g) Termination of Right of First Refusal . The provisions of this Right of First Refusal shall terminate as to all Shares upon the Registration Date.
(h) Additional Shares or Substituted Securities . In the event of any transaction described in Sections 10 or 11 of the Plan, any new, substituted or additional securities or other property which is by reason of any such transaction distributed with respect to the Shares shall be
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immediately subject to the Right of First Refusal, but only to the extent the Shares are at the time covered by such right.
13. Stop-Transfer Notices . In order to ensure compliance with the restrictions on transfer set forth in this Option Agreement or the Plan, the Company may issue appropriate stop transfer instructions to its transfer agent, if any, and, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.
14. Refusal to Transfer . The Company shall not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of this Option Agreement or (ii) to treat as owner of such Shares or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such Shares shall have been so transferred.
15. Tax Consequences . Set forth below is a brief summary as of the date of this Option Agreement of some of the federal tax consequences of exercise of the Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE GRANTEE UNDERSTANDS THAT THE GRANTEE MAY SUFFER ADVERSE TAX CONSEQUENCES AS A RESULT OF THE GRANTEES PURCHASE OR DISPOSITION OF THE SHARES. THE GRANTEE REPRESENTS THAT THE GRANTEE HAS CONSULTED WITH ANY TAX CONSULTANTS THE GRANTEE DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE OR DISPOSITION OF THE SHARES AND THAT THE GRANTEE IS NOT RELYING ON THE COMPANY FOR ANY TAX ADVICE.
(a) Exercise of Incentive Stock Option . If the Option qualifies as an Incentive Stock Option, there will be no regular federal income tax liability upon the exercise of the Option, although the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price will be treated as income for purposes of the alternative minimum tax for federal tax purposes and may subject the Grantee to the alternative minimum tax in the year of exercise. However, the Internal Revenue Service issued proposed regulations which would subject the Grantee to withholding at the time the Grantee exercises an Incentive Stock Option for Social Security and Medicare based upon the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price. These proposed regulations are subject to further modification by the Internal Revenue Service and, if adopted, would be effective only for the exercise of an Incentive Stock Option that occurs two years after the regulations are issued in final form.
(b) Exercise of Incentive Stock Option Following Disability . If the Grantees Continuous Service terminates as a result of Disability that is not permanent and total disability as such term is defined in Section 22(e)(3) of the Code, to the extent permitted on the date of termination, the Grantee must exercise an Incentive Stock Option within three (3) months of such termination for the Incentive Stock Option to be qualified as an Incentive Stock Option. Section 22(e)(3) of the Code provides that an individual is permanently and totally disabled if he or she is unable to engage in any substantial gainful activity by reason of any medically
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determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve (12) months.
(c) Exercise of Non-Qualified Stock Option . On exercise of a Non-Qualified Stock Option, the Grantee will be treated as having received compensation income (taxable at ordinary income tax rates) equal to the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price. If the Grantee is an Employee or a former Employee, the Company will be required to withhold from the Grantees compensation or collect from the Grantee and pay to the applicable taxing authorities an amount in cash equal to a percentage of this compensation income at the time of exercise, and may refuse to honor the exercise and refuse to deliver Shares if such withholding amounts are not delivered at the time of exercise.
(d) Disposition of Shares . In the case of a Non-Qualified Stock Option, if Shares are held for more than one year, any gain realized on disposition of the Shares will be treated as long-term capital gain for federal income tax purposes. In the case of an Incentive Stock Option, if Shares transferred pursuant to the Option are held for more than one year after receipt of the Shares and are disposed more than two years after the Date of Award, any gain realized on disposition of the Shares also will be treated as capital gain for federal income tax purposes and subject to the same tax rates and holding periods that apply to Shares acquired upon exercise of a Non-Qualified Stock Option. If Shares purchased under an Incentive Stock Option are disposed of prior to the expiration of such one-year or two-year periods, any gain realized on such disposition will be treated as compensation income (taxable at ordinary income rates) to the extent of the difference between the Exercise Price and the lesser of (i) the Fair Market Value of the Shares on the date of exercise, or (ii) the sale price of the Shares.
16. Lock-Up Agreement .
(a) Agreement . The Grantee, if requested by the Company and the lead underwriter of any public offering of the Common Stock (the Lead Underwriter), hereby irrevocably agrees not to sell, contract to sell, grant any option to purchase, transfer the economic risk of ownership in, make any short sale of, pledge or otherwise transfer or dispose of any interest in any Common Stock or any securities convertible into or exchangeable or exercisable for or any other rights to purchase or acquire Common Stock (except Common Stock included in such public offering or acquired on the public market after such offering) during the 180-day period following the effective date of a registration statement of the Company filed under the Securities Act of 1933, as amended, or such shorter period of time as the Lead Underwriter shall specify. The Grantee further agrees to sign such documents as may be requested by the Lead Underwriter to effect the foregoing and agrees that the Company may impose stop-transfer instructions with respect to such Common Stock subject to the lock-up period until the end of such period. The Company and the Grantee acknowledge that each Lead Underwriter of a public offering of the Companys stock, during the period of such offering and for the 180-day period thereafter, is an intended beneficiary of this Section 16.
