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EXHIBIT 4.1
COMMUNITY WEST BANCSHARES
1997 STOCK OPTION PLAN
ADOPTED JANUARY 23, 1997
1. Purpose
The purpose of the Community West Bancshares 1997
Stock Option Plan (the "Plan") is to strengthen Community West Bancshares (the
"Company") and those banks and corporations which are or hereafter become
subsidiary corporations (the "Subsidiary" or "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 Company 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
Company 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 Option Committee upon the grant of each
Stock Option hereunder.
2. Definitions
For purposes of this Plan, the following terms shall
have the following meanings:
a. "Affiliation" or "affiliated." For purposes of
Sections 10, 11, 12, 13 and 14 hereof, these terms shall mean service as a
director of the Company or any Subsidiary.
b. "Common Stock." This term shall mean shares of
the Company's common stock, no par value, subject to adjustment pursuant to
Section 15 (Adjustment Upon Changes in Capitalization) hereunder.
c. "Company." This term shall mean Community West
Bancshares, a California corporation.
d. "Eligible Participants." This term shall mean:
(i) all directors of the Company or any Subsidiary; (ii) all officers (whether
or not they are also directors) of the Company or any Subsidiary; and (iii) all
key employees (as such persons may be determined by the Stock Option Committee
from time to time) of the Company or any Subsidiary, provided that such officers
and key employees have a customary work week of at least forty hours in the
employ of the Company or a Subsidiary.
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e. "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.
f. "Incentive Stock Option." This term shall mean
a Stock Option which is an "incentive stock option" within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended.
g. "Non-Qualified Stock Option." This term shall
mean a Stock Option which is not an Incentive Stock Option.
h. "Option Shares." This term shall mean Common
Stock covered by and subject to any outstanding unexercised Stock Option granted
pursuant to this Plan.
i. "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.
j. "Plan." This term shall mean the Community West
Bancshares 1996 Stock Option Plan as embodied herein and as may be amended from
time to time in accordance with the terms hereof and applicable law.
k. "Stock Option." This term shall mean the right
to purchase a specified number of shares of Common Stock under this Plan, at a
price and upon the terms and conditions determined by the Stock Option
Committee.
l. "Stock Option Committee." The Board of
Directors of the Company may select and designate a Stock Option Committee
consisting of three or more directors of the Company, having full authority to
act in the matter. Regardless of whether a Stock Option Committee is selected,
the Board of Directors of the Company 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 Company
acting as the 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.
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m. "Subsidiary." This term shall mean each
"subsidiary corporation" (treating the Company as the employer corporation) as
defined in Section 424(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
Company 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 hereunder.
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.
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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 four hundred
fifty-six thousand four hundred and twenty-seven (456,427) in the aggregate. If
any Stock Option shall be canceled, surrendered, or expire for any reason
without having been exercised in full, the unpurchased Option Shares represented
thereby shall again be available for grants of Stock Options under this Plan.
5. 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:
(i) In the case of grants to Eligible Participants
who are not directors of the Company and/or any Subsidiary, for a
number of Option Shares, at the price(s) and time(s), and on the
terms and conditions as it deems advisable and specifies in the
respective grants; provided, however, that such grants shall vest
at least at the rate of twenty percent (20%) annually over five
(5) years from the date of grant; and
(ii) In the case of grants to Eligible Participants
who are directors of the Company, or any subsidiary for a number
of Option Shares, at the price(s) and time(s), and on the terms
and conditions as it deems advisable and specifies in the
respective grants; provided, however, that such grants may not
exceed a maximum of one hundred thirty-six thousand nine hundred
and twenty-eight (136,928) Option Shares to all directors who are
not officers or key employees of the Company or any Subsidiary at
any time; and provided further, that such grants shall vest at
least at the rate of twenty percent (20%) annually over five (5)
years from the date of grant. The foregoing maximum number of
Option Shares which may be granted to all directors of the
Company or any Subsidiary at any time shall be adjusted in
accordance with the provisions of Section 15 hereof.
The terms upon which and the times at which, or the
periods within which, the Option Shares subject to such Stock Options may become
acquired or such Stock Options may be acquired and exercised shall be as set
forth in the Plan and the related Stock Option Agreements.
