-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CsgEXEemYr5sv3xsfEOteJsAmgbGEBfxrzupPALrv/1Q68Hp9wTpawv7Ecrncfup gGNx2oDW75wPSfu8D7HMXA== /in/edgar/work/20000810/0000912057-00-035993/0000912057-00-035993.txt : 20000921 0000912057-00-035993.hdr.sgml : 20000921 ACCESSION NUMBER: 0000912057-00-035993 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000810 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST COMMUNITY BANCORP /CA/ CENTRAL INDEX KEY: 0001102112 STANDARD INDUSTRIAL CLASSIFICATION: [6021 ] IRS NUMBER: 330885320 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-30747 FILM NUMBER: 690994 BUSINESS ADDRESS: STREET 1: 6110 EL TORDO CITY: RANCHO SANTA FE STATE: CA ZIP: 92067 BUSINESS PHONE: 8587563023 10-Q 1 a10-q.txt FORM 10-Q - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM 10-Q /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ______________ TO ______________ COMMISSION FILE NUMBER: 00-30747 ------------------------ FIRST COMMUNITY BANCORP (Exact name of registrant as specified in its charter) CALIFORNIA 33-0885320 (State or other jurisdiction of (I.R.S. Employer Identification incorporation or organization) Number)
6110 EL TORDO RANCHO SANTA FE, CALIFORNIA 92067 (Address of principal executive offices) Registrant's telephone number: (858) 756-3023 ------------------------ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934, as ammended during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes /X/ No / / Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of August 10, 2000: 3,894,517 shares of common stock, no par value. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TABLE OF CONTENTS
PAGE -------- PART I--FINANCIAL INFORMATION ITEM 1. Consolidated Financial Statements (unaudited)............... 3 Unaudited Condensed Consolidated Balance Sheets............. 3 Unaudited Condensed Consolidated Statements of Operations... 4 Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)............................................. 5 Unaudited Condensed Consolidated Statements of Cash Flows... 6 Notes to Unaudited Condensed Consolidated Financial Statements................................................ 7 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations................................. 10 ITEM 3. Quantitative and Qualitative Disclosure About Market Risk... 18 PART II--OTHER INFORMATION ITEM 1. Legal Proceedings........................................... 19 ITEM 2. Changes in Securities and use of Proceeds................... 19 ITEM 3. Defaults Upon Senior Securities............................. 19 ITEM 4. Submission of Matters to a Vote of Security Holders......... 19 ITEM 5. Other Information........................................... 19 ITEM 6. Exhibits and Reports on Form 8-K............................ 19 SIGNATURES....................................................................... 20
2 PART I--FINANCIAL INFORMATION ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, DECEMBER 31, 2000 1999 --------- ------------- (IN THOUSANDS, EXCEPT PER SHARE DATA) ASSETS: Cash and due from banks..................................... $ 28,899 $ 21,148 Federal funds sold.......................................... 30,093 10,889 -------- -------- Total cash and cash equivalents......................... 58,992 32,037 Interest-bearing deposits in financial institutions......... 3,948 7,502 Federal Reserve Bank and Federal Home Loan Bank stock, at cost...................................................... 1,076 1,235 Securities held-to-maturity (fair value of $12,820,000 at June 30, 2000 and $14,775,000 at December 31, 1999)....... 12,866 14,868 Securities available-for-sale (amortized cost of $32,822,000 at June 30, 2000 and $35,435,000 at December 31, 1999).... 31,794 34,460 -------- -------- Total securities........................................ 45,736 50,563 Gross loans................................................. 224,412 206,650 Deferred fees and costs..................................... (572) (548) -------- -------- Loans, net of deferred fees and costs................... 223,840 206,102 Allowance for loan losses................................... (3,987) (4,025) -------- -------- Net loans............................................... 219,853 202,077 Premises and equipment...................................... 5,184 5,480 Other real estate owned, net................................ 1,315 1,315 Other assets................................................ 6,650 5,388 -------- -------- Total Assets............................................ $341,678 $304,362 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY: LIABILITIES: Non-interest bearing deposits............................... $106,061 $ 93,763 Interest bearing deposits................................... 204,282 180,469 -------- -------- Total deposits.......................................... 310,343 274,232 Accrued interest payable and other liabilities.............. 3,572 2,618 Short-term borrowings....................................... 2,472 1,657 -------- -------- Total Liabilities....................................... 316,387 278,507 SHAREHOLDERS' EQUITY: Common stock, no par value; authorized 15,000,000 shares, issued and outstanding 3,891,517 and 3,878,259 shares as of June 30, 2000 and December 31, 1999, respectively...... 19,849 19,394 Preferred stock; authorized 5,000,000 shares, no shares issued and outstanding.................................... -- -- Retained earnings........................................... 6,038 7,026 Accumulated other comprehensive loss: Net unrealized losses on securities available-for-sale, net....................................................... (596) (565) -------- -------- Total Shareholders' Equity.............................. 25,291 25,855 -------- -------- Total Liabilities and Shareholders' Equity............ $341,678 $304,362 ======== ======== Shares outstanding.......................................... 3,891.6 3,878.3 Book value per share........................................ $ 6.50 $ 6.67
See "Notes to Unaudited Condensed Consolidated Financial Statements." 3 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
6 MONTHS ENDED 3 MONTHS ENDED JUNE 30, JUNE 30, ------------------- ------------------- 2000 1999 2000 1999 -------- -------- -------- -------- (IN THOUSANDS, EXCEPT PER SHARE DATA) INTEREST INCOME: Interest and fees on loans................................ $ 11,553 $ 9,140 $ 5,978 $ 4,859 Interest on interest-bearing deposits in financial institutions............................................ 167 160 62 96 Interest on investment securities......................... 1,439 1,201 703 630 Interest on federal funds sold............................ 676 827 525 361 -------- -------- -------- -------- Total interest income................................... 13,835 11,328 7,268 5,946 INTEREST EXPENSE: Interest expense on deposits.............................. 3,495 2,779 1,930 1,352 Interest expense on short-term borrowings................. 53 19 15 13 -------- -------- -------- -------- Total interest expense.................................. 3,548 2,798 1,945 1,365 -------- -------- -------- -------- NET INTEREST INCOME......................................... 10,287 8,530 5,323 4,581 Provision for loan losses................................. -- 240 -- 105 -------- -------- -------- -------- Net interest income after provision for loan losses..... 10,287 8,290 5,323 4,476 NON-INTEREST INCOME: Service charges and fees on deposit accounts.............. 595 583 285 301 Merchant discount fees.................................... 507 387 258 227 Other commissions and fees................................ 312 265 157 148 Gain on sale of loans..................................... 179 167 124 75 Other income.............................................. 136 96 92 46 -------- -------- -------- -------- Total non-interest income............................... 1,729 1,498 916 797 NON-INTEREST EXPENSE: Salaries and employee benefits............................ 3,329 2,853 1,668 1,435 Occupancy................................................. 773 684 377 363 Furniture and equipment................................... 478 332 236 179 Legal expenses............................................ 159 107 75 52 Other professional services............................... 913 675 510 372 Stationery, supplies and printing......................... 135 117 90 60 FDIC assessment........................................... 32 22 17 11 Merchant card processing.................................. 456 340 224 196 Cost of other real estate owned........................... 33 160 33 159 Advertising............................................... 196 196 95 101 Insurance................................................. 63 53 32 27 Loss on sale of securities................................ 11 2 -- 2 Merger costs.............................................. 3,561 -- 3,561 -- Other..................................................... 951 870 605 459 -------- -------- -------- -------- Total non-interest expense.............................. 11,090 6,411 7,523 3,416 -------- -------- -------- -------- Income (loss) before income taxes........................... 926 3,377 (1,284) 1,857 Income taxes................................................ 1,125 1,439 207 804 -------- -------- -------- -------- Net income (loss)....................................... $ (199) $ 1,938 $ (1,491) $ 1,053 ======== ======== ======== ======== PER SHARE INFORMATION: Number of shares (weighted average): Basic................................................. 3,880.9 3,857.0 3,883.7 3,859.6 Diluted............................................... 4,093.5 4,059.0 4,082.6 4,058.4 Income (loss) per share: Basic................................................. $ (0.05) $ 0.50 $ (0.38) $ 0.27 Diluted............................................... $ (0.05) $ 0.48 $ (0.38) $ 0.26
See "Notes to Unaudited Condensed Consolidated Financial Statements." 4 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
SIX MONTHS THREE MONTHS ENDED ENDED JUNE 30, JUNE 30, ------------------- ------------------- 2000 1999 2000 1999 -------- -------- -------- -------- (IN THOUSANDS) Net income (loss)........................................... $(199) $1,938 $(1,491) $1,053 Other comprehensive income (loss), net of related income taxes: Unrealized gains (losses) on securities: Unrealized holding gains (losses) arising during the period................................................ (28) (375) 85 (299) Less reclassifications of realized losses included in income................................................ (3) -- -- (2) ----- ------ ------- ------ (31) (375) 85 (301) ----- ------ ------- ------ Comprehensive income (loss)................................. $(230) $1,563 $(1,406) $ 752 ===== ====== ======= ======
5 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
6 MONTHS ENDED JUNE 30, ------------------- 2000 1999 -------- -------- (IN THOUSANDS) Cash flows from operating activities: Net income (loss)......................................... $ (199) $ 1,938 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization........................... 492 368 Provision for loan losses............................... -- 240 Real estate valuation adjustment........................ -- 159 Gain on sale of loans................................... (179) (167) Loss on sale of securities available-for-sale........... 11 2 Increase in other assets................................ (1,240) (398) Increase (decrease) in accrued interest payable and other liabilities....................................... 954 (1,070) -------- -------- Net cash (used in) provided by operating activities... (161) 1,072 Cash flows from investing activities: Net increase in loans outstanding......................... (17,597) (16,761) Net decrease (increase) in interest-bearing deposits in financial institutions.................................. 3,554 (984) Securities held-to-maturity: Maturities.............................................. 4,002 2,388 Purchases............................................... (2,000) (9,500) Securities available-for-sale: Proceeds from sale...................................... 1,489 1,499 Maturities.............................................. 1,624 11,439 Purchases............................................... (501) (14,646) Net change in FRB and FHLB stock.......................... 159 (112) Proceeds from sale of property held for sale.............. -- 1,176 Increase in property held for sale........................ -- (128) Purchases of premises and equipment....................... (206) (770) -------- -------- Net cash used in investing activities................. (9,476) (26,399) Cash flows from financing activities: Net increase in deposits: Non-interest bearing.................................... 12,298 8,455 Interest bearing........................................ 23,813 11,616 Proceeds from exercise of stock options................... 114 20 Net increase in short-term borrowings..................... 815 1,135 Cash dividends paid....................................... (448) (296) -------- -------- Net cash provided by financing activities............. 36,592 20,930 -------- -------- Net increase (decrease) in cash and cash equivalents............................................ 26,955 (4,397) Cash and cash equivalents at beginning of period............ 32,037 54,966 -------- -------- Cash and cash equivalents at end of period.................. $ 58,992 $ 50,569 ======== ======== Supplemental disclosure of cash flow information: Cash paid during period for: Interest................................................ $ 3,511 $ 2,779 Income taxes............................................ $ 1,145 $ 1,255 Supplemental disclosure of noncash investing and financing activities: Transfers from retained earnings to common stock.......... $ 341 $ 264
See "Notes to Unaudited Condensed Consolidated Financial Statements." 6 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2000 NOTE 1--BASIS OF PRESENTATION First Community Bancorp (the "Company") is the holding company for Rancho Santa Fe National Bank ("Rancho") and First Community Bank of the Desert ("First Community" and together with Rancho, the "Banks"). The unaudited condensed consolidated financial statements of the Company included herein reflect all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary to present a fair statement of the results for the interim periods indicated. Certain reclassifications have been made to the unaudited condensed consolidated financial statements for 1999 to conform to the 2000 presentation. Certain information and note disclosures normally included in consolidated financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the "Commission"). The results of operations for the three and six months ended June 30, 2000 are not necessarily indicative of the results of operations to be expected for the remainder of the year. The preparation of unaudited condensed consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates subject to change include the allowance for loan losses, the carrying value of other real estate owned and the deferred tax asset. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in Rancho's and First Community's Annual Reports filed on Form S-4/A on May 5, 2000 for the year ended December 31, 1999. NOTE 2--ACQUISITIONS FIRST COMMUNITY ACQUISITION On May 31, 2000, a subsidiary of the Company merged with and into First Community pursuant to an Agreement and Plan of Merger, dated as of October 22, 1999, as amended (the "Merger Agreement"), by and between the Company, Rancho and First Community, (the "Merger"). As a result of the Merger, First Community became a wholly-owned subsidiary of the Company. Pursuant to the Merger Agreement, each issued and outstanding share of common stock of First Community ("First Community Common Stock") prior to the Merger (other than as provided in the Merger Agreement) was converted into the right to receive 0.3 shares (the "Conversion Number") of common stock of the Company ("Company Common Stock"). In addition, each option and each warrant to acquire shares of First Community Common Stock outstanding immediately prior to the Effective Time (as defined in the Merger Agreement) was converted into an option and warrant, respectively, to acquire 0.3 shares of Company Common Stock. Upon consummation of the Merger, the Company issued approximately 1,392,799 shares of Company Common Stock to former holders of First Community Common Stock, and as a result, the former shareholders of First Community Common Stock own shares of Company Common Stock representing approximately 35.9% of the outstanding shares of Company Common Stock. 7 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2000 NOTE 2--ACQUISITIONS (CONTINUED) The financial information as of all dates and for all periods prior to the First Community Merger presented herein has been restated to present the combined consolidated financial condition and results of operations of the Company and First Community as if the First Community Merger had been in effect as of all dates and for all periods presented. PROFESSIONAL BANCORP INC. ACQUISITION The Company announced on August 7, 2000 that it had signed a definitive agreement to acquire Professional Bancorp Inc. ("Professional") and its wholly-owned subsidiary, First Professional Bank ("First Professional"). Under terms of the agreement, shareholders of Professional will receive either $8.00 in cash or 0.55 shares of Company common stock for each share of Professional common stock. Professional shareholders will have the option to choose either cash or stock consideration. In the event that more than 50% of Professional shareholders choose common stock or cash, the consideration will be prorated to the Professional shareholders such that half the shares will receive cash and half will receive Company common stock. For Professional shareholders receiving stock, 0.55 shares of Company common stock will be received for each share of Professional common stock (within a range of Company stock prices). The Company anticipates issuing approximately 559,000 shares of Company common stock in this transaction. The acquisition will use purchase accounting and is expected to close late in the fourth quarter of the year. Both companies have completed their due diligence. Completion of the transaction is conditional upon the receipt of shareholder and regulatory approvals. NOTE 3--NET INCOME (LOSS) PER SHARE The following is a summary of the calculation of basic and diluted net income (loss) per share for the six and three month periods ended June 30, 2000 and 1999:
SIX MONTHS ENDED THREE MONTHS ENDED JUNE 30, JUNE 30, ------------------- ------------------- 2000 1999 2000 1999 -------- -------- -------- -------- Net income (loss)..................................... $ (199) $ 1,938 $ (1,491) $ 1,053 ======== ======== ======== ======== Weighted average shares outstanding................... 3,880.9 3,857.0 3,883.7 3,859.6 ======== ======== ======== ======== Basic net income (loss) per share..................... $ (0.05) $ 0.50 $ (0.38) $ 0.27 ======== ======== ======== ======== Weighted average shares outstanding................... 3,880.9 3,857.0 3,883.7 3,859.6 Effect of dilutive stock options and warrants (1)..... 212.6 202.0 198.9 198.8 -------- -------- -------- -------- Diluted shares outstanding............................ 4,093.5 4,059.0 4,082.6 4,058.4 ======== ======== ======== ======== Diluted net income (loss) per share (1)............... $ (0.05) $ 0.48 $ (0.38) $ 0.26 ======== ======== ======== ========
- ------------------------ (1) The effect of stock options and warrants is antidilutive in the 2000 periods and therefore are not used for the computation of diluted net loss per share. 8 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2000 NOTE 4--NEW ACCOUNTING STANDARDS In March 2000, the FASB issued Interpretation No. 44, "Accounting for Certain Transactions Involving Stock Compensation," an interpretation of Accounting Principles Board ("APB") Opinion No. 25. FASB Interpretation No. 44 clarifies certain issues related to the application of APB Opinion 25 and is effective July 1, 2000, with certain conclusions covering specific events that occurred either December 15, 1998 or January 12, 2000. FASB Interpretation No. 44 is not expected to have a material effect on the Company's financial position or results of operations. 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW The following tables and data set forth certain statistical information relating to the Company as of June 30, 2000, and for the six and three month periods ended June 30, 2000, and June 30, 1999. This discussion should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto as of June 30, 2000, included herein, and the consolidated financial statements and notes thereto included in Rancho's and First Community's Annual Reports filed on Form S-4/A for the year ended December 31, 1999. When the Company uses or incorporates by reference in this Quarterly Report on Form 10-Q (the "Quarterly Report") the words "anticipate," "estimate," "expect," "project," "intend," "commit," "believe" and similar expressions, the Company intends to identify certain forward-looking statements. Such statements are subject to certain risks, uncertainties and assumptions, including those described in this Quarterly Report. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, expected, projected, intended, committed or believed. Since December 31, 1999, the Company's total assets have increased by approximately $37.3 million. The major components of this increase in assets are an increase of approximately $19.2 million in federal funds sold and an increase of approximately $17.8 million in net loans. The increase in loans is a result of the overall increase in economic activity in Southern California and the Company's success in developing new business. Since December 31, 1999, the Company's total deposits have increased by approximately $36.1 million including an increase of approximately $12.3 million in noninterest-bearing deposits and an increase in interest-bearing deposits of approximately $23.8 million. This increase resulted primarily from the overall increase in economic activity in Southern California, the Company's success in obtaining new business and an increase in rates paid on some deposits. Operating earnings (net income before one-time after-tax merger costs) for the six months ended June 30, 2000 were $2,599,000 or $0.63 per diluted share. This compares with consolidated operating earnings of $1,938,000 or $0.48 per diluted share, for the six months ended June 30, 1999, a growth of approximately 31%. Consolidated operating earnings (net income before one-time after-tax merger costs) for the three months ended June 30, 2000 were $1,307,000 or $0.32 per diluted share. This compares with consolidated operating earnings of $1,053,000 or $0.26 per diluted share, for the three months ended June 30, 1999, a growth of approximately 23%. Consolidated earnings, including one-time after-tax merger costs of $2,798,000, for the six months ended June 30, 2000 were a loss of $199,000 or ($0.05) per diluted share. This compares with earnings of $1,938,000 or $0.48 per diluted share for the six months ended June 30, 1999. Consolidated earnings for the three months ended June 30, 2000, including one-time after-tax merger costs, were a loss of $1,491,000 or ($0.38) per diluted share. This compares with consolidated earnings of $1,053,000 or $0.26 per diluted share for the three months ended June 30, 1999. On July 27, 2000 the Company's Board of Directors approved a quarterly dividend of $0.09 per common share which is payable on August 31, 2000 to shareholders of record on August 15, 2000. RESULTS OF OPERATIONS OPERATING INCOME. The Company defines operating income as net income before after-tax merger costs. The Company's operating return on average assets was 1.54% in the second quarter of 2000 versus 1.45% in the second quarter of 1999. The operating efficiency ratio improved from 63.9% in the 10 first half of 1999 to 62.7% in the first half of 2000. The Company is working on various efficiency and revenue initiatives that are now available as a result of the acquisition of First Community. RESULTS OF OPERATIONS
SIX MONTHS ENDED THREE MONTHS ENDED JUNE 30, JUNE 30, --------------------- -------------------- 2000 1999 2000 1999 --------- --------- --------- -------- PER SHARE INFORMATION: Number of shares (weighted average, in thousands)....................................... 3,880.9 3,857.0 3,883.7 3,859.6 Diluted shares (weighted average, in thousands).... 4,093.5 4,059.0 4,082.6 4,058.4 Basic income (loss) per share...................... $ (0.05) $ 0.50 $ (0.38) $ 0.27 Diluted income (loss) per share.................... $ (0.05) $ 0.48 $ (0.38) $ 0.26 PER SHARE INFORMATION BEFORE MERGER COSTS: Basic income per share............................. $ 0.67 $ 0.50 $ 0.34 $ 0.27 Diluted income per share........................... $ 0.63 $ 0.48 $ 0.32 $ 0.26 PROFITABILITY MEASURES BEFORE MERGER COSTS: Return on average assets........................... 1.59% 1.36% 1.54% 1.45% Return on average equity........................... 18.8% 16.4% 18.0% 17.4% Efficiency ratio................................... 62.7% 63.9% 63.5% 63.5% ADJUSTMENTS TO NET INCOME (LOSS) (IN THOUSANDS): Net income (loss).................................. $ (199) $ 1,938 $ (1,491) $ 1,053 Merger costs....................................... 3,561 -- 3,561 -- Tax benefits..................................... 763 -- 763 -- --------- --------- --------- -------- After tax merger costs............................. 2,798 -- 2,798 -- --------- --------- --------- -------- Adjusted net income.............................. $ 2,599 $ 1,938 $ 1,307 $ 1,053 ========= ========= ========= ======== ADJUSTMENTS TO REVENUES (IN THOUSANDS): Net interest income................................ $ 10,287 $ 8,530 $ 5,323 $ 4,581 Non-interest income................................ 1,729 1,498 916 797 --------- --------- --------- -------- Operating revenues............................... $ 12,016 $ 10,028 $ 6,239 $ 5,378 ========= ========= ========= ======== ADJUSTMENTS TO EXPENSES (IN THOUSANDS): Non-interest expense............................... $ 11,090 $ 6,411 $ 7,523 $ 3,416 Merger costs....................................... (3,561) -- (3,561) -- --------- --------- --------- -------- Adjusted operating expenses...................... $ 7,529 $ 6,411 $ 3,962 $ 3,416 ========= ========= ========= ========