(b) No Amendment Without Consent of Underwriter . During the period from identification of a Lead Underwriter in connection with any public offering of the Companys
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Common Stock until the earlier of (i) the expiration of the lock-up period specified in Section 16(a) in connection with such offering or (ii) the abandonment of such offering by the Company and the Lead Underwriter, the provisions of this Section 16 may not be amended or waived except with the consent of the Lead Underwriter.
17. Entire Agreement: Governing Law . The Plan and this Option Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Grantee with respect to the subject matter hereof, and may not be modified adversely to the Grantees interest except by means of a writing signed by the Company and the Grantee. Nothing in the Plan and this Option Agreement (except as expressly provided therein) is intended to confer any rights or remedies on any persons other than the parties. The Plan and this Option Agreement are to be construed in accordance with and governed by the internal laws of the State of Nevada without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the State of Nevada to the rights and duties of the parties. Should any provision of the Plan or this Option Agreement be determined by a court of law to be illegal or unenforceable, such provision shall be enforced to the fullest extent allowed by law and the other provisions shall nevertheless remain effective and shall remain enforceable.
18. Headings . The captions used in this Option Agreement are inserted for convenience and shall not be deemed a part of the Option for construction or interpretation.
19. Dispute Resolution. The provisions of this Section 19 shall be the exclusive means of resolving disputes arising out of or relating to the Plan and this Option Agreement. The Company, the Grantee, and the Grantees assignees (the parties) shall attempt in good faith to resolve any disputes arising out of or relating to the Plan and this Option Agreement by negotiation between individuals who have authority to settle the controversy. Negotiations shall be commenced by either party by notice of a written statement of the partys position and the name and title of the individual who will represent the party. Within thirty (30) days of the written notification, the parties shall meet at a mutually acceptable time and place, and thereafter as often as they reasonably deem necessary, to resolve the dispute. If the dispute has not been resolved by negotiation, the parties agree that any suit, action, or proceeding arising out of or relating to the Plan or this Option Agreement shall be brought in the United States District Court for the District of Nevada (or should such court lack jurisdiction to hear such action, suit or proceeding, in a Nevada state court in the County of Clark) and that the parties shall submit to the jurisdiction of such court. The parties irrevocably waive, to the fullest extent permitted by law, any objection the party may have to the laying of venue for any such suit, action or proceeding brought in such court. THE PARTIES ALSO EXPRESSLY WAIVE ANY RIGHT THEY HAVE OR MAY HAVE TO A JURY TRIAL OF ANY SUCH SUIT, ACTION OR PROCEEDING. If any one or more provisions of this Section 19 shall for any reason be held invalid or unenforceable, it is the specific intent of the parties that such provisions shall be modified to the minimum extent necessary to make it or its application valid and enforceable.
20. Notices . Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery, upon deposit for delivery by an internationally recognized express mail courier service or upon deposit in the United States mail
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by certified mail (if the parties are within the United States), with postage and fees prepaid, addressed to the other party at its address as shown in this Option Agreement, or to such other address as such party may designate in writing from time to time to the other party.
21. Confidentiality . The Company shall provide to the Grantee, during the period the Option is outstanding, copies of financial statements of the Company at least annually. The Grantee understands and agrees that such financial statements are confidential and shall not be disclosed by the Grantee, to any entity or person, for any reason, at any time, without the prior written consent of the Company, unless required by law. If disclosure of such financial statements is required by law, whether through subpoena, request for production, deposition, or otherwise, the Grantee promptly shall provide written notice to Company, including copies of the subpoena, request for production, deposition, or otherwise, within five (5) business days of their receipt by the Grantee and prior to any disclosure so as to provide Company an opportunity to move to quash or otherwise to oppose the disclosure. Notwithstanding the foregoing, the Grantee may disclose the terms of such financial statements to his or her spouse or domestic partner, and for legitimate business reasons, to legal, financial, and tax advisors.
22. Rights as Stockholder . Until the stock certificate evidencing the Shares is issued following the exercise of the Option (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Shares, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such stock certificate promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in Section 10 of the Plan. The Grantee shall enjoy rights as a stockholder until such time as the Grantee disposes of the Shares or the Company and/or its assignee(s) exercises the Right of First Refusal. Upon such exercise, the Grantee shall have no further rights as a holder of the Shares so purchased except the right to receive payment for the Shares so purchased in accordance with the provisions of this Option Agreement, and the Grantee shall forthwith cause the certificate(s) evidencing the Shares so purchased to be surrendered to the Company for transfer or cancellation.
23. Restrictive Legends . The Grantee understands and agrees that the Company shall cause the legends set forth below or legends substantially equivalent thereto, to be placed upon any certificate(s) evidencing ownership of the Shares together with any other legends that may be required by the Company or by state or federal securities laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE ACT) OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR
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TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND A RIGHT OF FIRST REFUSAL HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN THE OPTION AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES OF THESE SHARES.
IN WITNESS WHEREOF, the Company and the Grantee have executed this Option Agreement and agree that the Option is to be governed by the terms and conditions of this Option Agreement and the Plan.
