<PAGE>
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT /X/
FILED BY A PARTY OTHER THAN THE REGISTRANT / /
CHECK THE APPROPRIATE BOX:
/ / PRELIMINARY PROXY STATEMENT / /CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY
/X/ DEFINITIVE PROXY STATEMENT (AS PERMITTED BY RULE 14a-6(e)(2))
/ / DEFINITIVE ADDITIONAL MATERIALS
/ / SOLICITING MATERIAL PURSUANT TO RULE 14a-11(c) OR RULE 14a-12
PBOC HOLDINGS, INC.
- -------------------------------------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
- -------------------------------------------------------------------------------
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/X/ NO FEE REQUIRED.
/ / FEE COMPUTED ON TABLE BELOW PER EXCHANGE ACT RULES 14a-6(i)(1) AND 0-11.
(1) TITLE OF EACH CLASS OF SECURITIES TO WHICH TRANSACTION APPLIES:
---
(2) AGGREGATE NUMBER OF SECURITIES TO WHICH TRANSACTION APPLIES:
------
(3) PER UNIT PRICE OR OTHER UNDERLYING VALUE OF TRANSACTION
COMPUTED PURSUANT TO EXCHANGE ACT RULE 0-11 (SET FORTH THE
AMOUNT ON WHICH THE FILING FEE IS CALCULATED AND STATE HOW IT
WAS DETERMINED):
--------------------------------------------------
(4) PROPOSED MAXIMUM AGGREGATE VALUE OF TRANSACTION:
-----------------------
(5) TOTAL FEE PAID:
---------------------------------------------------
/ / FEE PAID PREVIOUSLY WITH PRELIMINARY MATERIALS.
/ / CHECK BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY EXCHANGE ACT
RULE 0-11(a)(2) AND IDENTIFY THE FILING FOR WHICH THE OFFSETTING FEE
WAS PAID PREVIOUSLY. IDENTIFY THE PREVIOUS FILING BY REGISTRATION
STATEMENT NUMBER, OR THE FORM OR SCHEDULE AND THE DATE OF ITS FILING.
(1) AMOUNT PREVIOUSLY PAID:
-----------------------------------------------
(2) FORM, SCHEDULE OR REGISTRATION STATEMENT NO.:
-------------------------
(3) FILING PARTY:
---------------------------------------------------------
(4) DATE FILED:
-----------------------------------------------------------
<PAGE>
PBOC HOLDINGS, INC.
5900 WILSHIRE BOULEVARD
LOS ANGELES, CALIFORNIA 90036
(323) 938-6300
March 22, 1999
Dear Stockholder:
You are cordially invited to attend the first Annual Meeting of
Stockholders of PBOC Holdings, Inc. The meeting will be held at the Hotel Nikko,
located at 465 South La Cienega Boulevard, Los Angeles, California, on Monday,
April 26, 1999 at 9:30 a.m., Pacific Time. The matters to be considered by
stockholders at the Annual Meeting are described in the accompanying materials.
It is very important that your shares be voted at the Annual Meeting
regardless of the number you own or whether you are able to attend the meeting
in person. We urge you to mark, sign, and date your proxy card today and return
it in the envelope provided, even if you plan to attend the Annual Meeting. This
will not prevent you from voting in person, but will ensure that your vote is
counted if you are unable to attend.
For the reasons set forth in the Proxy Statement, the Board recommends that
you vote "FOR" each matter to be considered at the Annual Meeting.
Your continued support of and interest in PBOC Holdings, Inc. is sincerely
appreciated.
Sincerely,
/s/ Rudolf P. Guenzel
Rudolf P. Guenzel
President and Chief Executive Officer
<PAGE>
PBOC HOLDINGS, INC.
5900 WILSHIRE BOULEVARD
LOS ANGELES, CALIFORNIA 90036
(323) 938-6300
----------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 26, 1999
-----------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders ("Annual
Meeting") of PBOC Holdings, Inc. (the "Company") will be held at the Hotel
Nikko, located at 465 South La Cienega Boulevard, Los Angeles, California, on
Monday, April 26, 1999 at 9:30 a.m., Pacific Time, for the following purposes,
all of which are more completely set forth in the accompanying Proxy Statement:
(1) To elect two directors for a three-year term or until their successors
are elected and qualified;
(2) To consider and approve the adoption of the 1999 Stock Option Plan;
(3) To ratify the appointment of KPMG LLP as the Company's independent
auditors for the fiscal year ending December 31, 1999;
(4) If necessary, to adjourn the Annual Meeting to solicit additional
proxies; and
(5) To transact such other business as may properly come before the
meeting or any adjournment thereof. Management is not aware of any
other such business.
The Board of Directors has fixed March 9, 1999 as the voting record date
for the determination of stockholders entitled to notice of and to vote at the
Annual Meeting and at any adjournment thereof. Only those stockholders of record
as of the close of business on that date will be entitled to vote at the Annual
Meeting or at any such adjournment.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ J. Michael Holmes
J. Michael Holmes
Corporate Secretary
Los Angeles, California
March 22, 1999
- -------------------------------------------------------------------------------
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. IT IS IMPORTANT THAT
YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU OWN. EVEN IF YOU PLAN TO
BE PRESENT, YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY
PROMPTLY IN THE ENVELOPE PROVIDED. IF YOU ATTEND THE MEETING, YOU MAY VOTE
EITHER IN PERSON OR BY PROXY. ANY PROXY GIVEN MAY BE REVOKED BY YOU IN WRITING
OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE THEREOF.
- -------------------------------------------------------------------------------
<PAGE>
PBOC HOLDINGS, INC.
-------------
PROXY STATEMENT
-------------
ANNUAL MEETING OF STOCKHOLDERS
APRIL 26, 1999
This Proxy Statement is furnished to holders of common stock, $.01 par
value per share ("Common Stock"), of PBOC Holdings, Inc. (the "Company"), a
Delaware-chartered thrift holding company for People's Bank of California (the
"Bank"). Proxies are being solicited on behalf of the Board of Directors of the
Company to be used at the Annual Meeting of Stockholders ("Annual Meeting") to
be held at the Hotel Nikko, located at 465 South La Cienega Boulevard, Los
Angeles, California, on Monday, April 26, 1999 at 9:30 a.m., Pacific Time, and
at any adjournment thereof for the purposes set forth in the Notice of Annual
Meeting of Stockholders. This Proxy Statement is first being mailed to
stockholders on or about March 22, 1999.
The proxy solicited hereby, if properly signed and returned to the Company
and not revoked prior to its use, will be voted in accordance with the
instructions contained therein. If no contrary instructions are given, each
proxy received will be voted for the matters described below and, upon the
transaction of such other business as may properly come before the meeting, in
accordance with the best judgment of the persons appointed as proxies. Any
stockholder giving a proxy has the power to revoke it at any time before it is
exercised by (i) filing with the Secretary of the Company written notice thereof
(J. Michael Holmes, Executive Vice President, Chief Financial Officer and
Secretary, PBOC Holdings, Inc., 5900 Wilshire Boulevard, Los Angeles, California
90036); (ii) submitting a duly-executed proxy bearing a later date; or (iii)
appearing at the Annual Meeting and giving the Secretary notice of his or her
intention to vote in person. Proxies solicited hereby may be exercised only at
the Annual Meeting and any adjournment thereof and will not be used for any
other meeting.
VOTING
Only stockholders of record of the Company at the close of business on
March 9, 1999 (the "Voting Record Date") are entitled to notice of and to vote
at the Annual Meeting and at any adjournment thereof. On the Voting Record Date,
there were 20,448,705 shares of Common Stock issued and outstanding and the
Company had no other class of equity securities outstanding. Each share of
Common Stock is entitled to one vote at the Annual Meeting on all matters
properly presented at the meeting.
The presence in person or by proxy of at least a majority of the issued and
outstanding shares of Common Stock entitled to vote is necessary to constitute a
quorum at the Annual Meeting. The two persons who receive the greatest number of
votes of the holders of Common Stock represented in person or by proxy at the
Annual Meeting will be elected directors of the Company. The affirmative vote of
the holders of a majority of the total votes present in person or by proxy is
required to ratify the appointment of KPMG LLP as the Company's independent
auditors. Abstentions will not be counted as votes cast and accordingly will
have no effect on the voting of this proposal. The affirmative vote of the
holders of a majority of the total votes eligible to be cast in person or by
proxy at the Annual Meeting is required for approval of the proposals to approve
the 1999 Stock Option Plan (the "Option Plan"). Under rules applicable to
broker-dealers, the proposal to approve the Option Plan is considered
"discretionary" items upon which brokerage firms may vote in their discretion on
behalf of their clients if such clients have not furnished voting instructions
and for which there may be "broker non-votes" at the meeting. Because of the
required votes, abstentions and broker non-votes will have the same effect as a
vote against the proposal to approve the Option Plan.
1
<PAGE>
INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTOR,
CONTINUING DIRECTORS AND EXECUTIVE OFFICERS
ELECTION OF DIRECTORS
The Bylaws of the Company presently authorize up to fifteen but not less
than seven directors. Following the Annual Meeting, one (1) Board of Director
seat will remain vacant. The Certificate of Incorporation of the Company
provides that the Board of Directors of the Company shall be divided into three
classes as nearly equal in number as possible, with one class to be elected
annually. Stockholders of the Company are not permitted to cumulate their votes
for the election of directors.
No director or executive officer of the Company is related to any other
director or executive officer of the Company by blood, marriage or adoption, and
each of the nominees currently serve as a director of the Company.
Unless otherwise directed, each proxy executed and returned by a
stockholder will be voted for the election of the nominees for director listed
below. If the person or persons named as nominee should be unable or unwilling
to stand for election at the time of the Annual Meeting, the proxies will
nominate and vote for one or more replacement nominees recommended by the Board
of Directors. At this time, the Board of Directors knows of no reason why the
nominees listed below may not be able to serve as directors if elected.
2
<PAGE>
The following tables present information concerning the nominees for
director of the Company and each director whose term continues.
NOMINEES FOR DIRECTOR FOR THREE-YEAR TERM EXPIRING IN 2002
<TABLE>
<CAPTION>
Principal Occupation During Director
Name Age(1) the Past Five Years Since
- --------------------------- --------- ------------------------------------------------------------ -----------
<S> <C> <C> <C>
John F. Davis 51 Director; Director of People's Preferred Capital Corporation 1998
since 1997; Director of People's Bank of California (the
"Bank") since 1998; Chief Operating Officer of First
Fidelity Bancorp, Irvine, California since October 1998;
Mr. Davis has served as a legal consultant for two local
financial institutions since 1993 and 1995, respectively,
during which he was actively involved in troubled real
estate work-outs, foreclosed real estate disposition and
related litigation and with one of such institutions, a
reorganization and recapitalization.
Murray Kalis 59 Director; Director of the Bank since December 1998; Mr. 1998
Kalis is Chairman and Creative Director of Kalis and
Savage Advertising, Los Angeles, California, which he
founded in 1995; prior to 1995, Mr. Kalis was President of
Coen/Kalis Advertising, Los Angeles, California.
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF THE
ABOVE NOMINEES FOR DIRECTOR.
3
<PAGE>
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
DIRECTORS WHOSE TERMS EXPIRE IN 2000
<TABLE>
<CAPTION>
Principal Occupation During Director
Name Age(1) the Past Five Years Since
- -------------------------- --------- ----------------------------------------------------------- -----------
<S> <C> <C> <C>
Gerard Jervis 50 Director; Director of the Bank since 1995; Trustee of the 1995
Kamehameha Schools Bernice Pauahi Bishop Estate (the
"Bishop Estate"), since 1994. From 1986 to 1994, Mr. Jervis
was partner in the law firm of Jervis, Winer & Meheula
located in Kailua, Hawaii.
Robert W. MacDonald 51 Director; Director of the Bank since 1992; Managing 1998
Director of William E. Simon & Sons, a merchant banking
firm since 1991.
</TABLE>
DIRECTORS WHOSE TERMS EXPIRE IN 2001
<TABLE>
<CAPTION>
Principal Occupation During Director
Name Age(1) the Past Five Years Since
- -------------------------- --------- ----------------------------------------------------------- -----------
<S> <C> <C> <C>
Rudolf P. Guenzel 58 Director; Director of the Bank since 1995; President since 1998
1995 and President and Chief Executive Officer of the
Company since 1998 and President and Chief Executive
Officer of the Bank since March 1995. In 1991, Mr. Guenzel
was hired as President and Chief Executive Officer of
BancFlorida and its wholly-owned subsidiary, BancFlorida,
FSB. He served in this capacity until it was acquired by First
Union Corporation in August 1994. Following the
acquisition, Mr. Guenzel worked as a consultant in the area
of bank profitability analysis until being hired by the
Company.
