<PAGE>
As filed with the Securities and Exchange Commission on August 7, 1997
Registration No. 333-_____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-----------------------
NATIONAL MERCANTILE BANCORP
(Exact name of registrant as specified in its charter)
CALIFORNIA 95-3819685
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1840 CENTURY PARK EAST
LOS ANGELES, CALIFORNIA 90067
(Address of Principal Executive Offices and Zip Code)
-----------------------
NATIONAL MERCANTILE BANCORP 1996 STOCK INCENTIVE PLAN
(Full Title of Plan)
-----------------------
SCOTT A. MONTGOMERY
PRESIDENT AND CHIEF EXECUTIVE OFFICER
NATIONAL MERCANTILE BANCORP
1840 CENTURY PARK EAST
LOS ANGELES, CALIFORNIA 90067
(Name and address of agent for service)
(310) 277-2265
(Telephone number, including area code, of agent for service)
WITH A COPY TO:
THOMAS D. PHELPS
MANATT, PHELPS & PHILLIPS, LLP
11355 WEST OLYMPIC BOULEVARD
LOS ANGELES, CALIFORNIA 90064
Calculation of Registration Fee
<TABLE>
<CAPTION>
=========================================================================================================
Proposed Maximum Proposed Maximum
Title of Securities Amount to be Offering Price Aggregate Amount of
to be Registered Registered(1) per Share(2) Offering Price(2) Registration Fee
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, without 55,006(3) $13.00 $715,078 $217.00
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 of Common
Stock as may be issued upon exercise of options granted under the
Registrant's 1996 Stock Incentive Plan as a result of adjustment provisions
thereto.
(2) Estimated solely for purposes of calculating the amount of the registration
fee pursuant to Rule 457, based upon the average of the high and low prices
of the Common Stock as reported on the Nasdaq SmallCap Market System on
July 13, 1997.
(3) Adjusted for a 9.09 to 1 reverse stock split effected by National
Mercantile Bancorp on June 20, 1997.
================================================================================
<PAGE>
Unless otherwise indicated, all information contained in this Registration
Statement reflects a 9.09 to 1 reverse stock split effected by National
Mercantile Bancorp on June 20, 1997.
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The following documents listed under this Part I and the documents
incorporated by reference under Item 3 of Part II to this Form S-8, taken
together, constitute a prospectus that meets the requirements of Section 10(a)
of the Securities Act of 1933, as amended (the "Securities Act"), and are
incorporated herein by reference.
Item 1. Plan Information
----------------
(a) National Mercantile Bancorp 1996 Stock Incentive Plan
(b) Prospectus for the 1996 Stock Incentive Plan
(c) Form of Incentive Stock Option Agreement
(d) Form of Non-Qualified Stock Option Agreement
(e) Stock Option and Stock Appreciation Right Agreement dated June
19, 1997, between National Mercantile Bancorp and Scott A.
Montgomery
Item 2. Registrant Information and Employee Plan Annual Information
-----------------------------------------------------------
The written statement required to be provided to participants pursuant
to this Item 2 is set forth in the Prospectus referred to in Item 1 above.
I-1
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
National Mercantile Bancorp (the "Registrant") hereby files this
Registration Statement on Form S-8 with the Securities and Exchange Commission
(the "Commission") to register 55,006 shares of the Registrant's Common Stock
for issuance pursuant to the Registrant's 1996 Stock Incentive Plan (the
"Plan"), and such indeterminate number of shares as may become available under
the Plan as a result of the adjustment provisions thereof.
Item 3. Incorporation of Documents by Reference
---------------------------------------
The following documents previously filed by the Registrant with the
Commission pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act") are incorporated herein by reference:
(a) The Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996 filed pursuant to Section 13(a)
or 15(d) of the Exchange Act;
(b) All other reports filed by the Registrant pursuant to Section
13(a) or 15(d) of the Exchange Act since the end of the latest
fiscal year covered by the Annual Report referred to in (a)
above; and
(c) The description of the Common Stock set forth on pages 7, 8
and 9 of the Company's Amendment No. 2 to its Registration
Statement on Form S-14 (Registration No. 2-82386) filed under
the Securities Act, which description was incorporated by
reference in the Company's Registration Statement on Form 8-A,
dated June 15, 1987 filed under Section 12 of the Exchange
Act, and including any amendments or reports filed for the
purpose of updating such description.
All documents filed by the Registrant pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act subsequent to the date of this
Registration Statement and prior to the filing of a post-effective amendment
which indicates that all securities offered hereby have been sold or which
deregisters all securities then remaining unsold shall be deemed to be
incorporated herein by reference and to be a part hereof from the date of filing
of such documents.
Any statement made in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein or in any other subsequently filed document which is also
incorporated or deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
II-1
<PAGE>
Item 4. Description of Securities
-------------------------
Not applicable.
Item 5. Interests of Named Experts and Counsel
--------------------------------------
Not applicable.
Item 6. Indemnification of Directors and Officers
-----------------------------------------
Section 317 of the General Corporation Law of the State of California
(the "GCL") and Article V of the Registrant's Bylaws provide for the
indemnification of directors and officers under certain circumstances. The
Registrant's Bylaws grant the Registrant the power to indemnify its directors
and officers under certain circumstances to the extent permitted by the GCL
against certain expenses, judgments, fines, settlements, and other amounts
actually and reasonably incurred in connection with any proceeding arising by
reason of such person's position as a director or officer of the Registrant.
Pursuant to the GCL and the Registrant's Bylaws, the Registrant is required to
indemnify directors and officers against expenses actually and reasonably
incurred to the extent that such party is successful on the merits in the
defense of certain proceedings.
Section 204(a)(11) of the GCL provides for the indemnification,
subject to certain limitations, of directors and officers for breach of their
duty to a corporation and its stockholders in excess of that expressly permitted
by Section 317 of the GCL. An amendment to the Articles of Incorporation of the
Registrant adopted the implementation of Section 204(a)(11) of the GCL.
In addition, the Registrant has entered into Indemnity Agreements with
certain of its directors and certain officers which provide for, among other
items and except to the extent prohibited by any limitations on indemnification
under the GCL which cannot be waived, the mandatory indemnification by the
Registrant of any amount which a director or officer is legally obligated to pay
because of claims made against such person relating to his service as a director
or officer of the Registrant.
The Registrant also maintains a directors' and officers' liability
insurance policy insuring the Registrant's directors and officers against
certain liabilities and expenses incurred by them in their capacities as such,
and insuring the Registrant under certain circumstances, in the event that
indemnification payments are made by the Registrant to such directors and
officers.
Item 7. Exemption from Registration Claimed
-----------------------------------
Not applicable.
II-2
<PAGE>
Item 8. Exhibits
--------
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
5.1 Opinion of Manatt, Phelps & Phillips, LLP
23.1 Consent of Manatt, Phelps & Phillips, LLP (see Exhibit 5.1)
23.2 Consent of Deloitte & Touche LLP
24.1 Power of Attorney (see page II-5)
99.1 National Mercantile Bancorp 1996 Stock Incentive Plan
99.2 Form of Incentive Stock Option Agreement
99.3 Form of Non-Qualified Stock Option Agreement
99.4 Stock Option and Stock Appreciation Right Agreement dated
June 19, 1997, between National Mercantile Bancorp and Scott
A. Montgomery
</TABLE>
Item 9. Undertakings
------------
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement;
(i) To include any Prospectus required by Section
10(a)(3) of the Securities Act;
(ii) To reflect in the Prospectus any facts or events
arising after the effective date of this Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in this
Registration Statement. Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) of the Securities
Act if, in the aggregate, the changes in volume and price represent no more than
a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective Registration Statement;
and
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in this Registration
Statement or any material change to such information in this Registration
Statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in the post-effective amendment
by those paragraphs is contained in periodic reports filed with or furnished to
the Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in this Registration Statement.