Profits for the Company are dependent on loan growth, controlling costs and continual efforts to prevent any unexpected loan losses that would require additions to the allowance for loan losses ("ALL"). The Company believes that the demand for loans has increased in the Company's primary market areas due to the growth in the Southern California economy along with the ability of the Company's customers to participate in that growth. However, the perceived increase in the demand for loans is tempered by the highly competitive banking marketplace and the Company's desire to maintain strong credit quality standards. These factors contributed to the Company's loan growth of approximately 8.6% since December 31, 1999. As a result of the increase in loans and the approximate 13.2% increase in deposits, the Company's loan-to-deposit ratio, has decreased from 75.4% as of December 31, 1999, to 72.3% as of June 30, 2000. 11 NET INTEREST INCOME. Net interest income is the difference between interest earned on assets and interest paid on liabilities. Net interest margin is net interest income expressed as a percentage of average interest-earning assets. The following tables provide information concerning average interest-earning assets and interest-bearing liabilities and yields and rates thereon for the six and three months ended June 30, 2000 and June 30, 1999, respectively. Nonaccrual loans are included in the average earning assets amounts. UNAUDITED AVERAGE BALANCE SHEETS
SIX MONTHS ENDED THREE MONTHS ENDED JUNE 30, JUNE 30, ------------------- ------------------- 2000 1999 2000 1999 -------- -------- -------- -------- (IN THOUSANDS) AVERAGE ASSETS: Loans, net of deferred fees and costs............... $219,892 $178,490 $222,041 $182,552 Investment securities............................... 48,035 42,314 46,795 44,494 Federal funds sold.................................. 22,524 35,774 34,492 31,148 Interest-bearing deposits in financial institutions...................................... 6,125 5,772 5,107 6,349 -------- -------- -------- -------- Average earning assets............................ 296,576 262,350 308,435 264,543 Other assets........................................ 31,643 25,914 33,445 26,209 -------- -------- -------- -------- Average total assets............................ $328,219 $288,264 $341,880 $290,752 ======== ======== ======== ======== AVERAGE LIABILITIES AND SHAREHOLDERS' EQUITY: AVERAGE LIABILITIES: Noninterest-bearing deposits........................ $101,337 $ 83,580 $104,102 $ 86,403 Time deposits of $100,000 or more................... 25,483 22,154 19,727 21,945 Interest-bearing deposits........................... 169,836 156,443 186,141 155,351 -------- -------- -------- -------- Average deposits.................................. 296,656 262,177 309,970 263,699 Other interest-bearing liabilities.................. 1,991 752 1,288 1,063 Other liabilities................................... 1,734 1,529 1,486 1,654 -------- -------- -------- -------- Average liabilities............................... 300,381 264,458 312,744 266,416 Average equity...................................... 27,838 23,806 29,136 24,336 -------- -------- -------- -------- Average liabilities and shareholders' equity.... $328,219 $288,264 $341,880 $290,752 ======== ======== ======== ======== YIELD ANALYSIS: (Dollars in thousands) Average earning assets.............................. $296,576 $262,350 $308,435 $264,543 Yield............................................. 9.38% 8.71% 9.48% 9.02% Average interest-bearing deposits................... $195,319 $178,597 $205,868 $177,296 Cost.............................................. 3.60% 3.14% 3.77% 3.06% Average deposits.................................... $296,656 $262,177 $309,970 $263,699 Cost.............................................. 2.37% 2.14% 2.50% 2.06% Average interest-bearing liabilities................ $197,310 $179,349 $207,156 $178,359 Cost.............................................. 3.62% 3.15% 3.78% 3.07% Interest spread..................................... 5.76% 5.56% 5.70% 5.95% Net interest margin................................. 6.98% 6.56% 6.94% 6.95%
Interest income increased by approximately $1.3 million from $5.9 million for the second quarter of 1999 to $7.3 million for the same period of 2000. The increase was due to an increase of approximately $43.9 million in average earning assets, mostly in loans, and an increase in the yield on earning assets from 9.02% to 9.48% due to the higher percentage of loans to earning assets and the higher interest rate environment in the 2000 period versus the 1999 period. 12 Interest income increased by approximately $2.5 million from $11.3 million for the first six months of 1999 to $13.8 million for the same period of 2000. The increase was due to an increase in the yield on earnings assets from 8.71% to 9.38% due to the higher percentage of loans to earning assets and the higher interest rate environment in the 2000 period versus the 1999 period. Average earning assets also increased over the same period by approximately $34.2 million as a result of the increased level of economic activity. Interest expense increased by approximately $580,000 from $1.4 million for the second quarter of 1999 to $1.9 million for the same period of 2000. This increase is due both to the increase in average interest-bearing liabilities from $178.4 million to $207.2 million and the increase in the cost of interest- bearing liabilities from 3.07% to 3.78% over the same periods of time as a result of the previously mentioned increase in the general level of interest rates. The growth in average deposits is a result of the increased level of interest rates and the ability of the Company to capture new business. Interest expense increased by approximately $750,000 from $2.8 million for the first six months of 1999 to $3.5 million for the same period of 2000. This increase is due both to the increase in average interest-bearing liabilities from $179.3 million to $197.3 million and the increase in the cost of interest- bearing liabilities from 3.15% to 3.62% over the same periods of time as a result of the previously mentioned increase in the general level of interest rates. The growth in average deposits is a result of the increased level of interest rates and the ability of the Company to capture new business. NON-INTEREST INCOME. The following table sets forth the details of noninterest income for the six months ended June 30, 2000 and June 30, 1999:
SIX MONTHS ENDED JUNE 30, ------------------- INCREASE 2000 1999 (DECREASE) -------- -------- ---------- (IN THOUSANDS) NON-INTEREST INCOME: Service charges and fees on deposit accounts.............. $ 595 $ 583 $ 12 Merchant discount fees.................................... 507 387 120 Other commissions and fees................................ 312 265 47 Gain on sale of loans..................................... 179 167 12 Other income.............................................. 136 96 40 ------ ------ ---- Total non-interest income............................... $1,729 $1,498 $231 ====== ====== ====
Total noninterest income increased by approximately $231,000 from $1,498,000 to $1,729,000, or approximately 15.4%, from the six months ended June 30, 1999 to the six months ended June 30, 2000. Most of this increase resulted from an increase of $120,000 in merchant discount fees. This increase was due mainly to an increase in sales activities of the Company's customer base. The largest increase in other income was due to a recovery on an old litigation. Other items making up other income were relatively small. The following table sets forth the details of noninterest income for the three months ended June 30, 2000 and June 30, 1999:
THREE MONTHS ENDED JUNE 30, ------------------- INCREASE 2000 1999 (DECREASE) -------- -------- ---------- (IN THOUSANDS) NON-INTEREST INCOME: Service charges and fees on deposit accounts.............. $285 $301 $(16) Merchant discount fees.................................... 258 227 31 Other commissions and fees................................ 157 148 9 Gain on sale of loans..................................... 124 75 49 Other income.............................................. 92 46 46 ---- ---- ---- Total non-interest income............................... $916 $797 $119 ==== ==== ====
13 Total noninterest income increased by approximately $119,000 from $797,000 to $916,000, or approximately 14.9 percent, from the three months ended June 30, 1999 to the three months ended June 30, 2000. The increase in merchant discount fees of $31,000 was due mainly to an increase in sales activities of the Company's customer base. Gain on sale of loans increased due to a higher level of SBA loan sale activity. The increase of $46,000 in other income consisted of several small items. NON-INTEREST EXPENSE. The following table sets forth the details of noninterest expense for the six months ended June 30, 2000 and June 30, 1999:
6 MONTHS ENDED JUNE 30, ------------------- INCREASE 2000 1999 (DECREASE) -------- -------- ---------- (IN THOUSANDS) NON-INTEREST EXPENSE: Salaries and employee benefits................. $ 3,329 $2,853 $ 476 Occupancy...................................... 773 684 89 Furniture and equipment........................ 478 332 146 Legal expenses................................. 159 107 52 Other professional services.................... 913 675 238 Stationery, supplies and printing.............. 135 117 18 FDIC assessment................................ 32 22 10 Merchant card processing....................... 456 340 116 Cost of other real estate owned................ 33 160 (127) Advertising.................................... 196 196 -- Insurance...................................... 63 53 10 Loss on sale of securities..................... 11 2 9 Other.......................................... 951 870 81 ------- ------ ------ Non-interest expense before merger costs......... 7,529 6,411 1,118 Merger costs................................... 3,561 -- 3,561 ------- ------ ------ Total non-interest expense....................... $11,090 $6,411 $4,679 ======= ====== ======
Total operating noninterest expense increased approximately $1,118,000 from $6,411,000 to $7,529,000, or 17.4%, from the six months ended June 30, 1999 to the six months ended June 30, 2000. The increase in operating expenses in almost all categories is primarily a result of the increased level of economic activity in the Company's markets and the Company's response to this increased level of customers and customer activity. Average loans grew by approximately 23.3% during the same period and average noninterest-bearing deposits grew by approximately 21.2% between the two periods. The growth in these activities bears directly on the variable costs of the Company. The Company is also making various technology investments and upgrades. Merchant card processing grew as a result of the previously mentioned growth in customer sales activity. The decline in cost of other real estate owned is a result of the lower level of other real estate of the Company. Merger costs of $3,561,000 are one-time costs relating to the acquisition of First Community. The efficiency ratio (operating expense before merger costs divided by net interest income plus noninterest income) is a measure of how effective the Company is at using its expense dollars. A lower or declining ratio indicates improving efficiency. The Company's efficiency ratio improved from 63.9% in the first six months of 1999 to 62.7% in the first six months of 2000. 14 The following table sets forth the details of noninterest expense for the three months ended June 30, 2000 and June 30, 1999:
3 MONTHS ENDED JUNE 30, ------------------- INCREASE 2000 1999 (DECREASE) -------- -------- ---------- (IN THOUSANDS) NON-INTEREST EXPENSE: Salaries and employee benefits.................. 1,668 1,435 $ 233 Occupancy....................................... 377 363 14 Furniture and equipment......................... 236 179 57 Legal expenses.................................. 75 52 23 Other professional services..................... 510 372 138 Stationery, supplies and printing............... 90 60 30 FDIC assessment................................. 17 11 6 Merchant card processing........................ 224 196 28 Cost of other real estate owned................. 33 159 (126) Advertising..................................... 95 101 (6) Insurance....................................... 32 27 5 Loss on sale of securities...................... -- 2 (2) Other........................................... 605 459 146 ------ ------ ------ Non-interest expense before merger costs.......... 3,962 3,416 546 Merger costs.................................... 3,561 -- 3,561 ------ ------ ------ Total non-interest expense........................ $7,523 $3,416 4,107 ====== ====== ======
Total operating non-interest expense increased approximately $546,000 from $3,416,000 to $3,962,000, or 16.0%, from the three months ended June 30, 1999 to the three months ended June 30, 2000. The increase in operating expenses in almost all categories is primarily a result of the increased level of economic activity in the Company's markets and the Company's response to this increased level of customers and customer activity. Average loans grew by approximately 21.6% during the same period and average noninterest-bearing deposits grew by approximately 20.5% between the two periods. The Company is also making various technology investments and upgrades. Merchant card processing grew as a result of the previously mentioned growth in customer sales activity. The decline in cost of other real estate owned is a result of the lower level of other real estate of the Company. Merger costs of $3,561,000 are one-time costs relating to the acquisition of First Community. The efficiency ratio (operating expense before merger costs divided by net interest income plus noninterest income) is a measure of how effective the Company is at using its expense dollars. A lower or declining ratio indicates improving efficiency. The Company's operating efficiency ratio remained flat at 63.5% for both three month periods. INCOME TAXES. The Company's normal effective income tax rate is approximately 42.0%, representing a blend of the statutory Federal income tax rate of 35.0% and the California income tax rate of 10.84%. The Company's actual effective income tax rates were 121.5% and 42.6% for the six months ended June 30, 2000 and 1999, respectively. The Company's actual effective income tax rates were (16.1%) and 43.3% for the three months ended June 30, 2000 and 1999, respectively. The actual effective tax rates vary from the normal effective tax rate in the 2000 periods largely as a result of nondeductible merger costs. Adjusting for the nondeductible merger costs, the effective tax rates in the six month periods of 2000 and 1999 were 42.1% and 42.6%, respectively and 42.6% and 43.3% in the three month periods in 2000 and 1999, respectively. 15 BALANCE SHEET ANALYSIS CREDIT QUALITY. The Company defines nonperforming assets to include (i) loans past due 90 days or more and still accruing; (ii) loans on which it has ceased to accrue interest ("Nonaccrual Loans") and (iii) assets acquired through foreclosure including other real estate owned. "Impaired loans" are commercial, commercial real estate, and individually significant mortgage and consumer loans for which it is probable that the Company will not be able to collect all amounts due according to the original contractual terms of the loan agreement. The category of "impaired loans" is not coextensive with the category of "nonaccrual loans," although the two categories overlap. "Nonaccrual loans" include impaired loans and are those on which the accrual of interest is discontinued when collectibility of principal or interest is uncertain or payments of principal or interest have become contractually past due 90 days. The Company may choose to place a loan on nonaccrual status due to payment delinquency or uncertain collectibility, while not classifying the loan impaired, if (i) it is probable that the Company will collect all amounts due in accordance with the original contractual terms of the loan or (ii) the loan is not a commercial, commercial real estate or an individually significant mortgage or consumer loan. Planned workout arrangements are currently in place or in negotiation for all nonperforming assets. Management is not aware of any additional significant loss potential that has not already been included in the estimation of the allowance for loan losses ("ALL"). The following table shows the historical trends in nonperforming assets and key credit quality statistics for the Company: CREDIT QUALITY MEASURES (DOLLARS IN THOUSANDS)
AS OF AND FOR THE PERIODS ENDING --------------------------------------------------------------- 3 MONTHS 6 MONTHS 9 MONTHS YEAR 3 MONTHS 6 MONTHS 3/31/99 6/30/99 9/30/99 12/31/99 3/31/00 6/30/00 -------- -------- -------- -------- -------- -------- (DOLLARS IN THOUSANDS) Loans past due 90 days or more and still accruing................................ $1,441 $ 139 $ 209 $ 75 $ -- $ 218 Nonaccrual loans.......................... 1,608 858 821 1,845 442 2,268 Other real estate owned................... 1,392 1,466 1,315 1,315 1,315 1,315 ------ ------ ------ ------ ------ ------ Nonperforming assets.................... $4,441 $2,463 $2,345 $3,235 $1,757 $3,801 ====== ====== ====== ====== ====== ====== Impaired loans, gross..................... $1,489 $ 802 $2,136 $1,833 $ 434 $2,268 Allocated allowance for loan losses....... (64) (47) (277) (159) (201) (574) ------ ------ ------ ------ ------ ------ Net investment in impaired loans........ $1,425 $ 755 $1,859 $1,674 $ 233 $1,694 ====== ====== ====== ====== ====== ====== Charged off loans year-to-date............ $ 46 $ 452 $ 540 $ 592 $ 15 $ 92 Recoveries year-to-date................... (52) (85) (110) (314) (42) (54) ------ ------ ------ ------ ------ ------ Net charge-offs (recoveries)............ $ (6) $ 367 $ 430 $ 278 $ (27) $ 38 ====== ====== ====== ====== ====== ====== Allowance for loan losses to loans, net of deferred fees and costs................. 2.15% 1.95% 1.89% 1.95% 1.82% 1.78% Allowance for loan losses to nonaccrual loans and leases........................ 244.2% 426.3% 459.0% 218.2% 916.7% 175.8% Nonperforming assets to loans and OREO.... 2.41% 1.30% 1.17% 1.56% 0.79% 1.69% Annualized net charge offs to average loans................................... (0.01%) 0.41% 0.31% 0.15% (0.05%) 0.03% Nonaccrual loans to loans, net of deferred fees and costs.......................... 0.88% 0.46% 0.41% 0.90% 0.20% 1.01% Allowance for loan losses to nonperforming assets.................................. 88.4% 148.5% 160.7% 124.4% 230.6% 104.9%
16 Loans past due 90 days and still accruing represent loans which are past due 90 days or more as to interest or principal, but not included in the nonaccrual or restructured categories. All loans in this category are well-secured and in the process of collection or renewal. On June 30, 2000, the Company had approximately $2,268,000 of loans which were considered impaired, all of which were on nonaccrual status, compared to $442,000 at March 31, 2000 and $1,833,000 of impaired loans at December 31, 1999. The ALL at June 30, 2000, includes allocated allowances of approximately $574,000 established for certain impaired loans. Nonperforming assets increased approximately $566,000 from $3,235,000 at December 31, 1999, to $3,801,000 at June 30, 2000. This increase is a result of nonaccrual loans increasing $423,000 to $2,268,000 as a result of improvements in most nonaccrual loans in the period and one large loan being put on nonaccrual in the second quarter. ALLOWANCE FOR LOAN LOSSES. The Company has established a monitoring system for its loans in order to identify impaired loans and potential problem loans and to permit periodic evaluation of impairment and the adequacy of the ALL in a timely manner. The monitoring system and ALL methodology have evolved over a period of years, and loan classifications have been incorporated into the determination of the ALL. This monitoring system and allowance methodology include a loan-by-loan analysis for all classified loans as well as loss factors for the balance of the portfolio that are based on migration analysis relative to the Company's unclassified portfolio. This analysis includes such factors as historical loss experience, current portfolio delinquency and trends, and other inherent risk factors such as economic conditions, concentrations in the portfolio risk levels of particular loan categories, internal loan review and management oversight. The percentage of ALL to gross loans was 1.78% at June 30, 2000, a decrease from 1.95% at December 31, 1999. This decrease in the percentage is almost entirely a result of the growth in loans and not due to a decrease in the allowance for loan losses. Nonaccrual loans increased by $1,826,000 during the quarter ended June 30, 2000, from 0.20% to 1.01% of loans, net of deferred fees and costs, due mainly to one loan. Net OREO remained flat at $1,315,000 during the quarter. Total nonperforming assets increased by $2,044,000 during the second quarter of 2000, increasing from 0.79% to 1.69% of total loans and OREO at March 31, 2000 and June 30, 2000, respectively. The Company had net charge-offs of $38,000 in the six months ended June 30, 2000 represented by net recoveries during the first quarter of $27,000 and net charge-offs of $65,000 during the second quarter of 2000. With no provision for loan losses and net charge-offs of $38,000, the allowance for loan losses declined slightly by $38,000 from $4,025,000 at December 31, 1999 to $3,987,000 at June 30, 2000. The allowance as a percentage of nonperforming assets decreased from 124.4% at December 31, 1999 to 104.9% at June 30, 2000 due to the increase in nonperforming assets. Management believes that the allowance for loan losses at June 30, 2000 is adequate based on the Company's quarterly migration analysis of loan losses, improved economic conditions and continued adherence to established credit policies. REGULATORY MATTERS. The regulatory capital guidelines as well as the actual regulatory capital ratios for Rancho, First Community and the Company on a consolidated basis as of June 30, 2000, are as follows:
REGULATORY REQUIREMENTS ACTUAL ------------------------- ----------------------------------- ADEQUATELY WELL FIRST CAPITALIZED CAPITALIZED RANCHO COMMUNITY CONSOLIDATED ----------- ----------- -------- --------- ------------ (GREATER THAN OR EQUAL TO STATED PERCENTAGE) Detailed computations of Tier 1 leverage capital ratio.......... 4.00% 5.00% 8.43% 6.93% 7.57% Tier 1 risk-based capital ratio........ 4.00% 6.00% 10.16% 9.17% 9.49% Total risk-based capital................. 8.00% 10.00% 11.42% 10.43% 10.74%
17 LIQUIDITY, INTEREST RATE SENSITIVITY AND MARKET RISK. On a stand-alone basis, the Company's sources of liquidity include dividends from the Banks and outside borrowings. The amount of dividends that the Banks can pay to the Company is restricted by regulatory guidelines. The primary function of asset/liability management is to ensure adequate liquidity and maintain an appropriate balance between interest-sensitive earning assets and interest-bearing liabilities at the Banks. Liquidity management involves the ability to meet the cash flow requirements of customers who may be either depositors wanting to withdraw funds or borrowers who may need assurance that sufficient funds will be available to meet their credit needs. Interest rate sensitivity management seeks to avoid fluctuating interest margins and to enhance consistent growth of net interest income through periods of changing interest rates. Historically, the overall liquidity of the Banks is based on the core deposit base of the Banks. The Banks have not relied on large denomination time deposits. To meet short-term liquidity needs, the Company has maintained at the Banks what it believes are adequate balances in federal funds sold, interest-bearing deposits in financial institutions and investment securities having maturities of five years or less. On a consolidated basis, liquid assets (cash, federal funds sold and investment securities available-for-sale) as a percent of total deposits were 29.3% and 24.2% as of June 30, 2000 and December 31, 1999, respectively. Market risk sensitive instruments are generally defined as on and off balance sheet derivatives and other financial instruments. At December 31, 1999 and June 30, 2000, the Company had no material on or off balance sheet derivatives. The Company's financial instruments include interest sensitive loans receivable, federal funds sold, interest-bearing deposits in financial institutions, FRB and FHLB stock, investment securities, deposits and borrowings. At December 31, 1999, the Company had approximately $275 million in interest sensitive assets and approximately $276 million in interest sensitive liabilities (deposits and borrowings). At June 30, 2000, the Company's interest sensitive assets and interest sensitive liabilities totaled approximately $304 million and $313 million, respectively. The yield on interest sensitive assets and the cost of interest sensitive liabilities for the second quarter of 2000 was 9.48% and 2.51%, respectively, compared to 8.42% and 2.10%, respectively, at December 31, 1999. The increase in the yield on interest sensitive assets is primarily a result of the percentage of average loans to average interest sensitive assets increasing from approximately 70.7% at December 31, 1999 to 72.0% for the quarter ended June 30, 2000 and the general increase in the level of interest rates. The increase in the cost of interest sensitive liabilities is primarily a result of the increase in the level of interest rates over the same period of time. The Company's interest sensitive assets and interest sensitive liabilities were reported to have estimated fair values of $271 million and $274 million, respectively, at December 31, 1999. Because of the floating and short-term nature of its interest sensitive assets and liabilities, management believes that there has been no material change in the difference between the book value of the interest sensitive assets and liabilities and their estimated fair values. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK See the section titled "Liquidity, Interest Rate Sensitivity and Market Risk" in the Management's Discussion and Analysis of Financial Condition and Results of Operations. 18 PART II--OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS None ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K Exhibits
EXHIBIT NUMBER DESCRIPTION - --------------------- ----------- 3.1 Articles of Incorporation of First Community Bancorp (Exhibit 3.1 of a Registration Statement filed on June 2, 2000 on Form 8-A and incorporated herein by this reference). 3.2 Bylaws of First Community Bancorp (Exhibit 3.2 of a Registration Statement filed on June 2, 2000 on Form 8-A and incorporated herein by this reference). 10.1 First Community Bancorp 2000 Stock Incentive Plan; Form of Incentive Stock Option Agreement, Form of Nonstatutory Stock Option Agreement for directors and Form of Nonstatutory Stock Option agreement for consultants. 10.2 Revolving Credit Agreement and Pledge Agreement and Waiver, dated June 26, 2000. 10.3 Directors' Deferred Compensation Plan 11.0 Computation of Earnings Per Common Share (See Note 5 of the Notes to Unaudited Consolidated Financial Statements contained in "Item 1. Consolidated Financial Statements (unaudited)" of this Quarterly Report on Form 10-Q.) 27.1 Financial Data Schedule for six months ended June 30, 2000 and three months ended March 31, 2000. 27.2 Financial Data Schedules for three months ended March 31, 1999, six months ended June 30, 1999, nine months ended September 30, 1999 and year ended December 31, 1999.
