EXHIBIT 10.6
EAST WEST BANCORP, INC.
1998 STOCK INCENTIVE PLAN
-------------------------
Section 1. PURPOSE OF PLAN
The purpose of this 1998 Stock Incentive Plan ("Plan") of East West
Bancorp, Inc., a Delaware corporation (the "Company"), is to enable the Company
and its subsidiaries to attract, retain and motivate their employees and
consultants by providing for or increasing the proprietary interests of such
employees and consultants in the Company, and to enable the Company and its
subsidiaries to attract, retain and motivate nonemployee directors and further
align their interests with those of the stockholders of the Company by providing
for or increasing the proprietary interest of such directors in the Company.
Section 2. PERSONS ELIGIBLE UNDER PLAN
Each of the following persons (each, a "Participant") shall be
eligible to be considered for the grant of Awards (as hereinafter defined)
hereunder: (1) any employee of the Company or any of its subsidiaries,
including any director who is also such an employee, (2) any director of the
Company or any of its subsidiaries who is not also an employee of the Company or
any of its subsidiaries (a "Nonemployee Director") and (3) any consultant of the
Company or any of its subsidiaries.
Section 3. AWARDS
(A) The Committee (as hereinafter defined), on behalf of the Company,
is authorized under this Plan to enter into any type of arrangement with a
Participant that is not inconsistent with the provisions of this Plan and that,
by its terms, involves or might involve the issuance of (i) shares of common
stock of the Company ("Common Shares") or (ii) a Derivative Security (as such
term is defined in Rule 16a-1 promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), as such rule may be amended from time to
time) with an exercise or conversion privilege at a price related to the Common
Shares or with a value derived from the value of the Common Shares. The
entering into of any such arrangement is referred to herein as the "grant" of an
"Award."
(B) Awards are not restricted to any specified form or structure and
may include, without limitation, sales or bonuses of stock, restricted stock,
stock options, reload stock options, stock purchase warrants, other rights to
acquire stock, securities convertible into or redeemable for stock, stock
appreciation rights, phantom stock, dividend equivalents, performance units or
performance shares, and an Award may consist of one such security or benefit, or
two or more of them in tandem or in the alternative.
(C) Awards may be issued, and Common Shares may be issued pursuant to
an Award, for any lawful consideration as determined by the Committee,
including, without limitation, services rendered by the recipient of such Award.
(D) Subject to the provisions of this Plan, the Committee, in its
sole and absolute discretion, shall determine all of the terms and conditions of
each Award granted under this Plan, which terms and conditions may include,
among other things:
(i) a provision permitting the recipient of such Award,
including any recipient who is a director or officer of the Company,
to pay the purchase price of the Common Shares or other property
issuable pursuant to such Award, in whole or in part, by any one or
more of the following:
(A) the delivery of cash;
(B) the delivery of other property deemed acceptable by the
Committee;
(C) the delivery of previously owned shares of capital
stock of the Company (including "pyramiding") or other property; or
(D) a reduction in the amount of Common Shares or other
property otherwise issuable pursuant to such Award;
(ii) a provision conditioning or accelerating the receipt of
benefits pursuant to such Award, either automatically or in the
discretion of the Committee, upon the occurrence of specified events,
including, without limitation, a change of control of the Company (as
defined by the Committee), an acquisition of a specified percentage of
the voting power of the Company, the dissolution or liquidation of the
Company, a sale of substantially all of the property and assets of the
Company or an event of the type described in Section 7 hereof; or
(iii) a provision required in order for such Award to qualify as
an incentive stock option under Section 422 of the Internal Revenue
Code (an "Incentive Stock Option"); provided, however, that no Award
-------- -------
issued to any consultant or any Nonemployee Director may qualify as an
Incentive Stock Option.
(e) Notwithstanding anything to the contrary contained in this
Section 3, neither an Award nor any interest therein may be sold, assigned,
transferred, conveyed, gifted, pledged, hypothecated or otherwise transferred in
any manner other than by will or the laws of descent and distribution.
(f) All certificates evidencing Awards or Common Shares issued
pursuant thereto should bear any legend determined by the Board or the Committee
(as defined below) to be necessary or appropriate.
2
Section 4. STOCK SUBJECT TO PLAN
(A) At any time, the aggregate number of Common Shares issued and
issuable pursuant to all Awards (including all Incentive Stock Options) granted
under this Plan shall not exceed 1,902,000 subject to adjustment as provided in
Section 7 hereof. In the case of stock options and stock appreciation rights,
the maximum number of Common Shares with respect to which options or rights may
be granted to any person during a calendar year shall be 1,902,000 shares.
