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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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COMMUNITY WEST BANCSHARES
(Exact Name of Registrant as Specified in Its Charter)
California 77-0446957
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
5827 Hollister Avenue
Goleta, California 93117
(Address of Principal Executive Offices Including Zip Code)
COMMUNITY WEST BANCSHARES
1997 STOCK OPTION PLAN
(Full Title of the Plan)
---------
Llewellyn W. Stone
President and Chief Executive Officer
5827 Hollister Avenue
Goleta, California 93117
(Name and Address of Agent for Service)
Telephone number, including area code, of agent for service: (805) 683-4944
Copy to:
Arthur A. Coren, Esq.
HORGAN, ROSEN, BECKHAM & COREN, L.L.P.
21700 Oxnard Street, Suite 1400
Woodland Hills, California 91367
(818) 340-6100
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=================================================================================================================
Proposed Proposed
Maximum Maximum Amount of
Title of Securities Amount to be Offering Price Aggregate Registration
to be Registered Registered Per Share Offering Price Fee
<S> <C> <C> <C> <C>
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Common Stock, 456,427 shares $18.00(1) $8,215,686(1) $2,425
No Par Value
=================================================================================================================
</TABLE>
(1) Estimated solely for the purposes of calculating the registration fee on
the basis of the average of the high and low sales price for the Common
Stock, $2.50 par value per share, of Goleta National Bank within five
(5) business days prior to the date of filing in accordance with
Securities Act Rule 457(c).
<PAGE> 2
Introduction
Goleta National Bank (the "Bank") is a California state-chartered
community bank located in Goleta, California. The Board of Directors determined
that it was in the best interest of the Bank and its shareholders to form a one
bank holding company to remain competitive in the Bank's market area. Toward
that end, Community West Bancshares (the "Registrant") was formed as a
California corporation. Under the terms of the Plan of Reorganization and
Consolidation Agreement (the "Reorganization Agreement") adopted by the Board of
Directors of Registrant and Bank and approved by the requisite vote of the
Bank's shareholders at a Special Meeting of Shareholders held on October 30,
1997, the shareholders of the Bank will receive shares of Registrant's Common
Stock and Warrants to purchase Common Stock of the Registrant on a one-for-one
basis at the effective time of the reorganization. Upon consummation of the
reorganization, the shareholders of the Bank will become the shareholders of the
Registrant and the Bank will be the wholly-owned subsidiary of the Registrant.
The shareholders of the Registrant will have the same rights, preferences and
privileges as they did as shareholders of the Bank. It is anticipated that the
reorganization will be consummated effective December 31, 1997.
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
ITEM 1. PLAN INFORMATION.*
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.*
*Information required by Part I of Form S-8 to be contained in the Section 10(a)
Prospectus is omitted from this Registration Statement pursuant to the
instructions set forth in the Note to Part I of Form S-8.
***
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents heretofore filed by the Bank with the Office of
the Comptroller of the Currency (the "Comptroller") in accordance with Section
12 (i) of the Securities Exchange Act of 1934, are incorporated by reference in
this Registration Statement:
(a) Annual Report on Form 10-K for Goleta National Bank for the
fiscal year ended December 31, 1996;
(b) Quarterly Reports on Form 10-Q for Goleta National Bank for the
quarters ended March 31, June 30, and September 30, 1997; and
(c) The description of the Registrant's Common Stock contained in the
Registrant's Registration Statement on Form 8-A filed with the
Securities and Exchange Commission on December 31, 1997,
including any amendment or report heretofore or hereafter filed
for the purpose of updating the description of the Registrant's
Common Stock contained therein.
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), prior to the filing of a post-effective amendment which
indicates that all securities have been sold or which deregisters all securities
offered hereby 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
by reference shall be deemed to be modified or superseded for purposes of this
Registration Statement to the extent that a statement contained in any other
subsequently filed incorporated document 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.
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ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant's Bylaws provide that the Registrant shall, to the
maximum extent and in the manner permitted by the California Corporations Code
(the "Code"), indemnify each of its directors against expenses, judgments,
fines, settlements, and other amounts actually and reasonably incurred in
connection with any proceeding arising by reason of the fact that such person is
or was a director of the Registrant. Furthermore, pursuant to Registrant's
Bylaws, the Registrant has power to, to the maximum extent and in the manner
permitted by the Code, indemnify its employees, officers and agents (other than
directors) against expenses, judgments, fines, settlements, and other amounts
actually and reasonably incurred in connection with any proceeding arising by
reason of the fact that such person is or was an employee, officer or agent of
Registrant.
Under Section 317 of the Code, a corporation may indemnify a director,
officer, employee or agent of the corporation against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him or her if he or she acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best
interests of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
In the case of an action brought by or in the right of a corporation, the
corporation may indemnify a director, officer, employee or agent of the
corporation against expenses (including attorneys' fees) actually and reasonably
incurred by him or her if he or she acted in good faith and in a manner he or
she acted in good faith and in a manner he or she reasonably believed to be in
the best interests of the corporation, except that no indemnification shall be
made: (1) in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the corporation unless a court finds that, in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnify for such expenses as the court shall deem proper, (2) of
amounts paid in settling or otherwise disposing of a pending action without
court approval, and (3) of expenses incurred in defending a pending action which
is settled or otherwise disposed of without court approval.
The Registrant's Articles of Incorporation provides that to the fullest
extent permitted by the Code as the same exists or may hereafter be amended, a
director of the Registrant shall not be liable to the Registrant or its
shareholders for monetary damages for breach of fiduciary duty as a director.
The Code permits California corporations to include in their articles of
incorporation a provision eliminating or limiting director liability for
monetary damages arising from breaches of their fiduciary duty. The only
limitations imposed under the statute are that the provision may not eliminate
or limit a director's liability (i) for acts or omissions that involve
intentional misconduct or a knowing and culpable violation of law, (ii) for acts
or omissions that a director believes to be contrary to the best interests of
the corporation or its shareholders or that involve the absence of good faith on
the part of the director, (iii) for any transaction from which a director
derived an improper personal benefit, (iv) for acts or omissions that show a
reckless disregard for the director's duty to the corporation or its
shareholders in circumstances in which the director was aware, or should have
been aware, in the ordinary course of performing a director's duties, of a risk
of serious injury to the corporation or its shareholders, (v) for acts or
omissions that constitute an unexcused pattern of inattention that amounts to an
abdication of the director's duty to the corporation or its shareholders, (vi)
under a contract or transaction between the corporation and a director or
between the corporation and any corporation in which one more of its directors
has a material financial interest, or (vii) for approving any of the following
corporate actions, (1) the making of any distribution to its shareholders that
would cause the corporation to be unable to meet its liabilities, (2) the making
of any distribution to the corporation's shareholders on any shares of its stock
of any class or series that are junior to outstanding shares of any other class
or series with respect to distribution of assets on liquidation if, after giving
effect thereto, the excess of its assets (exclusive of goodwill, capitalized
research and development expenses and deferred charges) over its liabilities
(not including deferred taxes, deferred income and other deferred credits) would
be less than the liquidation preference of all shares having a preference on
liquidation over the class or series to which the distribution is made;
provided, however, that for the purpose of applying the aforementioned to a
distribution by a corporation of cash or property in payment by the corporation
in connection with the purchase of its shares, there shall be deducted from
liabilities all amounts that had been previously added thereto with respect to
obligations incurred in connection with the corporation's repurchase of its
shares and reflected on the corporation's balance sheet, but not in excess of
the principal of the obligations that will remain unpaid after the distribution;
provided, further, that no deduction from liabilities shall occur on account of
any obligation that is a distribution to the corporation's shareholders at the
time the obligation is incurred, (3)the distribution of assets to shareholders
after institution of dissolution proceeding of the corporation, without paying
or adequately providing for all known liabilities of the corporation, excluding
any claims not filed by creditors within the time limit set by the court in a
notice given to creditors under Chapters 18, 19 and 20, (4) the making of any
loan to or guarantee the obligation of any director or officer, unless
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the transaction is approved by a majority of the shareholders to act thereon, or
(5) the making of any loan to or guarantee the obligation of, any person upon
the security of shares of the corporation or of its parent if the corporation's
recourse in the event of default is limited to the security for the loan or
guaranty, unless the loan or guarantee is adequately secured without considering
these shares, or the loan or guaranty is approved by a majority of the
shareholders entitled to act thereon.
The Bank is insured against liabilities which it may incur by reason of
its indemnification of officers and directors in accordance with its Bylaws and
it is anticipated that the Registrant will assume that policy on its and the
Bank's behalf.
The foregoing summaries are necessarily subject to the complete text of
the statute, Articles of Incorporation, Bylaws and agreements referred to above
and are qualified in their entirety by reference thereto.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
Exhibit Number Description
4.1 Community West Bancshares 1997 Stock Option Plan
4.2 Form of Stock Option Agreement
5 Legal Opinion of Horgan, Rosen, Beckham & Coren,
L.L.P. with respect to the validity of the shares
of Common Stock underlying options registered
hereby
15 Not Applicable
23.1 Consent of Horgan, Rosen, Beckham & Coren, L.L.P.
(Included in Exhibit 5)
23.2 Consent of Deloitte & Touche LLP
24 Not Applicable
99 Plan of Reorganization and Consolidation Agreement
ITEM 9. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made of the securities registered hereby, a post-effective amendment to
this Registration Statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act;
(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 addlement thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in this Registration Statement;
(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 the undertakings set forth in paragraphs
(a)(1)(i) and (a)(1)(ii) above do not apply if the information required
to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in this Registration Statement.
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(2) That, for the purpose of determining any liability under the
Securities Act, 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 further undertakes that, for
purposes of determining any liability under the Securities Act, each filing of
the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) 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 may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Securities Act 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 and will be governed by the final adjudication of such issue.
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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 unincorporated area of Goleta, Santa Barbara County, State of
California on the 31st day of December, 1997.
