<PAGE>
As Filed with the Securities & Exchange Commission on August , 1999
SECURITIES & EXCHANGE COMMISSION
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended June 30, 1999.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the transition period from _______________ to
________________
SEC File Number: 0-30106
---------------
PACIFIC CONTINENTAL CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
OREGON 93-1269184
- ------------------------------ ----------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
111 West 7th Avenue
Eugene, Oregon 97401
(address of Principal Executive Offices) (Zip Code)
(541) 686-8685
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. [X] Yes [ ] No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date:
Common Stock, $1.00 par value, outstanding as of July 31, 1999: 4,831,140
---------------
Page 1
<PAGE>
PACIFIC CONTINENTAL CORPORATION
FORM 10-Q
QUARTERLY REPORT
TABLE OF CONTENTS
---------------
<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION Page
<S> <C> <C>
Item 1. Financial Statements
Consolidated Statements of Income: 3
Six months ended June 30, 1999, and June 30, 1998
Consolidated Statements of Comprehensive Income
Six months ended June 30, 1999 and June 30, 1998 4
Consolidated Balance sheets: 5
June 30, 1999, December 31, 1998 and June 30, 1998
Consolidated Statements of Cash Flows: 6
Six months ended June 30, 1999 and June 30, 1998
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial 8
Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk 12
PART II OTHER INFORMATION
Item 1. Legal Proceedings none
Item 2. Changes in Securities none
Item 3. Defaults Upon Senior Securities none
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information none
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 14
</TABLE>
Page 2
<PAGE>
PART I
Item 1. Financial Statements
CONSOLIDATED STATEMENTS OF INCOME
Amounts in $1,000's
(Unaudited)
<TABLE>
<CAPTION>
Quarter ended June 30, Year to date June 30,
1999 1998 1999 1998
---------------------------- ---------------------------
<S> <C> <C> <C> <C>
Interest income
Interest and fees on loans $5,004 $4,439 $ 9,798 $8,505
Interest on investment securities 499 473 1,005 1,016
Interest on federal funds sold 9 23 15 36
---------------------------- ---------------------------
5,512 4,935 10,818 9,557
---------------------------- ---------------------------
Interest expense
Interest on deposits 1,337 1,256 2,655 2,512
Interest on borrowings 241 201 509 411
---------------------------- ---------------------------
1,578 1,457 3,164 2,923
---------------------------- ---------------------------
Net interest income 3,934 3,478 7,654 6,634
Provision for possible loan losses 200 210 500 410
---------------------------- ---------------------------
Net interest income after provision 3,734 3,268 7,154 6,224
---------------------------- ---------------------------
Noninterest income
Service charges on deposit accounts 217 197 455 373
Other fee income, principally bankcard 372 254 666 492
Loan servicing fees 150 66 296 150
Mortgage banking income and gains
on loan sales 310 519 567 822
Gain on sale of securities 16 0 16 6
Other noninterest income 56 66 118 104
---------------------------- ---------------------------
1,121 1,102 2,118 1,947
---------------------------- ---------------------------
Noninterest expense
Salaries and employee benefits 1,387 1,226 2,706 2,349
Premises and equipment 315 286 617 566
Bankcard processing 263 199 479 338
Business development 180 195 342 318
Other noninterest expense 486 452 929 864
---------------------------- ---------------------------
2,631 2,358 5,073 4,435
---------------------------- ---------------------------
Income before income taxes 2,224 2,012 4,199 3,736
Provision for income taxes 859 760 1,619 1,436
---------------------------- ---------------------------
Net income $1,365 $1,252 $ 2,580 $2,299
---------------------------- ---------------------------
</TABLE>
Page 3
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Earnings per share
Basic $0.28 $0.27 $0.54 $0.49
---------------------------- ---------------------------
Diluted 0.28 0.26 0.53 0.48
---------------------------- ---------------------------
Weighted average shares outstanding
Basic 4,829 4,720 4,818 4,683
Common stock equivalents
attributable to stock options 44 137 44 137
