<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
VALLEY NATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 33-0825336
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1234 East Main Street, El Cajon, California 92021
(Address of Principal Executive Offices) (Zip Code)
Valley National Corporation 1982 Stock Option Plan
(Full title of the plan)
Mr. William V. Ehlen, President
Valley National Corporation
1234 East Main Street
El Cajon, CA 92021
(Name and address of agent for service)
(619) 593-3330
(Telephone Number, including area code,
of agent for service)
(619) 593-3344
(Fax number of agent for service)
The Commission is requested to send copies of all notices and other
communications to:
James K. Sterrett, Esq.
Dostart Clapp Sterrett & Coveney, LLP
4370 La Jolla Village Drive, Suite 970
San Diego, CA 92122
Telephone: (619) 623-4200
Fax: (619) 623-4299
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Title of Securities to be Amount to be maximum maximum Amount of
Registered Registered(1) offering price aggregate registration
per share(2) offering price(2) fee(2)
<S> <C> <C> <C> <C>
Common stock, par 83,534 $18.375 $1,534,937 $426.71
value $0.0001 per share
</TABLE>
(1) This Registration Statement shall also cover any additional shares of Common
Stock which may become issuable under the Valley National Corporation 1982 Stock
Option Plan by reason of any stock dividend, stock split, recapitalization or
any other similar transaction effected without receipt of consideration which
results in an increase in the number of outstanding shares of Common Stock.
(2) Estimated solely for purpose of calculating the registration fee pursuant to
Rule 457(h) on the basis of the average of the high and low prices of the Common
Stock on the Nasdaq National Market System as of a date within five business
days preceding the date of filing of this Registration Statement.
2
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PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The document(s) containing the information specified in Part I of Form
S-8 will be sent or given to participating officers and employees as
specified by Rule 428(b)(1) of the Securities Act of 1933, as amended (the
"Securities Act"). The documents and the documents incorporated by reference
in this Registration Statement pursuant to Item 3 of Part II below, taken
together, constitute a prospectus that meets the requirements of Section
10(a) of the Securities Act.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. Incorporation of Documents by Reference.
Valley National Corporation, a Delaware corporation (the "Company"),
hereby incorporates by reference into this Registration Statement on Form S-8
(the "Registration Statement") the following documents which have heretofore
been filed by the Company with the Securities and Exchange Commission (the
"Commission"):
(a) The Valle de Oro Bank, N.A.'s Annual Report on Form 10-KSB for
the year ended December 31, 1998 as filed with the Commission on March 31, 1999.
(b) The Company's Proxy Statement-Prospectus filed as part of the
Company's Registration Statement on Form S-4 (Reg. No. 333-67661), as filed with
the Commission on November 20, 1998, Amendment No. 1 to the Registration
Statement filed with the Commission on January 26, 1999, and Amendment No. 2 to
the Registration Statement filed with the Commission on February 18, 1999.
(c) All documents subsequently filed by the Company or the Valley
National Corporation 1982 Stock Option Plan pursuant to Sections 13(a), 13(c),
14 and 15(d) of the Exchange Act, prior to the filing of a post-effective
amendment which indicates that all securities offered have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof from the date of filing of such documents.
Any statements contained in a document incorporated by reference
herein shall be deemed to be modified or superseded for purposes hereof to the
extent that a statement contained herein (or in any other subsequently filed
document which is also incorporated by reference herein) modifies or supersedes
such statement. Any statement so modified or superseded shall not be deemed to
constitute a part of this Registration Statement except as so modified or
superseded.
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ITEM 4. Description of Securities.
Not applicable.
ITEM 5. Interests of Named Experts and Counsel.
Certain legal matters with respect to the validity of the shares of
Company Common Stock offered hereby will be passed upon by Dostart Clapp
Sterrett & Coveney, LLP, San Diego, California.
ITEM 6. Indemnification of Directors and Officers
Section 145 of the General Corporation Law of the State of Delaware:
(i) gives Delaware corporations broad powers to indemnify their present and
former directors and officers and those of affiliated corporations against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred in connection with threatened,
pending or completed actions, suits or proceedings to which they are parties or
are threatened to be made parties by reason of being or having been such
directors or officers, subject to specified conditions and exclusions;
(ii) gives a director or officer who successfully defends an action the right
to be so indemnified; and (iii) permits a corporation to buy directors' and
officers' liability insurance. Such indemnification is not exclusive of any
other rights to which those indemnified may be entitled under any bylaw,
agreement, vote of stockholders or otherwise.
Article VI of Valley National Corporation's Bylaws requires Valley
National Corporation to indemnify its directors and officers to the maximum
extent permitted by the General Corporation Law of the State of Delaware.
Article X of Valley National Corporation's Certificate of Incorporation also
provides that Valley National Corporation shall indemnify and advance expenses
to its directors, officers, employees or agents to the fullest extent permitted
by applicable law.
Valley National Corporation intends to enter into individual
agreements with each of its directors and executive officers pursuant to which
Valley National Corporation will agree to indemnify each of its directors and
executive officers to the fullest extent provided by applicable law and the
Bylaws of Valley National Corporation as currently in effect.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or persons
controlling Valley National Corporation pursuant to the foregoing provisions,
Valley National Corporation has been informed that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in such Act and therefore unenforceable.
Valley National Corporation intends to purchase insurance policies
containing customary terms and conditions for the purpose of insuring its
directors and officers against certain losses incurred by them as a result of
claims based upon their actions or statements (including omissions to act or
make statements) as directors and officers which may cover liabilities under the
Securities Act.
4
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Valley National Corporation also maintains an insurance policy
insuring those individuals who are fiduciaries, as defined by the Employee
Retirement Income Security Act of 1974, under certain employee benefit plans of
Valley National Corporation and its subsidiaries against certain losses incurred
by them as a result of claims based on their responsibilities, obligations and
duties under such Act.
Section 102(b)(7) of the General Corporation Law of the State of
Delaware permits a Delaware corporation to include in its certificate of
incorporation a provision eliminating the potential monetary liability of a
director to the corporation or its stockholders for breach of fiduciary duty as
a director, provided that such provision shall not eliminate the liability of a
director (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law,
(iii) for improper payment of dividends, or (iv) for any transaction from
which the director receives an improper personal benefit. Valley National
Corporation's Certificate of Incorporation includes such a provision in Article
IX thereof.
ITEM 7. Exemption from Registration Claimed.
Not applicable.
ITEM 8. Exhibits.
Exhibit Number Description of Exhibit
4.1 Valley National Corporation's Certificate of Incorporation,
filed as Exhibit (3)A. to the Company's Registration
Statement on Form S-4 (Registration No. 333-67661) is
incorporated herein by reference.
4.2 Valley National Corporation's Bylaws, filed as Exhibit (3)B.
to the Company's Registration Statement on Form S-4
(Registration No. 333-67661) is incorporated herein by
reference.
5 Opinion of Dostart Clapp Sterrett & Coveney, LLP regarding
Valley National Corporation Common Stock and Consent.
23.1 Consent of KPMG LLP, Independent Auditors.
23.2 Consent of PricewaterhouseCoopers LLP, Independent
Accountants
24 Powers of Attorney (included as part of the Signature Page
of this Registration Statement).
99.1 Valle de Oro Bank, N.A. 1982 Stock Option Plan.
99.2 Amendment to Valle de Oro Bank, N.A. 1982 Stock Option Plan.
5
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ITEM 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement.
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in this Registration Statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the Registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(h) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 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 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
6
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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 of
whether such indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such issue.
7
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
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 on Form S-8 to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of El Cajon, State of California, on March 17,
1999.
