As filed with the Securities and Exchange Commission on March 9, 2009

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM S-8

 

REGISTRATION STATEMENT

Under

The Securities Act of 1933

 

 

OAK VALLEY BANCORP

(Exact name of Registrant as specified in its charter)

 

 

California

 

26-2326676

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification Number)

 

125 North Third Avenue

Oakdale, California 95361

(209)  848-2265

(Address, including zip code and telephone number, of principal executive offices)

 

 

OAK VALLEY COMMUNITY BANK 1998 RESTATED STOCK OPTION PLAN

OAK VALLEY BANCORP 2008 EQUITY PLAN

(Full title of the plan)

 

Richard A. McCarty

Chief Financial Officer

Oak Valley Bancorp

125 North Third Avenue

Oakdale, California 95361

(Name and address of agent for service)

 

(209)  848-2265

(Telephone number, including area code, of agent for service)

 

 

Copy to:

Matteo G. Daste, Esq.

Darlene D. Chiang, Esq.

Leland Parachini Steinberg Matzger & Melnick, LLP

199 Fremont Street, 21 st  Floor

San Francisco, CA 94105

(415)  957-1800

 

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

 

Large accelerated filer   o

 

Accelerated filer   o

 

 

 

 

 

Non-accelerated filer   o

 

Smaller Reporting Company   x

(Do not Check if a smaller reporting company)

 

 

 

CALCULATION OF REGISTRATION FEE

 

 

 

 

 

 

 

 

 

 

 

Title of Securities to be Registered

 

Amount
to be
Registered (1)

 

Proposed
Maximum
Offering Price
Per Share

 

Proposed
Maximum
Aggregate
Offering Price

 

Amount of
 Registration Fee

 

Common Stock, no par value

 

 

 

 

 

 

 

 

 

Outstanding under Oak Valley Community Bank Restated and Amended 1991 Stock Option (1)

 

451,092 shares

 

$

4.065(2

)

$

1,833,689

 

$

102.32

 

To be issued under the 2008 Equity Plan (3)

 

1,500,000 shares

 

$

4.065(3

)

$

6,097,500

 

$

340.24

 

TOTAL

 

1,951,092 shares

 

 

 

$

7,931,189

 

$

442.56

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

 

Pursuant to Rule 416(a) under the Securities Act of 1933, as amended, this Registration Statement shall also cover any additional shares of the Registrant’s Common Stock that become issuable under any of the listed plans by reason of any stock dividend, stock split, recapitalization or other similar transaction effected without receipt of consideration that increases the number of the Registrant’s outstanding shares of Common Stock.

 

 

 

(2)

 

Estimated in accordance with Rule 457(h) under the Securities Act of 1933, as amended, solely for the purpose of calculating the registration fee.  The price of $4.065 per share represents the weighted average exercise price for outstanding options.

 

 

 

(3)

 

Estimated in accordance with Rule 457(h) solely for purposes of calculating the registration fee.  Computation based upon the average of the bid and asked prices of the Registrant’s Common Stock reported on the Nasdaq Capital Market on March 19, 2009, which average was $4.065 per share.

 

 

 


 

REGISTRATION STATEMENT ON FORM S-8

 

EXPLANATORY NOTE

 

PART I

INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS

 

ITEM 1.   PLAN INFORMATION.

 

The documents containing the information specified in this Item 1 will be sent or given to employees, officers, directors or others as specified by Rule 428(b)(1) under the Securities Act of 1933, as amended (the “Securities Act”).  In accordance with the rules and regulations of the Securities and Exchange Commission (the “Commission”) and the instructions to Form S-8, such documents are not being filed with the Commission either as part of this Registration Statement or as prospectuses or prospectus supplements pursuant to Rule 424 under the Securities Act.

 

ITEM 2.   REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.

 

The documents containing the information specified in this Item 2 will be sent or given to employees, officers, directors or others as specified by Rule 428(b)(1) under the Securities Act. In accordance with the rules and regulations of the Commission and the instructions to Form S-8, such documents are not being filed with the Commission either as part of this Registration Statement or as prospectuses or prospectus supplements pursuant to Rule 424 under the Securities Act.

 

PART II

INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

 

ITEM 3.   INCORPORATION OF DOCUMENTS BY REFERENCE.

 

Oak Valley Bancorp (the “Registrant”) hereby incorporates by reference in this Registration Statement the following documents and information previously filed with the Commission:

 

(a)  The description of the Registrant’s Common Stock in the registration statement on Form 10, filed with the Commission on July 31, 2008, pursuant to Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”);

 

(b)  The Registrant’s amended Form 10, filed with the Commission on October 31, 2008;

 

(c)  The Registrant’s quarterly report for the quarterly period ended June 30, 2008 on Form 10-Q filed on August 14, 2008;

 

(d)  The Registrant’s quarterly report for the quarterly period ended September 30, 2008 on Form 10-Q filed on November 14, 2008;

 

(e)  The Registrant’s current reports and amendments thereto on Form 8-K filed on October 28, November 19, December 15 in 2008, and on January 21 and February 3 in 2009;

 

(f)  The Registrant’s registration statement on Form 8-A, filed on January 14, 2009, which contains an updated description of the Registrant’s Common Stock.

 

(g)  All documents filed pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act on or after the date of this Registration Statement and prior to the filing of a post-effective amendment to this Registration Statement that indicate that all securities offered have been sold or that deregisters all securities then remaining unsold shall be deemed to be incorporated by reference in this Registration Statement and to be a part hereof from the date of filing of such documents.

 

Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Registration Statement to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Registration Statement.

 

II-1


 

ITEM 4.   DESCRIPTION OF SECURITIES.

 

Not applicable.

 

ITEM 5.   INTERESTS OF NAMED EXPERTS AND COUNSEL.

 

Not applicable.

 

ITEM 6.   INDEMNIFICATION OF DIRECTORS AND OFFICERS.

 

Oak Valley Bancorp and its subsidiary, Oak Valley Community Bank, are subject to the California General Corporation Law (the “CGCL”), which provides a detailed statutory framework covering indemnification of any officer or other agent of a corporation who is made or threatened to be made a party to any legal proceeding by reason of his or her services on behalf of such corporation.

 

With respect to indemnification, the CGCL provides that to the extent any officer, director or other agent of a corporation is successful “on the merits” in defense of any legal proceeding to which such person is a party or is threatened to be made a party by reason of his or her service on behalf of such corporation or in defense of any claim, issue, or matter therein, such agent shall be indemnified against expenses actually and reasonably incurred by the agent in connection therewith, but does not require indemnification in any other circumstance. The CGCL also provides that a corporation may indemnify any agent of the corporation, including officers and directors, against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in a third party proceeding against such person by reason of his or her services on behalf of the corporation, provided the person acted in good faith and in a manner he or she reasonably believed to be in the best interests of such corporation. The CGCL further provides that in derivative suits a corporation may indemnify such a person against expenses incurred in such a proceeding, provided such person acted in good faith and in a manner he or she reasonably believed to be in the best interests of the corporation and its shareholders. Indemnification is not available in derivative actions (i) for amounts paid or expenses incurred in connection with a matter that is settled or otherwise disposed of without court approval or (ii) with respect to matters for which the agent shall have been adjudged to be liable to the corporation unless the court shall determine that such person is entitled to indemnification.