Community West Bancshares
By: /s/ Llewellyn W. Stone
--------------------------------------
Llewellyn W. Stone
President and Chief Executive Officer
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Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/S/ Llewellyn W. Stone President, Chief December 31, 1997
- --------------------------------- Executive Officer and
Llewellyn W. Stone Director
(Principal Executive
Officer)
/S/ C. Randy Shaffer Executive Vice President December 31, 1997
- --------------------------------- and Chief Financial
C. Randy Shaffer Officer (Principal Financial Officer)
/S/ Michael A. Alexander Chairman of the Board December 31, 1997
- ---------------------------------
Michael A. Alexander
/S/ Mounir R. Ashamalla
- --------------------------------- Director December 31, 1997
Mounir R. Ashamalla
/S/ Robert H. Bartlein Director December 31, 1997
- ---------------------------------
Robert H. Bartlein
/S/ Jean W. Blois Director
- --------------------------------- December 31, 1996
Jean W. Blois
/S/ John D. Illgen Director December 31, 1997
- ---------------------------------
John D. Illgen
/S/ John D. Markel Vice Chairman of the Board December 31, 1997
- ---------------------------------
John D. Markel
/S/ Michel Nellis Secretary and December 31, 1997
- --------------------------------- Director (Director)
Michel Nellis
Director
- --------------------------------- December , 1997
William R. Peeples
Director
- --------------------------------- December , 1997
James R. Sims, Jr.
</TABLE>
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EXHIBIT 4.1
COMMUNITY WEST BANCSHARES
1997 STOCK OPTION PLAN
ADOPTED JANUARY 23, 1997
1. Purpose
The purpose of the Community West Bancshares 1997
Stock Option Plan (the "Plan") is to strengthen Community West Bancshares (the
"Company") and those banks and corporations which are or hereafter become
subsidiary corporations (the "Subsidiary" or "Subsidiaries") by providing
additional means of attracting and retaining competent managerial personnel and
by providing to participating directors, officers and key employees added
incentive for high levels of performance and for unusual efforts to increase the
earnings of the Company and any Subsidiaries. The Plan seeks to accomplish these
purposes and achieve these results by providing a means whereby such directors,
officers and key employees may purchase shares of the Common Stock of the
Company pursuant to Stock Options granted in accordance with this Plan.
Stock Options granted pursuant to this Plan are intended
to be Incentive Stock Options or Non-Qualified Stock Options, as shall be
determined and designated by the Stock Option Committee upon the grant of each
Stock Option hereunder.
2. Definitions
For purposes of this Plan, the following terms shall
have the following meanings:
a. "Affiliation" or "affiliated." For purposes of
Sections 10, 11, 12, 13 and 14 hereof, these terms shall mean service as a
director of the Company or any Subsidiary.
b. "Common Stock." This term shall mean shares of
the Company's common stock, no par value, subject to adjustment pursuant to
Section 15 (Adjustment Upon Changes in Capitalization) hereunder.
c. "Company." This term shall mean Community West
Bancshares, a California corporation.
d. "Eligible Participants." This term shall mean:
(i) all directors of the Company or any Subsidiary; (ii) all officers (whether
or not they are also directors) of the Company or any Subsidiary; and (iii) all
key employees (as such persons may be determined by the Stock Option Committee
from time to time) of the Company or any Subsidiary, provided that such officers
and key employees have a customary work week of at least forty hours in the
employ of the Company or a Subsidiary.
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e. "Fair Market Value." This term shall mean the
fair market value of the Common Stock as determined in accordance with any
reasonable valuation method selected by the Stock Option Committee, including
the valuation methods described in Treasury Regulations Section 20.2031-2.
f. "Incentive Stock Option." This term shall mean
a Stock Option which is an "incentive stock option" within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended.
g. "Non-Qualified Stock Option." This term shall
mean a Stock Option which is not an Incentive Stock Option.
h. "Option Shares." This term shall mean Common
Stock covered by and subject to any outstanding unexercised Stock Option granted
pursuant to this Plan.
i. "Optionee." This term shall mean any Eligible
Participant to whom a Stock Option has been granted pursuant to this Plan,
provided that at least part of the Stock Option is outstanding and unexercised.
j. "Plan." This term shall mean the Community West
Bancshares 1996 Stock Option Plan as embodied herein and as may be amended from
time to time in accordance with the terms hereof and applicable law.
k. "Stock Option." This term shall mean the right
to purchase a specified number of shares of Common Stock under this Plan, at a
price and upon the terms and conditions determined by the Stock Option
Committee.
l. "Stock Option Committee." The Board of
Directors of the Company may select and designate a Stock Option Committee
consisting of three or more directors of the Company, having full authority to
act in the matter. Regardless of whether a Stock Option Committee is selected,
the Board of Directors of the Company may act as the Stock Option Committee and
any action taken by said Board as such shall be deemed to be action taken by the
Stock Option Committee. All references in the Plan to the "Stock Option
Committee" shall be deemed to refer to the Board of Directors of the Company
acting as the Stock Option Committee and to a duly appointed Stock Option
Committee, if there be one. In the event of any conflict between action taken by
the Board acting as a Stock Option Committee and action taken by a duly
appointed Stock Option Committee, the action taken by the Board shall be
controlling and the action taken by the duly appointed Stock Option Committee
shall be disregarded.
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m. "Subsidiary." This term shall mean each
"subsidiary corporation" (treating the Company as the employer corporation) as
defined in Section 424(f) of the Internal Revenue Code of 1986, as amended.
3. Administration
a. Stock Option Committee. This Plan shall be
administered by the Stock Option Committee. The Board of Directors of the
Company shall have the right, in its sole and absolute discretion, to remove or
replace any person from or on the Stock Option Committee at any time for any
reason whatsoever.
b. Administration of the Plan. Any action of the
Stock Option Committee with respect to the administration of the Plan shall be
taken pursuant to a majority vote, or pursuant to the unanimous written consent,
of its members. Any such action taken by the Stock Option Committee in the
administration of this Plan shall be valid and binding, so long as the same is
not inconsistent with the terms and conditions of this Plan. Subject to
compliance with the terms, conditions and restrictions set forth in this Plan,
the Stock Option Committee shall have the exclusive right, in its sole and
absolute discretion, to establish the terms and conditions of all Stock Options
granted under the Plan, including, without meaning any limitation, the power to:
(i) establish the number of Stock Options, if any, to be granted hereunder, in
the aggregate and with regard to each Eligible Participant; (ii) determine the
time or times when such Stock Options, or parts thereof, may be exercised; (iii)
determine and designate which Stock Options granted under the Plan shall be
Incentive Stock Options and which shall be Non-Qualified Stock Options; (iv)
determine the Eligible Participants, if any, to whom Stock Options are granted;
(v) determine the duration and purposes, if any, of leaves of absence which may
be permitted to holders of unexercised, unexpired Stock Options without such
constituting a termination of employment under the Plan; and (vi) prescribe and
amend the terms, provisions and form of each instrument and agreement setting
forth the terms and conditions of every Stock Option granted hereunder.
c. Decisions and Determinations. Subject to the
express provisions of the Plan, the Stock Option Committee shall have the
authority to construe and interpret this Plan, to define the terms used herein,
to prescribe, amend, and rescind rules and regulations relating to the
administration of the Plan, and to make all other determinations necessary or
advisable for administration of the Plan. Determinations of the Stock Option
Committee on matters referred to in this Section 3 shall be final and conclusive
so long as the same are not inconsistent with the terms of this Plan.
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4. Shares Subject to the Plan
Subject to adjustments as provided in Section 15
hereof, the maximum number of shares of Common Stock which may be issued upon
exercise of all Stock Options granted under this Plan is limited to four hundred
fifty-six thousand four hundred and twenty-seven (456,427) in the aggregate. If
any Stock Option shall be canceled, surrendered, or expire for any reason
without having been exercised in full, the unpurchased Option Shares represented
thereby shall again be available for grants of Stock Options under this Plan.
5. Eligibility
Only Eligible Participants shall be eligible to
receive grants of Stock Options under this Plan.
6. Grants of Stock Options
a. Grant. Subject to the express provisions of the
Plan, the Stock Option Committee, in its sole and absolute discretion, may grant
Stock Options:
(i) In the case of grants to Eligible Participants
who are not directors of the Company and/or any Subsidiary, for a
number of Option Shares, at the price(s) and time(s), and on the
terms and conditions as it deems advisable and specifies in the
respective grants; provided, however, that such grants shall vest
at least at the rate of twenty percent (20%) annually over five
(5) years from the date of grant; and
(ii) In the case of grants to Eligible Participants
who are directors of the Company, or any subsidiary for a number
of Option Shares, at the price(s) and time(s), and on the terms
and conditions as it deems advisable and specifies in the
respective grants; provided, however, that such grants may not
exceed a maximum of one hundred thirty-six thousand nine hundred
and twenty-eight (136,928) Option Shares to all directors who are
not officers or key employees of the Company or any Subsidiary at
any time; and provided further, that such grants shall vest at
least at the rate of twenty percent (20%) annually over five (5)
years from the date of grant. The foregoing maximum number of
Option Shares which may be granted to all directors of the
Company or any Subsidiary at any time shall be adjusted in
accordance with the provisions of Section 15 hereof.
The terms upon which and the times at which, or the
periods within which, the Option Shares subject to such Stock Options may become
acquired or such Stock Options may be acquired and exercised shall be as set
forth in the Plan and the related Stock Option Agreements.
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Subject to the limitations and restrictions set forth
in the Plan, an Eligible Participant who has been granted a Stock Option may, if
otherwise eligible, be granted additional Stock Options if the Stock Option
Committee shall so determine. The Stock Option Committee shall designate in each
grant of a Stock Option whether the Stock Option is an Incentive Stock Option or
a Non-Qualified Stock Option.
b. Date of Grant and Rights of Optionee. The
determination of the Stock Option Committee to grant a Stock Option shall not in
any way constitute or be deemed to constitute an obligation of the Company, or a
right of the Eligible Participant who is the proposed subject of the grant, and
shall not constitute or be deemed to constitute the grant of a Stock Option
hereunder unless and until both the Company and the Eligible Participant have
executed and delivered to the other a Stock Option Agreement in the form then
required by the Stock Option Committee as evidencing the grant of the Stock
Option, together with such other instrument or instruments as may be required by
the Stock Option Committee pursuant to this Plan; provided, however, that the
Stock Option Committee may fix the date of grant as any date on or after the
date of its final determination to grant the Stock Option (or if no such date is
fixed, then the date of grant shall be the date on which the determination was
finally made by the Stock Option Committee to grant the Stock Option), and such
date shall be set forth in the Stock Option Agreement. The date of grant as so
determined shall be deemed the date of grant of the Stock Option for purposes of
this Plan.
c. Shareholder-Employees. A Stock Option granted
hereunder to an Eligible Participant who is also an officer or key employee of
the Company or any Subsidiary, who owns, directly or indirectly, at the date of
the grant of the Stock Option, more than ten percent (10%) of the total combined
voting power of all classes of capital stock of the Company or a Subsidiary (if
permitted in accordance with the provisions of Section 5 herein) shall not
qualify as an Incentive Stock Option unless: (i) the purchase price of the
Option Shares subject to said Stock Option is at least one hundred ten percent
(110%) of the Fair Market Value of the Option Shares, determined as of the date
said Stock Option is granted; and (ii) the Stock Option by its terms is not
exercisable after five (5) years from the date that it is granted. The
attribution rules of Section 424(d) of the Internal Revenue Code of 1986, as
amended, shall apply in the determination of indirect ownership of stock.
d. Maximum Value of Stock Options. No grant of
Incentive Stock Options hereunder may be made when the aggregate Fair Market
Value of Option Shares with respect to which Incentive Stock Options (pursuant
to this Plan or any other Incentive Stock Option Plan of the Bank or any
Subsidiary) are exercisable for the first time by the Eligible Participant
during any calendar year exceeds One Hundred Thousand Dollars ($100,000).