---------------------------- ---------------------------
Diluted 4,873 4,857 4,862 4,820
---------------------------- ---------------------------
</TABLE>
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Amounts in $1,000's
(Unaudited)
<TABLE>
<CAPTION>
Quarter ended Year to date
June 30, June 30,
1999 1998 1999 1998
----------------------- -------------------------
<S> <C> <C> <C> <C>
Net income $1,365 $1,252 $2,580 $2,299
----------------------- -------------------------
Unrealized gains (losses) on Investment Securities
Unrealized gains (losses) arising during the
period (304) (15) (466) 31
Reclassification for (gains) losses included in
statement of income (16) 0 (16) (6)
----------------------- -------------------------
(320) (15) (482) 25
Income tax (expense) benefit 123 6 185 (7)
----------------------- -------------------------
Net unrealized gains (losses) on securities
available for sale (197) (9) (297) 18
----------------------- -------------------------
Comprehensive Income $1,168 $1,243 $2,283 $2,310
----------------------- -------------------------
</TABLE>
Page 4
<PAGE>
CONSOLIDATED BALANCE SHEETS
Amounts in $1,000's
(Unaudited)
<TABLE>
<CAPTION>
June 30, December, 31, June 30,
1999 1998 1998
----------------------------------------------------------
<S> <C> <C> <C>
Assets
Cash and due from banks $ 11,692 $ 10,635 $ 10,700
Federal funds sold 618 355 487
----------------------------------------------------------
Total cash and cash equivalents 12,310 10,990 11,187
Investment securities 31,108 31,130 24,853
Loans, less allowance for loan losses 193,772 185,450 156,636
Federal home loan bank stock 2,079 2,004 1,929
Property, net of accumulated depreciation 11,040 10,716 8,942
Interest receivable 1,362 1,309 1,222
Other assets 1,067 345 992
----------------------------------------------------------
Total assets 252,738 241,944 205,761
----------------------------------------------------------
Liabilities and stockholders' equity
Deposits
Noninterest-bearing demand 59,241 56,556 47,197
Savings and interest-bearing checking 104,199 81,090 76,245
Time 46,990 56,683 45,036
----------------------------------------------------------
210,430 194,329 168,478
Federal funds purchased 1,800 8,600 2,000
Other borrowings 11,000 11,000 9,000
Accrued interest and other payables 535 849 1,514
Other liabilities 68 40 46
----------------------------------------------------------
Total liabilities 223,833 214,818 181,038
----------------------------------------------------------
Stockholders' equity
Common stock 19,601 19,376 18,917
Retained earnings 9,509 7,658 5,760
Accumulated other comprehensive income (205) 92 46
----------------------------------------------------------
Total stockholders' equity 28,905 27,126 24,723
----------------------------------------------------------
$252,738 $241,944 $205,761
----------------------------------------------------------
</TABLE>
Page 5
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Amounts in $1,000's
(Unaudited)
<TABLE>
<CAPTION>
For six months ended June 30,
1999 1998
------------------- -------------------
<S> <C> <C>
Cash flows from operating activity:
Net income $ 2,580 $ 2,299
Adjustments to reconcile net income to net cash provided
By operating activities
Depreciation 368 285
Amortization 77 91
Provision for loan losses 500 410
Deferred income taxes (158) 125
Origination of loans held for sale (20,158) (21,949)
Proceeds from sale of loans held for sale 19,743 24,142
Gain on sales of loans (224) (553)
Gain on sales of securities (16) (6)
Stock dividends from federal home loan bank (75) (72)
Change in interest receivable and other assets (775) (419)
Change in payables and other liabilities (287) 877
Other adjustments (204) (108)
------------------- -------------------
Net cash provided by operating activities 1,371 5,122
------------------- -------------------
Cash flows from investing activities
Change in investment securities (39) 5,440
Loans made net of principal collections (11,931) (22,089)
Proceeds from sales of loans 3,748 7,605
Purchase of loans - -
Purchase of property (693) (1,591)
------------------- -------------------
Net cash used in investing activities (8,915) (10,635)
------------------- -------------------
Cash flows from financing activities
Net increase in deposits 16,102 1,183