 

The CGCL permits the advancing of expenses incurred in defending any proceeding against a corporate agent by reason of his or her service on behalf of the corporation upon the giving of a promise to repay any such sums in the event it is later determined that such person is not entitled to be indemnified.  Finally, the CGCL provides that the indemnification provided by the statute is not exclusive of other rights to which those seeking indemnification may be entitled, by bylaw, agreement or otherwise, to the extent additional rights are authorized in a corporation’s articles of incorporation.  The law further permits a corporation to procure insurance on behalf of its directors, officers and agents against any liability incurred by any such individual, even if a corporation would not otherwise have the power under applicable law to indemnify the director, officer or agent for such expenses.

 

II-2


 

See also Registrant’s undertakings in Section 9 of this Registration Statement.

 

ITEM 7.   EXEMPTION FROM REGISTRATION CLAIMED.

 

Not applicable.

 

ITEM 8.   EXHIBITS.

 

Exhibit Number

 

Description

 

 

 

4.1

 

Oak Valley Community Bank 1998 Restated Stock Option Plan, (which is incorporated herein by reference to Exhibit 10.1 to the Registrant’s Form 10 filed on July 31, 2008)

 

 

 

4.2

 

Oak Valley Bancorp 2008 Equity Plan

 

 

 

4.3

 

Opinion of Consent of Leland, Parachini, Steinberg, Matzger & Melnick LLP regarding legality of the securities covered by the Registration Statement

 

 

 

4.4

 

Consent of Moss Adams, LLP

 

II-3


 

ITEM 9.   UNDERTAKINGS.

 

A. The undersigned Registrant hereby undertakes:

 

(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement:

 

(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

 

(ii) To reflect in the prospectus any facts or events arising after the effective date of this Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective Registration Statement; and

 

(iii) To include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement.

 

Provided, however , that paragraphs (A)(1)(i) and (A)(1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in this Registration Statement.

 

(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

 

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

 

B. The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in this Registration Statement shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

 

C. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or controlling persons of the Registrant pursuant to the indemnification provisions summarized in Item 6 or otherwise, the Registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.

 

II-4


 

SIGNATURES

 

Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Oakdale, State of California, on this 9 th  day of March, 2009.

 

 

OAK VALLEY BANCORP

 

 

 

 

By:

/s/ Ronald C. Martin

 

 

Ronald C. Martin

 

 

Chief Executive Officer

 

 

 

 

 

OAK VALLEY BANCORP

 

 

 

 

By:

/s/ Richard A. McCarty

 

 

Richard A. McCarty

 

 

Executive Vice President, Chief Financial Officer

 

 

POWER OF ATTORNEY

 

KNOW ALL PERSONS BY THESE PRESENTS, that each individual whose signature appears below constitutes and appoints Ronald C. Martin and Richard A. McCarty, and each of them, his true and lawful attorneys-in-fact and agents with full power of substitution, for him or her and in his or her name, place and stead, in any an all capacities, to sign any an all amendments (including pose-effective amendments) to this Registration Statement and to file the same, with all exhibits thereto and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or his or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

 

Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities and on the date indicated above:

 

Signature

 

Capacity

 

 

 

 

 

 

/s/ Don Barton

 

Director

DON BARTON

 

 

 

 

 

 

 

 

/s/ Christopher M. Courtney

 

Director, President

CHRISTOPHER M. COURTNEY

 

 

 

 

 

/s/ James J. Gilbert

 

Director

JAMES L. “JAY” GILBERT

 

 

 

 

 

 

 

 

/s/ Thomas A. Haidlen

 

Director

THOMAS A. HAIDLEN

 

 

 

 

 

 

 

 

/s/ Michael Q. Jones

 

Director, Chairman of the Board of Directors

MICHAEL Q. JONES

 

 

 

 

 

 

 

 

/s/ Arne J. Knudsen

 

Director, Secretary of the Board of Directors

ARNE J. KNUDSEN

 

 

 

 

 

 

 

 

/s/ Ronald C. Martin

 

Director, Chief Executive Officer

RONALD C. MARTIN

 

 

 

 

 

/s/ Richard A. McCarty

 

Executive Vice President, Chief Administrative Officer & Chief Financial Officer

RICHARD A. MCCARTY

 

 

 

 

 

 

 

 

/s/ Roger M. Schrimp

 

Director, Vice Chairman of the Board of Directors

ROGER M. SCHRIMP

 

 

 

 

 

 

 

 

/s/ Danny L. Titus

 

Director

DANNY L. TITUS

 

 

 

 

 

 

 

 

/s/ Richard J. Vaughan

 

Director

RICHARD J. VAUGHAN

 

 

 

II-5


 

OAK VALLEY BANCORP

 

REGISTRATION STATEMENT ON FORM S-8

 

INDEX TO EXHIBITS

 

Exhibit
Number

 

Description

 

 

 

4.1

 

Oak Valley Community Bank 1998 Restated Stock Option Plan thereunder (which are incorporated herein by reference to Exhibit 10.1 to the Registrant’s Form 10)

 

 

 

4.2

 

Oak Valley Bancorp 2008 Equity Plan and forms of agreement

 

 

 

4.3

 

Opinion of Consent of Leland, Parachini, Steinberg, Matzger & Melnick LLP regarding legality of the securities covered by the Registration Statement

 

 

 

4.4

 

Consent of Moss Adams, LLP

 

Exhibit 4.2

 

OAK VALLEY BANCORP

 

2008 Equity Plan

 

THIS 2008 EQUITY PLAN is hereby adopted by the Board of Directors of Oak Valley Bancorp, a California corporation (the “Company”) on May 1, 2008, subject to approval by the shareholders of the Company below.

 

ARTICLE I

 

PURPOSE AND EFFECTIVE DATE

 

1.1                                  Purpose. The purpose of the Plan is to provide financial incentives for selected Employees, Advisors and Non-Employee Directors, thereby promoting the long-term growth and financial success of the Company by (a) attracting and retaining Employees, Advisors and Non-Employee Directors of outstanding ability, (b) strengthening the Company’s capability to develop, maintain, and direct a competent management team, (c) providing an effective means for selected Employees, Advisors and Non-Employee Directors to acquire and maintain ownership of Company Stock, (d) motivating Employees to achieve long-range Performance Goals and objectives, and (e) providing incentive compensation opportunities competitive with peer financial institution holding companies.

 

1.2                                  Effective Date and Expiration of Plan. The Plan will be effective upon its adoption by the Board and approval by affirmative vote of the Shareholders required under applicable rules and procedures, including those prescribed under Sections 162(m) and 422 of the Code and applicable NASDAQ rules (the “Effective Date”).  Unless earlier terminated by the Board pursuant to Section 12.2, the Plan shall terminate on the tenth anniversary of its Effective Date.  No Award shall be made pursuant to the Plan after its termination date, but Awards made prior to the termination date may extend beyond that date.  Notwithstanding the foregoing, no Incentive Stock Options may be granted more than ten years after the earlier of (a) the adoption of this Plan by the Board or (b) the Effective Date.

 

ARTICLE II

 

DEFINITIONS

 

The following words and phrases, as used in the Plan, shall have the meanings set forth in this section.  When applying these definitions and any other word, term or phrase used in this Plan, the form of any word, term or phrase will include any and all of its other forms.