II-3
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in this Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(d) The undersigned Registrant hereby undertakes to deliver or cause to be
delivered with the Prospectus, to each person to whom the Prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the Prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Exchange Act; and, where
interim financial information required to be presented by Article 3 of
Regulation S-X are not set forth in the Prospectus, to deliver, or cause to be
delivered to each person to whom the Prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
Prospectus to provide such interim financial information.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Los Angeles, State of California, on this 7th day of
August, 1997.
NATIONAL MERCANTILE BANCORP
By /s/ Scott A. Montgomery
-------------------------------------
Scott A. Montgomery
President and Chief Executive Officer
By /s/ Joseph W. Kiley III
-------------------------------------
Joseph W. Kiley III
Executive Vice President and
Chief Financial Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints each of Scott A. Montgomery and Joseph W. Kiley,
III his true and lawful attorney-in-fact and agent, each with full power of
substitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments to this Registration Statement, and to
file the same with all exhibits thereto, and all other documents in connection
therewith, with the Commission, granting unto each said attorney-in-fact and
agent with full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully to
all intents and purposes as he might or could do in person, hereby ratifying and
confirming all that each said attorney-in-fact and agent, or his substitute, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Robert E. Gipson Chairman August 7, 1997
- --------------------------
Robert E. Gipson
/s/ Alan Grahm Secretary, Director August 7, 1997
- --------------------------
Alan Grahm
/s/ Joseph W. Kiley III Executive Vice President, August 7, 1997
- -------------------------- Chief Financial Officer and
Joseph W. Kiley III Director
/s/ Scott A. Montgomery President, Chief Executive August 7, 1997
- -------------------------- Officer and Director
Scott A. Montgomery
/s/ Robert E. Thomson Vice Chair August 7, 1997
- --------------------------
Robert E. Thomson
</TABLE>
II-5
<PAGE>
NATIONAL MERCANTILE BANCORP
FORM S-8
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
<C> <S>
5.1 Opinion of Manatt, Phelps & Phillips, LLP
23.1 Consent of Manatt, Phelps & Phillips, LLP (see Exhibit 5.1)
23.2 Consent of Deloitte & Touche LLP
24.1 Power of Attorney (see page II-5)
99.1 National Mercantile Bancorp 1996 Stock Incentive Plan
99.2 Form of Incentive Stock Option Agreement
99.3 Form of Non-Qualified Stock Option Agreement
99.4 Stock Option and Stock Appreciation Right Agreement dated
June 19, 1997, between National Mercantile Bancorp and Scott A.
Montgomery
</TABLE>
<PAGE>
EXHIBIT 5.1
[LETTERHEAD OF MANATT PHELPS PHILLIPS]
August 7, 1997
National Mercantile Bancorp
1840 Century Park East
Los Angeles, California 90067
RE: REGISTRATION STATEMENT ON FORM S-8
Gentlemen:
At your request, we have examined the Registration Statement on Form
S-8 (the "Registration Statement") to be filed by National Mercantile Bancorp, a
California corporation and a registered bank holding company under the Bank
Holding Company Act of 1956, as amended (the "Company"), with the Securities and
Exchange Commission (the "Commission") in connection with the registration under
the Securities Act of 1933, as amended (the "Securities Act"), of 55,006 shares
of the Company's common stock, no par value (the "Common Stock"), that may be
issued in the aggregate upon the exercise of awards granted under the Company's
1996 Stock Incentive Plan (the "Plan").
In rendering this opinion, we have examined such documents and records
as we deemed relevant, including, but not limited to, the following:
1. The Articles of Incorporation of the Company, as amended to date;
2. The Bylaws of the Company, as amended to date;
3. The Plan;
4. The Form of Incentive Stock Option Agreement, the Form of Non-
Qualified Stock Option Agreement and the Stock Option and Stock
Appreciation Right Agreement dated June 19, 1997, between the
Company and Scott A. Montgomery (collectively the "Agreements") to
be used in connection with the Plan;
<PAGE>
National Mercantile Bancorp
August 7, 1997
Page 2
5. Records of proceedings of the Company's Board of Directors and
shareholders pertaining to the adoption or amendment of the Plan
and the Agreements; and
6. The Registration Statement.
With respect to the foregoing documents, 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. We also have obtained from the officers of the
Company certificates as to such factual matters as we consider necessary for the
purpose of this opinion, and insofar as this opinion is based on such matters of
fact, we have relied on such certificates.
On the basis of the foregoing, subject to the assumptions, limitations
and exceptions set forth herein, we are of the opinion that the 55,006 shares of
Common Stock issuable by the Company upon the exercise of awards granted
pursuant to the Plan will be, when issued and delivered against payment therefor
in accordance with the Plan, the Agreements and the Registration Statement, duly
authorized, validly issued, fully paid and non-assessable.
For the purpose of rendering the opinions set forth herein, and with
your consent, we have assumed, without investigation that: (i) all awards
granted under the Plan to date have been, and all awards to be granted under the
Plan will be, duly and validly granted in accordance with the terms of the Plan,
(ii) the consideration for the shares of Common Stock to be issued pursuant to
the exercise of such awards will be received prior to the issuance thereof,
(iii) the shares of Common Stock to be issued pursuant to the exercise of such
awards will be issued in accordance with the terms of the Plan and the
Agreements, (iv) the Registration Statement will become effective under the
Securities Act prior to the issuance of any shares of Common Stock under the
Plan and no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall have
been instituted or be pending before the Commission, (v) a prospectus will be
updated and delivered to participants in the Plan as required by the Securities
Act and the rules and regulations promulgated by the Commission thereunder and
(vi) the grant of such awards and the issuance of shares of Common Stock upon
the exercise thereof will comply with the securities laws of each state or
jurisdiction applicable thereto (other than the Securities Act).
This opinion is limited to the current laws of the State of California
and the Securities Act and the rules and regulations promulgated by the
Commission thereunder, to present judicial interpretations thereof and to facts
as they presently exist. In rendering this opinion, we have no obligation to
revise or supplement it should the current laws of the State of California or
the Securities Act or such rules and regulations be changed by legislative
action, judicial decision or otherwise.
<PAGE>
National Mercantile Bancorp
August 7, 1997
Page 3
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 document, nor is it to be filed
with or furnished to any government agency or other person, without the prior
written consent of the undersigned in each instance.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Manatt, Phelps & Phillips, LLP
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
National Mercantile Bancorp on Form S-8 of our report dated March 7, 1997 (which
expresses an unqualified opinion and includes an explanatory paragraph relating
to National Mercantile Bancorp and Subsidiary's ability to continue as a going
concern) appearing in the Annual Report on Form 10-K of National Mercantile
Bancorp for the year ended December 31, 1996.
Deloitte & Touche LLP
August 1, 1997
<PAGE>
NATIONAL MERCANTILE BANCORP
1996 STOCK INCENTIVE PLAN
-------------------------
Section 1. PURPOSE
The purpose of the 1996 Stock Incentive Plan (the "1996 Plan") of
National Mercantile Bancorp, a California corporation and a registered bank
holding company under the Bank Holding Company Act of 1956, as amended (the
"Company"), is to enable the Company to attract, retain and motivate its
employees and independent contractors by providing for or increasing the
proprietary interests of such employees and independent contractors in the
Company, and to enable the Company to attract, retain and motivate its
nonemployee directors and further align their interest with those of the
shareholders of the Company by providing for or increasing the proprietary
interest of such directors in the Company.
