Exhibit 10.40


 


NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, NO SHARES OF
COMMUNITY VALLEY BANCORP’S COMMON STOCK SHALL BE ISSUED PURSUANT HERETO UNLESS
THE COMMUNITY VALLEY BANCORP 2000 STOCK OPTION PLAN SHALL HAVE FIRST BEEN
APPROVED BY THE SHAREHOLDERS OF COMMUNITY VALLEY BANCORP.


 


COMMUNITY VALLEY BANCORP

NONQUALIFIED STOCK OPTION AGREEMENT


 


This Nonqualified Stock Option Agreement (the “Agreement”) is made and
entered into as of the 21st of October, 2003, by and between COMMUNITY VALLEY
BANCORP, a California corporation (the “Company”), and Charles J. Mathews (“Optionee”);


 


WHEREAS, pursuant to the COMMUNITY VALLEY BANCORP 2000 Stock Option
Plan, as amended (the “Plan”), a copy of which is attached hereto, the Board of
Directors of the Company has authorized granting to Optionee, a nonqualified
stock option to purchase all or any part of Two thousand (2,000) authorized but
unissued shares of the Company’s common stock for cash at the price of Twenty-five
Dollars and 75 Cents ($ 25.75) 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 in full herein by this reference, all or any part of Two thousand (2,000)
shares of the Company’s common stock (hereinafter called “stock”) at the price
of Twenty-five Dollars and 75 Cents ($ 25.75) per share, which price is not
less than one hundred percent (100%) of the fair market value of the stock as
of the date of action of the Board of Directors granting this option.


 


2.             Exercisability.
This option shall be exercisable as to up to, but
not including, 20% of the options shares granted per year for a five year
period, at which time options will be exercisable at 100% of grant. The first
20% vesting will be available for exercise 12 months from the date of grant.
Upon death or disability of optionee, this grant will be deemed to be 100%
vested. This option shall remain exercisable as to all of such shares until
October 20, 2013, (but not later than ten (10) years from the date this option
is granted) unless this option has expired or terminated earlier in accordance
with the provisions hereof. Shares as to which this option becomes exercisable
pursuant to the foregoing provision may be purchased at any time prior to
expiration of this option.


 


3.             Exercise
of Option. This option may be exercised by written
notice delivered 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. Not fewer than ten (10) shares may be purchased
at any one time unless the number of shares purchased is the total number of
shares which is exercisable at such time, and in no event may the option be
exercised with respect to fractional shares. Upon exercise, Optionee shall make
appropriate arrangements and shall be responsible for the withholding of any
federal and state taxes then due.


 


4.             Cessation
of Directorship or Employment. Except as provided in
Paragraphs 2 and 5 hereof, if Optionee shall cease to be a director or an
employee of the Company or a subsidiary corporation for any reason other than
Optionee’s death or disability [as defined in Section 22(e)(3) of the Internal
Revenue Code of 1986, as amended from time to time (the “Code”)], this option
shall expire three (3) months thereafter. During the three (3) month period
this option shall be exercisable only as to those installments, if any, which
had accrued as of the date when Optionee ceased to be a director or an employee
of the Company or a subsidiary corporation.


 


5.             Termination
of Employment for Cause. If Optionee’s employment
with the Company or a subsidiary corporation is terminated for cause, this
option shall expire immediately, unless reinstated by the Board of Directors
within thirty days (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 Optionee had ceased to
be an employee of the Company or a subsidiary corporation upon the date of such
termination for a reason other than cause, death or disability. Termination for
cause shall include, but not be limited to, termination for malfeasance or
gross misfeasance in the performance of duties or conviction of a crime
involving moral turpitude, and, in any event, the determination of the Board of
Directors with respect thereto shall be final and conclusive.


 

















 


6.             Nontransferability;
Death or Disability of Optionee. This option shall
not be transferable except by will or by the applicable laws of descent and
distribution and shall be exercisable during Optionee’s lifetime only by
Optionee. If Optionee dies while serving as a director or an employee of the
Company or a subsidiary corporation, or during the three (3) month period
referred to in Paragraph 4 hereof, this option shall expire one (1) year after
the date of Optionee’s death or on the day specified in Paragraph 2 hereof,
whichever is earlier. After Optionee’s death but before such expiration, the
persons to whom Optionee’s rights under this option shall have passed by will
or by the applicable laws of descent and distribution or the executor or
administrator of Optionee’s estate shall have the right to exercise this option
as to those shares for which installments had accrued under Paragraph 2 hereof
as of the date on which Optionee ceased to be a director or an employee of the
Company or a subsidiary corporation.


 


If Optionee terminates his or her directorship or employment because of
disability, Optionee may exercise this option to the extent he or she is
entitled to do so at the date of termination, at any time within one (1) year
of the date of termination, or before the expiration date specified in
Paragraph 2 hereof, whichever is earlier.


 


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 shareholder with respect to the Company’s stock subject to this option
until the date of issuance of stock certificates to Optionee. Except as
provided in 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.             Modification
and Termination. The rights of Optionee are
subject to modification and termination upon the occurrence of certain events
as provided in Sections 13 and 14 of the Plan.


 


10.          Notification
of Sale. Optionee agrees that Optionee, or any
person acquiring shares upon exercise of this option, will notify the Company
not more than five (5) days after any sale or other disposition of such shares.
No shares issuable upon the exercise of this option shall be issued and
delivered unless and until the Company has fully complied with all applicable
requirements of any regulatory agency having jurisdiction over the Company, and
all applicable requirements of any exchange upon which stock of the Company may
be listed.


 


11.          Notices.
Any notice to the Company provided for in this
Agreement shall be addressed to it in care of its President or Chief Financial
Officer at its main office and any notice to Optionee shall be addressed to
Optionee’s address on file with the Company or a subsidiary corporation, or to
such other address as either may designate to the other in writing. Any notice
shall be deemed to be duly given if and when enclosed in a properly sealed
envelope and addressed as stated above and deposited, postage prepaid, with the
United States Postal Service. In lieu of giving notice by mail as aforesaid,
any written notice under this Agreement may be given to Optionee in person, and
to the Company by personal delivery to its President or Chief Financial
Officer.


 


IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.


 


	
  OPTIONEE

  	
   

  	
  COMMUNITY VALLEY BANCORP

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  //s// Charles J. Mathews

  	
   

  	
  By

  	
  //s// Keith C. Robbins

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By