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e. Substituted Stock Options. If all of the
outstanding shares of common stock of another corporation are changed into or
exchanged solely for the Common Stock in a transaction to which Section 424(a)
of the Internal Revenue Code of 1986, as amended, applies, then, subject to the
approval of the Board of Directors of the Company, Stock Options under the Plan
may be substituted ("Substituted Options") in exchange for valid, unexercised
and unexpired stock options of such other corporation. Substituted Options shall
qualify as Incentive Stock Options under the Plan, provided that (and to the
extent) the stock options exchanged for the Substituted Options were Incentive
Stock Options within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended.
f. Non-Qualified Stock Options. Stock Options and
Substituted Options granted by the Stock Option Committee shall be deemed
Non-Qualified Stock Options under this Plan if they: (i) are designated at the
time of grant as Incentive Stock Options but do not so qualify under the
provisions of Section 422 of the Code or any regulations or rulings issued by
the Internal Revenue Service for any reason; (ii) are not granted in accordance
with the provisions of Section 6(c); (iii) are in excess of the fair market
value limitations set forth in Section 6(d); (iv) are granted to an Eligible
Participant who is not an officer or key employee of the Company or any
Subsidiary; or (v) are designated at the time of grant as Non-Qualified Stock
Options. Non-Qualified Stock Options granted or substituted hereunder shall be
so designated in the Stock Option Agreement entered into between the Company and
the Optionee.
7. Stock Option Exercise Price
a. Minimum Price. The exercise price of any Option
Shares shall be determined by the Stock Option Committee, in its sole and
absolute discretion, upon the grant of a Stock Option. Except as provided
elsewhere herein, said exercise price shall not be less than one hundred percent
(100%) of the Fair Market Value of the Common Stock represented by the Option
Shares on the date of grant of the related Stock Option.
b. Substituted Options. The exercise price of the
Option Shares subject to each Substituted Option may be fixed at a price less
than one hundred percent (100%) of the Fair Market Value of the Common Stock at
the time such Substituted Option is granted if said exercise price has been
computed to be not less than the exercise price set forth in the stock option of
the other corporation for which it was exchanged immediately before
substitution, with appropriate adjustment to reflect the exchange ratio of the
shares of stock of the other corporation into the shares of Common Stock.
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<PAGE> 7
c. Ten Percent Shareholders. Notwithstanding the
provisions of Section 7(a) or Section 7(b), the exercise price of the Option
Shares shall be not less than one hundred ten percent (110%) of the Fair Market
Value in the case of any Optionee who owns more than ten percent (10%) of the
Common Stock.
8. Exercise of Stock Options
a. Exercise. Except as otherwise provided
elsewhere herein, each Stock Option shall be exercisable in such increments,
which need not be equal, and upon such contingencies as the Stock Option
Committee shall determine at the time of grant of the Stock Option; provided,
however, that if an Optionee shall not in any given period exercise any part of
a Stock Option which has become exercisable during that period, the Optionee's
right to exercise such part of the Stock Option shall continue until expiration
of the Stock Option or any part thereof as may be provided in the related Stock
Option Agreement. No Stock Option or part thereof shall be exercisable except
with respect to whole shares of Common Stock, and fractional share interests
shall be disregarded except that they may be accumulated.
b. Prior Outstanding Incentive Stock Options.
Incentive Stock Options granted (or substituted) to an Optionee under the Plan
may be exercisable while such Optionee has outstand ing and unexercised any
Incentive Stock Option previously granted (or substituted) to him or her
pursuant to this Plan or any other Incentive Stock Option Plan of the Company or
any Subsidiary. An Incentive Stock Option shall be treated as outstanding until
it is exercised in full or expires by reason of lapse of time.
c. Notice and Payment. Stock Options granted
hereunder shall be exercised by written notice delivered to the Company
specifying the number of Option Shares with respect to which the Stock Option is
being exercised, together with concurrent payment in full of the exercise price
as hereinafter provided. If the Stock Option is being exercised by any person or
persons other than the Optionee, said notice shall be accompanied by proof,
satisfactory to the counsel for the Company, of the right of such person or
persons to exercise the Stock Option. The Company's receipt of a notice of
exercise without concurrent receipt of the full amount of the exercise price
shall not be deemed an exercise of a Stock Option by an Optionee, and the
Company shall have no obligation to an Optionee for any Option Shares unless and
until full payment of the exercise price is received by the Company and all of
the terms and provisions of the Plan and the related Stock Option agreement have
been fully complied with.
d. Payment of Exercise Price. The exercise price
of any Option Shares purchased upon the proper exercise of a Stock Option shall
be paid in full at the time of each exercise of a Stock Option in cash (or bank,
cashier's or certified check) and/or, with the prior written approval of the
Stock Option Committee at or before the time of exercise, in Common Stock of
the Company which,
7
<PAGE> 8
when added to the cash payment, if any, which has an aggregate Fair Market Value
equal to the full amount of the exercise price of the Stock Option, or part
thereof, then being exercised. Payment by an Optionee as provided herein shall
be made in full concurrently with the Optionee's notification to the Company of
his intention to exercise all or part of a Stock Option. If all or any part of a
payment is made in shares of Common Stock as heretofore provided, such payment
shall be deemed to have been made only upon receipt by the Company of all
required share certificates, and all stock powers and all other required
transfer documents necessary to transfer the shares of Common Stock to the
Company.
e. Minimum Exercise. Not less than ten (10) Option
Shares may be purchased at any one time upon exercise of a Stock Option unless
the number of shares purchased is the total number which remains to be purchased
under the Stock Option.
f. Compliance With Law. No shares of Common Stock
shall be issued upon exercise of any Stock Option, and an Optionee shall have no
right or claim to such shares, unless and until: (i) payment in full as provided
hereinabove has been received by the Company; (ii) in the opinion of the counsel
for the Company, all applicable requirements of law and of regulatory bodies
having jurisdiction over such issuance and delivery have been fully complied
with; and (iii) if required by federal or state law or regulation, the Optionee
shall have paid to the Company the amount, if any, required to be withheld on
the amount deemed to be compensation to the Optionee as a result of the exercise
of his or her Stock Option, or made other arrangements satisfactory to the
Company, in its sole discretion, to satisfy applicable income tax withholding
requirements.
9. Nontransferability of Stock Options
Each Stock Option shall, by its terms, be non-
transferable by the Optionee other than by will or the laws of descent and
distribution, and shall be exercisable during the Optionee's lifetime only by
the Optionee.
10. Continuation of Affiliation
Nothing contained in this Plan (or in any Stock
Option Agreement) shall obligate the Company or any Subsidiary to employ or
continue to employ or remain affiliated with any Optionee or any Eligible
Participant for any period of time or interfere in any way with the right of the
Company or a Subsidiary to reduce or increase the Optionee's or Eligible
Participant's compensation.
11. Cessation of Affiliation
Except as provided in Section 12 hereof, if, for any
reason other than disability or death, an Optionee ceases to be employed by or
affiliated with the Company or a Subsidiary, the Stock Options granted to such
Optionee shall expire on the expiration dates specified for said Stock Options
at the time of their grant, or ninety (90) days after the Optionee ceases to
be so affiliated,
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<PAGE> 9
whichever is earlier. During such period after cessation of affiliation, such
Stock Options shall be exercisable only as to those increments, if any, which
had become exercisable as of the date on which such Optionee ceased to be
affiliated with the Company or the Subsidiary, and any Stock Options or
increments which had not become exercisable as of such date shall expire
automatically on such date.
12. Termination for Cause
If the Stock Option Agreement so provides and if an
Optionee's employment by or affiliation with the Company or a Subsidiary is
terminated for cause, the Stock Options granted to such Optionee shall expire on
the expiration dates specified for said Stock Options at the time of their
grant, or thirty (30) days after termination for cause, whichever is earlier;
provided, however, that the Stock Option Committee may, in its sole discre tion,
within thirty (30) days of such termination, reinstate such Stock Options by
giving written notice of such reinstatement to the Optionee. In the event of
such reinstatement, the Optionee may exercise the Stock Options only to such
extent, for such time, and upon such terms and conditions as if the Optionee had
ceased to be employed by or affiliated with the Company or a Subsidiary upon the
date of such termination for a reason other than cause, disability or death.
Termination for cause shall include, but shall not be limited to, termination
for malfeasance or gross misfeasance in the performance of duties or conviction
of illegal activity in connection therewith and, in any event, the determination
of the Stock Option Committee with respect thereto shall be final and
conclusive.
13. Death of Optionee
If an Optionee dies while employed by or affiliated
with the Company or a Subsidiary, or during the ninety-day period referred to in
Section 11 hereof, the Stock Options granted to such Optionee shall expire on
the expiration dates specified for said Stock Options at the time of their
grant, or one (1) year after the date of such death, whichever is earlier. After
such death, but before such expiration, subject to the terms and provisions of
the Plan and the related Stock Option Agreements, the person or persons to whom
such Optionee's rights under the Stock Options shall have passed by will or by
the applicable laws of descent and distribu tion, or the executor or
administrator of the Optionee's estate, shall have the right to exercise such
Stock Options to the extent that increments, if any, had become exercisable as
of the date on which the Optionee died.
14. Disability of Optionee
If an Optionee is disabled while employed by or
affiliated with the Company or a Subsidiary or during the ninety (90) day period
referred to in Section 11 hereof, the Stock Options granted to such Optionee
shall expire on the expiration dates specified for said Stock Options at the
time of their grant, or one (1) year after the date such disability occurred,
whichever is earlier.