Western Alliance Bancorporation | ||||||
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THE GRANTEE ACKNOWLEDGES AND AGREES THAT THE SHARES SUBJECT TO THE OPTION SHALL VEST, IF AT ALL, ONLY DURING THE PERIOD OF THE GRANTEES CONTINUOUS SERVICE (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THE OPTION OR ACQUIRING SHARES HEREUNDER). THE GRANTEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS OPTION AGREEMENT OR THE PLAN SHALL CONFER UPON THE GRANTEE ANY RIGHT WITH RESPECT TO FUTURE AWARDS OR CONTINUATION OF THE GRANTEES CONTINUOUS SERVICE, NOR SHALL IT INTERFERE IN ANY WAY WITH THE GRANTEES RIGHT OR THE RIGHT OF THE COMPANY OR RELATED ENTITY TO WHICH THE GRANTEE PROVIDES SERVICES TO TERMINATE THE GRANTEES CONTINUOUS SERVICE, WITH OR WITHOUT CAUSE, AND WITH OR WITHOUT NOTICE. THE GRANTEE ACKNOWLEDGES THAT UNLESS THE GRANTEE HAS A WRITTEN EMPLOYMENT AGREEMENT WITH THE COMPANY TO THE CONTRARY, THE GRANTEES STATUS IS AT WILL.
The Grantee acknowledges receipt of a copy of this Option Agreement and the Plan, and represents that he or she is familiar with the terms and provisions thereof, and hereby accepts the Option subject to all of the terms and provisions hereof and thereof. The Grantee has reviewed this Option Agreement and the Plan in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Option Agreement, and fully understands all provisions of this Option Agreement and the Plan. The Grantee hereby agrees that all disputes arising out of or
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relating to this Option Agreement and the Plan shall be resolved in accordance with Section 19 of this Option Agreement. The Grantee further agrees to notify the Company upon any change in the residence address indicated in this Option Agreement.
Dated:
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EXHIBIT A
WESTERN ALLIANCE BANCORPORATION 2002 STOCK OPTION PLAN
EXERCISE NOTICE
Attention: Chief Financial Officer
1. Effective as of today, , the undersigned (the Grantee) hereby elects to exercise the Grantees option to purchase shares of the Common Stock (the Shares) of Western Alliance Bancorporation, (the Company) under and pursuant to the Companys 2002 Stock Option Plan, as amended from time to time (the Plan) and the [ ] Incentive [ ] Non-Qualified Stock Option Award Agreement (the Option Agreement) dated , . Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Exercise Notice.
2. Representations of the Grantee . The Grantee acknowledges that the Grantee has received, read and understood the Plan and the Option Agreement and agrees to abide by and be bound by their terms and conditions. In the event the Shares purchased hereunder have not been registered under the Securities Act of 1933, as amended, the Grantee shall, if requested by the Company, deliver to the Company his or her Investment Representation Statement in the form attached hereto as Exhibit 1.
3. Delivery of Payment . The Grantee herewith delivers to the Company the full Exercise Price for the Shares, which, to the extent selected, shall be deemed to be satisfied by use of the broker-dealer sale and remittance procedure to pay the Exercise Price provided in Section 5(d) of the Option Agreement.
4. Successors and Assigns . The Company may assign any of its rights under this Exercise Notice to single or multiple assignees, and this agreement shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, this Exercise Notice shall be binding upon the Grantee and his or her heirs, executors, administrators, successors and assigns.
5. Headings . The captions used in this Exercise Notice are inserted for convenience and shall not be deemed a part of this agreement for construction or interpretation.
6. Further Instruments . The parties agree to execute such further instruments and to take such further action as may be reasonably necessary to carry out the purposes and intent of this Exercise Notice.
7. Entire Agreement . The Plan and the Option Agreement are incorporated herein by reference and together with this Exercise Notice constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Grantee with respect to the subject matter hereof, and may
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not be modified adversely to the Grantees interest except by means of a writing signed by the Company and the Grantee. Nothing in the Plan, the Option Agreement and this Exercise Notice (except as expressly provided therein) is intended to confer any rights or remedies on any persons other than the parties.
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EXHIBIT 1
WESTERN ALLIANCE BANCORPORATION 2002 STOCK OPTION PLAN
INVESTMENT REPRESENTATION STATEMENT
GRANTEE:
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COMPANY:
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In connection with the purchase of the above-listed Securities, the undersigned Grantee represents to the Company the following:
(a) Grantee is aware of the Companys business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Securities. Grantee is acquiring these Securities for investment for Grantees own account only and not with a view to, or for resale in connection with, any distribution thereof within the meaning of the Securities Act of 1933, as amended (the Securities Act).
(b) Grantee acknowledges and understands that the Securities constitute restricted securities under the Securities Act and have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon among other things, the bona fide nature of Grantees investment intent as expressed herein. Grantee further understands that the Securities must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. Grantee further acknowledges and understands that the Company is under no obligation to register the Securities. Grantee understands that the certificate evidencing the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not required in the opinion of counsel satisfactory to the Company.