 

2.1                                  Advisor means any advisor who renders bona fide services to the Company and/or one or more of the Subsidiaries as an advisory or marketing board member and who is neither an Employee nor a director of the Company or any Subsidiary; provided that the services rendered are not in connection with the offer or sale of securities in a capital-raising transaction and do not directly or indirectly promote or maintain a market for the Company’s securities.

 

2.2                                  Award means, individually or collectively, any Option, SAR, Restricted Stock, Restricted Stock, Performance Stock, or unrestricted Company Stock Award.

 

2.3                                  Award Agreement means the written agreement between the Company and each Participant that describes the terms and conditions of each Award.  If there is a conflict between the terms of the Plan and the Award Agreement, the terms of the Plan will govern.

 

2.4                                  Board means the Board of Directors of the Company.

 

2.5                                  Cause with respect to any Participant, means: (a) Gross negligence or gross neglect of duties; or (b) Commission of a felony or of a gross misdemeanor involving moral turpitude in connection with the Participant’s employment or service, as the case may be, with the Company or any of its Subsidiaries; or (c) Fraud, disloyalty, dishonesty or willful violation of any law or significant Company policy committed in connection with the Participant’s employment or provision of services, as the case may be; or (d) Issuance of an order for removal of the Participant by any agency which regulates the activities of the Company or any of its Subsidiaries.  Any determination of “Cause” under this Plan shall be made by the Committee in its sole discretion.

 

2.6                                  Company means Oak Valley Bancorp, a California corporation.

 

2.7                                  Company Director means a non-employee member of the Board.

 

2.8                                  Company Stock means the Company’s common shares, without par value per share.

 

2.9                                  Code means the Internal Revenue Code of 1986, as amended or superseded after the Effective Date, and any applicable rulings or regulations issued thereunder.

 

2.10                            Committee means the Compensation Committee of the Board or a subcommittee thereof.

 

2.11                            Disability means: (a) with respect to an Incentive Stock Option, “disabled” within the meaning of Section 22(e)(3) of the Code; (b) with respect to any Award subject to Section 409A of the Code, “disabled” as defined under Section 409A of the Code; and (c) with respect to any Award not described in subsections (a) and (b) of this Section 2.11, a long-term disability as defined by the Company’s or Subsidiary’s group disability insurance plan, or any successor plan that is applicable to such Participant at the time of his or her Termination.

 

2.12                            Effective Date means the date on which the Plan is approved by the Shareholders of the Company, as provided in Section 1.2.

 

2.13                            Employee means any person who, on any applicable date, is a common law employee of the Company or any Subsidiary.  A worker who is classified as other than a common law employee but who is subsequently reclassified as a common law employee of the Company or any Subsidiary for any reason and on any basis

 


 

will be treated as a common law employee only from the date that reclassification occurs and will not retroactively be reclassified as an Employee for any purpose of this Plan.

 

2.14                            Exchange Act means the Securities Exchange Act of 1934, as amended.

 

2.15                            Exercise Price means the amount, if any, that a Participant must pay to exercise an Award (other than an Option).

 

2.16                            Fair Market Value means, as of any specified date, an amount equal to the reported closing price on the specified date of a share of Company Stock on NASDAQ or any other established stock exchange or quotation system on which the Company Stock is then listed or traded or, if no shares of Company Stock have been traded on such date, the closing price of a share of Company Stock on NASDAQ or such other established stock exchange or quotation system as reported on the first day prior thereto on which shares of Company Stock were so traded. If the preceding sentence does not apply, Fair Market Value shall be determined in good faith by the Committee using other reasonable means.

 

2.17                            Fiscal Year means the fiscal year of the Company, which is the 52 week period ending on December 31.

 

2.18                            Incentive Stock Option means an option within the meaning of Section 422 of the Code.

 

2.19                            Non-Employee Director means either a Company Director or a Subsidiary Director.

 

2.20                            Nonqualified Stock Option means an option granted under the Plan other than an Incentive Stock Option.

 

2.21                            Option means either a Nonqualified Stock Option or an Incentive Stock Option to purchase Company Stock.

 

2.22                            Option Price means the price at which Company Stock may be purchased under an Option.

 

2.23                            Participant means an Employee, a Advisor or a Non-Employee Director to whom an Award has been made under the Plan.

 

2.24                            Performance Goals means goals established by the Committee pursuant to Section 4.5.

 

2.25                            Performance Period means a period of time over which performance is measured.

 

2.26                            Personal Representative means the person or persons who, upon the death, Disability, or incompetency of a Participant, shall have acquired, by will or by the laws of descent and distribution or by other legal proceedings, the right to exercise an Option or SAR or the right to any Restricted Stock Award theretofore granted or made to such Participant.

 

2.27                            Plan means the Oak Valley Bancorp 2008 Equity Plan.

 

2.28                            [Intentionally Omitted] .

 

2.29                            Restricted Performance Stock means Company Stock subject to Performance Goals.

 

2.30                            Restricted Stock means Company Stock subject to the terms and conditions provided in Article VI and including Restricted Performance Stock.

 

2.31                            Restricted Stock Award means an Award granted under Article VI.

 

2.32                            Restriction Period means a period of time determined under Section 6.2 during which Restricted Stock is subject to the terms and conditions provided in Section 6.3..

 

2.33                            SAR means a stock appreciation right granted under Section 5.7.

 

2.34                            Shareholders mean the shareholders of the Company.

 

2.35                            Subsidiary means a corporation or other entity the majority of the voting stock of which is owned directly or indirectly by the Company.

 

2.36                            Subsidiary Director means a non-employee member of the board of directors of a Subsidiary who is not also a Company Director.

 

2.37                            Termination means (i) in the case of an Employee, a cessation of the employee-employer relationship between the Employee and the Company or a Subsidiary for any reason, including, but not by way of limitation, a termination by resignation, discharge, death, Disability, retirement, but excluding any such termination where there is a simultaneous commencement or continuation of status as a Advisor or as a Director; (ii) in the case of a Advisor, a cessation of the service relationship between the Advisor and the Company or a Subsidiary for any reason, including, but not by way of limitation, a termination by resignation, discharge, death, Disability, but excluding any such termination where there is a simultaneous commencement or continuation of status as an Employee or as a Director; and (iii) in the case of a Director, a cessation of the Director’s service on the Board for any reason, including, but not by way of limitation, a termination by resignation, death, Disability, retirement or non-reelection to the Board, but excluding any such termination where there is a simultaneous commencement or continuation of status as an Employee or as a Advisor.

 


 

ARTICLE III

 

ADMINISTRATION

 

3.1                                  Committee to Administer. The Plan shall be administered by the Committee, in accordance with its charter, as adopted from time to time by the Board; provided, however, that the Board has the authority to grant Awards to Company Directors.

 

3.2                                  Powers of Committee.

 

(a)           The Committee and the Board shall have full power and authority to interpret and administer the Plan and to establish and amend rules and regulations for its administration. Any action or decision by the Board or the Committee shall be final, binding and conclusive with respect to the interpretation of the Plan and any Award made under it.

 

(b)          Subject to the provisions of the Plan, the Committee or the Board, as the case may be, shall have authority, in its discretion, to determine those Employees, Consultants/Advisors and Non-Employee Directors who shall receive an Award; the time or times when such Award shall be made; the vesting schedule, if any, for the Award; and the type of Award to be granted, the number of shares of Company Stock to be subject to each Option and Restricted Stock Award, and all other terms and conditions of any Award.

