<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 1985 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)
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- ------------------------------------------------------------------------------------------
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, 21,800 shares $7.90625(2) $172,356 $48.00
$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 1985 Plan as a result of the adjustment
provisions thereof.
(2) All options under the Plan have already been granted at an average
exercise price of $3.92.
<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 1985 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 1985 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 1985 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 1985 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 1985 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
1985 STOCK OPTION PLAN
ADOPTED OCTOBER 22, 1985
AMENDED AND RESTATED THROUGH
JANUARY 15, 1988
1. PURPOSE
The purpose of the Fallbrook National Bank 1985 Stock Option Plan (the
"Plan") is to strengthen Fallbrook National Bank (the "Bank") and those banks
and corporations which here after 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 be Incentive
Stock Options or Non-Qualified Stock Options, as shall be determined and
designated by the Stock Options, as shall be determined and designated by the
Stock Option Committee upon the grant of each Stock Option hereunder.
2. DEFINITIONS
For purpose of this Plan, the following terms shall have the following
meanings:
(a) "COMMON STOCK." This term shall mean shares of the Bank's common
stock, par value $5.00 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: (1) all officers
(whether or not they are also directors) of the Bank or any Subsidiaries; and
(ii) 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.
<PAGE>
(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.
(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-QUALIFIED 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 1985 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, at 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 a duly appointed Stock Option Committee, if there be one. In
the event of any conflict between action taken by the Board acting as a Stock
Option Committee and action taken by a duly appointed Stock Option Committee,
the action taken by the Board shall be controlling and the action taken by
the duly appointed Stock Option Committee shall be disregarded.
(l) "SUBSIDIARY." This term shall mean each "subsidiary corporation"
(treating the Bank as the employer corporation) as
2
<PAGE>
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.
(b) ADMINISTRATION OF THE PLAN. Any action of the Stock Option Committee
with respect to the administration of the Plan shall be taken pursuant to a
majority vote, or pursuant to the unanimous written consent, of its members.
Any such action taken by the Stock Option Committee in the administration of
this Plan shall be valid and binding, so long as the same is not inconsistent
with the terms and conditions of this Plan. Subject to compliance with the
terms, conditions and restrictions set forth in this Plan, the Stock Option
Committee shall have the exclusive right, in its sole and absolute
discretion, to establish the terms and conditions of all Stock Options
granted under the Plan, including, without meaning any limitation, the power
to: (i) establish the number of Stock Options, if any, to be granted
hereunder, in the aggregate and with regard to each Eligible Participant:
(ii) determine the time or times when such Stock Options, or parts thereof,
may be exercised; (iii) determine and designate which Stock Options granted
under the Plan shall be Incentive Stock Options and which shall be Non
Qualified Stock Options; (iv) determine the Eligible Participants, if any, to
whom Stock Options are granted; (v) determine the duration and purposes, if
any, of leaves of absence which may be permitted to holders of unexercised,
unexpired Stock Options without such constituting a termination of employment
under the Plan; and (vi) prescribe and amend the terms, provisions and form
of each instrument and agreement setting forth the terms and conditions of
every Stock Option granted here under.
(c) DECISIONS AND DETERMINATIONS. Subject to the express provisions of
the Plan, the Stock Option Committee shall have the authority to construe and
interpret this Plan, to define the terms used herein, to prescribe, amend,
and rescind rules and regulations relating to the administration of the Plan,
and to make all other determinations necessary or advisable for
administration of the Plan. Determinations of the Stock Option Committee on
matters referred to in this Section 3 shall be final and conclusive so long
as the same are not inconsistent with the terms of this Plan.
3
<PAGE>
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 42,000 shares, in the
aggregate. If any Stock Option shall be cancelled, surrendered, or expire
for any reason without having been exercised in full, the unpurchased Option
Shares represented thereby shall again be available for grants of Stock
Options under this Plan.
5. ELIGIBILITY
Only Eligible Participants shall be eligible to receive grants of Stock
Options under this Plan.
6. GRANTS OF STOCK OPTIONS
(a) GRANT. Subject to the express provisions of the Plan, the Stock
Option Committee, in its sole and absolute discretion may grant Stock Options
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
specifies in the respective grants.