J. Michael Holmes 52 Director; Director of the Bank since 1998; Executive Vice 1998
President and Chief Financial Officer of the Bank since
March 1995, Chief Financial Officer and Secretary of the
Company since 1995 and Executive Vice President, Chief
Financial Officer and Secretary of the Company since 1998.
Mr. Holmes previously served as Secretary, Treasurer and
Chief Financial Officer of BancFlorida between 1985 and
August 1994.
</TABLE>
- --------------------
(1) As of December 31, 1998.
STOCKHOLDER NOMINATIONS
Article IV, Section 4.15 of the Company's Bylaws ("Bylaws") governs
nominations for election to the Board of Directors and requires all such
nominations, other than those made by the Board of Directors or a committee
appointed by the Board, to be made at a meeting of stockholders called for the
election of directors, and only by a stockholder who has complied with the
notice provisions in that section. Stockholder nominations must be made pursuant
to timely notice in writing to the Secretary of the Company. Generally, to be
timely, a stockholder's notice must be delivered to, or mailed, postage prepaid,
to the principal executive offices of the Company not later than 90 days
4
<PAGE>
prior to the anniversary date of the mailing of proxy materials by the Company
in connection with the immediately preceding annual meeting of stockholders of
the Company. Each written notice of a stockholder nomination is required to set
forth certain information specified in the Bylaws. However, for this Annual
Meeting, a stockholder's notice must have been delivered or received no later
than the close of business on January 25, 1999. No such nominations by
stockholders were received.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES OF THE COMPANY AND THE BANK
Regular meetings of the Board of Directors of the Company are held as
necessary. Through the year ended December 31, 1998, the Board of Directors of
the Company met ten times. No director attended fewer than 75% of the total
number of Board meetings or committee meetings on which he or she served that
were held during this period. The Company has established various committees
including an Audit Committee, a Compensation Committee, a Planning and
Nominating Committee and a Litigation Committee.
The Board of Directors of the Bank generally meets on a monthly basis and
may have additional special meetings. During the year ended December 31, 1998,
the Board of Directors of the Bank met eleven times. The Board of Directors of
the Bank has established three committees, including an Audit Committee,
Compensation Committee and a Planning and Nominating Committee. No director
attended fewer than 75% of the total number of Board meetings or committee
meetings on which he served that were held during this period.
COMMITTEES OF THE COMPANY
AUDIT COMMITTEE. The Audit Committee reviews the records and affairs of the
Company and its financial condition. The Audit Committee reviews with management
and the independent auditors the systems of internal control, and monitors the
Company's adherence in accounting and financial reporting to generally accepted
accounting principles. Further, the Audit Committee ensures that the Company's
internal policies and procedures relative to the underwriting of loans is
adhered to by management. The current members of the Audit Committee are Messrs.
MacDonald, Davis and Jervis.
COMPENSATION COMMITTEE. Executive compensation philosophy, policies, and
programs are the responsibility of the Compensation Committee of the Board of
Directors. During 1998, the members of the committee were Messrs. MacDonald
(Chairman), Jervis and Davis. No member of the committee is a current or former
officer or employee of the Company, Bank or any of its subsidiaries. The report
of the committee with respect to compensation for the Chief Executive Officer
and all other executive officers is set forth below.
REPORT OF THE COMPENSATION COMMITTEE
The members recognize that the Company must attract, retain and motivate
the best people to achieve its business objectives. To do so, it must compensate
its executives fairly and competitively in the markets in which it competes. The
competitive market for executives is primarily banks of a similar asset size
located in the Southern California area.
The current compensation program permits recognition of individual
contribution, business unit results, and overall corporate results. Currently,
executive compensation comprises base salary and bonuses.
BASE SALARY. The Compensation Committee establishes base salaries for
executives of the Company by conducting an annual review utilizing salary survey
data provided by an external compensation consultant.
It is the intention of the Committee to pay base salaries at the average
salary paid by competitive banks.
BONUSES. The bonus portion of the executives' total compensation program is
tied to the achievement of specific individual and group corporate results.
Because it is the committee's intention to link a significant portion of
5
<PAGE>
executive pay to changes in shareholder value, the annual incentive bonus will
include annual financial measures that are highly correlated to market
indicators, such as Net Income, Earnings per Share, Cash Flow and Return on
Equity. Also, the Committee's intention is to offset base salaries which are
somewhat more conservative with greater upside potential through annual
incentives and stock plans to provide for above average total remuneration in
years when the Company has outstanding performance.
TAX DEDUCTIBILITY. At this point, and for the foreseeable future, the
Company does not anticipate problems with tax deductibility of executive
compensation. If, in the future, this becomes a concern, the Compensation
Committee will revisit the issue.
STOCK OPTION GRANTS. Stock options to purchase Common Stock were granted to
key personnel under the Company's Option Plan, subject to stockholder approval.
Grants were made to executive officers at an option price in excess of the
market value on the date of the grant. The Company's philosophy in granting
stock options is primarily to increase executive officer ownership in the
Company and as a vehicle for additional compensation. Executive officers are
provided with incentives to manage with a view toward maximizing long-term
stockholder value. In determining the total number of options to be granted to
all recipients, including the executive officers, the Committee considered
dilution, number of shares of Common Stock outstanding and the performance of
the Company during the immediately preceding year. The Committee sets guidelines
for the number of shares available for the granting of stock options to each
executive officer based on the total number of options available, an evaluation
of competitive data for grants by the comparison group as discussed under the
"Base Salary" section above, and the executive officer's salary and position.
These stock option grants provide incentive for the creation of stockholder
value since the full benefit of the grant to each executive officer can only be
realized with an appreciation in the price of the Company's Common Stock above
the Company's initial public offering price.
CHIEF EXECUTIVE OFFICER'S COMPENSATION. The Committee considered the
following factors in determining the base salary for 1998 for Rudolf P. Guenzel,
President and Chief Executive Officer of the Company: the Company's success in
attaining its profit plan for 1997as discussed below and the comparative data
for comparable bank and thrift holding companies. Based on these factors, the
Committee established Mr. Guenzel's base salary at $325,000, which was unchanged
from his 1997 salary level. This placed Mr. Guenzel's base salary below the
middle of the peer group.
For 1998, Mr. Guenzel was eligible to earn a cash bonus of up to 100% of
his base salary based on specific measurable and subjective performance goals.
The measurable performance goal set for Mr. Guenzel was the attainment of the
Company's profit plan. The Committee also considered the subjective assessment
of his ability to identify and develop key personnel as well as expressing the
leadership and vision to continue the long-term growth of the Company. While the
Committee did not assign specific relative weights to those goals, the level of
annual bonus is more heavily dependent upon the attainment of the profit plan.
For 1998, the Company's earnings increased over 1997. Based on these factors,
the Committee determined that Mr. Guenzel earned a bonus of $243,750, which
represented 75% of his base salary for 1998.
In January 1999, Mr. Guenzel was granted an option to purchase 390,000
shares of Common Stock of the Company. That grant was made in accordance with
the guidelines of the Committee referenced above, including specifically the
Company's increase in its year-to-date earnings for 1998 and comparison of Mr.
Guenzel's overall compensation package with similar positions within the peer
group as discussed above.
Robert W. MacDonald - Chairman
Gerard Jervis
John F. Davis
Murray Kalis
PLANNING AND NOMINATING COMMITTEE. The Planning and Nominating Committee is
responsible for reviewing and recommending to the Board of Directors the
Company's strategic and operational plans and programs. The Committee also
recommends persons to fill vacancies on the Board of Directors and reviews the
structure and operation
6
<PAGE>
of the Board of Directors. The current members of the Planning and Nominating
Committee are Messrs. Davis and Guenzel.
LITIGATION COMMITTEE. The Litigation Committee is responsible for
overseeing and directing the prosecution of the lawsuit filed by the Company,
the Bank and former stockholders of the Company with respect to allegations
against the United States Government of breach of contract and deprivation of
property without just compensation and without due process of law ("Goodwill
Litigation"), and any ancillary litigation related thereto. The Committee also
has the responsibility to consider and decide upon settlement of such
litigation. The current members of the Litigation Committee are Messrs. Jervis,
Guenzel and MacDonald.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Set forth below is information with respect to the principal occupations
during the last five years for the senior executive officers of the Company and
the Bank who do not serve as directors of the Company. No executive officer is
related to any director or other executive officer of the Company by blood,
marriage or adoption, and there are no arrangements or understandings between a
director of the Company and any other person pursuant to which such person was
elected an executive officer.
WILLIAM W. FLADER. Mr. Flader has served as Executive Vice President of
Retail Banking for the Bank since March 1995. Before joining the Bank, Mr.
Flader was employed by Banc Florida, FSB from October 1980 to August 1994 in
various capacities. Mr. Flader served as Senior Vice President of Retail Banking
for BancFlorida from December 1989 to August 1994. Mr. Flader has worked in
banking for over 20 years and at BancFlorida managed a 46 branch network. In
addition, Mr. Flader was responsible for the sale of alternative investment
products, marketing and residential lending. Mr. Flader also has experience with
alternative delivery banking services such as ATMs.
DOREEN J. BLAUSCHILD. Ms. Blauschild came to the Bank as Associate Counsel
in 1988 and was promoted to Vice President, General Counsel in 1989. In 1991,
Ms. Blauschild was promoted to Senior Vice President, General Counsel. Ms.
Blauschild also has served as the Bank's Secretary since 1989.
RICHARD I. NIEDLING. Mr. Niedling has served as the Bank's Senior Vice
President and Senior Credit Officer since January 1998. Mr. Niedling's
responsibilities include credit policy, loan underwriting and approval. He
joined the Bank in December 1995 as Vice President and Senior Credit Officer.
Before joining the Bank, Mr. Niedling was employed by First Interstate Bank from
1983 through 1995. Mr. Niedling worked in various capacities for First
Interstate Bank including credit and branch administration and worked with
several of First Interstate's affiliated banks located in Arizona, Wyoming and
New Mexico. From 1980 through 1983, Mr. Niedling served as Vice President and
Manager of Commercial Loans and Leasing with The Boatmen's National Bank of St.
Louis. From 1978 through 1980, Mr. Niedling was employed as a Senior Account
Officer handling accounts receivable and inventory financing at Citicorp in St.
Louis, Missouri.
WILLIAM G. CARROLL. Mr. Carroll has served as Senior Vice President in
charge of Corporate Financial Services (including branch operations) since
January 1998. He joined the Bank in March 1997 as Vice President with the same
responsibilities. Prior to joining the Bank, Mr. Carroll served as Vice
President of Preferred Bank in Los Angeles, California, from September 1996
through February 1997. From 1991 through 1996, Mr. Carroll served as Regional
Vice President of Metrobank/Comerica and from 1982 through 1991, Mr. Carroll was
employed as Senior Vice President in the commercial banking division at
California Federal Bank.
JAY P. HUNDLEY. Mr. Hundley has served as the Bank's Senior Vice President
and Senior Lending Officer since November 1998. Mr. Hundley's responsibilities
include business development and origination of commercial real estate, SBA,
commercial, indirect automobile loans and accounts receivable financing. From
1994 to November 1998, Mr. Hundley was a financial consultant for a bank in
Beverly Hills, California and for an agency of the U.S. Government. Prior to
that, he served as Senior Vice President at two commercial banks, First Florida
Bank from 1991 to 1993 and Riggs National Bank from 1993 to 1994.
7
<PAGE>
EMPLOYMENT AGREEMENTS
The Company and the Bank (the "Employers") entered into new employment
agreements with the Messrs. Guenzel, Holmes and Flader (individually, the
"Executive" and collectively, the " Executives") in 1998. The Employers agreed
to employ the executives for a term of three years, in each case in their
current respective positions. The agreements with the Executives was initially
at their current salary levels, which amounted to $325,000, $200,000 and
$170,000 for Messrs. Guenzel, Holmes and Flader, respectively. (As of January 1,
1999, salaries were increased to $348,000, $219,000 and $180,000 for Messrs.
Guenzel, Holmes and Flader, respectively.) The Executives' compensation and
expenses are to be paid by the Company and the Bank in the same proportion as
the time and services actually expended by the Executives on behalf of each
respective Employer. The employment agreements are to be reviewed annually and,
prior to the second annual anniversary of such agreements and each annual
anniversary thereafter, the Board of the Directors of the Employers will
determine whether to extend the term of such agreements. Under the agreements,
the term of the Executives' employment agreements may be extended after the
second anniversary of the agreement, for additional one-year periods upon the
approval of the Employers' Boards of Directors, unless either party elects, not
less than 30 days prior to the annual anniversary date, not to extend the
employment term.
Each of the employment agreements is terminable with or without cause by
the Employers. The Executives have no right to compensation or other benefits
pursuant to the employment agreements for any period after voluntary termination
or termination by the Employers for cause, disability or retirement. The
agreements provide for certain benefits in the event of the Executive's death.
