<PAGE>
As filed with the Securities and Exchange Commission on October 5, 1999
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
COMMUNITY BANCORP INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 33-0859334
-------- ----------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
130 WEST FALLBROOK STREET, FALLBROOK CA. 92028
- ---------------------------------------- ---------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
FALLBROOK NATIONAL BANK 1993 STOCK OPTION PLAN,
-----------------------------------------------
AS ADOPTED AND ASSUMED BY COMMUNITY BANCORP INC.
-----------------------------------------------
(FULL TITLE OF THE PLAN)
THOMAS SWANSON
PRESIDENT AND CHIEF EXECUTIVE OFFICER
COMMUNITY BANCORP INC.
130 WEST FALLBROOK STREET
FALLBROOK, CA 92028
--------------------
(NAME AND ADDRESS OF AGENT FOR SERVICE)
(760) 723-8811
(TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
PROPOSED PROPOSED
TITLE OF MAXIMUM MAXIMUM
SECURITIES AMOUNT OFFERING AGGREGATE AMOUNT OF
TO BE TO BE PRICE OFFERING REGISTRATION
REGISTERED REGISTERED (1) PER SHARE PRICE FEE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 665,000 shares $7.90625 $5,257,656 $1462.00
$0.625 par value
</TABLE>
- -------------------------------------------------------------------------------
(1) This Registration Statement covers, in addition to the number of shares of
Common Stock stated above, such indeterminate number of shares as may become
subject to options under the 1993 Plan as a result of the adjustment provisions
thereof.
<PAGE>
PART I INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The document containing the information in Part I and the documents
incorporated by reference into this Registration Statement constitute a
prospectus that meets the requirements of Section 10(a) of the Securities Act
of 1933. Pursuant to the notes to Form S-8, such documents need not be filed
with the Securities and Exchange Commission but must be given to participants
in the 1993 Plan.
Community Bancorp Inc. ("Community Bancorp") acquired all the
outstanding common stock of Fallbrook National Bank (the "Bank") in a bank
holding company reorganization (the "Reorganization") consummated on June 25,
1999. As a result of the Reorganization, the outstanding shares of the Bank
were converted and exchanged for shares of Community Bancorp on a tax-free,
one-share-for one-share basis and the Bank became a wholly-owned subsidiary
of Community Bancorp. Additionally, Community Bancorp was designated as the
"successor-registrant" to the Bank which previously had filed reports and
proxy statements pursuant to the Securities Exchange Act of 1934 with the
Comptroller of the Currency.
As part of the Reorganization, Community Bancorp adopted and assumed
certain stock based compensation plans of the Bank, including the 1993 Plan.
These plans now apply to the shares of common stock of Community Bancorp. Shares
of the Bank which were to be issued pursuant to the 1993 Plan had previously
been registered with the Comptroller of the Currency pursuant to the Securities
Act of 1933 prior to the Reorganization.
PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents are incorporated by reference in this
Registration Statement:
(a) The Bank's Form 10-KSB for the year ended December 31, 1998
(as filed with the Comptroller of the Currency);
(b) The Bank's Form 10-QSB for the quarter ended March 31, 1999
(as filed with the Comptroller of the Currency);
(c) Community Bancorp's Form 10-QSB for the quarter ended June 30,
1999 (as filed with the Securities and Exchange Commission),
including the description of Community Bancorp's common stock
included therein; and
(d) Community Bancorp's Form 8-K as of June 25, 1999 (as filed
with the Securities and Exchange Commission) filed in
connection with the Reorganization.
1
<PAGE>
Additionally, all documents subsequently filed by Community Bancorp
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange
Act of 1934, 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 in this Registration Statement and be part thereof from the date of
filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
COMMUNITY BANCORP
Community Bancorp's bylaws provide for indemnification of its officers,
directors, employees and agents to the fullest extent permitted by Delaware law.
Community Bancorp's Certificate of Incorporation also contains a provision,
consistent with Delaware law, reducing or eliminating director liability in
certain circumstances.
Section 145 of the Delaware Corporation Law provides that corporations
may indemnify an individual made a party to any threatened, pending, or
completed action, suit or proceeding whether civil, criminal, administrative or
investigative, because the individual is or was a director, officer, employee or
agent of the corporation, against liability incurred in the proceeding if the
person acted in good faith and reasonably believed his conduct was in the
corporation's best interest or was not opposed to the corporation's best
interest.
Section 145(c) further provides that a corporation shall indemnify an
individual who was fully successful on the merits or otherwise in any proceeding
to which the director or officer was a party because the individual was or is a
director or officer of the corporation, for reasonable expenses incurred by the
director in connection with the proceeding. Section 145(g) provides that a
corporation may purchase and maintain insurance on behalf of the corporation or
who, while a director, officer, employee or agent of the corporation is or was
serving at the request of the corporation as a director, officer, partner,
trustee, employee or agent of another corporation, partnership, joint venture,
trust, or other enterprise, against any liability asserted against or incurred
by the individual in that capacity or arising from the individual status as a
director, officer, employee or agent.