REPORTS ON FORM 8-K On June 9, 2000 the Company filed a Current Report on Form 8-K a press release announcing, under Item 2, the acquisition of First Community Bank of the Desert and the required audited and pro forma financial information. 19 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. FIRST COMMUNITY BANCORP /s/ JAMES A. BOYCE ----------------------------------------- James A. Boyce PRESIDENT AND CHIEF EXECUTIVE OFFICER Date: August 10, 2000 /s/ ARNOLD C. HAHN ----------------------------------------- Arnold C. Hahn EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND ASSISTANT SECRETARY
20 EX-10.1 2 ex-10_1.txt EXHIBIT 10.1 EXHIBIT 10.1 FIRST COMMUNITY BANCORP STOCK INCENTIVE PLAN ADOPTED: APRIL 18, 2000 1. PURPOSE. The purpose of the First Community Bancorp Stock Incentive Plan (the "Plan") is to strengthen First Community Bancorp, a California corporation (the "Corporation") and those corporations which are or hereafter become subsidiary corporations by providing an additional means of attracting and retaining competent managerial personnel and by providing to participating directors, officers, and key employees added incentives for high levels of performance and for unusual efforts to increase the earnings of the Corporation and any Subsidiary as defined herein; to allow consultants, business associates and others with business relationships with the Corporation, an opportunity to participate in the ownership of the Corporation and thereby have an interest in the success and increased value of the Corporation; and to allow optionees under the Rancho Santa Fe National Bank 1992 Stock Option Plan and under the First Community Bank of the Desert 1987 Incentive Stock Option Plan (collectively the "Subsidiary Plans") to exchange their unexercised, unexpired stock options under the Subsidiary Plans, for options granted under Section 7 of this Plan, adjusted as required by the Merger Agreement, as defined herein, or by Section 7 hereof. The Plan seeks to accomplish these purposes and achieve these results by providing a means whereby such directors, officers, key employees, consultants, business associates and others may purchase shares of Common Stock as defined herein of the Corporation pursuant to Stock Options or Stock Awards as defined herein granted in accordance with this Plan. Stock Options granted pursuant to this Plan are intended to be Incentive Stock Options as defined herein or Non-Qualified Stock Options as defined herein, as shall be determined and designated by the Stock Option Committee as defined herein upon the grant of each Stock Option hereunder. All options granted under the Subsidiary Plans shall be exchanged for comparable Incentive Stock Options or Non-Qualified Stock Options, according to their original terms, subject to those adjustments thereto as are required by the Merger Agreement, as defined herein, or by Section 7 hereof. The provisions of the Plan as amended shall apply to all Options previously issued pursuant to the Plan. 2. DEFINITIONS. For the purposes of this Plan, the following terms shall have the following meanings: (a) "COMMON STOCK." This term shall mean shares of the Corporation's no par value common stock, subject to adjustment pursuant to Section 15 (Adjustment Upon Changes in Capitalization) hereunder. -1- (b) "CORPORATION." This term shall mean First Community Bancorp, a California corporation. (c) "ELIGIBLE PARTICIPANT." This term shall mean: (i) all directors of the Corporation or any Subsidiary; (ii) all full time officers (whether or not they are also directors) of the Corporation or any Subsidiary; (iii) all full time key employees (as such persons may be determined by the Stock Option Committee from time to time) of the Corporation or any Subsidiary; and (iv) consultants, business associates or others with important business relationships with the Corporation. (d) "FAIR MARKET VALUE." This term shall mean, as of any date, the fair market value of the Corporation's Common Stock determined as follows: (i) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation, the National Market System of the National Association of Securities Dealers, Inc. Automated Quotation ("NASDAQ") System, the Fair Market Value of a share of Common Stock shall be the closing sales price for such stock (or the closing bid, if no sales are reported) as quoted on such system or exchange (or the exchange with the greatest volume of trading in the Common Stock) on the last market trading day prior to the day of determination, as reported in the Wall Street Journal or such other source as the Stock Option Committee deems reliable; (ii) If the Common Stock is quoted on the NASDAQ System (but not on the National Market System thereof) or is regularly quoted by recognized securities dealers but selling prices are not reported, the Fair Market Value of a share of Common Stock shall be the mean between the high bid and low asked prices for the Common Stock on the last market trading day prior to the day of determination, as reported in the Wall Street journal or such other source as the Stock Option Committee deems reliable; (iii) In the absence of any established market for the Common Stock, the Fair Market Value shall be determined in good faith by the Stock Option Committee. (e) "GRANTEE." This term shall mean (i) any Optionee or (ii) any Eligible Participant to whom a Stock Award has been granted pursuant to this Plan, provided that at least part of the Stock Award is outstanding and unvested. (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 (the "Code"). -2- (g) "MERGER AGREEMENT". This term shall mean the Agreement and Plan of Merger dated October 22, 1999 by and among the Corporation, and Rancho Santa Fe National Bank and First Community of the Desert. (h) "NON-QUALIFIED STOCK OPTION." This term shall mean a Stock Option which is not an Incentive Stock Option. (i) "OPTION SHARES." This term shall mean shares of Common Stock which are covered by and subject to any outstanding unexercised Stock Option granted pursuant to this Plan. (j) "OPTIONEE." This term shall mean any Eligible Participant to whom a Stock Option has been granted pursuant to this Plan, including those persons to whom an option is granted under Section 7 hereof in exchange for options previously granted under either of the Subsidiary Plans, provided that at least part of the Stock Option is outstanding and unexercised. (k) "PLAN." This term shall mean the First Community Bancorp Stock Incentive Plan as embodied herein and as may be amended from time to time in accordance with the terms hereof and applicable law. (l) "STOCK AWARD." This term shall mean a grant by the Corporation of a specified number of shares of Common Stock upon terms and conditions determined by the Stock Option Committee. (m) "STOCK OPTION." This term shall mean the right to purchase from the Corporation a specified number of shares of Common Stock under the Plan at a price and upon terms and conditions determined by the Stock Option Committee, and shall include options granted under Section 7 hereof in exchange for options previously granted under either of the Subsidiary Plans, as modified by the Merger Agreement. (n) "STOCK OPTION COMMITTEE." The Board of Directors of the Corporation may select and designate a stock option committee consisting of at least two and not more than five persons, at least two of whom are directors, having full authority to act in the matters. Regardless of whether a Stock Option Committee is selected, the Board of Directors may act as the Stock Option Committee and any action taken by the Board of Directors 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 references to the Board of Directors acting as a stock option committee and to a duly appointed Stock Option Committee, if there be one. In the event of any conflict between any action taken by the Board of Directors acting as a Stock Option Committee and any action taken by a duly appointed Stock Option Committee, the action taken by the Board of Directors shall be controlling and the action taken by the duly appointed Stock Option Committee shall be disregarded. -3- (o) "SUBSIDIARY." This term shall mean any subsidiary corporation of the Corporation as such term is defined in Section 424(f) of the Internal Revenue Code of 1986, as amended. (p) "SUBSIDIARY PLANS." This term shall be defined as provided in Section 1 of this Plan. (q) "TERMINATING EVENT." This term shall mean: (i) the consummation of a plan of dissolution or liquidation of the Corporation; (ii) the individuals who, as of the effective date of the reorganization contemplated by the Merger Agreement, are members of the Board of Directors of the Corporation ("Incumbent Board"), cease for any reason to constitute at least two-thirds of the members of the Board; provided, however, that if the election, or nomination for election by the Corporation's shareholders, of any new director was approved by a vote of at least two-thirds of the Incumbent Board, such new director shall, for purposes of this Plan, be considered as a member of the Incumbent Board; provided, further, however, that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result of either an actual or threatened "Election Contest" (as described in Rule 14a-11 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) or other actual or threatened solicitation of proxies or consents by or on behalf of a "Person" (as the term person is used for purposes of Section 13(d) or 14(d) of the Exchange Act) other than the Board of Directors (a "Proxy Contest") including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest; (iii) the consummation of a plan of reorganization, merger or consolidation involving the Corporation, except for a reorganization, merger or consolidation where (A) the shareholders of the Corporation immediately prior to such reorganization, merger or consolidation own directly or indirectly at least 70% of the combined voting power of the outstanding voting securities of the corporation resulting from such reorganization, merger or consolidation (the "Surviving Corporation") in substantially the same proportion as their ownership of voting securities of the Corporation immediately prior to such reorganization, merger or consolidation, and (B) the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such reorganization, merger or consolidation constitute at least two-thirds of the members of the board of directors of the Surviving Corporation, or a corporation beneficially directly or indirectly owning a majority of the voting securities of the Surviving Corporation; (iv) the sale of all or substantially all the assets of the Corporation to another Person; or -4- (v) the acquisition of beneficial ownership of stock representing more than fifty percent (50%) of the voting power of the Corporation then outstanding by another Person. (r) "VESTING EVENT." This term shall mean the approval by the shareholders of the Corporation of any matter, plan or transaction which would constitute a Terminating Event, or if any Terminating Event occurs without shareholder approval, the occurrence of such Terminating Event. -5- 3. ADMINISTRATION. (a) STOCK OPTION COMMITTEE. This Plan shall be administered by the Stock Option Committee. The Board of Directors of the Corporation 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 in conformity with the terms and conditions of this Plan. Subject to compliance with each of the terms, conditions and restrictions set forth in this Plan, including, but not limited to, those set forth in Section 6(a) hereof, the Stock Option Committee shall have the exclusive right, in its sole and absolute discretion, to establish the terms and conditions of any Stock Options or Stock Awards granted under the Plan, including, without limitation, the power to: (i) establish the number of Stock Options or Stock Awards, if any, to be granted hereunder, in the aggregate and with regard to any individual Eligible Participant; (ii) determine the time or times when such Stock Options or Stock Awards, or any parts thereof, may vest or 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 or Stock Awards are granted, and determine the date as of which a Grantee's status as an Eligible Participant shall have terminated and provide written notice of such termination to such Grantee within 60 days after such termination date; (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; (vi) prescribe and amend the terms, provisions and form of any instrument or agreement setting forth the terms and conditions of every Stock Option or Stock Award granted hereunder (such terms and conditions to include, without limitation, the exercise price, the time or times when Stock Options or Stock Awards may vest or be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Stock Option, Stock Award or the Option Shares or Common Stock relating thereto); and (vii) make loans to or guarantee any obligations of any Optionees, except directors, in connection with the exercise of Stock Options as specified in Section 8(c) -6- hereof, whenever the Stock Option Committee determines that such loan or guarantee may reasonably be expected to benefit the Corporation, subject to the provisions of Section 315(b) of the California General Corporations Law of 1977, as amended and subject to Regulations G, U and T promulgated by the Board of Governors of the Federal Reserve System pursuant to Section 7 of the Securities Exchange Act of 1934, if the Option Shares are listed on a stock exchange or are contained in the list of over-the-counter margin securities published by the Federal Reserve Board. (c) DECISIONS AND DETERMINATIONS. Subject to the express provisions of the Plan, the Stock Option Committee shall have the authority to construe and interpret the Plan, to define the terms used therein, to prescribe, amend, and rescind rules, regulations and policies 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 in conformity with the terms of this Plan. 4. SHARES SUBJECT TO THE PLAN. Subject to adjustments as provided in Section 15 hereof, the maximum number of shares of Common Stock which may be issued upon exercise of Stock Options or pursuant to Stock Awards granted under this Plan shall be 300,000 shares in the aggregate (including the shares of Common Stock issuable upon exercise of Stock Options previously granted under Subsidiary Plans). If any Stock Option or Stock Award shall be canceled, surrendered, or expire for any reason without having been exercised or received in full, the unpurchased Common Stock represented thereby shall again be available for grants under this Plan. 5. ELIGIBILITY. Only Eligible Participants shall be eligible to receive grants of Stock Options and Stock Awards under this Plan. 6. GRANTS OF STOCK OPTIONS. (a) GRANT. Subject to the express provisions and limitations of the Plan, the Stock Option Committee, in its sole and absolute discretion, may grant Stock Options to Eligible Participants exercisable, for a number of Option Shares, at the price(s) and time(s), on the terms and conditions and to such Eligible Participants as it deems advisable and specifies in the respective grants. Subject to the limitations and restrictions set forth in the Plan, an Eligible Participant who has been granted a Stock Option or Stock Award 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. No Eligible Participant shall be granted in any fiscal year of the Corporation Stock Options to purchase more than 100,000 Option Shares. If a Stock Option expires or terminates for any reason without having been exercised in -7- full, the unpurchased shares subject to such expired or terminated option will continue to count against the maximum number of shares for which Stock Options may be granted to an Eligible Participant in any fiscal year of the Corporation or portion thereof. The limitations set forth in the two preceding sentences are intended to satisfy the requirements applicable to Stock Options such that they qualify as "performance-based compensation" (within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended). (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 Corporation, 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 Corporation and the Eligible Participant have executed and delivered the form of stock option agreement then required by the Stock Option Committee as evidencing the grant of the Stock Option, together with such other 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 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. Notwithstanding anything to the contrary contained elsewhere herein, an Incentive Stock Option shall not be granted hereunder to an Eligible Participant who owns, directly or indirectly, at the date of the grant of the Incentive Stock Option, more than ten percent (10%) of the total combined voting power of all classes of capital stock of the Corporation or a Subsidiary corporation, unless the purchase price of the Option Shares subject to said Incentive Stock Option is at least one hundred and ten percent (110%) of the Fair Market Value of the Option Shares, determined as of the date said Stock Option is granted. (d) MAXIMUM VALUE OF INCENTIVE STOCK OPTIONS. To the extent that the aggregate Fair Market Value (determined at the time the Stock Option is granted) of Option Shares which are designated as Incentive Stock Options are exercisable for the first time by an Eligible Participant pursuant to the terms of the Plan during any calendar year exceeds One Hundred Thousand Dollars ($100,000), such excess Stock Options shall be treated as Non-Qualified Stock Options. (e) NON-QUALIFIED STOCK OPTIONS. All Stock Options granted by the Stock Option Committee which: (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 in excess of the Fair Market Value limitation set forth in Section 6(d); or (iii) are designated at the time of grant as Non-Qualified Stock Options, shall be deemed Non-Qualified Stock Options under this Plan. -8- Non-Qualified Stock Options granted or substituted hereunder shall be so designated in the stock option agreement entered into between the Corporation and the Optionee. (f) AWARD OF RESTORATION OPTIONS. In the event that any Optionee delivers to the Corporation, or has withheld from the Option Shares otherwise issuable upon exercise of an Option, shares of Common Stock in payment of the exercise price of any Option, the Stock Option Committee shall have the right to provide for the grant of a "Restoration Option" to such Optionee. The grant of a Restoration Option shall be subject to the satisfaction of such conditions and criteria as the Stock Option Committee in its sole discretion shall establish from time to time, including the requirement that the shares of Common Stock tendered in payment of the exercise price have been held by the Optionee for a period of more than six months. A Restoration Option shall entitle the holder thereof to purchase a number of shares of Common Stock equal to the number of shares delivered or withheld upon exercise of the original Option and, in the discretion of the Stock Option Committee, the number of shares, if any delivered or withheld by the Corporation to satisfy any withholding tax liability arising in connection with the exercise of the original Option. A Restoration Option shall have a per share exercise price of not less than 100% of the per share Fair Market Value of the Common Stock on the date of grant of such Restoration Option, a term not longer than the term of the original Option at the time of exercise thereof, and such other terms and conditions as the Committee in its sole discretion shall determine. 7. STOCK OPTION EXERCISE PRICE. (a) MINIMUM PRICE. The exercise price of any Stock Options for 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 Share on the date of grant of the related Stock Option. (b) EXCHANGED STOCK OPTIONS. Where the outstanding shares of stock of another corporation are changed into or exchanged for shares of Common Stock of the Corporation without monetary consideration to that other corporation, then, subject to the approval of the Board or Directors of the Corporation, Stock Options may be granted in exchange for unexercised, unexpired stock options of the other corporation, including but not limited to unexercised, unexpired stock options under the Subsidiary Plans, and the exercise price of the Option Shares subject to each Stock Option so granted 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 Stock 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, with appropriate adjustment to reflect the exchange ratio of the shares of stock of the other corporation into the shares of Common Stock of the Corporation. 8. EXERCISE OF STOCK OPTIONS. -9- (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, (i) 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, and (ii) a minimum of twenty percent (20%) of the Stock Option shall be exercisable in each year over a five year period from the date the Stock Option is granted. No Stock Option or part thereof shall be exercisable except with respect to whole shares of Common Stock, and fractional share interests shall be disregarded except that they may be accumulated. (b) NOTICE AND PAYMENT. Stock Options granted hereunder shall be exercised by written notice delivered to the Corporation 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 in Section 8(c) hereof. 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 counsel for the Corporation, of the right to such person or persons to exercise the Stock Option. The Corporation'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 Corporation shall have no obligation to an Optionee for any Option Shares unless and until full payment of the exercise price is received by the Corporation in accordance with Section 8(c) hereof, and all of the terms and provisions of the Plan and the related stock option agreement have been complied with. (c) PAYMENT OF EXERCISE PRICE. The exercise price of any Stock Option for 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 and/or, with the prior written approval of the Stock Option Committee, in Common Stock of the Corporation which, when added to the cash payment, if any, 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 and/or, with the prior written approval of the Stock Option Committee, on a deferred basis evidenced by a promissory note, containing such terms and subject to such security as the Stock Option Committee shall determine to be fair and reasonable from time to time, for the total option price for the number of Option Shares so purchased. In addition, the Optionee shall have the right upon the exercise of the Stock Option, in the manner set forth above to surrender for cancellation a portion of the Stock Option to the Company for the number of shares (the "Surrendered Shares") specified in the holder's notice of exercise, by delivery to the Company with such notice written instructions from such holder to apply the Appreciated Value (as defined below) of the Surrendered Shares to payment of the exercise price for Option Shares subject to this Stock Option that are being acquired upon such exercise. The term "Appreciated Value" for each Option Share subject to a Stock Option shall mean the excess of the Fair Market Value thereof over the exercise price then in effect. No director, consultant or business associate may purchase any Stock Option on a deferred basis unless evidenced by a promissory note. Unless payment is on a deferred basis, -10- payment by an Optionee as provided herein shall be made in full concurrently with the Optionee's notification to the Corporation of his intention to exercise all or part of a Stock Option. If all or part of 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 Corporation of all required share certificates, and all stock powers and other required transfer documents necessary to transfer the shares of Common Stock to the Corporation. (d) REORGANIZATION. Notwithstanding any provision in any stock option agreement pertaining to the time of exercise of a Stock Option, or part thereof, upon the occurrence of a Vesting Event, the Stock Option shall become immediately exercisable as to all Option Shares (whether or not previously vested). (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. 9. STOCK AWARDS. (a) GRANT. Subject to the express provisions and limitations of the Plan, the Stock Option Committee, in its sole and absolute discretion, may grant Stock Awards to Eligible Participants for a number of shares of Common Stock on the terms and conditions and to such Eligible Participants as it deems advisable and specifies in the respective grants. Subject to the limitations and restrictions set forth in the Plan, an Eligible Participant who has been granted a Stock Option or Stock Award may, if otherwise eligible, be granted additional Stock Options or Stock Awards if the Stock Option Committee shall so determine. (b) RESTRICTIONS. The Stock Option Committee, in its sole and absolute discretion, may impose restrictions in connection with any Stock Award, including without limitation, (i) imposing a restricted period during which all or a portion of the Common Stock subject to the Stock Award may not be sold, assigned, transferred, pledged or otherwise encumbered (the "Restricted Period"), (ii) providing for a vesting schedule with respect to such Common Stock such that if a Grantee ceases to be an Eligible Participant during the Restricted Period, some or all of the shares of Common Stock subject to the Stock Award shall be immediately forfeited and returned to the Corporation. The Stock Option Committee may, at any time, reduce or terminate the Restricted Period. Each certificate issued in respect of shares of Common Stock pursuant to a Stock Award which is subject to restrictions shall be registered in the name of the Grantee, shall be deposited by the Grantee with the Company together with a stock power endorsed in blank and shall bear an appropriate legend summarizing the restrictions imposed with respect to such shares of Common Stock. (c) REORGANIZATION. Notwithstanding any provision in any agreement pertaining to a Stock Award, or part thereof, upon the occurrence of a Vesting Event, all shares of Common Stock subject to the Stock Award shall become immediately vested. -11- (d) RIGHTS AS SHAREHOLDER. Subject to the terms of any agreement governing a Stock Award, the Grantee of a Stock Award shall have all the rights of a shareholder with respect to the Common Stock issued pursuant to a Stock Award, including the right to vote such shares; provided, however, that dividends or distributions paid with respect to any such shares which have not vested shall be deposited with the Corporation and shall be subject to forfeiture until the underlying shares have vested unless otherwise released by the Stock Option Committee in its sole discretion. A Grantee shall not be entitled to interest with respect to the dividends or distributions so deposited. 10. COMPLIANCE WITH LAW. No shares of Common Stock shall be issued by the Corporation pursuant to a Stock Award or upon exercise of any Stock Option, and a Grantee shall have no rights or claim to such shares, unless and until: (a) with respect to a Stock Option, payment in full as provided in Section 8(c) hereof has been received by the Corporation; (b) in the opinion of the counsel for the Corporation, all applicable registration requirements of the Securities Act of 1933, all applicable listing requirements of securities exchanges or associations on which the Corporation's Common Stock is then listed or traded, and all other requirements of law and of regulatory bodies having jurisdiction over such issuance and delivery, have been fully complied with; and (c) if required by federal or state law or regulation, the Grantee shall have paid to the Corporation the amount, if any, required to be withheld on the amount deemed to be compensation to the Grantee as a result of the exercise of his or her Stock Option or his or her Stock Award, or made other arrangements satisfactory to the Corporation, in its sole discretion, to satisfy applicable income tax withholding requirements. 11. NONTRANSFERABILITY OF STOCK OPTIONS. Each Stock Option shall, by its terms, be nontransferable by the Optionee other than by will or the laws of descent and distribution, and shall be exercisable during the Optionee's lifetime only by the Optionee or his or her guardian or legal representative. 