EXHIBIT 10.7
EAST WEST BANCORP, INC.
EMPLOYEE STOCK PURCHASE PLAN
The following constitute the provisions of the 1998 Employee Stock Purchase Plan
of East West Bancorp, Inc.
1. PURPOSE. The purpose of the Plan is to provide employees of the Company
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and its Designated Subsidiaries with an opportunity to purchase Common
Stock of the Company. It is the intention of the Company to have the
Plan qualify as an "Employee Stock Purchase Plan" under Section 423 of
the Internal Revenue Code of 1986, as amended. The provisions of the
Plan shall, accordingly, be construed so as to extend and limit
participation in a manner consistent with the requirements of that
section of the Code.
2. DEFINITIONS.
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a) "Board" shall mean the Board of Directors of the Company.
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b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
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c) "Common Stock" shall mean the Common Stock of the Company.
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d) "Company" shall mean East West Bancorp, Inc., a Delaware corporation.
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e) "Compensation" shall mean all regular straight time gross earnings
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and commissions, and shall not include payments for overtime, shift
premium, incentive compensation, incentive payments, bonuses and
other compensation.
f) "Continuous Status as an Employee" shall mean the absence of any
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interruption or termination of service as an Employee. Continuous
Status of an Employee shall not be considered interrupted in the
case of a leave of absence agreed to in writing by the Company,
provided that such leave is for a period of not more than 90 days
or reemployment upon the expiration of such leave is guaranteed by
contract or statute.
g) "Contributions" shall mean all amounts credited to the account of a
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participant pursuant to the Plan.
h) "Designated Subsidiaries" shall mean the Subsidiaries which have been
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designated by the Board from time to time in its sole discretion
as eligible to participate in the Plan.
i) "Employee" shall mean any person, including an Officer, who is
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customarily employed for at least twenty (20) hours per week and
more than five (5) months in a calendar year by the Company or one
of its Designated Subsidiaries.
j) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
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amended.
k) "Exercise Date" shall mean the last day of each offering period of
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the Plan.
l) "Purchase Date" shall mean the last day of each Purchase Period of
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the Plan.
m) "Offering Date" shall mean the first business day of each Offering
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Period of the Plan.
n) "Offering Period" shall mean a period of six (6) months commencing on
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April 1 and October 1 of each year except as otherwise indicated by
the Company.
o) "Officer" shall mean a person who is an officer of the Company within
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the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
p) "Plan" shall mean this Employee Stock Purchase Plan.
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q) "Subsidiary" shall mean a corporation, domestic or foreign, of which
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not less than 50% of the voting shares are held by the Company or a
Subsidiary, whether or not such corporation now exists or is
hereafter organized or acquired by the Company or a Subsidiary.
3. ELIGIBILITY.
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a) Any person who is an Employee as of the Offering Date of a given
Offering Period shall be eligible to participate in such Offering
Period under the Plan, subject to the requirements of Section 5(a)
and the limitations imposed by Section 423(b) of the Code.
b) Any provisions of the Plan to the contrary notwithstanding, no
Employee shall be granted an option under the Plan (i) if,
immediately after the grant, such Employee (or any other person whose
stock would be attributed to such an Employee pursuant to Section
424(d) of the Code) would own stock and/or hold outstanding options
to purchase stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of stock of the Company
or of any subsidiary of the Company, or (ii) if such option would
permit his or her rights to purchase stock under all employee stock
purchase plans (described in Section 423 of the Code) of the Company
and its Subsidiaries to accrue at a rate which exceeds Twenty-Five
Thousand Dollars ($25,000) of fair market value of such stock
(determined at the time such option is granted) for each calendar
year in which such option is outstanding at any time.
4. OFFERING PERIODS.
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a) The Plan shall be implemented by a series of Offering Periods of six
(6) months duration, with new Offering Periods commencing on or about
April 1 and October 1 of each year (or at such other time or times as
may be determined by the Board of Directors). The Plan shall continue
until terminated in accordance with Section 19 hereof. The Board of
Directors of the Company shall have the power to change the duration
and/or the frequency of Offering Period with respect to future
offerings without shareholder approval if such change is announced at
least fifteen (15) days
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prior to the scheduled beginning of the first Offering Period to be
affected. Eligible employees may not participate in more than one
Offering at a time.