2
<PAGE>
FALLBROOK NATIONAL BANK
Pursuant to the regulations of the Comptroller of the Currency, a
national bank may only make or agree to make indemnification payments to an
institution-affiliated party with respect to any administrative proceeding or
civil action initiated by any Federal banking agency that are reasonable and
consistent with the requirements of 12 USC 1828(k) and the implementing
regulation thereunder. In connection with administrative proceedings or civil
actions not initiated by a Federal banking agency, a national bank may
indemnify an institution-affiliated party for damages and expenses, including
the advancement of expenses and legal fees, in accordance with the law of the
state in which the main office of the bank is located, the law of the state
in which the bank's holding company, if any, is incorporated or the relevant
provisions of the Model Business Corporation Act or the Delaware General
Corporations Law, provided such payments are consistent with safe and sound
banking practices. The Bank has selected California as the model for its
indemnification provisions.
The California General Corporation Law (the "CGCL") provides a detailed
statutory framework covering limitation of liability of directors in certain
instances and indemnification of any officer or other agent of a corporation who
is made or threatened to be made a party to any legal proceeding by reason of
his or her services on behalf of such corporation.
With respect to limitation of liability, the CGCL permits a California
corporation to adopt a provision in its articles of incorporation reducing or
eliminating the liability of a director to the corporation or its shareholders
for monetary damages for breach of the fiduciary duty of care, provided that
such liability does not arise from certain proscribed conduct (including
intentional misconduct and breach of duty of loyalty). The CGCL in this regard
relates only to actions brought by shareholders on behalf of the corporation
(i.e., "derivative actions") and does not apply to claims brought by outside
parties.
With respect to indemnification, the CGCL provides that to the extent
any officer, director or other agent of a corporation is successful "on the
merits" in defense of any legal proceeding to which such person is a party or is
threatened to be made a party by reason of his or her service on behalf of such
corporation or in defense of any claim, issue, or matter therein, such agent
shall be indemnified against expenses actually and reasonably incurred by the
agent in connection therewith, but does not require indemnification in any other
circumstance. The CGCL also provides that a corporation may indemnify any agent
of the corporation, including officers and directors, against expenses,
judgments, fines, settlements and other amounts actually and reasonably incurred
in a third party proceeding against such person by reason of his or her services
on behalf of the corporation, provided the person acted in good faith and in a
manner he or she reasonably believed to be in the best interests of such
corporation. The CGCL further provides that in derivative suites a corporation
may indemnify such a person against expenses incurred in such a proceeding,
provided such person acted in good faith and in a manner he or she reasonably
believed to be in the best interests of the corporation and its shareholders.
Indemnification is not available in derivative actions (i) for amounts paid or
expenses incurred in connection with a matter that is settled or otherwise
disposed of without court approval or (ii) with respect to matters for which the
agent shall have been adjudged to be liable to the corporation unless the court
shall determine that such person is entitled to indemnification.
3
<PAGE>
The CGCL permits the advancing of expenses incurred in defending any
proceeding against a corporate agent by reason of his or her service on
behalf of the corporation upon the giving of a promise to repay any such sums
in the event it is later determined that such person is not entitled to be
indemnified. Finally, the CGCL provides that the indemnification provided by
the statute is not exclusive of other rights to which those seeking
indemnification may be entitled, by bylaw, agreement or otherwise, to the
extent additional rights are authorized in a corporation's articles of
incorporation. The law further permits a corporation to procure insurance on
behalf of its directors, officers and agents against any liability incurred
by any such individual, even if a corporation would not otherwise have the
power under applicable law to indemnify the director, officer or agent for
such expenses.
The Articles of Association and Bylaws of the Bank implement the
applicable statutory framework by limiting the personal liability of directors
for monetary damages for a breach of a director's fiduciary duty of care and
making indemnification mandatory in those situations where it is merely
permissible under the CGCL. The Bank's Articles of Association, pursuant to the
applicable provisions of the CGCL, also include a provision allowing the Bank to
include agreements between the Bank and its directors, officers and other
agents, provisions expanding the scope of indemnification not inconsistent with
the spirit of the Articles.
The Bylaws of the Bank have been amended to provided for mandatory
indemnification in certain instances.
DIRECTORS' AND OFFICERS' LIABILITY INSURANCE
The Bank presently maintains a policy of directors' and officers'
liability insurance.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
4a Fallbrook National Bank 1993 Stock Option Plan, as
adopted and assumed by Community Bancorp Inc.
4b Form of stock option agreement
5 Opinion of Reitner & Stuart relating to the legality
of securities being registered, and consent
23a Consent of KMPG LLP
23b Consent of Reitner & Stuart is contained in the
opinion filed as Exhibit 5
4
<PAGE>
ITEM 9. UNDERTAKINGS.
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 the 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 the registration
statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) of this section do
not apply if the registration statement is on Form S-3, Form S-8 or Form F-3,
and the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or furnished to the
Securities and Exchange Commission by the registrant pursuant to section 13 or
section 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the 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.
(4) If the registrant is a foreign private issuer, to file a
post-effective amendment to the registration statement to include any
financial statements required by section 210.3-19 of this chapter at
the start of any delayed offering or throughout a continuous offering.