Subject to the limitations and restrictions set forth in the Plan, an
Eligible Participant who has been granted a Stock Option may, if otherwise
eligible, be granted additional Stock Options if the Stock Option Committee
shall so determine. The Stock Option Committee shall designate in each grant
of a Stock Option whether the Stock Option is an Incentive Stock Option or a
Non-Qualified Stock Option.
(b) DATE OF GRANT AND RIGHTS OF OPTIONEE. The determination of the Stock
Option Committee to grant a Stock Option shall not in any way constitute or
be deemed to constitute an obligation of the 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
Committiee 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
4
<PAGE>
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 the 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.
(e) SUBSTITUTED STOCK OPTIONS. If outstanding shares of common stock of
another bank or corporation are changed into an 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 Section 422A of the Internal
Revenue Code of 1986, as amended.
(f) NON-QUALIFIED STOCK OPTIONS. Stock Options and Substituted Options
granted by the Stock Option Committee shall be deemed Non-Qualified Stock
Options under this Plan if they (i) are designated at the time of grant as
Incentive Stock Options but do not so qualify under the provisions of Section
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-Qualified Stock Options. Non-Qualified Stock Options granted or
substituted hereunder
5
<PAGE>
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 Option.
(b) SUBSTITUTED OPTIONS. The exercise price of the Option Shares subject
to each Substituted Option may be fixed at a price less than one hundred
percent (100%) of the Fair Market Value of the Common Stock at the time such
Substituted Option is granted if said exercise price has been computed to be
not less than the exercise price set forth in the stock option of the other
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 any Optionee
shall not in any given period exercise any part of a Stock Option which has
become exercisable during that period, the Optionee's right to exercise such
part of the Stock Option shall continue until expiration of the Stock Option
or any part thereof as may be provided in the related Stock Option
agreement. No Stock Option or part thereof shall be exercisable except with
respect to whole shares of Common Stock, and fractional share interests shall
be disregarded except that they may be accumulated.
(b) NOTICE AND PAYMENT. Stock Options granted hereunder shall be exercised
by 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 than
the Optionee, said notice shall be accompanied by proof, satisfactory to the
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
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<PAGE>
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 there of, then
being exercised. Payment by an Optionee as provided herein shall be made in
full concurrently with the Optionee's notification to the 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 under
the Stock Option.
(e) COMPLIANCE WITH LAW. No shares of Common Stock shall be issued upon
exercise of any Stock Option, and an Optionee shall have no right or claim to
such shares, unless and until: (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 the Bank the amount, if any, required to be withheld on the amount
deemed to be compensation to the Optionee as a result of the exercise of his
or her Stock Option, or made other arrangements satisfactory to the 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 adoption by the requisite holders of the outstanding shares of
Common Stock of any plan of 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 the
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
7
<PAGE>
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 descent and distribution, and shall be
exercisable during the Optionee's lifetime only by the Optionee.
10. CONTINUATION OF AFFILIATION
Nothing contained in this Plan (or in any Stock Option agreement) shall
obligate the 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 a Subsidiary to reduce or increase the
Optionee's or Eligible Participant's compensation.
11. CESSATION OF AFFILIATION
Except as provided in Section 12 hereof, if, for any reason other than
disability or death, an Optionee ceases to be an Eligible Participant with
the Bank or a Subsidiary, the Stock Options granted to such Optionee shall
expire on the expiration dates specified for said Stock Options at the time
of their grant, or three (3) months after the Optionee ceases to be so
affiliated, whichever is earlier. During such period after cessation of
affiliation, such Stock Options shall be exercisable only as to those
increments, if any, which had become exercisable as of the date on which such
Optionee ceased to be 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 entirety 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 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
the date of such termination for a reason other than cause, disability or
death. Termination for cause shall include, but shall not be limited to,
termination for malfeasance or gross
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<PAGE>
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, any "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.