9
<PAGE> 10
After such disability occurs, but before such expiration, the Optionee or the
guardian or conservator of the Optionee's estate, as duly appointed by a court
of competent jurisdiction, shall have the right to exercise such Stock Options
to the extent that increments, if any, had become exercisable as of the date on
which the Optionee became disabled or ceased to be employed by or affiliated
with the Company or a Subsidiary as a result of the disability. An Optionee
shall be deemed to be "disabled" if it shall appear to the Stock Option
Committee, upon written certification delivered to the Company of a qualified
licensed physician, that the Optionee has become permanently and totally unable
to engage in any substantial gainful activity by reason of a medically
determinable physical or mental impairment which can be expected to result in
the Optionee's death, or which has lasted or can be expected to last for a
continuous period of not less than 12 months.
15. Adjustment Upon Changes in Capitalization
If the outstanding shares of Common Stock of the
Company are increased, decreased, or changed into or exchanged for a different
number or kind of shares or securities of the Company, through a reorganization,
merger, recapitalization, reclassifi cation, stock split, stock dividend, stock
consolidation, or otherwise, without consideration to the Company, an
appropriate and proportionate adjustment shall be made in the number and kind of
shares as to which Stock Options may be granted. A corresponding adjustment
changing the number or kind of Option Shares and the exercise prices per share
allocated to unexercised Stock Options, or portions thereof, which shall have
been granted prior to any such change, shall likewise be made. Such adjustments
shall be made without change in the total price applicable to the unexercised
portion of the Stock Option, but with a corresponding adjustment in the price
for each Option Share subject to the Stock Option. Adjustments under this
Section shall be made by the Stock Option Committee, whose determination as to
what adjustments shall be made, and the extent thereof, shall be final and
conclusive. No fractional shares of stock shall be issued or made available
under the Plan on account of such adjustments, and fractional share interests
shall be disregarded, except that they may be accumulated.
16. Terminating Events
Upon consummation of a plan of dissolution or
liquidation of the Company, or upon consummation of a plan of reorganization,
merger or consolidation of the Company with one or more corporations, as a
result of which the Company is not the surviving entity, or upon the sale of all
or substantially all the assets of the Company to another corporation, the Plan
shall auto matically terminate and all Stock Options theretofore granted shall
be terminated, unless provision is made in connection with such transaction for
assumption of Stock Options theretofore granted (in which case such Stock
Options shall be converted into stock options for a like number and kind of
shares of the surviving entity),
10
<PAGE> 11
or substitution for such Stock Options with new stock options covering stock of
a successor employer corporation, or a parent or subsidiary corporation thereof,
solely at the discretion of such successor corporation, or parent or subsidiary
corporation, with appropriate adjustments as to number and kind of shares and
prices.
17. Amendment and Termination
The Board of Directors of the Company may at any time
and from time to time suspend, amend, or terminate the Plan and may, with the
consent of an Optionee, make such modifications of the terms and conditions of
that Optionee's Stock Option as it shall deem advisable; provided that, except
as permitted under the provisions of Section 15 hereof, no amendment or
modification may be adopted without the Company having first obtained the
approval of the holders of a majority of the Bank's outstanding shares of Common
Stock present, or represented, and entitled to vote at a duly held meeting of
shareholders of the Company, or by written consent, if the amendment or
modification would:
(a) materially increase the number of securities
which may be issued under the Plan;
(b) materially increase the number of securities
which may be issued at any time under the Plan to all directors who
are not also officers or key employees of the Company or any
Subsidiary;
(c) materially modify the requirements as to
eligibility for participation in the Plan;
(d) increase or decrease the exercise price of any
Stock Option granted under the Plan;
(e) increase the maximum term of Stock Options
provided for herein;
(f) permit Stock Options to be granted to any person
who is not an Eligible Participant; or
(g) change any provision of the Plan which would
affect the qualification as an Incentive Stock Option under the internal revenue
laws then applicable of any Stock Option granted as an Incentive Stock Option
under the Plan.
No Stock Option may be granted during any suspension
of the Plan or after termination of the Plan. Amendment, suspension, or
termination of the Plan shall not (except as otherwise provided in Section 15
hereof), without the consent of the Optionee, alter or impair any rights or
obligations under any Stock Option theretofore granted.
11
<PAGE> 12
18. Rights of Eligible Participants and Optionees
No Eligible Participant, Optionee or other person
shall have any claim or right to be granted a Stock Option under this Plan, and
neither this Plan nor any action taken hereunder shall be deemed to give or be
construed as giving any Eligible Participant, Optionee or other person any right
to be retained in the employ of the Company or any Subsidiary. Without limiting
the generality of the foregoing, no person shall have any rights as a result of
his or her classification as an Eligible Participant or Optionee, such
classifications being made solely to describe, define and limit those persons
who are eligible for consideration for privileges under the Plan.
19. Privileges of Stock Ownership; Regulatory Law
Compliance; Notice of Sale
No Optionee shall be entitled to the privileges of
stock ownership as to any Option Shares not actually issued and delivered. No
Option Shares may be purchased upon the exercise of a Stock Option unless and
until all then applicable requirements of all regulatory agencies having
jurisdiction and all applicable requirements of the securities exchanges upon
which securities of the Company are listed (if any) shall have been fully
complied with. The Optionee shall, not more than five (5) days after each sale
or other disposition of shares of Common Stock acquired pursuant to the exercise
of Stock Options, give the Company notice in writing of such sale or other
disposition.
20. Effective Date of the Plan
The Plan shall be deemed adopted as of January 23,
1997, and shall be effective immediately, subject to approval of the Plan by the
holders of at least a majority of the Company's outstanding shares of Common
Stock represented and voting at a meeting of shareholders.
21. Termination
Unless previously terminated as aforesaid, the Plan
shall terminate ten (10) years from the earliest date of: (i) adoption of the
Plan by the Board of Directors of the Company; or (ii) approval of the Plan by
holders of at least a majority of the outstanding shares of Common Stock. No
Stock Options shall be granted under the Plan thereafter, but such termination
shall not affect any Stock Option theretofore granted.
22. Option Agreement
Each Stock Option granted under the Plan shall be
evidenced by a written Stock Option Agreement executed by the Company and the
Optionee, and shall contain each of the provisions and agreements herein
specifically required to be contained therein, and such other terms and
conditions as are deemed desirable by the Stock Option Committee and are not
inconsistent with this Plan.
12
<PAGE> 13
23. Stock Option Period
Each Stock Option and all rights and obligations
thereunder shall expire on such date as the Stock Option Committee may
determine, but not later than ten (10) years from the date such Stock Option is
granted, and shall be subject to earlier termination as provided elsewhere in
this Plan.
24. Exculpation and Indemnification of Stock Option
Committee
In addition to such other rights of indemnification
which they may have as directors of the Company or as members of the Stock
Option Committee, the members of the Stock Option Committee, and each of them,
shall be indemnified by the Company for and against all costs, judgments,
penalties and reasonable expenses, including reasonable attorneys' fees,
actually and appropriately incurred by them in connection with all actions,
suits and proceedings, and in connection with appeals thereof, to which they or
any of them may be a party by reason of any act or omission of any member of the
Stock Option Committee under or in connection with the Plan or any Stock Option
granted thereunder; provided, however, that a member of the Stock Option
Committee shall not be entitled to any indemnification whatsoever pursuant to
this Section for or as a result of any act or omission of such member which was
not taken in good faith and which constituted willful misconduct or gross
negligence by such member; provided further, that any amounts paid by any member
of the Stock Option Committee in settlement of an action, suit or proceeding for
which indemnification may be sought pursuant to this Section shall be first
approved in writing by independent legal counsel selected by the Company; and,
provided further, that within thirty (30) days after institution of an action,
suit or proceeding against any member with respect to which such member is
entitled to indemnification hereunder, such member shall, in writing, offer the
Company the opportunity, at its own expense, to handle (including settle) and
conduct the defense thereof. The provisions of this Section shall apply to the
estate, executor and administrator of each member of the Stock Option Committee.
25. Agreement and Representations of Optionee
Unless the shares of Common Stock covered by this
Plan have been registered with the Securities and Exchange Commission pursuant
to the registration requirements under the Securities Act of 1933, each Optionee
shall: (i) by and upon accepting a Stock Option, represent and agree in writing,
in the form of the letter attached hereto as Exhibit "A," for himself or herself
and his or her transferees by will or the laws of descent and distribution, that
the Option Shares will be acquired for investment purposes and not for resale or
distribution; and (ii) by and upon the exercise of a Stock Option,
13
<PAGE> 14
or a part thereof, furnish evidence satisfactory to counsel for the Company,
including written and signed representations in the form of the letter attached
hereto as Exhibit "B," to the effect that the Option Shares are being acquired
for investment purposes and not for resale or distribution, and that the Option
Shares being acquired shall not be sold or otherwise transferred by the Optionee
except in compliance with the registration provisions under the Securities Act
of 1933, as amended, or an applicable exemption therefrom. Furthermore, the
Company, at its sole discretion, to assure itself that any sale or distribution
by the Optionee complies with this Plan and any applicable federal or state
securities laws, may take all reasonable steps, including placing stop transfer
instructions with the Company's transfer agent prohibiting transfers in
violation of the Plan and affixing the following legend (and/or such other
legend or legends ad the Stock Option Committee shall require) on certificates
evidencing the shares:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR
OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT WITH RESPECT TO THEM UNDER THE ACT OR A WRITTEN OPINION
OF COUNSEL FOR THE HOLDER THEREOF, WHICH OPINION SHALL BE
ACCEPTABLE TO COMMUNITY WEST BANCSHARES, THAT REGISTRATION IS NOT
REQUIRED."
At any time that an Optionee contemplates the disposition of any of the Option
Shares (whether by sale, exchange, gift or other form of transfer), he or she
shall first notify the Company of such proposed disposition and shall thereafter
cooperate with the Company in complying with all applicable requirements of law
which, in the opinion of counsel for the Company, must be satisfied prior to the
making of such disposition. Before consummating such disposition, the Optionee
shall provide to the Company an opinion of Optionee's counsel, at the Company's
expense, of which both such opinion and such counsel shall be satisfactory to
the Company, that such disposition will not result in a violation of any state
or federal securities laws or regulations. The Company shall remove any legend
affixed to certificates for Option Shares pursuant to this Section if and when
all of the restrictions on the transfer of the Option Shares, whether imposed by
this Plan or federal or state law, have terminated.