Increase (decrease) in fed funds purchased (6,800) (5,150)
Increase (decrease) in other borrowings - 6,000
Proceeds from stock options exercised 190 736
Dividends paid, net of reinvestment (628) (322)
------------------- -------------------
Net cash provided by financing activities 8,864 2,447
------------------- -------------------
Net increase (decrease) in cash and cash equivalents 1,320 (3,066)
Cash and cash equivalents, beginning of period 10,990 14,253
------------------- -------------------
Cash and cash equivalents, end of period $ 12,310 $ 11,187
------------------- -------------------
</TABLE>
Page 6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
A complete set of Notes to Consolidated Financial Statements is a part of the
Annual Report to Shareholders for the period ended December 31, 1998, included
as exhibit 13 within the Bank's Form 10-K filed with the Federal Deposit
Insurance Corporation ("FDIC") on March 30, 1999. The notes below are included
for Pacific Continental Bank (the "Bank") because of material changes in the
financial statements or to provide the reader with additional information not
otherwise available.
Holding Company Reorganization. Effective June 7, 1999, the bank completed its
reorganization and formation of a bank holding company, Pacific Continental
Corporation (the "Company"). At that time, the Bank ceased reporting under the
Securities Exchange Act of 1934 with the FDIC, and the Company became the
successor registrant reporting with the SEC. The reorganization was accounted
for as a pooling of interests and required no restatement of previously reported
income.
Allowance for Loan Losses
<TABLE>
<CAPTION>
1999
-----------------
<S> <C>
Balance, December 31, 1998 $2,070
Provision charged to income 500
Loans charged off 103
Recoveries credited to allowance 11
-----------------
Balance, June 30, 1999 $2,478
-----------------
</TABLE>
Net charge offs were $54 in the second quarter 1999 and $38 in the first quarter
of 1999. This compares to net charge offs of $18 in the second quarter of 1998
and $11 in the first quarter of 1998. Through June 30, 1999 net charge offs were
0.05% of average loans compared to 0.02% at June 30, 1998.
Below is a summary of nonaccrual loans, loans past due 90 days or more and still
accruing interest, and other real estate owned for the periods covered in this
report:
<TABLE>
<CAPTION>
June 30, 1999 December 31, 1998 June 30, 1998
------------- ----------------- -------------
<S> <C> <C> <C>
Nonaccrual loans $824 $873 $475
90 days past due and accruing interest $149 $247 $ 92
Other real estate owned $129 $ 0 $ 0
</TABLE>
Stock Option Plans
The Bank has an Employee Stock Option Plan and a Nonemployee Director Stock
Option Plan that have subsequently been adopted by the Company that reserves
shares of stock for issuance to executives, employees and directors. Information
with respect to options granted under the stock option plans, adjusted for stock
splits and dividends, is as follows:
<TABLE>
<CAPTION>
1999
-------------------------------------------------
Options Average price
outstanding per share
-------------------------------------------------
<S> <C> <C>
Balance, December 31, 1998 201 $11.05
Grants - -
Exercised 28 7.79
-------------------------------------------------
Balance, June 30, 1999 173 $11.59
</TABLE>
Page 7
<PAGE>
Outstanding options at June 30, 1999 are as follows:
<TABLE>
<CAPTION>
Shares Price per share Expiration
- --------------------------------------------------------------------------------------------
<S> <C> <C>
84 9.12 May, 2001
63 9.66 April, 2002
26 24.22 June, 2003
</TABLE>
Item 2. Management's Discussion And Analysis Of Financial Condition And
Results Of Operation
The following discussion contains a review of the Company's operating results
and financial condition for the second quarter and year to date for 1999. When
appropriate, comparisons are made to the same period in 1998 and to the previous
year ended December 31, 1998. The discussion should be read in conjunction with
the financial statements (unaudited) contained elsewhere in this report. The
reader is assumed to have access to the Bank's Form 10-K as filed with the FDIC
for the previous year ended December 31, 1998, which contains additional
statistics and explanations. All numbers, except per share data, are expressed
in thousands of dollars.