5. PARTICIPATION.
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a) An eligible Employee may become a participant in the Plan by
completing a subscription agreement on the form provided by the
Company and filing it with the Company's payroll office prior to the
applicable Offering Date, unless a later time for filing the
subscription agreement is set by the Board for all eligible Employees
with respect to a given offering. The subscription agreement shall
set forth the whole number percentage of the participant's
Compensation (which shall be not less than 1% and not more than 25%)
to be paid as Contributions pursuant to the Plan.
b) Payroll deductions shall commence on the first payroll following the
Offering Date and shall end on the last payroll paid prior to the
Exercise Date of the Offering Period to which the subscription
agreement is applicable, unless sooner terminated by the participant
as provided in Section 10, provided however, that any payroll paid
within ten (10) business days preceding the Exercise Date will be
included in the subsequent Offering Period.
c) By enrolling in the Plan, each participant will be deemed to have
authorized the establishment of a brokerage account in his or her
name at a securities brokerage firm or other financial institution,
if approved by the Committee in its discretion.
6. METHOD OF PAYMENT OF CONTRIBUTIONS.
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a) The participants shall elect to have payroll deductions made on each
payday during the Offering Period in an amount not less than one
percent (1%) and not more than twenty-five percent (25%) (in whole
number increments) of such participant's Compensation on each such
payday. All payroll deductions made by a participant shall be
credited to his or her account under the Plan. A participant may not
make any additional payments into such account.
b) A participant may discontinue his or her participation in the Plan as
provided in Section 10, or, on one occasion only during the Offering
Period, may decrease the rate of his or her Contributions during the
Offering Period by completing and filing with the Company a new
subscription agreement. The change in rate shall be effective as of
the beginning of the next calendar month following the date of filing
of the new subscription agreement, if the agreement is filed at least
ten (10) business days prior to such date and, if not, as of the
beginning of the next succeeding calendar month.
7. GRANT OF OPTION.
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a) On the Offering Date of each Offering Period, each eligible Employee
participating in such Offering Period shall be granted an option to
purchase on the Exercise Date a number of share of the Company's
Common Stock determined by dividing such Employee's Contribution
accumulated prior to such Purchase Date and retained in the
participant's account as of the Purchase Date by the lower of
(i) eighty-five
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percent (85%) of the fair market value of a share of the Company's
Common Stock on the Offering Date, or (ii) eighty-five percent (85%)
of the fair market value of a share of the Company's Common Stock on
the Exercise Date; provided however, that such purchase shall be
subject to the limitations set forth in Section 3(b) and 13. The fair
market value of a share of the Company's Common Stock shall be
determined as provided in Section 7(b).
b) The option price per share of the shares offered in a given Offering
Period shall be the lower of (i) 85% of the fair market value of a
share of the Common Stock of the Company on the Offering Date; or
(ii) 85% of the fair market value of a share of the Common Stock of
the Company on the Exercise Date. The fair market value of the
Company's Common Stock on a given date shall be determined by the
Board in its discretion based on the closing price of the Common
Stock for date preceding the date of determination (or, in the event
that the Common Stock is not traded on such date, on the immediately
preceding trading date on which there was a closing price), as
reported by the National Association of Securities Dealers Automated
Quotation (NASDAQ) National Market or, in the event the Common Stock
is listed on a stock exchange, the fair market value per share shall
be the closing price on such exchange on the date preceding the date
of determination (or, in the event that the Common Stock is not
traded on such date, on the immediately preceding trading date), as
reported in the Wall Street Journal.
8. EXERCISE OF OPTION. Unless a participant withdraws from the Plan as
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provided in Section 10, his or her option for the purchase of shares will
be exercised automatically on the Exercise Date of the Offering Period,
and the maximum number of full shares subject to the option will be
purchased at the applicable option price with the accumulated
Contributions in his or her account. The shares purchased upon exercise
of an option hereunder shall be deemed to be transferred to the
participant on the Exercise Date. During his or her lifetime, a
participant's option to purchase shares hereunder is exercisable only by
him or her.