Section 2. PERSONS ELIGIBLE
Each of the following persons (each, a "Participant") shall be
eligible to be considered for the grant of an Award (as hereinafter defined)
hereunder: (a) any employee of the Company or any of its subsidiaries,
including any director who is also such an employee; and (b) any independent
contractor of the Company or any of its subsidiaries. Any director of the
Company who is not also an employee of the Company (a "Nonemployee Director")
shall receive Nonemployee Director Options (as hereinafter defined) pursuant to
Section 10 hereof, but shall not otherwise participate in the 1996 Plan.
Section 3. AWARDS
(a) The Committee (as hereinafter defined) responsible for
administration of the 1996 Plan is authorized to enter into any type of
arrangement on behalf of the Company with a Participant that is not inconsistent
with the provisions of the 1996 Plan and that, by its terms, involves or might
involve the issuance of (i) shares of common stock of the Company ("Common
Shares") or (ii) a Derivative Security (as such term is defined in Rule 16a-1
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as such rule may be amended from time to time) with an exercise or
conversion privilege at a price related to the Common Shares or with a value
derived from the value of the Common Shares. The entering into of any such
arrangement is referred to herein as the grant of an "Award."
(b) Awards are not restricted to any specified form or structure
and may include, without limitation, sales or bonuses of stock, restricted
stock, stock options, reload stock options, stock purchase warrants, other
rights to acquire stock, securities convertible into or redeemable for
1
<PAGE>
stock, stock appreciation rights, phantom stock, dividend equivalents,
performance units or performance shares, and an Award may consist of one such
security or benefit, or two or more of them in tandem or in the alternative.
(c) Awards may be issued, and Common Shares may be issued pursuant
to an Award, for any lawful consideration as determined by the Committee,
including, without limitation, services rendered by the recipient of such Award.
(d) Subject to the provisions of the 1996 Plan, the Committee, in
its sole and absolute discretion, shall determine all of the terms and
conditions of each Award granted hereunder, which terms and conditions may
include, among other things:
(i) a provision permitting the recipient of such Award,
including any recipient who is a director or officer of the Company, to pay
the purchase price of the Common Shares or other property issuable pursuant
to such Award, or such recipient's tax withholding obligation with respect
to such issuance, in whole or in part, by any one or more of the following:
(A) the delivery of cash;
(B) the delivery of other property deemed acceptable by
the Committee;
(C) the delivery of previously owned shares of capital
stock of the Company (including "pyramiding"); or
(D) a reduction in the amount of Common Shares or other
property otherwise issuable pursuant to such Award.
(ii) a provision conditioning or accelerating the receipt of
benefits pursuant to such Award, either automatically or in the discretion
of the Committee, upon the occurrence of specified events, including,
without limitation, a change of control of the Company (as defined by the
Committee), an acquisition of a specified percentage of the voting power of
the Company, the dissolution or liquidation of the Company, a sale of
substantially all of the property and assets of the Company or an event of
the type described in Section 7 hereof; or
(iii) a provision required in order for such Award to qualify as
an incentive stock option (an "Incentive Stock Option") under Section 422
of the Internal Revenue Code of 1986, as amended (the "Code"); provided,
however, that no Award issued to any Nonemployee Director or any
independent contractor of the Company shall qualify as an Incentive Stock
Option.
2
<PAGE>
Section 4. STOCK SUBJECT TO THE 1996 PLAN
(a) At any time, the aggregate number of Common Shares issued or
issuable pursuant to all Awards (including all Incentive Stock Options) granted
under the 1996 Plan shall not exceed 500,000 shares subject to adjustment as
provided in Section 7 hereof.
(b) For purposes of Section 4(a) hereof, the aggregate number of
Common Shares issued or issuable pursuant to Awards granted under the 1996 Plan
shall at any time be deemed to be equal to the sum of the following:
(i) the number of Common Shares that were issued prior to such
time pursuant to Awards granted under the 1996 Plan, other than Common
Shares that were subsequently reacquired by the Company pursuant to the
terms and conditions of such Awards and with respect to which the holder
thereof received no benefits of ownership such as dividends; plus
(ii) the number of Common Shares that were otherwise issuable
prior to such time pursuant to Awards granted under the 1996 Plan, but
that were withheld by the Company as payment of the purchase price of the
Common Shares issued pursuant to such Awards or as payment of the
recipient's tax withholding obligation with respect to such issuance; plus
(iii) the maximum number of Common Shares that are or may be
issuable at or after such time pursuant to Awards granted under the 1996
Plan prior to such time.
Section 5. DURATION
Unless sooner terminated pursuant to Section 8 below, the 1996 Plan
shall terminate on March 28, 2006. No Awards shall be granted under the 1996
Plan while the 1996 Plan is suspended or after it is terminated.
Section 6. ADMINISTRATION
(a) The 1996 Plan shall be administered by a committee (the
"Committee") of the Board of Directors of the Company (the "Board") consisting
of two or more directors, each of whom: (i) is a "disinterested person" (as such
term is defined in Rule 16b-3 promulgated under the Exchange Act, as such Rule
may be amended from time to time); and (ii) is an "outside director" within the
meaning of Section 162(m) of the Code. Members of the Committee shall serve at
the pleasure of the Board, and the Board may from time to time remove members
from or add members to, the Committee.
3
<PAGE>
(b) Subject to the provisions of the 1996 Plan, the Committee shall
be authorized and empowered to do all things necessary or desirable in
connection with the administration of the 1996 Plan, including, without
limitation, the following:
(i) adopt, amend and rescind rules and regulations relating to
the 1996 Plan;
(ii) determine which persons are Participants and to which of
such Participants, if any, Awards shall be granted hereunder;
(iii) grant Awards to Participants and determine the terms and
conditions thereof, including the number of Common Shares issuable
pursuant thereto;
(iv) determine the terms and conditions of the Nonemployee
Director Options that are automatically granted hereunder, other than the
terms and conditions specified in Section 10 hereof;
(v) determine whether, and the extent to which adjustments are
required pursuant to Section 7 hereof; and
(vi) interpret and construe the 1996 Plan and the terms and
conditions of any Award granted hereunder.
Section 7. ADJUSTMENTS
If the outstanding shares of the class of Company stock then subject
to the 1996 Plan are increased, decreased or exchanged for or converted into
cash, property or a different number or kind of securities, or if cash, property
or securities are distributed in respect of such outstanding securities, in
either case as a result of a reorganization, merger, consolidation,
recapitalization, restructuring, reclassification, dividend (other than a
regular cash dividend) or other distribution, stock split, reverse stock split
or the like, or if substantially all of the property and assets of the Company
are sold, then, unless the terms of such transaction shall provide otherwise,
the Committee shall make appropriate and proportionate adjustments in: (i) the
number and type of shares or other securities or cash or other property that may
be acquired pursuant to Awards theretofore granted under the 1996 Plan; and (ii)
the maximum number and type of shares or other securities that may be issued
pursuant to Awards thereafter granted under the 1996 Plan. The determination of
the Committee as to what adjustments shall be made pursuant to this section, and
the extent thereof, shall be final and conclusive. No fractional shares of
stock shall be issued under the 1996 Plan on account of any such adjustment.
4
<PAGE>
Section 8. AMENDMENT AND TERMINATION
The Board may suspend or terminate the 1996 Plan at any time;
provided, however, that no such suspension or termination shall deprive the
recipient of any Award theretofore granted under the 1996 Plan, without the
consent of such recipient, of any of his or her rights thereunder or with
respect thereto.