12. CESSATION OF EMPLOYMENT. Except as provided in Sections 13, 14 or 16 hereof, if, for any reason, an Optionee's status as an Eligible Participant is terminated, the Stock Options granted to such Optionee shall expire on the expiration dates specified for said Stock Options at the time of their initial grant, or three (3) months after written notice is provided to the Optionee that the Optionee's status as an Eligible Participant is terminated, whichever is earlier. During such period Stock Options shall be exercisable only as to those increments, if any, which had become exercisable as of the date on which written notice is provided to the Optionee that such Optionee's status as an Eligible Participant terminated, and any Stock Options or increments which had not become exercisable as of such date shall expire and terminate automatically on such date. -12- 13. DEATH OF OPTIONEE. If an Optionee loses his status as an Eligible Participant by reason of death, or if an Optionee dies during the three-month period referred to in Section 12 hereof, the Stock Options granted to such Optionee shall expire on the expiration dates specified for said Stock Options at the time of their initial grant, or one (1) year after the date of such death, whichever is earlier. After such death but before such expiration, subject to the terms and provisions of the Plan and the related stock option agreements, the person or persons to whom such Optionee's rights under the Stock Options shall have passed by will or by the applicable laws of descent and distribution, or the executor or administrator of the Optionee's estate, shall have the right to exercise such Stock Options to the extent that increments, if any, had become exercisable as of the date on which the Optionee died. 14. DISABILITY OF OPTIONEE. If an Optionee is disabled while employed by or while serving as a director of the Corporation or a Subsidiary or during the three-month period referred to in Section 12 hereof, the Stock Options granted to such Optionee shall expire on the expiration dates specified for said Stock Options at the time of their initial grant, or one (1) year after the date of such disability, whichever is earlier. After such disability but before such expiration, the Optionee or a 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 the Corporation or a Subsidiary as a result of the disability. For the purpose of this Section 14, an Optionee shall be deemed to have become "disabled" if it shall appear to the Stock Option Committee, upon written certification delivered to the Corporation by a qualified licensed physician, that the Optionee has become permanently and totally unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death, or which has lasted or can be expected to last for a continuous period of not less than twelve (12) months. 15. ADJUSTMENT UPON CHANGES IN CAPITALIZATION. If the outstanding shares of Common Stock of the Corporation are increased, decreased, or changed into or exchanged for a different number or kind of shares or securities of the Corporation, through a reorganization, merger, recapitalization, reclassification, stock split, stock dividend, stock consolidation, or otherwise, without consideration to the Corporation, an appropriate and proportionate adjustment shall be made in the number and kind of shares as to which Stock Options and Stock Awards may be granted. A corresponding adjustment changing the number or kind of Option Shares and Stock Awards 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. Any such adjustment, however, in an outstanding Stock Option 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 -13- Share subject to the Stock Option. Any adjustment 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 any such adjustment, and fractional share interests shall be disregarded and the fractional share interest shall be rounded down to the nearest whole number. 16. TERMINATING EVENTS. Not less than thirty (30) days prior to the occurrence of any Terminating Event, the Stock Option Committee or the Board of Directors shall notify each Grantee of the pendency of the Terminating Event. Upon the effective date of the Terminating Event, the Plan shall automatically terminate and all Stock Options theretofore granted shall terminate and all unvested Stock Awards shall be cancelled and the underlying Common Stock forfeited and returned to the Company, unless provision is made in connection with such transaction for the continuance of the Plan and/or assumption of Stock Options and unvested Stock Awards theretofore granted, or substitution for such Stock Options and unvested Stock Awards with new stock options and awards 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, in which event the Plan, options and awards theretofore granted shall continue in the manner and under the terms so provided. If the Plan and unexercised Stock Options shall terminate pursuant to the foregoing sentence, all persons shall have the right to exercise the Stock Options then outstanding and not exercised (including those vested pursuant to Section 8(d) hereof) at such time prior to the consummation of the transaction causing such termination as the Corporation shall designate, unless the Board of Directors shall have provided for the cancellation of such Stock Options in exchange for a cash payment equal to the excess of the Fair Market Value of the Common Stock as of the date of the Terminating Event over the exercise price of such Stock Options. 17. AMENDMENT AND TERMINATION. The Board of Directors of the Corporation may at any time and from time-to-time suspend, amend, or terminate the Plan and may, with the consent of a Grantee, make such modifications of the terms and conditions of a Stock Option or Stock Award as it shall deem advisable; provided that, except as permitted under the provisions of Section 16 hereof, no amendment or modification may be adopted without the Corporation having first obtained all necessary regulatory approvals and approval of the holders of a majority of the Corporation's shares of Common Stock present, or represented, and entitled to vote at a duly held meeting of shareholders of the Corporation if the amendment or modification would: (a) increase the number of Shares of Common Stock which may be issued under the Plan; (b) change any provision of the Plan which would affect the qualification as an Incentive Stock Option under the Plan; or (c) make any other change for which shareholder approval is required pursuant to the provisions of Section 162(m) of the Internal Revenue Code of 1986, as amended. No Stock Option or Stock Award may be granted during any suspension of the Plan or after termination of -14- the Plan. Amendment, suspension, or termination of the Plan shall not (except as otherwise provided in Section 8(d) or Section 16 hereof), without the consent of the Grantee, alter or impair any rights or obligations under any Stock Option or Stock Award theretofore granted. 18. RIGHTS OF PARTICIPANTS. Neither any Eligible Participant, any Grantee nor any other person shall have any claim or right to be granted any Stock Option or Stock Award under this Plan, and neither this Plan nor any action taken hereunder shall be deemed or construed as giving any Eligible Participant, Grantee, Optionee or any other person any right to be retained in the employ of the Corporation or any subsidiary of the Corporation. Without limiting the generality of the foregoing, there is no vesting of any right in the classification of any person as an Eligible Participant, such classification being used solely to define and limit those persons who are eligible for consideration of the grant of Stock Options or Stock Awards under the Plan. 19. PRIVILEGES OF STOCK OWNERSHIP: SECURITIES LAW COMPLIANCE: NOTICE OF SALE. No Grantee shall be entitled to the privileges of stock ownership as to any Common Stock not actually issued and delivered. No Option Shares may be purchased upon the exercise of a Stock Option and no Common Stock may be delivered pursuant to a Stock Award unless and until all then applicable requirements of all regulatory agencies having jurisdiction and all applicable requirements of securities exchanges upon which the stock of the Corporation is listed (if any) shall have been fully complied with. The Corporation will diligently endeavor to comply with all applicable securities laws before any options are granted under the Plan and before any stock is issued pursuant to options or Stock Awards. The Grantee 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 or pursuant to Stock Awards, give the Corporation notice in writing of such sale or other disposition. 20. EFFECTIVE DATE OF THE PLAN. The Plan was originally adopted by the Board of Directors of the Corporation, and by the sole shareholder of the Corporation, as of April 18, 2000, and shall be effective as of that date. 21. TERMINATION. Unless previously terminated as aforesaid, the Plan shall terminate on April 17, 2010, which is ten (10) years from the date of adoption of the Plan by the Board of Directors. No Stock Options or Stock Awards shall be granted under the Plan thereafter, but such termination shall not affect any Stock Option or Stock Award theretofore granted. 22. AGREEMENT. -15- Each Stock Option or Stock Award granted under the Plan shall be evidenced by a written agreement executed by the Corporation and the Grantee, 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 the Plan. 23. STOCK OPTION PERIOD. Each Stock Option and all rights and obligations thereunder shall expire on such date as the Stock Option Committee may determine, but not later than ten (10) years from the date such Stock Option is granted, and shall be subject to earlier termination as provided elsewhere in the Plan. 24. EXCULPATION AND INDEMNIFICATION OF STOCK OPTION COMMITTEE. In addition to such other rights of indemnification which they may have as officers or members of the board of directors of the Corporation or as members of any committee thereof, the p0resent and former members of the Stock Option Committee shall be indemnified by the Corporation in accordance with the Articles of Incorporation and the Bylaws of the Corporation, and Section 317 of the California General Corporation Law. The Corporation has the power to purchase and maintain insurance on behalf of any person who is or was a director, officer, agent or employee of the Corporation, including members of the Stock Option Committee, whether or not the Corporation would have the power to indemnify such person under the provisions of the Bylaws. 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 GRANTEE. Unless the shares of Common Stock covered by this Plan have been registered with the Securities and Exchange Commission pursuant to Section 5 of the Securities Act of 1933, each Grantee shall by and upon accepting a Stock Option or Stock Award, represent and agree in writing, for himself or herself and his or her transferees by will or the laws of descent and distribution, that all shares of Common Stock acquired pursuant thereto will be acquired for investment purposes and not for resale or distribution. Upon the exercise of a Stock Option, or a part thereof, and upon issuance of a Stock Award, Grantee shall, unless waived by the Corporation, furnish evidence satisfactory to the Corporation, including written and signed representations, to the effect that the Common Stock issued thereunder is being acquired for investment purposes and not for resale or distribution. Furthermore, the Corporation, at its sole discretion, to assure itself that any sale or distribution by the Grantee complies with this Plan and any applicable federal or state securities laws, may take all reasonable steps, including placing stop transfer instructions with the corporation's transfer agent prohibiting transfers in violation of the Plan and affixing the following legend (and/or such other legend or legends as the Stock Option Committee shall require) on certificates evidencing the shares: "IT IS UNLAWFUL TO -16- CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES." and "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 DETERMINATION BY FIRST COMMUNITY BANCORP (OR ANY SUCCESSOR ENTITY) THAT REGISTRATION IS NOT REQUIRED." At any time that Grantee contemplates the disposition of any Common Stock acquired pursuant to this Plan (whether by sale, exchange, gift or other form of transfer) he or she shall first notify the Corporation of such proposed disposition and shall thereafter cooperate with the Corporation in complying with all applicable requirements of law which, in the opinion of counsel for the Corporation, must be satisfied prior to the making of such disposition. Before consummating such disposition, the Corporation (or any successor entity) shall determine that such disposition will not result in a violation of any state or federal securities law or regulations. The Corporation shall remove any legend affixed to certificates representing Common Stock pursuant to this Section if and when all of the restrictions on the transfer of the Common Stock, whether imposed by this Plan or federal or state law, have terminated. A Grantee who thereafter sells or disposes of his shares of Common Stock will be required to notify the Corporation of such sale or disposition within five (5) days after the sale or disposition. 26. NOTICES. All notices and demands of any kind which the Stock Option Committee, any Grantee, or any other person may be required or desires to serve under the terms of this Plan shall be in writing and shall be served by personal service upon the respective person or by leaving a copy of such notice or demand at the address of such person as may be reflected in the records of the Corporation, or in the case of the Stock Option Committee, with the Secretary of the Corporation, or by mailing a copy thereof by certified or registered mail, postage prepaid, with return receipt requested. In the case of service by mail, it shall be deemed complete at the expiration of the third day after the day of mailing, except for notice of the exercise of any Stock Option and payment of the Stock Option exercise price, both of which must be actually received by the Corporation. 27. LIMITATION OF OBLIGATIONS OF THE CORPORATION. Any obligation of the Corporation arising under or as a result of this Plan or any Stock Option or Stock Award granted hereunder shall constitute the general unsecured obligation of the Corporation, and not of the Board of Directors of the Corporation, or any members thereof, the Stock Option Committee, or any member thereof, any officer of the Corporation, or any other person or any Subsidiary, and none of the foregoing, except the Corporation, shall be liable for any debt, obligation, cost or expense hereunder. -17- 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 or Stock Award. No oral or written agreement by any person on behalf of the Corporation relating to this Plan or any Stock Option or Stock Award granted hereunder is authorized, and such agreement may not bind the Corporation or the Stock Option Committee to grant any Stock Option or Stock Award to any person. 29. SEVERABILITY. If any provision of this Plan as applied to any person or to any circumstances shall be adjudged by a court of competent jurisdiction to be void, invalid, or unenforceable, the same shall in no way effect any other provision hereof, the application of any such provision in any other circumstances, or the validity of enforceability hereof. 30. CONSTRUCTION. Where the context or construction requires, all words applied in the plural shall be deemed to have been used in the singular and vice versa, and the masculine gender shall include the feminine and the neuter. 31. HEADINGS. The headings of the several paragraphs of this Plan 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. 32. SUCCESSORS. This Plan shall be binding upon the respective successors, assigns, heirs, executors, administrators, guardians and personal representatives of the Corporation and any Optionee. 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 limitation, any stock option agreement, the terms and provisions of this Plan shall control. END OF PLAN. -18- FIRST COMMUNITY BANCORP [NAME] INCENTIVE STOCK OPTION AGREEMENT _____ SHARES THIS INCENTIVE STOCK OPTION AGREEMENT ("Agreement") is dated ______, 20__ by and between FIRST COMMUNITY BANCORP, a California corporation (the "Company"), and _________________________ ("Optionee"); WHEREAS, pursuant to the First Community Bancorp Stock Incentive Plan (the "Plan"), the Board of Directors of the Company has authorized granting to Optionee a stock option to purchase all or any part of ________________ (_____) authorized but unissued shares of common stock of the Company, no par value per share, for cash at the price of _________________ DOLLARS ($____) per share, such option to be for the term and upon the terms and conditions hereinafter stated. NOW, THEREFORE, it is hereby agreed: 1. GRANT OF OPTION. Pursuant to said action of the Board of Directors and pursuant to authorizations granted by all appropriate regulatory and governmental agencies, the Company hereby grants to Optionee the option to purchase, upon and subject to the terms and conditions of the Plan, which is incorporated herein by this reference, all or any part of _____________________ (_______) shares of common stock of the Company at the price of ________________________ DOLLARS ($____) per share, which price is one hundred percent (100%) of the fair market value of such stock as of the date of action of the Board of Directors granting this option. This option is intended to qualify as an Incentive Stock Option under Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). OPTIONEE ACKNOWLEDGES THAT UNDER SECTION 422(d) OF THE CODE, TO THE EXTENT THAT THE AGGREGATE FAIR MARKET VALUE OF THE STOCK (DETERMINED AS OF THE DATE OF THE GRANT, WHICH UNDER THIS OPTION IS THE EXERCISE PRICE) WITH RESPECT TO WHICH INCENTIVE STOCK OPTIONS ARE EXERCISABLE FOR THE FIRST TIME BY THE OPTIONEE DURING ANY CALENDAR YEAR (UNDER ALL OPTIONS HELD BY OPTIONEES) EXCEEDS $100,000, SUCH OPTIONS SHALL BE TREATED AS OPTIONS WHICH ARE NOT INCENTIVE STOCK OPTIONS. 2. VESTING AND EXERCISABILITY. The options granted herein shall be exercisable as to ________________________________________ (________) shares on _________, 20__; as to an additional ________________________________ (_______) shares on ________, -19- 20__; and as to an additional ____________________________________ (_______) shares on __________, 20__. The options shall remain exercisable as to all of the shares of stock described above until ________, 20__ unless the stock options granted have expired or terminated earlier in accordance with provisions hereof. Shares as to which the options are exercisable pursuant to the foregoing provision may be purchased at any time prior to expiration of the option period. 3. EXERCISE OF OPTIONS. The stock options granted herein may be exercised by giving written notice to the Company stating the number of shares with respect to which this option is being exercised, together with cash in the amount of the purchase price of such shares. If the option is being exercised by any person other than the Optionee, said notice shall be accomplished by proof, satisfactory to counsel for the Company, of the right of such person to exercise the option. Not less that ten (10) shares may be purchased at any one time unless the number purchased is the total number which may be purchased under this option. All determinations by the Stock Option Committee, as described in Section 3 of the Plan, with regard to payment amounts and eligibility shall be conclusive and binding upon Optionee. Upon exercise, Optionee shall make appropriate arrangements and shall be responsible for the withholding of any federal and state taxes then due upon acquisition of the shares. 4. CESSATION OF EMPLOYMENT. Subject to the terms of the Plan, and except as provided in Paragraph 5 next below, if Optionee shall cease to be employed by the Company or a subsidiary corporation for any reason other than Optionee's death or disability, the options granted herein shall expire three (3) months thereafter or on the day specified in Paragraph 2 above, whichever is earlier. Before such expiration, Optionee shall have the right to exercise his or her option as to those shares with respect to which installment, if any, had accrued under Paragraph 2 above. 5. TERMINATION OF EMPLOYMENT FOR CAUSE. If Optionee's employment by the Company or a subsidiary corporation is terminated for cause, the options granted herein shall expire immediately unless reinstated by the Board of Directors within thirty (30) days of such termination by giving written notice of such reinstatement to Optionee at his or her last known address. In the event of such reinstatement, Optionee may exercise this option only to such extent, for such time, and upon such terms and conditions as if he or she had ceased to be employed by the Company or a subsidiary corporation upon the date of such termination for any reason other than cause or death. Termination for cause shall include 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 Company or a subsidiary corporation, and in any event, the determination by a majority of the members of the Board of Directors (excluding Optionee) with respect thereto shall be final and conclusive. 6. NONTRANSFERABILITY; DEATH OR DISABILITY OF OPTIONEE. The options granted herein shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the Optionee's lifetime only by Optionee. If Optionee dies or is disabled, as defined in the Plan, while employed by the Company or a subsidiary corporation, or during the -20- three-month period referred to in Paragraph 4 above, options granted herein shall expire one (1) year after the date of Optionee's death or date of disability, as applicable, or on the day specified in Paragraph 2 above, whichever is earlier. After Optionee's death or disability, but before such expiration, in the case of death the person or persons to whom Optionee's rights under the options granted herein shall have passed by will or by the applicable laws of descent and distribution, and in the case of disability Optionee or his authorized representative, shall have the right to exercise such options as to those shares and rights for which installments had accrued under Paragraph 2 above as of the date on which Optionee died or was disabled. 7. EMPLOYMENT. This Agreement shall not obligate the Company or a subsidiary corporation to employ Optionee for any period, nor shall it interfere in any way with the right of the Company or a subsidiary corporation to reduce Optionee's compensation. 8. PRIVILEGES OF STOCK OWNERSHIP. Optionee shall have no rights as a stockholder with respect to common stock of the Company subject to this Agreement until the date of issuance of stock certificates to Optionee. Except as provided in Section 15 of the Plan, no adjustment will be made for dividends or other rights for which the record date is prior to the date such stock certificates are issued. 9. AMENDMENT AND TERMINATION BY BOARD OF DIRECTORS. The Plan is subject to amendment and termination in certain events as provided in Section 17 of the Plan. 10. NOTIFICATION OF SALE. In accordance with Section 19 of the Plan, Optionee agrees that Optionee, or any person acquiring shares upon exercise of the options granted herein, will notify the Company not more than five (5) days after any sale or disposition of such shares. 11. AMBIGUITY. If there exists or arises any ambiguity or question or interpretation between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall control under all circumstances. 12. RESTRICTIONS ON TRANSFERABILITY. Optionee acknowledges that certain restrictions on transferability of the shares received upon exercise of the options granted herein may apply, as described in Section 25 of the Plan. If the Company determines that such restrictions do apply, then the certificates issued by the Company, representing the shares purchased by Optionee upon exercise of the options granted herein, shall contain the restrictive legends described in Section 25 of the Plan. IN WITNESS WHEREOF, the parties hereto have executed this Agreement. Company: FIRST COMMUNITY BANCORP, a California corporation By: ____________________________ James A. Boyce President Optionee: _________________________________ [Typed Name] -21- FIRST COMMUNITY BANCORP [NAME] NON-QUALIFIED STOCK OPTION AGREEMENT (DIRECTOR) ______ SHARES THIS NON-QUALIFIED STOCK OPTION AGREEMENT ("Agreement") is dated _________, 20__, by and between First Community Bancorp, a California corporation (the "Company"), and __________________ ("Optionee"); WHEREAS, pursuant to the First Community Bancorp Stock Incentive Plan (the "Plan"), the Board of Directors of the Company has authorized granting to Optionee a non-qualified stock option to purchase all or any part of ____________ (______) authorized but unissued shares of common stock of the Company, no par value, for cash at the price of ______________ ($______) per share, such option to be for the term and upon the terms and conditions hereinafter stated. NOW, THEREFORE, it is hereby agreed: 1. GRANT OF OPTION. Pursuant to said action of the Board of Directors and pursuant to authorizations granted by all appropriate regulatory and governmental agencies, the Company hereby grants to Optionee a non-qualified option to purchase, upon and subject to the terms and conditions of the Stock Option Plan, which is incorporated in full herein by reference, all or any part of __________________ (______) shares of common stock of the Company at the price of _________________ ($_____) per share, which price is one hundred percent (100%) of the fair market value of such stock as of the date of action of the Board of Directors granting this option. This option is a non-qualified option; i.e., it is not qualified as an Incentive Stock Option under Section 422 of the Internal Revenue Code of 1986, as amended. 2. VESTING AND EXERCISABILITY. The options granted herein shall vest and be exercisable as to ____________ (______) shares on _____, 20__, an additional _______________ (______) shares on _____, 20__, an additional _____________ (_____) shares on _____, 20__, and an additional shares on , 20__, and shall remain exercisable as to all of the shares of stock described above until _____, 20__, unless the stock options granted herein are terminated earlier in accordance with provisions hereof. Shares as to which the options are exercisable pursuant to the foregoing provision may be purchased at any time prior to expiration of the option period. -22- 3. EXERCISE OF OPTIONS. The stock options granted herein may be exercised giving written notice to the Company stating the number of shares with respect to which this option is being exercised, together with cash in the amount of the purchase price of such shares. If the option is being exercised by any person other than the Optionee, said notice shall be accomplished by proof, satisfactory to counsel for the Company, of the right of such person to exercise the option. Not less than ten (10) shares may be purchased at any one time unless the number purchased is the total number which may be purchased under this option. All determinations by the Stock Option Committee, as described in Section 3 of the Plan, with regard to payment amounts and eligibility shall be conclusive and binding upon Optionee. Upon exercise, Optionee shall make appropriate arrangements and shall be responsible for the payment of any federal and state taxes due upon Optionee's acquisition of the shares. 4. CESSATION OF SERVICE AS A DIRECTOR. Subject to the terms of the Plan, and except as provided in Paragraph 5 next below, if Optionee shall cease to serve as a director of the Company or a subsidiary corporation for any reason other than Optionee's death or disability, the options granted herein shall expire three (3) months thereafter or on the day specified in Paragraph 2 above, whichever is earlier. Before such expiration, Optionee shall have the right to exercise his or her option as to all or any part of the shares subject to the options granted herein. 5. TERMINATION OF SERVICE FOR CAUSE. If Optionee's service as a director of the Company or a subsidiary corporation is terminated due to the Board's decision that Optionee not be nominated for re-election to the Board due to cause, the options granted herein shall expire upon termination of his or her term of office then being served, unless reinstated by the Board of Directors within thirty (30) days of such termination by giving written notice of such reinstatement to Optionee at his or her last known address. In the event of such reinstatement, Optionee may exercise this option only to such extent, for such time, and upon such terms and conditions as if he or she had ceased to serve as a director of the Company or a subsidiary corporation upon the date of such termination for any reason other than cause or death. Termination for cause shall include 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 Company or a subsidiary corporation, and in any event, the determination by a majority of the members of the Board of Directors (excluding Optionee) with respect thereto shall be final and conclusive. 