(c) Grantee is familiar with the provisions of Rule 701 and Rule 144, each promulgated under the Securities Act, which, in substance, permit limited public resale of restricted securities acquired, directly or indirectly from the issuer thereof, in a non-public offering subject to the satisfaction of certain conditions. Rule 701 provides that if the issuer qualifies under Rule 701 at the time of the grant of the Option to the Grantee, the exercise will be exempt from registration under the Securities Act. In the event the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, ninety (90) days thereafter (or such longer period as any market stand-off agreement may require) the Securities exempt under Rule 701 may be resold, subject to the satisfaction of certain of the conditions specified by Rule 144, including: (1) the resale being made through a broker in an unsolicited brokers transaction or in transactions directly with a market maker (as said term is defined under the Securities Exchange Act of 1934); and, in the case of an affiliate, (2) the
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availability of certain public information about the Company, (3) the amount of Securities being sold during any three month period not exceeding the limitations specified in Rule 144(e), and (4) the timely filing of a Form 144, if applicable.
In the event that the Company does not qualify under Rule 701 at the time of grant of the Option, then the Securities may be resold in certain limited circumstances subject to the provisions of Rule 144, which requires the resale to occur not less than one year after the later of the date the Securities were sold by the Company or the date the Securities were sold by an affiliate of the Company, within the meaning of Rule 144; and, in the case of acquisition of the Securities by an affiliate, or by a non-affiliate who subsequently holds the Securities less than two (2) years, the satisfaction of the conditions set forth in sections (1), (2), (3) and (4) of the paragraph immediately above.
(d) Grantee further understands that in the event all of the applicable requirements of Rule 701 or 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rules 144 and 701 are not exclusive, the Staff of the Securities and Exchange Commission has expressed its opinion that persons proposing to sell private placement securities other than in a registered offering and otherwise than pursuant to Rules 144 or 701 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk. Grantee understands that no assurances can be given that any such other registration exemption will be available in such event.
(e) Grantee represents that Grantee is a resident of the state of .
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Exhibit 10.8
NON-COMPETE COVENANT
This Non-Compete Covenant ( Covenant ) is being entered into _______________ by and between the undersigned senior executive or director of Western Alliance Bancorporation, a Nevada corporation (the Company) and the Company, and is made with reference to the following facts:
RECITALS
A. Pursuant to a Common Stock and Warrant Purchase Agreement (the Purchase Agreement ) entered into on July 31,2002, certain Investors, as defined therein, have agreed to purchase Common Stock and warrants of the Company, and the Company has agreed to sell such Common Stock and warrants to the Investors, on the terms and conditions set forth therein. Capitalized terms not otherwise defined shall have the meaning assigned to them in the Purchase Agreement.
B. The undersigned either (i) serves as a senior executive and/or director of the Company or (ii) is contemplated to become a senior executive and/or director pursuant to the Purchase Agreement and the transactions contemplated thereby as of the Closing.
C. The undersigned has and/or after the Closing will have access to business secrets and confidential information of the Company, which are proprietary to the Company. The use of such business secrets and confidential information of the Company by any of the Companys competitors could materially and adversely impact the Company.
D. As an inducement to the Company and the Investors to enter into the Purchase Agreement, the Investors who are contemplated to become senior executives and/or directors of the Company at the Closing have agreed to enter into this Covenant to be effective as of the Closing, and certain current senior executives and directors of the Company and a person who it is anticipated will be elected as a future director have entered into this Covenant.
E. In consideration of the undersigneds continued and/or future employment by the Company as a senior executive, or continued and/or future service as a director, and to facilitate the consummation of the transactions contemplated by the Purchase Agreement, the undersigned has agreed to enter into this Covenant.
In view of the foregoing and for good and valuable consideration, receipt of which is hereby acknowledged, the undersigned covenants and agrees with the Company as follows:
1. Activities Subject to Covenant . Effective as of the Closing and only if the Closing occurs, and during the period the undersigned serves as a senior executive and/or director of the Company and for a period of two (2) years thereafter (the Covenant Period ), the undersigned hereby covenants to refrain (a) within any state in which the Company or any Subsidiary is engaged in the business of banking during such period (the Territory ) from carrying on directly or indirectly (either as a proprietor, partner,
shareholder, member, officer, director, agent, employee, contractor, consultant, advisor, trustee, affiliate or otherwise) or having any interest in, the business of banking other than through the Company or any Subsidiary, (b) from soliciting for employment for an entity (other than the Company or any Subsidiary) engaged in the banking business any person then employed by the Company, or (c) from diverting or attempting to divert from the Company any business of any kind in which the Company is engaged, including, without limitation, the solicitation of or interference with any clients. Notwithstanding the foregoing, it shall not be a breach of this Covenant for the undersigned to own, as a passive investment, not more than five percent (5%) of the outstanding stock of any corporation having securities listed on the New York Stock Exchange, the American Stock Exchange, or traded on NASDAQ, that carries on activities prohibited to the undersigned hereunder.