The Board may amend the 1996 Plan at any time and in any manner
subject to the following limitations:
(a) No such amendment shall deprive the recipient of any Award
theretofore granted under the 1996 Plan, without the consent of such recipient,
of any of his or her rights thereunder or with respect thereto;
(b) Except as provided in Section 7 relating to adjustments upon
changes in stock, no such amendment shall be effective unless approved by the
affirmative vote of the holders of a majority of the outstanding shares of the
Company present, represented and entitled to vote at a shareholders meeting or
by the written consent of a majority of the outstanding shares of the Company
where such shareholder approval is required by law or pursuant to the Articles
of Incorporation or Bylaws of the Company; and
(c) Section 10 hereof shall not be amended more than once every six
(6) months, other than to comport with changes in the Code, the Employee
Retirement Income Security Act, or the rules and regulations thereunder.
Section 9. EFFECTIVE DATE
The 1996 Plan shall be effective as of June 18, 1997, the date upon
which it was approved by the shareholders of the Company; provided, however,
that no Common Shares may be issued under this Plan until it has been approved,
directly or indirectly, by the affirmative vote of the holders (the
"Shareholders") of a majority of the outstanding shares of the Company present,
or represented, and entitled to vote at a meeting duly held in accordance with
the laws of the State of California.
Section 10. NONEMPLOYEE DIRECTOR OPTIONS
(a) Any person elected or appointed to serve as a Nonemployee
Director who has not previously served as a Nonemployee Director of the Company
on or prior to October 1, 1996, shall be granted, on the first business day
following the later of the date of such election or appointment or the date the
1996 Plan is approved by the Shareholders, an option to purchase 5,000 Common
Shares without the requirement of any further action by the Committee. On the
first
5
<PAGE>
business day following the date of the annual meeting of shareholders of the
Company held in 1998, or any adjournment thereof (the "1998 Meeting"), any
person who was a Nonemployee Director on or after the effective date of the 1996
Plan and who is re-elected to the Board at the 1998 Meeting shall be granted an
option to purchase 2,500 Common Shares without the requirement of any further
action by the Committee. Options that may be granted to newly-elected
Nonemployee Directors or to re-elected Nonemployee Directors under this Section
10 shall be referred to collectively as the "Nonemployee Director Options." The
date on which a Nonemployee Director Option is granted shall be the Date of
Grant for such option.
(b) If, on any date upon which Nonemployee Director Options are to
be automatically granted pursuant to this Section 10, the number of Common
Shares remaining available for options under the 1996 Plan is insufficient for
the grant to each Nonemployee Director entitled thereto of a Nonemployee
Director Option to purchase the entire number of Common Shares specified in this
Section 10, then a Nonemployee Director Option to purchase a proportionate
amount of such available number of Common Shares (rounded to the nearest whole
share) shall be granted to each Nonemployee Director entitled thereto on such
date.
(c) Each Nonemployee Director Option granted under the 1996 Plan
shall become fully exercisable one year from the Date of Grant, provided that in
the event that a Change of Control (as defined below) shall occur, such granted
Nonemployee Director Option shall be immediately exercisable.
(d) Each Nonemployee Director Option granted under the 1996 Plan
shall expire upon the sixth anniversary of the Date of Grant.
(e) Each Nonemployee Director Option shall have an exercise price
equal to the aggregate Fair Market Value on the Date of Grant of the Common
Shares subject thereto.
(f) Payment of the exercise price of any Nonemployee Director
Option granted under the 1996 Plan shall be made in full in cash concurrently
with the exercise of such option; provided, however, that, in the discretion of
the Board, the payment of such exercise price may instead be made:
(i) in whole or in part, with Common Shares delivered
concurrently with such exercise (such shares to be valued on the basis of
the Fair Market Value of such shares on the date of such exercise),
provided that the Company is not then prohibited from purchasing or
acquiring Common Shares; or
(ii) in whole or in part, by the delivery, concurrently with
such exercise and in accordance with Section 220.3(e)(4) of Regulation T
promulgated under the Exchange Act, of a properly executed exercise notice
for such option and irrevocable instructions to a broker promptly to
deliver to the Company a specified dollar amount of the proceeds of a sale
of or a loan secured by the Common Shares issuable upon exercise of such
option.
6
<PAGE>
(g) For purposes of this Section 10, the "Fair Market Value" of a
Common Share or other security on any date (the "Determination Date") shall be
equal to the average of the high bid and low asked prices per Common Share or
unit of such other security on the business day immediately preceding the
Determination Date in the market where the security is traded, or, if the Common
Shares or such other security were not quoted by any such organization on such
immediately preceding business day, as determined by the Board. For purposes of
this Section 10, the term "Change of Control" shall mean the occurrence of
either of the following events: (a) the Company consolidates with or merges
with or into any person or conveys, transfers or leases all or substantially all
of its assets to any person, or any corporation consolidates with or merges into
or with the Company in any event pursuant to a transaction in which the
outstanding voting stock or units of the Company is changed into or exchanged
for cash, securities or other property, other than any such transaction where
the outstanding voting stock or units of the Company is not changed or exchanged
at all (except to the extent necessary to reflect a change in the jurisdiction
of incorporation or organization of the Company) or where the outstanding voting
stock or units of the Company is changed into or exchanged for voting stock or
units of the surviving corporation or organization which is not redeemable, or
no "person" or "group" owns immediately after such transaction, directly or
indirectly, an amount of outstanding voting stock or units necessary to effect
the change of control of, or influence over, the surviving corporation or
organization, as the case may be, or (b) the Company is liquidated or dissolved
or adopts a plan of liquidation or dissolution.
(h) Each Nonemployee Director Option shall 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 or the
optionee's guardian or legal representative.
(i) Nonemployee Director Options are not intended to qualify as
Incentive Stock Options.
7
<PAGE>
EXHIBIT 99.2
NATIONAL MERCANTILE BANCORP
1996 STOCK OPTION PLAN
FORM OF INCENTIVE STOCK OPTION AGREEMENT
This INCENTIVE STOCK OPTION AGREEMENT (the "Agreement") is made as of the
____ day of __________, 19__ between NATIONAL MERCANTILE BANCORP, a California
corporation (the "Company"), and ___________________ (the "Optionee").
R E C I T A L S
---------------
A. The Board of Directors of the Company adopted the 1996 Stock Incentive
Plan (the "1996 Plan") on March 28, 1996 and April 25, 1997, and the 1996 Plan
was approved by the shareholders of the Company on June 18, 1997.
B. The 1996 Plan provides for the granting of options to purchase shares
of Common Stock of the Company to selected employees of the Company or any
subsidiary of the Company, as the Stock Option Committee (the "Committee")
appointed by the Board of Directors may from time to time determine, and,
pursuant to Section 10 of the 1996 Plan, to directors of the Company who are not
also employees of the Company.
C. The Committee has determined that it is in the best interests of the
Company and its shareholders to grant, pursuant to the 1996 Plan, an incentive
stock option to the Optionee to purchase ____________________ (_______) shares
of the Company's Common Stock on the terms and conditions hereinafter set forth.
D. The option granted hereby is intended to qualify as an "incentive
stock option" under Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"), to the extent possible.
NOW, THEREFORE, the parties hereto agree as follows:
1. GRANT OF OPTION. The Company hereby grants to the Optionee as of the
---------------
date hereof (the "Date of Grant") an incentive stock option (the "Option") to
purchase, on the terms and conditions hereinafter set forth,
____________________ (_______) shares of the Company's Common Stock, no par
value (the "Option Shares"), at a purchase price of __________ per share.
2. VESTING. The Option shall vest and become exercisable in full
-------
_____________________; provided, however, that no portion of the Option may be
exercised by the Optionee to the extent that such exercise would cause an
ownership change to occur pursuant to Section 382 of the Code. Section 382 of
the Code provides, among other things, that utilization of net operating losses
will be restricted if there is a change in ownership of the loss corporation.
Changes in ownership are determined by reference to 5% shareholders.