This discussion may contain certain forward-looking statements, which are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Such statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from those
stated. Readers are cautioned not to place undue reliance on these forward-
looking statements.
Highlights
Net income in the second quarter 1999 was $1,365 an increase of 9% over second
quarter 1998 income of $1,252. Return on average assets and return on average
equity in the current quarter were 2.20% and 18.82% respectively as compared to
2.44% and 20.75% in the same quarter one year ago.
For the first six months of 1999 the Company earned $2,580 a 12% increase over
six month 1998 earnings of $2,299. Per share earnings on a diluted basis for the
first six months of 1999 and 1998 were $0.53 and $0.48, respectively. Comparing
the first six months of 1999 to the same period in 1998, return on average
assets was 2.12% and 2.27%, while return on average equity decreased to 18.20%
from 19.77%.
At June 30, 1999 total assets were $252,738 or 4% more than December 31, 1998
and 23% more than June 30, 1998.
On June 7, 1999, the Bank opened its ninth banking office in Tualatin, Oregon.
Effective also on this date, the bank completed its reorganization and formation
of a bank holding company. The Bank has also received regulatory approval to
open its tenth banking office later this year on West 11th Avenue in Eugene,
Oregon. The West 11th office will open in the fall of 1999.
Results of Operations
Net Interest Income
Net interest income is the primary source of the Company's revenue. Net interest
income is the difference between interest earned on earning assets and interest
paid on paying liabilities. Net interest income as a percent of average earning
assets is referred to as the interest margin. The interest margin can be
examined more closely by considering the interest income and interest expense
components separately.
For the quarter ended June 30, 1999, net interest income, prior to the provision
for loan loss, totaled $3,934 a 13% increase from the same period in 1998.
Average earning assets increased 22%. Net interest income
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<PAGE>
for the current quarter as a percent of earning assets was 6.94% down from 7.46%
for the same period in 1998. The yield on earning assets declined 0.87%
primarily due to lower loan fees and slightly lower loan yields while the Bank's
cost of funds fell only 0.35% as interest bearing deposits repriced more slowly
than loans. A significant portion of the Company's loan portfolio is variable
rate tied to the prime-lending rate. The 0.75% drop in prime in late 1998
reduced yields on these loans as compared to the same period last year. The
decline in loan fees is primarily due to competitive pressures in the Company's
major markets.
Net interest income for the first six months showed similar results. For the
first six months of 1999, net interest income, prior to the provision for loan
loss, totaled $7,654, an increase of 15% from the same period in 1998. Year-to-
date average earning assets increased 21% as compared to the same period in
1998. However, net interest income as a percent of earning assets declined from
7.21% in 1998 to 6.89% in 1999. This decline results from loan yields falling at
a faster rate than interest bearing liabilities. Net interest income for the
first six months of 1999 was $1,020 higher than the same period in 1998. A rate
volume analysis indicates that net interest income increased by $1,412 due to
higher volumes which was offset by a decline in net interest income of $392 due
to lower rates.
Noninterest Income
Year-to-date noninterest income of $2,118 was up 9% over 1998 noninterest income
for the same time period. Three categories of noninterest income showed
significant growth. Service charges on deposit accounts increased $82 or 22% due
to higher levels of accounts and price changes, which took effect in the fourth
quarter 1998. The Company also continued to be successful in expanding its
merchant banking activity. Revenues in this category increased by $174 or 35%
when compared to the first six months of 1998.