(B) For purposes of Section 4(a) hereof, the aggregate number of
Common Shares issued and issuable pursuant to Awards granted under this Plan
shall at any time be deemed to be equal to the sum of the following:
(i) the number of Common Shares that were issued prior to such
time pursuant to Awards granted under this Plan, other than Common
Shares that were subsequently reacquired by the Company pursuant to
the terms and conditions of such Awards and with respect to which the
holder thereof received no benefits of ownership such as dividends;
plus
(ii) the number of Common Shares that were otherwise issuable
prior to such time pursuant to Awards granted under this Plan, but
that were withheld by the Company as payment of the purchase price of
the Common Shares issued pursuant to such Awards; plus
(iii) the maximum number of Common Shares that are or may be
issuable at or after such time pursuant to Awards granted under this
Plan prior to such time.
Section 5. DURATION OF PLAN
No Awards shall be made under this Plan after June 25, 2008. Although
Common Shares may be issued after June 25, 2008 pursuant to Awards made prior to
such date, no Common Shares shall be issued under this Plan after June 25, 2008.
Section 6. ADMINISTRATION OF PLAN
(A) This Plan shall be administered by a committee (the "Committee")
of the Board of Directors of the Company (the "Board") consisting of two or more
directors, each of whom is an "outside director" within the meaning of Section
162(m) of the Internal Revenue Code of 1986, as amended, and who otherwise
comply with the requirements of Rule 16b-3; provided, however, that before the
-------- -------
registration of the Common Shares under Section 12 of the Exchange Act, grants
of Awards may, in the absence of action of the Committee, be made by the entire
Board.
3
(B) Subject to the provisions of this Plan, the Committee shall be
authorized and empowered to do all things necessary or desirable in connection
with the administration of this Plan, including, without limitation, the
following:
(i) adopt, amend and rescind rules and regulations relating to
this Plan;
(ii) determine which persons are Participants and to which of
such Participants, if any, Awards shall be granted hereunder;
(iii) grant Awards to Participants and determine the terms and
conditions thereof, including the number of Common Shares issuable
pursuant thereto;
(iv) determine whether, and the extent to which adjustments are
required pursuant to Section 7 hereof;
(v) interpret and construe this Plan and the terms and
conditions of any Award granted hereunder; and
(vi) certify in writing prior to payment of compensation that
the performance goals and any other material terms of an Award were in
fact satisfied. For this purpose, approved minutes of the Committee
meeting in which the certification is made are treated as a written
certification.
Section 7. ADJUSTMENTS
If the outstanding securities of the class then subject to this Plan
are increased, decreased or exchanged for or converted into cash, property or a
different number or kind of securities, or if cash, property or securities are
distributed in respect of such outstanding securities, in either case as a
result of a reorganization, merger, consolidation, recapitalization,
restructuring, reclassification, dividend (other than a regular cash dividend)
or other distribution, stock split, reverse stock split or the like, or if
substantially all of the property and assets of the Company are sold, then,
unless the terms of such transaction shall provide otherwise, the Committee
shall make appropriate and proportionate adjustments in (i) the number and type
of shares or other securities or cash or other property that may be acquired
pursuant to Awards theretofore granted under this Plan and (ii) the maximum
number and type of shares or other securities that may be issued pursuant to
Awards thereafter granted under this Plan.
Section 8. AMENDMENT AND TERMINATION OF PLAN
The Board may amend or terminate this Plan at any time and in any
manner, provided that no such amendment or termination shall deprive the
recipient of any Award theretofore granted under this Plan, without the consent
of such recipient, of any of his or her rights thereunder or with respect
thereto.
4
Section 9. EFFECTIVE DATE OF PLAN
This Plan shall be effective as of the latter of the date upon which
it was approved by the Board of Directors of the Company and the date on which
it was approved by the holders of a majority of the voting securities of the
Company.
Section 10. GOVERNING LAW
This Plan and any Award granted hereunder shall be governed by and
construed and enforced in accordance with the laws of the State of California
without reference to choice or conflict of law principles.
5
EAST WEST BANCORP, INC.