 

(c)           The Committee or the Board, as the case may be, shall determine and set forth in an Award Agreement the terms of each Award, including such terms, restrictions, and provisions as shall be necessary to cause certain Options to qualify as Incentive Stock Options. The Committee or the Board, as the case may be, may correct any defect or supply any omission or reconcile any inconsistency in the Plan or in any Award Agreement, in such manner and to the extent the Committee or the Board, as appropriate, shall determine in order to carry out the purposes of the Plan. The Committee or the Board, as the case may be, may, in its discretion, accelerate (i) the date on which any Option or SAR may be exercised or (ii) the date of termination of the restrictions applicable to a Restricted Stock Award, if the Committee or the Board, as appropriate, determines that to do so will be in the best interests of the Company and the Participants in the Plan.

 

ARTICLE IV

 

AWARDS

 

4.1                                  Awards.  Awards under the Plan shall consist of Incentive Stock Options, Nonqualified Stock Options, SARs, Restricted Stock, Restricted Performance Stock and unrestricted Company Stock. All Awards shall be subject to the terms and conditions of the Plan and to such other terms and conditions consistent with the Plan as the Committee or the Board, as the case may b e, deems appropriate. Awards under a particular section of the Plan need not be uniform and Awards under two or more sections may be combined in one Award Agreement. Any combination of Awards may be granted at one time and on more than one occasion to the same Employee, Advisor or Non-Employee Director. Awards of Restricted Performance Stock shall be earned solely upon attainment of Performance Goals and the Committee shall have no discretion to increase such Awards.

 

4.2                                  Eligibility for Awards.  An Award may be made to any Employee or Advisor selected by the Committee. In making this selection and in determining the form and amount of the Award, the Committee may give consideration to the functions and responsibilities of the respective Employee and/or Advisor, his or her present and potential contributions to the success of the Company or any of its Subsidiaries, the value of his or her services to the Company or any of its Subsidiaries, and such other factors deemed relevant by the Committee. Non-Employee Directors are eligible to receive Awards pursuant to Article VII.

 

4.3                                  Shares Available Under the Plan.

 

(a)                                   The Company Stock to be offered under the Plan pursuant to Options, SARs, Restricted Performance Stock and Restricted Stock and unrestricted Company Stock Awards must be (i) Company Stock previously issued and outstanding and reacquired by the Company or (ii) authorized but unissued Company Stock not reserved for any other purpose. Subject to adjustment under Section 12.2, the number of shares of Company Stock that may be issued pursuant to Awards under the Plan (the “Section 4.3 Limit”) shall not exceed, in the aggregate, 1,500,000 shares.

 

(b)                                  Any shares of Company Stock subject to Restricted Stock or unrestricted Company Stock Awards shall not exceed Fifty Percent (50%) of the total shares available under the Plan and the maximum number of shares of Company Stock that may be issued subject to Incentive Stock Options is 1,500,000 subject to adjustment under Section 12.1.  The Section 4.3 Limit shall not have counted against it:  (i) the number of shares of Company Stock subject to an Option or any other Award which is equal to the number of shares of Company Stock tendered by a Participant to the Company in payment of the Option Price of such Option or the Exercise Price of such other Award, as applicable; (ii) shares of Company Stock subject to an Award which for any reason terminates by expiration, forfeiture, cancellation or otherwise without having been exercised or paid; (iii) shares of Company Stock withheld from any Award to satisfy a Participant’s tax withholding obligations or, if applicable, to pay the Option Price of an Option or the Exercise Price of any other Award; (iv) if an SAR is settled in whole or in part by the issuance of shares of Company Stock, the number of shares of Company Stock which represents the difference between (A) the number of shares of Company Stock which remain subject to such SAR on the date of such settlement and (B) the number of shares of Company Stock actually issued upon settlement of such SAR; or (v) the number of shares of Company Stock subject to an Option which is equal to the number of shares of Company Stock acquired by the Company on the open market using the cash proceeds received by the Company from the exercise of such Option; provided, however, that such number of shares of Company Stock shall in no event be greater than the number which is determined by dividing (A) the amount of cash proceeds received by the Company from the Participant upon the exercise of such Option by (B) the Fair Market Value of a share of the Company Stock on the date of exercise of such Option.

 

(c)                                   No awards shall be granted under the 1998 Oak Valley Bank Stock Option Plan on and after the date on which the merger and reorganization is approved by the Shareholders.

 

4.4                                  Annual Limitation on Awards. The maximum number of shares of Company Stock subject to Restricted Stock awarded to any Employee or Advisor with respect to a Performance Period or Restriction Period  may not exceed 150,000 shares of Company Stock for each Fiscal Year included in such Performance Period or Restriction Period.  The maximum number of shares of Company Stock for which Options or SARs may be granted to any Participant in any one Fiscal Year shall not exceed 150,000 subject to adjustment under Section 12.1.

 


 

4.5                                  General Performance Goals.

 

(a)                                   Performance Goals relating to the payment or vesting of an Award that is intended to qualify as “performance-based compensation” under Section 162(m) of the Code will be comprised of one or more of the following performance criteria as the Committee may deem appropriate:

 

(i)

Earnings per share (actual or targeted growth);

(ii)

Net income after capital costs;

(iii)

Net income (before or after taxes);

(iv)

Return measures (including, but not limited to, return on average assets, risk-adjusted return on capital, or return on average equity);

(v)

Efficiency ratio;

(vi)

Full-time equivalency control;

(vii)

Stock price (including, but not limited to, growth measures and total shareholder return);

(viii)

Noninterest income compared to net interest income ratio;

(ix)

Expense targets;

(x)

Operating efficiency;

(xi)

Credit quality measures;

(xii)

Customer satisfaction measures;

(xiii)

Loan growth;

(xiv)

Deposit growth;

(xv)

Net interest margin;

(xvi)

Fee income; and

(xvii)

Operating expense.

 

(b)                                  For any Awards not intended to qualify as “performance-based compensation” under Section 162(m) of the Code, the Committee may establish Performance Goals based on the performance criteria listed in Section 4.5(a) or other performance criteria as it deems appropriate.

 

(c)                                   Any of the performance criteria listed in Section 4.5(a) may be applied solely with reference to the Company and/or any Subsidiary or relatively between the Company and/or any Subsidiary and one or more unrelated entities.  In addition, different performance criteria may be applied to individual Participants or to groups of Participants and, as specified by the Committee, may be based on results achieved (i) separately by the Company or any Subsidiary, (ii) any combination of the Company and the Subsidiaries or (iii) any combination of business units or divisions of the Company and the Subsidiaries.

 

(d)                                  With respect to each Performance Period, the Committee will establish the Performance Goals in writing no later than the earlier of (i) 90 days after the beginning of the Performance Period or (ii) expiration of 25 percent of the Performance Period.

 

(e)                                   Except as otherwise provided in the Plan or the Award Agreement, as of the end of each Performance Period, the Committee will certify in writing the extent to which a Participant has or has not met the Participant’s Performance Goal.  To the extent permitted under Section 162(m) of the Code, if applicable, the Committee may disregard or offset the effect of any special charges or gains or cumulative effect of a change in accounting in determining the attainment of Performance Goals.