6. NONTRANSFERABILITY; DEATH OR DISABILITY OF OPTIONEE. The options granted herein shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the Optionee's lifetime only by Optionee. If Optionee dies or is disabled, as defined in the Plan, while employed by the Company or a subsidiary corporation, or during the three-month period referred to in Paragraph 5 above, options granted herein shall expire one (1) year after the date of Optionee's death, or date of disability, as applicable, or date of disability, as applicable, or on the day specified in Paragraph 2 above, whichever is earlier. After Optionee's death, or disability, but before such expiration, in the case of death the person or persons to whom Optionee's rights under the options granted herein shall have passed by will or by the -23- applicable laws of descent and distribution, and in the case of disability Optionee or his authorized representative, shall have the right to exercise such options as to all or any part of the shares subject to the options granted herein. 7. SERVICE AS A DIRECTOR. This agreement shall not obligate the Company or a subsidiary corporation to retain Optionee as a director for any period, nor shall it interfere in any way with the right of the Company or a subsidiary corporation to elect not to nominatered Optionee to its Board. 8. PRIVILEGES OF STOCK OWNERSHIP. Optionee shall have no rights as a stockholder with respect to common stock of the Company subject to this Agreement until the date of issuance of stock certificates to Optionee. Except as provided in Section 15 of the Plan, no adjustment will be made for dividends or other rights for which the record date is prior to the date such stock certificates are issued. 9. AMENDMENT AND TERMINATION BY BOARD OF DIRECTORS. The Plan is subject to amendment and termination in certain events as provided in Section 17 of the Plan. 10. NOTIFICATION OF SALE. Optionee, or any person acquiring shares upon exercise of the Options granted herein, hereby agrees to notify the Bank not more than five (5) days after any sale or disposition of such shares, as required by Section 19 of the Plan. 11. AMBIGUITY. If there exists or arises any ambiguity or question or interpretation between the terms of this Agreement and the terms of the Stock Option Plan, the terms of the Stock Option Plan shall control under all circumstances. 12. RESTRICTIONS ON TRANSFERABILITY. Optionee acknowledges that certain restrictions on transferability of the shares received upon exercise of the options granted herein may apply, as described in Section 25 of the Plan. If the Company determines that such restrictions do apply, then the certificates issued by the Company, representing the shares purchased by Optionee upon exercise of the options granted herein, shall contain the restrictive legends described in Section 25 of the Plan. IN WITNESS WHEREOF, the parties hereto have executed this Agreement. Company: FIRST COMMUNITY BANCORP, a California corporation By: __________________________________ James A. Boyce President Optionee: __________________________________ [Typed Name] -24- FIRST COMMUNITY BANCORP NON-QUALIFIED STOCK OPTION AGREEMENT (NON-DIRECTOR/CONSULTANT) ______ SHARES THIS NON-QUALIFIED STOCK OPTION AGREEMENT ("Agreement") is dated _________, 20__, by and between FIRST COMMUNITY BANCORP, a California corporation (the "Company"), and __________________ ("Optionee"); WHEREAS, pursuant to the First Community Bancorp Stock Incentive Plan (the "Plan"), the Board of Directors of the Company has authorized granting to Optionee a non-qualified stock option to purchase all or any part of ____________ (______) authorized but unissued shares of common stock of the Company, no par value, for cash at the price of __________________ ($_____) per share, such option to be for the term and upon the terms and conditions hereinafter stated. NOW, THEREFORE, it is hereby agreed: 1. GRANT OF OPTION. Pursuant to said action of the Board of Directors and pursuant to authorizations granted by all appropriate regulatory and governmental agencies, the Company hereby grants to Optionee a non-qualified option to purchase, upon and subject to the terms and conditions of the Plan, which is incorporated in full herein by reference, all or any part of __________________ (______) shares of common stock of the Company at the price of _________________ ($______) per share, which price is one hundred percent (100%) of the fair market value of such stock as of the date of action of the Board of Directors granting this option. This option is a non-qualified option; i.e., it is not qualified as an Incentive Stock Option under Section 422 of the Internal Revenue Code of 1986, as amended. 2. VESTING AND EXERCISABILITY. The options granted herein shall vest and be exercisable as to ____________ (______) shares on _____, 20__, an additional _______________ (______) shares on _____, 20__, an additional _____________ (_____) shares on _____, 20__, and an additional shares on , 20__, and shall remain exercisable as to all of the shares of stock described above until _____, 20__, unless the stock options granted herein are terminated earlier in accordance with provisions hereof. Shares as to which the options are exercisable pursuant to the foregoing provision may be purchased at any time prior to expiration of the option period. -25- 3. EXERCISE OF OPTIONS. The stock options granted herein may be exercised giving written notice to the Company stating the number of shares with respect to which this option is being exercised, together with cash in the amount of the purchase price of such shares. If the option is being exercised by any person other than the Optionee, said notice shall be accomplished by proof, satisfactory to counsel for the Company, of the right of such person to exercise the option. Not less than ten (10) shares may be purchased at any one time unless the number purchased is the total number which may be purchased under this option. All determinations by the Stock Option Committee, as described in Section 3 of the Plan, with regard to payment amounts and eligibility shall be conclusive and binding upon Optionee. Upon exercise, Optionee shall make appropriate arrangements and shall be responsible for the payment of any federal and state taxes due upon Optionee's acquisition of the shares. 4. NONTRANSFERABILITY; DEATH OR DISABILITY OF OPTIONEE. The options granted herein shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the Optionee's lifetime only by Optionee. If Optionee dies before fully exercising the options granted herein, then the options granted herein shall expire one (1) year after the date of Optionee's death, or on the day specified in Paragraph 2 above, whichever is earlier. After Optionee's death, but before such expiration, the person or persons to whom Optionee's rights under the options granted herein shall have passed by will or by the applicable laws of descent and distribution, shall have the right to exercise such options as to all or any part of the shares subject to the options granted herein. 5. PRIVILEGES OF STOCK OWNERSHIP. Optionee shall have no rights as a stockholder with respect to common stock of the Company subject to this Agreement until the date of issuance of stock certificates to Optionee. Except as provided in Section 15 of the Plan, no adjustment will be made for dividends or other rights for which the record date is prior to the date such stock certificates are issued. 6. AMENDMENT AND TERMINATION BY BOARD OF DIRECTORS. The Plan is subject to amendment and termination in certain events as provided in Section 17 of the Plan. 7. NOTIFICATION OF SALE. Optionee, or any person acquiring shares upon exercise of the Options granted herein, hereby agrees to notify the Bank not more than five (5) days after any sale or disposition of such shares, as required by Section 19 of the Plan. 8. AMBIGUITY. If there exists or arises any ambiguity or question or interpretation between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall control under all circumstances. 9. RESTRICTIONS ON TRANSFERABILITY. Optionee acknowledges that certain restrictions on transferability of the shares received upon exercise of the options granted herein may apply, as described in Section 25 of the Plan. If the Company determines that such restrictions do apply, then the certificates issued by the Company, representing the shares -26- purchased by Optionee upon exercise of the options granted herein, shall contain the restrictive legends described in Section 25 of the Plan. IN WITNESS WHEREOF, the parties hereto have executed this Agreement. Company: FIRST COMMUNITY BANCORP, a California corporation By: __________________________ James A. Boyce President Optionee: ______________________________ [Printed Name] -27- EX-10.2 3 ex-10_2.txt EXHIBIT 10.2 EXHIBIT 10.2 REVOLVING CREDIT AGREEMENT Dated as of June 26, 2000 This Agreement is between FIRST COMMUNITY BANCORP, a corporation formed under the laws of the State of California ("BORROWER"), and THE NORTHERN TRUST COMPANY, an Illinois banking corporation ("LENDER"), with a banking office at 50 South LaSalle Street, Chicago, Illinois 60675. SECTION 1. LOANS SECTION 1.1. REVOLVING CREDIT LOANS. Subject to the terms and conditions of this Agreement, Lender agrees to make loans to Borrower, from time to time from the date of this Agreement through June 25, 2001 (the "MATURITY DATE"), at such times and in such amounts, not to exceed FIVE MILLION and NO/100 UNITED STATES DOLLARS ($5,000,000) (the "COMMITMENT") at any one time outstanding, as Borrower may request (the "LOAN(S)"). During such period Borrower may borrow, repay and reborrow hereunder. Each borrowing shall be in the amount of at least $100,000 or the remaining unused amount of the Commitment. SECTION 1.2. REVOLVING CREDIT NOTE. The Loans shall be evidenced by a promissory note (the "Note"), substantially in the form of EXHIBIT A, with appropriate insertions, dated the date hereof, payable to the order of Lender and in the original principal amount of the Commitment. Lender may at any time and from time to time at Lender's sole option attach a schedule (grid) to the Note and endorse thereon notations with respect to each Loan specifying the date and principal amount thereof, the Interest Period (as defined below)(if applicable), the applicable interest rate and rate option, and the date and amount of each payment of principal and interest made by Borrower with respect to each such Loan. Lender's endorsements as well as its records relating to the Loans shall be rebuttably presumptive evidence of the outstanding principal and interest on the Loans, and, in the event of inconsistency, shall prevail over any records of Borrower and any written confirmations of the Loans given by Borrower. The principal of the Note shall be payable on or before the Maturity Date. SECTION 1.3. EXTENSION OF MATURITY DATE. Borrower may request an extension of the Maturity Date by submitting a request for an extension to Lender (an "EXTENSION REQUEST") no more than sixty (60) days prior to the current Maturity Date. The Extension Request must specify the new Maturity Date requested by Borrower and the date (which must be at least thirty (30) days after the Extension Request is delivered to Lender) as of which Lender must respond to the Extension Request (the "EXTENSION DATE"). The new Maturity Date shall be no more than 364 days after the Maturity Date in effect at the time the Extension Request is received, including such Maturity Date as one of the days in the calculation of the days elapsed. If Lender, in its sole discretion, decides to approve the Extension Request, Lender shall deliver its written consent to Borrower no later than the Extension Date. Lender's failure to deliver a response before the Extension Date shall constitute a rejection of the Extension Request. If and only if Lender consents to the Extension Request on or before the Extension Date, the Maturity Date specified in the Extension Request shall become effective at the expiration of the existing Maturity Date and Lender shall promptly notify Borrower thereof. SECTION 2. INTEREST AND FEES SECTION 2.1. INTEREST RATE. Borrower agrees to pay interest on the unpaid principal amount of the Loans from time to time outstanding hereunder at the following rates per year: (a) Before maturity of any Loan, whether by acceleration or otherwise, at the option of Borrower, subject to the terms hereof at a rate equal to: (i) The "PRIME-BASED RATE," which shall mean the Prime Rate (as hereinafter defined) minus seventy-five hundredths of one percent (-0.75%) per annum; (ii) "LIBOR," which shall mean the sum of (A) that fixed rate of interest per year for deposits with Interest Periods of 1, 3 or 6 months (which Interest Period Borrower shall select subject to the terms stated herein) in United States Dollars offered to Lender in or through the London interbank market at or about 10:00 A.M., London time, two days (during which banks are generally open in both Chicago and London) before the rate is to take effect in an amount corresponding to the amount of the requested Loan or portion thereof and for the London deposit Interest Period requested, DIVIDED BY one minus any applicable reserve requirement (expressed as a decimal) on Eurodollar deposits of the same amount and Interest Period as determined by Lender in its sole discretion, PLUS (B) one and one-half percent (+1.50%) per annum; or (iii) "FEDERAL FUNDS RATE," which shall mean the sum of (A) the weighted average of the rates on overnight Federal funds transactions, with members of the Federal Reserve System only, arranged by Federal funds brokers, PLUS (B) one and one-half percent (1.50%) per annum. The Federal Funds Rate shall be determined by Lender on the basis of reports by Federal funds brokers to, and published daily by, the Federal Reserve Bank of New York in the Composite Closing Quotations for U.S. Government Securities. If such publication is unavailable or the Federal Funds Rate is not set forth therein, the Federal Funds Rate shall be determined on the basis of any other source reasonably selected by Lender. The Federal Funds Rate applicable each day shall be the Federal Funds Rate reported as applicable to Federal funds transactions on that date. In the case of Saturday, Sunday or a legal holiday, the Federal Funds Rate shall be the rate applicable to Federal funds transactions on the immediately preceding day for which the Federal Funds Rate is reported. -2- (b) After the maturity of any Loan, whether by acceleration or otherwise, such Loan shall bear interest until paid at a rate equal to two percent (2%) in addition to the rate in effect immediately prior to maturity (but not less than the Prime-Based Rate in effect at maturity). SECTION 2.2. RATE SELECTION. Borrower shall select and change its selection of the interest rate as among LIBOR, the Federal Funds Rate and the Prime-Based Rate, as applicable, to apply to at least $100,000 and in integral multiples of $100,000 thereafter of any Loan or portion thereof, subject to the requirements herein stated: (a) At the time any Loan is made; (b) At the expiration of a particular LIBOR Interest Period selected for the outstanding principal balance of any Loan or portion of any Loan currently bearing interest at LIBOR; and (c) At any time for the outstanding principal balance of any Loan or portion thereof currently bearing interest at the Prime-Based Rate or the Federal Funds Rate. SECTION 2.3. RATE CHANGES AND NOTIFICATIONS. (a) LIBOR. If Borrower wishes to borrow funds at LIBOR or Borrower wishes to change the rate of interest on any Loan or portion thereof, within the limits described above, from any other rate to LIBOR, it shall, at or before 12:00 noon, Chicago time, not less than two Banking Days of Lender prior to the Banking Day of Lender on which such rate is to take effect, give Lender written or telephonic notice thereof, which shall be irrevocable. Such notice shall specify the Loan or portion thereof to which LIBOR is to apply, and, in addition, the desired LIBOR Interest Period of 1, 3 or 6 months (but not to exceed the Maturity Date). (b) FEDERAL FUNDS RATE OR PRIME-BASED RATE. If Borrower wishes to borrow funds at the Federal Funds Rate or the Prime-Based Rate or to change the rate of interest on any Loan or any portion thereof, to such rate, it shall, at or before 12:00 noon, Chicago time, on the date such borrowing or change is to take effect, which shall be a Banking Day of Lender, give written or telephonic notice thereof, which shall be irrevocable. Such notice shall specify the advance and the desired interest rate option. (c) FAILURE TO NOTIFY. If Borrower does not notify Lender at the expiration of a selected Interest Period with respect to any principal outstanding at LIBOR, then in the absence of such notice Borrower shall be deemed to have elected to have such principal accrue interest after the respective LIBOR Interest Period at the Prime-Based Rate. If Borrower does not notify Lender as to its selection of the interest rate option with respect to any new Loan, then in the absence of such notice Borrower shall be deemed to have elected to have such initial advance accrue interest at the Prime-Based Rate. -3- SECTION 2.4. INTEREST PAYMENT DATES. Accrued interest shall be paid in respect of each portion of principal to which the Federal Funds Rate or Prime-Based Rate applies on the last day of each month in each year, beginning with the first of such dates to occur after the date of the first Loan or portion thereof, at maturity, and upon payment in full, and to each portion of principal to which any other interest rate option applies, the end of each respective Interest Period, every three months, at maturity, and upon payment in full, whichever is earlier or more frequent. After maturity, interest shall be payable upon demand. SECTION 2.5. ADDITIONAL PROVISIONS WITH RESPECT TO FEDERAL FUNDS RATE AND LIBOR LOANS. The selection by Borrower of the Federal Funds Rate or LIBOR and the maintenance of the Loans or portions thereof at such rate shall be subject to the following additional terms and conditions: (a) AVAILABILITY OF DEPOSITS AT A DETERMINABLE RATE. If, after Borrower has elected to borrow or maintain any Loan or portion thereof at the Federal Funds Rate or LIBOR, Lender notifies Borrower that: (i) United States dollar deposits in the amount and for the maturity requested are not available to Lender (in the case of LIBOR, in the London interbank market); or (ii) Reasonable means do not exist for Lender to determine the Federal Funds Rate or LIBOR for the amount and maturity requested; all as determined by Lender in its sole discretion, then the principal subject to the Federal Funds Rate or LIBOR shall accrue or shall continue to accrue interest at the Prime-Based Rate. (b) PROHIBITION OF MAKING, MAINTAINING, OR REPAYMENT OF PRINCIPAL AT THE FEDERAL FUNDS RATE OR LIBOR. If any treaty, statute, regulation, interpretation thereof, or any directive, guideline, or otherwise by a central bank or fiscal authority (whether or not having the force of law) shall either prohibit or extend the time at which any principal subject to the Federal Funds Rate or LIBOR may be purchased, maintained, or repaid, then on and as of the date the prohibition becomes effective, the principal subject to that prohibition shall continue at the Prime-Based Rate. (c) PAYMENTS OF PRINCIPAL AND INTEREST TO BE INCLUSIVE OF ANY TAXES OR COSTS. All payments of principal and interest shall include any taxes and costs incurred by Lender resulting from having principal outstanding hereunder at the Federal Funds Rate or LIBOR. Without limiting the generality of the preceding obligation, illustrations of such taxes and costs are: (i) Taxes (or the withholding of amounts for taxes) of any nature whatsoever including income, excise, and interest equalization taxes (other than income taxes imposed by the United States or any state thereof on the income of Lender), as -4- well as all levies, imposts, duties, or fees whether now in existence or resulting from a change in, or promulgation of, any treaty, statute, regulation, interpretation thereof, or any directive, guideline, or otherwise, by a central bank or fiscal authority (whether or not having the force of law) or a change in the basis of, or time of payment of, such taxes and other amounts resulting therefrom; (ii) Any reserve or special deposit requirements against assets or liabilities of, or deposits with or for the account of, Lender with respect to principal outstanding at LIBOR including those imposed under Regulation D of the Federal Reserve Board or resulting from a change in, or the promulgation of, such requirements by treaty, statute, regulation, interpretation thereof, or any directive, guideline, or otherwise by a central bank or fiscal authority (whether or not having the force of law); (iii) Any other costs resulting from compliance with treaties, statutes, regulations, interpretations, or any directives or guidelines, or otherwise by a central bank or fiscal authority (whether or not having the force of law), including capital adequacy regulations; (iv) Any loss (including loss of anticipated profits) or expense incurred by reason of the liquidation or re-employment of deposits acquired by Lender: (A) To make Loans or a portion thereof or maintain principal outstanding at the LIBOR or the Federal Funds Rate; (B) As the result of a voluntary prepayment at a date other than the Interim Maturity Date selected for principal outstanding at LIBOR; (C) As the result of a mandatory repayment at a date other than that Interim Maturity Date selected for principal outstanding at LIBOR as the result of the occurrence of an Event of Default and the acceleration of any portion of the indebtedness hereunder; or (D) As the result of a prohibition on making, maintaining, or repaying principal outstanding at the Federal Funds Rate or LIBOR. If Lender incurs any such taxes or costs, Borrower, upon demand in writing specifying such taxes and costs, shall promptly pay them; save for manifest error Lender's specification shall be presumptively deemed correct. SECTION 2.6. BASIS OF COMPUTATION. Interest shall be computed for the actual number of days elapsed on the basis of a year consisting of 360 days, including the date a Loan is made and excluding the date a Loan or any portion thereof is paid or prepaid. -5- SECTION 2.7. COMMITMENT FEE, REDUCTION OF COMMITMENT. Borrower agrees to pay Lender a commitment fee (the "COMMITMENT FEE") of twenty-five hundredths of one percent (0.25%) per year on the average daily unused amount of the Commitment. The Commitment Fee shall commence to accrue on the date of this Agreement and shall be paid on the last day of each calendar quarter in each year, beginning with the first of such dates to occur after the date of this Agreement, at maturity and upon payment in full. At any time or from time to time, upon at least ten days' prior written notice, which shall be irrevocable, Borrower may reduce the Commitment in the amount of at least $100,000 or in full; provided that Borrower may not reduce the Commitment below an amount equal to the aggregate outstanding principal amount of all Loans. Upon any such reduction of any part of the unused Commitment, the Commitment Fee on the part reduced shall be paid in full as of the date of such reduction. SECTION 3. PAYMENTS AND PREPAYMENTS SECTION 3.1. PREPAYMENTS. Borrower may prepay without penalty or premium any principal bearing interest at the Prime-Based Rate or the Federal Funds Rate. If Borrower prepays any principal bearing interest at LIBOR in whole or in part on a date other than the Interim Maturity Date, or if the maturity of any such LIBOR principal is accelerated, then, to the fullest extent permitted by law Borrower shall also pay Lender for all losses (including but not limited to interest rate margin and any other losses of anticipated profits) and expenses incurred by reason of the liquidation or re-employment of deposits acquired by Lender to make the Loan or maintain principal outstanding at LIBOR. Upon Lender's demand in writing specifying such losses and expenses, Borrower shall promptly pay them; Lender's specification shall be deemed correct in the absence of manifest error. All Loans or portions thereof made at LIBOR shall be conclusively deemed to have been funded by or on behalf of Lender (in the London interbank market) by the purchase of deposits corresponding in amount and maturity to the amount and Interest Periods selected (or deemed to have been selected) by Borrower under this Agreement. Any partial repayment or prepayment shall be in an amount of at least $500,000. SECTION 3.2. FUNDS. All payments of principal, interest and the Commitment Fee shall be made in immediately available funds to Lender at its banking office indicated above or as otherwise directed by Lender. SECTION 4. REPRESENTATIONS AND WARRANTIES To induce Lender to make each of the Loans, Borrower represents and warrants to Lender that: SECTION 4.1. ORGANIZATION. Borrower is existing and in good standing as a duly qualified and organized bank holding company. Borrower and each Subsidiary (as hereinafter defined) are existing and in good standing under the laws of their jurisdiction of formation, and are duly qualified, in good standing and authorized to do business in each jurisdiction where failure to do so might have a material adverse impact on the consolidated -6- assets, condition or prospects of Borrower. Borrower and each Subsidiary have the power and authority to own their properties and to carry on their businesses as now being conducted. SECTION 4.2. AUTHORIZATION; NO CONFLICT. The execution, delivery and performance of this Agreement, the Pledge Agreement, the Note and all related documents and instruments: (a) are within Borrower's powers; (b) have been authorized by all necessary corporate action; (c) have received any and all necessary governmental approvals; and (d) do not and will not contravene or conflict with any provision of law or charter or by-laws of Borrower or any agreement affecting Borrower or its property. This Agreement and the Pledge Agreement are, and the Note when executed and delivered will be, legal, valid and binding obligations of Borrower, enforceable against Borrower in accordance with their respective terms. SECTION 4.3. FINANCIAL STATEMENTS. Borrower has supplied to Lender copies of its unaudited pro forma consolidating financial statements as at December 31, 1999. Such statements have been furnished to Lender, have been prepared in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding fiscal year, and fairly present the financial condition of Borrower and its Subsidiaries as at such dates and the results of their operations for the respective periods then ended. Since the date of those financial statements, no material, adverse change in the business, condition, properties, assets, operations, or prospects of Borrower or its Subsidiaries has occurred of which Lender has not been advised in writing before this Agreement was signed. There is no known contingent liability of Borrower or any Subsidiary which is known to be in an amount in excess of $1,000,000 (excluding loan commitments, letters of credit, and other contingent liabilities incurred in the ordinary course of the banking business) in excess of insurance for which the insurer has confirmed coverage in writing which is not reflected in such financial statements or of which Lender has not been advised in writing before this Agreement was signed. SECTION 4.4. TAXES. Borrower and each Subsidiary have filed or caused to be filed all federal, state and local tax returns which, to the knowledge of Borrower or such Subsidiary, are required to be filed, and have paid or have caused to be paid all taxes as shown on such returns or on any assessment received by them, to the extent that such taxes have become due (except for current taxes not delinquent and taxes being contested in good faith and by appropriate proceedings for which adequate reserves have been provided on the books of Borrower or the appropriate Subsidiary, and as to which no foreclosure, sale or similar proceedings have been commenced). Borrower and such Subsidiary have set up reserves which are adequate for the payment of additional taxes for years which have not been audited by the respective tax authorities. SECTION 4.5. LIENS. None of the assets of Borrower or any Subsidiary are subject to any mortgage, pledge, title retention lien, or other lien, encumbrance or security interest except: (a) for current taxes not delinquent or taxes being contested in good faith and by appropriate proceedings; (b) for liens arising in the ordinary course of business for sums not due or sums being contested in good faith and by appropriate proceedings, but not involving any deposits or loan or portion thereof or borrowed money or the deferred purchase price of property or services; (c) to the extent specifically shown in the financial statements referred to in SECTION -7- 4.3; (d) for liens in favor of Lender or pursuant to the Pledge Agreement; and (e) liens and security interests securing deposits of public funds, repurchase agreements, Federal funds purchased, trust assets, advances from a Federal Home Loan Bank, discount window borrowings from a Federal Reserve Bank and other similar liens granted in the ordinary course of the banking business. SECTION 4.6. ADVERSE CONTRACTS. Neither Borrower nor any Subsidiary is a party to any agreement or instrument or subject to any charter or other