Financial statements and information otherwise required by Section
10(a)(3) of the Act need not be furnished, PROVIDED that the registrant
includes in the prospectus to this paragraph (a)(4) and other
information necessary to ensure that all other information in the
prospectus is at least as current as the date of those financial
statements. Notwithstanding the foregoing, with respect to registration
statements on Form F-3, a
5
<PAGE>
post-effective amendment need not be filed to include financial
statements and information required by Section 10(a)(3) of the Act or
section 210.3-19 of this chapter if such financial statements and
information are contained in periodic reports file with or furnished
to the Commission by the registrant pursuant to section 13 or
section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Form F-3.
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 the
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.
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 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 Act and will be governed by the final adjudication of
such issue.
6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Community
Bancorp Inc. has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Fallbrook, State of California on October 4, 1999.
COMMUNITY BANCORP INC.
By: /s/ THOMAS E. SWANSON
-----------------------
THOMAS E. SWANSON
President and Chief Executive officer
By: /s/ L. BRUCE MILLS, JR.
------------------------
L. BRUCE MILLS, JR.
Chief Financial officer
II-1
<PAGE>
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>
Dated:
<S> <C> <C>
/s/ GRANGER HAUGH
- ------------------------ Chairman of the October 4, 1999
GRANGER HAUGH Board
/s/ E. STEVE LEFEVRE
- ------------------------ Director October 4, 1999
E. STEVE LEFEVRE
/s/ ROY B. HISCOCK
- ------------------------ Director October 4, 1999
ROY B. HISCOCK
- ------------------------ Director October ___, 1999
ROBERT H.S. KIRKPATRICK
- ------------------------ Director October ___, 1999
PHILLIP D. OBERHANSLEY
/s/ COREY SEALE
- ------------------------ Director October 4, 1999
COREY SEALE
/s/ THOMAS E. SWANSON
- ------------------------ Director October 4, 1999
THOMAS E. SWANSON
- ------------------------ Director October ___, 1999
GORDON T. TUCKER
/s/ GARY M. YOUMANS
- ------------------------ Director October 4, 1999
GARY M. YOUMANS
</TABLE>
II-2
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
PAGE AT WHICH
EXHIBIT APPEARS
IN SEQUENTIALLY
EXHIBIT DESCRIPTION NUMBERED COPY
- ------- ----------- --------------
<S> <C> <C>
4a Fallbrook National Bank 1993 Stock Option
Plan, as adopted and assumed by Community
Bancorp Inc.
4b Form of stock option agreement
5 Opinion of Reitner & Stuart relating to the legality of
securities being registered, and consent
23a Consent of KMPG LLP
23b Consent of Reitner & Stuart*
</TABLE>
- -------------------------------
* Contained in the opinion filed as Exhibit 5
<PAGE>
FALLBROOK NATIONAL BANK
1993 STOCK OPTION PLAN
Adopted April 21, 1993
1. PURPOSE.
The purpose of the Fallbrook National Bank 1993 Stock Option Plan (the
"plan") is to strengthen Fallbrook National Bank (the "Bank") and those banks
and corporations which hereafter become 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 Bank 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 Bank pursuant
to Stock Options granted in accordance with this Plan.
Stock Options granted pursuant to this Plan are intended to by Incentive
Stock Options or Non-Statutory Stock Options, as shall be determined and
designated by the Stock Option Committee upon the grant of each Stock Option
hereunder.
2. DEFINITIONS.
For the purpose of this Plan, the following terms shall have the following
meanings:
(a) "COMMON STOCK." This term shall mean shares of the Bank's commons
stock, par value $1.25 per share, subject to adjustment pursuant to Paragraph 15
(Adjustment Upon Changes in Capitalization) hereunder.
(b) "BANK" This term shall mean Fallbrook National Bank, a national
banking association.
(c) "ELIGIBLE PARTICIPANTS". This term shall mean: (i) all officers
(whether or not they are also directors) of the Bank or any Subsidiaries; (ii)
all directors of the Bank; and (iii) all key employees (as such persons may be
determined by the Stock Option Committee from time to time) of the Bank or any
Subsidiary; provided that such officers and key employees have a customary work
week of at least 35 hours in the employ of the Bank or a Subsidiary, unless
options are granted to them in their capacity as directors who shall have no
minimum required customary work week.
(d) "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.
<PAGE>
(e) "INCENTIVE STOCK OPTION". This term shall mean a Stock Option which
is an "incentive stock option" within the meaning of Section 422A of the
Internal Revenue Code of 1986, as amended.
(f) "NON-STATUTORY STOCK OPTION". This term shall mean a Stock Option
which is not an Incentive Stock Option.
(g) "OPTION SHARES". This term shall mean Common Stock covered by and
subject to any outstanding unexercised Stock Option granted pursuant to this
Plan.
(h) "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.
(i) "PLAN". This term shall mean the Fallbrook National Bank 1993 Stock
Option plan as embodied herein and as may be amended from time to time in
accordance with the terms hereof and applicable law.