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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 Company, 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 Company and the Eligible Participant have
executed and delivered to the other a Stock Option Agreement in the form then
required by the Stock Option Committee as evidencing the grant of the Stock
Option, together with such other instrument or instruments as may be required by
the Stock Option Committee pursuant to this Plan; provided, however, that the
Stock Option Committee may fix the date of grant as any date on or after the
date of its final determination to grant the Stock Option (or if no such date is
fixed, then the date of grant shall be the date on which the determination was
finally made by the Stock Option Committee to grant the Stock Option), and such
date shall be set forth in the Stock Option Agreement. The date of grant as so
determined shall be deemed the date of grant of the Stock Option for purposes of
this Plan.
c. Shareholder-Employees. A Stock Option granted
hereunder to an Eligible Participant who is also an officer or key employee of
the Company 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 Company 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 one hundred ten percent
(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 424(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. No grant of
Incentive Stock Options hereunder may be made when the aggregate Fair Market
Value of Option Shares with respect to which Incentive Stock Options (pursuant
to this Plan or any other Incentive Stock Option Plan of the Bank or any
Subsidiary) are exercisable for the first time by the Eligible Participant
during any calendar year exceeds One Hundred Thousand Dollars ($100,000).
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e. Substituted Stock Options. If all of the
outstanding shares of common stock of another corporation are changed into or
exchanged solely for the Common Stock in a transaction to which Section 424(a)
of the Internal Revenue Code of 1986, as amended, applies, then, subject to the
approval of the Board of Directors of the Company, Stock Options under the Plan
may be substituted ("Substituted Options") in exchange for valid, unexercised
and unexpired stock options of such other 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 422 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 422 of the Code or any regulations or rulings issued by
the Internal Revenue Service for any reason; (ii) are not granted in accordance
with the provisions of Section 6(c); (iii) are in excess of the fair market
value limitations set forth in Section 6(d); (iv) are granted to an Eligible
Participant who is not an officer or key employee of the Company or any
Subsidiary; or (v) are designated at the time of grant as Non-Qualified Stock
Options. Non-Qualified Stock Options granted or substituted hereunder shall be
so designated in the Stock Option Agreement entered into between the Company 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 corporation for which it was exchanged immediately before
substitution, with appropriate adjustment to reflect the exchange ratio of the
shares of stock of the other corporation into the shares of Common Stock.
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c. Ten Percent Shareholders. Notwithstanding the
provisions of Section 7(a) or Section 7(b), the exercise price of the Option
Shares shall be not less than one hundred ten percent (110%) of the Fair Market
Value in the case of any Optionee who owns more than ten percent (10%) of the
Common Stock.
8. Exercise of Stock Options
a. Exercise. Except as otherwise provided
elsewhere herein, each Stock Option shall be exercisable in such increments,
which need not be equal, and upon such contingencies as the Stock Option
Committee shall determine at the time of grant of the Stock Option; provided,
however, that if an Optionee shall not in any given period 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. Prior Outstanding Incentive Stock Options.
Incentive Stock Options granted (or substituted) to an Optionee under the Plan
may be exercisable while such Optionee has outstand ing and unexercised any
Incentive Stock Option previously granted (or substituted) to him or her
pursuant to this Plan or any other Incentive Stock Option Plan of the Company or
any Subsidiary. An Incentive Stock Option shall be treated as outstanding until
it is exercised in full or expires by reason of lapse of time.
c. Notice and Payment. Stock Options granted
hereunder shall be exercised by written notice delivered to the Company
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 Company, of the right of such person or
persons to exercise the Stock Option. The Company'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
Company shall have no obligation to an Optionee for any Option Shares unless and
until full payment of the exercise price is received by the Company and all of
the terms and provisions of the Plan and the related Stock Option agreement have
been fully complied with.
d. 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) and/or, with the prior written approval of the
Stock Option Committee at or before the time of exercise, in Common Stock of
the Company which,
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when added to the cash payment, if any, which has an aggregate Fair Market Value
equal to the full amount of the exercise price of the Stock Option, or part
thereof, then being exercised. Payment by an Optionee as provided herein shall
be made in full concurrently with the Optionee's notification to the Company of
his intention to exercise all or part of a Stock Option. If all or any part of a
payment is made in shares of Common Stock as heretofore provided, such payment
shall be deemed to have been made only upon receipt by the Company of all
required share certificates, and all stock powers and all other required
transfer documents necessary to transfer the shares of Common Stock to the
Company.
e. 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.
f. 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: (i) payment in full as provided
hereinabove has been received by the Company; (ii) in the opinion of the counsel
for the Company, all applicable requirements of law and of regulatory bodies
having jurisdiction over such issuance and delivery have been fully complied
with; and (iii) if required by federal or state law or regulation, the Optionee
shall have paid to the Company 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
Company, in its sole discretion, to satisfy applicable income tax withholding
requirements.