 

(f)                                     To the extent permitted under Section 162(m) of the Code, if applicable, the Committee shall make (i) appropriate adjustments to performance criteria to reflect the effect on any performance criteria of any stock dividend or stock split affecting Company Stock, recapitalization, merger, consolidation, combination, spin-off, distribution of assets to Shareholders, exchange of shares or similar corporate change and (ii) similar adjustments to any portion of performance criteria that is not based on Company Stock but which is affected by an event having an effect similar to those just described.

 

ARTICLE V

 

OPTIONS AND STOCK APPRECIATION RIGHTS

 

5.1                                  Award of Options.  The Committee may, from time to time, and on such terms and conditions as the Committee may prescribe, award (a) Incentive Stock Options, subject to Section 5.5, to any eligible Employee of the Company or any parent or subsidiary corporation (as permitted under Sections 422 and 424 of the Code) and (b) Nonqualified Stock Options to any Employee or Advisor.

 

5.2                                  Period of Option.

 

(a)                                   An Option granted under the Plan shall be exercisable only in accordance with the vesting schedule approved by the Committee. The Committee may in its discretion prescribe additional conditions, restrictions or terms on the vesting of an Option, including the full or partial attainment of Performance Goals pursuant to Section 4.5. After the Option vests, the Option may be exercised at any time during the term of the Option, in whole or in installments, as specified in the related Award Agreement.  Subject to Article X and except as provided in Section 5.5, the duration of each Option shall not be more than ten years from the date of grant.

 

(b)                                  Except as provided in Article X, a Participant may not exercise an Option unless such Participant is then, and continually (except for sick leave, military service, or other approved leave of absence) after the grant of the Option has been, an Employee, Advisor, or Non-Employee Director.

 

5.3                                  Award Agreement. Each Option shall be evidenced by an Award Agreement. The Award Agreement shall specify whether the Option is intended to be an Incentive Stock Option or a Nonqualified Stock Option.

 

5.4                                  Option Price, Exercise and Payment.

 

(a)                                   Except as provided in Section 5.5, the Option Price of Company Stock under each Option shall be determined by the Committee but shall be a price not less than 100 percent of the Fair Market Value of Company Stock at the close of business on the date such Option is granted.

 

(b)                                  Subject to Section 12.2, the Committee may not (i) amend an Option to reduce its Option Price, (ii) cancel an Option and regrant an Option with a lower Option Price than the original Option Price of the cancelled Option, or (iii) take any other action (whether in the form of an amendment, cancellation or replacement grant) that has the effect of “repricing” an Option, as defined under applicable NASDAQ rules or the rules of the established stock exchange or quotation system on which the Company Stock  is then listed or traded.

 


 

(c)                                   Vested Options may be exercised from time to time by giving written notice to the Chief Financial Officer of the Company or the Secretary of the Committee, or his or her designee, specifying the number of shares to be purchased. The notice of exercise shall be accompanied by payment in full of the Option Price in cash or the Option Price may be paid in whole or in part through the transfer to the Company of shares of Company Stock in accordance with procedures established by the Committee from time to time.  In addition, full payment of the purchased shares may be effected through a broker-dealer sale and remittance procedure pursuant to which the Participant (i) shall provide irrevocable written instructions to a designated brokerage firm to effect the immediate sale 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 plus all applicable federal, state and local income and employment taxes required to be withheld by the Company by reason of such purchase and (ii) shall provide written directives to the Company to deliver the certificates for the purchased sales directly to such brokerage firm in order to complete the sale transaction.

 

(d)                                  In the event such Option Price is paid, in whole or in part, with shares of Company Stock, the portion of the Option Price so paid shall be equal to the value, as of the date of exercise of the Option, of such shares. The value of such shares shall be equal to the number of such shares multiplied by the Fair Market Value of such shares on the trading day coincident with the date of exercise of such Option (or the immediately preceding trading day if the date of exercise is not a trading day). The Company shall not issue or transfer Company Stock upon exercise of an Option until the Option Price is fully paid.

 

5.5                                  Limitations on Incentive Stock Options.   Each provision of the Plan and each Award Agreement relating to an Incentive Stock Option shall be construed so that each Incentive Stock Option shall be an incentive stock option as defined in Section 422 of the Code, and any provisions of the Award Agreement thereof that cannot be so construed shall be disregarded.  No Incentive Stock Option may be granted to any Employee who, at the time of such grant, owns stock possessing more than 10 percent of the total combined voting power of all classes of stock of the Company or of its parent or subsidiary corporation (as determined under Sections 422 and 424 of the Code), unless (a) the Option Price for such Incentive Stock Option is at least 110 percent of the Fair Market Value of a share of Company Stock on the date the Incentive Stock Option is granted and (b) such Incentive Stock Option may not be exercised more than five years after it is granted.  Notwithstanding anything in the Plan to the contrary, to the extent required by the Code, the exercise of Incentive Stock Options granted under the Plan shall be subject to the $100,000 calendar year limit as set forth in Section 422 of the Code; provided that, to the extent any grant exceeds such $100,000 calendar year limit, the portion of such granted Option shall be deemed a Nonqualified Stock Option in accordance with Section 422 of the Code.

 

5.6                                  Rights and Privileges. A Participant shall have no rights as a Shareholder with respect to any shares of Company Stock covered by an Option until the issuance of such shares to the Participant.

 

5.7                                  Award of SARs.

 

(a)                                   The Committee may, from time to time, and on such terms and conditions as the Committee may prescribe, award SARs to any Employee and/or Advisor.

 

(b)                                  A SAR shall represent the right to receive payment of an amount equal to (i) the amount by which the Fair Market Value of one share of Company Stock on the trading day immediately preceding the date of exercise of the SAR exceeds the Exercise Price multiplied by (ii) the number of shares covered by the SAR.  Payment of the amount to which a Participant is entitled upon the exercise of a SAR shall be made in cash, Company Stock, or partly in cash and partly in Company Stock at the discretion of the Committee.  The shares shall be valued at their Fair Market Value on the date of exercise.

 

(c)                                   SARs awarded under the Plan shall be evidenced by an Award Agreement between the Company and the Participant.

 

(d)                                  The Committee may prescribe conditions and limitations on the exercise of any SAR. SARs may be exercised only when the Fair Market Value of a share of Company Stock exceeds the Exercise Price.

 

(e)                                   A SAR shall be exercisable only by written notice to the Chief Financial Officer of the Company or the Secretary of the Committee , or his or her designee.

 

(f)                                     To the extent not previously exercised, all SARs shall automatically be exercised on the last trading day prior to their expiration, so long as the Fair Market Value of a share of Company Stock exceeds the Exercise Price, unless prior to such day the holder instructs the Chief Financial Officer or Secretary of the Committee, otherwise in writing.

 

(g)                                  Subject to Article X, each SAR shall expire on a date determined by the Committee at the time of grant.

 

ARTICLE VI

 

RESTRICTED STOCK

 

6.1                                  Award of Restricted Stock. The Committee may make a Restricted Stock Award to any Employee and/or Advisor, subject to this Article VI and to such other terms and conditions as the Committee may prescribe.

 

6.2                                  Restriction Period. At the time of making a Restricted Stock Award, the Committee shall establish the Restriction Period applicable to such Award. The Committee may establish different Restriction Periods from time to time and each Restricted Stock Award may have a different Restriction Period, in the discretion of the Committee. Restriction Periods, when established for a Restricted Stock Award, shall not be changed except as permitted by Section 6.3.