(j) "STOCK OPTION". This term shall mean the right to purchase Common
Stock under this Plan in a specified number of shares, a price and upon the
terms and conditions determined by the Stock Option Committee.
(k) "STOCK OPTION COMMITTEE". The Board of Directors of the Bank may
select and designate a stock Option committee consisting of three or more
persons, at least three of whom are directors of the Bank, having full authority
to act on matters related to this Plan. Regardless of whether a Stock Option
Committee is selected, the Board of Directors of the Bank 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 Bank acting as a stock option committee and to 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, the action taken by the
Board shall be controlling and the action taken by the duly appointed Stock
Option Committee shall be disregarded.
(l) "SUBSIDIARY". This term shall mean each "subsidiary corporation"
(treating the Bank as the employer corporation) as defined in Section 425 (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 Bank 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.
2
<PAGE>
(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 the
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) determined
and designate which Stock Options and which shall be Non-Statutory Stock
Options; (iv) determined the Eligible Participants, if any, to whom Stock
Options are granted; (v) determined 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 too 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 prescribed, amend and
rescind rules and regulations relating to the administration of the Plan, and to
make all other determinations necessary to 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.
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 665,000 shares (adjusted for the stock
split approved in 1993), in the aggregate. It 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. ELIGIBLE
Only Eligible Participants shall be eligible to receive grants of Stock
Options under this Plan.
3
<PAGE>
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
for such number of option shares, at the price(s) and time(s), on the terms and
conditions and to such Eligible Participants as it deems advisable and specified
in the respective grants.
Subject to the limitations and restrictions set forth in the Plan, and
Eligible Participant who has been granted a Stock Option may, if otherwise
eligible, be granted additional Stock Options whether the Stock Option is an
Incentive Stock Option or a Non-Statutory 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 Bank, 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 Bank 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.
Any grant may be rescinded by action of the Stock Option Committee prior to the
time the Stock Option Agreement evidencing such option has been duly executed by
the Optionee and Bank.
(c) SHAREHOLDER-EMPLOYEES A Stock Option granted hereunder to an Eligible
Participant who is also an employee of the Bank 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 Bank 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 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 425(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. The maximum aggregate Fair Market
Value of Option Shares (determined as of the respective Stock Option grant
dates) for which an Eligible Participant may be granted Incentive Stock Options
in any calendar year after 1986 shall not exceed $100,000.
4
<PAGE>
(e) SUBSTITUTED STOCK OPTIONS. If outstanding shares of common stock of
another bank or corporation are changed into or exchanged solely for Common
Stock in a transaction to which Section 425(a) of the Internal Revenue Code of
1986, as amended, applies, then, subject to the approval of the Board of
Directors of the Bank, Stock Options under the Plan may be substituted
("Substituted Options") in exchange for valid, unexercised and unexpired stock
options of such other bank or 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 the Section 422A of the Internal Revenue Code of
1986, as amended.
(f) NON-STATUTORY STOCK OPTIONS. Stock Options and Substituted Options
granted by the Stock Option Committee shall be deemed Non-Statutory 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
422A of the Code or any regulations or rulings issued by the Internal Revenue
Service for any reason: (ii) are not in accordance with the provisions of
Section 6(c), or are in excess of the fair market value limitations set forth in
Section 6(d); or (iii) are designated at the time of grant as Non-Statutory
Stock Options. Non-Statutory Stock Options granted or substituted hereunder
shall be so designated in the Stock Option agreement entered into between the
Bank 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 Options.
(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
(1005) of the Fair Market Value of the Common Stock at the time such Substituted
Option is granted is exercise price has been computed to be less than the
exercise price set forth in the stock option of the other bank or corporation
for which it was exchanged, with appropriate adjustment to reflect the exchange
ration of the shares of stock of the other bank or corporation for which it was
exchanged, with appropriate adjustment to reflect the exchange ratio of the
shares of stock of the other bank or corporation into the shares of 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
5
<PAGE>
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 interest shall be disregarded except that they may be
accumulated.
(b) NOTICE AND PAYMENT. Stock Options granted hereunder shall be
exercised b written notice delivered to the Bank 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 that the
Optionee, said notice shall be accompanied by proof, satisfactory tot he counsel
for the Bank, of the right of such person or persons to exercise the Stock
Option. The Bank'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 Bank shall have no obligation to an
Optionee for any Option Shares unless and until full payment of the exercise
price is received by the Bank and all of the terms and provisions of the Plan
and the related Stock Option agreement have been fully complied with.
(c) 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 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 tot he Bank of his intention to
exercise all or part of a Stock Option.
(d) 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 is the total
number which remains to be purchased under the Stock Option.
(e) COMPLIANCE WITH LAW. No shares of Common Stock 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 (a) payment in full as provided
hereinabove has been received by the bank; (b) in the opinion of the counsel
for the Bank, all applicable requirements of law and of regulatory bodies having
jurisdiction over such issuance and delivery have been fully complied with; and
(c) if required by federal or state law or regulation, the Optionee shall have
paid to the Bank the amount, if any required to be withhold on the amount deemed
to be compensation of the Optionee as a result of the exercise of his or her
Stock Option, or made other arrangements satisfactory to the Bank, in its sole
discretion, to satisfy applicable income tax withholding requirements.