1
<PAGE>
3. EXPIRATION OF OPTION AND CERTAIN LIMITATIONS ON RIGHT TO EXERCISE.
-----------------------------------------------------------------
(a) The Option shall expire on the tenth anniversary of the Date of Grant
(the "Expiration Date"), except that (i) if the Optionee ceases, on or before
the Expiration Date, for any reason other than death or permanent disability, to
be employed by the Company or a subsidiary of the Company, the Option shall
expire as provided in Section 6 below, and (ii) if the Optionee ceases, on or
before the Expiration Date, to be employed by the Company or a subsidiary of the
Company, by reason of death or permanent disability, the Option shall expire as
provided in Section 7 below. The term "Employee" as used in this Option means
an officer or other employee of the Company or any subsidiary (including an
officer who is also a director of the Company or any subsidiary).
(b) The Option may be exercised in whole or in part from time to time on
or after _________________ until the Expiration Date (subject to the provisions
hereof), except that not less than one hundred (100) shares may be purchased at
any time unless the number of shares then purchasable hereunder shall be less
than one hundred.
(c) Except as provided in Sections 6 and 7 below, none of the Option
Shares may be purchased hereunder unless the Optionee, at the time he exercises
the Option, is employed by the Company or a subsidiary of the Company, since the
date hereof. A leave of absence approved in writing by the Committee shall not
be deemed a termination of employment for any purpose of this Option.
4. METHOD OF EXERCISE OF OPTION. The Option may be exercised only by
----------------------------
delivery to the Company of a written notice of exercise specifying the number of
Option Shares which the Optionee then elects to purchase, accompanied by payment
in full of the aggregate exercise price for such shares (the "Exercise Price"),
in cash or by check payable to the Company, or in shares of the Company's Common
Stock, represented by a certificate duly endorsed, transferring to the Company
good and valid title to such shares, such shares to be valued on the basis of
the aggregate Fair Market Value (as defined in the 1996 Plan) thereof on the
date of such exercise.
5. NON-TRANSFERABILITY OF OPTION. The Option shall not be transferable
-----------------------------
by the Optionee otherwise than by will or the laws of descent and distribution,
and it shall be exercisable, during the lifetime of the Optionee only by him or
by his guardian or legal representative regardless of any community property
interest therein of the spouse of the Optionee or such spouse's successors in
interest.
6. TERMINATION OF EMPLOYMENT.
-------------------------
(a) If the Optionee ceases to be employed by the Company or a subsidiary
of the Company for any reason other than death or permanent disability, the
Option shall expire three
2
<PAGE>
(3) months after the date the Optionee ceases to be so employed, unless by its
terms it expires sooner. The Option may be exercised by the Optionee within
such three month period to the extent it was exercisable on the date of such
cessation of employment.
(b) The Option confers no right upon the Optionee with respect to the
continuation of his employment with the Company or any of its subsidiaries, and
shall not interfere with the right of the Company or a subsidiary, or of the
Optionee, to terminate his employment at any time.
7. DEATH OR PERMANENT DISABILITY OF OPTIONEE. If the Optionee ceases to
-----------------------------------------
be employed by the Company or a subsidiary of the Company by reason of death or
permanent disability, the Option shall expire one (1) year after the date of
such death or disability, unless by its terms it expires sooner. The Option may
be exercised only by the heirs of the Optionee within such one year period to
the extent it was exercisable on the date of such death or disability.
8. ADJUSTMENTS UPON THE OCCURRENCE OF CERTAIN EVENTS.
-------------------------------------------------
(a) If the outstanding shares of the Company's Common Stock are
increased, decreased, or exchanged for or converted into cash, property or a
different number or kind of shares or securities of the Company through
reorganization, recapitalization, reclassification, merger, consolidation,
restructuring, stock dividend, stock split, reverse stock split or other similar
transaction, or if substantially all of the property and assets of the Company
are sold, then, unless the terms of such transaction provide otherwise, an
appropriate and proportionate adjustment shall be made in the Option Shares
pursuant to which the Options relate. Any such adjustment in the outstanding
Options shall be made without change in the aggregate purchase price applicable
to the unexercised portion of the Options but with a corresponding adjustment in
the price for each Option Share.
(b) No adjustment provided for in this Section 8 shall require the
Company to sell a fractional share under the Options.
9. DELIVERY OF STOCK CERTIFICATES. Upon the exercise of all or a portion
------------------------------
of the Option, the Company, as promptly as practicable, shall mail or deliver to
the Optionee a stock certificate or certificates representing the shares then
purchased, and will pay all stamp taxes payable in connection therewith. The
issuance of such shares and delivery of the certificate or certificates therefor
shall, however, be subject to any delay necessary to complete (a) the listing of
such shares on any stock exchange upon which shares of the same class are then
listed or quoted on the Nasdaq, (b) such registration or other qualification of
such shares under any state or federal law, rule, or regulation as the Company
may determine to be necessary or advisable, and (c) the making of provision for
the payment or withholding of any taxes required to be withheld pursuant to any
applicable law, in respect of the exercise of the Option or the receipt of such
shares.
3
<PAGE>
10. NOTICES, ETC.
-------------
(a) Any notice hereunder by the Optionee shall be given to the Company in
writing and such notice and any payment by the Optionee hereunder shall be
deemed duly given or made only upon receipt thereof at the Company's corporate
offices at 1840 Century Park East, Los Angeles, California 90067, or at such
other address as the Company may designate by notice to the Optionee.
(b) Any notice or other communication to the Optionee shall be in writing
and any such communication and any delivery to the Optionee hereunder shall be
deemed duly given or made if mailed or delivered to the Optionee at such address
as the Optionee shall have on file with the Company or in care of the Company at
the address of its corporate offices indicated above.
11. WAIVER. The waiver by the Company of any provision of the Option
------
shall not operate as or be construed to be a waiver of the same provision or any
other provision hereof at any subsequent time or for any other purpose.
12. IRREVOCABILITY. The Option shall be irrevocable until it expires as
--------------
herein provided.
13. EFFECTIVE DATE. The Option shall be deemed granted and effective on
--------------
the Date of Grant.
14. INTERPRETATION AND CONSTRUCTION. The interpretation and construction
-------------------------------
of the Option by the Committee shall be final, binding and conclusive. The
section headings in this Agreement are for convenience of reference only and
shall not be deemed part of, or germane to the interpretation or construction
of, this Agreement.
NATIONAL MERCANTILE BANCORP
By:
----------------------------------
-------------------------------------
Optionee
4
<PAGE>
By his or her signature below, the spouse of the Optionee agrees to be
bound by all of the terms and conditions of the foregoing Agreement.
-------------------------------------
5
<PAGE>
NATIONAL MERCANTILE BANCORP
1996 STOCK OPTION PLAN
FORM OF NON-QUALIFIED STOCK OPTION AGREEMENT
This INCENTIVE STOCK OPTION AGREEMENT (the "Agreement") is made as of the
____ day of __________, 19__ between NATIONAL MERCANTILE BANCORP, a California
corporation (the "Company"), and ___________________ (the "Optionee").
R E C I T A L S
---------------
A. The Board of Directors of the Company adopted the 1996 Stock Incentive
Plan (the "1996 Plan") on March 28, 1997 and April 25, 1997, and the 1996 Plan
was approved by the shareholders of the Company on June 18, 1997.
B. The 1996 Plan provides for the granting of options to purchase shares
of Common Stock of the Company to selected employees of the Company or any
subsidiary of the Company, as the Stock Option Committee (the "Committee")
appointed by the Board of Directors may from time to time determine, and,
pursuant to Section 10 of the 1996 Plan, to directors of the Company who are not
also employees of the Company.
C. Pursuant to the 1996 Plan, the Optionee is automatically entitled to a
non-qualified stock option to purchase ___________________ (___________) shares
of the Company's Common Stock on the terms and conditions hereinafter set forth.