9. DELIVERY. As promptly as practicable after the Exercise Date of each
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Offering Period, the Company shall arrange the delivery to each
participant, as appropriate, including, but not limited to, direct
deposit into a book entry account or brokerage account, the shares
purchased upon exercise of his or her option. Any cash remaining to the
credit of a participant's account under the Plan after a purchase by him
or her of shares on the Exercise Date, other than amounts representing
fractional shares, will be returned to him or her as soon as practicable.
Amounts representing fractional shares will be carried forward for use in
subsequent purchases.
10. VOLUNTARY WITHDRAWAL: TERMINATION OF EMPLOYMENT.
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a) A participant may withdraw all but not less than all the
Contributions credited to his or her account under the Plan at any
time prior to two (2) business days prior to the Exercise Date of the
Offering Period by completing a Company approved notification. All of
the participant's Contributions credited to his or her account will
be paid to him or her as soon as practicable after receipt of his or
her notice of withdrawal and his or her option for the current period
will be automatically terminated, and no further Contributions for
the purchase of shares will be made during the Offering Period.
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b) Upon termination of the participant's Continuous Status as an
Employee prior to the Exercise Date of an Offering Period for any
reason, including retirement or death, the Contributions credited to
his or her account will be returned to him or her or, in the case of
his or her death, to the person or persons entitled thereto under
Section 14, and his or her option will be automatically terminated.
c) In the event an Employee fails to remain in Continuous Status as an
Employee of the Company for at least twenty (20) hours per week
during the Offering Period in which the employee is participant, he
or she will be deemed to have elected to withdraw from the Plan and
the Contributions credited to his or her account will be returned to
him or her and his or her option terminated.
d) A participant's withdrawal from an offering will not have any effect
upon his or her eligibility to participate in a succeeding offering
or in any similar plan which may hereafter be adopted by the Company.
11. INTEREST. No interest shall accrue on the Contributions of a participant
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in the Plan.
12. STOCK.
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a) The maximum number of shares of the Company's Common Stock which
shall be made available for sale under the Plan shall be one million
(1,000,000) shares, subject to adjustment upon changes in
capitalization of the Company as provided in Section 18. If the total
number of shares which would otherwise be subject to options granted
pursuant to Section 7(a) on the Offering Date of an Offering Period
exceeds the number of shares then available under the Plan (after
deduction of all shares for which options have been exercised or are
then outstanding), the Company shall make a pro rata allocation of
the shares remaining available for option grant in as uniform a
manner as shall be practicable and as it shall determine to be
equitable. In such event, the Company shall give written notice of
such reduction of the number of shares subject to the option to each
Employee affected thereby and shall similarly reduce the rate of
Contributions, if necessary.
b) The participant will have no interest or voting right in shares
covered by his or her option until such option has been exercised.
c) Shares to be delivered to a participant under the Plan will be
registered in the name of the participant or in the "Street Name" of
a Company approved broker.
13. ADMINISTRATION. The Board, or a committee named by the Board, shall
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supervise and administer the Plan and shall have full power to adopt,
amend and rescind any rules deemed desirable and appropriate for the
administration of the Plan and not inconsistent with the Plan, to
construe and interpret the Plan, and to make all other determinations
necessary or advisable for the administration of the Plan. The
composition of the committee shall be in accordance with the requirements
to obtain or retain any available exemption from the operation of Section
16(b) of the Exchange Act pursuant to Rule 16b-3 promulgated thereunder.
14. DESIGNATION OF BENEFICIARY.
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a) A participant may file a written designation of a beneficiary who is
to receive shares and cash, if any, from the participant's account
under the Plan in the event of such participant's death subsequent to
the end of an Offering Period but prior to delivery to him or her of
such shares and cash. In addition, a participant may file a written
designation of a beneficiary who is to receive any cash from the
participant's account under the Plan in the event of such
participant's death prior to the Exercise Date of an Offering Period.