(f) REORGANIZATION. Notwithstanding any provision in any stock Option
agreement pertaining to the time of exercise of a Stock Option, or part thereof,
upon
6
<PAGE>
adoption by the requisite holders of the outstanding shares of Common Stock of
any plan or dissolution, liquidation, reorganization, merger, consolidation or
sale of all or substantially all of the assets of the Bank to another bank or
corporation which would, upon consummation, result in termination of a Stock
Option in accordance with Section 16 hereof, all Stock Options previously
granted shall become immediately exercisable as to all unexercised option shares
for such period of time as may be determined by the Stock Option Committee, but
in any event not less than the shorter of 30 days or the remaining time until
consummation of such terminating event, on the condition that the terminating
event, described in Section 16 hereof is consummated. If such terminating event
is not consummated, Stock Options granted pursuant to the Plan shall be
exercisable in accordance with their respective terms.
9. NON-TRANSFERABILITY OF STOCK OPTIONS
Each Stock Option shall, by its terms, be nontransferable by the Optionee
other than by will or the laws of decent and distribution, and shall be
exercisable during the Optionee's lifetime only the Optionee.
10. CONTINUATION OF AFFILIATION
Nothing contained in this Plan (or in any Stock Option agreement) shall
obligate the Bank or any Subsidiary to employ or continue to employ any Optionee
or any Eligible Participant for any period of time or interfere in any way with
the right of the Bank or Subsidiary to reduce or increase the Optionee's
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 e an Eligible Participant with the
Bank or a Subsidiary, the Stock Options granted to such Optionee (unless
designated as "Director Option") shall expire on the expiration dates specified
for said stock Options at the time of their grant, or thirty (30) days after the
Optionee ceases to be so affiliated, whichever is earlier. During such period
after cessation of affiliation, such Stock Options (other than "Director
Options") shall be exercisable as of the date on which such Optionee ceased to
be an Eligible Participant with the Bank 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 Bank or a Subsidiary is terminated for cause, the
Stock Options granted to such Optionee shall automatically expire and terminate
in their entirely immediately upon such termination; provided, however, that the
Stock Option Committee may, in its sole discretion, 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
7
<PAGE>
such time, and upon such terms and conditions as if the Optionee had ceased to
be employed by or affiliated with the Bank or a Subsidiary upon that 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, if the Optionee serves pursuant
to a written employment agreement, and "cause" or similar ground for termination
set forth in such employment agreement. In any event, the determination of the
Stock Option Committee with respect thereto shall be final and conclusive.
Termination for cause shall include:
a. A material breach by Optionee of any of the terms or provisions
of any employment agreement with the Bank;
b. Optionee is convicted of illegal activity by a court of competent
jurisdiction or pleads guilty to or nolo contendere to, illegal activity, which
activity materially adversely affects Bank's reputation in the community or
which evidences the lack of Optionee's fitness or ability to perform Optionee's
duty and determined by the Board of Directors in good faith; or
c. Optionee has committed any illegal or dishonest act which would
cause termination of coverage under Bank's Bankers Blanket Bond as to Optionee
as distinguished from termination of coverage as to Bank as a whole; or
d. Optionee materially fails to perform or habitually neglects
Optionee's duties or commits a material act of malfeasance or misfeasance in
connection therewith; or
e. Actions are commenced by the Comptroller of the Currency, or any
other regulatory agency having jurisdiction, to remove, dismiss or suspend
Executive from office, or notice of intent thereof is served upon Executive, or
a case and desist order under 12. U.S.C. 1818(b) or any similar statute is
issued against Executive or Bank which calls for his suspension or removal from
office; or
f The Comptroller of the Currency or other supervisory or
regulatory authority having jurisdiction takes possession of the property and
business of Bank pursuant to Section 191 ET. SEQ. of Title 12 of the United
States Code or a successor statute or regulation.
13. DEATH OF OPTIONEE
If an Optionee dies while employed by or affiliated with the Bank or a
Subsidiary, or during the thirty-day period referred to in Section 11 hereof,
the Stock Options (unless designated as Director 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 expiration of the Stock
Option (whether or not pursuant to this paragraph), subject to the terms and
8
<PAGE>
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 decent and ________________ 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
the date on which the Optionee died.
14. DISABILITY OF OPTIONEE
If an Optionee is disabled while employed by or affiliated with the Bank or
a Subsidiary or during the thirty days referred to in Section 11 hereof, the
Stock Options (Unless designated as Director 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. After such disability occurs, but before expiration of
the Stock Option (whether or not pursuant to this paragraph), 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 Bank or a Subsidiary as a result of the disability. An
Optionee shall be deemed to be "disabled" when and if it shall appear to the
Stock Option Committee, upon written certification delivered to the Bank 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 Bank are increased,
decreased or changed into or exchanged for a different number or kind of shares
or securities of the Bank, through a reorganization, merger, recapitalization,
reclassification, stock split, stock dividend, stock consolidation, or
otherwise, without consideration to the Bank, an appropriate and proportional
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 interest shall be disregarded, except
that they may be accumulated.