9. Nontransferability of Stock Options
Each Stock Option shall, by its terms, be non-
transferable 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 Company or any Subsidiary to employ or
continue to employ or remain affiliated with any Optionee or any Eligible
Participant for any period of time or interfere in any way with the right of the
Company 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 employed by or
affiliated with the Company 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 ninety (90) days after the Optionee ceases to
be so affiliated,
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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
affiliated with the Company 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 Company or a Subsidiary is
terminated for cause, 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 thirty (30) days after termination for cause, whichever is earlier;
provided, however, that the Stock Option Committee may, in its sole discre tion,
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 Company 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 and, 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 Company or a Subsidiary, or during the ninety-day 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 distribu tion, 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 Company or a Subsidiary or during the ninety (90) day 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.
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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 Company or a Subsidiary as a result of the disability. An Optionee
shall be deemed to be "disabled" if it shall appear to the Stock Option
Committee, upon written certification delivered to the Company of a qualified
licensed physician, that the Optionee has become permanently and totally unable
to engage in any substantial gainful activity by reason of a medically
determinable physical or mental impairment which can be expected to result in
the Optionee's death, or which has lasted or can be expected to last for a
continuous period of not less than 12 months.
15. Adjustment Upon Changes in Capitalization
If the outstanding shares of Common Stock of the
Company are increased, decreased, or changed into or exchanged for a different
number or kind of shares or securities of the Company, through a reorganization,
merger, recapitalization, reclassifi cation, stock split, stock dividend, stock
consolidation, or otherwise, without consideration to the Company, 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 Company, or upon consummation of a plan of reorganization,
merger or consolidation of the Company with one or more corporations, as a
result of which the Company is not the surviving entity, or upon the sale of all
or substantially all the assets of the Company to another corporation, the Plan
shall auto matically 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 (in which case such Stock
Options shall be converted into stock options for a like number and kind of
shares of the surviving entity),
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or substitution for such Stock Options with new stock options covering stock of
a successor employer corporation, or a parent or subsidiary corporation thereof,
solely at the discretion of such successor 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 Company 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 Company having first obtained the
approval of 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 Company, or by written consent, if the amendment or
modification would:
(a) materially increase the number of securities
which may be issued under the Plan;
(b) materially increase the number of securities
which may be issued at any time under the Plan to all directors who
are not also officers or key employees of the Company or any
Subsidiary;
(c) materially modify the requirements as to
eligibility for participation in the Plan;
(d) increase or decrease the exercise price of any
Stock Option granted under the Plan;
(e) increase the maximum term of Stock Options
provided for herein;
(f) permit Stock Options to be granted to any person
who is not an Eligible Participant; or
(g) 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.
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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 Company 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 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 Company 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 Company notice in writing of such sale or other
disposition.
20. Effective Date of the Plan
The Plan shall be deemed adopted as of January 23,
1997, and shall be effective immediately, subject to approval of the Plan by the
holders of at least a majority of the Company's outstanding shares of Common
Stock represented and voting at a meeting of shareholders.
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 Company; 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 Company and the
Optionee, and shall contain each of the provisions and agreements herein
specifically required to be contained therein, and such other terms and
conditions as are deemed desirable by the Stock Option Committee and are not
inconsistent with this Plan.
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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.
24. Exculpation and Indemnification of Stock Option
Committee
In addition to such other rights of indemnification
which they may have as directors of the Company or as members of the Stock
Option Committee, the members of the Stock Option Committee, and each of them,
shall be indemnified by the Company 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 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 Company; 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
Company 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. Agreement and Representations of Optionee
Unless the shares of Common Stock covered by this
Plan have been registered with the Securities and Exchange Commission pursuant
to the registration requirements under the Securities Act of 1933, each Optionee
shall: (i) by and upon accepting a Stock Option, represent and agree in writing,
in the form of the letter attached hereto as Exhibit "A," for himself or herself
and his or her transferees by will or the laws of descent and distribution, that
the Option Shares will be acquired for investment purposes and not for resale or
distribution; and (ii) by and upon the exercise of a Stock Option,
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or a part thereof, furnish evidence satisfactory to counsel for the Company,
including written and signed representations in the form of the letter attached
hereto as Exhibit "B," to the effect that the Option Shares are being acquired
for investment purposes and not for resale or distribution, and that the Option
Shares being acquired shall not be sold or otherwise transferred by the Optionee
except in compliance with the registration provisions under the Securities Act
of 1933, as amended, or an applicable exemption therefrom. Furthermore, the
Company, at its sole discretion, to assure itself that any sale or distribution
by the Optionee complies with this Plan and any applicable federal or state
securities laws, may take all reasonable steps, including placing stop transfer
instructions with the Company's transfer agent prohibiting transfers in
violation of the Plan and affixing the following legend (and/or such other
legend or legends ad the Stock Option Committee shall require) on certificates
evidencing the shares:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR
OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT WITH RESPECT TO THEM UNDER THE ACT OR A WRITTEN OPINION
OF COUNSEL FOR THE HOLDER THEREOF, WHICH OPINION SHALL BE
ACCEPTABLE TO COMMUNITY WEST BANCSHARES, THAT REGISTRATION IS NOT
REQUIRED."