If a participant is married and the designated beneficiary is not the
spouse, spousal consent shall be required for such designation to be
effective.
b) Such designation of beneficiary may be changed by the participant
(and his or her spouse, if any) at any time by written notice. In the
event of the death of a participant and in the absence of a
beneficiary validly designated under the Plan who is living at the
time of such participant's death, the Company shall deliver such
shares and/or cash to the executor or administrator of the estate of
the participant, or if no such executor or administrator has been
appointed (to the knowledge of the Company), the Company, in its
discretion, may deliver such shares and/or cash to the spouse or to
any one or more dependents or relatives of the participant, or if no
spouse, dependent or relative is known to the Company, then to such
other person as the Company may designate.
15. TRANSFERABILITY. Neither Contributions credited to a participant's
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account nor any rights with regard to the exercise of an option or to
receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent
and distribution, or as provided in Section 13) by the participant. Any
such attempt at assignment, transfer, pledge or other disposition shall
be without effect, except that the Company may treat such act as election
to withdraw funds in accordance with Section 10.
16. USE OF FUNDS. All Contributions received or held by the Company under
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the Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such Contributions.
17. REPORTS. Individual accounts will be maintained for each participant in
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the Plan. Statements of account will be given to participating Employees
promptly following the Exercise Date, which statements will set forth the
amounts of Contributions, the per share purchase price, the number of
shares purchased and the remaining cash balance, if any.
18. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION: CORPORATE TRANSACTIONS.
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a) Adjustments. Subject to any required action by the shareholders of
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the Company, the number of shares of Common Stock covered by each
option under the Plan which has yet been exercised and the number of
shares of Common Stock which have been authorized for issuance under
the Plan but have not yet been placed under option (collectively, the
"Reserves"), as well as the price per share of Common Stock covered
by each option under the Plan which has not yet been exercised, shall
be proportionately adjusted for any increase or decrease in the
number of issued shares of Common Stock resulting from a stock split,
reverse stock split, stock dividend, combination or reclassification
of the Common Stock, or any other increase or decrease in the number
of shares of Common Stock effected without
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receipt of consideration by the Company; provided, however, that
conversion of any convertible securities of the Company shall be made
by the Board, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no issue
by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the
number or price of shares of Common Stock subject to an option.
b) Corporate Transactions. In the event of the proposed dissolution or
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liquidation of the Company, the Offering Period will terminate
immediately prior to the consummation of such proposed action, unless
otherwise provided by the Board. In the event of a proposed sale of
all or substantially all of the assets of the Company, or the merger
of Company with or into another corporation, each option under the
Plan shall be assumed or an equivalent option shall be substituted by
such successor corporation or a percent or subsidiary of such
successor corporation, unless the Board determines, in the exercise
of its sole discretion and in lieu of such assumption or
substitution, to shorten the Offering Period then in progress by
setting a new Exercise Date (the "New Exercise Date"). If the Board
shortens the Offering Period then in progress in lieu of assumption
or substitution in the event of a merger or sale of assets, the Board
shall notify each participant in writing, at least ten (10) days
prior to the New Exercise Date, that the Exercise Date for his or her
option has been changed to the New Exercise Date and that his or her
option will be exercised automatically on the New Exercise Date,
unless prior to such date he or she has withdrawn from the Offering
Period as provided in Section 10. For purposes of this paragraph, an
option granted under the Plan shall be deemed to be assumed if,
following the sale of assets or merger, the option confers the right
to purchase, for each share of option stock subject to the option
immediately prior to the sale of assets or merger, the consideration
(whether stock, cash or other securities or property) received in the
sale of assets or merger by holders of Common Stock for each share of
Common Stock held on the effective date of the transaction (and if
such holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding
shares of Common Stock); provided, however, that if such
consideration received in the sale of assets or merger was not solely
common stock of the successor corporation or its parent (as defined
in Section 424(e) of the Code), the Board may, with the consent of
the successor corporation and the participant, provide for the
consideration to be received upon exercise of the option to be solely
common stock of the successor corporation or its parent equal in fair
market value to the per share consideration received by holders of
Common Stock and the sale of assets of merger.