9
<PAGE>
16. TERMINATING EVENTS
Upon consummation of a plan of dissolution or liquidation of the Bank, or
upon consummation of a plan of reorganization, merger or consolidation of the
Bank with one or more banks or corporations, as a result of which the Bank is
not the surviving entity, or upon the sale of all or substantially all the
assets of the Bank to another bank or corporation, the Plan shall automatically
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 for assumption of Stock Options theretofore granted, or
substitution for such Stock Options with new stock options covering stock of a
successor employer or bank or corporation, or a parent or subsidiary corporation
thereof, solely at the discretion of such successor bank or corporation, or
parent or subsidiary corporation, with appropriate adjustment as to number and
kind of shares and prices.
17. AMENDMENT AND TERMINATION
The Board of Directors of the Bank 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 advisable; provided that, except as
permitted under the provisions of Section 15 hereof, no amendment or
modification may be adopted with the Banking having first obtained the approval
of the holders of a majority of the Bank's outstanding shares of Common Stock
present, or represented, and entitles to vote at a duly held meeting of
shareholders of the Bank if the amendment or modification would:
(a) materially increase the number of securities which may be issued
under the Plan;
(b) materially modify the requirements as to eligibility for
participation in the Plan;
(c) increase or decrease the exercise price of any Stock Option
granted under the Plan;
(d) increase the maximum term of Stock Options provided for herein;
(e) permit Stock Options to be granted to any person who is not an
Eligible Participant; or
(f) 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
10
<PAGE>
(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.
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 Bank or any Subsidiary. Without limiting the generally 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
Bank 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 Bank notice in writing of such sale or other disposition.
20. EFFECTIVE DATE OF THE PLAN
The Plan shall be deemed adopted as of the adoption date set forth on the
first page hereof, and shall be effective immediately, subject to approval of
the Plan by the holders of at least a majority of the Bank's outstanding shares
of Common Stock.
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 Bank, 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 Bank 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.
11
<PAGE>
23. STOCK OPTION PERIOD
Each Stock Option and all rights and obligations thereunder shall expire on
such date at the Stock Option Committee may determined, 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. Any Stock Option which
is initially granted for a term of less than ten (10) years may be modified to
extend its expiration date to a date which is not more than ten (10) years from
the date of grant, by action of the Stock Option Committee.
24. EXCULPATION AND INDEMNIFICATION OF STOCK OPTION COMMITTEE
In addition to such other rights of indemnification which they may have as
directors of the Bank or as members of the Stock Option Committee, the present
former and future members of the Stock Option Committee, and each of them,
shall, to the extent permitted by law, e indemnified by the Bank for and against
all costs, judgment 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 by be sought pursuant to
this Section shall be first approved in writing by independent legal counsel
selected by the Bank; 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 Bank opportunity at its own expense to handle (including
settle) and induct 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. LIMITATION OF OBLIGATIONS OF THE BANK
All obligations of the Bank arising under or as a result of this Plan or
Stock Options granted hereunder shall constitute the general unsecured
obligations of the Bank, and not of the Board of Directors of the Bank, any
member thereof, the Stock Option Committee, any member thereof, any officer of
the Bank, or any other person or any Subsidiary, and none of the foregoing,
except the Bank, shall be liable for any debt, obligation, cost or expense
hereunder.
12
<PAGE>
26. 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 Bank
relating to this Plan or any Stock Option granted hereunder is authorized, and
such may not bind the Bank or the Stock Option Committee to grant a Stock Option
to any person.
27. 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.
28. 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.
29. HEADINGS
The heading of the several paragraphs 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.
30. SUCCESSORS
This Plan shall be binding upon the respective successors, assigns, heirs,
executors, administrators, guardians and personal representatives of the Bank
and Optionees.
31. GOVERNMENT LAW
To the extent not governed by the law of the United States, this Plan shall
be governed by and construed in accordance with the laws of the State of
California.
32. CONFLICT
In the event of any conflict between the terms and provision 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.
13
<PAGE>
33. PROVISIONAL GRANT OR MODIFICATION
Notwithstanding any other limitations contained in the Plan, Stock Options
may be granted or modified in accordance with the provision of any amendment
adopted by the Board of Directors; provided, however, that Stock Option so
granted or modified may not be exercised except to the extent it complies with
the terms of the Plan as in effect prior to the date of such amendment or until
such amendment is approved by the holders of a majority of the outstanding
shares of Common Stock of the Bank.
* * * * * * *
14
<PAGE>
FALLBROOK NATIONAL BANK
STOCK OPTION AGREEMENT UNDER 1993 STOCK OPTION PLAN
To: [Name of Employee] Granting Date: [Month, date], 19[year]
We are pleased to notify you that Fallbrook National Bank (the "Bank")
hereby grants to you an option to purchase all or any part of * _________ *
shares of the Common Stock of the Bank ("the Shares") at the option price of
*$_______* (the "Option Price") per Share as a stock option under the Bank's
1993 Stock Option Plan (the "Plan")
THIS OPTION IS:
A. AN INCENTIVE OPTION ONLY IF THE BLANK IS INITIALED BY THE
BANK AT THE TIME THIS AGREEMENT IS DELIVERED TO YOU ______.