26. Notices
All notices and demands of any kind which the Stock
Option Committee, any Optionee, Eligible Participant, or other person may be
required or desires to give under the terms of this Plan shall be in writing and
shall be delivered in hand to the person or persons to whom addressed (in the
case of the Stock Option Committee, with the Chief Executive Officer of the
Company), by leaving a copy of such notice or demand at the address of such
person or persons as may be reflected in the records of the Company,
14
<PAGE> 15
or by mailing a copy thereof, properly addressed as above, by certified or
registered mail, postage prepaid, with return receipt requested. Delivery by
mail shall be deemed made upon receipt by the notifying party of the return
receipt request acknowledging receipt of the notice or demand.
27. Limitation on Obligations of the Company
All obligations of the Company arising under or as a
result of this Plan or Stock Options granted hereunder shall constitute the
general unsecured obligations of the Company, and not of the Board of Directors
of the Company, any member thereof, the Stock Option Committee, any member
thereof, any officer of the Company, or any other person or any Subsidiary, and
none of the foregoing, except the Company, shall be liable for any debt,
obligation, cost or expense hereunder.
28. Limitation of Rights
The Stock Option Committee, in its sole and absolute
discretion, is entitled to determine who, if anyone, is an Eligible Participant
under this Plan, and which, if any, Eligible Participant shall receive any grant
of a Stock Option. No oral or written agreement by any person on behalf of the
Company relating to this Plan or any Stock Option granted hereunder is
authorized, and such may not bind the Company or the Stock Option Committee to
grant any Stock Option to any person.
29. Severability
If any provision of this Plan as applied to any
person or to any circumstance shall be adjudged by a court of competent
jurisdiction to be void, invalid, or unenforceable, the same shall in no way
affect any other provision hereof, the application of any such provision in any
other circumstances, or the validity or enforceability hereof.
30. Construction
Where the context or construction requires, all words
applied in the plural herein shall be deemed to have been used in the singular
and vice versa, and the masculine gender shall include the feminine and the
neuter and vice versa.
31. Headings
The headings of the several sections herein are
inserted solely for convenience of reference and are not intended to form a part
of and are not intended to govern, limit or aid in the construction of any term
or provision hereof.
15
<PAGE> 16
32. Successors
This Plan shall be binding upon the respective
successors, assigns, heirs, executors, administrators, guardians and personal
representatives of the Company and Optionees.
33. Governing Law
This Plan shall be governed by and construed in
accordance with the laws of the State of California.
34. Conflict
In the event of any conflict between the terms and
provisions of this Plan, and any other document, agreement or instrument,
including, without meaning any limitation, any Stock Option Agreement, the terms
and provisions of this Plan shall control.
* * * * * * * *
16
<PAGE> 17
SECRETARY'S CERTIFICATE OF ADOPTION
I, the undersigned, do hereby certify that:
1. I am the duly elected or appointed and acting
Secretary of Community West Bancshares; and
2. The foregoing Community West Bancshares 1997 Stock Option Plan was
adopted by the Board of Directors of Community West Bancshares at a meeting duly
called as required by law and convened on the 23rd day of January, 1997.
IN WITNESS WHEREOF, I have hereunto subscribed my name this 23rd day of
January, 1997.
/s/ M. NELLIS
---------------------------------------
Michel Nellis, Secretary
<PAGE> 18
EXHIBIT "A"
-----------, -----
Community West Bancshares
5827 Hollister Avenue
Goleta, California 93117
Gentlemen:
On this _____ day of ___________________, 19____, the undersigned
has received, pursuant to the Community West Bancshares 1997 Stock Option Plan
(the "Plan") and the Stock Option Agreement (the "Agreement") by and between
Community West Bancshares (the "Company") and the undersigned dated
______________________, ______ an option to purchase ________ shares of the
common stock, no par value, of Community West Bancshares (the "Stock").
In consideration of the grant of such option by Community West
Bancshares:
1. I hereby represent and warrant to you that the Stock to be
acquired pursuant to the option will be acquired by me in good faith and for my
own personal account, and not with a view to distributing the Stock to others or
otherwise reselling the stock in violation of the Securities Act of 1933, as
amended, or the rules and regulations promulgated thereunder.
2. I hereby acknowledge and agree that: (a) the Stock to be
acquired by me pursuant to the Plan has not been registered and that there is no
obligation on the part of Community West Bancshares to register such Stock under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder; and (b) the Stock to be acquired by me will not be freely tradeable
unless the Stock is either registered under the Securities Act of 1933, as
amended, or the holder presents a legal opinion acceptable to Community West
Bancshares that the transfer will not violate the federal securities laws.
3. I understand that the Company is relying upon the truth and
accuracy of the representations and agreements contained herein in determining
to grant such option to me and upon subsequently issuing any Stock pursuant to
the Plan without
<PAGE> 19
Community West Bancshares
- --------------, -----
Page 2
Community West Bancshares first registering the same under the Securities Act of
1933, as amended.
4. I understand that the certificate evidencing the Stock to be
issued pursuant to the Plan will contain a legend upon the face thereof to the
effect that the Stock is not registered under the Securities Act of 1933 and
that stop transfer orders will be placed against the shares with the Company's
transfer agent.
5. In further consideration for the grant of an option to
purchase Stock of Community West Bancshares the undersigned hereby agrees to
indemnify you and hold you harmless against all liability, cost, or expenses
(including reasonable attorney's fees) arising out of or as a result of any
distribution or resale of shares of the Stock by the undersigned in violation of
the securities laws. The agreements contained herein shall inure to the benefit
of and be binding upon the respective legal representatives, successors and
assigns of the undersigned and Community West Bancshares.
Very truly yours,
-----------------------------
(Signature)
-----------------------------
(Type or Print Your Name)
<PAGE> 20
EXHIBIT "B"
-----------, -----
Community West Bancshares
5827 Hollister Avenue
Goleta, California 93117
Gentlemen:
On this _____ day of ___________________, 19____, the undersigned
has acquired, pursuant to the Community West Bancshares 1997 Stock Option Plan
(the "Plan") and the Stock Option Agreement (the "Agreement") by and between
Community West Bancshares (the "Company") and the undersigned dated
______________________, ______ an option to purchase _____________________
(_________) shares of the common stock, no par value, of Community West
Bancshares (the "Stock"). In consideration of the issuance by Community West
Bancshares to the undersigned of said shares of its Common Stock:
1. I hereby represent and warrant to you that the Stock is being
acquired by me in good faith for my own personal account, and not with a view to
distributing the Stock to others or otherwise reselling the Stock in violation
of the Securities Act of 1933, as amended, or the rules and regulations
promulgated thereunder.
2. I hereby acknowledge and agree that: (a) the Stock being
acquired by me pursuant to the Plan has not been registered and that there is no
obligation on the part of Community West Bancshares to register such Stock under
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder; and (b) the Stock being acquired by me is not freely
tradeable and must be held by me for investment purposes unless the Stock is
either registered under the Securities Act of 1933 or transferred pursuant to an
exemption from such registration, as accorded by the Securities Act of 1933 and
under the rules and regulations promulgated thereunder. I further represent and
acknowledge that I have been informed by legal counsel in connection with said
Plan of the restrictions on my ability to transfer the Stock and that I
understand the scope and effect of those restrictions.
3. I understand that the effects of the above representations are
the following: (i) that the undersigned does not presently intend to sell or
otherwise dispose of all or any
<PAGE> 21
Community West Bancshares
- --------------, -----
Page 2
part of the shares of the Stock to any person or entity except in compliance
with the terms described above, in the Plan and in the Agreement; and (ii) that
the Company is relying upon the truth and accuracy of the representations and
agreements contained herein in issuing said shares of the Stock to me without
first registering the same under the Securities Act of 1933, as amended.
4. I hereby agree that the certificate evidencing the Stock may
contain the following legend stamped upon the face thereof to the effect that
the Stock is not registered under the Securities Act of 1933, as amended, and
that the Stock has been acquired pursuant to the representations and
restrictions in this letter, the Plan and in the Agreement:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR
OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT WITH RESPECT TO THEM UNDER THE ACT OR A WRITTEN OPINION
OF COUNSEL FOR THE HOLDER HEREOF, WHICH OPINION SHALL BE
ACCEPTABLE TO COMMUNITY WEST BANCSHARES, THAT REGISTRATION IS NOT
REQUIRED."
5. I hereby agree and understand that the Company will place a
stop transfer notice with its stock transfer agent to ensure that the
restrictions on transfer described herein will be observed.
6. In further consideration of the issuance of the Stock, the
undersigned does hereby agree to indemnify you and hold you harmless against all
liability, costs, or expenses (including reasonable attorney's fees) arising out
of or as a result of any distribution or resale by the undersigned or any of the
Stock. The Agreements contained herein shall inure to the benefit of and be
binding upon the respective legal representatives, successors and assigns of the
undersigned and Community West Bancshares.
Very truly yours,
-----------------------------
(Signature)
-----------------------------
(Type or Print Your Name)
<PAGE> 1
EXHIBIT 4.2
OPTIONEES TO WHOM INCENTIVE STOCK OPTIONS ARE GRANTED MUST MEET
CERTAIN HOLDING PERIOD AND EMPLOYMENT REQUIREMENTS FOR FAVORABLE TAX
TREATMENT.
UNLESS OTHERWISE STATED, ALL TERMS DEFINED IN THE PLAN SHALL HAVE THE SAME
MEANING HEREIN AS SET FORTH IN THE PLAN.
COMMUNITY WEST BANCSHARES
STOCK OPTION AGREEMENT
1997 STOCK OPTION PLAN
[ ] Incentive Stock Option
[ ] Non-Qualified Stock Option
THIS AGREEMENT, dated the______ day of _______________, 19___,
by and between Community West Bancshares, a California corporation
(the "Company"), and________________________________("Optionee");
WHEREAS, pursuant to the Company's 1997 Stock Option Plan (the "Plan"),
the Stock Option Committee has authorized the grant to Optionee of a Stock
Option to purchase all or any part of _________________________________________
(___________)authorized but unissued shares of the Company's Common Stock at the
price of __________________________ Dollars ($ _______________) per share,
such Stock Option to be for the term and upon the terms and conditions
hereinafter stated;
NOW, THEREFORE, it is hereby agreed:
1. Grant of Stock Option. Pursuant to said action of the
Stock Option Committee and pursuant to authorizations granted by all
1
<PAGE> 2
appropriate regulatory and governmental agencies, the Company hereby grants to
Optionee the option to purchase, upon and subject to the terms and conditions of
the Plan, which is incorporated in full herein by this reference, all or any
part of _____________________________( _______________) Option Shares of the
Company's Common Stock at the price of _________________________________Dollars
($__________ ) per share. For purposes of this Agreement and the Plan, the date
of grant shall be ___________________. At the date of grant, Optionee does not
own/owns stock possessing more than 10% of the total combined voting power of
all classes of capital stock of the Company or any Subsidiary.