VALLEY NATIONAL CORPORATION
By: /s/ William V. Ehlen
-----------------------------------
Name: William V. Ehlen
Title: President and Director
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints William V. Ehlen and C. K. Hill, or either one of
them, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement and any subsequent registration
statements relating to the offering to which this Registration Statement
relates, and to file the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully and to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or either of them, or their or his substitutes or
substitute, may lawfully do or cause to be done by virtue hereof.
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 date indicated.
/s/ William V. Ehlen /s/ C. K. Hill
- ---------------------------------------- ---------------------------------
William V. Ehlen, President and Director C. K. Hill, O.D., Secretary
and Director
/s/ James F. Carroll /s/ Philip J. Gelber
- ---------------------------------------- ---------------------------------
James F. Carroll, Chairman of the Philip J. Gelber, M.D., Director
Board and Director
8
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/s/ Samuel M. Ciccati /s/ Obert D. "Dale" Conway
- ---------------------------------------- ---------------------------------
Samuel M. Ciccati, Ph.D., Director Obert D. "Dale" Conway, Director
/s/ Paul M. Cable
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Paul M. Cable, Treasurer, Chief Financial
Officer and Principal Accounting Officer
9
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Pursuant to the requirements of the Securities Act of 1933, a member of the
Committee for the administration of the plan set forth below has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of El Cajon, State of California, on
March 17, 1999.
Committee for the Valley National Corporation 1982
Stock Option Plan
By: /s/ William V. Ehlen
-----------------------------
Committee Member
10
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EXHIBIT 5
[DOSTART CLAPP STERRETT & COVENEY, LLP LETTERHEAD]
March 29, 1999
The Board of Directors
Valley National Corporation
1234 East Main Street
San Diego CA 92021
Attention: Mr. William V. Ehlen
Re: Registration Statement on Form S-8 --
Valley National Corporation 1982 Stock Option Plan
Ladies and Gentlemen:
We have served as counsel for Valley National Corporation, a Delaware
corporation (the "Company"), in connection with the registration under the
Securities Act of 1933, as amended, of an aggregate of 83,534 shares (the
"Shares") of the Company's authorized Common Stock, par value $0.0001 per
share, to be issued to participants in the Valley National Corporation 1982
Stock Option Plan (the "Plan"), pursuant to the Company's Registration
Statement on Form S-8 (the "Registration Statement"). This opinion is
furnished to you pursuant to the requirements of Form S-8.
We are familiar with the proceedings to date with respect to such offering
and have examined such records, documents and matters of law and satisfied
ourselves as to such matters of fact as we have considered relevant for purposes
of this opinion.
For purposes of this opinion, we have assumed the authenticity of all
documents submitted to us as originals and the conformity to the originals of
all documents submitted to us as copies. We have also assumed the genuineness
of the signatures of persons signing all documents in connection with which this
opinion is rendered, the authority of such persons signing on behalf of the
parties thereto, and the due authorization, execution and delivery of all
documents by the parties thereto.
Based upon the foregoing, and having regard for such legal considerations
as we have deemed relevant, it is our opinion that the Shares have been duly
authorized and upon
<PAGE>
Valley National Corporation
March 29, 1999
Page 2
issuance, sale and delivery of the Shares as contemplated in this
Registration Statement, the Shares will be legally issued, fully paid and
nonassessable.
This opinion shall be limited to the laws of the State of California, the
General Corporation Law of the State of Delaware and the federal laws of the
United States of America.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement on Form S-8.
Very truly yours,
DOSTART CLAPP STERRETT & COVENEY, LLP
/s/ James K. Sterrett
JAMES K. STERRETT
JKS/bbc
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Valley National Corporation:
We consent to incorporation by reference in the registration statement on
Form S-8 of Valley National Corporation related to its 1982 Stock Option Plan
of our report dated January 20, 1999, relating to the balance sheets of Valle
de Oro Bank, N.A. as of December 31, 1998 and 1997, and the related
statements of earnings, changes in stockholders' equity and comprehensive
income, and cash flows for each of the years in the two-year period ended
December 31, 1998, which report appears in the December 31, 1998, annual
report on Form 10-KSB of Valle de Oro Bank, N.A.
KPMG LLP
San Diego, California
March 30, 1999
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EXHIBIT 23.2
Consent of Independent Accountants
We consent to the incorporation by reference in the Registration
Statement (Form S-8) pertaining to the Valley National Corporation 1982 Stock
Option Plan of our report, dated January 17, 1997, with respect to the
financial statements of Valle de Oro Bank, N.A. included in Form 10-KSB for
1998, filed with the Securities and Exchange Commission.
PricewaterhouseCoopers LLP
San Diego, California
March 29, 1999
<PAGE>
EXHIBIT 99.1
VALLE DE ORO BANK, N.A.
1982 STOCK OPTION PLAN
INDEX
<TABLE>
ARTICLE COMMENCING
NO. DESCRIPTION ON PAGE
- --------------------------------------------------------------------------------
<S> <C> <C>
1. PURPOSE 1
2. ADMINISTRATION 2
3. PARTICIPANTS 4
4. THE SHARES 4
5. GRANT, TERMS AND CONDITIONS 5
OF OPTIONS
6. ADJUSTMENT OF AND CHANGES IN 11
THE SHARES
7. LISTING OR QUALIFICATION OF 14
SHARES
8. BINDING EFFECT OF CONDITIONS 14
9. AMENDMENT AND TERMINATION OF 15
THE PLAN
10. EFFECTIVENESS OF THE PLAN 16
11. PRIVILEGES OF STOCK OWNERSHIP; 17
SECURITIES LAW COMPLIANCE;
NOTICE OF SALE
12. INDEMNIFICATION 17
</TABLE>
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VALLE DE ORO BANK, N.A.
1982 STOCK OPTION PLAN
____________oOo____________
1. PURPOSE.
The purpose of this 1982 Stock Option Plan (the "Plan") of Valle de Oro
Bank, N.A. and its Affiliates (hereinafter collectively referred to as the
"Bank"), is to secure for the Bank and its stockholders the benefits of the
incentive inherent in the ownership of Common Stock of Valle de Oro Bank, N.A.
by those key full-time, employees and officers of the Bank who will share
responsibility with management of the Bank for its future growth and success.
The word "Affiliate", as used in this Plan, means any bank or corporation
in an unbroken chain of banks or corporations beginning or ending with the Bank,
if at the time of the granting of an option, each such bank or corporation other
than the last in that chain owns stock possessing fifty percent (50%) or more of
the total combined voting power of all classes of stock in one of the other
banks or corporations in the chain.
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2. ADMINISTRATION.
The following provisions shall govern the administration of the Plan:
(a) the Plan shall be administered by a committee of the Board of
Directors appointed for this purpose by the Board of Directors (the
"Committee") composed of not less than three (3) directors. The Board of
Directors may from time to time remove members from or add members to the
Committee. Vacancies on the Committee, howsoever caused, shall be filled by
the Board of Directors. The Board of Directors shall designate a Chairman
and Vice-Chairman of the Committee from among the Committee members. Acts of
the Committee (i) at a meeting, held at a time and place and in accordance
with rules adopted by the Committee, at which a quorum of the Committee is
present and acting, or (ii) reduced to and approved in writing by a majority
of the members of the Committee, shall be the valid acts of the Committee.