1998 NON-QUALIFIED STOCK OPTION PLAN
FOR OFFICERS AND INDEPENDENT CONTRACTORS
This 1998 Non-Qualified Stock Option Plan for Officers and Independent
Contractors ("Plan") sets forth the terms and conditions under which options to
purchase shares of common stock of East West Bancorp, Inc., a Delaware
corporation (the "Company"), may be granted from time to time to officers and
independent contractors of the Company or one or more of its subsidiaries.
WHEREAS, the Board of Directors of the Company adopted the 1998 Stock
Incentive Plan (the "1998 Stock Incentive Plan") under which the Board of
Directors, or a committee of the Board of Directors of the Company administering
the 1998 Stock Incentive Plan (the "Committee"), may from time to time approve
the grant to employees, directors and independent contractors of the Company or
one or more of its subsidiaries of options to purchase shares of the common
stock of the Company (the "Common Stock"); and
WHEREAS, this Plan sets forth the terms and conditions of Options (as defined
below) granted to officers and independent contractors of the Company or one or
more of its subsidiaries ("Participants").
NOW, THEREFORE, this Plan is as follows:
1. Grants Of Options; Certain Terms and Conditions. The Company may from
-----------------------------------------------
time to time grant to Participants, options to purchase shares of Common Stock
("Option Shares"), which grants shall be evidenced by a written certificate of
the Company delivered to the Participant setting forth the number of Option
Shares granted, the Date of Grant, the Exercise Price per share, the Expiration
Date by which the options must be exercised, and the Annual Vesting Rate (the
"Options"). Unless indicated otherwise on the certificate delivered to a
Participant, Options shall expire at 5:00 p.m., California time, on the
Expiration Date indicated on the certificate. On each anniversary of the Date of
Grant to a Participant, the Participant's Options that are exercisable to
purchase, and that shall become vested, shall be the number of Option Shares
(rounded to the nearest whole share) equal to the total number of Option Shares
subject to the grant multiplied by the Annual Vesting Rate for the granted
Options.
This Plan and all Options granted under this Plan are subject to all of the
terms and conditions of the 1998 Stock Incentive Plan. Options granted under
this Plan are not intended to qualify as incentive stock options under Section
422 of the Internal Revenue Code of 1986, as amended.
2. Acceleration and Termination of Options.
---------------------------------------
(A) Change of Control. A Participant's Options shall become fully vested
-----------------
and exercisable upon the date of a Change of Control (as hereinafter defined),
if the date on which the Participant's employment with the Company and all of
its subsidiaries terminates (such event shall be referred to as the "Termination
of Employment") does not occur before the Change in Control. "Change of
Control" shall mean the first to occur of the following events:
(I) any date upon which the directors of the Company who were last
nominated by the Board of Directors (the "Board") for election as directors
cease to constitute a majority of the directors of the Company;
6
(II) the date of the first public announcement that any person or entity,
together with all Affiliates and Associates (as such capitalized terms are
defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) of such person or entity, shall have become the
Beneficial Owner (as defined in Rule 13d-3 promulgated under the Exchange Act)
of voting securities of the Company representing 51% or more of the voting power
of the Company (a "51% Stockholder"); provided, however, that the terms "person"
-------- -------
and "entity," as used in this clause (B), shall not include (1) the Company or
any of its subsidiaries, (2) any employee benefit plan of the Company or any of
its subsidiaries, (3) any entity holding voting securities of the Company for or
pursuant to the terms of any such plan or (4) any person or entity who was a 51%
Stockholder on the date of adoption of the Plan by the Board; or
(III) a reorganization, merger or consolidation of the Company (other than
a reorganization, merger or consolidation the purpose of which is (A) to change
the Company's domicile solely within the United States or (B) the formation of a
holding company in which the shareholders of the holding company after its
formation are substantially the same as for the Company prior to the holding
company formation), the consummation of which results in the outstanding
securities of any class then subject to the Option being exchanged for or
converted into cash, property or a different kind of securities.
(B) Termination of Employment.
-------------------------
(I) Retirement. If a Participant's Employment is Terminated by reason of
----------
the Participant's retirement in accordance with the Company's then-current
retirement policy ("Retirement"), then (A) the portion of the Participant's
Options that have not vested on or prior to the date of such Retirement shall
terminate on such date and (B) the remaining vested portion of the Options shall
terminate upon the earlier of the date three (3) months after the date of such
Termination of Employment and the Expiration Date.