corporate restriction, nor is it subject to any judgment, decree or order of any court or governmental body, which may have a material and adverse effect on the business, assets, liabilities, financial condition, operations or business prospects of Borrower and its Subsidiaries taken as a whole or on the ability of Borrower to perform its obligations under this Agreement, the Pledge Agreement and the Note. Neither Borrower nor any Subsidiary has, nor with reasonable diligence should have had, knowledge of or notice that it is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any such agreement, instrument, restriction, judgment, decree or order. SECTION 4.7. REGULATION U. Borrower is not engaged principally in, nor is one of Borrower's important activities, the business of extending credit for the purpose of purchasing or carrying "margin stock" within the meaning of Regulation U of the Board of Governors of the Federal Reserve System as now and from time to time hereinafter in effect. SECTION 4.8. LITIGATION AND CONTINGENT LIABILITIES. No litigation (including derivative actions), arbitration proceedings or governmental proceedings are pending or threatened against Borrower which would (singly or in the aggregate), if adversely determined, have a material and adverse effect on the financial condition, continued operations or prospects of Borrower or any Subsidiary, except as and if set forth (including estimates of the dollar amounts involved) in a schedule furnished by Borrower to Lender before this Agreement was signed. SECTION 4.9. FDIC INSURANCE. The deposits of each Subsidiary Bank of Borrower are insured by the FDIC and no act has occurred which would adversely affect the status of such Subsidiary Bank as an FDIC insured bank. SECTION 4.10. INVESTIGATIONS. Neither Borrower nor any Subsidiary Bank is under investigation by, or is operating under the restrictions imposed by or agreed to in connection with, any regulatory authority, other than routine examinations by regulatory authorities having jurisdiction over Borrower or such Subsidiary Bank. SECTION 4.11. SUBSIDIARIES. Attached hereto as EXHIBIT C is a correct and complete list of all Subsidiaries of Borrower. SECTION 4.12. BANK HOLDING COMPANY. Borrower has complied in all material respects with all federal, state and local laws pertaining to bank holding companies, including without limitation the Bank Holding Company Act of 1956, as amended, and to the -8- best of its knowledge there are no conditions precedent or subsequent to its engaging in the business of being a registered bank holding company. SECTION 4.13. ERISA. (a) Borrower and the ERISA Affiliates and the plan administrator of each Plan have fulfilled in all material respects their respective obligations under ERISA and the Code with respect to such Plan and such Plan is currently in material compliance with the applicable provisions of ERISA and the Code. (b) With respect to each Plan, there has been no (i) "reportable event" within the meaning of Section 4043 of ERISA and the regulations thereunder which is not subject to the provision for waiver of the 30-day notice requirement to the PBGC; (ii) failure to make or properly accrue any contribution which is due to any Plan; (iii) action under Section 4041 of ERISA to terminate any Pension Plan; (iv) withdrawal from any Pension Plan with two or more contributing sponsors or the termination of any such Pension Plan resulting in liability pursuant to Section 4063 or 4064 of ERISA; (v) institution by PBGC of proceedings to terminate any Pension Plan, or the occurrence of any event or condition which might constitute grounds under ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (vi) the imposition of liability pursuant to Sections 4062(e), 4069 or 4212 of ERISA; (vii) complete or partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) from any Pension Plan which is a Multiemployer Plan that is in reorganization or insolvency pursuant to Sections 4241 or 4245 of ERISA, or that it intends to terminate or has terminated under Sections 4041A or 4042 of ERISA; (viii) prohibited transaction described in Section 406 of ERISA or 4975 of the Code which could give rise to the imposition of any material fines, penalties, taxes or related charges; (ix) assertion of a claim (other than routine claims for benefits) against any Plan (other than a Multiemployer Plan) which could reasonably be expected to be successful; (x) receipt from the Internal Revenue Service of notice of the failure of any Plan to qualify under Section 401(a) of the Code, or the failure of any trust forming part of any Plan to fail to qualify for exemption from taxation under Section 501(a) of the Code, if applicable; or (xi) imposition of a Lien pursuant to Section 401(a)(29) or 412(n) of the Code or Section 302(f) of ERISA. SECTION 4.14. ENVIRONMENTAL LAWS. (a) Borrower and each of its Subsidiaries have obtained all permits, licenses and other authorizations which are required under all Environmental Laws and are in compliance in all material respects with any applicable Environmental Laws. (b) On or prior to the date hereof, no notice, demand, request for information, citation, summons or order has been issued, no complaint has been filed, no penalty has been assessed and no investigation or review is pending or threatened by any governmental or other Person with respect to any alleged or suspected failure by -9- Borrower or any of its Subsidiaries to comply in any material respect with any Environmental Laws. (c) There are no material liens arising under or pursuant to any Environmental Laws on any of the property owned or leased by Borrower or any of its Subsidiaries. (d) There are no conditions existing currently or likely to exist during the term of this Agreement which would subject Borrower or any of its Subsidiaries or any of their property to any material lien, damages, penalties, injunctive relief or cleanup costs under any Environmental Laws or which require or are likely to require cleanup, removal, remedial action or other responses pursuant to Environmental Laws by Borrower and its Subsidiaries. SECTION 4.15. PLEDGED SHARES. The Pledged Shares (as hereinafter defined) constitute 100% of the issued and outstanding capital stock of Rancho Santa Fe National Bank, have been duly authorized and validly issued and are fully paid and non-assessable. Borrower owns the Pledged Shares free and clear of all other interests, liens or encumbrances of any nature whatsoever, other than liens in favor of Lender. SECTION 5. COVENANTS Until all obligations of Borrower hereunder, under the Pledge Agreement, the Note and all other related documents and instruments are paid and fulfilled in full, Borrower agrees that it shall, and shall cause each Subsidiary to, comply with the following covenants, unless Lender consents otherwise in writing: SECTION 5.1. EXISTENCE, MERGERS, ETC. Borrower and each Subsidiary shall preserve and maintain their respective corporate, partnership or joint venture (as applicable) existence, rights, franchises, licenses and privileges, and will not liquidate, dissolve, or merge, or consolidate with or into any other entity, or sell, lease, transfer or otherwise dispose of all or a substantial part of their assets other than in the ordinary course of business as now conducted, except that: (a) Any Subsidiary may merge or consolidate with or into Borrower or any one or more wholly-owned Subsidiaries; and (b) Any Subsidiary may sell, lease, transfer or otherwise dispose of any of its assets to Borrower or one or more wholly-owned Subsidiaries. Borrower and each Subsidiary shall take all steps to become and remain duly qualified, in good standing and authorized to do business in each jurisdiction where failure to do so might have a material adverse impact on the consolidated assets, condition or prospects of Borrower. SECTION 5.2. REPORTS, CERTIFICATES AND OTHER INFORMATION. Borrower shall furnish (or cause to be furnished) to Lender: -10- (a) INTERIM REPORTS. Within forty-five (45) days after the end of each quarter of each fiscal year of Borrower, a copy of an unaudited financial statement of Borrower and its Subsidiaries prepared on a consolidated basis consistent with the consolidating financial statements of Borrower and its Subsidiaries referred to in SECTION 4.3 above and prepared in accordance with generally accepted accounting principles, signed by an authorized officer of Borrower and consisting of at least: (i) a balance sheet as at the close of such quarter; and (ii) a statement of earnings and source and application of funds for such quarter and for the period from the beginning of such fiscal year to the close of such quarter. (b) ANNUAL REPORT. Within ninety (90) days after the end of each fiscal year of Borrower, a copy of an annual report of Borrower and its Subsidiaries prepared on a consolidated basis and in conformity with generally accepted accounting principles applied on a basis consistent with the consolidating financial statements of Borrower and its Subsidiaries referred to in SECTION 4.3 above, duly certified by independent certified public accountants of recognized standing satisfactory to Lender, accompanied by an opinion without significant qualification. (c) CERTIFICATES. Contemporaneously with the furnishing of a copy of each annual report and of each quarterly statement provided for in this SECTION, a certificate dated the date of such annual report or such quarterly statement and signed by either the President, the Chief Financial Officer or the Treasurer of Borrower, to the effect that no Event of Default or Unmatured Event of Default has occurred and is continuing, or, if there is any such event, describing it and the steps, if any, being taken to cure it, and containing (except in the case of the certificate dated the date of the annual report) a computation of, and showing compliance with, any financial ratio or restriction contained in this Agreement. (d) REPORTS TO SEC AND TO SHAREHOLDERS. Copies of each filing and report made by Borrower or any Subsidiary with or to any securities exchange or the Securities and Exchange Commission, except in respect of any single shareholder, and of each communication from Borrower or any Subsidiary to shareholders generally, promptly upon the filing or making thereof. (e) NOTICE OF DEFAULT, LITIGATION AND ERISA MATTERS. Immediately upon learning of the occurrence of any of the following, written notice describing the same and the steps being taken by Borrower or any Subsidiary affected in respect thereof: (i) the occurrence of an Event of Default or an Unmatured Event of Default; (ii) the institution of, or any adverse determination in, any litigation, arbitration or governmental proceeding which is material to Borrower and its Subsidiaries on a consolidated basis; (iii) the occurrence of any event referred to in SECTION 4.13(b); or (iv) the issuance of any cease and desist order, memorandum of understanding, cancellation of insurance, or proposed disciplinary action from the FDIC or other regulatory entity. -11- (f) OTHER INFORMATION. From time to time such other information, financial or otherwise, concerning Borrower or any Subsidiary as Lender may reasonably request. SECTION 5.3. INSPECTION. At Borrower's expense if an Event of Default or Unmatured Event of Default has occurred or is continuing, Borrower and each Subsidiary shall permit Lender and its agents at any time during normal business hours to inspect their properties and to inspect and make copies of their books and records. SECTION 5.4. FINANCIAL REQUIREMENTS. (a) LEVERAGE RATIO. Borrower and each Subsidiary Bank shall maintain at all times a ratio of Tier 1 Capital to average quarterly assets less all non-qualified intangible assets of at least five percent (5%), all calculated on a consolidated basis. (b) TIER 1 CAPITAL RATIO. Borrower and each Subsidiary Bank shall maintain at all times a ratio of Tier 1 Capital to risk-weighted assets of not less than six percent (6%), all calculated on a consolidated basis. (c) RISK-BASED CAPITAL RATIO. Borrower and each Subsidiary Bank shall maintain at all times a ratio of Total Capital to risk-weighted assets of not less than ten percent (10%). (d) NONPERFORMING ASSETS. All assets of all Subsidiary Banks and other Subsidiaries classified as "non-performing" (which shall include all loans in non-accrual status, more than ninety (90) days past due in principal or interest, restructured or renegotiated, or listed as "other restructured" or "other real estate owned") on the FDIC or other regulatory agency call report shall not exceed at any time three percent (3.0%) of the total loans of Borrower and its Subsidiaries on a consolidated basis. (e) LOAN LOSS RESERVES RATIO. Each Subsidiary Bank shall maintain at all times on a consolidated basis a ratio of loan loss reserves to non-performing loans of not less than one hundred percent (100%). (f) MINIMUM TANGIBLE NET WORTH. Borrower shall maintain a consolidated minimum Tangible Net Worth equal to at least $20,000,000 at all times. (g) TOTAL DEBT TO NET WORTH. Borrower's total indebtedness for borrowed money (specifically excluding the indebtedness for borrowed money of Borrower's Subsidiaries) shall not at any time exceed thirty-five percent (35%) of its Tangible Net Worth. (h) RETURN ON AVERAGE ASSETS. Borrower's consolidated net income shall be at least seventy hundredths of one percent (0.70%) of its average assets, calculated on an annualized basis as at the last day of each fiscal quarter of Borrower. -12- SECTION 5.5. INDEBTEDNESS, LIENS AND TAXES. Borrower and each Subsidiary shall: (a) INDEBTEDNESS. Not incur, permit to remain outstanding, assume or in any way become committed for indebtedness in respect of borrowed money (specifically including but not limited to indebtedness in respect of money borrowed from financial institutions, but excluding deposits), except: (i) indebtedness incurred hereunder or to Lender; (ii) indebtedness existing on the date of this Agreement shown on the financial statements furnished to Lender before this Agreement was signed; and (iii) indebtedness of the Subsidiary Banks arising in the ordinary course of the banking business of the Subsidiary Banks. (b) LIENS. Not create, suffer or permit to exist any lien or encumbrance of any kind or nature upon any of their assets now or hereafter owned or acquired (specifically including but not limited to the capital stock of any of the Subsidiary Banks), or acquire or agree to acquire any property or assets of any character under any conditional sale agreement or other title retention agreement, but this Section shall not be deemed to apply to: (i) liens existing on the date of this Agreement of which Lender has been advised in writing before this Agreement was signed; (ii) liens of landlords, contractors, laborers or suppliers, tax liens, or liens securing performance or appeal bonds, or other similar liens or charges arising out of Borrower's business, provided that tax liens are removed before related taxes become delinquent and other liens are promptly removed, in either case unless contested in good faith and by appropriate proceedings, and as to which adequate reserves shall have been established and no foreclosure, sale or similar proceedings have commenced; (iii) liens in favor of Lender; (iv) liens on the assets of any Subsidiary Bank arising in the ordinary course of the banking business of such Subsidiary Bank; and (v) liens contemplated by SECTION 4.5. (c) TAXES. Pay and discharge all taxes, assessments and governmental charges or levies imposed upon them, upon their income or profits or upon any properties belonging to them, prior to the date on which penalties attach thereto, and all lawful claims for labor, materials and supplies when due, except that no such tax, assessment, charge, levy or claim need be paid which is being contested in good faith by appropriate proceedings as to which adequate reserves shall have been established, and no foreclosure, sale or similar proceedings have commenced. (d) GUARANTIES. Not assume, guarantee, endorse or otherwise become or be responsible in any manner (whether by agreement to purchase any obligations, stock, assets, goods or services, or to supply or loan any funds, assets, goods or services, or otherwise) with respect to the obligation of any other Person, except: (i) by the endorsement of negotiable instruments for deposit or collection in the ordinary course of business, issuance of letters of credit or similar instruments or documents in the ordinary course of business; and (ii) except as permitted by this Agreement. -13- SECTION 5.6. INVESTMENTS AND LOANS. Neither Borrower nor any Subsidiary shall make any loan, advance, extension of credit or capital contribution to, or purchase or otherwise acquire for a consideration, evidences of indebtedness, capital stock or other securities of any Person, except that Borrower and any Subsidiary may: (a) purchase or otherwise acquire and own short-term money market items; (b) invest, by way of purchase of securities or capital contributions, in the Subsidiary Banks or any other bank or banks, and upon Borrower's purchase or other acquisition of twenty-five percent (25%) or more of the stock of any bank, such bank shall thereupon become a "Subsidiary Bank" for all purposes under this Agreement; (c) invest, by way of loan, advance, extension of credit (whether in the form of lease, conditional sales agreement, or otherwise), purchase of securities, capital contributions, or otherwise, in Subsidiaries other than banks or Subsidiary Banks; and (d) invest, by way of purchase of securities or capital contributions, in other Persons so long as before and after giving effect thereto no Event of Default or Unmatured Event of Default shall have occurred and be continuing and the investment is in compliance with Regulation Y of the Federal Reserve Board. Nothing in this SECTION 5.6 shall prohibit a Subsidiary Bank from making investments, loans, advances, or other extensions of credit in the ordinary course of the banking business upon such terms as may at the time be customary in the banking business. SECTION 5.7. CAPITAL STRUCTURE AND DIVIDENDS. Borrower shall not, and shall not permit any Subsidiary to, (i) purchase or redeem, or obligate itself to purchase or redeem, any shares of Borrower's capital stock, of any class, issued and outstanding from time to time, or any partnership, joint venture or other equity interest in Borrower or any Subsidiary; or (ii) declare or pay any dividend (other than dividends payable in its own common stock or to Borrower) or make any other distribution in respect of such shares or interest other than to Borrower. Except as provided in SECTION 5.1, Borrower shall continue to own, directly or indirectly, the same (or greater) percentage of the stock and partnership, joint venture, or other equity interest in each Subsidiary that it held on the date of this Agreement, and no Subsidiary shall issue any additional stock or partnership, joint venture or other equity interests, options or warrants in respect thereof, or securities convertible into such securities or interests, other than to Borrower. SECTION 5.8. MAINTENANCE OF PROPERTIES. Borrower and each Subsidiary shall maintain, or cause to be maintained, in good repair, working order and condition, all their properties (whether owned or held under lease), and from time to time make or cause to be made all needed and appropriate repairs, renewals, replacements, additions, and improvements thereto, so that the business carried on in connection therewith may be properly and advantageously conducted at all times. -14- SECTION 5.9. INSURANCE. Borrower and each Subsidiary shall maintain insurance in responsible companies in such amounts and against such risks as is required by law and such other insurance, in such amount and against such hazards and liabilities, as is customarily maintained by bank holding companies and banks similarly situated. Each Subsidiary Bank shall have deposits insured by the FDIC. SECTION 5.10. USE OF PROCEEDS. (a) GENERAL. The proceeds of the Loans shall be used for general corporate purposes. Neither Borrower nor any Subsidiary shall use or permit any proceeds of the Loans to be used, either directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of "purchasing or carrying any margin stock" within the meaning of Regulations U or X of the Board of Governors of the Federal Reserve System, as amended from time to time. If requested by Lender, Borrower and each Subsidiary will furnish to Lender a statement in conformity with the requirements of Federal Reserve Form U-1. No part of the proceeds of the Loans will be used for any purpose which violates or is inconsistent with the provisions of Regulation U or X of the Board of Governors. (b) TENDER OFFERS AND GOING PRIVATE. Neither Borrower nor any Subsidiary shall use (or permit to be used) any proceeds of the Loans to acquire any security in any transaction which is subject to Section 13 or 14 of the Securities Exchange Act of 1934, as amended, or any regulations or rulings thereunder. SECTION 5.11. COLLATERAL. Borrower shall execute and deliver to Lender a pledge agreement dated even date herewith, substantially in the form of EXHIBIT B, with appropriate insertions (as the same may be amended from time to time, herein called the "PLEDGE AGREEMENT"), pursuant to which Borrower shall pledge to Lender all of the issued and outstanding shares of the capital stock owned by Borrower (herein collectively called the "PLEDGED SHARES") of Rancho Santa Fe National Bank, located in Rancho Santa Fe, California. SECTION 5.12. WELL CAPITALIZED. Each Subsidiary Bank shall at all times be at least "well capitalized" as defined in the FDIC Improvement Act of 1991 and any regulations issued thereunder, as such statute or regulation may be amended or supplemented from time to time. SECTION 5.13. COMPLIANCE WITH LAW. Borrower and each Subsidiary shall comply with all laws and regulations (whether federal, state or local and whether statutory, administrative, judicial or otherwise) and with every lawful governmental order or similar actions (whether administrative or judicial), specifically including but not limited to all requirements of the Bank Holding Company Act of 1956, as amended, and with the regulations of the Board of Governors of the Federal Reserve System relating to bank holding companies. SECTION 6. CONDITIONS OF LENDING SECTION 6.1. DOCUMENTATION; NO DEFAULT. The obligation of Lender to make any Loan is subject to the following conditions precedent: -15- (a) INITIAL DOCUMENTATION. Lender shall have received all of the following concurrently with the execution and delivery hereof, each duly executed and dated the date hereof or other date satisfactory to Lender, in form and substance satisfactory to Lender and its counsel, at the expense of Borrower, and in such number of signed counterparts as Lender may request (except for the Note, of which only the original shall be signed): (i) NOTE. The Note duly executed; (ii) PLEDGE AGREEMENT. The Pledge Agreement duly executed, together with the Pledged Shares and stock powers, duly executed, in blank; (iii) RESOLUTION; CERTIFICATE OF INCUMBENCY. A copy of a resolution of the Board of Directors of Borrower authorizing the execution, delivery and performance of this Agreement, the Note, the Pledge Agreement and other documents provided for in this Agreement, certified by the secretary or assistant secretary of Borrower, together with a certificate of such officer of Borrower, certifying the names of the officer(s) of Borrower authorized to sign this Agreement, the Pledge Agreement, the Note and any other documents provided for in this Agreement, together with a sample of the true signature of each such person (Lender may conclusively rely on such certificate until formally advised by a like certificate of any changes therein); (iv) GOVERNING DOCUMENTS. A copy of the articles of incorporation and by-laws of Borrower, certified by the secretary or assistant secretary of Borrower; (v) CERTIFICATE OF NO DEFAULT. A certificate signed by an appropriate officer of Borrower to the effect that: (A) no Event of Default or Unmatured Event of Default has occurred and is continuing or will result from the making of the first Loan; and (B) the representations and warranties of Borrower contained herein are true and correct as at the date of the first Loan as though made on that date; (vi) OPINION OF COUNSEL TO BORROWER. An opinion of Knecht & Hansen, counsel to Borrower to such effect as Lender may require; (vii) GOOD STANDING CERTIFICATE. A good standing certificate from Borrower's Federal Reserve Bank; (viii) EVIDENCE OF ACQUISITION OF SUBSIDIARY BANKS. Evidence, including any government approvals, satisfactory to Lender that Borrower was permitted to and has in fact acquired one hundred percent (100%) of the stock of each of the Subsidiary Banks on or before the date hereof; and (ix) MISCELLANEOUS. Such other documents and certificates as Lender may reasonably request. -16- (b) REPRESENTATIONS AND WARRANTIES TRUE. At the date of each Loan, Borrower's representations and warranties set forth herein shall be true and correct as of such date as though made on such date. (c) NO DEFAULT. At the time of each Loan, and immediately after giving effect to such Loan, no Event of Default or Unmatured Event of Default shall have occurred and be continuing at the time of such Loan, or would result from the making of such Loan. SECTION 6.2. AUTOMATIC UPDATE OF REPRESENTATIONS AND WARRANTIES AND NO-DEFAULT CERTIFICATE; CERTIFICATE AT LENDER'S OPTION. The request by Borrower for any Loan shall be deemed a representation and warranty by Borrower that the statements in SUBSECTIONS (b) and (c) of SECTION 6.1 are true and correct on and as at the date of each succeeding Loan, as the case may be. Upon receipt of each Loan request Lender in its sole discretion shall have the right to request that Borrower provide to Lender, prior to Lender's funding of the Loan, a certificate executed by Borrower's President, Treasurer, or Chief Financial Officer to such effect. SECTION 7. DEFAULT SECTION 7.1. EVENTS OF DEFAULT. The occurrence of any of the following shall constitute an "EVENT OF DEFAULT": (a) failure to pay, when and as due, any principal, interest or other amounts payable hereunder or under the Note; provided that, in the case of interest only, such failure shall continue for three (3) days after its due date; (b) any default, event of default, or similar event shall occur or continue under any other instrument, document, note or agreement delivered to Lender in connection with this Agreement, including without limitation, the Pledge Agreement, and any applicable cure period provided therein shall have expired; or any such instrument, document, note or agreement shall not be, or shall cease to be, enforceable in accordance with its terms; (c) there shall occur any default or event of default, or any event or condition that might become such with notice or the passage of time or both, or any similar event, or any event that requires the prepayment of borrowed money or the acceleration of the maturity thereof, under the terms of any evidence of indebtedness or other agreement issued or assumed or entered into by Borrower or any Subsidiary, or under the terms of any indenture, agreement, or instrument under which any such evidence of indebtedness or other agreement is issued, assumed, secured, or guaranteed, and such event shall continue beyond any applicable period of grace provided therein; (d) any representation, warranty, schedule, certificate, financial statement, report, notice, or other writing furnished by or on behalf of Borrower or any Subsidiary to Lender is false or misleading in any material respect on the date as of which the facts therein set forth are stated or certified; -17- (e) Any guaranty of or pledge of collateral security for the Loans shall be repudiated or become unenforceable or incapable of performance or Borrower shall fail to pledge and deliver to Lender any share certificate of Rancho Santa Fe National Bank as provided in SECTION 3(c) of the Pledge Agreement; (f) Borrower or any Subsidiary shall fail to comply with SECTIONS 5.1, 5.4, 5.5, 5.6, 5.7 and 5.11 hereof; or fail to comply with or perform any agreement or covenant of Borrower or any Subsidiary contained herein, which failure does not otherwise constitute an Event of Default, and such failure shall continue unremedied for thirty (30) days after notice thereof to Borrower by Lender; (g) an event or condition specified in SECTION 4.13(b) shall occur or exist with respect to any Plan or Multiemployer Plan if as a result of such event or condition, together with all other such events or conditions, Borrower or any ERISA Affiliate shall incur, or, in the opinion of Lender, shall be reasonably likely to incur, a liability to a Plan, a Multiemployer Plan or the PBGC (or any combination of the foregoing) which is, in the determination of Lender, material in relation to the consolidated financial condition, business, operations or prospects taken