(b) The Bank shall effect the grant of options under the Plan by execution
of instruments in writing in a form approved by the Committee. Subject to the
express terms and conditions of the Plan and the terms of any option outstanding
under the Plan, the Committee, shall have full power to construe the Plan and
the terms of any option granted under the Plan, to prescribe, amend and rescind
rules and regulations relating to
-2-
<PAGE>
the Plan or such options and to make all other determinations necessary or
advisable for the Plan's administration, including, without limitation, the
power to (i) determine which persons meet the requirements of Section 3 hereof
for selection as participants in the Plan and which persons are considered to be
"employees" for purposes of the Internal Revenue Code of 1954, as amended (the
"Code"), and therefore eligible to receive incentive stock options under the
Plan; (ii) determine to whom of the eligible persons, if any, options shall be
granted under the Plan; (iii) establish the terms and conditions required or
permitted to be included in every option agreement or any amendments thereto,
including whether options to be granted thereunder shall be "incentive stock
options," as defined in the Code, or "nonstatutory stock options"; (iv)
specify the number of shares to be covered by each option; (v) in the event a
particular option is to be an incentive stock option, determine and incorporate
such terms and provisions, as well as amendments thereto, as shall be required
in the judgment of the Board of Directors or the Committee, so as to provide for
or conform such option to any change in any law, regulations, ruling or
interpretation applicable thereto; and (vi) to make all other determinations
deemed necessary or advisable for administering the Plan. The Committee's
determination on the foregoing matters shall be conclusive.
-3-
<PAGE>
(c) No member of the Stock Option Committee while serving as such shall
be, or during the one year period prior to such service shall have been,
eligible to participate in the Plan or in any other such Stock Option, Stock
Appreciation Right, Stock Bonus or other Stock Plan of the Bank or any of its
Affiliates unless each such agreement granted under all such plans while such
member is serving on the Stock Option Committee, or during the one year period
prior to such service, including the grant of such option or right, the number
of shares subject to such option or right, the exercise price and option or
right term are subject to shareholder approval.
3. PARTICIPANTS.
Participants in the Plan shall be those key full-time salaried officers
and employees of the bank to whom options may be granted from time to time by
the Committee.
4. THE SHARES.
The shares of stock initially subject to options authorized to be granted
under the Plan shall consist of twenty-five thousand (25,000) shares of Common
Stock, $5.00 par value (the "Shares"), of Valle de Oro Bank, N.A., or the number
and kind of shares of stock or other securities which shall be
-4-
<PAGE>
substituted for such shares or to which such shares shall be adjusted as
provided in Section 6. The Shares subject to the Plan may be set aside out of
the authorized but unissued shares of Common Stock of Valle de Oro Bank, N.A.
not reserved for any other purpose or out of shares of Common Stock subject to
an option which, for any reason, terminates unexercised as to the Shares.
5. GRANT, TERMS AND CONDITIONS OF OPTIONS.
Options may be granted at any time prior to the termination of the Plan to
key full-time salaried officers and employees of the Bank who, in the judgment
of the Committee, contribute to the successful conduct of the Bank's operation
through their judgment, interest, ability and special efforts; provided,
however, that: (i) an eligible officer or employee shall not participate in
the granting of his or her own option; (ii) the aggregate fair market value of
the stock (determined as the date the option is granted) for which any one
employee may be granted incentive stock options in any calendar year (under all
stock option plans of the Bank or its Affiliates) shall not exceed $100,000 plus
any unused limit carryover to such year as provided in Section 422A of the Code;
(iii) except in the case of termination by death or disability, as set forth in
Section 5(c)
-5-
<PAGE>
below, the granted option must be exercised by optionee no later than three (3)
months after any termination of employment with the Bank and said employment
must have been continuous since the granting of the option.
In addition, options granted pursuant to the Plan shall be subject to the
following terms and conditions:
(a) OPTION PRICE. The purchase price under each option shall be not less
than one hundred percent (100%) of the fair market value of the Shares subject
thereto on the date the option is granted, as such value is determined by the
Committee. The fair market value of such stock shall be determined in
accordance with any reasonable valuation method, including the valuation methods
described in Treasury Regulation Section 10.2031-2. An employee of the Bank may
not be granted an option in an amount, that, when exercised, will result in an
employee's owning more than 10 percent (10%) of that class of stock of the Bank.
(b) DURATION AND EXERCISE OF OPTIONS. Each option shall vest and shall be
exercisable in such manner and at such time up to but not exceeding (10) years
from the date the option is granted for all Participants as the Committee shall
determine in its sole discretion; provided also, however, that the Committee
may, in its sole discretion, accelerate the time of exercise of any option;
provided further, that if an incentive
-6-
<PAGE>
stock option is granted to an employee owning stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Bank, such option by its terms is not exercisable after the expiration of 5
years from the date such option is granted. No incentive stock option granted
or otherwise outstanding under the Plan shall be exercisable by any optionee
while there is outstanding (within the meaning of Section 422A of the Code) any
previously granted incentive stock option to such optionee to purchase stock of
the Bank or in a predecessor corporation. The termination of the Plan shall not
alter the maximum duration, the vesting provisions, or any other term or
condition of any option granted prior to the termination of the Plan.
To the extent the right to purchase Shares has vested under a Participant's
stock option agreement, options may be exercised from time to time by delivering
payment in full at the Option Price for the number of Shares being purchased by
cash, certified check, official Bank check or the equivalent thereof acceptable
to the Bank together with written notice to the Secretary of the Bank
identifying the option or part thereof being exercised and specifying the number
of Shares for which payment is being tendered. The Bank shall deliver to the
optionee, which delivery shall be not less than fifteen (15) days
-7-
<PAGE>
and not more than thirty (30) days after the giving of such notice, without
transfer or issue tax to the optionee (or other person entitled to exercise the
option) at the principal office of the Bank, or such other place as shall be
mutually acceptable, a certificate or certificates for such Shares dated the
date the options were validly exercised; provided, however, that the time of
such delivery may be postponed by the Bank for such period as may be required
for it with reasonable diligence to comply with any requirements of law. If an
option covers incentive and non-statutory stock options, separate stock
certificates shall be issued; one or more for stock acquired upon exercise of
the incentive stock options and one or more for the stock acquired upon exercise
of the non-statutory stock options.
(c) TERMINATION OF EMPLOYMENT OR OFFICER OR DIRECTOR STATUS. Upon the
termination of an optionee's status as an officer or employee of the Bank, his
or her rights to exercise an option then held shall be only as follows:
DEATH OR DISABILITY: If an optionee's employment or status as an officer
or employee is terminated by death or disability, such optionee or such
optionee's qualified representative (in the event of optionee's death) shall
have the right for a period of twelve (12) months following the date of such
death or disability to exercise such option on the date of
-8-
<PAGE>
the optionee's death or disability, provided the actual date of exercise is in
no event after the expiration of the term of the option.
An optionee's "estate" shall mean the optionee's legal representative or
any person who acquires the right to exercise an option by reason of the
optionee's death.