2. Remedy for Breach . The parties agree that, in the event of breach or threatened breach of the undersigneds covenants herein, the damage or imminent damage to the value and the goodwill of the Company will be difficult to estimate, making any remedy at law or in damages inadequate. Accordingly, the parties agree that the Company shall be entitled to injunctive relief against the undersigned in the event of any breach or threatened breach of any of such covenants by the undersigned, in addition to any other relief (including money damages) available to the Company under this Covenant or under law. The undersigned agrees that the remedy at law for any breach by the undersigned of this Covenant will be inadequate and that the Company shall be entitled to injunctive relief.
3. Severability . It is the understanding of the parties that the scope of the covenants contained herein, including as to time, geographic area and activities covered, are necessary to protect the reasonable expectations of the Company. It is the parties intention that these covenants be enforced to the greatest extent in time, area, and activities covered as is permitted by the law. The parties intend that the unenforceability or invalidity of any term or provision of this Covenant shall not render any other term or provision contained herein unenforceable or invalid. If the business activities, period of time or geographical area covered by this Covenant shall be deemed too extensive, then the parties intend that this Covenant be construed to cover the maximum scope of business activities, period of time and geographical area (not exceeding those specifically set forth herein) as may be permissible under applicable law.
4. Governing Law . This Covenant shall be governed by and construed and enforced in accordance with the laws of the State of Nevada without giving effect to the principles of conflicts of law thereof.
IN WITNESS WHEREOF, the parties have signed this Covenant on the date set forth on the first page of this Covenant.
[NAME] | ||||
WESTERN ALLIANCE
BANCORPORATION |
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Exhibit 10.9
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE ACT), OR ANY STATE SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED UNLESS THERE IS (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT RELATED THERETO, (ii) AN OPINION OF COUNSEL FOR THE HOLDER, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED, (iii) RECEIPT OF A NO-ACTION LETTER FROM THE APPROPRIATE GOVERNMENTAL AUTHORITY(IES), OR (iv) AN EXEMPTION THEREFROM UNDER RULE 144 (OR ANY SUCCESSOR PROVISION) OF THE ACT.
WARRANT TO PURCHASE
[____________________] SHARES OF COMMON STOCK OF
BANKWEST NEVADA CORPORATION
This certifies that [ ] (the Initial Holder ), or its registered transferee, successor or assignee (each, a Holder ), for value received, is entitled to purchase at the Exercise Price (as defined below) from Bank West Nevada Corporation, a Nevada corporation (the Company" ), up to [ ( )] fully paid and nonassessable shares (the Warrant Shares ) of the Companys Common Stock, par value $1.00 per share (the Common Stock ), subject to adjustment pursuant to Section 4 and the terms and conditions set forth herein. This Warrant shall be exercisable during the period beginning on [ ] ___, 2002 until the Expiration Date (as defined below).
As used herein, (a) the term Issue Date shall mean [ ] , 2002, (b) the term Expiration Date shall mean the earlier of the date upon which all Warrant Shares shall have been exercised or [ January ] , 2010, (c) the term Exercise Price shall mean $22.85, subject to adjustment pursuant to Section 4, and (d) the term Stock Purchase Agreement shall mean that certain Common Stock and Warrant Purchase Agreement dated as of July 31, 2002 among the Company, William S. Boyd, Trustee of the William S. Boyd Trust and certain investors including the Initial Holder. This Warrant is being issued pursuant to the Stock Purchase Agreement.
1. Exercise; Issuance of Certificates; Acknowledgement . This Warrant may be exercised, in whole or in part, for shares of Common Stock (but not for a fraction of a share) upon surrender to the Company at its principal office (or at such other location as the Company may advise the Holder in writing) of this Warrant properly endorsed with (i) the Form of Subscription attached as Exhibit A hereto duly completed and executed, (ii) payment pursuant to Section 2 of the aggregate Exercise Price for the number of shares for which this Warrant is being exercised determined in accordance with the provisions of this Warrant, and (iii) any
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documents reasonably requested by the Company to be executed by the Holder. The shares of Common Stock purchased under this Warrant shall be and are deemed to be issued to the Holder, as the record owner of such shares, as of the close of business on the date of exercise. Certificates for the shares of the Common Stock so purchased, together with any other securities or property to which the Holder is entitled upon such exercise, shall be delivered to the Holder by the Company at the Companys expense as soon as practicable after the rights represented by this Warrant have been so exercised. Each stock certificate so delivered shall be in such denominations of Common Stock as may be requested by the Holder and shall be registered in the name of such Holder. In case of a purchase of less than all the Warrant Shares, the Company shall execute and deliver to Holder within five (5) business days after the date of exercise an Acknowledgement in the form attached as Exhibit B indicating the number of Warrant Shares which remain subject to this Warrant, if any.
2. Payment for Shares . The aggregate purchase price for Warrant Shares being purchased hereunder may be paid either (i) by check or wire transfer of immediately available funds or (ii) by surrender of a number of Warrant Shares which have a fair market value equal to the aggregate purchase price of the Warrant Shares being purchased ( Net Issuance ) as determined herein. If the Holder elects the Net Issuance method of payment, the Company shall ) issue to Holder upon exercise a number of shares of Warrant Shares determined in accordance with the following formula:
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X=
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where: X = the number of Warrant Shares to be issued to the Holder;
Y = the number of Warrant Shares with respect to which the Holder is exercising its purchase rights under this Warrant;
A = the Fair Market Value (as defined below) of one (1) Warrant Share on the date of exercise; and
B = the Exercise Price on the date of exercise.