In the event that (i) the Executive terminates his or her employment because of
failure to comply with any material provision of the employment agreement or the
Employers change the executive's title or duties or (ii) the employment
agreement is terminated by the Employers other than for cause, disability,
retirement or death or by the Executive as a result of certain adverse actions
which are taken with respect to the executive's employment following a change in
control of the Company, as defined, the Executives will be entitled to a cash
severance amount equal to the Executive's base salary in effect prior to the
date of termination multiplied by the number of years or fraction thereof
remaining in the term of the agreement at the date of termination up to a
maximum of two years. In the event that the Company was required to make cash
severance payments to the Executives because of the occurrence of any of the
aforementioned circumstances, Messrs. Guenzel, Holmes and Flader would be
entitled to receive $696,000, $438,000 and $360,000, respectively.
The employment agreements with the Executives provide that, in the event
that any of the payments to be made thereunder or otherwise upon termination of
employment are deemed to constitute "excess parachute payments" within the
meaning of Section 280G of the Internal Revenue Code, then such payments and
benefits received thereunder shall be reduced by the amount which is the minimum
necessary to result in the payments not exceeding three times the recipient's
average annual compensation from the employer which was includable in the
recipient's gross income during the most recent five taxable years. Recipients
of excess parachute payments are subject to a 20% excise tax on the amount by
which such payments exceed the base amount, in addition to regular income taxes,
and payments in excess of the base amount are not deductible by the employer as
compensation expense for federal income tax purposes.
A change in control is generally defined in the employment agreements to
include any change in control of the Company required to be reported under the
federal securities laws, as well as (i) the acquisition by any person of 25% or
more of the Company's outstanding voting securities and (ii) a change in a
majority of the directors of the Company during any three-year period without
the approval of at least two-thirds of the persons who were directors of the
Company at the beginning of such period. The employment agreements provide that
any additional purchase of Common Stock by the Bishop Estate or BIL Securities
(Offshore) Limited ("BIL Securities") shall not be deemed to constitute a change
of control for purposes of such agreements.
Although the above-described employment agreements could increase the cost
of any acquisition of control of the Company, management of the Company does not
believe that the terms thereof would have a significant anti-takeover effect.
The Company and/or the Bank may determine to enter into similar employment
agreements with other officers in the future.
8
<PAGE>
In April 1995, the Bank entered into an employment agreement with Doreen J.
Blauschild. In the event the Bank terminates Ms. Blauschild's employment without
cause or following her resignation due to an unauthorized reduction in
compensation, the employment agreement provides that Ms. Blauschild shall be
entitled to certain benefits including (i) four months base salary and payment
of accrued and unpaid vacation, (ii) a $25,000 lump sum payment, (iii) continued
coverage under the Bank's group health, dental, life and disability plans for a
period of six months from termination or until Ms. Blauschild becomes eligible
for comparable group benefit coverages, whichever is earlier, and (iv) continued
benefit of the Company's indemnification obligations and director and officer
insurance policy. In addition, Ms. Blauschild is also entitled to a payment
equal to 0.25% of the amount by which any net recovery (i.e., gross amount less
attorneys' fees incurred by the Bank) by and payable to the Bank relating to the
Goodwill Litigation, whether by judgment or settlement, exceeds $150.0 million.
The employment agreement generally defines "cause" as termination because of
personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty
involving personal profit, intentional failure to perform stated duties, willful
violation of any law, rule or regulation (other than traffic violations or
similar offenses) or final cease-and-desist order or material breach of any
provision of the employment agreement.
9
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth a summary of certain information concerning
the compensation information with respect to the Chief Executive Officer of the
Company and the other five most highly compensated officers of the Company and
the Bank whose total compensation exceeded $100,000 for services rendered in all
capacities during the fiscal year ended December 31, 1998.
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
------------------------------------- -----------------------------------
Awards Payouts
----------------------- -------
Other Securities All Other
Name and Fiscal Annual Restricted Underlying LTIP Compensation
Principal Position Year Salary(1) Bonus Compensation Stock Options Payouts (2)
- -------------------------- ------ --------- ----- ------------ ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Rudolf P. Guenzel 1998 $325,000 $243,750(3) - - - - - - - - $3,717,466
President and 1997 325,000 243,750(4) - - - - - - - - 3,200
Chief Executive Officer
J. Michael Holmes 1998 200,000 150,000(3) - - - - - - - - 2,957,790
Executive Vice 1997 200,000 150,000(4) - - - - - - - - 4,750
President and
Chief Financial Officer
William W. Flader 1998 170,000 127,500(3) - - - - - - - - 2,957,790
Executive Vice 1997 170,000 127,500(4) - - - - - - - - 4,750
President of the Company
and the Bank
Doreen J. Blauschild 1998 150,000 15,000 - - - - - - - - 3,312
Senior Vice 1997 150,000 5,000 - - - - - - - - 3,076
President and General
Counsel of the Bank
Richard I. Niedling 1998 115,300 15,000 - - - - - - - - 3,873
Senior Vice President 1997 108,300 12,000 - - - - - - - - 3,579
and Senior Credit Officer
of the Bank
</TABLE>
(1) Does not include amounts attributable to miscellaneous benefits
received by the named officers. The costs to the Company of providing
such benefits to the named officers during the year ended December 31,
1998 and 1997 did not exceed the lesser of $50,000 or 10% of the total
of annual salary and bonus reported.
(2) An aggregate of $3,712,466, $2,952,790 and $2,952,790 of the other
compensation for Messrs. Guenzel, Holmes and Flader, respectively,
were payments made at the time of the Company's initial public
offering in May 1998, which resulted from the termination of each of
the employment agreements entered into by Messrs. Guenzel, Holmes and
Flader in connection with the Bank's 1995 recapitalization. The
remainder represents the employers' contribution on behalf of the
employee to the 401(k) Plan.
(3) Amounts were accrued in 1998 and paid in 1999.
(4) Amounts were accrued in 1997 and paid in 1998.
10
<PAGE>
The following table discloses the total options granted to the executive
officers named in the Summary Compensation Table on January 25, 1999:
<TABLE>
<CAPTION>
Number of % of Total Potential Realizable Value at
Securities Options Assumed Annual Rates of Stock
Underlying Granted To Exercise Price Appreciation for Option
Name Options Employees(1) Price(2) Expiration Date Term(3)
- ----------------- ----------- ------------ --------- ----------------- -----------------------------
5% 10%
----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Rudolf P. Guenzel 390,000 38.3% $13.75 January 25, 2009 $990,600 $ 4,754,100
J. Michael Holmes 240,000 23.6% 13.75 January 25, 2009 609,600 2,925,600
William W. Flader 198,000 19.4% 13.75 January 25, 2009 502,920 2,413,620
Doreen J. Blauschild 18,500 1.8% 13.75 January 25, 2009 46,990 225,515
Richard I. Niedling 25,000 2.5% 13.75 January 25, 2009 63,500 304,750
Executive officer group 56,500 5.6% 13.75 January 25, 2009 143,510 688,735
Non-executive officer group 90,000 8.8% 13.75 January 25, 2009 228,600 1,097,100
--------- ------ ----------- -----------
All Persons 1,018,000 100.0% 13.75 January 25, 2009 $2,585,720 $12,409,420
----------- -----------
----------- -----------
</TABLE>
- ----------
(1) Percentage of options granted to all employees during fiscal 1999.
(2) The exercise price was based on the price the Company's Common Stock
was issued in the 1998 initial public offering. The price of the
Common Stock on the date of grant was $10.00.
(3) Assumes compounded rates of return for the remaining life of the
options and a future stock price of $16.29 and $25.94 at compounded
rates of return of 5% and 10%, respectively.
DIRECTORS' COMPENSATION.
Members of the Company's Board of Directors, except for Messrs. Jervis,
MacDonald, Guenzel and Holmes, receive $1,000 and $500 for attendance at each
meeting of the Board of Directors and each Committee meeting, respectively.
BENEFITS
SAVINGS PLUS PLAN. The Bank maintains a 401(k) profit sharing plan (the
"Savings Plus Plan"). The Savings Plus Plan is designed to promote the future
economic welfare of the employees of the Bank and to encourage employee savings.
Employee deferrals of salary and employer contributions made under the Savings
Plus Plan, together with the income thereon, are accumulated in individual
accounts maintained in trust on behalf of the employee participants, and is made
available to the employee participants upon retirement and under certain other
circumstances as provided in the Savings Plus Plan. Since employee deferrals of
salary and employer contributions made under the Savings Plus Plan are made on a
tax deferred basis, employee participants are able to enjoy significant income
tax savings by participating in the Savings Plus Plan. Employees are also
permitted to direct the investment of their accounts among six separate funds,
including various fixed income and equity investment funds.
An employee of the Bank becomes eligible to participate in the Savings Plus
Plan on the entry date (January 1, April 1, July 1 or October 1) nearest the
date he or she completes a year of service. A year of service is a 12
consecutive month period in which the employee works at least 1,000 hours for
the Bank. Participants may elect to defer amounts up to 15% of their annual
compensation under the Savings Plus Plan, subject to certain limits imposed by
law. The Bank matches 50% of compensation deferred up to 6% and may make
additional discretionary matching contributions. During the years ended December
31, 1998, 1997 and 1996, the Bank contributed $76,000, $144,000 and $155,000,
respectively, to the Savings Plus Plan on behalf of its employees.
11
<PAGE>
PENSION PLAN. The Bank maintains a defined benefit pension plan ("Pension
Plan") covering all employees who were Pension Plan participants as of December
31, 1990. All Pension Plan benefits were frozen as of December 31, 1990. In
general, the Pension Plan provides for annual benefits payable monthly upon
retirement at age 65 in an amount equal to 4.1% of an employee's average annual
salary for the five consecutive years as of December 31, 1990 ("Five Year
Average Compensation") plus 0.65% of Five Year Average Compensation multiplied
by his number of years of service, not in excess of 10 years. Under the Pension
Plan, an employee's benefits are 20% vested after three years of service and
fully vested after seven years of service. A year of service is any year in
which an employee works a minimum of 1,000 hours. Benefits under the Pension
Plan are payable for ten years certain and life thereafter commencing at age 65
and are not subject to Social Security offsets. The Bank incurred a net periodic
pension (benefit) cost of $(25,000), $(1,000) and $9,000 in 1998, 1997 and 1996,
respectively.
The following table illustrates annual pension benefits for retirement at
age 65 under various levels of compensation and years of service. The figures in
the table assume that the Pension Plan continues in its present form and that
the participant elect a straight life annuity form of benefit.
<TABLE>
<CAPTION>
Five Year
Average 5 Years of 10 Years of Over 10 Years
Compensation Service Service of Service
- ----------------------------- ------------------------- ------------------------- --------------------------
<S> <C> <C> <C>
$ 80,000........................ $18,610 $37,220 $37,220
100,000......................... 23,360 46,720 46,720
120,000......................... 28,110 56,220 56,220
140,000......................... 32,860 65,720 65,720
160,000......................... 37,610 75,220 75,220
180,000......................... 42,360 84,720 84,720
200,000......................... 47,110 94,220 94,220
Over 200,000.................... 47,110 94,220 94,220
</TABLE>
The maximum annual compensation which may be taken into account under the
Code (as adjusted from time to time by the Internal Revenue Service) for
calculating contributions under qualified defined benefit plans currently is
$160,000 and the maximum annual benefit permitted under such plans currently is
$130,000.
Ms. Blauschild has three years of credited service and her final
compensation earned under such plan as of December 31, 1990 was $95,000. Messrs.
Guenzel, Holmes, Flader, Hundley, Carroll and Niedling are not participants in
the Pension Plan and have no credited service or plan benefits.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Compensation Committee was at any time during
the fiscal year ended December 31, 1998, or at any other time, an officer or
employee of the Company.
THE STOCKHOLDERS' AGREEMENT
In order to simplify the Company's equity structure, terminate various
agreements which have governed the relationship among the Material Stockholders
(which includes (i) the Bishop Estate, a charitable educational trust
established under Hawaii law, (ii) BIL Securities, a wholly owned subsidiary of
Brierley Investments Limited, a New
12
<PAGE>
Zealand corporation, and (iii) Arbur, Inc. ("Arbur"), a Delaware corporation
(collectively, the "Material Stockholders")) since the 1995 recapitalization and
to effect certain other changes, the Company entered into the Stockholders'
Agreement with the Material Stockholders in connection with the Company's 1998
initial public offering (the "1998 Stockholders' Agreement").