CAUSE: If an employee or officer is determined by the Board of
Directors to have committed an act of embezzlement, fraud, dishonesty, breach
of fiduciary duty to the Bank, or to have deliberately disregarded the rules
of the Bank which resulted in loss, damage or injury to the Bank, or if an
optionee makes any unauthorized disclosure of any of the secrets or
confidential information of the Bank, induces any client or customer of the
Bank to break any contract with the Bank or induces any principal for whom
the Bank acts as agent to terminate such agency relations, or engages in any
conduct which constitutes unfair competition with the Bank, or if an optionee
is removed from any office of the Bank by the Federal Deposit Insurance
Corporation or any other bank regulatory agency, neither the optionee nor the
optionee's estate shall be entitled to exercise any option with respect to
any Shares whatsoever after termination of employment or officer status, the
optionee may receive payment from the Bank for vacation pay, for services
-9-
<PAGE>
rendered prior to termination, for services for the day on which termination
occurred, for salary in lieu of notice, or for other benefits. In making such
determination, the Board of Directors shall act fairly and shall give the
optionee an opportunity to appear and be heard at a hearing before the full
Board of Directors and present evidence on the optionee's behalf. IN CASE OF
TERMINATION FOR CAUSE, THE BOARD OF DIRECTORS MAY, BY RESOLUTION, PERMIT
OPTIONEE TO EXERCISE HIS OR HER OPTIONS FOR A PERIOD OF UP TO THIRTY (30) DAYS
FROM THE DATE OF TERMINATION. For the purpose of this paragraph, termination of
employment or officer status shall be deemed to occur when the Bank dispatches
notice or advice to the optionee that the optionee's employment or status as an
officer is terminated and not at the time of optionee's receipt thereof.
OTHER REASONS: If an optionee's employment or status as an officer is
terminated for any reason other than those mentioned above under "Death or
Disability" and "Cause", the optionee may, within three (3) months following
such termination, exercise the option to the extent such option was exercisable
by the optionee on the date of termination of the optionee's employment or
status as an officer, provided the date of exercise is in no event after the
expiration of the term of the option.
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<PAGE>
(d) TRANSFERABILITY OF OPTION. Each option shall be transferable only by
Will or the laws of descent and distribution and shall be exercisable during the
optionee's lifetime only by the optionee.
(e) OTHER TERMS AND CONDITIONS. Options may also contain such other
provisions, which shall not be inconsistent with any of the foregoing terms, as
the committee shall deem appropriate. No option, however, nor anything
contained in the Plan, shall confer upon any optionee any right to continue in
the employ or in the status as an officer of the Bank, nor limit in any way the
right of the Bank to terminate an optionee's employment or status as an officer
at any time.
(f) USE OF PROCEEDS FROM STOCK. Proceeds from the sale of Shares pursuant
to the exercise of options granted under the Plan shall constitute general funds
of Valle de Oro Bank, N.A.
(g) RIGHTS AS A SHAREHOLDER. The optionee shall have no rights as a
shareholder with respect to any Shares until the date of issuance of a stock
certificate for such Shares. No adjustment shall be made for dividends or other
rights for which the record date is prior to the date of such issuance, except
as provided in Section 6 hereof.
11
<PAGE>
6. ADJUSTMENT OF AND CHANGES IN THE SHARES.
In the event the shares of Common Stock of Valle de Oro Bank, N.A., as
presently constituted, shall be changed into or exchanged for a different
number or kind of shares of stock or other securities of Valle de Oro Bank,
N.A. or of another corporation (whether by reason of reorganization, merger,
consolidation, recapitalization, reclassification, split-up, combination of
shares, or otherwise), or if the number of shares of Common Stock of Valle de
Oro Bank, N.A. shall be increased through the payment of a stock dividend or
through a stock split, the Board of Directors shall substitute for or add to
each share of Common Stock of Valle de Oro Bank, N.A. theretofore
appropriated or thereafter subject or which may become subject to an option
under the Plan, the number and kind of shares of stock or other securities
into which each outstanding share of Common Stock of Valle de Oro Bank, N.A.
shall be so changed, or for which each share shall be exchanged, or to which
each such share shall be entitled, as the case may be. In addition, the
Committee shall make appropriate adjustment in the number and kind of shares
as to which outstanding options, or portions thereof then unexercised, shall
be exercisable, so that any optionee's proportionate interest in Valle de Oro
Bank, N.A. by reason of his rights under unexercised portions of such options
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<PAGE>
shall be maintained as before the occurrence of such event. Such adjustment in
outstanding options shall be made without change in the total price to the
unexercised portion of the option and with a corresponding adjustment in the
option price per share.
No right to purchase fractional shares shall result from any adjustment in
options pursuant to this Section 6. In case of any such adjustment, the shares
subject to the option shall be rounded down to the nearest whole share. Notice
of any adjustment shall be given by the Bank to each holder of an option which
was in fact so adjusted and such adjustment (whether or not such notice is
given) shall be effective and binding for all purposes of the Plan.
To the extent the foregoing adjustments relate to stock or securities of
Valle de Oro Bank, N.A., such adjustments shall be made by the Committee, whose
determination in that respect shall be final, binding and conclusive.
Except as expressly provided in this Section 6, an optionee shall have no
rights by reason of any of the following events: (1) subdivision or
consolidation of shares of stock of any class; (2) payment of any stock
dividend; (3) any other increase or decrease in the number of shares of stock
of any class; (4) any dissolution, liquidation, merger, consolidation, spin-off
or assets or stock of another corporation. Any issue by
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<PAGE>
the Bank of shares of stock of any class, or securities convertible into shares
of any class, shall not affect the number or price of shares of Common Stock
subject to the option, and no adjustment by reason thereof shall be made.
The grant of an option pursuant to the Plan shall not affect in any way the
right or power of the Bank to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge or
to consolidate or to dissolve, liquidate or sell, or transfer all or any part of
its business or assets.
7. LISTING OR QUALIFICATION OF SHARES.
All option granted under the Plan are subject to the requirement that if at
any time the Board of Directors or the Committee shall determine in its
discretion that the listing or qualification of the Shares subject thereto on
any securities exchange or under any applicable law, or the consent or approval
of any governmental regulatory body, is necessary or desirable as a condition of
or in connection with the issuance of Shares under the option, the option may
not be exercised in whole or in part unless such listing, qualification, consent
or approval shall have been effected or obtained free of any condition not
acceptable to the Board of Directors or the Committee.
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<PAGE>
8. BINDING EFFECT OF CONDITIONS.
The conditions and stipulations herein contained, or in any option granted
pursuant to the Plan shall be, and constitute, a covenant running with all of
the Shares acquired by the optionee pursuant to this Plan, directly or
indirectly, whether the same have been issued or not, and those Shares owned by
the optionee shall not be sold, assigned or transferred by any person save and
except in accordance with the terms and conditions herein provided, and the
optionee shall agree to use the optionee's best efforts to cause the officers of
the Bank to refuse to record on the books of Valle de Oro Bank, N.A. any
assignment or transfer made or attempted to be made except as provided in the
Plan and to cause said officers to refuse to cancel old certificates or to issue
or deliver new certificates therefor where the purchaser or assignee has
acquired certificates or the Shares represented thereby, except strictly in
accordance with the provisions of the Plan.
9. AMENDMENT AND TERMINATION OF THE PLAN.
The Board of Directors shall have complete power and authority to terminate
or amend the Plan; provided, however, that the Board of Directors shall not,
without the approval of the shareholders of Valle de Oro Bank, N.A. and the
approval of the
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<PAGE>
Comptroller of the Currency (i) increase the maximum number of shares for which
options may be granted under the Plan; (ii) change the computation as to
minimum option prices set forth in Paragraph 5(a); (iii) extend the period
during which options may be granted or exercised, or (iv) amend the
requirements as to the class of officers or employees eligible to receive
options. Except as provided in Section 6, no termination, modification or
amendment of the Plan may, without the consent of an officer or employee to whom
such option shall theretofore have been granted, adversely affect the rights of
such officer or employee under such option. Unless the Plan shall have been
terminated by action of the Board of Directors prior thereto, it shall terminate
ten years from its adoption by the Board of Directors unless earlier terminated
by the Board of Directors. The Comptroller of the Currency shall be notified if
the Plan is terminated by the Board of Directors.