19. AMENDMENT OR TERMINATION.
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a) The Board of Directors of the Company may at any time terminate or
amend the Plan. Except as provided in Section 19, no such termination
may affect options previously granted, nor may an amendment make any
change in any option theretofore granted which adversely affects the
rights of any participant. In addition, to the extent necessary to
comply with Rule 16b-3 under the Exchange Act, or under Section 423
of the Code (or any successor rule or provision or any
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applicable law or regulation), the Company shall obtain shareholder
approval in such a manner and to such a degree as so required.
b) Without shareholder consent and without regard to whether any
participant rights may be considered to have been adversely affected,
the Board (or its committee) shall be entitled to change the Offering
Periods and Purchase Periods, limit the frequency and/or number of
changes in the amount withheld during an Offering Period, to permit
purchases to be made by check or cash in addition to through payroll
deductions, to arrange for Contributions to be held in an interest
bearing account for the benefit of participants, permit payments the
payment of interest on establish the exchange ratio applicable to
amounts withheld in currency other than U.S. dollars, permit payroll
withholding in excess of the amount designated by a participant in
order to adjust for delays or mistakes in the Company's processing of
properly completed withholding elections, establish reasonable
waiting and adjustment periods and/or accounting and crediting
procedures to ensure that amounts applied toward the purchase of
Common Stock for each participant properly correspond with amounts
withheld from the participant's Compensation, to change the date as
of which the fair market value of shares of Common Stock is
calculated for shares purchased by participants, and establish such
other limitations or procedures and make such other amendments as the
Board (or its committee) determines at its sole discretion advisable
and which do not require shareholder approval in order to comply with
Rule 16b-3 under the Exchange Act, or Section 423 of the Code (or any
successor rule or provision or any applicable law or regulation).
20. NOTICES. All notices or other communications by a participant to the
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Company under or in connection with the Plan shall be deemed to have been
duly given when received in the form specified by the Company at the
location, or by the person, designated by the Company for the receipt
thereof.
21. CONDITIONS UPON ISSUANCE OF SHARES.
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a) Shares shall not be issued with respect to an option unless the
exercise of such option and the issuance and delivery of such shares
pursuant thereto shall comply with all applicable provisions of law,
domestic or foreign, including, without limitation, the Securities
Act of 1933, as amended, the Exchange Act, the rules and regulations
promulgated thereunder, and the requirements of any stock exchange
upon which the shares may then be listed, and shall be further
subject to the approval of counsel for the Company with respect to
such compliance.
b) As a condition to the exercise of an option, the Company may require
the person exercising such option to represent and warrant at the
time of any such exercise that the shares are being purchased only
for investment and without any present intention to sell or
distribute such shares if, in the opinion of counsel for the Company,
such a representation is required by any of the aforementioned
applicable provisions of law.
c) Each participant agrees, by entering the Plan, to promptly give the
Company notice of any disposition of shares purchased under the
Plan where such disposition occurs
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within two (2) years after the date of grant of the Option pursuant
to which such shares were purchased.
22. TERM OF PLAN: EFFECTIVE DATE. The Plan shall become effective upon the
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earlier to occur of its adoption by the Board of Directors or its
approval by the shareholders of the Company. It shall continue in effect
for a term of ten (10) years unless sooner terminated under Section 19.
23. ADDITIONAL RESTRICTIONS OF RULE 16b-3. The terms and conditions of
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options granted hereunder to, and the purchase of shares by, persons
subject to Section 16 of the Exchange Act shall comply with the
applicable provisions of Rule 16b-3. This Plan shall be deemed to
contain, and such options shall contain, and the shares issued upon
exercise thereof shall be subject to, such additional conditions and
restrictions as may be required by Rule 16b-3 to qualify for the maximum
exemption from Section 16 of the Exchange Act with respect to Plan
transactions.
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