13. DEATH OF OPTIONEE
If an Optionee dies while employed by or affiliated with the Bank or a
Subsidiary, or during the three-month period referred to in Section 11
hereof, the Stock Options granted to such Optionee shall expire on the
expiration dates specified for said Stock Options at the time of their grant,
or one (1) year after the date of such death, whichever is earlier. After
such death, but before such expiration, subject to the terms and provisions of
the Plan and the related Stock Option agreements, the person or persons to
whom such Optionee's rights under the Stock Options shall have passed by will
or by the applicable laws of descent and distribution, or the executor or
administrator of the Optionee's estate, shall have the right to exercise such
Stock Options to the extent that increments, if any, had become exercisable
as of the date on which the Optionee died.
14. DISABILITY OF OPTIONEE
If an Optionee is disabled while employed by or affiliated with the Bank
or a Subsidiary or during the three-month period referred to in Section 11
hereof, the Stock Options granted to such Optionee shall expire on the
expiration dates specified for said Stock Options at the time of their grant,
or one (1) year after the date such disability occurred, whichever is
earlier. After such disability occurs, but before such expiration, the
Optionee or the guardian or conservator of the Optionee's estate, as duly
appointed by a court of competent jurisdiction, shall have the right to
exercise such Stock Options to the extent that increments, if any, had become
exercisable as of the date on which the Optionee became disabled or ceased to
be employed by or affiliated with the 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.
9
<PAGE>
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 proportionate adjustment shall be made in the number and kind
of shares as to which Stock Options may be granted. A corresponding
adjustment changing the number or kind of Option Shares and the exercise
prices per share allocated to unexercised Stock Options, or portions thereof,
which shall have been granted prior to any such change, shall likewise be
made. Such adjustments shall be made without change in the total price
applicable to the unexercised portion of the Stock Option, but with a
corresponding adjustment in the price for each Option Share subject to the
Stock Option. Adjustments under this Section shall be made by the Stock
Option committee, whose determination as to what adjustments shall be made,
and the extent thereof, shall be final and conclusive. No fractional shares
of stock shall be issued or made available under the Plan on account of such
adjustments, and fractional share interests shall be disregarded, except that
they may be accumulated.
16. TERMINATING EVENTS
Upon consummation of a plan of dissolution or liquidation of the 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 granted, or substitution for such
Stock Options with new stock options covering stock of a successor employer
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 adjustments 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 and conditions of that
Optionee's Stock Option as it shall deem advisable; provided that, except as
permitted under the provisions of Section 15 hereof, no amendment or
modification may be adopted without the Bank having first obtained the
approval of
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<PAGE>
the holders of a majority of the Bank's outstanding shares of Common Stock
present, or represented, and entitled to vote at a duly held meeting of
shareholders of the 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 (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 generality of
the foregoing, no person shall have any rights as a result of his or her
classification as an Eligible Participant or Optionee, such classifications
being made solely to describe, define and limit those persons who are
eligible for consideration for privileges under the Plan.
19. PRIVILEGES OF STOCK OWNERSHIP; REGULATORY LAW COMPLIANCE; NOTICE OF SALE
No Optionee shall be entitled to the privileges of stock ownership as to
any Option Shares not actually issued and delivered. No Option Shares may be
purchased upon the exercise of
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<PAGE>
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 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.
23. STOCK OPTION PERIOD
Each Stock Option and all rights and obligations thereunder shall expire
on such date as the Stock Option Committee may determine, but not later than
ten (10) years from the date such Stock Option is granted, and shall be
subject to earlier termination as provided elsewhere in this Plan. 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 for 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
12
<PAGE>
Option Committee, the present, former and future members of the Stock Option
Committee, and each of them, shall, to the extent permitted by law, be
indemnified by the Bank for and against all costs, judgments, penalties and
reasonable expenses, including reasonable attorneys' fees, actually and
appropriately incurred by them in connection with all actions, suits and
proceedings, and in connection with appeals thereof, to which they or any of
them may be as a party by reason of any act or omission of any member of the
Stock Option Committee under or in connection with the Plan or any Stock
Option granted thereunder; provided, however, that a member of the Stock
Option Committee shall not be entitled to any indemnification whatsoever
pursuant to this Section for or as a result of any act or omission of such
member which was not taken in good faith and which constituted willful
misconduct or gross negligence by such member; provided further, that any
amounts paid by any member of the Stock Option Committee in settlement of an
action, suit or proceeding for which indemnification may be sought pursuant
to this Section shall be first approved in writing by independent legal
counsel selected by the 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 the opportunity, at its own
expense, to handle (including settle) and conduct the defense thereof. The
provisions of this Section shall apply to the estate, executor and
administrator of each member of the Stock Option Committee.