10. EFFECTIVENESS OF THE PLAN.
The Plan shall become effective only upon approval by the Board of
Directors. The exercise of any options granted pursuant to the Plan shall be
conditioned upon the approval of the Plan by the holders of a majority of the
outstanding shares of Common Stock of the Bank.
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<PAGE>
11. PRIVILEGES OF STOCK OWNERSHIP; SECURITIES LAW COMPLIANCE; NOTICE OF SALE.
No optionee shall be entitled to the privileges of stock ownership as to
any Shares not actually issued and delivered to the optionee. No Shares shall
be purchased upon the exercise of any option unless and until any then
applicable requirements of any regulatory agencies having jurisdiction and of
any exchanges upon which the Common Stock of the Bank may be listed shall have
been duly complied with. The Bank shall diligently endeavor to comply with all
applicable securities laws before any options are granted under the Plan and
before any Shares are issued pursuant to the exercise of such options. The
optionee shall give the Bank notice of any sale or other disposition of any such
Shares not more than five (5) days after such sale or other disposition.
12. INDEMNIFICATION.
To the extent permitted by applicable law in effect from time to time, no
member of the Board of Directors or the Committee shall be liable for any action
or omission of any other member of the Board of Directors or Committee nor for
any act or omission on the member's own part, excepting only the member's own
willful misconduct or gross negligence. The Bank shall pay expenses incurred
by, and satisfy a judgment or fine rendered or levied against, a present or
former director or member of the Committee in any action against such person
(whether or not the Bank is joined as a party defendant) to impose a liability
or
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<PAGE>
penalty on such person for an act alleged to have been committed by such person
while a director or member of the Committee arising with respect to the Plan or
administration thereof or out of membership on the Committee or by the Bank, or
all or any combination of the preceding; provided, the Director or Committee
member was acting in good faith, within what such director or Committee member
reasonably believed to have been within the scope of his or her employment or
authority and for a purpose which he or she reasonably believed to be in the
best interests of the Bank or its shareholders. Payments authorized hereunder
include amounts paid and expenses incurred in settling any such action or
threatened action. This section does not apply to any action instituted or
maintained in the right of Valle de Oro Bank, N.A. by a shareholder or holder of
a voting trust certificate representing shares of Valle de Oro Bank, N.A. The
provisions of this action shall apply to the estate, executor, administrator,
heirs, legatees or devisees of a director or Committee member, and the term
"person" as used in this section shall include the estate, executor,
administrator, heirs, legatees, or devisees of such person.
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<PAGE>
VALLE DE ORO BANK, N.A.
INCENTIVE
STOCK OPTION AGREEMENT
Granting Date:
TO:
We are pleased to notify you that Valle de Oro Bank, N.A. ("Valle")
this day hereby grants to you an option to purchase all or any part of ___
shares of the Common Stock of Valle (the "Shares") at the Option Price of
_______ per share as a Stock Option under Valle's 1982 Stock Option Plan (the
"Plan").
THIS OPTION MAY BE EXERCISED ONLY IN ACCORDANCE WITH THE TERMS OF THE PLAN.
ONLY CERTAIN PROVISIONS OF THE PLAN ARE SUMMARIZED IN THIS AGREEMENT. A COPY
OF THE PLAN IS PROVIDED WITH THIS AGREEMENT.
THIS OPTION MAY BE EXERCISED ONLY IF THE PLAN IS APPROVED BY SHAREHOLDERS
HOLDING AT LEAST A MAJORITY OF THE VOTING POWER OF THE ISSUED AND OUTSTANDING
SHARES OF VALLE.
<PAGE>
1. PURPOSE OF THE OPTION.
One of the purposes of the Plan is to advance the interests of
Valle by stimulating the efforts of officers and full-time salaried employees
on behalf of Valle, by granting them financial participation in the progress
and success of Valle.
2. SIGNATURE ON OPTION AGREEMENT.
This option cannot be exercised unless you first sign this
document in the place provided and return it to the Secretary of Valle before
the close of business on the 20th day after the granting date of this option.
If you fail to do so, this option will terminate and be of no effect.
However, your signing and delivering this letter will not bind you to
purchase any of the shares subject to the option. Your obligation to
purchase the Shares can arise only when you exercise this option in the
manner set forth in Paragraph 3 below.
3. TERMS OF OPTION AND EXERCISE OF OPTION.
The option is not exercisable while there is outstanding
(within the meaning of Section 422A of the Internal Revenue Code of 1954, as
amended) (the "Code") any incentive stock option which was granted to you
before the granting of this option, to purchase stock of Valle or in a
corporation which (at the time of the granting of such option) is a parent or
subsidiary corporation (as defined for purposes of Section 422A of the
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<PAGE>
Code) of Valle, or in a predecessor corporation of any of such corporations.
Subject to the provisions of Paragraph 4 below and this
Paragraph 3, this option can be exercised by you at any time during a period
of _____ (____) months from the granting date as follows:
(a) This option may be exercised immediately to the extent of
not more than ____ percent (___%) of the Shares;
(b) After the expiration of _____ (__) months from the
granting date, this option may be exercised to the extent of not more than
_____________ percent (____%) of the Shares;
(c) After the expiration of ________ (____) months from the
granting date, this option may be exercised to the extent of an additional
____________ percent (____%) of the Shares;
(d) After the expiration of _________________ (____) months
from the granting date, this option may be exercised to the extent of an
additional ________________ percent (____%) of the Shares;
(e) After the expiration of _____________________ (___)
months from the granting date, this option may be exercised to the
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<PAGE>
extent of an additional ____________________ percent (____%) of the Shares;
(f) After the expiration of ________________ (___) months
from the granting date, this option may be exercised to the extent of an
additional __________________ percent (___%) of the Shares;
(g) After the expiration of _________ (____) months from the
granting date, this option may be exercised to the extent of an additional
__________________ percent (___%) of the Shares;
(h) After the expiration of _________ (____) months from the
granting date, this option may be exercised to the extent of an additional
__________________ percent (___%) of the Shares;
(i) After the expiration of _________ (____) months from the
granting date, this option may be exercised to the extent of an additional
__________________ percent (___%) of the Shares;
(j) After the expiration of _________ (____) months from the
granting date, this option may be exercised to the extent of an additional
__________________ percent (___%) of the Shares;
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<PAGE>
(k) After the expiration of _________ (____) months from the
granting date, this option may be exercised to the extent of an additional
__________________ percent (___%) of the Shares;
Any portion of the options that you do not exercise shall
accumulate and can be exercised by you any time prior to the expiration of
___________ (____) months from the granting date.
This option may be exercised by delivering to the Secretary of
Valle, payment in full at the Option Price for the number of Shares being
purchased in cash or by certified check or official Bank check or the
equivalent thereof acceptable to Valle, together with a written notice in a
form satisfactory to Valle, signed by you specifying the number of Shares you
then desire to purchase and the time of delivery thereof, which shall not be
less than fifteen (15) days and not more than thirty (30) days after the
giving of such notice unless an earlier or later date is mutually agreed
upon. At such time Valle shall, without transfer or issue tax to you (or
such other person entitled to exercise the option), deliver to you (or such
other person entitled to exercise the option) at the principal office of
Valle, or such other place as shall be mutually acceptable, a certificate or
certificates for such Shares dated the date the options were validly
exercised; provided, however, that the time
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<PAGE>
of such delivery may be postponed by Valle for such period as may be required
for it with reasonable diligence to comply with any requirements of law. No
fractional Shares shall be issued or delivered.
As a holder of an option, you shall have the rights of a
shareholder with respect to the Shares subject to this option only after such
Shares shall have been issued to you upon the exercise of this option.