as a whole of Borrower and its Subsidiaries; (h) any person or entity presently not in control of Borrower on the date hereof shall obtain control directly or indirectly of Borrower, whether by purchase or gift of stock or assets, by contract, or otherwise; (i) any proceeding (judicial or administrative) shall be commenced against Borrower or any Subsidiary, or with respect to any assets of Borrower or any Subsidiary which shall threaten to have a material and adverse effect on the assets, condition or prospects of Borrower or any Subsidiary, and which is not dismissed within thirty (30) days after it is commenced against Borrower or any Subsidiary; or final judgment(s) and/or settlement(s) in an aggregate amount in excess of ONE MILLION UNITED STATES DOLLARS ($1,000,000) in excess of insurance for which the insurer has confirmed coverage in writing, a copy of which writing has been furnished to Lender, shall be entered or agreed to in any suit or action commenced against Borrower or any Subsidiary, and which are not satisfied within thirty (30) days after they have been entered or agreed to in any suit or action commenced against Borrower or any Subsidiary; (j) Borrower shall grant or any Person (other than Lender) shall obtain a security interest in any collateral for the Loans; Borrower or any other Person shall perfect (or attempt to perfect) such a security interest; a court shall determine that Lender does not have a first priority security interest in any of the collateral for the Loans enforceable in accordance with the terms of the related documents; or any notice of a federal tax lien against Borrower shall be filed with any public recorder and is not satisfied within thirty (30) days from the time of such filing; (k) There shall be any material loss or depreciation in the value of any collateral for the Loans for any reason, or, unless expressly permitted by the related documents, all or -18- any part of any collateral for the Loans or any direct, indirect, legal, equitable or beneficial interest therein is assigned, transferred or sold without Lender's prior written consent; (l) the FDIC or other regulatory entity shall issue or agree to enter into a letter agreement, memorandum of understanding, or a cease and desist order with or against Borrower or any Subsidiary; or the FDIC or other regulatory entity shall issue or enter into an agreement, order, or take any similar action with or against Borrower or any Subsidiary materially adverse to the business or operation of Borrower or any Subsidiary; (m) any bankruptcy, insolvency, reorganization, arrangement, readjustment, liquidation, dissolution, or similar proceeding, domestic or foreign, is instituted by or against Borrower or any Subsidiary, and in the case of an involuntary bankruptcy proceeding, such proceeding is not dismissed within sixty (60) days; or Borrower or any Subsidiary shall take any steps toward, or to authorize, such a proceeding; or (n) Borrower or any Subsidiary shall become insolvent, generally shall fail or be unable to pay its debts as they mature, shall admit in writing its inability to pay its debts as they mature, shall make a general assignment for the benefit of its creditors, shall enter into any composition or similar agreement, or shall suspend the transaction of all or a substantial portion of its usual business. SECTION 7.2. DEFAULT REMEDIES. (a) Upon the occurrence and during the continuance of any Event of Default specified in SECTION 7.1 (a)-(l), Lender at its option may declare the Note (principal, interest and other amounts) and any other amounts owed to Lender, including without limitation any accrued but unpaid Commitment Fee, immediately due and payable without notice or demand of any kind. Upon the occurrence of any Event of Default specified in SECTION 7.1 (m)-(n), the Note (principal, interest and other amounts) and any other amounts owed to Lender, including without limitation any accrued but unpaid Commitment Fee, shall be immediately and automatically due and payable without action of any kind on the part of Lender. Upon the occurrence and during the continuance of any Event of Default, any obligation of Lender to make any Loan shall immediately and automatically terminate without action of any kind on the part of Lender, and Lender may exercise any rights and remedies under this Agreement, the Pledge Agreement, the Note, any related document or instrument, and at law or in equity. (b) Lender may, by written notice to Borrower, at any time and from time to time, waive any Event of Default or Unmatured Event of Default, which shall be for such period and subject to such conditions as shall be specified in any such notice. In the case of any such waiver, Lender and Borrower shall be restored to their former position and rights hereunder, and any Event of Default or Unmatured Event of Default so waived shall be deemed to be cured and not continuing; but no such waiver shall extend to or impair any subsequent or other Event of Default or Unmatured Event of Default. No -19- failure to exercise, and no delay in exercising, on the part of Lender of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies of Lender herein provided are cumulative and not exclusive of any rights or remedies provided by law. SECTION 8. DEFINITIONS SECTION 8.1. GENERAL. As used herein: (a) The term "BANKING DAY" means a day on which Lender is open at its main office for the purpose of conducting a commercial banking business and is not authorized to close. (b) The term "CODE" shall mean the Internal Revenue Code of 1986, as amended form time to time. (c) The term "ENVIRONMENTAL LAWS" shall mean all federal, state and local laws, including statutes, regulations, ordinances, codes, rules and other governmental restrictions and requirements, relating to the discharge of air pollutants, water pollutants or process waste water or otherwise relating to the environment or hazardous substances or the treatment, processing, storage, disposal, release, transport or other handling thereof, including, but not limited to, the federal Solid Waste Disposal Act, the federal Clean Air Act, the federal Clean Water Act, the federal Resource Conservation and Recovery Act, the federal Hazardous Materials Transportation Act, the federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, the federal Toxic Substances Control Act, regulations of the Nuclear Regulatory Agency, and regulations of any state department of natural resources or state environmental protection agency, in each case as now or at any time hereafter in effect. (d) The term "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time. (e) The term "ERISA AFFILIATE" shall mean any corporation or trade or business which is a member of the same controlled group of corporations (within the meaning of Section 414(b) of the Code) as Borrower or is under common control (within the meaning of Section 414(c) of the Code) with Borrower. (f) The term "FDIC" means the Federal Deposit Insurance Corporation and any successor thereof. (g) The term "INTEREST PERIOD" means, with regard to LIBOR Loans, the amount of days from the date an interest rate is to be in effect to the date such interest period matures according to its terms. (h) The term "INTERIM MATURITY DATE" means the last day of any Interest Period. -20- (i) The term "MULTIEMPLOYER PLAN" shall mean a multiemployer plan defined as such in Section 3(37) of ERISA to which contributions have been made by Borrower or any ERISA Affiliate as a "contributing sponsor" (within the meaning of Section 4001(a)(13) of ERISA). (j) The term "PBGC" shall mean the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA. (k) The term "PENSION PLAN" shall mean any Plan which is a "defined benefit plan" within the meaning of Section 3(35) of ERISA. (l) The term "PERSON" shall mean any individual, corporation, company, limited liability company, voluntary association, partnership, trust, estate, unincorporated organization or government (or any agency, instrumentality or political subdivision thereof). (m) The term "PLAN" shall mean any plan, program or arrangement which constitutes an "employee benefit plan" within the meaning of Section 3(3) of ERISA. (n) The term "PRIME RATE" means that rate of interest announced from time to time by Lender called its prime rate, which rate may not at any time be the lowest rate charged by Lender. Changes in the rate of interest on the Loans resulting from a change in the Prime Rate shall take effect on the date set forth in each announcement of a change in the Prime Rate. (o) The term "SUBSIDIARY" means any corporation, partnership, joint venture, trust, or other legal entity of which Borrower owns directly or indirectly twenty-five percent (25%) or more of the outstanding voting stock or interest, or of which Borrower has effective control, by contract or otherwise. The term Subsidiary includes each Subsidiary Bank unless stated otherwise explicitly. (p) The term "SUBSIDIARY BANK" means each Subsidiary which is a bank. (q) The term "TANGIBLE NET WORTH" means at any date the total shareholders' equity (including all classes of capital stock, capital surplus, additional paid-in capital, retained earnings, contingencies, and capital reserves), MINUS the cost of common stock reacquired by Borrower and other capital accounts of Borrower at such date, MINUS goodwill, patents, trademarks, service marks, trade names, copyrights, and all intangible assets (including without limitation "core-deposit intangibles" and unidentifiable intangibles resulting from acquisitions) and all items that are treated as intangible assets under generally accepted accounting principles or that otherwise fit within the definition of "intangible assets" in the instructions for the call report of the FDIC, MINUS unrealized gains on "available for sale" securities, PLUS unrealized losses on "available for sale" securities. -21- (r) The term "TIER 1 CAPITAL" means the same as that determined under the capital formula currently used by the Federal Reserve Board. (s) The term "TOTAL CAPITAL" means the same as that determined under the capital formula currently used by the Federal Reserve Board. (t) The term "UNMATURED EVENT OF DEFAULT" means an event or condition which would become an Event of Default with notice or the passage of time or both. Except as and unless otherwise specifically provided herein, all accounting terms shall have the meanings given to them by generally accepted accounting principles and shall be applied and all reports required by this Agreement shall be prepared, in a manner consistent with the financial statements referred to in SECTION 4.3 above. SECTION 8.2. APPLICABILITY OF SUBSIDIARY REFERENCES. Terms hereof pertaining to any Subsidiary shall apply only during such times as Borrower has any Subsidiary. SECTION 9. NO INTEREST OVER LEGAL RATE. Borrower does not intend or expect to pay, nor does Lender intend or expect to charge, accept or collect any interest which, when added to any fee or other charge upon the principal which may legally be treated as interest, shall be in excess of the highest lawful rate. If acceleration, prepayment or any other charges upon the principal or any portion thereof, or any other circumstance, result in the computation or earning of interest in excess of the highest lawful rate, then any and all such excess is hereby waived and shall be applied against the remaining principal balance. Without limiting the generality of the foregoing, and notwithstanding anything to the contrary contained herein or otherwise, no deposit of funds shall be required in connection herewith which will, when deducted from the principal amount outstanding hereunder, cause the rate of interest hereunder to exceed the highest lawful rate. SECTION 10. PAYMENTS, ETC. All payments hereunder shall be made in immediately available funds, and shall be applied first to accrued interest and then to principal; however, if an Event of Default occurs, Lender may, in its sole discretion, and in such order as it may choose, apply any payment to interest, principal and/or lawful charges and expenses then accrued. Borrower shall receive immediate credit on payments received during Lender's normal banking hours if made in cash, immediately available funds, or by debit to available balances in an account at Lender; otherwise payments shall be credited after clearance through normal banking channels. Borrower authorizes Lender to charge any account of Borrower maintained with Lender for any amounts of principal, interest, taxes, duties, or other charges or amounts due or payable hereunder, with the amount of such payment subject to availability of collected balances in Lender's discretion; unless Borrower instructs otherwise, all Loans shall be made in immediately available funds and shall be credited to an account(s) of Borrower with Lender. LENDER AT ITS OPTION MAY -22- MAKE LOANS HEREUNDER UPON TELEPHONIC INSTRUCTIONS AND IN SO DOING SHALL BE FULLY ENTITLED TO RELY SOLELY UPON INSTRUCTIONS, INCLUDING INSTRUCTIONS TO MAKE TRANSFERS TO THIRD PARTIES, REASONABLY BELIEVED BY LENDER TO HAVE BEEN GIVEN BY AN AUTHORIZED PERSON, WITHOUT INDEPENDENT INQUIRY OF ANY TYPE. All payments shall be made without deduction for or on account of any present or future taxes, duties or other charges levied or imposed on this Agreement, the Pledge Agreement, the Note, the Loans or the proceeds, Lender or Borrower by any government or political subdivision thereof. Borrower shall upon request of Lender pay all such taxes, duties or other charges in addition to principal and interest, including without limitation all documentary stamp and intangible taxes, but excluding income taxes based solely on Lender's income. SECTION 11. SETOFF. At any time after an Event of Default of Unmatured Event of Default shall have occurred and be continuing, and without notice of any kind, any account, deposit or other indebtedness owing by Lender to Borrower, and any securities or other property of Borrower delivered to or left in the possession of Lender or its nominee or bailee, may be set off against and applied in payment of any obligation hereunder, whether due or not. SECTION 12. NOTICES All notices, requests and demands to or upon the respective parties hereto shall be deemed to have been given or made when deposited in the mail, postage prepaid, addressed if to Lender to its office indicated above (Attention: Division Head, Correspondent Services Division), and if to Borrower to its address set forth below, or to such other address as may be hereafter designated in writing by the respective parties hereto or, as to Borrower, may appear in Lender's records. SECTION 13. MISCELLANEOUS. This Agreement and any document or instrument executed in connection herewith shall be governed by and construed in accordance with the internal law of the State of Illinois, and shall be deemed to have been executed in the State of Illinois. This Agreement may only be amended, supplemented or modified at any time by written instrument duly executed by Lender and Borrower. Unless the context requires otherwise, wherever used herein the singular shall include the plural and vice versa, and the use of one gender shall also denote the other. Captions herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof; references herein to Sections or provisions without reference to the document in which they are contained are references to this Agreement. This Agreement shall bind Borrower, its successors and assigns, and shall inure to the benefit of Lender, its successors and assigns, except that Borrower may not transfer or assign any of its rights or interest hereunder without the prior written consent of Lender. Borrower agrees to pay upon demand all expenses (including without limitation attorneys' fees, legal costs and expenses, and time charges of attorneys who may be employees of Lender, in each case whether in or out of court, in original or -23- appellate proceedings or in bankruptcy) incurred or paid by Lender or any holder of the Note in connection with (a) the negotiation, preparation, execution and delivery of this Agreement, the Note, the Pledge Agreement and the other documents to be delivered hereunder, (b) any amendment, modification or waiver of any of the terms of this Agreement, the Pledge Agreement or the Note, (c) any Event of Default or Unmatured Event of Default and any enforcement or collection proceedings resulting therefrom, and (d) any transfer, stamp, documentary or other similar taxes, assessments or charges levied by any governmental or revenue authority in respect of this Agreement, the Pledge Agreement, the Note or any other document referred to herein; provided that the maximum amount of such expenses to be paid by Borrower under CLAUSE (a) above shall not exceed THREE THOUSAND FIVE HUNDRED UNITED STATES DOLLARS ($3,500). Except as otherwise specifically provided herein, Borrower expressly and irrevocably waives presentment, protest, demand and notice of any kind in connection herewith. SECTION 14. WAIVER OF JURY TRIAL, ETC. BORROWER HEREBY IRREVOCABLY AGREES THAT, SUBJECT TO LENDER'S SOLE AND ABSOLUTE ELECTION, ALL SUITS, ACTIONS OR OTHER PROCEEDINGS WITH RESPECT TO, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY DOCUMENT OR INSTRUMENT EXECUTED IN CONNECTION HEREWITH SHALL BE SUBJECT TO LITIGATION IN COURTS HAVING SITUS WITHIN OR JURISDICTION OVER COOK COUNTY, ILLINOIS. BORROWER HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED IN OR HAVING JURISDICTION OVER SUCH COUNTY, AND HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO REQUEST OR DEMAND TRIAL BY JURY, TO TRANSFER OR CHANGE THE VENUE OF ANY SUIT, ACTION OR OTHER PROCEEDING BROUGHT BY LENDER IN ACCORDANCE WITH THIS PARAGRAPH, OR TO CLAIM THAT ANY SUCH PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written. -24- FIRST COMMUNITY BANCORP By: _______________________________ Title: ____________________________ Address for notices: 6110 El Tordo Rancho Santa Fe, California 92067 Attention:_________________________ THE NORTHERN TRUST COMPANY By: _______________________________ Title: ____________________________ -25- EXHIBIT A REVOLVING CREDIT NOTE $5,000,000 Chicago, Illinois June 26, 2000 FOR VALUE RECEIVED, on or before the Maturity Date, FIRST COMMUNITY BANCORP, a corporation formed under the laws of the State of California ("BORROWER"), promises to pay to the order of THE NORTHERN TRUST COMPANY, an Illinois banking corporation (hereafter, together with any subsequent holder hereof, called "LENDER"), at its main banking office at 50 South LaSalle Street, Chicago, Illinois 60675, or at such other place as Lender may direct, the aggregate unpaid principal balance of each advance (a "LOAN" and collectively the "LOANS") made by Lender to Borrower hereunder. The total principal amount of Loans outstanding at any one time hereunder shall not exceed FIVE MILLION UNITED STATES DOLLARS ($5,000,000). Lender is hereby authorized by Borrower at any time and from time to time at Lender's sole option to attach a schedule (grid) to this Note and to endorse thereon notations with respect to each Loan specifying the date and principal amount thereof, and the date and amount of each payment of principal and interest made by Borrower with respect to each such Loan. Lender's endorsements as well as its records relating to Loans shall be rebuttably presumptive evidence of the outstanding principal and interest on the Loans, and, in the event of inconsistency, shall prevail over any records of Borrower and any written confirmations of Loans given by Borrower. Borrower agrees to pay interest on the unpaid principal amount from time to time outstanding hereunder on the dates and at the rate or rates as set forth in the Revolving Credit Agreement (as hereinafter defined). Payments of both principal and interest are to be made in immediately available funds in lawful money of the United States of America. This Note evidences indebtedness incurred under a Revolving Credit Agreement dated as of the date hereof executed by and between Borrower and Lender (and, if amended, restated or replaced, all amendments, restatements and replacements thereto or therefor, if any) (the "REVOLVING CREDIT AGREEMENT;" capitalized terms not otherwise defined herein have the same meaning herein as in the Revolving Credit Agreement). Reference is hereby made to the Revolving Credit Agreement for a statement of its terms and provisions, including without limitation those under which this Note may be paid prior to its due date or have its due date accelerated. Borrower agrees to pay upon demand all expenses (including without limitation attorneys' fees, legal costs and expenses, and time charges of attorneys who may be employees of Lender, in each case whether in or out of court, in original or appellate proceedings or in bankruptcy) incurred or paid by Lender or any holder hereof in connection with the enforcement or preservation of its rights hereunder or under any document or instrument executed in connection herewith. Borrower expressly and irrevocably waives presentment, protest, demand and notice of any kind in connection herewith. This Note is secured by the property described in the Pledge Agreement (as such term is defined in the Revolving Credit Agreement), to which reference is made for a description of the collateral provided thereby and the rights of Lender and Borrower in respect of such collateral. This Note and any document or instrument executed in connection herewith shall be governed by and construed in accordance with the internal law of the State of Illinois, and shall be deemed to have been executed in the State of Illinois. Unless the context requires otherwise, wherever used herein the singular shall include the plural and vice versa, and the use of one gender shall also denote the other. Captions herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof; references herein to Sections or provisions without reference to the document in which they are contained are references to this Note. This Note shall bind Borrower, its successors and assigns, and shall inure to the benefit of Lender, its successors and assigns, except that Borrower may not transfer or assign any of its rights or interest hereunder without the prior written consent of Lender. FIRST COMMUNITY BANCORP By: _______________________________ Title: ____________________________ -2- EXHIBIT B PLEDGE AGREEMENT Please see attached. EXHIBIT C SUBSIDIARIES PERCENTAGE OWNED 1. Rancho Santa Fe National Bank 100% 6110 El Tordo, P.O. Box 2388 Rancho Santa Fe, California 92067 2. First Community Bank of the Desert 100% 74-750 Highway 111 Indian Wells, California 92210 -2- PLEDGE AGREEMENT PLEDGE AGREEMENT (this "AGREEMENT") dated as of June 26, 2000 between FIRST COMMUNITY BANCORP (the "PLEDGOR") and THE NORTHERN TRUST COMPANY (the "PLEDGEE"). WHEREAS, the Pledgor and the Pledgee have entered into a Revolving Credit Agreement (as amended, restated, supplemented or modified from time to time, the "LOAN AGREEMENT") dated as of the date hereof pursuant to which the Pledgee has agreed to make revolving loans to the Pledgor from time to time, on and subject to the terms and conditions set forth in the Loan Agreement; WHEREAS, pursuant to the Loan Agreement, the Pledgor will execute and deliver to the Pledgee the "REVOLVING CREDIT NOTE" referred to in the Loan Agreement (including any amendments thereto or replacements or extensions thereof, the "NOTE") to further evidence its obligations with respect to loans made thereunder; and WHEREAS, in order to secure the due and punctual payment in full of all principal, interest and other amounts from time to time payable under the Loan Agreement and the Note, the Pledgor has agreed to provide security to the Pledgee as provided herein. NOW, THEREFORE, the parties agree as follows: 1. DEFINITIONS. The following terms used in this Agreement shall have the following meanings: "COLLATERAL" shall mean the Pledged Shares, the Stock Rights, and the proceeds of each. "CREDIT DOCUMENTS" shall mean, collectively, the Loan Agreement and the Note. "DEFAULT" shall mean any "EVENT OF DEFAULT" as defined in the Loan Agreement. "LIABILITIES" shall mean all of the duties, liabilities and obligations of the Pledgor under the Credit Documents and this Agreement. "PLEDGED SHARES" shall mean 100% of the issued and outstanding shares of capital stock of Rancho Santa Fe National Bank held by the Pledgor or otherwise held from time to time by Pledgor. "STOCK RIGHTS" shall mean any dividend or other distribution (whether in cash, securities or other property) and any other right or property which the Pledgor shall receive or shall become entitled to receive for any reason whatsoever as a result of its being a holder of the Pledged Shares, or with respect to, in substitution for, or in exchange for, Pledged Shares. -3- 2. GRANT OF SECURITY INTEREST. To secure the payment and performance of the Liabilities, the Pledgor hereby pledges, hypothecates, assigns, sets over and delivers to the Pledgee, and grants the Pledgee a security interest in, the Collateral. 3. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Pledgor represents, warrants and covenants that: (a) The Pledgor is the lawful owner of the Collateral, free and clear of all claims, security interests, liens, encumbrances and rights of others, other than the security interest hereunder, with full right to deliver, pledge, assign and transfer the Collateral to the Pledgee as Collateral hereunder and, until all Liabilities have been fully, finally and irrevocably satisfied and discharged, the Pledgor shall maintain the lien of this Agreement as a first priority lien on the Collateral and shall not sell or otherwise dispose of all or any part of the Collateral (except, prior to the occurrence of a Default, ordinary cash dividends received by the Pledgor) and shall keep all of the Collateral free of any liens, security interests, claims, encumbrances and rights of others except those arising hereunder. (b) The Pledgor agrees to deliver to the Pledgee from time to time upon request of the Pledgee such stock powers, financing statements and other documents, satisfactory in form and substance to the Pledgee, with respect to the Collateral as the Pledgee may reasonably request. (c) The Pledgor shall deliver to the Pledgee the certificate(s) evidencing any Pledged Shares held or acquired by the Pledgor from time to time, not later than two Banking Days (as defined in the Loan Agreement) following the acquisition thereof by the Pledgor, together with stock powers covering such certificate(s) duly executed in blank by the Pledgor, being the registered holder of the certificate(s). (d) The Pledgor agrees to hold in trust for the Pledgee upon receipt and immediately thereafter as provided in SECTION 3(c) pledge and deliver to the Pledgee any stock certificate, instrument or other document evidencing or constituting Collateral (except, prior to the occurrence of a Default, ordinary cash dividends paid with respect to the Pledged Shares). (e) The Pledgor agrees to pay when due all taxes, assignments and governmental charges and levies upon the Collateral. 4. CARE OF COLLATERAL. The Pledgee shall use reasonable care with respect to the preservation and maintenance of the Collateral; provided that the Pledgee shall not be liable to the Pledgor for any action taken by it in good faith, nor shall the Pledgee be responsible for the consequences of any action or failure to act except to the extent that such action or failure to act is the proximate result of the gross negligence, lack of good faith or willful misconduct of the Pledgee, its agents or employees. -4- 5. DIVIDENDS AND VOTING. Prior to the occurrence of a Default, the Pledgor shall be entitled (i) to receive and retain all ordinary cash dividends in respect of the Pledged Shares and (ii) to exercise all voting rights in respect of the Pledged Shares. If any Default occurs and is continuing, all ordinary cash dividends distributed in respect of the Pledged Shares shall be delivered to the Pledgee and held as Collateral hereunder. 