No fractional shares arising out of the above formula, or otherwise arising out of the exercise of this Warrant, shall be issued. The Company shall in lieu thereof make payment to the Holder of cash in the amount of such fraction multiplied by the Fair Market Value of one share of the Warrant Shares on the date of exercise. The term Fair Market Value of one (1) share of the Warrant Shares shall mean (a) if the Common Stock is then traded on a national securities exchange or Nasdaq, the average of the closing prices of such Common Stock on such exchange over the ten (10) trading day period (or portion thereof) ending three (3) trading days prior to the date of exercise, multiplied by the number of shares of Common Stock into which each share of the Warrant Shares is then convertible, (b) if the Common Stock is then regularly traded over-the-counter, the average of the closing sale prices or secondarily the closing bid of such Common Stock over the ten (10) trading day period (or portion thereof) ending three (3) trading days prior to the date of exercise, multiplied by the number of shares of Common Stock into which each
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share of the Warrant Shares is then convertible, or (c) if there is no active public market for the Common Stock, the fair market value thereof as determined in good faith by the Board of Directors of the Company, multiplied by the number of shares of Common Stock into which each share of the Warrant Shares is then convertible.
3. Shares to be Fully Paid; Reservation of Shares . The Company covenants and agrees that all shares of Common Stock which may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be duly authorized, validly issued, fully paid and nonassessable and free from all preemptive rights of any stockholder and free of all taxes, liens and charges with respect to the issuance thereof. The Company further covenants and agrees that during the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized and reserved, for the purpose of issue or transfer upon exercise of the subscription rights evidenced by this Warrant, a sufficient number of shares of authorized but unissued shares of Common Stock or other securities and property, when and as required to provide for the exercise of the rights represented by this Warrant. If at any time prior to the Expiration Date the number of authorized but unissued shares of Common Stock shall not be sufficient to permit the exercise of the rights represented by this Warrant, the Company will take such corporate action, subject to receipt of any required stockholder approval, as may be necessary to increase its authorized but unissued shares of Common Stock as shall be sufficient for such purpose.
4. Adjustment of Exercise Price and Number of Shares . The Exercise Price and the number of shares purchasable upon the exercise of this Warrant shall be subject to adjustment from time to time upon the occurrence of certain events described in this Section 4. Upon each adjustment of the Exercise Price, the Holder of this Warrant shall thereafter be entitled to purchase, at the Exercise Price resulting from such adjustment, the number of shares obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of shares purchasable pursuant hereto immediately prior to such adjustment, and dividing the product thereof by the Exercise Price resulting from such adjustment.
4.1 Stock Dividends . If the Company, at any time while this Warrant is outstanding and unexpired, pays a dividend or distribution payable in Common Stock, then the Exercise Price shall be adjusted, from and after the date of determination of stockholders entitled to receive such dividend or distribution, to that price determined by multiplying the Exercise Price in effect immediately prior to such date of determination by a fraction (i) the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to such dividend or distribution, and (ii) the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately after such dividend or distribution.
4.2 Stock Splits or Combinations . In the event the Company shall at any time split or subdivide its outstanding shares of Common Stock into a greater number of shares, the Exercise Price in effect immediately prior to such subdivision shall be proportionately reduced, and in the event the outstanding shares of the Common Stock of the Company shall be combined or reverse split into a smaller number of shares, the Exercise Price in effect immediately prior to such combination shall be proportionately increased.
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4.3 Reclassification . In the event of any reclassification, change or conversion of securities of the class issuable upon exercise of this Warrant (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination described in Section 4.2), then the Company shall take all necessary actions (including but not limited to executing and delivering to the Holder of this Warrant an additional Warrant or other instrument, in form and substance satisfactory to the holder of this Warrant) to ensure that the Holder of this Warrant shall thereafter have the right to receive, at a total purchase price not to exceed that payable upon the exercise of the unexercised portion of this Warrant, and in lieu of the shares of Common Stock theretofore issuable upon exercise of this Warrant, the kind and amount of shares of stock, other securities, money and property receivable upon such reclassification, change or conversion by a holder of the number of shares of Common Stock then purchasable under this Warrant. Such new Warrant shall provide for adjustments that shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 4. The provisions of this Section 4.3 shall similarly apply to successive reclassifications, changes and conversions.
4.4 Consolidation, Merger or Sale . In the event of any consolidation or merger of the Company with or into any other corporation, entity or person, or any other corporate reorganization, in which the Company shall not be the continuing or surviving entity of such consolidation, merger or reorganization, or any transaction in which in excess of 50% of the Companys voting power is transferred, or any sale of all or substantially all of the assets of the Company (any such transaction being hereinafter referred to as a Reorganization ), then the Company will have the right to cancel this Warrant provided that, upon the consummation or effective date of such Reorganization, the Holder will receive, in lieu of this Warrant, the stock and other securities and property (including cash) to which such Holder would have been entitled upon the date of such Reorganization if such Holder had exercised this Warrant immediately prior thereto pursuant to the Net Issuance provisions of Section 2 and this Warrant had been exercisable for all of the Warrant Shares as of the date of such Reorganization.