The 1998 Stockholders' Agreement provides for continuing Board of Directors
representation by the Material Stockholders, if requested by such Material
Stockholders subject to maintenance by the Material Stockholders of specified
minimum levels of beneficial ownership of Common Stock and lack of any
applicable regulatory prohibition or objection. The Company has agreed that for
so long as a Material Stockholder is a "Material Stockholder," as defined below,
it shall (i) exercise all authority under applicable law to cause the number of
nominees permitted to be designated by such Stockholder and consented to by the
Board of Directors of the Company (such consent not to be unreasonably withheld)
(a "Company Designated Director") to be included in the slate of nominees
recommended by the Board of Directors to stockholders for election as directors
at each annual meeting of stockholders of the Company after the date of the 1998
Stockholders' Agreement at which the term of the Company Designated Director is
scheduled to expire (subject to the satisfaction of any applicable regulatory
requirements), and (ii) use all practical efforts to cause the election of such
slate, including such Company Designated Director.
Bishop Estate shall be considered a "Material Stockholder" entitled to
nominate: (i) two directors to the Company's Board of Directors for so long as
Bishop Estate beneficially owns 9.9% or more of the Company's Common Stock, and
(ii) one director to the Company's Board of Directors for so long as Bishop
Estate beneficially owns less than 9.9% but more than 4.9% of the Company's
Common Stock. BIL Securities and Arbur collectively shall be considered a
"Material Stockholder" and entitled to nominate one director to the Company's
Board of Directors for so long as BIL Securities and Arbur collectively
beneficially own more than 4.9% of the Company's Common Stock. To the extent
that either Bishop Estate, or BIL Securities and Arbur collectively,
beneficially own less than 5.0% of the Company's Common Stock, such party or
parties, as the case may be, shall no longer be considered a "Material
Stockholder."
The 1998 Stockholders' Agreement also provides that to the extent a Company
Designated Director elected to the Board of Directors ceases to serve as a
director for any reason while the Material Stockholder remains a Material
Stockholder, such vacancy will be promptly filled by the Board of Directors of
the Company with a substitute Company Designated Director designated by such
Material Stockholder if requested to do so by such Material Stockholder. The
1998 Stockholders' Agreement provides that subject to any applicable regulatory
prohibitions, the Material Stockholders shall at all times have and maintain a
right of attendance at Board of Directors meetings, irrespective of their
continued status as Material Stockholders as long as the Goodwill Litigation is
pending. Finally, the 1998 Stockholders' Agreement provides that unless
otherwise approved by the requisite vote of stockholders required to amend the
Company's Bylaws, for so long as a Material Stockholder is a Material
Stockholder, the Bylaws of the Company shall provide for and the Board of
Directors shall be comprised of, seven directors.
The Agreement and Plan of Reorganization (the "Reorganization Agreement")
which was executed in June 1995 in connection with the 1995 recapitalization of
the Company provided the Material Stockholders with a right of first refusal
with respect to the sale by the Company or the Bank of any shares of capital
stock of either entity, subject to certain exceptions. In the Reorganization
Agreement, the Company also made various ongoing covenants with respect to,
among other things, its issuance of the senior notes, discussed below. Pursuant
to the terms of the 1998 Stockholders' Agreement, all provisions which survived
the closing under the Reorganization Agreement were terminated. The Company and
the Material Stockholders also executed a stockholders' agreement in connection
with the 1995 recapitalization (the "1995 Stockholders' Agreement"), which
provides, among other things, for restrictions on the ability of a Material
Stockholder to transfer shares of Common Stock and registration rights under
various circumstances with respect to the Company's capital stock owned by such
Selling Stockholders. Pursuant to the terms of the 1998 Stockholders' Agreement,
the 1995 Stockholders' Agreement was terminated.
Finally, the 1998 Stockholders' Agreement provided for the Company to
prepay the $10.0 million aggregate principal amount of senior notes which were
issued to the Bishop Estate in connection with the 1995 recapitalization,
13
<PAGE>
plus accrued interest thereon to the date of prepayment (but not including the
date of prepayment) in connection with the closing of the Company's 1998 initial
public offering.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors, and persons who
own more than 10% of the Company's Common Stock, to file reports of ownership
and changes in ownership with the Securities and Exchange Commission ("SEC") and
the Nasdaq Stock Market. Officers, directors and greater than 10% stockholders
are required by regulation to furnish the Company with copies of all Section
16(a) forms they file. The Company knows of no person, other than the Bishop
Estate, who beneficially owns 10% or more of the Company's Common Stock.
Based solely on review of the copies of such forms furnished to the
Company, or written representations from its officers and directors, the Company
believes that with respect to the year ended December 31, 1998, the Company's
officers and directors satisfied the reporting requirements promulgated under
Section 16(a) of the 1934 Act, except that Mr. Jay P. Hundley was late in
reporting his Form 3 upon becoming an officer of the Company.
14
<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK
BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of the Common Stock
as of the Voting Record Date, and certain other information with respect to (i)
each person or entity, including any "group" as that term is used in Section
13(d)(3) of the Exchange Act, who or which was known to the Company to be a
beneficial owner of more than 5% of the issued and outstanding Common Stock,
(ii) each director of the Company, (iii) each executive officer of the Company
and (iv) all directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
Amount and Nature
Name of Beneficial of Beneficial
Owner or Number of Ownership as of Percent of
Persons In Group March 9, 1999(1) Outstanding Common Stock
---------------- ---------------- ------------------------
<S> <C> <C>
Trustees of the Estate of Bernice Pauahi Bishop 4,759,848 23.3%
567 South King Street, Suite 200
Honolulu, Hawaii 96813
BIL Securities (Offshore) Limited 1,912,272 9.4%
P.O. Box 5018
Level 9, CML Building
22-24 Victoria Street
Wellington, New Zealand
Value Partners, Ltd. 1,449,000 7.1%
Suite 808
4514 Cole Avenue
Dallas, Texas 75205
Arbur, Inc. 637,418 3.1%
c/o William E. Simon & Sons, Inc.
310 South Street
Morristown, New Jersey 07960-1913
Directors and Executive Officers:
Rudolf P. Guenzel 285,000(2) 1.4%
J. Michael Holmes 148,806(3) *
Gerard Jervis 0(4) 0
Murray Kalis 2,000 *
Robert W. MacDonald 0 *
John F. Davis 8,000(5) *
William W. Flader 151,895(6) *
Doreen J. Blauschild 1,818 *
William G. Carroll 3,273(7) *
Richard Niedling 1,747(8) 0
Jay P. Hundley 0 0
All directors and executive officers as a group
(11 persons) 602,539 2.9%
</TABLE>
- ------------------------------------
(FOOTNOTES CONTINUED ON FOLLOWING PAGE)
15
<PAGE>
- ----------------
* Represents less than 1% of the outstanding shares of Common Stock.
(1) Based upon filings made pursuant to the Exchange Act and information
furnished by the respective individuals. Under regulations promulgated
pursuant to the Exchange Act, shares of Common Stock are deemed to
beneficially owned by a person if he or she directly or indirectly has
or shares (i) voting power, which includes the power to vote or to
direct the voting of the shares, or (ii) investment power, which
includes the power to dispose or to direct the disposition of the
shares. Unless otherwise indicated, the named beneficial owner has
sole voting and dispositive power with respect to the shares.
(2) Includes 3,090 shares held by Mr. Guenzel's spouse.
(3) Mr. Holmes' shares are held jointly with his spouse.
(4) Mr. Jervis serves as a member of the Board of Trustees, which consists
of five voting members, of the Bishop Estate.
(5) All 8,000 shares are held by Mr. Davis' children.
(6) Includes 2,180 shares held by Mr. Flader's daughters, 138,806 shares
held with Mr. Flader's spouse serving as co-trustees of a family trust
and 10,909 shares held in an individual retirement account.
(7) All 3,273 shares are held in Mr. Carroll's spouse's individual
retirement account
(8) Mr. Niedling's shares are held jointly with his spouse.
16
<PAGE>
PERFORMANCE GRAPH
Pursuant to the rules and regulations of the SEC, the graph below compares
the performance of the Company's Common Stock with that of the Nasdaq Composite
Index (U.S. Companies) and the Nasdaq Financial Index (U.S. banks and thrifts)
from May 13, 1998, the date the Company's common stock began trading on the
Nasdaq National Market, through December 31, 1998. The graph is based on the
investment of $100 in the Company's Common Stock at its closing price on May 13,
1998.
<TABLE>
<CAPTION>
Period Ended
-----------------------------------------------------------------------------
INDEX 5/13/98 6/30/98 7/31/98 8/31/98 9/30/98 12/31/98
- ----- -------- ------- ------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
PBOC Holdings, Inc. $100.0 $96.93 $89.47 $65.79 $77.19 $71.93
Nasdaq - Total U.S. $100.0 $101.28 $100.21 $80.56 $91.69 $118.25
Nasdaq - Financial Index $100.0 $96.79 $93.79 $76.45 $80.42 $90.70
</TABLE>
17
<PAGE>
CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS
In accordance with applicable laws and regulations, the Bank offers
mortgage loans to its directors, officers and employees as well as members of
their immediate families for the financing of their primary residences and
certain other loans. These loans are generally made on substantially the same
terms as those prevailing at the time for comparable transactions with
non-affiliated persons. It is the belief of management that these loans neither
involve more than the normal risk of collectibility nor present other
unfavorable features. All such loans to directors and executive officers were
current as of December 31, 1998.
Section 22(h) of the Federal Reserve Act generally provides that any credit
extended by a savings institution, such as the Bank, to its executive officers,
directors and, to the extent otherwise permitted, principal stockholder(s), or
any related interest of the foregoing, must be on substantially the same terms,
including interest rate and collateral , as those prevailing at the time for
comparable transactions by the savings institution with non-affiliated parties,
unless the loans are made pursuant to a benefit or compensation program that (i)
is widely available to employees of the institution and (ii) does not give
preference to any director, executive officer or principal stockholder, or
certain affiliated interests of either, over other employees of the savings
institution, and must not involve more than the normal risk of repayment or
present other unfavorable features.
The Bank utilizes Kalis and Savage Advertising for routine and customary
marketing services of which Murray Kalis, a director of the Company, is Chairman
and Creative Director. A total of $151,000 was paid to that firm by the Bank in
1998.
The Bank has made a $5.0 million term loan at 9.0% and a $3.0 million line
of credit at 7.75% to First Fidelity Bancorp of which Mr. Davis is Chief
Operating Officer. The term loan is due July 31, 2003 and as of December 31,
1998 had an outstanding balance of $4,666,654. The revolving line of credit is
due February 28, 2000 and as of December 31, 1998 had an outstanding balance of
$105,000. The loan and line of credit were made in the ordinary course of
business and were made on substantially the same terms, including interest rate
and collateral, as those prevailing at the time for comparable transactions with
other persons. The loan and line of credit do not involve more than normal risk
of collectibility.
The Bank has also made a $15.0 million loan at an interest rate of 7.75% to
Value Partners, Ltd., which owns 1,449,000 shares or 7.1% of the Company's
Common Stock. This loan was originated in November 1998 and is set to mature on
March 31, 2000. As of December 31, 1998, the balance of the loan was $15.0
million. This loan is secured by marketable securities.
PROPOSAL TO ADOPT THE 1999 STOCK OPTION PLAN
GENERAL
The Board of Directors has adopted the Option Plan which is designed to
improve the growth and profitability of the Company and its subsidiaries by
providing employees with a proprietary interest in the Company as an incentive
to contribute to the success of the Company and its subsidiaries. The Option
Plan provides for the grant of incentive stock options intended to comply with
the requirements of Section 422 of the Code ("Incentive Stock Options"),
non-qualified stock options and stock appreciation rights (collectively
"Awards"). Awards will be available for grant to certain officers and employees
of the Company and any of its subsidiaries. If stockholder approval is obtained,
options to acquire shares of Common Stock will be awarded to officers and key
employees of the Company and the Bank with an exercise price in excess of the
fair market value of the Common Stock on the date of grant.
DESCRIPTION OF THE OPTION PLAN
The following description of the Option Plan is a summary of its terms and
is qualified in its entirety by reference to the Option Plan, a copy of which is
attached hereto as Appendix A. Unless otherwise expressed, all capitalized terms
shall be defined as set forth in the Option Plan.
18
<PAGE>
ADMINISTRATION. The Option Plan will be administered and interpreted by a
committee appointed by the Board of Directors ("Committee") that is comprised
solely of two or more non-employee directors. The members of the Committee will
initially consist of Messrs. Jervis, Davis, Kalis and MacDonald, who also
comprise the Compensation Committee.
STOCK OPTIONS. Under the Option Plan, the Committee will determine which
officers and employees will be granted options, whether such options will be
Incentive Stock Options or non-qualified options, the number of shares subject
to each option, the exercise price of each option, whether such options may be
exercised by delivering other shares of Common Stock and when such options
become exercisable. The per share exercise price of both an Incentive Stock
Option and a non-qualified stock option shall at least equal the Fair Market
Value of a share of Common Stock on the date the option is granted.
Options granted under the Option Plan shall become vested and exercisable
in the manner specified by the Committee. Notwithstanding the foregoing, no
vesting shall occur after a participant's employment or service with the Company
is terminated for any reason other than his death, Disability, or Retirement.