 

6.3                                  Other Terms and Conditions. Company Stock, when awarded pursuant to a Restricted Stock Award, will be represented in a book entry account in the name of the Participant who receives the Restricted Stock Award. The Participant shall be entitled to receive dividends during the Restriction Period and shall have the right to vote such Restricted Stock and shall have all other Shareholder  rights, with the exception that (i) unless otherwise provided by the Committee, if any dividends are paid in shares of Company Stock, those shares will be subject to the same restrictions as the shares of Restricted Stock with respect to which they were issued, (ii) the Participant will not be entitled to delivery of any stock certificate evidencing the Company Stock underlying the Restricted Stock Award during the Restriction Period, (iii) the Company will retain custody of the Restricted Stock during the Restriction Period, and (iv) a breach of a restriction or a breach of the terms and conditions established by the Committee pursuant to the Restricted Stock Award will cause a forfeiture of the Restricted Stock Award. The Committee may, in addition, prescribe additional restrictions, terms, or conditions upon or to the Restricted Stock Award including the attainment of Performance Goals in accordance with Section 4.5.

 

6.4                                  Restricted Stock Award Agreement. Each Restricted Stock Award shall be evidenced by an Award Agreement.

 


 

6.5                                  Payment for Restricted Stock. Restricted Stock Awards may be made by the Committee under which the Participant shall not be required to make any payment for the Company Stock or, in the alternative, under which the Participant, as a condition to the Restricted Stock Award, shall pay all (or any lesser amount than all) of the Fair Market Value of the Company Stock, determined as of the date the Restricted Stock Award is made. If the latter, such purchase price shall be paid in cash as provided in the Award Agreement.

 

ARTICLE VII

 

AWARDS FOR NON-EMPLOYEE DIRECTORS

 

7.1                                  Awards to Non-Employee Directors. The Board shall determine all Awards to Company Directors. The Board or the Committee, as the case may be, retains the discretionary authority to make Awards to Non-Employee Directors and any type of Award (other than Incentive Stock Options) may be granted to Non-Employee Directors under this Plan. All such Awards shall be subject to the terms and conditions of the Plan and to such other terms and conditions consistent with the Plan as the Board or the Committee, as the case may be, deems appropriate.

 

7.2                                  No Right to Continuance as a Director. None of the actions of the Company in establishing the Plan, the actions taken by the Company, the Board, or the Committee under the Plan, or the granting of any Award under the Plan shall be deemed (i) to create any obligation on the part of the Board or the board of directors of the applicable Subsidiary to nominate any Non-Employee Director for reelection or (ii) to be evidence of any agreement or understanding, express or implied, that the Non-Employee Director has a right to continue as a Non-Employee Director for any period of time or at any particular rate of compensation.

 

ARTICLE VIII

 

UNRESTRICTED COMPANY STOCK AWARDS FOR EMPLOYEES AND/OR
ADVISORS

 

8.1                                  The Committee may make awards of unrestricted Company Stock to Employees and/or Consultants/Advisors on such terms and conditions as the Committee may prescribe.

 

ARTICLE IX

 

[Intentionally Omitted]

 

ARTICLE X

 

GENERAL TERMINATION PROVISIONS

 

10.1                            Termination. Subject to Article XI and unless otherwise specified in the applicable Award Agreement, the following provisions will govern the treatment of a Participant’s outstanding Awards following a Participant’s Termination.

 

(a)                                   Upon the Participant’s Termination, any Awards that are not vested and/or exercisable on the date of such Termination will immediately terminate and be of no further force and effect.

 

(b)                                  If the Participant Terminates for any reason other than (i) death, (ii) Disability, or (iii) discharge for Cause, such Participant’s outstanding SARs or Options may be exercised at any time within three months after such Termination, to the extent of the number of shares covered by such Options or SARs which are exercisable at the date of such Termination; except that an Option or SAR shall not be exercisable on any date beyond the expiration date of such Option or SAR.

 

(c)                                   Upon a Termination for Cause, any Options or SARs held by the Participant (whether or not then exercisable) shall expire and any rights thereunder shall terminate immediately.  Any non-vested Restricted Stock Awards of such Participant shall immediately be forfeited and any rights thereunder shall terminate.

 

(d)                                  Upon a Termination due to the Participant’s death, any SARs or Options that are then exercisable may be exercised by the Participant’s Personal Representative at any time before the earlier of (i) one year after the Participant’s death or (ii) the expiration date of the Award.

 

(e)                                   Upon a Termination due to the Participant’s Disability, any SARs or Options that are then exercisable may be exercised by the Participant at any time before the earlier of (i) one year after the date of such Termination or (ii) the expiration date of the Award; provided, however, that an Option which is intended to qualify as an Incentive Stock Option will only be treated as such to the extent it complies with the requirements of Section 422 of the Code.

 

ARTICLE XI

 

CHANGE IN CONTROL OF THE COMPANY

 

11.1                            Contrary Provisions.  Notwithstanding anything contained in the Plan to the contrary, the provisions of this Article XI shall govern and supersede any inconsistent terms or provisions of the Plan.

 

11.2                            Definitions

 

(a)                                   Change in Control .  For purposes of this Plan, Change in Control shall mean a change in the ownership or effective control of the Company or in the ownership of a substantial portion of the assets of the Company (within the meaning of Section 409A of the Code.

 

(i)                                      Change in Actual Control shall mean the acquisition by any one person, or more than one person acting as a group (as defined in Section 11.2(a)(iv), below) of ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of the Company.  However, if any one person, or more than one person acting as a group, is

 


 

considered to own more than 50 percent of the total fair market value or total voting power of the stock of the Company, the acquisition of additional stock by the same person or persons is not considered to cause a Change in Actual Control of the Company (or to cause a Change in Effective Control of the Company (within the meaning of Section 11.2(a)(ii)). An increase in the percentage of stock owned by any one person, or persons acting as a group, as a result of a transaction in which the Company acquires its stock in exchange for property will be treated as an acquisition of stock for purposes of this Section 11.2(a)(i).

 

(ii)                                   Change in Effective Control shall mean:

 

(A)                               The acquisition by any one person, or more than one person acting as a group (as defined in Section 11.2(a)(iv), below), during any 12-month period of ownership of stock of the Company possessing 35 percent or more of the total voting power of the stock of the Company; or

 

(B)                                 The replacement of a majority of members of the Board during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election in accordance with Treasury Regulation § 1.409A-1(g)(5)(vi)(A)(2).

 

Notwithstanding the foregoing, if any one person, or more than one person acting as a group, is considered to effectively control the Company (within the meaning of this Section 11.2(a)(ii)), the acquisition of additional control of the Company by the same person or persons is not considered to cause a Change in Control.

 

(iii)                                Change in the Ownership of the Company’s Assets shall mean the acquisition by any one person, or more than one person acting as a group (as defined in Section 11.2(a)(iv), below), during any 12-month period of assets from the Company that have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions.

 

Notwithstanding the foregoing, there is no change in control event under this Section 11.2(a) when there is a transfer to an entity that is controlled by the Shareholders immediately after the transfer.