4.5 Notice of Adjustment . Upon any adjustment provided for under -this Section 4, the Company shall give written notice thereof, by first class mail postage prepaid, addressed to the registered Holder of this Warrant at the address of such Holder as shown on the books of the Company. The notice shall be signed by the Companys chief financial officer and shall state the Exercise Price resulting from such adjustment and the increase, decrease or change, if any, in the number or type of shares purchasable at such price upon the exercise of this Warrant, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based.
4.6 Other Notices. If at any time:
(1) the Company shall declare any cash dividend upon its Common Stock;
(2) there shall be any capital reorganization or reclassification of the capital stock of the Company; or consolidation or merger of the Company with, or sale of all or substantially all of its assets to, another corporation; or
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(3) there shall be a voluntary or involuntary dissolution, liquidation or winding-up of the Company;
then, in any one or more of said cases, the Company shall give, by first class mail, postage prepaid, addressed to the Holder of this Warrant at the address of such Holder as shown on the books of the Company, (a) at least ten (10) days prior written notice of the date on which the books of the Company shall close or a record shall be taken for such dividend or for determining rights to vote in respect of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, and (b) in the case of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation, winding-up or public offering, at least ten (10) days prior written notice of the date when the same shall take place; provided, however, that the Holder shall make a best efforts attempt to respond to such notice as early as possible after the receipt thereof. Any notice given in accordance with the foregoing clause (a) shall also specify, in the case of any such dividend, the date on which the holders of Common Stock shall be entitled thereto. Any notice given in accordance with the foregoing clause (b) shall also specify the date on which the holders of Common Stock shall be entitled to exchange their Common Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation, winding-up, conversion or public offering, as the case may be.
5. No Voting or Dividend Rights . Nothing contained in this Warrant shall be construed as conferring upon the Holder the right to vote or to consent to receive notice as a stockholder of the Company or any other matters or any rights whatsoever as a stockholder of the Company prior to the exercise of the Holders right to purchase the Warrant Shares. No cash dividends or interest shall be payable or accrued in respect of this Warrant or the interest represented hereby until, and only to the extent that, this Warrant shall have been exercised.
6. Transfer . Subject to compliance with applicable laws, this Warrant and all rights hereunder may be transferred by a Holder, in whole or in part, to the extent this Warrant is exercisable, only to an affiliate (as such term is defined under Rule 405 of the Act) of such Holder. Any such transfer to an affiliate shall be made upon surrender of this Warrant together with a written request for transfer confirm by telephone to the person to whom such communication was addressed each communication made by it by facsimile pursuant hereto but the absence of such confirmation shall not affect the validity of any such communication. A party may change or supplement the addresses given above, or designate additional addresses, for purposes of this Section 10 by giving the other party written notice of the new address in the manner set forth above.
7. Representations and Warranties of Holder . Holder hereby agrees, represents and warrants as follows: (i) Holder is acquiring this Warrant and any Warrant Shares issuable hereunder (collectively, the Securities) solely for its own account for investment and not with a view to or for sale or distribution of the Securities or any portion thereof in violation of the Act; (ii) Holder is an accredited investor within the meaning of Rule 501 under the Act, as presently in effect; (iii) the entire legal and beneficial interest of the Securities is being acquired for, and will be held for the account of, Holder only and neither in whole nor in part for any other person, except for such transfer of any of the Securities as may be permitted hereunder; (iv) Holder either (a) has a prior business relationship with the Company and/or its officers and
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directors, or (b) by reason of its business or financial experience or the business or financial experience of its professional advisors who are unaffiliated with the Company, and who are not compensated by the Company, has the capacity to protect its own interests in connection with its acquisition of the Securities; and (v) the transaction under which Holder is acquiring the Securities has not been registered under the Act and the Securities must be held indefinitely unless subsequently registered under the Act or an exemption from such registration is available.
8. Lost Warrants . Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction, or mutilation of this Warrant and, in the case of any such loss, theft or destruction, upon receipt of an indemnity reasonably satisfactory to the Company, or in the case of any such mutilation upon surrender and cancellation of such Warrant, the Company, at its expense, will make and deliver a new Warrant, of like tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant.
9. Modification and Waiver . Any term of this Warrant may be amended and the observance of any term of this Warrant may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the holders of Warrants representing at least a majority of the aggregate number of Warrant Shares then issuable upon exercise of this Warrant. Any amendment or waiver effected in accordance with this paragraph shall be binding upon the Company, the Holder and the holders of all Warrants issued pursuant to this Warrant.