Unless the Committee shall specifically state otherwise at the time an option is
granted, all options granted shall become vested and exercisable in full on the
date an optionee terminates his or her employment or service with the Company or
a subsidiary of the Company because of his death, Disability, or Retirement. In
addition, all stock options will become vested and exercisable in full on the
effective date of a Change in Control of the Company.
With the exception for Incentive Stock Options granted to employees who own
more than ten percent of the total combined voting power of all classes of stock
of the Company, each stock option or portion thereof shall be exercisable at any
time on or after it vests and is exercisable until the earlier of ten years
after its date of grant or three months after the date on which the optionee's
employment terminates, unless extended by the Committee to a period not to
exceed one year from such termination. Unless stated otherwise at the time an
option is granted (i) if an optionee terminates his or her employment or service
with the Company or a subsidiary as a result of death, Disability or Retirement
without having fully exercised his or her options, the optionee shall have
twelve months following his or her death or termination due to Disability or
Retirement to exercise such options. However, failure to exercise Incentive
Stock Options within three months (or twelve months for termination as a result
of death or Disability) after the date on which the optionee's employment
terminates may result in adverse tax consequences to the optionee. If an
optionee dies while serving as an employee without having fully exercised his
options, the optionee's executors, administrators, legatees or distributees of
his estate shall have the right to exercise such options during the twelve
months following his death, provided no option will be exercisable more than ten
years from the date it was granted.
Stock options are non-transferable except by will or the laws of descent
and distribution. Notwithstanding the foregoing, an optionee who holds
non-qualified options may transfer such options to his or her spouse, lineal
ascendants, lineal descendants, or to a duly established trust for the benefit
of one or more of these individuals. Options so transferred may thereafter be
transferred only to the optionee who originally received the grant or to an
individual or trust to whom the optionee could have initially transferred the
option. Options which are so transferred shall be exercisable by the transferee
according to the same terms and conditions as applied to the optionee.
Payment for shares purchased upon the exercise of options may be made
either in cash, by certified or cashier's check or if permitted by the
Committee, by delivering shares of Common Stock (including shares acquired
pursuant to the exercise of an option) with a Fair Market Value equal to the
total option exercise price, by withholding some of the shares of Common Stock
which are being purchased upon exercise of an option, or any combination of the
foregoing. With respect to delivering shares of Common Stock in lieu of cash,
such shares must have been either purchased in open market transactions or
issued by the Company pursuant to a similar incentive plan more than six months
prior to the exercise date of the Option. If the Fair Market Value of a share of
Common Stock at the time of exercise is greater than the option's exercise price
per share, this feature would enable the optionee to acquire a number of shares
of Common Stock upon exercise of the Option, which is greater than the number of
shares delivered as payment for the exercise price. In addition, an optionee can
exercise an option in whole or in part and then, six months hence, deliver the
shares
19
<PAGE>
acquired thereby (if permitted by the Committee) as payment for the exercise
price of all or part of his or her options. Again, if the fair market value of a
share of Common Stock at the time of exercise is greater than the exercise price
per share, this feature would enable the optionee to either (1) reduce the
amount of cash required to receive a fixed number of shares upon exercise of the
option or (2) receive a greater number of shares upon exercise of the option for
the same amount of cash that would have otherwise been used. Because options may
be exercised in part from time to time, the ability to deliver Common Stock as
payment of the exercise price could enable the optionee to turn a relatively
small number of shares into a large number of shares. In addition, an optionee
can elect, with the Committee's concurrence, to defer the delivery of the
proceeds derived from the exercise of non-qualified options pursuant to the
terms of the Option Plan. Such deferral must comply with the provisions of the
Option Plan and other rules and regulations as may be established by the
Committee.
STOCK APPRECIATION RIGHTS. Under the Option Plan, the Board of Directors or
the Committee is authorized to grant rights to optionees ("Stock Appreciation
Rights") under which an optionee may surrender any exercisable Incentive Stock
Option or non-qualified stock option or part thereof in return for payment by
the Company to the optionee of cash or Common Stock in an amount equal to the
excess of the Fair Market Value of the shares of Common Stock subject to the
option at the time over the option's exercise price of such shares, or a
combination of cash and Common Stock. Stock Appreciation Rights granted in
connection with an Incentive Stock Option must be granted concurrently with the
Option to which it relates and Stock Appreciation Rights in connection with a
non-qualified option may be granted concurrently with the stock options to which
they relate or at any time thereafter which is prior to the exercise or
expiration of such option. The proceeds of the exercise of a Stock Appreciation
Right may also be deferred as provided by the provisions of the Option Plan.
NUMBER OF SHARES COVERED BY THE OPTION PLAN. A total of 1,020,390 shares of
Common Stock, which is equal to 4.99% of the outstanding Common Stock of the
Company, as of March 9, 1999, has been reserved for future issuance pursuant to
the Option Plan. In the event of a stock split, reverse stock split,
subdivision, stock dividend or any other capital adjustment, the number of
shares of Common Stock under the Option Plan, the number of shares to which any
Award relates and the exercise price per share under any option or Stock
Appreciation Right shall be adjusted to reflect such increase or decrease in the
total number of shares of Common Stock outstanding or such capital adjustment.
AMENDMENT AND TERMINATION OF THE OPTION PLAN. Unless sooner terminated, the
Option Plan shall continue in effect for a period of ten years from January 25,
1999, the date the Option Plan was adopted by the Board of Directors.
Termination of the Option Plan shall not affect any previously granted Awards.
FEDERAL INCOME TAX CONSEQUENCES. Under current provisions of the Code, the
federal income tax treatment of Incentive Stock Options and non-qualified stock
options is different. As regards Incentive Stock Options, an optionee who meets
certain holding period requirements will not recognize taxable income at the
time the option is granted or at the time the option is exercised, and a federal
income tax deduction generally will not be available to the Company as a result
of such grant or exercise. With respect to non-qualified stock options, the
difference between the fair market value on the date of exercise and the option
exercise price generally will be treated as taxable compensation income upon
exercise, and the Company will be entitled to a deduction in the amount of such
taxable income recognized by the optionee. Upon the exercise of a Stock
Appreciation Right, the holder will realize taxable income for federal income
tax purposes equal to the Fair Market Value of the amount received by him or
her, whether in cash, shares of stock or both, and the Company will be entitled
to a federal tax deduction in the same amount.
Section 162(m) of the Code generally limits the deduction for certain
compensation in excess of $1.0 million per year paid by a publicly-traded
corporation to its chief executive officer and the four other most highly
compensated executive officers ("Covered Executives"). Certain types of
compensation, including compensation based on performance goals, are excluded
from the $1.0 million deduction limitation. In order for compensation to qualify
for this exception: (i) it must be paid solely on account of the attainment of
one or more preestablished, objective performance goals; (ii) the performance
goal must be established by a compensation committee consisting solely of two or
more outside directors; (iii) the material terms under which the compensation is
to be paid, including performance
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goals, must be disclosed to and approved by stockholders in a separate vote
prior to payment; and (iv) prior to payment, the compensation committee must
certify that the performance goals and any other material terms were in fact
satisfied (the "Certification Requirement").
Final Treasury regulations issued in July 1996 provide that compensation
attributable to a stock option or stock appreciation right is deemed to satisfy
the requirement that compensation be paid solely on account of the attainment of
one or more performance goals if: (i) the grant is made by a compensation
committee consisting solely of two or more outside directors; (ii) the plan
under which the option or stock appreciation right is granted states the maximum
number of shares with respect to which options or stock appreciation rights may
be granted during a specified period to any employee; and (iii) under the terms
of the option or stock appreciation right, the amount of compensation the
employee could receive is based solely on an increase in the value of the stock
after the date of grant or award. The Certification Requirement is not necessary
if these other requirements are satisfied.
The Option Plan has been designed to meet the requirements of Section
162(m) of the Code and, as a result, the Company believes that compensation
attributable to stock options and Stock Appreciation Rights granted under the
Option Plan in accordance with the foregoing requirements will be fully
deductible under Section 162(m) of the Code. If the non-excluded compensation of
a Covered Executive exceeded $1.0 million, however, compensation attributable to
other awards granted under other such plans may not be fully deductible unless
the grant or vesting of the award is contingent on the attainment of a
performance goal determined by a compensation committee meeting the specified
requirements and disclosed to and approved by the stockholders of the Company.
The Board of Directors believe that the likelihood of any impact on the Company
from the deduction limitation contained in Section 162(m) of the Code is remote
at this time.
The above description of tax consequences under federal law is necessarily
general in nature and does not purport to be complete. Moreover, statutory
provisions are subject to change, as are their interpretations, and their
application may vary in individual circumstances. Finally, the consequences
under applicable state and local income tax laws may not be the same as under
the federal income tax laws.
ACCOUNTING TREATMENT. Stock Appreciation Rights will, in most cases,
require a charge against the earnings of the Company each year representing
appreciation in the value of such rights over periods in which they become
exercisable. Such charge is based on the difference between the exercise price
specified in the related option and the current market price of the Common
Stock. In the event of a decline in the market price of the Common Stock
subsequent to a charge against earnings related to the estimated costs of Stock
Appreciation Rights, a reversal of prior charges is made in the amount of such
decline (but not to exceed aggregate prior charges).
Neither the grant nor the exercise of an Incentive Stock Option or a
non-qualified stock option under the Option Plan currently requires any charge
against earnings under generally accepted accounting principles. In October
1995, the Financial Accounting Standards Board ("FASB") issued Statement of
Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation," which is effective for transactions entered into after December
15, 1995. This Statement establishes financial accounting and reporting
standards for stock-based employee compensation plans. This Statement defines a
fair value method of accounting for an employee stock option or similar equity
instrument and encourages all entities to adopt that method of accounting for
all of their employee stock compensation plans. However, it also allows an
entity to continue to measure compensation cost for those plans using the
intrinsic value method of accounting prescribed by APB Opinion No. 25,
"Accounting for Stock Issued to Employees." Under the fair value method,
compensation cost is measured at the grant date based on the value of the award
and is recognized over the service period, which is usually the vesting period.
Under the intrinsic value method, compensation cost is the excess, if any, of
the quoted market price of the stock at grant date or other measurement date
over the amount an employee must pay to acquire the stock. The Company
anticipates that it will use the intrinsic value method, in which event pro
forma disclosure will be included in the footnotes to the Company's financial
statements to show what net income and earnings per share would have been if the
fair value method had been utilized. If the Company elects to utilize the fair
value method, its net income and earnings per share may be adversely affected.
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STOCKHOLDER APPROVAL. No Awards granted under the Option Plan will be
effective unless the Option Plan is approved by stockholders. Stockholder
ratification of the Option Plan will also satisfy Nasdaq Stock Market ("Nasdaq
Stock Market") listing and federal tax requirements.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR ADOPTION
OF THE 1999 STOCK OPTION PLAN.
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors of the Company has appointed KPMG LLP, independent
certified public accountants, to perform the audit of the Company's financial
statements for the year ending December 31, 1999, and further directed that the
selection of auditors be submitted for ratification by the stockholders at the
Annual Meeting.
The Company has been advised by KPMG LLP that neither that firm nor any of
its associates has any relationship with the Company or its subsidiaries other
than the usual relationship that exists between independent certified public
accountants and clients. KPMG LLP will have one or more representatives at the
Annual Meeting who will have an opportunity to make a statement, if they so
desire, and who will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF KPMG LLP AS INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING
DECEMBER 31, 1999.
ADJOURNMENT OF ANNUAL MEETING
Each proxy solicited hereby requests authority to vote for an adjournment
of the Annual Meeting, if an adjournment is deemed to be necessary. The Company
may seek an adjournment of the Annual Meeting for not more than 30 days in order
to enable the Company to solicit additional votes in favor of the proposals to
adopt the Stock Option Plan in the event that the proposal has not received the
requisite vote of stockholders at the Annual Meeting and such proposal has not
received the negative votes of the holders of a majority of the Company's Common
Stock. If the Company desires to adjourn the meeting with respect to the
foregoing proposal, it will request a motion that the meeting be adjourned for
up to 30 days with respect to such proposal (and solely with respect to such
proposal, provided that a quorum is present at the Annual Meeting), and no vote
will be taken on such proposal at the originally scheduled Annual Meeting. Each
proxy solicited hereby, if properly signed and returned to the Company and not
revoked prior to its use, will be voted on any motion for adjournment in
accordance with the instructions contained therein. If no contrary instructions
are given, each proxy received will be voted in favor of any motion to adjourn
the meeting. Unless revoked prior to its use, any proxy solicited for the Annual
Meeting will continue to be valid for any adjournment of the Annual Meeting, and
will be voted in accordance with instructions contained therein, and if no
contrary instructions are given, for the proposal in question.