D. The option granted hereby is not intended to qualify as an "incentive
---
stock option" under Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"), to the extent possible.
NOW, THEREFORE, the parties hereto agree as follows:
1. GRANT OF OPTION. The Company hereby grants to the Optionee as of the
---------------
date hereof (the "Date of Grant") a non-qualified stock option (the "Option") to
purchase, on the terms and conditions hereinafter set forth,
____________________ (_______) shares of the Company's Common Stock, no par
value (the "Option Shares"), at a purchase price of __________ per share.
2. VESTING. The Option shall vest and become exercisable in full [one
-------
year from Date of Grant]; provided, however, that in the event that a Change of
Control as defined in the 1996 Plan shall occur, the Option shall be immediately
exercisable; provided, further, that no portion of the Option may be exercised
by the Optionee to the extent that such exercise would cause an ownership change
to occur pursuant to Section 382 of the Code. Section 382 of the Code provides,
among other things, that utilization of net operating losses will be restricted
if there is a change in ownership of the loss corporation. Changes in ownership
are determined by reference to 5% shareholders.
1
<PAGE>
3. EXPIRATION OF OPTION AND CERTAIN LIMITATIONS ON RIGHT TO EXERCISE.
-----------------------------------------------------------------
(a) The Option shall expire on the sixth anniversary of the Date of Grant
(the "Expiration Date").
(b) The Option may be exercised in whole or in part from time to time on or
after _________________ until the Expiration Date (subject to the provisions
hereof), except that not less than one hundred (100) shares may be purchased at
any time unless the number of shares then purchasable hereunder shall be less
than one hundred.
4. METHOD OF EXERCISE OF OPTION. The Option may be exercised only by
----------------------------
delivery to the Company of a written notice of exercise specifying the number of
Option Shares which the Optionee then elects to purchase, accompanied by payment
in full of the aggregate exercise price for such shares (the "Exercise Price"),
in cash or by check payable to the Company, or in shares of the Company's Common
Stock, represented by a certificate duly endorsed, transferring to the Company
good and valid title to such shares, such shares to be valued on the basis of
the aggregate Fair Market Value (as defined in the 1996 Plan) thereof on the
date of such exercise.
5. NON-TRANSFERABILITY OF OPTION. The Option shall not be transferable by
-----------------------------
the Optionee otherwise than by will or the laws of descent and distribution, and
it shall be exercisable, during the lifetime of the Optionee only by him or by
his guardian or legal representative regardless of any community property
interest therein of the spouse of the Optionee or such spouse's successors in
interest.
6. ADJUSTMENTS UPON THE OCCURRENCE OF CERTAIN EVENTS.
-------------------------------------------------
(a) If the outstanding shares of the Company's Common Stock are increased,
decreased, or exchanged for or converted into cash, property or a different
number or kind of shares or securities of the Company through reorganization,
recapitalization, reclassification, merger, consolidation, restructuring, stock
dividend, stock split, reverse stock split or other similar transaction, or if
substantially all of the property and assets of the Company are sold, then,
unless the terms of such transaction provide otherwise, an appropriate and
proportionate adjustment shall be made in the Option Shares pursuant to which
the Options relate. Any such adjustment in the outstanding Options shall be made
without change in the aggregate purchase price applicable to the unexercised
portion of the Options but with a corresponding adjustment in the price for each
Option Share.
(b) No adjustment provided for in this Section 6 shall require the Company
to sell a fractional share under the Options.
2
<PAGE>
7. DELIVERY OF STOCK CERTIFICATES. Upon the exercise of all or a portion
------------------------------
of the Option, the Company, as promptly as practicable, shall mail or deliver to
the Optionee a stock certificate or certificates representing the shares then
purchased, and will pay all stamp taxes payable in connection therewith. The
issuance of such shares and delivery of the certificate or certificates therefor
shall, however, be subject to any delay necessary to complete (a) the listing of
such shares on any stock exchange upon which shares of the same class are then
listed or quoted on the Nasdaq SmallCap Market, (b) such registration or other
qualification of such shares under any state or federal law, rule, or regulation
as the Company may determine to be necessary or advisable, and (c) the making of
provision for the payment or withholding of any taxes required to be withheld
pursuant to any applicable law, in respect of the exercise of the Option or the
receipt of such shares.
8. NOTICES, ETC.
-------------
(a) Any notice hereunder by the Optionee shall be given to the Company in
writing and such notice and any payment by the Optionee hereunder shall be
deemed duly given or made only upon receipt thereof at the Company's corporate
offices at 1840 Century Park East, Los Angeles, California 90067, or at such
other address as the Company may designate by notice to the Optionee.
(b) Any notice or other communication to the Optionee shall be in writing
and any such communication and any delivery to the Optionee hereunder shall be
deemed duly given or made if mailed or delivered to the Optionee at such address
as the Optionee shall have on file with the Company or in care of the Company at
the address of its corporation offices indicated above.
9. WAIVER. The waiver by the Company of any provision of the Option shall
------
not operate as or be construed to be a waiver of the same provision or any other
provision hereof at any subsequent time or for any other purpose.
10. IRREVOCABILITY. The Option shall be irrevocable until it expires as
--------------
herein provided.
11. EFFECTIVE DATE. The Option shall be deemed granted and effective on
--------------
the Date of Grant.
12. INTERPRETATION AND CONSTRUCTION. The interpretation and construction
-------------------------------
of the Option by the Committee shall be final, binding and conclusive. The
section headings in this
3
<PAGE>
Agreement are for convenience of reference only and shall not be deemed part of,
or germane to the interpretation or construction of, this Agreement.
NATIONAL MERCANTILE BANCORP
By: _______________________________________
-------------------------------------------
___________________, Optionee
By his or her signature below, the spouse of the Optionee agrees to be
bound by all of the terms and conditions of the foregoing Agreement.
------------------------------------------
4
<PAGE>
EXHIBIT 99.4
NATIONAL MERCANTILE BANCORP
1996 STOCK INCENTIVE PLAN
STOCK OPTION AND STOCK APPRECIATION RIGHT AGREEMENT
This STOCK OPTION AND STOCK APPRECIATION RIGHT AGREEMENT ("Agreement") is
made as of the 19th day of June, 1997 between NATIONAL MERCANTILE BANCORP, a
California corporation (the "Company") and Scott A. Montgomery, ("Awardee").
R E C I T A L S
---------------
A. The Board of Directors of the Company adopted the 1996 Stock Incentive
Plan (the "1996 Plan") on March 28, 1996 and the 1996 Plan was approved by the
shareholders of the Company on June 18, 1997.
B. The 1996 Plan provides for the granting to selected employees and
independent contractors and directors of the Company or any subsidiary of the
Company, as the Stock Option Committee (the "Committee") may from time to time
determine, of awards involving or which might involve the issuance of shares of
common stock, no par value, of the Company (the "Common Stock").
C. Awardee and Mercantile National Bank (the "Bank") have entered into an
Employment Agreement dated as of June 21, 1996, as such agreement may be amended
from time to time (collectively, the "Employment Agreement").
D. Pursuant to the Employment Agreement and under the 1996 Plan, a non-
qualified stock option, together with a tandem stock appreciation right, has
been granted to Awardee with respect to Seventy Five Thousand (75,000) shares of
the Company's Common Stock, on the terms and conditions hereinafter set forth.
E. The option granted hereby is not intended to qualify as "an incentive
stock option" under Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code").
NOW, THEREFORE, the parties hereto agree as follows:
1. GRANT OF OPTION AND SAR. The Company hereby grants to Awardee as of
-----------------------
the date hereof (the "Date of Grant") a non-qualified stock option ("Option")
and tandem stock appreciation right ("SAR") with respect to 75,000 shares of
Common Stock of the Company ("Base Shares") on the terms and conditions
hereinafter set forth. The Date of Grant is June 19, 1997. All capitalized
terms not otherwise defined herein shall have the meanings ascribed to them in
the 1996 Plan.