Loan servicing income of $296 through June 30, 1999 is nearly twice as high as
1998 levels resulting from loan sales and participations that occurred in the
second half of 1998. The growth in noninterest income in these three categories
was offset by a decline of $255 in gains on loan sales and mortgage-banking
income. The Company continued to be very successful in generating government
guaranteed loans. Through June 30, 1999 the Bank originated $7,423 of government
guaranteed Small Business Administration loans. This compares to $4,268
originated during the same period in 1998. However, due to the deposit growth
experienced in the first half of the year, the Company elected to hold more of
the government guaranteed loans in its loan portfolio rather than selling them.
Holding more guaranteed loans combined with slightly lower premiums on sales of
such loans has resulted in gains on loan sales dropping from $405 in 1998 to
$264 in 1999. Year-to-date 1999 mortgage-banking revenues have declined by $85
from $388 to $303. Higher interest rates in 1999 have slowed refinancing
activity reducing originations of mortgage loans during the first six months by
$3,973 thus reducing mortgage banking revenues.
Noninterest Expense
Year-to-date June 30, 1999 noninterest expense increased $638 or 14% from the
same period in 1998. Two expense categories accounted for $408 or 64% of the
total dollar increase in expenses. Salaries and employee benefits through the
first six months of 1999 increased $357 or 15% over the same period in 1998.
Premises and equipment expenses increased $51 or 9% over 1998. The increase in
both of these categories results from the opening of two new offices. The
Gateway Office in Springfield, Oregon opened in September 1998 and the Tualatin
Office in Tualatin, Oregon opened in June 1999. Staff increases and
corresponding salaries and benefits increases were the result of staffing these
two new offices. Merchant banking processing expenses were also up $141 or 42%
which corresponds directly with the revenue increase discussed above.
Liquidity
The Company derives liquidity through the growth of core deposits and the
maturity of investment securities and loans. Core deposits include demand,
interest checking, money market, savings and local
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<PAGE>
time deposits. In addition, the Bank sells or participates loans to other
financial institutions. Additional liquidity is provided through access to
national CD markets, public deposits and both secured and unsecured borrowings.
In 1999 the Company has experienced strong growth in core deposits that
alleviated seasonal funding pressures typically experienced in the first half of
the year. Total deposits at June 30, 1999 are $16,102 or 8% higher than December
31, 1998 deposits and are $41,953 or 25% higher than June 30, 1998 deposits.
This has resulted in less reliance on funding from national CD markets and
public deposits. It has also reduced the level of loan sales and loan
participations in 1999 compared to 1998. Through the first six months of 1999,
the Company has sold or participated $3,748 in loans compared to $7,605 during
the same period in 1998. Core deposits at June 30, 1999 represent 89% of total
deposits compared to 86% of total deposits at June 30, 1998.
Capital Resources
Capital is the shareholder's investment in the Company. Capital grows through
the retention of earnings and the issuance of new stock. Capital formation
allows the Company to grow assets and provides flexibility in times of
adversity.
The Company's capital as a percent of total period end assets declined slightly
to 11.64% at June 30, 1999 from 11.92% in 1998. Fewer stock options exercised
and the suspension of the dividend reinvestment program in January 1999 resulted
in slower growth in capital relative to total assets. The Company is subject to
various regulatory capital requirements administered by Federal regulators. The
following schedlule shows that the Company is considered "well capitalized"
under regulatory guidelines.
<TABLE>
<CAPTION>
Regulatory Guidelines
------------------------------------------------------
At 6/30/99 Adequate Well Capitalized
---------------------- ---------- ------------------
<S> <C> <C> <C>
Total capital to risk based assets 14.75% 8.00% 10.00%
Tier 1 capital to risk based assets 13.59% 4.00% 6.00%
</TABLE>
Expected earnings are considered sufficient to meet all anticipated capital
expenditures and any expenditures related to the year 2000 project. The Bank has
received regulatory approval to open a new office on West 11th Avenue in Eugene,
Oregon. Construction is expected to commence in October 1999.