Any adjournment will permit the Company to solicit additional proxies and
will permit a greater expression of the stockholders' views with respect to such
proposal. Such an adjournment would be disadvantageous to stockholders who are
against the proposal, because an adjournment will give the Company additional
time to solicit favorable votes and thus increase the chances of passing such
proposal.
If a quorum is not present at the Annual Meeting, no proposal will be acted
upon and the Board of Directors of the Company will adjourn the Annual Meeting
to a later date in order to solicit additional proxies on the proposal being
submitted to stockholders.
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An adjournment for up to 30 days will not require either the setting of a
new record date or notice of the adjourned meeting as in the case of an original
meeting. The Company has no reason to believe that an adjournment of the Annual
Meeting will be necessary at this time.
BECAUSE THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
PROPOSALS TO ADOPT THE STOCK OPTION PLAN, AS DISCUSSED ABOVE, THE BOARD OF
DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE POSSIBLE ADJOURNMENT OF THE
ANNUAL MEETING. THE HOLDERS OF A MAJORITY OF THE COMPANY'S COMMON STOCK PRESENT,
IN PERSON OR BY PROXY, AT THE ANNUAL MEETING WILL BE REQUIRED TO APPROVE A
MOTION TO ADJOURN THE ANNUAL MEETING.
STOCKHOLDER PROPOSALS
Any proposal which a stockholder wishes to have included in the proxy
materials of the Company relating to the next annual meeting of stockholders of
the Company, which currently is scheduled to be held on April 24, 2000, must be
received at the principal executive offices of the Company, 5900 Wilshire
Boulevard, Los Angeles, California 90036, Attention: J. Michael Holmes,
Executive Vice President, Chief Financial Officer and Secretary, no later than
November 23, 1999.
Stockholder proposals which are not submitted for inclusion in the
Company's proxy materials pursuant to Rule 14a-8 under the Exchange Act may be
brought before an annual meeting pursuant to Section 2.14 of the Company's
Bylaws, which provides that business at an annual meeting of stockholders must
be (a) properly brought before the meeting by or at the direction of the Board
of Directors, or (b) otherwise properly brought before the meeting by a
stockholder. For business to be properly brought before an annual meeting by a
stockholder, the stockholder must have given timely notice thereof in writing to
the Secretary of the Company. To be timely, a stockholder's notice must be
delivered to, or mailed and received at, the principal executive offices of the
Company not later than 90 days prior to the mailing of proxy materials with
respect to the immediately preceding annual meeting of stockholders of the
Company. Such stockholder's notice is required to set forth as to each matter
the stockholder proposes to bring before an annual meeting certain information
specified in the Bylaws.
ANNUAL REPORTS
A copy of the Company's Annual Report on Form 10-K for the year ended
December 31, 1998 accompanies this Proxy Statement. Such annual report is not
part of the proxy solicitation materials.
OTHER MATTERS
Each proxy solicited hereby also confers discretionary authority on the
Board of Directors of the Company to vote the proxy with respect to the election
of any person as a director if the nominee is unable to serve or for good cause
will not serve, matters incident to the conduct of the meeting, and upon such
other matters as may properly come before the Annual Meeting. Management is not
aware of any business that may properly come before the Annual Meeting other
than the matters described above in this Proxy Statement. However, if any other
matters should properly come before the meeting, it is intended that the proxies
solicited hereby will be voted with respect to those other matters in accordance
with the judgment of the persons voting the proxies.
The cost of the solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending the proxy
materials to the beneficial owners of the Common Stock. In addition to
solicitations by mail, directors, officers and employees of the Company may
solicit proxies personally or by telephone without additional compensation.
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APPENDIX A
PBOC HOLDINGS, INC.
1999 STOCK OPTION PLAN
ARTICLE I
ESTABLISHMENT OF THE PLAN
PBOC Holdings, Inc. (the "Corporation") hereby establishes this 1999 Stock
Option Plan (the "Plan") upon the terms and conditions hereinafter stated.
ARTICLE II
PURPOSE OF THE PLAN
The purpose of this Plan is to improve the growth and profitability of the
Corporation and its Subsidiaries by providing Employees with a proprietary
interest in the Corporation as an incentive to contribute to the success of the
Corporation and its Subsidiaries. All Incentive Stock Options issued under this
Plan are intended to comply with the requirements of Section 422 of the Code,
and the regulations thereunder, and all provisions hereunder shall be read,
interpreted and applied with that purpose in mind.
ARTICLE III
DEFINITIONS
3.01 "Award" means an Option or Stock Appreciation Right granted pursuant
to the terms of this Plan.
3.02 "Bank" means People's Bank of California, a wholly owned subsidiary of
the Corporation.
3.03 "Board" means the Board of Directors of the Corporation.
3.04 "Change in Control of the Corporation" means a change in control of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Exchange Act, or any
successor thereto, whether or not the Corporation in fact is required to comply
with Regulation 14A thereunder.
3.05 "Code" means the Internal Revenue Code of 1986, as amended.
3.06 "Committee" means a committee of two or more directors appointed by
the Board pursuant to Article IV hereof, none of whom shall be an Officer or
Employee of the Corporation, and each of whom shall be a "disinterested person"
within the meaning of Rule 16b-3 under the Exchange Act, or any successor
thereto and within the meaning of Section 162(m) of the Code and regulations
thereunder.
3.07 "Common Stock" means shares of the common stock, par value $0.01 per
share, of the Corporation.
3.08 "Disability" means any physical or mental impairment which qualifies
an Employee for disability benefits under the applicable long-term disability
plan maintained by the Corporation or a Subsidiary, or, if no such plan applies,
which would qualify such Employee for disability benefits under the Federal
Social Security System.
3.09 "Effective Date" means the day upon which the Board approves this
Plan.
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3.10 "Employee" means any person who is employed by the Corporation or a
Subsidiary, including Officers of the Corporation or a Subsidiary, but not
including directors who are not also Officers of or otherwise employed by the
Corporation or a Subsidiary.
3.11 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
3.12 "Fair Market Value" shall be equal to the fair market value per share
of the Corporation's Common Stock on the date an Award is granted. For purposes
hereof, the Fair Market Value of a share of Common Stock shall be the closing
sale price of a share of Common Stock on the date in question (or, if such day
is not a trading day in the U.S. markets, on the nearest preceding trading day),
as reported with respect to the principal market (or the composite of the
markets, if more than one) or national quotation system in which such shares are
then traded, or if no such closing prices are reported, the mean between the
high bid and low asked prices that day on the principal market or national
quotation system then in use, or if no such quotations are available, the price
furnished by a professional securities dealer making a market in such shares
selected by the Committee, or if no such prices are available, the book value of
a share of Common Stock as determined under generally accepted accounting
principles as of the latest practicable date.
3.13 "Incentive Stock Option" means any Option granted under this Plan
which the Board intends (at the time it is granted) to be an incentive stock
option within the meaning of Section 422 of the Code or any successor thereto.
3.14 "Non-Qualified Option" means any Option granted under this Plan which
is not an Incentive Stock Option.
3.15 "Officer" means an Employee whose position in the Corporation or
Subsidiary is that of a corporate officer, as determined by the Board.
3.16 "Option" means a right granted under this Plan to purchase Common
Stock.
3.17 "Optionee" means an Employee to whom an Option is granted under the
Plan.
3.18 "Retirement" means a termination of employment upon or after
attainment of age sixty-five (65) or such earlier age as may be specified in any
applicable plans or policies maintained by the Corporation or a Subsidiary or,
if no such plan is applicable, which would constitute "retirement" under any
qualified pension benefit plan maintained by the Corporation or a Subsidiary, if
such individual were a participant in such plan.
3.20 "Stock Appreciation Right" means a right to surrender an Option in
consideration for a payment by the Corporation in cash and/or Common Stock, as
provided in the discretion of the Committee in accordance with Section 8.11.
3.21 "Subsidiaries" means those subsidiaries of the Corporation, including
the Bank, which meet the definition of "subsidiary corporations" set forth in
Section 424(f) of the Code, at the time of granting of the Option in question.
ARTICLE IV
ADMINISTRATION OF THE PLAN
4.01 DUTIES OF THE COMMITTEE. The Plan shall be administered and
interpreted by the Committee, as appointed from time to time by the Board
pursuant to Section 4.02. The Committee shall have the authority in its absolute
discretion to adopt, amend and rescind such rules, regulations and procedures
as, in its opinion, may be advisable in the administration of the Plan,
including, without limitation, rules, regulations and procedures which (i) deal
with satisfaction of an Optionee's tax withholding obligation pursuant to
Section 13.02 hereof, (ii) include arrangements to
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facilitate the Optionee's ability to borrow funds for payment of the exercise or
purchase price of an Award, if applicable, from securities brokers and dealers,
and (iii) include arrangements which provide for the payment of some or all of
such exercise or purchase price by delivery of previously owned shares of Common
Stock or other property and/or by withholding some of the shares of Common Stock
which are being acquired. The interpretation and construction by the Committee
of any provisions of the Plan, any rule, regulation or procedure adopted by it
pursuant thereto or of any Award shall be final and binding.
4.02 APPOINTMENT AND OPERATION OF THE COMMITTEE. The members of the
Committee shall be appointed by, and will serve at the pleasure of, the Board.
The Board from time to time may remove members from, or add members to, the
Committee, provided that the Committee shall continue to consist of two or more
members of the Board, none of whom shall be an Officer or Employee of the
Corporation, and each of whom shall be a "disinterested person" within the
meaning of Rule 16b-3 under the Exchange Act. In addition, each member of the
Committee shall be an "outside director" within the meaning of Section 162(m) of
the Code and regulations thereunder at such times as is required under such
regulations. The Committee shall act by vote or written consent of a majority of
its members. Subject to the express provisions and limitations of the Plan, the
Committee may adopt such rules, regulations and procedures as it deems
appropriate for the conduct of its affairs. It may appoint one of its members to
be chairman and any person, whether or not a member, to be its secretary or
agent. The Committee shall report its actions and decisions to the Board at
appropriate times but in no event less than one time per calendar year.
4.03 REVOCATION FOR MISCONDUCT. The Committee may by resolution immediately
revoke, rescind and terminate any Option, or portion thereof, to the extent not
yet vested, or any Stock Appreciation Right, to the extent not yet exercised,
previously granted or awarded under this Plan to an Employee who is discharged
from the employ of the Corporation or a Subsidiary for cause, which, for
purposes hereof, shall mean termination because of the Employee's personal
dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving
personal profit, intentional failure to perform stated duties, willful violation
of any law, rule or regulation (other than traffic violations or similar
offenses) or final cease-and-desist order or material breach of any employment
agreement. For purposes of this paragraph, no act or failure to act on the
Employee's part shall be considered "willful" unless done, or omitted to be
done, by the Employee not in good faith and without reasonable belief that the
Employee's action or omission was in the best interest of the Corporation and
its Subsidiaries.
4.04 LIMITATION ON LIABILITY. Neither the members of the Board nor any
member of the Committee shall be liable for any action or determination made in
good faith with respect to the Plan, any rule, regulation or procedure adopted
by it pursuant thereto or for any Awards granted hereunder. If a member of the
Board or Committee is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of anything done or not
done by him in such capacity under or with respect to the Plan, the Corporation
shall, subject to the requirements of applicable laws and regulations, indemnify
such member against all liabilities and expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in the best interests of the
Corporation and its Subsidiaries and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
4.05 COMPLIANCE WITH LAW AND REGULATIONS. All Awards granted hereunder
shall be subject to all applicable federal and state laws, rules and regulations
and to such approvals by any government or regulatory agency as may be required.
The Corporation shall not be required to issue or deliver any certificates for
shares of Common Stock prior to the completion of any registration or
qualification of or obtaining of consents or approvals with respect to such
shares under any federal or state law or any rule or regulation of any
government body, which the Corporation shall, in its sole discretion, determine
to be necessary or advisable. Moreover, no Option or Stock Appreciation Right
may be exercised if such exercise would be contrary to applicable laws and
regulations.
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4.06 RESTRICTIONS ON TRANSFER. The Corporation may place a legend upon any
certificate representing shares acquired pursuant to an Award granted hereunder
noting that the transfer of such shares may be restricted by applicable laws and
regulations.
ARTICLE V
ELIGIBILITY
Awards may be granted to such Employees of the Corporation and its
Subsidiaries as may be designated from time to time by the Committee. Awards may
not be granted to individuals who are not Employees of either the Corporation or
its Subsidiaries.