OTHERWISE, IT IS A NON-STATUTORY OPTION
B. A "DIRECTOR OPTION" ONLY IF THIS BLANK IS INITIALED AT THE TIME
THIS AGREEMENT IS DELIVERED TO YOU, ______. ALL DIRECTOR OPTIONS ARE
NON-STATUTORY OPTIONS, REGARDLESS OF ANY OTHER TERMS SET FORTH HEREIN.
THE OPTION MAY BE EXERCISED ONLY IN ACCORDANCE WITH THE TERMS OF THE
PLAN. ONLY CERTAIN PROVISIONS OF THE PLAN ARE SUMMARIZED IN THIS
STOCK OPTION AGREEMENT (THIS "AGREEMENT")
THIS OPTION MAY BE EXERCISED ONLY IF THE PLAN IS APPROVED BY
SHAREHOLDERS HOLDING A MAJORITY OF THE VOTING POWER OF THE ISSUED AND
OUTSTANDING SHARES OF THE BANK.
1. PURPOSE OF THE OPTION.
One of the purposes of the Plan is to advance the interests of the Bank by
stimulating the efforts of directors, officers and full-time salaried employees
on behalf of the Bank by granting them financial participation in the process
and success of the Bank.
2. SIGNATURE ON OPTION AGREEMENT
This option can not be exercised unless you first sign this document in the
place provided and return it to the Secretary of the Bank. It should be
returned before the close of business on
1
<PAGE>
the 20th day after the granting date of this option. If you fail to do so, this
option may terminate and be of no effect. However, your signing and delivering
this letter will not bind you to purchase any 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 Paragraphs 4 and 5 below and this Paragraph
3, this option shall vest and become exercisable as to the following shares on
the following dates.
<TABLE>
<CAPTION>
Number of Months Number
Following Grant of Shares
--------------- ---------
<S> <C>
12 mo. - [month, date, year] [ ]
24 mo. - [month, date, year] [ ]
36 mo. - [month, date, year] [ ]
48 mo. - [month, date, year] [ ]
48 mo. - [month, date, year] [ ]
</TABLE>
Any portion of this option that you do not exercise shall accumulate and
can be exercised by you any time prior to the expiration of [MONTH, DATE, YEAR]
(120) months from the granting date.
This option may be exercised by delivering to the Secretary of the Bank,
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 the Bank, together with a written notice in a form satisfactory to
the Bank, 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 the Bank
shall, without transfer or issue tax to you (or such other person entitled to
exercise this option), deliver to you (or such person entitled to exercise this
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 of this option was 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. No
fractional shares shall be issued or delivered.
As a holder of this 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 and delivered to you upon the exercise of this option.
4. TERMINATION OF OFFICE OR EMPLOYMENT.
Unless this option is a Director Option, if your status as an employee or
officer of the Bank or is Affiliates (as such term is defined in the Plan) is
terminated for any reason other than death, disability or cause, this option may
be exercised within thirty (30) days from the date of
2
<PAGE>
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 this option is a Director Option,
then it may be exercised until the expiration of the term of this option,
regardless of any termination of your status as an employee, officer or director
of the Bank. If, however, you are removed from your office or your employment
with the Bank or its Affiliates for cause, 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, unless the Board of Directors, in its sole discretion, determines
otherwise.
5. DEATH OR DISABILITY.
Unless this option is a Director Option, if you die or become disables
while serving as an officer or employee of the Bank or its Affiliates, this
option may be exercised in whole or in part by you or your qualified
representative (in the event of your mental disability) or by 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. If this option is a
Director Option, then it may be so exercised until the expiration of the term of
this option, regardless of your death or disability.
Disability shall be determined under Section 422A of the Internal Revenue
Code of 1986 (the "Code") in effect at the date of such disability. Section
422A of the Code currently uses the definition of Section 22 (e) (3) of the Code
which state:
"(3) PERMANENT AND TOTAL DISABILITY DEFINED- 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 twelve (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
times, as the Secretary may require".
6. NONTRANSFERABILITY OF OPTION .
This option shall be not be transferable except by Will or the laws of
descent and distribution, and this Agreement 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 the Bank the right to terminate this
option as of the date of such purported transfer or assignment.
3
<PAGE>
7. ADJUSTMENT OF AND CHANGES IN THE SHARES.
Notwithstanding the preceding provision of this agreement, upon receipt of
notice from the Stock Option Committee or the Board of Directors of the pendency
of dissolution or liquidation of the Bank or a reorganization, merger, or
consolidation of the Bank with one or more corporations as a result of which the
Bank will not be the surviving corporation, or a sale of substantially all the
assets and property of the Bank to another person (a "Terminating Event"), this
option shall be exercisable in full and not only as to those shares with respect
to which installments , if any, have been accrued. Upon the date thirty (30)
days after receipt of said notice, this option or any portion hereof not
exercised shall terminate, unless provision shall be made in connection with the
Termination Event for assumption of this option or for substitution for this
option of new options covering stock of a successor employer corporation, or
parent or subsidiary corporation thereof, solely at the option of such successor
corporation or parent or subsidiary corporation, with appropriate adjustments as
to the number and kind of shares and prices.