At any time that an Optionee contemplates the disposition of any of the Option
Shares (whether by sale, exchange, gift or other form of transfer), he or she
shall first notify the Company of such proposed disposition and shall thereafter
cooperate with the Company in complying with all applicable requirements of law
which, in the opinion of counsel for the Company, must be satisfied prior to the
making of such disposition. Before consummating such disposition, the Optionee
shall provide to the Company an opinion of Optionee's counsel, at the Company's
expense, of which both such opinion and such counsel shall be satisfactory to
the Company, that such disposition will not result in a violation of any state
or federal securities laws or regulations. The Company shall remove any legend
affixed to certificates for Option Shares pursuant to this Section if and when
all of the restrictions on the transfer of the Option Shares, whether imposed by
this Plan or federal or state law, have terminated.
26. 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, with the Chief Executive Officer of the
Company), 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 Company,
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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 upon receipt by the notifying party of the return
receipt request acknowledging receipt of the notice or demand.
27. Limitation on Obligations of the Company
All obligations of the Company arising under or as a
result of this Plan or Stock Options granted hereunder shall constitute the
general unsecured obligations of the Company, and not of the Board of Directors
of the Company, any member thereof, the Stock Option Committee, any member
thereof, any officer of the Company, or any other person or any Subsidiary, and
none of the foregoing, except the Company, shall be liable for any debt,
obligation, cost or expense hereunder.
28. 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
Company relating to this Plan or any Stock Option granted hereunder is
authorized, and such may not bind the Company or the Stock Option Committee to
grant any Stock Option to any person.
29. Severability
If any provision of this Plan as applied to any
person or to any circumstance shall be adjudged by a court of competent
jurisdiction to be void, invalid, or unenforceable, the same shall in no way
affect any other provision hereof, the application of any such provision in any
other circumstances, or the validity or enforceability hereof.
30. 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.
31. Headings
The headings of the several sections 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.
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32. Successors
This Plan shall be binding upon the respective
successors, assigns, heirs, executors, administrators, guardians and personal
representatives of the Company and Optionees.
33. Governing Law
This Plan shall be governed by and construed in
accordance with the laws of the State of California.
34. 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.
* * * * * * * *
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SECRETARY'S CERTIFICATE OF ADOPTION
I, the undersigned, do hereby certify that:
1. I am the duly elected or appointed and acting
Secretary of Community West Bancshares; and
2. The foregoing Community West Bancshares 1997 Stock Option Plan was
adopted by the Board of Directors of Community West Bancshares at a meeting duly
called as required by law and convened on the 23rd day of January, 1997.
IN WITNESS WHEREOF, I have hereunto subscribed my name this 23rd day of
January, 1997.
/s/ M. NELLIS
---------------------------------------
Michel Nellis, Secretary
18
EXHIBIT "A"
-----------, -----
Community West Bancshares
5827 Hollister Avenue
Goleta, California 93117
Gentlemen:
On this _____ day of ___________________, 19____, the undersigned
has received, pursuant to the Community West Bancshares 1997 Stock Option Plan
(the "Plan") and the Stock Option Agreement (the "Agreement") by and between
Community West Bancshares (the "Company") and the undersigned dated
______________________, ______ an option to purchase ________ shares of the
common stock, no par value, of Community West Bancshares (the "Stock").
In consideration of the grant of such option by Community West
Bancshares:
1. I hereby represent and warrant to you that the Stock to be
acquired pursuant to the option will be acquired by me in good faith and for my
own personal account, and not with a view to distributing the Stock to others or
otherwise reselling the stock in violation of the Securities Act of 1933, as
amended, or the rules and regulations promulgated thereunder.
2. I hereby acknowledge and agree that: (a) the Stock to be
acquired by me pursuant to the Plan has not been registered and that there is no
obligation on the part of Community West Bancshares to register such Stock under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder; and (b) the Stock to be acquired by me will not be freely tradeable
unless the Stock is either registered under the Securities Act of 1933, as
amended, or the holder presents a legal opinion acceptable to Community West
Bancshares that the transfer will not violate the federal securities laws.