ARTICLE VI
COMMON STOCK COVERED BY THE PLAN
6.01 OPTION SHARES. The aggregate number of shares of Common Stock which
may be issued pursuant to this Plan, subject to adjustment as provided in
Article IX, shall be an amount equal to 1,020,390 shares. None of such shares
shall be the subject of more than one Award at any time (other than a Stock
Appreciation Right related to an Option), but if an Option as to any shares is
surrendered before exercise, or expires or terminates for any reason without
having been exercised in full, or for any other reason ceases to be exercisable,
the number of shares covered thereby shall again become available for grant
under the Plan as if no Awards had been previously granted with respect to such
shares. Notwithstanding the foregoing, if an Option is surrendered in connection
with the exercise of a Stock Appreciation Right, the number of shares covered
thereby shall not be available for grant under the Plan.
6.02 SOURCE OF SHARES. The shares of Common Stock issued under the Plan may
be authorized but unissued shares, treasury shares or shares purchased by the
Corporation on the open market or from private sources for use under the Plan.
ARTICLE VII
DETERMINATION OF AWARDS, NUMBER OF SHARES, ETC.
The Committee shall, in its discretion, determine from time to time which
Employees will be granted Awards under the Plan, the number of shares of Common
Stock subject to each Award, whether each Option will be an Incentive Stock
Option or a Non-Qualified Stock Option and the exercise price of an Option. In
making all such determinations, there shall be taken into account the duties,
responsibilities and performance of each respective Employee, his past, present
and potential contributions to the growth and success of the Corporation and the
Bank, his salary and such other factors as the Committee shall deem relevant to
accomplishing the purposes of the Plan.
ARTICLE VIII
OPTIONS AND STOCK APPRECIATION RIGHTS
Each Option granted hereunder shall be on the following terms and
conditions:
8.01 STOCK OPTION AGREEMENT. The proper Officers on behalf of the
Corporation and each Optionee shall execute a Stock Option Agreement which shall
set forth the total number of shares of Common Stock to which it pertains, the
exercise price, whether it is a Non-Qualified Option or an Incentive Stock
Option, and such other terms, conditions, restrictions and privileges as the
Committee in each instance shall deem appropriate, provided they are not
inconsistent
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with the terms, conditions and provisions of this Plan. Each Optionee shall
receive a copy of his executed Stock Option Agreement.
8.02 AWARDS TO EMPLOYEES. Awards pursuant to Article VIII hereof may be
made to such Employees as may be selected by the Committee and on such terms as
may be determined by the Committee. The Committee may but shall not be required
to request the written recommendation of the Chief Executive Officer of the
Corporation other than with respect to Awards to be granted to him.
Notwithstanding anything to the contrary contained herein, no Employee shall
have any right or entitlement to receive an Award hereunder, such Awards being
at the total discretion of the Committee.
8.03 OPTION EXERCISE PRICE.
(a) INCENTIVE STOCK OPTIONS. The per share price at which the subject
Common Stock may be purchased upon exercise of an Incentive Stock Option shall
be no less than one hundred percent (100%) of the Fair Market Value of a share
of Common Stock at the time such Incentive Stock Option is granted, except as
provided in Section 8.10(b).
(b) NON-QUALIFIED OPTIONS. The per share price at which the subject
Common Stock may be purchased upon exercise of a Non-Qualified Option shall be
no less than one hundred percent (100%) of the Fair Market Value of a share of
Common Stock at the time such Non-Qualified Option is granted.
8.04 VESTING AND EXERCISE OF OPTIONS.
(a) GENERAL RULES. Incentive Stock Options and Non-Qualified Options
to Employees granted hereunder shall become vested and exercisable at the rate,
to the extent and subject to such limitations as may be specified by the
Committee. Notwithstanding the foregoing, no vesting shall occur on or after an
Employee's employment with the Corporation and all Subsidiaries is terminated
for any reason other than as set forth in subsection (b) below. In determining
the number of shares of Common Stock with respect to which Options are vested
and/or exercisable, fractional shares will be rounded up to the nearest whole
number if the fraction is 0.5 or higher, and down if it is less.
(b) ACCELERATED VESTING. Unless the Committee shall specifically state
otherwise at the time an Option is granted, all Options granted under the Plan
shall become vested and exercisable in full on the date an Optionee terminates
his employment with or service to the Corporation or a Subsidiary because of his
death, Disability or Retirement. In addition, all options hereunder shall become
immediately vested and exercisable in full on the date an Optionee terminates
his employment with or service to the Corporation or a Subsidiary or as a result
of a Change in Control of the Corporation.
8.05 DURATION OF OPTIONS.
(a) GENERAL RULE. Except as provided in Sections 8.05(b) and 8.10,
each Option or portion thereof granted to Employees shall be exercisable at any
time on or after it vests and becomes exercisable until the earlier of (i) ten
(10) years after its date of grant or (ii) three (3) months after the date on
which the Optionee ceases to be employed by the Corporation and all
Subsidiaries, unless the Committee in its discretion decides at the time of
grant or thereafter to extend such period of exercise upon termination of
employment from three (3) months to a period not exceeding one (1) year.
(b) EXCEPTIONS. If an Employee dies while in the employ of the
Corporation or a Subsidiary or terminates employment with the Corporation or a
Subsidiary as a result of Disability or Retirement without having fully
exercised his Options, the Optionee or the executors, administrators, legatees
or distributees of his estate shall have the right, during the twelve-month
period following the earlier of his death or termination due to Disability or
Retirement,
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to exercise such Options. In no event, however, shall any Option be exercisable
more than ten (10) years from the date it was granted.
8.06 NONASSIGNABILITY. Options shall not be transferable by an Optionee
except by will or the laws of descent or distribution, and during an Optionee's
lifetime shall be exercisable only by such Optionee or the Optionee's guardian
or legal representative. Notwithstanding the foregoing, or any other provision
of this Plan, an Optionee who holds Non-Qualified Options may transfer such
Options to his or her spouse, lineal ascendants, lineal descendants, or to a
duly established trust for the benefit of one or more of these individuals.
Options so transferred may thereafter be transferred only to the Optionee who
originally received the grant or to an individual or trust to whom the Optionee
could have initially transferred the Option pursuant to this Section 8.06.
Options which are transferred pursuant to this Section 8.06 shall be exercisable
by the transferee according to the same terms and conditions as applied to the
Optionee.
8.07 MANNER OF EXERCISE. Options may be exercised in part or in whole and
at one time or from time to time. The procedures for exercise shall be set forth
in the written Stock Option Agreement provided pursuant to Section 8.01.
8.08 PAYMENT FOR SHARES. Payment in full of the purchase price for shares
of Common Stock purchased pursuant to the exercise of any Option shall be made
to the Corporation upon exercise of such Option. All shares sold under the Plan
shall be fully paid and nonassessable. Payment for shares may be made by the
Optionee (i) in cash or (ii) at the discretion of the Committee, by delivering
shares of Common Stock (including shares acquired pursuant to the exercise of an
Option) or other property equal in Fair Market Value to the purchase price of
the shares to be acquired pursuant to the Option, by withholding some of the
shares of Common Stock which are being purchased upon exercise of an Option, or
any combination of the foregoing. With respect to subclause (ii) hereof, the
Shares of Common Stock delivered to pay the purchase price must have either been
(x) purchased in open market transactions or (y) issued by the Corporation
pursuant to a plan thereof more than six months prior to the exercise date of
the Option.
8.09 VOTING AND DIVIDEND RIGHTS. No Optionee shall have any voting or
dividend rights or other rights of a stockholder in respect of any shares of
Common Stock covered by an Option prior to the time that the Option is exercised
and certificates representing the shares acquired pursuant to an exercise of
such Option have been issued and delivered.
8.10 ADDITIONAL TERMS APPLICABLE TO INCENTIVE STOCK OPTIONS. All Options
issued under the Plan as Incentive Stock Options will be subject, in addition to
the terms detailed in Sections 8.01 to 8.09 above, to those contained in this
Section 8.10.
(a) Notwithstanding any contrary provisions contained elsewhere in
this Plan and as long as required by Section 422 of the Code, the aggregate Fair
Market Value, determined as of the time an Incentive Stock Option is granted, of
the Common Stock with respect to which Incentive Stock Options are exercisable
for the first time by the Optionee during any calendar year under this Plan and
stock options that satisfy the requirements of Section 422 of the Code under any
other stock option plan maintained by the Corporation (or any parent or
Subsidiary), shall not exceed $100,000.
(b) LIMITATION ON TEN PERCENT STOCKHOLDERS. The price at which shares
of Common Stock may be purchased upon exercise of an Incentive Stock Option
granted to an individual who, at the time such Incentive Stock Option is
granted, owns, directly or indirectly, more than ten percent (10%) of the total
combined voting power of all classes of stock issued to stockholders of the
Corporation or any Subsidiary, shall be no less than one hundred and ten percent
(110%) of the Fair Market Value of a share of Common Stock of the Corporation at
the time of grant, and such Incentive Stock Option shall by its terms not be
exercisable after the earlier of the date determined under Sections 8.04 and
8.05 or the expiration of five (5) years from the date such Incentive Stock
Option is granted.
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(c) NOTICE OF DISPOSITION; WITHHOLDING; ESCROW. An Optionee shall
immediately notify the Corporation in writing of any sale, transfer, assignment
or other disposition (or action constituting a disqualifying disposition within
the meaning of Section 421 of the Code) of any shares of Common Stock acquired
through the exercise of an Incentive Stock Option and disposed of within two (2)
years after the grant of such Incentive Stock Option or within one (1) year
after the acquisition of such shares. Such notice shall set forth the date and
manner of disposition, the number of shares disposed of and the price at which
such shares were disposed of. The Corporation shall be entitled to withhold from
any compensation or other payments then or thereafter due to the Optionee such
amounts as may be necessary to satisfy any withholding requirements of federal
or state law or regulation and, further, to collect from the Optionee any
additional amounts which may be required for such purpose. The Committee may, in
its discretion, require shares of Common Stock acquired by an Optionee upon
exercise of an Incentive Stock Option to be held in an escrow arrangement for
the purpose of enabling compliance with the provisions of this Section 8.10(c).
8.11 STOCK APPRECIATION RIGHTS.
(a) GENERAL TERMS AND CONDITIONS. The Committee may, but shall not be
obligated to, authorize the Corporation, on such terms and conditions as it
deems appropriate in each case, to grant rights to Optionees to surrender an
exercisable Option, or any portion thereof, in consideration for the payment by
the Corporation of an amount equal to the excess of the Fair Market Value of the
shares of Common Stock subject to the Option, or portion thereof, surrendered
over the exercise price of the Option with respect to such shares (any such
authorized surrender and payment being hereinafter referred to as a "Stock
Appreciation Right"). Such payment, at the discretion of the Committee, may be
made in shares of Common Stock valued at the then Fair Market Value thereof, or
in cash, or partly in cash and partly in shares of Common Stock.
The terms and conditions set with respect to a Stock Appreciation Right may
include (without limitation), subject to other provisions of this Section 8.11
and the Plan, the period during which, date by which or event upon which the
Stock Appreciation Right may be exercised; the method for valuing shares of
Common Stock for purposes of this Section 8.11; a ceiling on the amount of
consideration which the Corporation may pay in connection with exercise and
cancellation of the Stock Appreciation Right; and arrangements for income tax
withholding. The Committee shall have complete discretion to determine whether,
when and to whom Stock Appreciation Rights may be granted.
(b) TIME LIMITATIONS. If a holder of a Stock Appreciation Right
terminates service with the Corporation as an Officer or Employee, the Stock
Appreciation Right may be exercised only within the period, if any, within which
the Option to which it relates may be exercised.
(c) EFFECTS OF EXERCISE OF STOCK APPRECIATION RIGHTS OR OPTIONS. Upon
the exercise of a Stock Appreciation Right, the number of shares of Common Stock
available under the Option to which it relates shall decrease by a number equal
to the number of shares for which the Stock Appreciation Right was exercised.
Upon the exercise of an Option, any related Stock Appreciation Right shall
terminate as to any number of shares of Common Stock subject to the Stock
Appreciation Right that exceeds the total number of shares for which the Option
remains unexercised.
(d) TIME OF GRANT. A Stock Appreciation Right granted in connection
with an Incentive Stock Option must be granted concurrently with the Option to
which it relates, while a Stock Appreciation Right granted in connection with a
Non-Qualified Option may be granted concurrently with the Option to which it
relates or at any time thereafter prior to the exercise or expiration of such
Option.
(e) NON-TRANSFERABLE. The holder of a Stock Appreciation Right may not
transfer or assign the Stock Appreciation Right otherwise than by will or in
accordance with the laws of descent and distribution, and during a holder's
lifetime a Stock Appreciation Right may be exercisable only by the holder.
