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 ($___________) per share, such Stock Option to be for
the term and upon the terms and conditions hereinafter stated;
NOW, THEREFORE, it is hereby agreed:
1. GRANT OF STOCK OPTION.
(a) Pursuant to said action of the Stock Option
Committee and pursuant to authorizations granted by all appropriate
regulatory and governmental agencies, the Bank hereby grants to Optionee the
option to purchase, upon and subject to the terms and conditions of the Plan,
which is incorporated in full herein by this reference, all or any part of
_____________ (_________________) Option Shares of the Bank's Common Stock at
the price of ____________________ Dollars ($_________) 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
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(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
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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
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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
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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.
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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
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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.
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