4. TERMINATION OF OFFICE OR EMPLOYMENT
If your status as an employee or officer of Valle or its
Affiliates (as such term is defined in the Plan) is terminated for any reason
other than death or cause, this option may be exercised within three (3)
months from the date of such termination to the extent you were entitled to
exercise the option on the date of termination, but in no event may this
option be exercised after the expiration of the term of this option. If,
however, you are removed from your office or your employment with Valle or
its Affiliates is terminated for cause as defined in the plan, this option
shall expire at the time notice or advice of such removal or termination is
dispatched by Valle or its Affiliates and notwithstanding anything else
herein to the contrary, neither you nor your estate shall be entitled to
exercise any option with respect to any Shares whatsoever after such removal
or termination.
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<PAGE>
IN THE EVENT OF YOUR TERMINATION FOR CAUSE, THE BOARD OF
DIRECTORS MAY, BY RESOLUTION, PERMIT YOU TO EXERCISE YOUR OPTIONS FOR A
PERIOD OF UP TO THIRTY (30) DAYS FROM THE DATE OF TERMINATION OF YOUR
EMPLOYMENT.
5. DEATH OR DISABILITY
If you die or become disabled while an officer or employee of
Valle or its Affiliates, the option may be exercised in whole or in part by
you or your qualified representative (in the event of your mental disability)
or by the duly authorized executor of your will or by the duly authorized
administrator or special administrator of your estate (in the event of your
death) within twelve (12) months from the date of your death or disability to
the extent that you had the right to exercise this option on the date of your
death or disability, but in no event after the expiration of the term of this
option.
Disability shall be determined under Section 422A of the Code
in effect at the date of such disability. Section 422A of the Code currently
uses the definition of Section 105(d)(4) of the Code which states:
"(4) PERMANENT AND TOTAL DISABILITY DEFINED--For purposes
of this subsection, an individual is permanently and totally
disabled if he is unable to engage in any substantial
gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to
result in death or which has lasted or can be expected to
last for a continuous period of not less than 12 months. An
individual shall
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<PAGE>
not be considered to be permanently and totally disabled
unless he furnished proof of the existence thereof in such
form and manner, and at such times as the Secretary may
require."
6. NONTRANSFERABILITY OF OPTION.
This option shall not be transferable except by Will or the
laws of descent and distribution, and this option may be exercised during
your lifetime only by you. Any purported transfer or assignment of this
option shall be void and of no effect, and shall give Valle the right to
terminate this option as of the date of such purported transfer or assignment.
7. ADJUSTMENT OF AND CHANGES IN THE SHARES.
In the event of any change in the outstanding Common Stock of
the Bank, without receipt by the Bank of additional consideration in lieu of
such change (whether by reason of reorganization, merger, consolidation,
recapitalization, reclassification, split-up, combination of shares or
otherwise), the aggregate number or class of Shares subject to this option
immediately prior to such event shall be appropriately adjusted by the Board
of Directors in accordance with the terms of the Plan so that your
proportionate interest in the Bank by reason of your rights under any
unexercised portions of such options shall be maintained as before the
occurrence of such event. Such adjustment by the Board of Directors shall be
conclusive.
-8-
<PAGE>
In the event of a dissolution or liquidation of the Bank or a
merger or consolidation in which the Bank is not the surviving corporation,
the Board of Directors shall have the power to cause each outstanding option
to terminate, provided that you shall have the right to exercise all or a
part of the Shares subject to this option immediately prior to such
dissolution, liquidation, merger or consolidation, and purchase Shares
subject hereto to the extent of any unexercised portion of this option,
subject to the vesting provisions of paragraph 3 hereof.
8. SUBJECT TO TERMS OF THE PLAN.
This Agreement shall be subject in all respects to the terms
and conditions of the Plan. Your signature herein represents your
acknowledgement of receipt of a copy of the plan. Any dispute or
disagreement which shall arise under or as a result of or pursuant to this
Agreement shall be finally and conclusively determined by the Board of
Directors of Valle or duly appointed Committee in its sole discretion, and
such determination shall be binding upon all parties.
9. EXERCISE OF OPTION CONDITIONED ON APPROVAL.
Exercise of this option is conditioned upon approval of the
Plan by Valle's shareholders and the approval of the Comptroller of the
Currency.
-9-
<PAGE>
10. TAX EFFECTS.
THE FEDERAL TAX CONSEQUENCES OF EMPLOYEE STOCK OPTIONS ARE
COMPLEX AND SUBJECT TO CHANGE. THE FOLLOWING SUMMARY IS INTENDED ONLY AS A
GENERAL GUIDE. A TAXPAYER'S PARTICULAR SITUATION MAY BE SUCH THAT SOME
VARIATION OF THE GENERAL RULES IS APPLICABLE. ACCORDINGLY, AN OPTIONEE (OR
HIS GUARDIAN, ESTATE OR LEGATEE) SHOULD CONSULT WITH HIS OWN TAX ADVISOR
BEFORE EXERCISING ANY OPTION OR DISPOSING OF ANY SHARES ACQUIRED UPON THE
EXERCISE OF AN OPTION.
Under the Internal Revenue Code of 1954, as amended and as
presently in effect, the grant of an incentive stock option under the Plan is
not a taxable event.
The exercise of an incentive stock option is not a taxable
event if at all times during the period beginning on the date of the granting
of the option and ending on the day 3 months (12 months in the event of
disability, as disability is defined for purposes of Section 422A) before the
date of such exercise, such optionee was an employee of either the
corporation granting such option, a parent or a 50% or more owned subsidiary
corporation of such corporation, or a corporation or a parent or subsidiary
corporation of such corporation issuing or assuming a stock option in certain
reorganizations. If such employment periods are not met at the date of
exercise, the optionee will
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<PAGE>
recognize, at the date of exercise, ordinary income on the difference between
the option price and the fair market value of the shares at the date of
exercise.
If the optionee does not dispose of the Shares within two (2)
years after the incentive stock option is granted and holds the Shares at
least one (1) year after the date of exercise, the optionee will be taxed on
any gain at long-term capital gain rates (maximum rate of 20 percent under
the Economic Recovery Tax Act of 1981) when the Shares are sold. If those
holding periods are not met, the optionee will recognize, at the date of
disposition, ordinary income on the difference between the Option Price and
the fair market value of the Shares at the date of exercise (or sale price if
lower). Any excess of the sale price over the fair market value of the
Shares on the date of exercise will be taxed at capital gains rates. In such
a case, Valle would be entitled to a compensation expense deduction for the
ordinary income portion recognized by the optionee.
Valle will not be entitled to a compensation deduction on the
bargain element (the difference between the option price of the Shares and
their fair market value at the date of exercise) of the option assuming that
the Optionee received capital gain treatment.
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<PAGE>
The difference between the option price and fair market value
of the Shares at the time of exercise will not be an item of tax preference
for purposes of the add-on minimum tax. Special rules apply to the exercise
of an incentive stock option by the estate of an optionee and to the transfer
by an insolvent individual of stock acquired pursuant to the exercise of an
incentive stock option.
11. RIGHTS AS A SHAREHOLDER.
You have no rights as a shareholder of Valle with respect to
any Shares until the date of the issuance of a stock certificate to you for
such Shares.
12. NOTIFICATION OF SALE.
You agree that you, or any person acquiring Shares upon
exercise of this Option, will notify Valle not more than five (5) days after
any sale or disposition of such Shares.
VALLE DE ORO BANK, N.A.
By
-----------------------------------
Agreed to this ,
---------
day of , 19 .