The Stock Option granted hereunder is/is not intended to qualify
as an Incentive Stock Option within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended.
2. Exercisability. This Stock Option shall be exercisable as to
_____________Option Shares on ______________; as to ______________Option Shares
on ______________; as to ______________Option Shares on ______________; as to
______________Option Shares on ______________; and as to ______________Option
Shares on ______________. This Stock Option shall remain exercisable as to all
of such Option Shares until ______________,______ (but not later than ten (10)
years from the date hereof), at which time it shall expire in its entirety,
unless this Stock Option has expired or terminated earlier in accordance with
the provisions hereof or of the Plan. Option Shares as to which
2
<PAGE> 3
this Stock Option become exercisable may be purchased at any time prior to
expiration of this Stock Option.
3. Exercise of Stock Option. This Stock Option may be exercised
by: (i) delivering written notice substantially in the form of Exhibit 1 hereto
to the Company stating the number of Option Shares with respect to which this
Stock Option is being exercised; (ii) delivering cash (or bank, cashier's or
certified check) and/or, if permitted at or before the time of exercise by the
Stock Option Committee, shares of Common Stock of the Company which when added
to the cash payment, if any, have an aggregate Fair Market Value equal to the
full amount of the purchase price of such Option Shares; and (iii) unless the
shares of Common Stock covered by the Plan have been registered with the
Securities and Exchange Commission pursuant to the registration requirements
under the Securities Act of 1933, delivering a written representation letter
substantially in the form of Exhibit "B" to the Plan. Not less than ten (10)
Option Shares may be purchased at any one time unless the number purchased is
the total number which remains to be purchased under this Stock Option and in no
event may the Stock Option be exercised with respect to fractional shares. Upon
exercise, Optionee shall make appropriate arrangements and shall be responsible
for the withholding of all federal and state income taxes then due, if any.
4. Prior Outstanding Stock Options. Pursuant to Section 8(b) of
the Plan, an Incentive Stock Option held by Optionee may be exercisable while
the Optionee has outstanding and unexercised any Incentive Stock Option
previously granted to him or her by the
3
<PAGE> 4
Company, or a bank or corporation which (at the time of grant) is a parent or
Subsidiary of the Company, or a predecessor corporation of any such entity.
5. Cessation of Affiliation. Except as provided in Paragraph 6
hereof, if, for any reason other than Optionee's disability or death, Optionee
ceases to be employed by or affiliated with the Company or a Subsidiary, this
Stock Option shall expire ninety (90) days thereafter or on the date specified
in Paragraph 2 hereof, whichever is earlier. During such period after cessation
of employment or affiliation, this Stock Option shall be exercisable only as to
those increments, if any, which had become exercisable as of the date on which
the Optionee ceased to be employed by or affiliated with the Company or
Subsidiary, and any Stock Options or increments which had not become exercisable
as of such date shall expire and terminate automatically on such date.
6. Termination for Cause. If Optionee's employment by or
affiliation with the Company or a Subsidiary is terminated for cause, this Stock
Option shall expire thirty (30) days thereafter unless reinstated by the Stock
Option Committee within thirty (30) days of such termination by giving written
notice of such reinstatement to Optionee. In the event of such reinstatement,
Optionee may exercise this Stock Option only to such extent, for such time, and
upon such terms and conditions as if Optionee had ceased to be employed by or
affiliated with the Company or a Subsidiary upon the date of such termination
for a reason other than cause, disability or death. Termination for cause shall
include, but shall not be limited to,
4
<PAGE> 5
termination for malfeasance or gross misfeasance in the performance of duties or
conviction of illegal activity in connection therewith, or any conduct
detrimental to the interests of the Company or a Subsidiary, and, in any event,
the determination of the Stock Option Committee with respect thereto shall be
final and conclusive.
7. Disability or Death of Optionee. If Optionee becomes disabled
or dies while employed by or affiliated with the Company or a Subsidiary, or
during the ninety-day period referred to in Paragraph 5 hereof, this Stock
Option shall automatically expire and terminate one (1) year after the date of
Optionee's disability or death or on the day specified in Paragraph 2 hereof,
whichever is earlier. After Optionee's disability or death but before such
expiration, the person or persons to whom Optionee's rights under this Stock
Option shall have passed by order of a court of competent jurisdiction or by
will or the applicable laws of descent and distribution, or the executor,
administrator or conservator of Optionee's estate, subject to the provisions of
Paragraph 13 hereof, shall have the right to exercise this Stock Option to the
extent that increments, if any, had become exercisable as of the date on which
Optionee ceased to be employed by or affiliated with the Company or a
Subsidiary. For purposes hereof, "disability" shall have the same meaning as set
forth in Section 14 of the Plan.
5
<PAGE> 6
8. Nontransferability. This Stock Option shall not be
transferable except by will or by the laws of descent and distribution, and
shall be exercisable during Optionee's lifetime only by Optionee.
9. Employment. This Agreement shall not obligate the Company or a
Subsidiary to employ Optionee for any period, nor shall it interfere in any way
with the right of the Company or a Subsidiary to increase or reduce Optionee's
compensation.
10. Privileges of Stock Ownership. Optionee shall have no rights
as a stockholder with respect to the Option Shares unless and until said Option
Shares are issued to Optionee as provided in the Plan. Except as provided in
Section 15 of the Plan, no adjustment will be made for dividends or other rights
in respect of which the record date is prior to the date such stock certificates
are issued.
11. Modification and Termination by Board of Directors. The
rights of Optionee are subject to modification and termination upon the
occurrence of certain events as provided in Sections 16 and 17 of the Plan.
12. Notification of Sale. Optionee agrees that Optionee, or any
person acquiring Option Shares upon exercise of this Stock Option, will notify
the Company in writing not more than five (5) days after any sale or other
disposition of such Shares.
13. Approvals. This Agreement and the issuance of Option Shares
hereunder are expressly subject to the approval of the Plan and the form of this
Agreement by the holders of not less than a majority of the voting stock of the
Company. This Stock Option may
6
<PAGE> 7
not be exercised unless and until all applicable requirements of all regulatory
agencies having jurisdiction with respect thereto, and of the securities
exchanges upon which securities of the Company are listed, if any, have been
complied with.
14. Notices. All notices to the Company provided for in this
Agreement shall be addressed to it in care of its Chief Executive Officer at its
main office and all notices to Optionee shall be addressed to Optionee's address
on file with the Company or a Subsidiary, or to such other address as either may
designate to the other in writing, all in compliance with the notice provisions
set forth in Section 26 of the Plan.
15. Incorporation of Plan. All of the provisions of the Plan are
incorporated herein by reference as if set forth in full in this Agreement. In
the event of any conflict between the terms of the Plan and any provision
contained herein, the terms of the Plan shall be controlling and the conflicting
provisions contained herein shall be disregarded.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
COMMUNITY WEST BANCSHARES
By
----------------------------------------
By
----------------------------------------
OPTIONEE
------------------------------------------
7
<PAGE> 8
ACKNOWLEDGMENT:
I hereby acknowledge receipt of a copy of this Agreement as well as a
copy of the Stock Option Plan.
OPTIONEE
----------------------------------------
8
<PAGE> 9
EXHIBIT 1
NOTICE OF EXERCISE OF STOCK OPTION
Community West Bancshares
5827 Hollister Avenue
Goleta, California 93117
Attention: President
Gentlemen:
Pursuant to a Stock Option Agreement dated ________________, _____,
Community West Bancshares granted to me an option covering _________________
shares of its Common Stock at a price of $_____________ per share. Taking into
account all appropriate adjustments for stock splits and dividends and the like,
as well as for option shares already exercised, if any, that Stock Option
Agreement presently covers ________________ shares at approximately
$_______________ per share.
By executing this Notice, the undersigned hereby exercises the option as
to ____________ shares (the "Shares"), for an aggregate purchase price of
$_______________, which Shares are currently vested and exercisable pursuant to
the terms of the Stock Option Agreement. The exercise of the stock options
effected hereby is subject to and pursuant to the terms of the Company's 1997
Stock Option Plan and the Stock Option Agreement by and between the undersigned
and the Company.
In accordance with the terms of the 1997 Stock Option Plan and my Stock
Option Agreement, I hereby tender payment for, and the amount to be held
withheld for taxes upon, the purchase of the Shares as follows:
1. Purchase Price Paid: $___________________
Form of Payment:
[ ] Cash
[ ] Company, Cashier's of Certified Check
[ ] Funds Transfer From Account No.______________
[ ] _______ Shares of the Company's Common
Stock (requires special approvals)
2. Withholding taxes:
[ ] (a) Submitted herewith is $__________________; or
<PAGE> 10
[ ] (b) I have instructed my employer not to deposit
with the Internal Revenue Service and the
California Franchise Tax Board any amount required
to be withheld, as I will personally assume
responsibility for the amounts and timing of my
estimated tax withholding.
As reported to me by _______________________, an officer of Community
West Bancshares, the fair market value per share of Community West Bancshares's
common stock as of this date is
$----------------.
Please register the Shares in the following manner:
_______________________________________________________________
Print or Type Name
Please mail certificate to the following address:
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
---------------------------------
(Signature)
Dated: ____________________ ---------------------------------
(Type or Print Your Name)
<PAGE> 1
EXHIBIT 5
December 30, 1997
COMMUNITY WEST BANCSHARES
5827 Hollister Avenue
Goleta, California 93117
Re: Registration Statement on Form S-8
Lady and Gentlemen:
We have acted as counsel to Community West Bancshares (the "Company") in
connection with the registration by the Company of a total of up to 456,427
shares of the Company's Common Stock, no par value per share (the "Shares")
issuable by the Company upon the exercise of options granted under the Community
West Bancshares 1997 Stock Option Plan and options granted and which may be
granted thereunder (the "Plan").
A Registration Statement on Form S-8 under the Securities Act of 1933,
as amended, covering the Shares is being filed with the Securities and Exchange
Commission concurrently herewith.