<PAGE>
2. VESTING. Subject to the foregoing and the limitations contained
-------
herein, the Option and Tandem SAR shall be exercisable, on a cumulative basis,
with respect to each installment shown below on or after the date of vesting
applicable to such installment, as follows:
<TABLE>
<CAPTION>
Number of Shares Date of Earliest
(Installment) Exercise (Vesting)
---------------- ------------------
<S> <C>
37,500 June 30, 1998
37,500 December 31, 1999
</TABLE>
3. EXERCISE. Awardee may exercise the Option and Tandem SAR by either (a)
--------
exercising the Option and paying the Exercise Price (as defined below) with
respect to the shares of Common Stock underlying the exercised Option (the
"Option Shares") or (b) exercising the SAR in which case the Company shall pay
to Awardee an amount, in cash or shares of Common Stock, at the discretion of
Committee, equal to the excess, if any, of the Fair Market Value of the Common
Stock over the Measurement Price (as defined below).
4. EXERCISE PRICE OF OPTION AND MEASUREMENT PRICE OF SAR.
-----------------------------------------------------
(a) The exercise price (the "Exercise Price") for the Option is One Dollar
and Fifty-Nine Cents ($1.59) per share.
(b) The measurement price (the "Measurement Price") for the SAR is One
Dollar and Fifty-Nine Cents ($1.59) per share, which is the Fair Market Value
(defined below) per share of the Common Stock on the date of execution of the
Employment Agreement.
(c) The SAR shall entitle Awardee upon exercise (in whole or in part) to
receive shares of Common Stock, or cash, or a combination thereof, as the
Committee shall determine, in its sole and absolute discretion. The aggregate
value to be paid to Awardee upon exercise (i.e., the sum of the amount of cash
or Fair Market Value of such shares on the date of exercise) shall equal an
amount by which the Fair Market Value per share on the date of exercise of the
SAR exceeds the Measurement Price multiplied by the number of shares with
respect to which the SAR is exercised on the exercise date.
(d) The term "Fair Market Value" shall mean the average of the bid and
asked price of the Common Stock as quoted on the Nasdaq Stock Market on the
applicable date. If, for any reason, no such price is available, Fair Market
Value shall mean the fair market value of a share of the Common Stock as
determined by the Committee in its sole discretion.
5. MINIMUM NUMBER OF SHARES.
------------------------
(a) The minimum number of shares with respect to which the SAR may be
exercised at any one time is one hundred (100) except as to an installment
subject to exercise, as set forth in paragraph 2 above, for which fewer than one
hundred (100) shares are unexercised, in which
2
<PAGE>
case, as to the exercise of that installment, the number of shares in such
installment remaining unexercised shall be the minimum number of shares. The
SAR may not be exercised for a fractional share.
(b) The Option may be exercised in whole or in part from time to time on or
after June 30, 1998 until the Expiration Date (subject to the provisions
hereof), except that not less than one hundred (100) shares may be purchased at
any time unless the number of shares then purchasable hereunder shall be less
than one hundred.
6. TIME OF EXERCISE. Any election by Awardee to exercise the Option or
----------------
SAR must be made during the period beginning on the third business day following
the release for publication of quarterly or annual financial information and
ending on the twelfth business day following such date. This condition of
release shall be deemed satisfied when the specified financial data is first
made publicly available.
7. TERM. The term of the Option and Tandem SAR commences on the date of
----
the grant hereof and, unless sooner terminated as set forth below or in the
Plan, terminates on January 1, 2000, with respect to the installment of 37,500
shares vesting on June 30, 1998, and on January 31, 2000, with respect to the
installment of 37,500 shares vesting on December 31, 1999. The Option and
Tandem SAR shall terminate prior to the expiration of its term in the following
circumstances:
(a) any portion of the Option and Tandem SAR which is not vested at the
time Awardee ceases to be employed by the Bank, for any reason, shall expire and
be forfeited immediately and automatically,
(b) any portion of the Option and Tandem SAR which is vested but has not
been exercised at the time Awardee ceases to be employed by the Bank, for any
reason, shall expire thirty (30) days after the date Awardee ceased to be
employed by the Bank,
(c) if Awardee elects to exercise any portion of the Option, Awardee shall
be deemed to have forfeited the SAR with respect to that portion exercised under
the Option or
(d) if Awardee elects to exercise any portion of the SAR, Awardee shall be
deemed to have forfeited the Option with respect to that portion exercised under
the SAR.
8. NOTICE OF EXERCISE.
------------------
(a) The SAR may be exercised, to the extent specified above, by delivering
ten (10) days' prior written notice of exercise to the Secretary of the Company,
or to such other person as the Company may designate, during regular business
hours, together with such additional documents as the Company may then require.
(b) The Option may be exercised only by delivery to the Company of a
written notice of exercise specifying the number of shares of Common Stock which
Awardee then elects to purchase, accompanied by payment in full of the aggregate
Exercise Price for such shares, in
3
<PAGE>
cash or by check payable to the Company, or in shares of the Company's Common
Stock, represented by a certificate duly endorsed, transferring to the Company
good and valid title to such shares, such shares to be valued on the basis of
the aggregate Fair Market Value thereof on the date of such exercise.
9. NONTRANSFERABILITY; NONASSIGNABILITY. Neither the SAR nor the Option
------------------------------------
is transferable or assignable, except by will or by the laws of descent and
distribution or pursuant to the terms of a "qualified domestic relations order"
within the meaning of Section 414(p) of the Internal Revenue Code of 1986, as
amended, is not subject to execution, attachment or other process, and is
exercisable during Awardee's life only by Awardee, or by Awardee's guardian or
legal representative regardless of any community property interest therein of
the spouse of Awardee or such spouse's successors in interest or a permitted
transferee. The terms of the SAR and the Option shall be binding upon the
beneficiaries, executors, administrators, heirs and successors of Awardee.
10. WRITTEN NOTICE.
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(a) Any notice hereunder by Awardee shall be given to the Company in
writing and such notice and any payment by Awardee hereunder shall be deemed
duly given or made only upon receipt thereof at the Company's corporate offices
at 1840 Century Park East, Los Angeles, California 90067, or at such other
address as the Company may designate by notice to Awardee.
(b) Any notice or other communication to Awardee shall be in writing and
any such communication and any delivery to Awardee hereunder shall be deemed
duly given or made if mailed or delivered to Awardee at such address as Awardee
shall have on file with the Company or in care of the Company at the address of
its corporation offices indicated above.
11. THE PLAN. Each of the SAR and the Option is subject to all the
--------
provisions of the 1996 Plan, a copy of which is attached hereto, and all of the
provisions of the 1996 Plan are hereby made a part of this Agreement, and are
further subject to all interpretations, amendments, rules and regulations which
may from time to time be promulgated and adopted pursuant to the 1996 Plan. In
the event of any conflict between the provisions of this Agreement and those of
the 1996 Plan, the provisions of the 1996 Plan shall control. Terms used in
this Agreement shall have the same meanings as the definitions of those terms in
the 1996 Plan.
12. TAX LIMITATION. Notwithstanding the foregoing provisions, no portion
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of the Option and Tandem SAR may be exercised by Awardee to the extent that the
exercise of such Option and Tandem SAR will cause an ownership change to occur
pursuant to Section 382 of the Internal Revenue Code. Section 382 provides,
among other things, that utilization of net operating losses will be restricted
if there is a change in ownership of the loss corporation. Changes in ownership
are determined by reference to 5% shareholders.