-------------------- ----
- -----------------------------------
Signature of Optionee
-12-
<PAGE>
VALLE DE ORO BANK, N.A.
NON-QUALIFIED
STOCK OPTION AGREEMENT
Granting Date:
TO:
We are pleased to notify you that Valle de Oro Bank, N.A. ("Valle")
this day hereby grants to you an option to purchase all or any part of ___
shares of the Common Stock of Valle (the "Shares") at the Option Price of
_______ per share as a Stock Option under the Valle 1982 Stock Option Plan
(the "Plan").
THIS OPTION MAY BE EXERCISED ONLY IN ACCORDANCE WITH THE TERMS OF THE PLAN.
ONLY CERTAIN PROVISIONS OF THE PLAN ARE SUMMARIZED IN THIS AGREEMENT. A COPY
OF THE PLAN IS PROVIDED WITH THIS AGREEMENT.
THIS OPTION MAY BE EXERCISED ONLY IF THE PLAN IS APPROVED BY SHAREHOLDERS
HOLDING AT LEAST A MAJORITY OF THE VOTING POWER OF THE ISSUED AND OUTSTANDING
SHARES OF VALLE.
<PAGE>
1. PURPOSE OF THE OPTION.
One of the purposes of the plan is to advance the interests of
Valle by stimulating the efforts of full-time salaried officers and employees
on behalf of Valle, by granting them financial participation in the progress
and success of Valle.
2. SIGNATURE ON OPTION AGREEMENT.
This option cannot be exercised unless you first sign this
document in the place provided and return it to the Secretary of Valle before
the close of business on the 20th day after the granting date of this option.
If you fail to do so, this option will terminate and be of no effect.
However, your signing and delivering this letter will not bind you to
purchase any of the shares subject to the option. Your obligation to
purchase the Shares can arise only when you exercise this option in the
manner set forth in Paragraph 3 below.
3. TERMS OF OPTION AND EXERCISE OF OPTION.
Subject to the provisions of Paragraph 4 below and this
Paragraph 3, this option can be exercised by you at any time during a period
of _____ (____) months from the granting date as follows:
(a) This option may be exercised immediately to the extent of
not more than ____ percent (___%) of the Shares.
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<PAGE>
(b) After the expiration of _____ (__) months from the
granting date, this option may be exercised to the extent of not more than
_____________ percent (____%) of the Shares.
(c) After the expiration of _____ (___) months from the
granting date, this option may be exercised to the extent of an additional
____________ percent (____%) of the Shares.
(d) After the expiration of _________________ (____) months
from the granting date, this option may be exercised to the extent of an
additional ________________ percent (____%) of the Shares.
(e) After the expiration of _____________________ (___)
months from the granting date, this option may be exercised to the extent of
an additional ____________________ percent (____%) of the Shares.
(f) After the expiration of ________________ (___) months
from the granting date, this option may be exercised to the extent of an
additional __________________ percent (___%) of the Shares.
(g) After the expiration of _________ (____) months from the
granting date, this option may be exercised to the extent of an additional
__________________ percent (___%) of the Shares.
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<PAGE>
(h) After the expiration of _________ (____) months from the
granting date, this option may be exercised to the extent of an additional
__________________ percent (___%) of the Shares.
(i) After the expiration of _________ (____) months from the
granting date, this option may be exercised to the extent of an additional
__________________ percent (___%) of the Shares.
(j) After the expiration of _________ (____) months from the
granting date, this option may be exercised to the extent of an additional
__________________ percent (___%) of the Shares.
(k) After the expiration of _________ (____) months from the
granting date, this option may be exercised to the extent of an additional
__________________ percent (___%) of the Shares.
Any portion of the options that you do not exercise shall
accumulate and can be exercised by you any time prior to the expiration of
___________ (____) months from the granting date.
This option may be exercised by delivering to the Secretary of
Valle, payment in full at the Option Price for the number of Shares being
purchased in cash or by certified check or official bank check or the
equivalent thereof acceptable to
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<PAGE>
Valle, together with a written notice in a form satisfactory to Valle, signed
by you specifying the number of Shares you then desire to purchase and the
time of delivery thereof, which shall not be less than fifteen (15) days and
not more than thirty (30) days after the giving of such notice unless an
earlier or later date is mutually agreed upon. At such time Valle shall,
without transfer or issue tax to you (or such other person entitled to
exercise the option), deliver to you (or such other person entitled to
exercise the option) at the principal office of Valle, or such other place as
shall be mutually acceptable a certificate or certificates for such shares
dated the date the options were validly exercised; provided, however, that
the time of such delivery may be postponed by Valle for such period as may be
required for it with reasonable diligence to comply with any requirements of
law. No fractional shares shall be issued or delivered.
As a holder of an option, you shall have the rights of a
shareholder with respect to the Shares subject to this option only after such
Shares shall have been issued to you upon the exercise of this option.
4. TERMINATION OF OFFICE OR EMPLOYMENT
If your status as an employee or officer of Valle or its
Affiliates (as such term is defined in the Plan) is
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<PAGE>
terminated for any reason other than death or cause this option may be
exercised within three (3) months from the date of such termination to the
extent you were entitled to exercise the option on the date of termination,
but in no event may this option be exercised after the expiration of the term
of this option. If, however, you are removed from your office or your
employment with Valle or its affiliates is terminated for cause as defined in
the Plan, this option shall expire at the time notice or advice of such
removal or termination is dispatched by Valle or its Affiliates and
notwithstanding anything else herein to the contrary, neither you nor your
estate shall be entitled to exercise any option with respect to any Shares
whatsoever after such removal or termination.
IN THE EVENT OF YOUR TERMINATION FOR CAUSE, THE BOARD OF
DIRECTORS MAY, BY RESOLUTION, PERMIT YOU TO EXERCISE YOUR OPTIONS FOR A
PERIOD OF UP TO THIRTY (30) DAYS FROM THE DATE OF TERMINATION OF YOUR
EMPLOYMENT.
5. DEATH OR DISABILITY
If you die or become disabled while an officer or employee of
Valle or its Affiliates, the option may be exercised in whole or in part by
you or your qualified representative (in the event of your mental disability)
or by the duly authorized executor of your Will or by the duly authorized
administrator or
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special administrator of your estate (in the event of your death) within
twelve (12) months from the date of your death or disability to the extent
that you had the right to exercise this option on the date of your death or
disability, but in no event after the expiration of the term of this option.
Disability shall be determined under Section 422A of the Code
in effect at the date of such disability. Section 422A of the Code currently
uses the definition of Section 105(d)(4) of the code which states:
"(4) PERMANENT AND TOTAL DISABILITY DEFINED -- For purposes
of this subsection, an individual is permanently and totally
disabled if he is unable to engage in any substantial
gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to
result in death or which has lasted or can be expected to
last for a continuous period of not less than 12 months. An
individual shall not be considered to be permanently and
totally disabled unless he furnished proof of the existence
thereof in such form and manner, and at such time, as the
Secretary may require."
6. NONTRANSFERABILITY OF OPTION.
This option shall not be transferable except by Will or the
laws of descent and distribution, and this option may be exercised during
your lifetime only by you. Any purported transfer or assignment of this
option shall be void and of no effect, and shall give Valle the right to
terminate this option as of the date of such purported transfer or assignment.
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7. ADJUSTMENT OF AND CHANGES IN THE SHARES.
In the event of any change in the outstanding Common Stock of
the Bank, without receipt by the Bank of additional consideration in lieu of
such change (whether by reason of reorganization, merger, consolidation,
recapitalization, reclassification, split-up, combination of shares or
otherwise), the aggregate number or class of Shares subject to this option
immediately prior to such event shall be appropriately adjusted by the Board
of Directors in accordance with the terms of the Plan so that your
proportionate interest in the Bank by reason of your rights under any
unexercised portions of such options shall be maintained as before the
occurrence of such event. Such adjustment by the Board of Directors shall be
conclusive.