In connection herewith we have examined and relied as to matters of fact
upon such certificates of public officials, such certificates of officers of the
Company and originals or copies certified to our satisfaction of the Articles of
Incorporation and Bylaws of the Company, as amended, the Plan, proceedings of
the Board of Directors of the Company and other corporate records, documents,
certificates and instruments as we have deemed necessary or appropriate in order
to enable us to render the opinion expressed below.
In rendering the following opinion, we have assumed the genuineness of
all signatures on all documents examined by us, the authenticity of all
documents submitted to us as originals and the conformity to authentic originals
of all documents submitted to us as certified or photostated copies, and we have
relied as to matters of fact upon statements and certifications of officers of
the Company. In addition, we have assumed that the certificates for the Shares
to be issued will conform to the
<PAGE> 2
COMMUNITY WEST BANCSHARES
December 30, 1997
Page 2
specimen thereof examined by us and will be duly registered and countersigned by
the Company's transfer agent.
Based on the foregoing, we are of the opinion that when sold in
accordance with the terms and conditions of the plan and the respective Stock
Option Agreements, the Shares will be duly and validly authorized and issued,
fully paid and non-assessable.
We hereby consent to the filing of this opinion as Exhibit 5 to the
aforesaid Registration Statement on Form S-8.
Very truly yours,
/s/ HORGAN, ROSEN, BECKHAM & COREN, L.L.P.
------------------------------------------
HORGAN, ROSEN, BECKHAM & COREN, L.L.P.
EXHIBIT 5
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in this Registration Statement of
Community West Bancshares on Form S-8 of our report dated January 31, 1997,
(except for Note 15, as to which the date is March 26, 1997) appearing in the
Annual Report on Form 10-K of Goleta National Bank for the year ended December
31, 1996.
DELOITTE & TOUCHE LLP
Los Angeles, California
December 31, 1997
EXHIBIT 23.2
<PAGE> 1
EXHIBIT 99
PLAN OF REORGANIZATION AND CONSOLIDATION AGREEMENT
This Plan of Reorganization and Consolidation Agreement (this
"Agreement") is entered into as of October 30, 1997, by and between Goleta
National Bank (the "Bank") and Goleta Interim National Bank (the "Interim
Bank"), to which Community West Bancshares (the "Holding Company") is a party.
RECITALS AND UNDERTAKINGS
A. Bank is a National Banking Association duly organized and licensed
under the laws of the United States of America with its principal office in the
unincorporated area known as Goleta, County of Santa Barbara, State of
California. Interim Bank has been approved to organize as a National Banking
Association and will, as of the date of the consolidation contemplated by this
Agreement, be duly organized and licensed as a National Banking Association
under the laws of the United States which will have its principal office in the
unincorporated area known as Goleta, County of Santa Barbara, State of
California.
B. As of the date hereof, Bank has 4,000,000 shares of Common Stock
authorized, $2.50 par value, with capital stock $3,803,558, divided into
1,521,423 shares of the par value of $2.50 each, surplus of $4,615,922 and has
warrants outstanding to purchase and additional 445,238 shares of Common Stock
of the bank at an exercise price of $8.75 per share will expire June 30, 1998
(the "Warrants").
C. As of the date just prior to the consummation of the consolidation
contemplated by this Agreement, Interim Bank will have 80,000 shares of Common
Stock authorized, $2.50 par value, with capital stock of $200,000, divided into
80,000 shares of the par value of $2.50 each, surplus of $40,000, and at the
time of the consolidation contemplated hereby all of such shares will be
outstanding and will be owned by Holding Company.
D. As of the date hereof, Holding Company has 10,000,000 shares of
Common Stock authorized, no par value, 1,000 shares of which will be
outstanding at the time of the consolidation referred to herein.
E. The Boards of Directors of Bank and Interim Bank have approved this
Agreement and authorized its execution, and the Board of Directors of Holding
Company has approved this Agreement, undertaken that Holding Company shall
join in and be bound by it, and authorized the undertakings hereinafter made by
Holding Company.
F. It is intended that the transactions contemplated herein be done in
such fashion as to qualify as a tax-free reorganization under the Internal
Revenue Code of 1986, as amended.
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<PAGE> 2
In consideration of the mutual covenants, agreements, representations and
warranties contained herein, and intending to be legally bound, the parties
hereto agree as follows:
AGREEMENT
Section 1. General
1.1 The Consolidation. On the Effective time of the Consolidation (as
that term is defined in Paragraph 1.2 hereof), Bank and Interim Bank shall be
consolidated under the charter of Bank (the "Consolidation"). The name of the
consolidated association (the "Consolidated Bank") shall be "Goleta National
Bank." The business of the Consolidated Bank shall be that of a national
banking association and shall be conducted by the Consolidated Bank at its main
office which shall be located at 5827 Hollister Avenue, Goleta, California
93117.
1.2 Effective Time of the Consolidation. This Agreement shall become
effective at the close of business on the day (the "Effective Date") specified
on the Certificate to be issued by the Office of the Comptroller of the
Currency (the "Comptroller") approving the Consolidation (the "Effective Time
of the Consolidation").
1.3 Articles of Association, Bylaws, and Charter. At the Effective Time
of the Consolidation, the Articles of Association of Bank, as in effect
immediately prior thereto, shall be and remain the Articles of Association of
the Consolidated Bank; the Bylaws of Bank shall be and remain the Bylaws of the
Consolidated Bank until altered, amended or repealed; the banking charter of
Bank shall become the charter of the Consolidated Bank; and the insurance of
deposits coverage by the Federal Deposit Insurance Corporation of Bank as
provided by law shall be and remain the deposit insurance of the Consolidated
Bank.
1.4 Directors and Officers of the Consolidated Bank. At the Effective
Time of the Consolidation, the directors and officers of Bank immediately prior
thereto shall become the directors and officers of the Consolidated Bank. The
directors of the Consolidated Bank shall serve until the next annual meeting of
stockholders of the Consolidated Bank or until such time as their successors
are elected and have qualified.
1.5 Corporate Acts, Plans, Policies, Programs and Contracts. Except as
otherwise provided herein and until changed by the Board of Directors of the
Consolidated Bank in accordance with the law or the Articles of Association or
Bylaws of the Consolidated Bank, all corporate acts, plans, policies, programs,
contracts, approvals and authorizations of Bank and its shareholders, Board of
Directors, committees elected or appointed thereby, officers and agents, which
were valid and effective immediately prior to the Effective time of
2
<PAGE> 3
the Consolidation, shall be taken for all purposes as the acts, plans,
policies, programs, contracts, approvals and authorizations of the Consolidated
Bank and shall be as effective and binding thereon as the same were with
respect to the Bank, including all insurance policies maintained by Bank and
the Interim Bank which are in effect immediately prior to the Effective Time of
the Consolidation, and all group and employee benefit insurance policies.
1.6 Effect of the Consolidation.
(a) Assets and Rights. All rights, privileges, franchises
and property of Bank or Interim Bank, and all debts and liabilities due or to
become due to Bank or Interim Bank, including things in action and every
interest or asset of conceivable value or benefit, shall be deemed fully and
finally and without any right of reversion transferred to and vested in the
Consolidated Bank without further act or deed, and the Consolidated Bank shall
have and hold the same in its own right as fully as the same was possessed and
held by Bank or Interim Bank.
(b) Liabilities. All debts, liabilities, and obligations
due or to become due of, and all claims or demands for any cause existing
against, Bank or Interim Bank shall be and become the debts, liabilities,
obligations of, and the claims and demands against, the Consolidated Bank in
the same manner as if the Consolidated Bank had itself incurred or become
liable for them.
(c) Creditor's Rights and Liens. All rights of creditors
of Bank or Interim Bank, and all liens upon the property of Bank or Interim
Bank, shall be preserved unimpaired, limited in lien to the property affected
by the liens immediately prior to the Effective Time of the Consolidation.
(d) Pending Actions. Any action or proceeding pending by
or against Bank or Interim Bank shall not be deemed to have abated or been
discontinued, but may be prosecuted to judgment with the right to appeal or
review as in other cases as if the Consolidation had not taken place or the
Consolidated Bank may be substituted for Bank or Interim Bank, as the case may
be.
1.7 Further Assistance. Bank and Interim Bank each agree that at
any time, or from time to time, as and when requested by the Consolidated Bank,
or by its successors and assigns, it will execute and deliver, or cause to be
executed and delivered in its name by its last acting officers, or by the
corresponding officers of the Consolidated Bank, all such conveyances,
assignments, transfers, deeds or other instruments, and will take or cause to
be taken such further or other action as the Consolidated Bank, its successors
or assigns may deem necessary or desirable in order to evidence the transfer,
vesting or devolution of any property right, privilege or franchise or to vest
or perfect in or confirm to the
3
<PAGE> 4
Consolidated Bank, its successors and assigns, title to and possession of all
the property, rights, privileges, powers, immunities, franchises and interests
referred to in this Section 1 and otherwise to carry out the intent and
purposes thereof.
1.8 Stock Option Plan. Prior to the Effective Time of the Consolidation,
the Holding Company will adopt and receive all necessary approvals and permits
for a Stock Option Plan which shall have terms and provisions substantially
similar to those contained in the Bank's Stock Option Plan(s) (the "Stock Option
Plan") as said Stock Option Plan shall exist on the date of this Agreement. At
the Effective Time of the Consolidation, Bank's Stock Option Plan shall
terminate and the Holding Company will grant options pursuant to its Stock
Option Plan for shares of its Common Stock (evidenced by Stock Option
Agreements) to each officer and employee of Bank who immediately prior to the
Effective Time of the Consolidation held an option granted by Bank pursuant to
its Stock Option Plan, such options to be on substantially the same terms
(including number of shares, price and duration) and subject to the same
conditions as the respective options granted by Bank.
Section 2. Exchange of Stock.
2.1 Stock of Interim Bank. Each share of Common Stock, $2.50 par value, of
Interim Bank issued and outstanding immediately prior to the Effective Time of
the Consolidation, on the Effective Time of the Consolidation, and without any
further action on the part of the holders thereof or the parties hereto, shall
be converted into the same number of shares of fully paid Common Stock, $2.50
par value, of Bank.
2.2 Stock of Bank. Each share of Common Stock of Bank, $2.50 par value,
issued and outstanding immediately prior to the Effective Time of the
Consolidation, except for shares as to which dissenters' rights are perfected
pursuant to 12 U.S.C. Section 215, shall upon the Effective Time of the
Consolidation, and without any further action on the part of the holders thereof
or the parties hereto, be exchanged for and converted into an equal number of
shares of fully paid and nonassessable Common Stock of Holding Company without
par value. Upon the Effective Time of the Consolidation, outstanding
certificates representing shares of the Common Stock of Bank shall, thereafter
represent shares of the Common Stock of Holding Company, and such certificates
may, but need not, be exchanged by the holders thereof, after the Consolidation
becomes effective, for new certificates for the appropriate number of shares
bearing the name of Holding Company.