(II) Death or Permanent Disability. If a Participant's Employment is
-----------------------------
Terminated by reason of the death or Permanent Disability (as hereinafter
defined) of the Participant, then (A) the portion of the Option that has not
vested on or prior to the date of such Termination of Employment shall terminate
on such date and (B) the remaining vested portion of the Option shall terminate
upon the earlier of the Expiration Date or the first anniversary of the date of
such Termination of Employment. "Permanent Disability" shall mean the inability
to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment that can be expected to result in
death or that has lasted or can be expected to last for a continuous period of
not less than 12 months. A Participant shall not be deemed to have a Permanent
Disability until proof of the existence thereof shall have been furnished to the
Board in such form and manner, and at such times, as the Board may require. Any
determination by the Board that a Participant does or does not have a Permanent
Disability shall be final and binding upon the Company and the Participant.
(III) Other Termination. If a Participant's Employment is Terminated for
-----------------
any reason other as set forth in clauses (i) and (ii) above, including
termination by voluntary resignation, then (A) the portion of the Participant's
Options that have not vested on or prior to the date of Termination of
Employment shall terminate on such date and (B) the remaining vested portion of
the Options shall terminate upon the earlier of the date three (3) months after
the date of such Termination of Employment and the Expiration Date.
7
(C) Death Following Termination of Employment. Notwithstanding anything to the
-----------------------------------------
contrary contained in this Plan, if a Participant shall die at any time after
the Termination of his or her Employment and prior to the Expiration Date, then
the remaining vested portion of that Participant's Options shall terminate on
the earlier of the Expiration Date or the first anniversary of the date of such
death.
(D) Other Events Causing Acceleration of Option. The Committee, in its sole
-------------------------------------------
discretion, may accelerate the exercisability of a Participant's Options at any
time and for any reason.
(E) Other Events Causing Termination of Option. Notwithstanding anything to
------------------------------------------
the contrary contained in this Plan, a Participant's Options shall terminate
upon the consummation of any of the following events, or, if later, the
thirtieth day following the first date upon which such event shall have been
approved by both the Board and the shareholders of the Company:
(I) the dissolution or liquidation of the Company; or
(II) a sale of substantially all of the property and assets of the
Company, unless the terms of such sale shall provide otherwise.
3. Adjustments. In the event that the outstanding securities of the class then
-----------
subject to Options are increased, decreased or exchanged for or converted into
cash, property or a different number or kind of securities, or cash, property or
securities are distributed in respect of such outstanding securities, in either
case as a result of a reorganization, merger, consolidation, recapitalization,
reclassification, dividend (other than a regular cash dividend) or other
distribution, stock split, reverse stock split or the like, or in the event that
substantially all of the property and assets of the Company are sold, then,
unless such event shall cause the Options to terminate pursuant to Section 2(d)
hereof, the Committee shall make appropriate and proportionate adjustments in
the number and type of shares or other securities or cash or other property that
may thereafter be acquired upon the exercise of the Options; provided, however,
-------- -------
that any such adjustments in the Options shall be made without changing the
aggregate Exercise Price of the then unexercised portion of Options granted
under this Plan.
4. Exercise.
--------
(A) Options of a Participant shall be exercisable during the Participant's
lifetime only by the Participant or by his or her guardian or legal
representative, and after the Participant's death only by the person or entity
entitled to do so under the Participant's last will and testament or applicable
intestate law. A Participant's Options may only be exercised by the delivery to
the Company of a written notice of such exercise, which notice shall specify the
number of Option Shares to be purchased (the "Purchased Shares") and the
aggregate Exercise Price for such shares (the "Exercise Notice"), together with
payment in full of such aggregate Exercise Price in cash or by check payable to
the Company; provided, however, that payment of such aggregate Exercise Price
-------- -------
may instead be made, in whole or in part, by the delivery to the Company of a
certificate or certificates representing shares of Common Stock, duly endorsed
or accompanied by a duly executed stock powers, which delivery effectively
transfers to the Company good and valid title to such shares, free and clear of
any pledge, commitment, lien, claim or other encumbrance (such shares to be
valued on the basis of the aggregate Fair Market Value (as defined below)
thereof on the date of such exercise), provided that the Company is not then
prohibited from purchasing or acquiring such shares of Common Stock.