3. I understand that the Company is relying upon the truth and
accuracy of the representations and agreements contained herein in determining
to grant such option to me and upon subsequently issuing any Stock pursuant to
the Plan without
19
Community West Bancshares
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Page 2
Community West Bancshares first registering the same under the Securities Act of
1933, as amended.
4. I understand that the certificate evidencing the Stock to be
issued pursuant to the Plan will contain a legend upon the face thereof to the
effect that the Stock is not registered under the Securities Act of 1933 and
that stop transfer orders will be placed against the shares with the Company's
transfer agent.
5. In further consideration for the grant of an option to
purchase Stock of Community West Bancshares the undersigned hereby agrees to
indemnify you and hold you harmless against all liability, cost, or expenses
(including reasonable attorney's fees) arising out of or as a result of any
distribution or resale of shares of the Stock by the undersigned in violation of
the securities laws. The agreements contained herein shall inure to the benefit
of and be binding upon the respective legal representatives, successors and
assigns of the undersigned and Community West Bancshares.
Very truly yours,
-----------------------------
(Signature)
-----------------------------
(Type or Print Your Name)
20
EXHIBIT "B"
-----------, -----
Community West Bancshares
5827 Hollister Avenue
Goleta, California 93117
Gentlemen:
On this _____ day of ___________________, 19____, the undersigned
has acquired, pursuant to the Community West Bancshares 1997 Stock Option Plan
(the "Plan") and the Stock Option Agreement (the "Agreement") by and between
Community West Bancshares (the "Company") and the undersigned dated
______________________, ______ an option to purchase _____________________
(_________) shares of the common stock, no par value, of Community West
Bancshares (the "Stock"). In consideration of the issuance by Community West
Bancshares to the undersigned of said shares of its Common Stock:
1. I hereby represent and warrant to you that the Stock is being
acquired by me in good faith for my own personal account, and not with a view to
distributing the Stock to others or otherwise reselling the Stock in violation
of the Securities Act of 1933, as amended, or the rules and regulations
promulgated thereunder.
2. I hereby acknowledge and agree that: (a) the Stock being
acquired by me pursuant to the Plan has not been registered and that there is no
obligation on the part of Community West Bancshares to register such Stock under
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder; and (b) the Stock being acquired by me is not freely
tradeable and must be held by me for investment purposes unless the Stock is
either registered under the Securities Act of 1933 or transferred pursuant to an
exemption from such registration, as accorded by the Securities Act of 1933 and
under the rules and regulations promulgated thereunder. I further represent and
acknowledge that I have been informed by legal counsel in connection with said
Plan of the restrictions on my ability to transfer the Stock and that I
understand the scope and effect of those restrictions.
3. I understand that the effects of the above representations are
the following: (i) that the undersigned does not presently intend to sell or
otherwise dispose of all or any
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Community West Bancshares
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Page 2
part of the shares of the Stock to any person or entity except in compliance
with the terms described above, in the Plan and in the Agreement; and (ii) that
the Company is relying upon the truth and accuracy of the representations and
agreements contained herein in issuing said shares of the Stock to me without
first registering the same under the Securities Act of 1933, as amended.
4. I hereby agree that the certificate evidencing the Stock may
contain the following legend stamped upon the face thereof to the effect that
the Stock is not registered under the Securities Act of 1933, as amended, and
that the Stock has been acquired pursuant to the representations and
restrictions in this letter, the Plan and in the Agreement:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR
OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT WITH RESPECT TO THEM UNDER THE ACT OR A WRITTEN OPINION
OF COUNSEL FOR THE HOLDER HEREOF, WHICH OPINION SHALL BE
ACCEPTABLE TO COMMUNITY WEST BANCSHARES, THAT REGISTRATION IS NOT
REQUIRED."
5. I hereby agree and understand that the Company will place a
stop transfer notice with its stock transfer agent to ensure that the
restrictions on transfer described herein will be observed.
6. In further consideration of the issuance of the Stock, the
undersigned does hereby agree to indemnify you and hold you harmless against all
liability, costs, or expenses (including reasonable attorney's fees) arising out
of or as a result of any distribution or resale by the undersigned or any of the
Stock. The Agreements contained herein shall inure to the benefit of and be
binding upon the respective legal representatives, successors and assigns of the
undersigned and Community West Bancshares.
Very truly yours,
-----------------------------
(Signature)
-----------------------------
(Type or Print Your Name)