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ARTICLE IX
ADJUSTMENTS FOR CAPITAL CHANGES
The aggregate number of shares of Common Stock available for issuance under
this Plan, the number of shares to which any Award relates, the exercise price
per share of Common Stock under any Option and the maximum number of Awards
which may be granted to any Employee shall be proportionately adjusted for any
increase or decrease in the total number of outstanding shares of Common Stock
issued subsequent to the Offering resulting from a split, subdivision or
consolidation of shares or any other capital adjustment, the payment of a stock
dividend, or other increase or decrease in such shares effected without receipt
or payment of consideration by the Corporation. If, upon a merger,
consolidation, reorganization, liquidation, recapitalization or the like of the
Corporation, the shares of the Corporation's Common Stock shall be exchanged for
other securities of the Corporation or of another corporation, each recipient of
an Award shall be entitled, subject to the conditions herein stated, to purchase
or acquire such number of shares of Common Stock or amount of other securities
of the Corporation or such other corporation as were exchangeable for the number
of shares of Common Stock of the Corporation which such optionees would have
been entitled to purchase or acquire except for such action, and appropriate
adjustments shall be made to the per share exercise price of outstanding
Options. In the event the Corporation declares a special cash dividend or return
of capital in an amount per share which exceeds 10% of the Fair Market Value of
a share of Common Stock as of the date of declaration, the per share exercise
price of all previously granted Options which remain unexercised as of the date
of such declaration shall be proportionately adjusted to give effect to such
special cash dividend or return of capital as of the date of payment of such
special cash dividend or return of capital; provided, however, that if such
adjustment with respect to Incentive Stock Options would be treated as a
modification of the outstanding Incentive Stock Options with the effect that,
for purposes of Sections 422 and 424(h) of the Code and the rules and
regulations thereunder, new Incentive Stock Options would be deemed to be
granted, then no adjustment to the per share exercise price of outstanding
Incentive Stock Options shall be made.
ARTICLE X
DEFERRED PAYMENTS
10.01 DEFERRAL OF OPTIONS AND STOCK APPRECIATION RIGHTS. Notwithstanding
any other provision of this Plan, any Optionee may elect, with the concurrence
of the Committee and consistent with any rules and regulations established by
the Committee, to defer the delivery of the proceeds of the exercise of any
Non-Qualified Option.
10.02 TIMING OF ELECTION. The election to defer the delivery of the
proceeds from any eligible Non-Qualified Option or Stock Appreciation Right must
be made at least six (6) months prior to the date such Option or Stock
Appreciation Right is exercised or at such other time as the Committee may
specify. Deferrals of eligible Non-Qualified Options or Stock Appreciation
Rights shall only be allowed for exercises of Options and Stock Appreciation
Rights that occur while the Optionee or holder of the Stock Appreciation Right,
as the case maybe, is in active employment with the Corporation or its
Subsidiaries. Any election to defer the proceeds from an eligible Non-Qualified
Option or Stock Appreciation Right shall be irrevocable.
10.03 STOCK OPTION DEFERRAL. The deferral of the proceeds of Non-Qualified
Options may be elected by an Optionee subject to the rules and regulations
established by the Committee. The proceeds from such an exercise shall be
credited to a deferred stock option account established for the Optionee (which
may be part of an existing deferred compensation trust account). The proceeds
shall be credited to the deferred stock option account as a number of deferred
shares or share units equivalent in value to those proceeds. Deferred share
units shall be valued at the Fair Market Value on the date of exercise.
Subsequent to exercise, the deferred shares or share units shall be valued at
the Fair Market Value of Common Stock. Deferred share units shall accrue
dividends at the rate paid upon the Common Stock credited in the form of
additional deferred share units. Deferred shares or share units shall be
distributed in shares of Common Stock or cash, at the discretion of the
Committee, upon the Employee's termination of employment or at such other date,
as may be approved by the Committee, over a period of no more than ten (10)
years.
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10.04 STOCK APPRECIATION RIGHT DEFERRAL. The deferral of the proceeds of
Stock Appreciation Rights may be made by a holder of Stock Appreciation Rights
subject to the rules and regulations established by the Committee. Upon
exercise, the Committee will credit such Employee's deferred stock option
account with a number of deferred shares or share units equivalent in value to
the difference between the Fair Market Value of a share of Common Stock on the
exercise date and the exercise Price of the Stock Appreciation Right multiplied
by the number of shares exercised. Deferred shares or share units shall be
valued at the Fair Market Value on the date of exercise. Subsequent to exercise,
the deferred shares or share units shall be valued at the Fair Market Value of
Common Stock. Deferred shares or share units shall accrue dividends at the rate
paid upon the Common Stock credited in the form of additional deferred shares or
share units. Deferred shares or share units shall be distributed in shares of
Common Stock or cash, at the discretion of the Committee, upon the Participant's
termination of service or at such other date, as may be approved by the
Committee, over a period of no more than ten (10) years.
10.05 ACCELERATED DISTRIBUTIONS. The Committee may, at its sole discretion,
allow for the early payment of an Employee's deferred stock option account in
the event of an "unforeseeable emergency" or in the event of the death or
Disability of the Employee. An "unforeseeable emergency" means an unanticipated
emergency caused by an event beyond the control of the Employee that would
result in severe financial hardship if the distribution were not permitted. Such
distributions shall be limited to the amount necessary to sufficiently address
the financial hardship. Any distributions under this provision, shall be
consistent with the Code and the regulations promulgated thereunder.
Additionally, the Committee may use its discretion to cause stock option
deferral accounts to be distributed when continuing the program is no longer in
the best interest of the Corporation.
10.06 ASSIGNABILITY. No rights to deferred stock option accounts may be
assigned or subject to any encumbrance, pledge or charge of any nature except
that an Optionee may designate a beneficiary pursuant to any rules established
by the Committee.
10.07 UNFUNDED STATUS. No Employee or other person shall have any interest
in any fund or in any specific asset of the Corporation or its Subsidiaries by
reason of any amount credited pursuant to the provisions hereof. Any amounts
payable pursuant to the provisions hereof shall be paid from the general assets
of the Corporation or its Subsidiaries and no Employee or other person shall
have any rights to such assets beyond the rights afforded general creditors of
the Corporation or its Subsidiaries. However, the Corporation or its
Subsidiaries shall have the right to establish a reserve, trust or make any
investment for the purpose of satisfying the obligations created under this
Article X of the Plan; provided, however, that no Employee or other person shall
have any interest in such reserve, trust or investment.
ARTICLE XI
AMENDMENT AND TERMINATION OF THE PLAN
The Board may, by resolution, at any time terminate or amend the Plan with
respect to any shares of Common Stock as to which Awards have not been granted,
subject to any applicable regulatory requirements and any required stockholder
approval or any stockholder approval which the Board may deem to be advisable
for any reason, such as for the purpose of obtaining or retaining any statutory
or regulatory benefits under tax, securities or other laws or satisfying any
applicable stock exchange listing requirements. The Board may not, without the
consent of the holder of an Award, alter or impair any Award previously granted
or awarded under this Plan as specifically authorized herein.
ARTICLE XII
EMPLOYMENT RIGHTS
Neither the Plan nor the grant of any Awards hereunder nor any action taken
by the Committee or the Board in connection with the Plan shall create any right
on the part of any Employee of the Corporation or a Subsidiary to continue in
such capacity.
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ARTICLE XIII
WITHHOLDING
13.01 TAX WITHHOLDING. The Corporation may withhold from any cash payment
made under this Plan sufficient amounts to cover any applicable withholding and
employment taxes, and if the amount of such cash payment is insufficient, the
Corporation may require the Optionee to pay to the Corporation the amount
required to be withheld as a condition to delivering the shares acquired
pursuant to an Award. The Corporation also may withhold or collect amounts with
respect to a disqualifying disposition of shares of Common Stock acquired
pursuant to the exercise of an Incentive Stock Option, as provided in Section
8.10(c), or with respect to the exercise of a Stock Appreciation Right.
13.02 METHODS OF TAX WITHHOLDING. The Committee is authorized to adopt
rules, regulations or procedures which provide for the satisfaction of an
Optionee's tax withholding obligation by the retention of shares of Common Stock
to which the Employee would otherwise be entitled pursuant to an Award and/or by
the Optionee's delivery of previously-owned shares of Common Stock or other
property.
ARTICLE XIV
EFFECTIVE DATE OF THE PLAN; TERM
14.01 EFFECTIVE DATE OF THE PLAN. This Plan shall become effective on the
Effective Date, and Awards may be granted hereunder as of or after the Effective
Date and prior to the termination of the Plan, provided that no Incentive Stock
Option issued pursuant to this Plan shall qualify as such unless this Plan is
approved by the requisite vote of the holders of the outstanding voting shares
of the Corporation at a meeting of stockholders of the Corporation held within
twelve (12) months of the Effective Date.
14.02 TERM OF PLAN. Unless sooner terminated, this Plan shall remain in
effect for a period of ten (10) years ending on the tenth anniversary of the
Effective Date. Termination of the Plan shall not affect any Awards previously
granted, and such Awards shall remain valid and in effect until they have been
fully exercised or earned, are surrendered or by their terms expire or are
forfeited.
ARTICLE XV
STOCKHOLDER APPROVAL
The Corporation shall submit the Plan to stockholders for approval at a
meeting of stockholders of the Corporation held within twelve (12) months
following the Effective Date in order to meet the requirements of (i) Section
422 of the Code and regulations thereunder and (ii) Section 162(m) of the Code
and regulations thereunder.
ARTICLE XIV
MISCELLANEOUS
16.01 GOVERNING LAW. To the extent not governed by federal law, this Plan
shall be construed under the laws of the State of California.
16.02 PRONOUNS. Wherever appropriate, the masculine pronoun shall include
the feminine pronoun, and the singular shall include the plural.
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REVOCABLE PROXY
PBOC HOLDINGS, INC.
ANNUAL MEETING OF STOCKHOLDERS
April 26, 1999
The undersigned, being a stockholder of PBOC Holdings, Inc. (the "Company")
as of March 9, 1999, hereby authorizes Rudolf P. Guenzel and Robert MacDonald or
any successors thereto as proxies with full powers of substitution, to represent
the undersigned at the Annual Meeting of Stockholders of the Company to be held
at the Hotel Nikko, located at 465 South La Cienega Boulevard, Los Angeles,
California, on Monday, April 26, 1999 at 9:30 a.m., Pacific Time, and at any
adjournment of said meeting, and thereat to act with respect to all votes that
the undersigned would be entitled to cast, if then personally present, as
follows:
1. ELECTION OF DIRECTORS
Nominees for a three-year term expiring 2002: John F. Davis
Murray Kalis
/ / FOR / / WITHHOLD
AUTHORITY
NOTE: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
MARK "FOR ALL EXCEPT" AND WRITE THAT NOMINEE'S NAME IN
THE SPACE PROVIDED BELOW. UNLESS AUTHORITY TO VOTE FOR
ALL OF THE FOREGOING NOMINEES IS WITHHELD, THIS PROXY
WILL BE DEEMED TO CONFER AUTHORITY TO VOTE FOR EACH
NOMINEE WHOSE NAME IS NOT WRITTEN BELOW.
_______________________________________________
2. PROPOSAL to adopt the 1999 Stock Option Plan.
/ / FOR / / AGAINST / / ABSTAIN
3. PROPOSAL to ratify the appointment of the Board of Directors of KPMG
LLP as the Company's independent auditors for the fiscal year ending
December 31, 1999.
/ / FOR / / AGAINST / / ABSTAIN
<PAGE>
4. PROPOSAL, if necessary, to adjourn the Annual Meeting to solicit
additional proxies.
/ / FOR / / AGAINST / / ABSTAIN
5. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE
COMPANY FOR USE AT THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 26,
1999 AND AT ANY ADJOURNMENT THEREOF.
SHARES OF THE COMPANY'S COMMON STOCK WILL BE VOTED AS SPECIFIED. IF
RETURNED, BUT NOT OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE ELECTION
OF THE BOARD OF DIRECTORS' NOMINEES TO THE BOARD OF DIRECTORS, FOR THE 1999
STOCK OPTION PLAN, FOR RATIFICATION OF THE COMPANY'S INDEPENDENT AUDITORS, TO
ADJOURN, IF NECESSARY, THE ANNUAL MEETING TO SOLICIT ADDITIONAL PROXIES AND
OTHERWISE AT THE DISCRETION OF THE PROXIES. YOU MAY REVOKE THIS PROXY AT ANY
TIME PRIOR TO THE TIME IT IS VOTED AT THE ANNUAL MEETING.
PLEASE BE SURE TO SIGN AND DATE THIS PROXY
IN THE SPACE BELOW.
Date:________________ , 1999
-----------------------
(SIGNATURE)
PLEASE SIGN ABOVE EXACTLY AS YOUR NAME(S) APPEAR(S) ON THIS
PROXY. WHEN SIGNING IN A REPRESENTATIVE CAPACITY, PLEASE GIVE FULL
TITLE. WHEN SHARES ARE HELD JOINTLY, ONLY ONE HOLDER NEED SIGN.
PLEASE ACT PROMPTLY. SIGN, DATE AND MAIL YOUR PROXY CARD TODAY.