8. SUBJECT TO TERMS OF THE PLAN.
This Agreement and the option granted hereby shall be subject in all
respects to the terms and conditions of the Plan. In the event of any conflict
or inconsistency between this Agreement and the terms of the Plan, the terms of
the Plan shall control. Your signature herein represents your acknowledgment 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 the Bank or duly appointed
Committee in its sole discretion, and such determination shall be binding upon
all parties.
9. TAX EFFECTS.
THE FEDERAL TAX CONSEQUENCES OF EMPLOYEE STOCK OPTIONS ARE COMPLEX AND
SUBJECT TO CHANGE. A TAXPAYER'S PARTICULAR SITUATION MAY BE SUCH THAT SOME
VARIATION OF THE GENERAL RULE IS APPLICABLE. ACCORDINGLY, AN OPTIONEE (OR HIS
OR HER GUARDIAN, ESTATE OR LEGATEE) SHOULD CONSULT WITH HIS OR HER OWN TAX
ADVISOR BEFORE EXERCISING ANY OPTION OR DISPOSING OF ANY SHARES ACQUIRED UPON
THE EXERCISE OF AN OPTION.
10. RIGHTS AS A SHAREHOLDER OR EMPLOYEE.
You have no rights as a shareholder of the Bank with respect to any Shares
until the date of the issuance and delivery of stock certificate to you for
such Shares. The existence of this option shall neither create nor imply a right
to continued employment with the Bank.
4
<PAGE>
11. NOTIFICATION OF SALE.
You agree that you, or any person acquiring Shares upon exercise of this
option, will notify the Bank not more than five (5) days after any sale or
disposition of such Shares. If this option is a non-statutory option, you may,
in addition to the exercise price, be required to pay to the Bank an amount
equal to the withholding taxes imposed.
FALLBROOK NATIONAL BANK
By: ___________________________________
Thomas E. Swanson
President/CEO
Agreed to this _________ day
of _____________________, 19_____
_______________________________
[Name of Employee]
5
<PAGE>
EXHIBIT 5
[REITNER & STUART LETTERHEAD]
October 4, 1999
Community Bancorp Inc.
130 West Fallbrook Street
Fallbrook, CA 92028
Re: Registration Statement on Form S-8
Gentlemen:
At your request, we have examined the Registration Statement on Form
S-8 (the "Registration Statement") being filed by Community Bancorp Inc. (the
"Company") with the Securities and Exchange Commission in connection with the
registration under the Securities Act of 1933, as amended, of 665,000 shares
of the Company's common stock, (the "Common Stock"), issuable pursuant to
stock grants or upon the exercise of stock options granted pursuant to
Fallbrook National Bank's 1993 Stock Option Plan, as adopted and assumed by
the Company (the "Plan").
In rendering this opinion, we have examined such documents and
records as we have deemed relevant. We have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals
and the conformity to originals of all documents submitted to us as certified
or reproduced copies.
Based upon the foregoing and such other and further review of fact
and law as we have deemed necessary or appropriate under the circumstances,
and assuming that (i) all options granted under the Plan will be granted
pursuant to the terms of the Plan, (ii) the consideration for the shares of
Common Stock issued pursuant to the exercise of such options will be received
prior to the issuance thereof and (iii) the shares of Common Stock issued
pursuant to the exercise of such options will be issued in accordance with
the terms of the Plan and the option agreements (as appropriate), upon which
assumptions the following opinions are expressly conditioned, it is our
opinion that the shares upon the exercise of options granted pursuant to the
<PAGE>
Plan and pursuant to the Registration Statement will, when sold in accordance
with the terms of the Plan and the option agreements, be validly issued,
fully paid and non-assessable.
This opinion is issued to you solely for use in connection with the
Registration Statement and is not to be quoted or otherwise referred to in
any financial statements of the Company or related documents, nor is it to be
filed with or furnished to any government agency or other person, without the
prior written consent of this firm in each instance.
This firm hereby consents to the filing of this opinion as an
exhibit to the Registration Statement and to the reference to the undersigned
under the heading "Legal Matters" therein and in any prospectus delivered to
participants in the Plan and any amendments thereto.
Respectfully submitted,
/s/ REITNER & STUART
--------------------
REITNER & STUART
JFS:wsm
<PAGE>
EXHIBIT 23.a
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Community Bancorp Inc.:
We consent to incorporation by reference in the registration statement on
Form S-8 of Community Bancorp Inc. of our report dated January 13, 1999,
relating to the balance sheet of Fallbrook National Bank as of December 31,
1998 and 1997, and the related statements of income, shareholders' equity,
and cash flows for the three-year period ended December 31, 1998, which
report appears in the Form 10-KSB of Fallbrook National Bank.
/s/ KPMG LLP
San Diego, California
October 1, 1999