10. Notices . Except as may be otherwise provided herein, all notices, requests, waivers and other communications made pursuant to this Warrant shall be in writing and shall be conclusively deemed to have been duly given (a) when hand delivered to the other party; (b) when sent by facsimile to the number set forth below if sent between 8:00 a.m. and 5:00 p.m. recipients local time on a business day, or on the next business day if sent by facsimile to the number set forth below if sent other than between 8:00 a.m. and 5:00 p.m. recipients local time on a business day; (c) three business days after deposit in the U.S. mail with first class or certified mail receipt requested postage prepaid and addressed to the other party at the address set forth below; or (d) the next business day after deposit with a national overnight delivery service, postage prepaid, addressed to the parties as set forth below with next business day delivery guaranteed, provided that the sending party receives a confirmation of delivery from the delivery service provider. Each person making a communication hereunder by facsimile shall prompts obligations made herein), as may be reasonably required or desirable to carry out or to perform the provisions of this Warrant and to consummate and make effective as promptly as possible the transactions contemplated by this Warrant.
11. Titles and Subtitles; Governing Law; Venue . The titles and subtitles used in this Warrant are used for convenience only and are not to be considered in construing or interpreting this agreement. This Warrant is to be construed in accordance with and governed by the internal laws of the State of Nevada without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the State of Nevada to the rights and duties of the Company and the Holder. All disputes and controversies arising out of or in connection with this Warrant shall be resolved exclusively by the state and federal courts located in the State of Nevada, and each of the Company and the
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Holder hereto agrees to submit to the jurisdiction of said courts and agrees that venue shall lie exclusively with such courts.
12. Counterparts . This Warrant may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.
13. Charges, Taxes and Expenses . Issuance of certificates for shares upon the exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax or other incidental expense with respect to the issuance of such certificates, all of which taxes and expenses shall be paid by the Company.
14. Redemption . This Warrant is not redeemable by the Company.
15. Further Assurances . Each of the parties shall execute such documents and perform such further acts (including, without limitation, obtaining any consents, exemptions, authorizations or other actions by, or giving any notices to, or making any filings with, any governmental authority or any other person, and otherwise fulfilling, or causing the fulfillment of, the various obligations made herein), as may be reasonably required or desirable to carry out or perform the provisions of this Warrant and to consummate and make effective as promptly as possible the transactions contemplated by this Warrant.
[Signatures on following page]
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IN WITNESS WHEREOF, the Company and the Initial Holder have caused this Warrant to be duly executed by its officers, thereunto duly authorized, as of the date first above written.
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SCHEDULE OF WARRANT HOLDERS AS OF MARCH 31, 2005
Name
Warrants Outstanding
966,087
34,137
13,656
68,274
68,274
44,381
34,137
34,137
23,895
17,067
27,312
13,656
3,414
13,656
13,656
10,242
10,242
6,828
6,828
13,656
6,828
5,463
1,365
3,414
3,414
1,444,019
Exhibit 10.10
WESTERN ALLIANCE BANCORPORATION
DIRECTORS FEE SCHEDULE
The following sets forth the amount of fees payable in fiscal year 2005 to each outside director of Western Alliance Bancorporation for his or her service as a director of one or more of Western Alliances subsidiary banks. No separate fees are paid to directors in their role as directors of Western Alliance.
Per In-person | Per Telephonic | |||||||||||
Annual Retainer | Meeting | Meeting | ||||||||||
BankWest of Nevada
|
$ | 10,000 | $ | 2,000 | $ | 2,000 | ||||||
Alliance Bank
|
| 1,500 | 1,500 | |||||||||
Torrey Pines Bank
|
| 1,500 | 1,500 |
In addition, the Chairman of the Audit Committee of Western Alliance receives an annual retainer of $10,000.
Exhibit 10.11
WESTERN ALLIANCE BANCORPORATION
SUMMARY OF COMPENSATION ARRANGEMENTS WITH NAMED EXECUTIVE OFFICERS
The named executive officers of Western Alliance Bancorporation (the Company) are at will employees lacking written employment agreements with the Company. The annual base salaries of the named executive officers are set annually by the Companys Board of Directors, based on the Compensation Committees recommendation. For 2005, the annual base salaries of the Companys named executive officers are as follows:
Robert Sarver
|
Chairman, President and
Chief Executive Officer |
$ | 500,000 | |||
|
||||||
Larry Woodrum
|
Executive Vice President,
Nevada Administration |
$ | 310,000 | |||
|
||||||
Dale Gibbons
|
Executive Vice President and
Chief Financial Officer |
$ | 231,000 | |||
|
||||||
James Lundy
|
Executive Vice President,
Arizona Administration |
$ | 212,000 | |||
|
||||||
Linda Mahan
|
Executive Vice President,
Operations |
$ | 175,000 |
In addition to their base salary, each of the named executive officers is eligible for a bonus and to participate in the Companys 2005 Stock Incentive Plan.
Exhibit 21.1
WESTERN ALLIANCE BANCORPORATION
LIST OF SUBSIDIARIES
Nevada
Arizona
California
Nevada
Arizona
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the use in this Registration Statement of Western Alliance Bancorporation on Form S-1
of our report, dated February 11, 2005, appearing in the Prospectus, which is part of this
Registration Statement.
We also consent to the reference to our Firm under the caption Experts in such Prospectus.
Las Vegas, Nevada
McGladrey &
Pullen, LLP is an independent member firm of RSM International,
an affiliation of independent accounting and consulting firms.
/s/ McGladrey &
Pullen LLP
McGLADREY & PULLEN, LLP
April 27, 2005