13. SHAREHOLDER RIGHTS. Awardee shall not be entitled to vote, receive
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dividends or be deemed for any purpose the holder of any shares of Common Stock
to which the Option and Tandem SAR apply until the Option and Tandem SAR shall
have been duly
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exercised to purchase such shares (if any shares are given, as determined by the
Board of Directors) in accordance with the provisions of this Agreement.
14. EMPLOYMENT RIGHTS. No provision of this Agreement shall (a) confer
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upon Awardee any right to continue in the employ of the Company or any of its
subsidiaries, (b) affect the right of the Company and each of its subsidiaries
to terminate the employment of Awardee, with or without cause, or (c) confer
upon Awardee any right to participate in any employee welfare or benefit plan or
other program of the Company or any of its subsidiaries other than the Plan.
AWARDEE HEREBY ACKNOWLEDGES THAT THE COMPANY AND EACH OF ITS SUBSIDIARIES MAY
TERMINATE THE EMPLOYMENT OF AWARDEE AT ANY TIME AND FOR ANY REASON, OR FOR NO
REASON, UNLESS AWARDEE AND THE COMPANY OR SUCH SUBSIDIARY ARE PARTIES TO A
WRITTEN EMPLOYMENT AGREEMENT THAT EXPRESSLY PROVIDES OTHERWISE.
15. NO ADVICE. The Company is not providing Awardee with advice,
---------
warranties, or representations regarding any of the legal, tax or business
effects to Awardee with respect to the 1996 Plan or this grant. Awardee is
encouraged to seek legal, tax and business advice from his own legal, tax and
business advisers as soon as possible. By accepting the grant of this award,
Awardee acknowledges that he has not relied on legal, tax or business advice
from the law firm of Manatt, Phelps & Phillips, LLP (or any of its partners,
employees or independent contractors) with respect to the 1996 Plan or this
award and that such law firm represented solely the Company and its affiliates
with respect to the 1996 Plan and this award. Awardee specifically waives any
actual or apparent conflict of interest of, and release from any liability, such
law firm (and its partners, employees and independent contractors) with respect
to the 1996 Plan and this award.
16. ACKNOWLEDGMENT OF TERMS. By accepting this grant and by signing this
-----------------------
instrument, Awardee acknowledges that he is familiar with the terms of the grant
and the 1996 Plan, that he has been encouraged by the Company to discuss the
grant and the 1996 Plan with his own legal, tax and business advisers, and that
he agrees to be bound by the terms of the grant and the 1996 Plan.
17. PAYMENT OF WITHHOLDING TAXES. Awardee acknowledges that federal and
----------------------------
state income tax withholding and payroll tax may apply upon exercise of the SAR.
Such withholding may be accomplished with respect to the cash compensation (if
any) due to Awardee from the Company or its affiliates. If withholding pursuant
to the foregoing sentence is insufficient (in the sole judgment of the Company)
to satisfy the full withholding obligation, Awardee shall pay to the Company the
amount of cash or, if permitted by applicable law and acceptable to the Company,
property with a value necessary to satisfy such remaining withholding obligation
on the date the SAR is exercised or at a time thereafter specified in writing by
the Company.
18. GOVERNING LAW. This Agreement shall be governed by and construed and
-------------
enforced in accordance with the laws of the State of California applicable to
agreements made and to be performed entirely in California.
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<PAGE>
19. TERMINATION OF EMPLOYMENT.
-------------------------
(a) If Awardee ceases to be employed by the Company or a subsidiary of the
Company for any reason other than death or permanent disability, the Option
shall expire thirty (30) days after the date Awardee ceases to be so employed,
unless by their terms they expire sooner. The Option may be exercised by
Awardee only within such three month period to the extent they were exercisable
on the date of such cessation of employment.
(b) The Option confer no right upon Awardee with respect to the
continuation of his employment with the Company or any of its subsidiaries, and
shall not interfere with the right of the Company or a subsidiary, or of
Awardee, to terminate his employment at any time.
20. ADJUSTMENTS UPON THE OCCURRENCE OF CERTAIN EVENTS.
-------------------------------------------------
(a) If the outstanding shares of the Company Common Stock are increased,
decreased, changed into or exchanged for a different number or kind of shares or
securities of the Company through reorganization, recapitalization (excluding
the Reclassification as defined in the Employment Agreement), reclassification,
stock dividend, stock split, reverse stock split or other similar transaction,
an appropriate and proportionate adjustment shall be made in the Base Shares
pursuant to which the Option and Tandem SAR relate. Any such adjustment in the
outstanding Option and Tandem SAR shall be made without change in the aggregate
purchase price applicable to the unexercised portion of the Option or the
aggregate Maintenance Price but with a corresponding adjustment in the price for
each Option Share or each Base Share.
(b) Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation of the Company with one or more
corporations as a result of which the Company is not the surviving corporation,
or upon a sale of substantially all the property or more than eighty percent
(80%) of the then outstanding stock of the Company to another corporation, the
Option and Tandem SAR shall terminate; provided, however, that notwithstanding
the foregoing, the Company or the Committee may provide to Awardee in writing in
connection with such transaction any or all of the following alternatives
(separately or in combinations): (i) for the Option and Tandem SAR granted more
than six months before such transaction to become immediately exercisable; (ii)
for the assumption by the successor corporation of the Option and Tandem SAR or
the substitution by such corporation for such Option and Tandem SAR of new
Option and Tandem SAR and rights covering the stock of the successor
corporation, or a parent or subsidiary thereof, with appropriate adjustments as
to the number and kind of shares and prices; (iii) the continuance of the Option
and Tandem SAR in the matter and under the terms so provided; or (iv) for the
payment in cash or stock in lieu of and in complete satisfaction of such Option
and Tandem SAR.
(c) No adjustment provided for herein shall require the Company to sell a
fractional share under the Option.
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<PAGE>
21. DELIVERY OF STOCK CERTIFICATES. Upon the exercise of all or a portion
------------------------------
of the Option, or exercise of all or a portion of the SAR which the Committee,
in its sole and absolute discretion, determines to pay in shares of Common
Stock, the Company, as promptly as practicable, shall mail or deliver to Awardee
a stock certificate or certificates representing the shares then purchased, and
will pay all stamp taxes payable in connection therewith. The issuance of such
shares and delivery of the certificate or certificates therefor shall, however,
be subject to any delay necessary to complete (a) the listing of such shares on
any stock exchange upon which shares of the same class are then listed or quoted
on the Nasdaq Stock Market, (b) such registration or other qualification of such
shares under any state or federal law, rule, or regulation as the Company may
determine to be necessary or advisable, and (c) the making of provision for the
payment or withholding of any taxes required to be withheld pursuant to any
applicable law, in respect of the exercise of the Option or the receipt of such
shares.
22. WAIVER. The waiver by the Company of any provision of the Agreement
------
shall not operate as or be construed to be a waiver of the same provision or any
other provision hereof at any subsequent time or for any other purpose.
23. IRREVOCABILITY. The Option and Tandem SAR shall be irrevocable until
--------------
it expires as herein provided.
24. INTERPRETATION AND CONSTRUCTION. The interpretation and construction
-------------------------------
of this Agreement by the Committee shall be final, binding and conclusive. The
section headings in this Agreement are for convenience of reference only and
shall not be deemed part of, or germane to the interpretation or construction
of, this Agreement.
NATIONAL MERCANTILE BANCORP
By: /s/ Howard P. Ladd
-------------------------------------
Howard P. Ladd, Chairman of the Board
/s/ Scott A. Montgomery
-------------------------------------
Scott A. Montgomery, Awardee
7
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By her signature below, the spouse of Awardee agrees to be bound by all of
the terms and conditions of the foregoing Agreement.
/s/ Elaine Bell Montgomery
-------------------------------------
Elaine Bell Montgomery
8