In the event of a dissolution or liquidation of the Bank or a
merger or consolidation in which the Bank is not the surviving corporation,
the Board of Directors shall have the power to cause each outstanding option
to terminate, provided that you shall have the right to exercise all or a
part of the Shares subject to this option immediately prior to such
dissolution, liquidation, merger or consolidation, and purchase Shares
subject hereto to the extent of any unexercised portion of this option,
subject to the vesting provisions of paragraph 3 hereof.
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<PAGE>
8. SUBJECT TO TERMS OF THE PLAN.
This Agreement shall be subject in all respects to the terms
and conditions of the Plan. Your signature herein represents your
acknowledgement of receipt of a copy of the Plan. Any dispute or
disagreement which shall arise under or as a result of or pursuant to this
Agreement shall be finally and conclusively determined by the Board of
Directors of Valle or duly appointed Committee in its sole discretion, and
such determination shall be binding upon all parties.
9. EXERCISE OF OPTION CONDITIONED ON APPROVAL.
Exercise of this option is conditioned upon approval of the
Plan by Valle's shareholders and the approval of the Comptroller of the
Currency.
10. TAX EFFECTS.
THE FEDERAL TAX CONSEQUENCES OF EMPLOYEE STOCK OPTIONS ARE
COMPLEX AND SUBJECT TO CHANGE. THE FOLLOWING SUMMARY IS INTENDED ONLY AS A
GENERAL GUIDE. A TAXPAYER'S PARTICULAR SITUATION MAY BE SUCH THAT SOME
VARIATION OF THE GENERAL RULES IS APPLICABLE. ACCORDINGLY, AN OPTIONEE (OR
HIS GUARDIAN, ESTATE OR LEGATEE) SHOULD CONSULT WITH HIS OWN TAX ADVISOR
BEFORE EXERCISING ANY OPTION OR DISPOSING OF ANY SHARES ACQUIRED UPON THE
EXERCISE OF AN OPTION.
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Under the Internal Revenue Code of 1954, as amended and as
presently in effect, the grant of a non-qualified stock option under the Plan
is not a taxable event. However, the exercise of a non-qualified stock
option to purchase Shares granted under the Plan results in the realization
of ordinary income to the optionee in an amount equal to the difference
between the fair market value of the Shares at the date of exercise and the
option price. For tax purposes, Valle reports a compensation expense
deduction in the same amount. If the option is exercised for all cash, the
fair market value of the Shares at the time of exercise then becomes the
basis for determination of capital gain or loss upon any subsequent sale of
the Shares. This gain will be long-term if the Shares are sold more than
twelve months from the date of exercise.
Where payment of the option price upon exercise of
non-statutory options is made in whole or in part through the delivery of
shares of common stock of Valle, certain further tax considerations apply.
Gain or loss will not be recognized for tax purposes upon disposition of any
shares delivered in payment of the option price. The number of shares
received on exercise equal to the number delivered will have the same basis
and holding period as the delivered shares. The difference between the fair
market value of the remaining shares received on
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exercise and the amount of cash used to acquire them is compensation for
services and therefore is includable in the gross income of the optionee in
the year of exercise and deductable by Valle. The total basis of such remaining
shares is the amount of compensation stated in the preceeding sentence plus
any cash paid upon exercise. For such additional shares the holding period
for determining capital gain or loss begins upon the date after the date of the
option exercise.
11. RIGHTS AS A SHAREHOLDER.
You have no rights as a shareholder of Valle with respect to
any Shares until the date of the issuance of a stock certificate to you for
such Shares.
12. NOTIFICATION OF SALE.
You agree that you, or any person acquiring Shares upon
exercise of this Option, will notify Valle not more than five (5) days after
any sale or disposition of such Shares.
VALLE DO ORO BANK, N.A.
By _______________________
Agreed to this ____,
day of _______________, 19__
_____________________________
Signature of Optionee
DB-503
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<PAGE>
EXHIBIT 99.2
AMENDMENT
TO
VALLE DE ORO BANK, N. A. 1982 STOCK OPTION PLAN
This AMENDMENT to VALLE DE ORO BANK, N. A. 1982 STOCK OPTION PLAN (the
"Amendment"), dated as of this 17th day of March, 1999 is made by the Board of
Directors of Valle de Oro Bank, N.A.
WITNESSETH:
WHEREAS, Valle de Oro Bank, N.A. (the "Bank") is in the process of
organizing a one-bank holding company; and
WHEREAS, the one-bank holding company will be called Valley National
Corporation (the "Company") and the Bank will be a wholly-owned subsidiary of
the Company; and
WHEREAS, the VALLE DE ORO BANK, N. A. 1982 STOCK OPTION PLAN (the "Plan")
was adopted by the Board of Directors, approved by the Shareholders of the Bank,
and the organization of a one-bank holding company was not contemplated at that
time; and
WHEREAS, the Board desires to amend the Plan in light of the formation of
the one-bank holding company by the Bank; and
WHEREAS, Section 9 of the Plan provides that the Board of Directors of the
Bank may amend the Plan, however the Board of Directors can not, without the
approval of the shareholders of Valle de Oro Bank, N.A. and the approval of the
Comptroller of the Currency (i) increase the maximum number of shares for which
options may be granted under the Plan; (ii) change the computation as to minimum
option prices set forth in Paragraph 5(a) of the Plan; (iii) extend the period
during which options may be granted or exercised, or (iv) amend the requirements
as to the class of officers or employees eligible to receive options. In
addition, Section 9 of the Plan provides that the Board of Directors of the Bank
can not make any amendment that would adversely affect the rights of an officer
or employee to whom an option has been granted without the consent of such
officer or employee that would be adversely affected; and
WHEREAS, the Board of Directors of the Bank is not making any amendment
that would (i) increase the maximum number of shares for which options may be
granted under the Plan; (ii) change the computation as to minimum option prices
set forth in Paragraph 5(a) of the Plan; (iii) extend the period during which
options may be granted or exercised, or (iv) amend the requirements as to the
class of officers or employees eligible to receive options. In addition, the
Board of Directors of the Bank is not making any amendment that would adversely
affect the rights of an officer or employee to whom an option has been granted.
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NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree to amend said
Plan as follows:
The name of the Plan shall be Valley National Corporation 1982 Stock Option
Plan.
IN WITNESS WHEREOF, the Board of Directors of Valle de Oro Bank, N.A. have
caused this Amendment to be executed as of the date first above written.
/s/ James F. Carroll /s/ Philip J. Gelber, M.D.
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James F. Carroll, Director Philip J. Gelber, M.D. Director
/s/ Samuel M. Ciccati /s/ C.K. Hill
- ----------------------------------- ------------------------------------
Samuel M. Ciccati, Ph. D. Director C.K. Hill, O.D. Director
/s/ Obert D. "Dale" Conway /s/ Janet L. Johnson
- ----------------------------------- ------------------------------------
Obert D. "Dale" Conway, Director Janet L. Johnson, Director
/s/ William V. Ehlen /s/ Lloyd E. Peterson
- ----------------------------------- ------------------------------------
William V. Ehlen, Director Lloyd E. Peterson, Director
/s/ Myron D. Fessler /s/ Joseph G. Vehige
- ----------------------------------- ------------------------------------
Myron D. Fessler, M.D. Director Joseph G. Vehige, Director
2