 

(iv)                               Persons acting as a group . For purposes of this Section 11.2(a), persons will not be considered to be acting as a group solely because they purchase or own stock of the same corporation at the same time, or as a result of the same public offering. However, persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the corporation. If a person, including an entity, owns stock in both corporations that enter into a merger, consolidation, purchase or acquisition of stock, or similar transaction, such shareholder is considered to be acting as a group with other shareholders in a corporation only with respect to the ownership in that corporation prior to the transaction giving rise to the change and not with respect to the ownership interest in the other corporation.

 

11.3                           Effect of Change in Control on Certain Awards.

 

(a)                                   If the Company is not the surviving corporation following a Change in Control, and the surviving corporation following such Change in Control or the acquiring corporation (such surviving corporation or acquiring corporation is hereinafter referred to as the “Acquiror”) does not assume the outstanding Options, SARs, Restricted Stock, or Restricted Performance Stock or does not substitute equivalent equity awards relating to the securities of such Acquiror or its affiliates for such Awards, then all such Awards shall become immediately and fully exercisable (or in the case of Restricted Stock, fully vested and all restrictions will immediately lapse). In the case of Restricted Performance Stock, the target payout opportunities under all outstanding Awards of Restricted Performance Stock shall be deemed to have been fully earned based on targeted performance being attained as of the effective date of the Change in Control.  In addition, the Board or its designee may, in its sole discretion, provide for a cash payment to be made to each Participant for the outstanding Options, Restricted Stock, Restricted Performance Stock, or SARs upon the consummation of the Change in Control, determined on the basis of the fair market value that would be received in such Change in Control by the holders of the Company’s securities relating to such Awards. Notwithstanding the foregoing, any Option intended to be an Incentive Stock Option under Section 422 of the Code shall be adjusted in a manner to preserve such status.

 

(b)

If the Company is the surviving corporation following a Change in Control, or the Acquiror assumes the outstanding Options, SARs, Restricted Stock, or Restricted Performance Stock or substitutes equivalent equity awards relating to the securities of such Acquiror or its affiliates for such Awards, then all such Awards or such substitutes therefor shall remain outstanding and be governed by their respective terms and the provisions of the Plan.

 

 

(c)

If (i) a Participant Terminates without Cause within twenty-four (24) months following a Change in Control, and (ii) the Company is the surviving corporation following such Change in Control, or the Acquiror assumes the outstanding Options, SARs, Restricted Stock, or Restricted Performance Stock or substitutes equivalent equity awards relating to the securities of such Acquiror or its affiliates for such Awards, then all outstanding Options, SARs, Restricted Stock, or Restricted Performance Stock shall become immediately and fully exercisable (or in the case of Restricted Stock, fully vested and all restrictions will immediately lapse). In the case of Restricted Performance Stock, the target payout opportunities under all outstanding Awards of Restricted Performance Stock shall be deemed to have been fully earned based on targeted performance being attained.

 

 

(d)

If (i) the employment of a Participant with the Company and its Subsidiaries is terminated for Cause within twenty-four (24) months following a Change in Control and (ii) the Company is the surviving corporation following such Change in Control, or the Acquiror assumes the outstanding Options, SARs, Restricted Stock, or Restricted Performance Stock or substitutes equivalent equity awards relating to the securities of such Acquiror or its affiliates for such Awards, then any Options or SARs of such Participant shall expire, and any non-vested Restricted Stock or Restricted Performance Stock shall be forfeited, and any rights under such Awards shall terminate immediately.

 

 

(e)

Outstanding Options or SARs which vest in accordance with Section 11.3, may be exercised by the Participant in accordance with Article X; provided, however, that a Participant whose Options or SARs become exercisable in accordance with Section 11.3(c) may exercise such Options or SARs at any time within one year after such Termination, except that an Option or SAR shall not be exercisable on any date beyond the expiration date of such Option or SAR. In the event of a Participant’s death after such Termination, such Options or SARs may be exercised by the Participant’s Personal Representative at any time before the earlier of (i) one year after the Participant’s death or (ii) the expiration date of the Award; provided, however, that, an Option which is intended to qualify as an Incentive Stock Option will only be treated as such to the extent it complies with the requirements of Section 422 of the Code.

 

11.4                            Amendment or Termination.  This Article XI shall not be amended or terminated at any time if any such amendment or termination would adversely affect the rights of any Participant under the Plan.

 


 

ARTICLE XII

 

MISCELLANEOUS PROVISIONS

 

12.1                            Adjustments Upon Changes in Stock. In case of any reorganization, recapitalization, reclassification, stock split, stock dividend, distribution, combination of shares, merger, consolidation, rights offering, or any other changes in the corporate structure or shares of the Company, appropriate adjustments may be made by the Committee or the Board, as the case may be, (or if the Company is not the surviving corporation in any such transaction, the board of directors of the surviving corporation) in the aggregate number and kind of shares subject to the Plan, and the number and kind of shares and the Option Price per share subject to outstanding Options or which may be issued under outstanding Restricted Stock Awards or pursuant to unrestricted Company Stock Awards. Appropriate adjustments may also be made by the Committee or the Board, as the case may be, in the terms of any Awards under the Plan, subject to Article XI, to reflect such changes and to modify any other terms of outstanding Awards on an equitable basis. Any such adjustments made by the Committee or the Board pursuant to this Section 12.1 shall be conclusive and binding for all purposes under the Plan.

 

12.2                            Amendment, Suspension, and Termination of Plan.

 

(a)                                  The Board may suspend or terminate the Plan or any portion thereof at any time, and may amend the Plan from time to time in such respects as the Board may deem advisable in order that any Awards thereunder shall conform to any change in applicable laws or regulations or in any other respect the Board may deem to be in the best interests of the Company; provided, however, that no such amendment shall, without  approval, (i) except as provided in Section 12.1, increase the number of shares of Company Stock which may be issued under the Plan, (ii) expand the types of awards available to Participants under the Plan, (iii) materially expand the class of employees and/or Advisors eligible to participate in the Plan, (iv) materially change the method of determining the Option Price of Options; (v) delete or limit the provision in Section 5.4 prohibiting the repricing of Options; (vi) extend the termination date of the Plan or (vii) be made to the extent that Shareholder approval is required to satisfy applicable law, regulation or any securities stock exchange, market or other quotation system on or through which the Company Stock is listed or traded. No such amendment, suspension, or termination shall materially adversely alter or impair any outstanding Options, SARs or shares of Restricted Stock without the consent of the Participant affected thereby.

 

(b)                                 The Committee may amend or modify any outstanding Options, SARs, or Restricted Stock Awards in any manner to the extent that the Committee would have had the authority under the Plan initially to award such Options, SARs, or Restricted Stock Awards, as so modified or amended, including without limitation, to change the date or dates as of which such Options or SARs may be exercised, or to remove the restrictions on shares of Restricted Stock.

 

(c)                                   Notwithstanding the foregoing, the Plan and any Award Agreements may be amended without any additional consideration to affected Participants to the extent necessary to comply with, or avoid penalties under, Section 409A of the Code, even if those amendments reduce, restrict or eliminate rights granted prior to such amendments.