6. REMEDIES UPON DEFAULT. In addition to rights granted under other provisions of this Agreement, upon the occurrence of a Default hereunder the Pledgee may from time to time exercise any one or more of the following remedies: (a) The Pledgee may exercise, as to all or any part of the Collateral, any one or more or all of the rights and remedies granted to a secured party under the Uniform Commercial Code as in effect in the State of Illinois or otherwise available at law or in equity, to assure that the Collateral is devoted to the satisfaction of all Liabilities. (b) The Pledgee may exercise all voting and corporate rights respecting the Collateral, including, without limitation, exchange, subscription or any other rights, privileges or options pertaining to any of the Pledged Shares and the Stock Rights as if the Pledgee were the absolute owner thereof. (c) (i) The Pledgee may sell, assign, contract to sell or otherwise dispose of all or any portion of the Collateral in any commercially reasonable manner, including by private or public sale at such prices and on such terms as the Pledgee deems reasonable under the circumstances, for cash or on credit or for future delivery and without the assumption of any credit risk. The Pledgee shall give the Pledgor at least fifteen (15) days' written notice of the time and place of any public sale of the Collateral, or any portion thereof, or of the time after which any private sale or other disposition thereof is to be made, it being expressly acknowledged that said fifteen (15) days' notice, when given as herein provided, constitutes reasonable notice. The Pledgee may purchase all or any portion of the Collateral at any sale, and in that event payment of the purchase price may be made by credit against the Liabilities. Any sale, assignment, contract to sell or other disposition shall be made free of any right or equity of redemption in the Pledgor, which right or equity, if any, is hereby released. The net proceeds of any disposition of the Collateral by the Pledgee, after deduction of all expenses as in SECTION 7 provided, shall be applied toward satisfaction of the Liabilities. (ii) The Pledgor hereby agrees that in any sale of any of the Collateral hereunder, the Pledgee is hereby authorized to comply with any limitation or restriction in connection with such sale as it may be advised by counsel is necessary in order to avoid any violation of applicable securities or other law (including, without limitation, compliance with such procedures as may restrict the number of prospective bidders and purchasers, require that such prospective bidders and purchasers have certain qualifications, and restrict such prospective bidders and purchasers to persons who will represent and agree that they are purchasing for their own account for investment and not with a view to the distribution or resale of such Collateral), or in order to obtain any required approval of the sale or of the purchaser by any governmental -5- regulatory authority or official, and the Pledgor further agrees that such compliance shall not result in such sale being considered or deemed not to have been made in a commercially reasonable manner, nor shall the Pledgee be liable nor accountable to the Pledgor for any discount allowed by reason of the fact that such Collateral is sold in compliance with any such limitation or restriction. (d) To the extent permitted by applicable law and upon any notice required by law, the Pledgee may (but need not) retain the Collateral in full satisfaction of the Liabilities. (e) Without prior notice to the Pledgor, the Pledgee may transfer all or any part of the Collateral into the name of the Pledgee or its nominee. The Pledgee shall give notice to the Pledgor of such transfer after the completion thereof. (f) The Pledgee may, instead of or concurrently with exercising the power of sale or any other right or remedy herein conferred upon it, while a Default exists, proceed by a suit or suits at law or in equity to foreclose the lien on the Collateral or any portion thereof and sell the same under a judgment or decree of a court or courts of competent jurisdiction. 7. CERTAIN EXPENSES. In connection with any disposition of the Collateral as in SECTION 6 provided, the Pledgor shall pay and discharge all expenses, if any, of retaking, insuring, holding, preparing for sale, selling and the like, including, without limiting the generality of the foregoing, accounting and other professional fees and expenses and reasonable attorneys' fees and legal expenses incurred by the Pledgee in connection with the enforcement of any of its rights hereunder. Any such expenses may be deducted and retained by the Pledgee from the proceeds of any disposition of the Collateral. 8. DEFICIENCY. Notwithstanding that the Pledgee may take or refrain from taking any right or remedy hereunder or hold the Collateral and regardless of the value thereof, the Pledgor shall remain liable for the payment in full of the Liabilities. 9. INDEMNITY. Subject to applicable law, the Pledgor hereby agrees to indemnify and hold harmless the Pledgee from and against any loss, cost, expense, damage, claim or liability incurred by or asserted against the Pledgee in connection with this Agreement or the Credit Documents or the pledge of the Collateral pursuant hereto. 10. PLEDGEE APPOINTED ATTORNEY-IN-FACT. The Pledgor hereby irrevocably appoints the Pledgee the Pledgor's attorney-in-fact, with power of substitution and with full authority in the place and stead of the Pledgor and in the name of the Pledgor or otherwise, from time to time in the Pledgee's discretion, to take any action and to execute any instrument that the Pledgee deems necessary or advisable to accomplish the purposes of this Agreement. 11. NOTICES. Any notice hereunder to the Pledgor or the Pledgee shall be in writing and shall be given to such party at its address set forth below its name on the signature page. -6- 12. BINDING AGREEMENT; ASSIGNMENT. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their successors and assigns, except that the Pledgor shall not assign this Agreement. 13. MISCELLANEOUS. (a) No Default shall be waived by the Pledgee except in writing and no waiver by the Pledgee of any Default shall operate as a waiver of any other or of the same Default at a future occasion. No single or partial exercise of any right, power or privilege hereunder or under applicable law shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. (b) The Section headings used herein are for convenience of reference only and shall not define or limit the provisions of this Agreement. (c) Any modification or amendment of or waiver of rights under this Agreement shall be binding only if contained in a writing signed by the parties hereto. (d) This Agreement shall be governed by the internal laws (not the laws of conflict) of the State of Illinois. (e) Each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. -7- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written. FIRST COMMUNITY BANCORP By:_______________________________ Name: Title: Address: Attention: THE NORTHERN TRUST COMPANY By:______________________________ Name: Thomas E. Bernhardt Title: Vice-President Address: 50 South LaSalle Street Chicago, Illinois 60675 Attention: Correspondent Services Division -8- EX-10.3 4 ex-10_3.txt EXHIBIT 10.3 EXHIBIT 10.3 FIRST COMMUNITY BANCORP DEFERRED COMPENSATION PLAN This First Community Bancorp Deferred Compensation Plan (the "Plan") is effective for compensation earned on and after June 1, 2000 by all directors of First Community Bancorp (the "Company") or any subsidiary corporation of the Company, as defined in Section 424(f) of the Internal Revenue Code of 1986, as amended ("Subsidiaries"), including but not limited to Rancho Santa Fe National Bank ("Rancho") and First Community Bank of the Desert, and all full time officers having the title of Senior Vice President or above (whether or not they are also directors of the Company or any Subsidiary), collectively referred to herein as "Eligible Participants." The Plan was approved by the Board of Directors of the Company, and by a majority of the outstanding shares of the Company, effective May 31, 2000. 1. DEFERRAL OF STOCK OR FEES. a. From time to time Eligible Participants may, by written notice, elect to have payment of all or a portion of their salaries, bonuses or director's fees for the next succeeding calendar year, and/or all or a portion of any grant of shares of common stock of the Company ("Company Stock") to the Eligible Participants made on or after such election, deferred as herein provided. Each such deferral of compensation shall be (and is hereinafter referred to as) a "Deferred Amount." Each Eligible Participant who elects to participate in the Plan is referred to herein as a "Participant". Notwithstanding the foregoing, however, a Participant may not elect to defer any portion of compensation or Company Stock unless such Participant's deferrals with respect to such year are in round percentage increments of 10%. b. Any elections with respect to Deferred Amounts of compensation or Company Stock shall be exercised in writing by the Participant prior to the latest to occur of the following: (i) the beginning of the calendar year for which the compensation is to be earned; (ii) such Participant's first day of service in that year; (iii) the first day of the calendar month next following the date the Participant first becomes eligible to participate in the Plan; PROVIDED THAT, an election made after the first day of a calendar year shall only apply to compensation earned after the date of the election. Notwithstanding the foregoing, in the case of any Participants who may be required to file reports of their Company Stock ownership on Form 3 or 4 with the Securities and Exchange Commission, the election shall be no later than the date specified in the preceding sentence or, if earlier, six months prior to the date on which any compensation deferred by the Participant are invested in Company Stock; and in the case of deferral of grants of Company Stock, the election shall be made no later than the date specified in the preceding sentence or, if earlier, the effective date of the grant of the Company Stock. An election of -1- Deferred Amounts, once made, is irrevocable, except as provided in paragraph 6 hereof. An election of Deferred Amounts, once made, shall continue to be effective for succeeding calendar years until revoked by the Participant by written request to the Secretary of the Company prior to the beginning of a calendar year for which fees would otherwise be deferred. c. Deferred Amounts shall be subject to the rules set forth in this document, and each Participant shall have the right to receive cash payments on account of previously Deferred Amounts only in the amounts and under the circumstances hereinafter set forth. d. All Eligible Participants shall be eligible to participate in this Plan. Eligibility shall be determined annually as of the latest practicable date prior to the commencement of each new calendar year. In the event a Participant ceases to be eligible for this Plan during the course of a calendar year, the Participant's eligibility shall nevertheless continue through the end of that calendar year with respect to fees earned prior to cessation of service. 2. ADMINISTRATIVE COMMITTEE. Full power and authority to construe, interpret, and administer this document, shall be vested in an Administrative Committee (the "Committee") to be comprised of all members of the Executive Committee of the Board of Directors of the Company, and chaired by the chief financial officer of the Company. The Committee shall have full power and authority to make each determination provided for in this document, and in this connection, to promulgate such rules and regulations as the Committee considers necessary or appropriate for the implementation and management of this Plan. All determinations made by the Committee shall be conclusive upon the Company and its Subsidiaries, each Eligible Participant and Participant and their respective designees, heirs and assigns. 3. DEFERRED COMPENSATION ACCOUNTS. The Company shall establish on its books a separate account ("Account") for each of its Eligible Participants who becomes a Participant in this Plan, and each such Account shall be maintained as follows: a. Each Account shall be credited with the Deferred Amounts elected by the Participant for whom such Account is established as of the date on which such Deferred Amount would otherwise have been paid to the Participant. b. The value of a Participant's Account is to be measured by the value of and income from Company Stock, in which all Deferred Amount shall be deemed to be invested, however such value is merely a measuring device to determine the payments to be made to each Participant hereunder. Each Participant, and each other recipient of a Participant's Deferred Amounts pursuant to paragraph 7, shall be and remain an unsecured general creditor of the Company with respect to any payments due and owing to such Participant hereunder. If the Company should from time to time, in its discretion, actually purchase the investments deemed to have been made for Participant's Account, through the trust described in paragraph 4, such -2- investments shall be solely for such trust's own account, and the Participants shall have no right, title or interest therein. c. At the time a Participant makes his or her first election described in paragraph 1.b., the Participant may also consent to have Deferred Amounts contributed to the trust described in paragraph 4, and to have the Participant's Account adjusted as provided in paragraph 4 from the date as of which it is established. Any such consent, if granted, shall be irrevocable as to the Participant, and shall apply to all of the Participant's Deferred Amounts. Any consent given pursuant to this paragraph 3.c. shall in no way obligate the Company to make contributions to the trust described in paragraph 4, such contributions being in the Company's discretion as provided in paragraph 4. 4. TRUST. The Company may establish a trust (of the type commonly known as a "rabbi trust") to aid in the accumulation of assets for payment of Deferred Amounts. In the event that such a trust is established ("Trust") the amounts credited to the Directors' Participant's Accounts shall be adjusted as follows: a. The Company may, in its discretion, contribute to the Trust an amount equal to the balance credited to the Account of each Participant (other than Participants who have not made the election described in paragraph 3.c.) who remains an Eligible Participant on the date of such contribution. Thereafter, the Company may, in its discretion, contribute to the Trust an amount equal to the Deferred Amounts of the Participants within five business days after the Deferred Amount would otherwise be paid to the Participant. The assets of the Trust shall be invested in Company Stock, subject to the Company's right to substitute assets of equal value as provided in the Trust. The terms of the Trust shall be consistent with the terms of this Plan. The Trustee shall be a corporate trustee independent of the Company and shall conform to the provisions of the "model trust," as described in Rev. Proc. 92-64. Nothing herein shall be construed as requiring the Company to make any contributions to the Trust. To the extent such contributions are actually made, the Trust's assets shall remain subject to the claims of the Company's general creditors in the event of its insolvency. b. The Trust shall provide for separate accounts in the name of each Participant who has elected a Deferred Amount. Except as provided in paragraph 4.d., from and after the date as of which such accounts are established, the balances in the Accounts established for Participants pursuant to this Plan shall be equal to the balances credited to such separate accounts. Each such separate account shall then be adjusted as follows: (i) Contributions made by the Company to the trust on behalf of such Participant, and all dividends or other distributions made with respect to property allocated to such separate account, shall be credited to such separate account and invested in Company Stock. -3- (ii) Each Participant's separate account shall be increased by the amount of any increase in the fair market value, as determined by the Trustee, of any assets allocated to such separate account, and shall be decreased by any decrease in the fair market value of such assets, as determined by the Trustee. (iii) Each Participant's separate account shall be reduced by any distributions made to the Participant from the Trust which are chargeable to such separate account. c. A Participant's separate account shall continue during any period of distribution subsequent to the Participant's termination of service on the board to be invested in Company Stock. d. The adjustments described in this paragraph 4 shall only be made to a Participant's Account to the extent that the Company has made contributions to the Trust pursuant to this paragraph 4. If for any reason such contributions have not been made then, and only to that extent, the Participant's Account shall be adjusted as provided in paragraph 3.b. 5. PAYMENT OF DEFERRED AMOUNTS. a. At the next regularly scheduled meeting of the Committee following the earlier of (a) the January 31 following the election made upon a Participant's commencement of participation in the Plan, unless prior to such date the Participant elects to continue deferral until the next following January 31, or (b) the date of a Participant's termination of status as an Eligible Participant, the Committee shall direct the Trustee to commence distribution of the amounts credited to such Participant's Account. Commencing within the 30-day period following the Committee's direction, the balance credited to the Participant's Account shall be paid in one lump sum or in annual installments over the period directed by the Participant in an election made upon the Participant's commencement of participation in the Plan. b. The first payment under paragraph 5.a. shall be paid on a date selected by the Committee which is no later than 30 days after the date on which the Committee's direction as to the form and timing of distributions is made. Succeeding installments (if any) shall be paid on January 31 of each calendar year following the calendar year in which the first payment was made. c. Each payment shall be made in cash or in kind as the Committee, in its discretion, shall determine, and each annual installment payment shall have a value equal to the amount credited to Participant's Account as of the first day of the calendar month in which the installment is paid multiplied by a fraction, the numerator of which is one and the denominator of which is the number of installments remaining to be paid, including the current installment. -4- d. For purposes of this section, a Participant's status as an Eligible Participant is considered to terminate as of the Participant's last date of service as an Eligible Participant. e. In the event installment payments commence and any installments are unpaid at the time of Participant's death, the payments shall be made at the times and in such amounts as if Participant were living to the persons specified in paragraph 7.a. f. Notwithstanding any other provision of this Section 5 or any payment schedule directed by a Participant pursuant to this Section 5 and regardless of whether payments have commenced under this Section 5, in the event that the Internal Revenue Service should finally determine that part or all of the value of a Participant's Deferred Amounts or Plan Account which have not actually been distributed to the Participant, or that part or all of a related Trust Account which has not actually been distributed to the Participant, is nevertheless required to be included in the Participant's gross income for federal and/or state income tax purposes, then the Deferred Amounts or the Account or the part thereof that was determined to be includible in gross income shall be distributed to the Participant in a lump sum as soon as practicable after such determination without any action or approval by the Committee. A "final determination" of the Internal Revenue Service for purposes of this paragraph 5.f is a determination in writing by said Service ordering the payment of additional tax, reporting of additional gross income or otherwise requiring Plan amounts to be included in gross income, which is not appealable or which the Participant does not appeal within the time prescribed for appeals. 6. EMERGENCY PAYMENTS. In the event of an "unforeseeable emergency" as determined hereafter, the Committee may determine the amounts payable under paragraph 5 hereof and pay all or a part of such amounts without regard to the payment dates provided in paragraph 5 to the extent the Committee determines that such action is necessary in light of immediate and heavy needs of the Participant (or his or her beneficiary) occasioned by severe financial hardship. For the purposes of this paragraph 6, an "unforeseeable emergency" is a severe financial hardship to the Participant resulting from a sudden and unexpected illness or accident of the Participant or beneficiary, or of a dependent (as defined in Section 152(a) of the Internal Revenue Code of 1986, as amended) of the Participant or beneficiary, loss of the Participant's or beneficiary's property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant or beneficiary. Payments shall not be made pursuant to this paragraph 6 to the extent that such hardship is or may be relieved: (a) through reimbursement or compensation by insurance or otherwise, (b) by liquidation of the Participant's or beneficiary's assets, to the extent the liquidation of such assets would not itself cause severe financial hardship, or (c) by cessation of the Participant's deferrals under the Plan. Such action shall be taken only if the Participant (or Participant's legal representatives or successors) signs an application describing fully the circumstances which are deemed to justify the payment, together with an -5- estimate of the amounts necessary to prevent such hardship, which application shall be approved by the Committee after making such inquiries as the Committee deems necessary or appropriate. 7. METHOD OF PAYMENTS. a. In the event of a Participant's death, payments shall be made to the persons (including a trustee or trustees) named in the last written instrument signed by the Participant and received by the Committee prior to the Participant's death, or if the Participant fails to so name any person, the amounts shall be paid to the Participant's estate or the appropriate distributee thereof. The Committee, the Bank, and the Trustee shall be fully protected in making any payments due hereunder in accordance with what the Committee believes to be such last written instrument received by it. b. Payments due to a legally incompetent person may be made in such of the following ways as the Committee shall determine: (i) directly to such incompetent person, (ii) to the legal representative of such incompetent person, or (iii) to some near relative of the incompetent person to be used for the latter's benefit. c. Except as otherwise provided in paragraphs 7.a. and b., all payments to persons entitled to benefits hereunder shall be made to such persons in person or upon their personal receipt or endorsement, and shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment by creditors of the Participant or the Participant's beneficiary. d. All payments to persons entitled to benefits hereunder shall be made out of the general assets, and shall be the sole obligations, of the Company, except to the extent that such payments are made out of the trust described in paragraph 4. The Plan is a mere promise to pay benefits in the future and it is the intention of the parties that it be "unfunded" for tax purposes (and for the purposes of Title I of the Employee Retirement Income Security Act of 1974 ("ERISA")). 8. CLAIMS PROCEDURES. a. If a claim for benefits made by any person (the "Applicant") is denied, the Committee shall furnish to the Applicant within 90 days after its receipt of such claim (or within 180 days after such receipt if special circumstances require an extension of time) a written notice which: (i) specifies the reasons for the denial, (ii) refers to the pertinent provisions of the Plan on which the denial is based, (iii) describes any additional material or information -6- necessary for the perfection of the claim and explains why such material or information is necessary, and (iv) explains the claim review procedures. b. Upon the written request of the Applicant submitted within 60 days after his receipt of such written notice, the Committee shall afford the Applicant a full and fair review of the decision denying the claim and, if so requested: (i) permit the Applicant to review any documents which are pertinent to the claim, (ii) permit the Applicant to submit to the Committee issues and comments in writing, and (iii) afford the Applicant an opportunity to meet with a quorum of the Committee as a part of the review procedure. c. Within 60 days after its receipt of a request for review (or within 120 days after such receipt if special circumstances, such as the need to hold a hearing, require an extension of time) the Committee shall notify the Applicant in writing of its decision and the reasons for its decision and shall refer the Applicant to the provisions of the Plan which form the basis for its decision. 9. MISCELLANEOUS. a. Except as limited by paragraph 7.c. and except that a Participant shall have a continuing power to designate a new recipient in the event of Participant's death at any time prior to such death without the consent or approval of any person theretofore named as Participant's recipient by an instrument meeting the requirements of paragraph 7.a., this document shall be binding upon and inure to the benefit of the Company, Participant, their legal representatives, successors and assigns, and all persons entitled to benefits hereunder. b. Any notice given in connection with this document shall be in writing and shall be delivered in person or by registered mail, return receipt requested. Any notice given by registered mail shall be deemed to have been given upon the date of delivery indicated on the registered mail return receipt, if correctly addressed. c. Nothing in this document shall interfere with the rights of any Participant to participate or share in any profit sharing or pension plan which is now in force or which may at some future time become a recognized plan of the Company or its Subsidiaries. d. Nothing in this document shall be construed as an employment agreement nor as in any way impairing the right of the Company or its Subsidiaries, or their respective boards, committees or shareholders, to terminate the services of the Participant, to refuse to renominate or reelect such person as a director, or to enforce the duly adopted retirement policies of the Company or its Subsidiaries. -7- 10. RULE 16b-3; STOCKHOLDER APPROVAL. This Plan is intended to qualify for the exemption from short swing profits liability under Section 16(b) of the Securities Exchange Act of 1934 provided by Rule 16b-3 of the Securities and Exchange Commission. 11. REGISTRATION. The Company may, in its discretion, register the shares of Company Stock subject to this Plan and any other applicable provisions of State or Federal law, and may enter into a listing agreement for such shares with Nasdaq, if such actions are deemed necessary or advisable by the Company in order to provide Participants with freely marketable shares. However, nothing herein shall be deemed to require any such registration or listing. 12. TERMINATION OR AMENDMENT. The Board of Directors of the Company may, in its discretion, terminate or amend this Plan from time to time, provided, however, that no such termination or amendment shall (without the Participant's consent) alter any Participant's right to payments of amounts previously credited to such Participant's Account or delay the time or times at which a Participant is entitled to receive payments with respect to his or her Deferred Amounts. -8- EX-27.1 5 ex-27_1.txt EXHIBIT 27.1
9 1000 6-MOS 3-MOS DEC-31-2000 DEC-31-2000 JAN-01-2000 JAN-01-2000 JUN-30-2000 MAR-31-2000 28,899 17,704 3,948 6,417 30,093 14,211 0 0 31,794 32,242 12,866 14,854 12,820 14,854 224,412 222,876 3,987 4,052 341,678 318,164 310,343 286,946 2,472 1,700 3,572 2,712 0 0 0 0 0 0 19,849 19,565 5,442 7,241 341,678 318,164 11,553 5,575 1,439 736 843 256 13,835 6,567 3,495 1,565 3,548 1,603 10,287 4,964 0 0 (11) (11) 11,079 3,556 926 2,210 (199) 1,292 0 0 0 0 (199) 1,292 (0.05) 0.33 (0.05) 0.32 6.975 7.012 2,268 442 218 0 0 0 2,268 434 4,025 4,025 92 15 54 42 3,987 4,052 3,987 4,052 0 0 0 0
EX-27.2 6 ex-27_2.txt EXHIBIT 27.2
9 1000 3-MOS 6-MOS 9-MOS YEAR DEC-31-1999 DEC-31-1999 DEC-31-1999 DEC-31-1999 JAN-01-1999 JAN-01-1999 JAN-01-1999 JAN-01-1999 MAR-31-1999 JUN-30-1999 SEP-30-1999 DEC-31-1999 18,037 17,235 18,707 21,148 5,635 6,424 7,714 7,502 30,702 33,334 12,332 10,889 0 0 0 0 36,177 32,682 33,372 34,460 5,994 13,045 14,070 14,868 5,994 13,045 14,070 14,775 183,575 188,278 200,064 206,650 3,926 3,658 3,768 4,025 288,632 299,035 293,707 304,362 262,671 271,492 264,624 274,232 431 1,605 2,400 1,657 2,014 1,819 1,619 2,618 0 0 0 0 0 0 0 0 0 0 0 0 18,923 19,055 19,232 19,394 4,593 5,064 5,832 6,461 288,632 299,035 293,707 304,362 4,281 9,140 14,369 19,056 571 1,201 1,912 2,614 530 987 1,303 1,735 5,382 11,328 17,584 23,405 1,427 2,779 4,174 5,648 1,433 2,798 4,204 5,688 3,949 8,530 13,380 17,717 135 240 413 518 0 (2) (2) (2) 2,995 6,409 9,837 12,786 1,520 3,377 5,311 7,430 885 1,938 3,057 4,263 0 0 0 0 0 0 0 0 885 1,938 3,057 4,263 0.23 0.50 0.79 1.10 0.22 0.48 0.75 1.05 6.157 6.557 6.767 6.639 1,608 858 821 1,845 1,441 139 209 75 0 0 0 0 1,489 802 2,136 1,833 3,785 3,785 3,785 3,785 46 452 540 592 52 85 110 314 3,926 3,658 3,768 4,025 3,926 3,658 3,768 4,025 0 0 0 0 0 0 0 0
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