25. NOTICES
All notices and demands of any kind which the Stock Option Committee, any
Optionee, Eligible Participant, or other person may be required or desires to
give under the terms of this Plan shall be in writing and shall be delivered
in hand to the person or persons to whom addressed (in the case of the Stock
Option Committee, the President or Cashier of the Bank), by leaving a copy of
such notice or demand at the address of such person or persons as may be
reflected in the records of the Bank, or by mailing a copy thereof, properly
addressed as above, by certified or registered mail, postage prepaid, with
return receipt requested. Delivery by mail shall be deemed made at the
expiration of the third day after the day of mailing, except for notice of
the exercise of a Stock Option and payment of the Stock Option exercise
price, both of which must be actually received by the Bank.
26. LIMITATION ON OBLIGATIONS OF THE BANK
All obligations of the Bank arising under or as 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
13
<PAGE>
committee, any member thereof, any officer of the Bank, or any other person
or any Subsidiary, and none of the fore going, except the Bank, shall be
liable for any debt, obligation, cost or expense hereunder.
27. 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 any Stock Option to any person.
28. SEVERABILITY
If any provision of this Plan as applied to any person or to any
circumstance shall be adjudged by a court of a 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.
29. 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.
30. HEADINGS
The headings 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.
31. SUCCESSORS
This Plan shall be binding upon the respective successors, assigns,
heirs, executors, administrators, guardians and personal representatives of
the Bank and Optionees.
32. GOVERNING LAW
To the extent not governed by the laws of the United States, this Plan
shall be governed by and construed in accordance with the laws of the State
of California.
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<PAGE>
33. CONFLICT
In the event of any conflict between the terms and provisions of this
Plan, and any other document, agreement or instrument, including, without
meaning any limitation, any Stock Option agreement, the terms and provisions
of this Plan shall control.
34. PROVISIONAL GRANT OR MODIFICATION
Notwithstanding any other limitations contained in the Plan, Stock
Options may be granted or modified in accordance with the provisions of any
amendment adopted by the Board of Directors: provided, however, that a 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.
* * * *
15
<PAGE>
NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, NO SHARES OF THE
BANK'S COMMON STOCK SHALL BE ISSUED PURSUANT HERETO UNLESS THE BANK'S 1985
STOCK OPTION PLAN SHALL HAVE FIRST BEEN APPROVED BY THE SHAREHOLDERS OF THE
BANK HOLDING NOT LESS THAN A MAJORITY OF THE OUTSTANDING SHARES OF THE BANK'S
COMMON STOCK.
OPTIONEES TO WHOM INCENTIVE STOCK OPTIONS ARE GRANTED MUST MEET CERTAIN
HOLDING PERIOD AND EMPLOYMENT REQUIREMENTS FOR FAVORABLE TAX TREATMENT.
UNLESS OTHERWISE STATED, ALL TERMS DEFINED IN THE PLAN SHALL HAVE THE SAME
MEANING HEREIN AS SET FORTH IN THE PLAN.
FALLBROOK NATIONAL BANK
STOCK OPTION AGREEMENT
/ / Incentive Stock Option
/ / Non-Qualified Stock Option
THIS AGREEMENT, dated the _____ day of __________, 19__, by and
between Fallbrook National Bank, a national banking association (the "Bank"),
and __________________________________, ("Optionee");
WHEREAS, pursuant to the Bank's 1985 Stock Option Plan (the "Plan"),
the Stock Option Committee has authorized the grant to Optionee of a Stock
Option to purchase all or any part of __________________________ (__________)
authorized but unissued shares of the Bank's Common Stock, at the price of
_____________ Dollars ($___________) per share, such Stock Option to be for
the term and upon the terms and conditions hereinafter stated;
NOW, THEREFORE, it is hereby agreed:
1. GRANT OF STOCK OPTION.
(a) Pursuant to said action of the Stock Option
<PAGE>
Committee and pursuant to authorizations granted by all appropriate
regulatory and governmental agencies, the Bank hereby grants to Optionee the
option to purchase, upon and subject to the terms and conditions of the Plan,
which is incorporated in full herein by this reference, all or any part of
_____________ (_________________) Option Shares of the Bank's Common Stock at
the price of ____________________ Dollars ($_________) per share. For
purposes of this Agreement and the Plan, the date of grant shall be __________
____________.
(b) At the date of grant, Optionee does not own [ owns ]
(cross out inapplicable reference) stock possessing more than 10% of the
total combined voting power of all classes of capital stock of the Bank or
any Subsidiary.
(c) The Stock Option granted hereunder is [ is not ] (cross
out inapplicable reference) intended to qualify as an Incentive Stock Option
within the meaning of Section 422A of the Internal Revenue Code of 1986, as
amended.
2. EXERCISABILITY. This Stock Option shall be exercisable as to
_________ Option Shares on _______________; as to _______________ Option
Shares on ______________; as to ______________ Option Shares on ______________;
as to ________________ Option Shares on _________________; and as to __________
Option Shares on ________________. This Stock Option shall remain exercisable
as to all of such Option Shares until ___________, 19__ (but not later than ten
2
<PAGE>
(10) years from the date of grant), at which time it shall expire in its
entirety, unless this Stock Option has expired or terminated earlier in
accordance with the provisions hereof or of the Plan. Option Shares as to
which this Stock Option become exercisable may be purchased at any time prior
to expiration of this Stock Option.
3. EXERCISE OF STOCK OPTION. Subject to the provision of
Paragraph 4 hereof, this Stock Option may be exercised by written notice
delivered to the Bank stating the number of Option Shares with respect to
which this Stock Option is being exercised, together with cash, or bank,
cashier's or certified check, for the full amount of the purchase price of
such Option Shares. Not less than ten (10) Option Shares may be purchased at
any one time unless the number purchased is the total number which remains to
be purchased under this Stock Option and in no event may the Stock Option be
exercised with respect to fractional shares. Upon exercise, Optionee shall
make appropriate arrangements and shall be responsible for the withholding of
all federal and state income taxes then due, if any.
4. [Deleted]
5. CESSATION OF AFFILIATION. Except as provided in Paragraphs 6
and 7 hereof, if, for any reason other than Optionee's disability or death,
Optionee ceases to be employed by or affiliated with the Bank or a
Subsidiary, this Stock Option shall expire three (3) months thereafter or on
the date specified in Paragraph 2 hereof, whichever is earlier. During such
period
3
<PAGE>
after cessation of employment or affiliation, this Stock Option shall be
exercisable only as to those increments, if any, which had become exercisable
as of the date on which the Optionee ceased to be employed by or affiliated
with the Bank or Subsidiary, and any Stock Option or increments which had not
become exercisable as of such date shall expire and terminate automatically
on such date.
6. TERMINATION FOR CAUSE. If Optionee's employment by or
affiliation with the Bank or a Subsidiary is terminated for cause, this Stock
Option shall automatically expire unless reinstated by the Stock Option
Committee within thirty (30) days of such termination by giving written
notice of such reinstatement to Optionee. In the event of such reinstatement,
Optionee may exercise this Stock Option only to such extent, for such time,
and upon such terms and conditions as if Optionee had ceased to be employed
by or affiliated with the Bank or a Subsidiary upon the date of such
termination for a reason other than cause, disability or death. Termination
for cause shall include, but shall not be limited to, termination for
malfeasance or gross misfeasance in the performance of duties or conviction
of illegal activity in connection therewith, or any conduct detrimental to
the interests of the Bank or a Subsidiary, and, in any event, the
determination of the Stock Option Committee with respect thereto shall be
final and conclusive.