 

12.3                            Nonuniform Determinations. The Committee’s (or, if applicable, the Board’s) determinations under the Plan, including without limitation, (a) the determination of the Employees, Advisors and Non-Employee Directors to receive Awards, (b) the form, amount, and timing of any Awards, (c) the terms and provisions of any Awards and (d) the Award Agreements evidencing the same, need not be uniform and may be made by it selectively among Employees, Advisors and/or Non-Employee Directors who receive, or who are eligible to receive, Awards under the Plan, whether or not such Employees, Consultants/Advisors and/or Non-Employee Directors are similarly situated.

 

12.4                            General Restriction. Each Award under the Plan shall be subject to the condition that, if at any time the Committee shall determine that (a) the listing, registration, or qualification of the shares of Company Stock subject or related thereto upon NASDAQ or any other established stock exchange, market or quotation system or under any state or federal law, (b) the consent or approval of any government or regulatory body, or (c) an agreement by the Participant with respect thereto, is necessary or desirable, then such Award shall not become exercisable in whole or in part unless such listing, registration, qualification, consent, approval, or agreement shall have been effected or obtained free of any conditions not acceptable to the Committee.

 

12.5                            No Right To Employment. None of the actions of the Company in establishing the Plan, the actions taken by the Company, the Board or the Committee under the Plan, or the granting of any Award under the Plan shall be deemed (a) to create any obligation on the part of the Company or any Subsidiary to retain any person in the employ of, or continue the provision of services to, the Company or any Subsidiary, or (b) to be evidence of any agreement or understanding, express or implied, that the person has a right to continue as an employee, consultant, or advisor for any period of time or at any particular rate of compensation.

 

12.6                            Governing Law. The provisions of the Plan shall take precedence over any conflicting provision contained in an Award Agreement. All matters relating to the Plan or to Awards granted hereunder shall be governed by and construed in accordance with the laws of the State of California without regard to the principles of conflict of laws.

 

12.7                            Trust Arrangement. All benefits under the Plan represent an unsecured promise to pay by the Company. The Plan shall be unfunded and the benefits hereunder shall be paid only from the general assets of the Company resulting in the Participants having no greater rights than the Company’s general creditors; provided, however, nothing herein shall prevent or prohibit the Company from establishing a trust or other arrangement for the purpose of providing for the payment of the benefits payable under the Plan.

 

12.8                            Indemnification of Board and Committee. Indemnification of the members of the Board and/or the members of the Committee shall be in accordance with the charter documents of the Company, as amended by the Shareholders from time to time, and any agreements issued consistent therewith.

 

12.9                            No Impact on Benefits.   Awards are not compensation for purposes of calculating a Participant’s rights under any employee benefit plan that does not specifically require the inclusion of Awards in calculating benefits.

 

12.10                      Beneficiary Designation .  Each Participant may name a beneficiary or beneficiaries to receive or exercise any vested Award that is unpaid or unexercised at the Participant’s death.  Unless otherwise provided in the beneficiary designation, each designation will revoke all prior designations made by the same Participant, must be made on a form prescribed by the Committee and will be effective only when filed in writing with the Committee.  If a Participant has not made an effective beneficiary designation, the deceased Participant’s beneficiary will be the Participant’s surviving spouse or, if none, the deceased Participant’s estate.  The identity of a Participant’s designated beneficiary will be based only on the information included in the latest beneficiary designation form completed by the Participant and will not be inferred from any other evidence.

 

12.11                      Tax Withholding .  The Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company, the minimum statutory amount to satisfy federal, state and local taxes required by law or regulation to be withheld with respect to any taxable event arising as a result of the Plan.  With respect to withholding required upon any taxable event arising as a result of an Award granted hereunder, a Participant may elect, subject to the approval of the Committee, to satisfy the withholding requirement, in whole or in part, by having the Company withhold shares of Company Stock having a Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax that could be imposed on the transaction.  All such elections shall be irrevocable, made in writing and signed by the Participant, and shall be subject to any restrictions or limitations that the Committee, in its sole discretion, deems appropriate.

 

Exhibit 4.3

 

Opinion of Leland, Parachini, Steinberg, Matzger & Melnick, LLP

 

March 9, 2009

 

Oak Valley Bancorp

125 North Third Avenue

Oakdale, CA 95361

 

RE: REGISTRATION STATEMENT ON FORM S-8

 

Ladies and Gentlemen:

 

We have acted as counsel to Oak Valley Bancorp, a California corporation (the “Company”), in connection with the preparation of a Registration Statement on Form S-8 to be filed with the Securities and Exchange Commission (the “Registration Statement”) with respect to the registration under the Securities Act of 1933, as amended, of 1,951,092 shares of Common Stock, no par value (the “Shares”) of the Company (the “Common Stock”), subject to issuance by the Company upon exercise of options granted under the Oak Valley Community Bank 1991 Stock Option Plan, as restated and amended in May 1998 (the “1998 Restated Stock Option Plan”) as assumed by the Company pursuant to the terms of the Agreement and Plan of Merger, dated as of May 1, 2008 (the “Merger Agreement”), among the Company, Oak Valley Community Bank, a California corporation, and Interim Oak Valley Bancorp, a California corporation, a wholly owned subsidiary of the Company, and also subject to issuance by the Company upon exercise of options granted under the Oak Valley Bancorp 2008 Equity Plan (the “2008 Equity Plan”).

 

We have examined the originals or certified copies of such corporate records, certificates of officers of the Company and/or public officials, and such other documents as we have deemed relevant and necessary as the basis for the opinions set forth below.  In such examination, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as conformed or photostatic copies, and the authenticity of the originals of such copies.

 

We have also assumed the due authorization and execution of the Registration Statement.

 

With respect to certain factual matters material to the opinions expressed herein, we have relied, without independent investigation, on certificates of public officials as to the good standing or qualifications to do business, the representations and warranties of the Company in the Registration Statement, and statements contained in the certificates executed and delivered by the President and Secretary of the Company.

 

Based on our examination mentioned above, subject to the assumptions stated above, and relying on the statements of fact contained in the documents that we have examined, we are of the opinion that when issued in accordance with the terms of the 1998 Restated Stock Option Plan and the 2008 Equity Plan, the Shares will be validly issued, fully paid and non-assessable shares of Common Stock.

 

We are members of the Bar of the State of California and express no opinion as to matters governed by any laws other than the federal laws of the United States, and the laws of the State of California.  We assume no obligation to update the opinions set forth in this letter.

 

This opinion is rendered to you solely for your benefit and may not be furnished to, used, circulated, quoted or relied upon by any other person, firm, corporation or entity for any purpose without our prior written consent.

 

We hereby consent to the filing of this opinion as an exhibit to the Registration Statement.  In giving this consent, we do not admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act or the General Rules and Regulations of the Securities and Exchange Commission.

 

 

Very truly yours,

 

/s/ Leland, Parachini, Steinberg, Matzger & Melnick, LLP

Leland, Parachini, Steinberg, Matzger & Melnick, LLP

 

Exhibit 4.4

 

Consent of Independent Registered Public Accounting Firm

 

We consent to the incorporation by reference in this registration statement on Form S-8 of Oak Valley Bancorp of our report dated July 21, 2008 with respect to the balance sheets of Oak Valley Community Bank as of December 31, 2007 and 2006, and the related statements of earnings, stockholders’ equity, and cash flows for the two years in the period ended December 31, 2007 appearing in Oak Valley Bancorp’s filing on Form 10/A dated October 31, 2008.

 

/s/ Moss Adams, LLP

 

Stockton, California

 

March 24, 2009