2.3 Stock of Consolidated Bank. The amount and number of shares of capital
stock of the Consolidated Bank outstanding upon completion of the Consolidation
shall be equal to the aggregate amount and aggregate number of shares of capital
stock of Bank and Interim Bank, combined, immediately before the Effective time
of the Consolidation (adjusted to reflect all increases in capital stock of Bank
and Interim Bank after this date until immediately before the Effective Time of
the Consolidation). The 80,000 shares of Interim Bank Common Stock plus the
1,540,658 shares of Bank Common Stock, which constitute the total number of
shares of capital stock of the Consolidated Bank outstanding upon completion of
the Consolidation, shall be issued to the Holding Company at the
4
<PAGE> 5
Effective Time of the Consolidation.
2.4 Other Rights to Stock. Upon the Effective Time of the Consolidation
and by reason of the Consolidation:
(a) The options to purchase shares of Common Stock of Bank which
have been granted by Bank pursuant to its Stock Option Plan in effect
immediately before the Effective Time of the Consolidation shall be deemed to be
options granted by Holding Company with the same terms and conditions and for
the same number of shares of common stock of Holding Company. Holding company
shall issue shares of its common stock so that appropriate adjustments to
reflect the Consolidation may be made to (i) the class and number of shares of
common stock available for options under the Stock Option Plan and (ii) the
class and number of shares and the price per share of the common stock subject
to options outstanding under Bank's Stock Option Plan.
(b) The Warrants to purchase Common Stock of Bank which are
outstanding immediately before the Effective Time of the Consolidation shall
upon the Effective Time of the Consolidation, and without any further action on
the part of the holders thereof or the parties thereto, be exchanged for,
converted into and be deemed to be warrants issued by Holding Company with the
same terms and conditions and to purchase the same number of shares of Common
Stock of Holding Company as the Warrants issued and outstanding immediately
prior to the Effective Time of the Consolidation.
(c) From time to time, as and when required by the provisions of any
agreement to which Bank or Holding Company shall become a party after the date
hereof providing for the issuance of shares of common stock of other equity
securities of Bank or Holding Company in connection with a merger into Bank or
any other banking institution or other corporation, Holding Company will issue
in accordance with the terms of any such agreement shares of its common stock
or other equity securities of Bank or Holding Company in connection with a
merger into Bank or any other banking institution or other corporation,
Holding Company will issue in accordance with the terms of any such agreement
shares of its agreement or in substitution for the shares of common stock or
other equity securities of Bank required to be issued by such agreement, as the
case may be, which the stockholders of any other such banking institution or
other corporation shall be entitled to receive by virtue of any such agreement.
2.5 Stock Repurchase. At the Effective Time of the Consolidation, the
Holding Company shall repurchase the shares of the Holding Company then held by
the initial shareholders of the Holding Company as set forth on Exhibit "A"
hereto ("Initial Shareholders"); provided, however, that if such stock
repurchase will be treated as a distribution, the Initial Shareholders may
elect to keep the shares of the Holding Company owned by them immediately prior
to the Consolidation.
5
<PAGE> 6
2.6 Cash Dividend. Unless prohibited by regulatory agencies,
immediately after the Effective Time of the Consolidation, or as soon
thereafter as legally possible, the Consolidated Bank will declare and pay a
cash dividend to Holding Company in such amount (estimated to be approximately
$240,000) as is necessary for the Holding Company to repay loans made to the
Holding Company by an unaffiliated bank or other person for the purpose of
capitalizing the Interim Bank and related expenses.
Section 3. Approvals
3.1 Stockholder Approval. This Agreement shall be submitted to the
stockholders of Bank, Interim Bank and Holding Company, if required by law, for
ratification and confirmation in accordance with the applicable provisions of
the law.
3.2 Rights of Dissenting Stockholders. Any Shareholder of Bank who
has voted against the Consolidation at the meeting of stockholders of Bank, or
has given notice in writing at or prior to such meeting to the presiding officer
that he/she dissents from the Consolidation, shall be entitled to receive the
value of the shares so held by him/her when the Consolidation shall be approved
by the Comptroller upon written request made to the Holding Company at any time
before thirty (30) days after the date of consummation of the Consolidation,
accompanied by the surrender of his/her stock certificates. The value of the
shares of any dissenting stockholder shall be ascertained, as to the Effective
Time of the Consolidation, by an appraisal made by a committee of three
persons, composed of: (1) one selected by the vote of the holders of the
majority of the stock, the owners of which are entitled to payment in cash (by
reason of such request for appraisal); (2) one selected by the directors of
the Consolidated Bank or Holding Company; and (3) one selected by the two so
selected. The valuation agreed upon by any two of the three appraisers shall
govern. If the value so fixed shall not be satisfactory to any dissenting
shareholder who has requested payment, the shareholder may, within five (5)
days after being notified of the appraisal value of such shares, appeal to
the Comptroller, who shall cause a reappraisal to be made which shall be final
and binding as to the value of the shares of the appellant. If, within ninety
(90) days from the date of consummation of the Consolidation, for any reason,
one or more of the appraisers is not selected as herein provided, or the
appraisers fail to determine the value of such shares, the Comptroller shall
upon written request of any interested party cause an appraisal to be made
which shall be final and binding on all parties. The expenses of the
Comptroller in making the reappraisal or the appraisal, as the case may be,
shall be paid by the Consolidated Bank or the Holding Company. The value of the
shares ascertained shall be promptly paid to the dissenting shareholders by the
Consolidated Bank and/or the Holding Company.
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3.3 Regulatory Approvals. The parties shall proceed expeditiously
and cooperate fully in the procurement of any other consents and approvals and
in the taking of any other action, and the satisfaction of all other
requirements prescribed by law or otherwise, necessary or desirable for
consummation of this Plan of Reorganization and Consolidation Agreement on the
terms herein provided, including, without being limited to, those consents and
approvals referred to in Paragraph 4.1(b).
Section 4. Conditions Precedent. Termination and Payment of Expenses
4.1 Conditions Precedent to the Consolidation. Consummation of the
Consolidation is conditional upon:
(a) Ratification and confirmation of the Agreement by the
stockholders of Bank, Interim Bank and Holding Company, as required by law;
(b) Obtaining all other consents and approvals, and the
satisfaction of all other requirements prescribed by law which are necessary
for consummation of the Consolidation, including, but not limited to, approval
of the Comptroller and the Board of Governors of the Federal Reserve System
under the Bank Holding Company Act of 1956.
(c) Obtaining all other consents or approvals, governmental
or otherwise, which are, or in the opinion of counsel for Bank, Interim Bank
and Holding Company may be, necessary to permit or enable the Consolidated
Bank, upon and after the Consolidation, to conduct all or any part of the
business and activities of Bank up to the time of the Consolidation, in the
manner in which such activities and business are then conducted;
(d) Bank's obtaining for Holding Company, prior to the
Effective Time of the Consolidation, a letter, in form and substance
satisfactory to Holding Company's counsel, signed by each person who is an
"affiliate" of Bank for purposes of Rule 145 of the Securities and Exchange
Commission to the effect that: (i) such person will not dispose of any shares
of Holding Company's common stock to be received pursuant to the reorganization
and merger, in violation of the Securities Act or the rules and regulations of
the Commission promulgated thereunder, or in any event prior to such time as
financial results covering at least 30 days of post-merger combined operations
have been published; and (ii) such person consents to the placing of a legend
on the certificate(s) evidencing such shares referring to the issuance of such
shares in a transaction to which Rule 145 is applicable and to giving of
stop-transfer instructions to Holding Company's transfer agent with respect to
such certificate(s); and
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(e) Performance by each party hereto of all of its obligations
hereunder to be performed prior to the Consolidation becoming effective.
4.2 Termination of the Consolidation. If any condition in Paragraph 4.1
has not been fulfilled, or, in the opinion of a majority of the Board of
Directors of any of the parties:
(a) The number of shares of Common Stock of Bank voted against the
Consolidation, or with respect to which written notice is given purporting to
dissent from the Consolidation, makes consummation of the Consolidation unwise;
or
(b) Any action, suit, proceeding or claim has been instituted, made
or threatened relating to the proposed Consolidation which makes consummation
of the Consolidation inadvisable; or
(c) For any other reason consummation of the Consolidation is deemed
inadvisable; then this Agreement may be terminated at any time before the
Consolidation becomes effective. Upon termination, this Agreement shall be void
and of no further effect, and there shall be no liability by reason of this
Agreement or the termination thereof on the part of the parties or their
respective directors, officers, employees, agents of stockholders.
4.3 Expenses of the Consolidation. All of the expenses of the Bank and
Interim Bank regarding the Consolidation, including filing fees, printing
costs, mailing costs, accountant's fees and legal fees shall be borne by the
Consolidation Bank. The expenses of the reorganization which relate solely to
the Holding Company shall be borne by the Holding Company.
4.4 Modification. Bank, Interim Bank and Holding Company, by mutual
consent of their respective Boards of Directors, to the extent permitted by
law, may amend, modify, supplement and interpret this Agreement in such manner
as may be mutually agreed upon them in writing at any time before or after
adoption thereof by stockholders of Bank and Interim Bank; provided, however,
that no such amendment, modification or supplement shall change the number or
kind of shares to be issued by Holding Company in exchange for each share of
Bank, except by the affirmative action of such stockholders as required by law.
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IN WITNESS WHEREOF, the parties hereto have caused this Plan of
Reorganization and Consolidation Agreement to be executed by their duly
organized officers as of the day and year first above written.
GOLETA NATIONAL BANK
By /s/ LLEWELLYN W. STONE
--------------------------------
Llewellyn W. Stone
President
By /s/ MICHEL NELLIS
--------------------------------
Michel Nellis
Secretary
COMMUNITY WEST BANCSHARES GOLETA INTERIM NATIONAL BANK
By /s/ LLEWELLYN W. STONE By /s/ LLEWELLYN W. STONE
-------------------------------- --------------------------------
Llewellyn W. Stone Llewellyn W. Stone
President President
By /s/ MICHEL NELLIS By /s/ MICHEL NELLIS
-------------------------------- --------------------------------
Michel Nellis Michel Nellis
Secretary Secretary
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