7. DISABILITY OR DEATH OF OPTIONEE. If Optionee becomes disabled
or dies while employed by or affiliated with the Bank or
4
<PAGE>
a Subsidiary, or during the three-month period referred to in Paragraph 5
hereof, this Stock Option shall automatically expire and terminate one (1)
year after the date of Optionee's disability or death or on the day specified
in Paragraph 2 hereof, whichever is earlier. After Optionee's disability or
death but before such expiration, the person or persons to whom Optionee's
rights under this Stock Option shall have passed by order of a court of
competent jurisdiction or by will or the applicable laws of descent and
distribution, or the executor, administrator or conservator of Optionee's
estate, subject to the provisions of Paragraph 13 hereof, shall have the
right to exercise this Stock Option to the extent that increments, if any,
had become exercisable as of the date on which Optionee ceased to be employed
or affiliated with the Bank or a Subsidiary. For purposes hereof, "disability"
shall have the same meaning as set forth in Section 14 of the Plan.
8. NON-TRANSFERABILITY. This Stock Option shall not be
transferable except by will or by the laws of descent and distribution, and
shall be exercisable during Optionee's lifetime only by Optionee.
9. EMPLOYMENT. This Agreement shall not obligate the Bank or a
Subsidiary to employ Optionee for any period, nor shall it interfere in any
way with the right of the Bank or a Subsidiary to increase or reduce
Optionee's compensation.
10. PRIVILEGES OF STOCK OWNERSHIP. Optionee shall have no rights
as a stockholder with respect to the Option Shares unless
5
<PAGE>
and until said Option Shares are issued to Optionee as provided in the Plan.
Except as provided in Section 15 of the Plan, no adjustment will be made for
dividends or other rights in respect of which the record date is prior to the
date such stock certificates are issued.
11. MODIFICATION AND TERMINATION BY BOARD OF DIRECTORS. The rights
of Optionee are subject to modification and termination upon the occurrence
of certain events as provided in Sections 16 and 17 of the Plan. Upon
adoption by the requisite holders of the Bank's outstanding shares of Common
Stock of any plan of 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 this Stock Option in accordance with Section 16 of the Plan,
this Stock Option shall become immediately exercisable as to all unexercised
Option Shares notwithstanding the incremental exercise provisions of
Paragraph 2 of this Agreement, for a period then specified 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, in
accordance with Section 8(g) of the Plan, on the condition that the
terminating event described in Section 16 of the Plan is consummated. If such
terminating event is not consummated, this Stock Option shall be exercisable
in accordance with the terms of the Agreement, excepting this Paragraph 11.
6
<PAGE>
12. NOTIFICATION OF SALE. Optionee agrees that Optionee, or any
person acquiring Option Shares upon exercise of this Stock Option, will
notify the Bank in writing not more than five (5) days after any sale or
other disposition of such Shares.
13. APPROVALS. This Agreement and the issuance of Option Shares
hereunder are expressly subject to the approval of the Plan and the form of
this Agreement by the holders of not less than a majority of the voting stock
of the Bank. This Stock Option may not be exercised unless and until all
applicable requirements of all regulatory agencies having jurisdiction with
respect thereto, and of the securities exchanges upon which securities of the
Bank are listed, if any, have been complied with.
14. NOTICES. All notices to the Bank provided for in this Agreement
shall be addressed to it in care of its President or Cashier at its main
office and all notices to Optionee shall be addressed to Optionee's address
on file with the Bank or a Subsidiary, or to such other address as either may
designate to the other in writing, all in compliance with the notice
provisions set forth in Section 25 of the Plan.
15. INCORPORATION OF PLAN. All of the provisions of the Plan, as
amended through the date hereof, including definitions, are incorporated
herein by reference as if set forth in full in this Agreement. In the event
of any conflict between the terms of the Plan and any provision contained
herein, the terms of the
7
<PAGE>
Plan shall be controlling and the conflicting provisions contained herein
shall be disregarded.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
FALLBROOK NATIONAL BANK
By
-------------------------------------
PRESIDENT AND CHIEF EXECUTIVE OFFICER
By
---------------------------- OPTIONEE
--------------------------
BEFORE EXECUTION, BE SURE ALL BLANKS HAVE BEEN FILLED IN AND THAT INAPPLICABLE
REFERENCES IN SECTIONS 1(b) AND (c) ON PAGE TWO HAVE BEEN CROSSED OUT.
8
<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 21,800
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 1985 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 sheets 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