8
(B) The "Fair Market Value" of a Common Share on any date (the "Determination
Date") shall be equal to the closing price per Common Share on the business day
immediately preceding the Determination Date, as reported in The Wall Street
Journal, Western Edition, or, if no closing price was so reported for such
immediately preceding business day, the closing price for the next preceding
business day for which a closing price was so reported, or, if no closing price
was so reported for any of the 30 business days immediately preceding the
Determination Date, the average of the high bid and low asked prices per Common
Share on the business day immediately preceding the Determination Date in the
over-the-counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotations System ("NASDAQ") or such other system then
in use, or, if the Common Shares were not quoted by any such organization on
such immediately preceding business day, the average of the closing bid and
asked prices on such day as furnished by a professional market maker making a
market in the Common Shares selected by the Board. If Common Shares are not
registered on the Determination Date under applicable rules of the Securities
and Exchange Commission, the Fair Market Value shall be determined by the Board
of Directors upon consultation with an investment banker familiar with the
Company and the market for its shares.
5. Payment of Withholding Taxes. If the Company becomes obligated to withhold
----------------------------
an amount on account of any tax imposed as a result of the exercise of Options
by a Participant, including, without limitation, any federal, state, local or
other income tax, or any F.I.C.A., state disability insurance tax or other
employment tax, then the Participant shall, on the first day upon which the
Company becomes obligated to pay such amount to the appropriate taxing
authority, pay such amount to the Company in cash or by check payable to the
Company, or by shares of Company stock owned by the Participant or otherwise
distributable pursuant to the exercise of the Option (except that, if shares are
used to satisfy such withholding obligation, the Company may impose such
reasonable restrictions relating to the delivery of the shares as may be
necessary to avoid the Company incurring a charge to earnings as a result of
such use of shares).
6. Notices. All notices and other communications required or permitted to be
-------
given pursuant to this Plan shall be in writing and shall be deemed given if
delivered personally or five days after mailing by certified or registered mail,
postage prepaid, return receipt requested, to the Company at 415 Huntington
Drive, San Marino, California 91108, Attention: Corporate Secretary, or to a
Participant at the Participant's work or home address as set forth on the
records of the Company.
7. Stock Exchange Requirements; Applicable Laws. Notwithstanding anything to
--------------------------------------------
the contrary in this Plan, no shares of stock purchased upon exercise of
Options, and no certificate representing all or any part of such shares, shall
be issued or delivered if (i) such shares have not been admitted to listing upon
official notice of issuance on each stock exchange upon which shares of that
class are then listed or (ii) in the opinion of counsel to the Company, such
issuance or delivery would cause the Company to be in violation of or to incur
liability under any federal, state or other securities law, or any requirement
of any stock exchange listing agreement to which the Company is a party, or any
other requirement of law or of any administrative or regulatory body having
jurisdiction over the Company.
8. Nontransferability. Neither Options nor any interest therein may be sold,
------------------
assigned, conveyed, gifted, pledged, hypothecated or otherwise transferred by a
Participant in any manner other than by will or the laws of descent and
distribution.
9. Plan. Options granted pursuant to this Plan are subject to all the terms
----
and conditions of the Plan, as the same may be amended from time to time by the
Company. The Company shall have the right to amend the Plan at any time and in
any manner without the consent of or prior notice to Participants; provided,
--------
however, that no such amendment shall deprive a Participant, without his or her
- -------
consent, of Options or of any of
9
a Participant's rights under this Plan. The interpretation and construction by
the Committee of the 1998 Stock Incentive Plan, this Plan, the Options and such
rules and regulations as may be adopted by the Committee for the purpose of
administering the 1998 Stock Incentive Plan and this Plan shall be final and
binding upon all Participants. Until a Participant's Options shall have expired,
terminated or exercised in full, the Company shall, upon written request
therefor, send a copy of the Plan, in its then-current form, to the Participant.
10. Shareholder Rights. No person or entity shall be entitled to vote, receive
------------------
dividends or be deemed for any purpose the holder of any Option Shares until the
Options shall have been duly exercised to purchase such Option Shares in
accordance with the provisions of this Plan.
11. Employment or Contract Rights. No provision of this Plan or of the Options
-----------------------------
granted hereunder shall (i) confer upon a Participant any right to continue in
the employ of the Company or any of its subsidiaries or to continue under any
employment or other contract that may exist between a Participant and the
Company, (ii) affect the right of the Company and each of its subsidiaries to
terminate the employment or contract of a Participant, with or without cause, or
(iii) confer upon a Participant any right to participate in any employee welfare
or benefit plan or other program of the Company or any of its subsidiaries other
than the Plan.
12. Governing Law. This Plan and the Options granted hereunder shall be
-------------
governed by and construed and enforced in accordance with the laws of the State
of California without reference to choice or conflict of law principles.
10