Subsequent to the end of the second quarter, on July 6, 1999, the Company
announced the implementation of a stock repurchase plan. Pursuant to the plan,
the Company is authorized to purchase up to 240,000 shares of its issued and
outstanding common stock, adjusted for any stock splits or stock dividends,
through the Nasdaq OTC Bulletin Board, as determined by the officers of the
Company, at a per share price not to exceed $18.
Year 2000
The year 2000 presents a unique problem for all software and hardware users. The
"Y2K" problem results from the use of only 2 digits to represent the year in
many computer programs. Therefore these computer programs do not properly
recognize a year that begins with "20" instead of the familiar "19." If not
corrected, many computer applications could fail or create erroneous results.
The global extent of the Y2K problem is not yet known and it is prudent for all
companies to evaluate their exposure and to work towards mitigating any harmful
results.
The Company has identified several areas of potential concern, these being
computer operations, third party processors, client preparedness, and the need
for Y2K liquidity reserves.
The Company relies heavily on computers to process its daily work and to
maintain client records for loans and deposits. The Company has a wide area
network used for word processing, internal communications, loan document
preparation, and spreadsheet applications. The Company processes daily postings
of loan
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<PAGE>
and deposit information using an "in-house" software and hardware solution. The
Company also utilizes a number of third party vendors for the processing of
various transactions such as automated teller, automated clearinghouse, and
bankcard transactions.
The Company is also exposed to the degree that its clients are prepared for Y2K.
The client's ability to continue servicing their debts can, in many cases, be
dependent on their ability to process work for themselves and from their third
party vendors.
At this point liquidity needs are not known. Besides the day-to-day liquidity
needed to operate the Company there is a concern that additional liquidity may
be required to fund cash withdrawals of worried depositors.
The Company has established a detailed plan to prepare for the year 2000. The
Federal Financial Institutions Examination Counsel (FFIEC) has made
recommendations to the financial community for preparing for Y2K. The Company
has incorporated their suggestions and timelines within its Y2K plan. The plan
has five distinct phases, these being: awareness, assessment, renovation,
validation, and implementation. The following table shows the Company's progress
in each of these phases.
<TABLE>
<CAPTION>
Phase FFIEC mandated Bank's date of Comments
date completion
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Awareness 06-30-1998 09-30-1997 Established Y2K Team
- ----------------------------------------------------------------------------------------------------------------
Assessment 09-01-1998 03-01-1998 The assessment phase was conducted with the help
of a consultant. The software vendor assessed
core-processing systems.
- ----------------------------------------------------------------------------------------------------------------
Renovation 12-31-1998 09-30-1998 Renovation is now complete. All hardware has been
upgraded or replaced. All required software has
been purchased and installed.
- ----------------------------------------------------------------------------------------------------------------
Validation 03-31-1999 01-31-1999 The Company's wide area network and software used
throughout the network has been validated. The
Company completed testing recently released
versions of its core banking software for loan and
deposit processing and its check processing
software.
- ----------------------------------------------------------------------------------------------------------------
Implementation 06-30-1999 03-31-1999 Completed testing all of the Company's "Mission
Critical" hardware and software. Developed a
viable contingency plan.
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
As the table above shows the Company has successfully completed the five phases
outlined by the FFIEC. Work commenced on the Year 2000 date change in 1997.
Testing all of our internal systems has been completed, and the Company feels
confident all systems will be fully functional in the year 2000. The Company is
working with our third party suppliers to encourage, aid, and monitor their
progress. Contingency plans are in place as parts of our strategy to ensure
minimal inconvenience to our clients come January 1, 2000. The Company spent
approximately $220 for the Y2K problem. This expense was allocated among
consultants, hardware upgrades, and software enhancements. In some cases
remediation of the problem resulted in an escalation of hardware and software
replacement.
The Company has held a number of Y2K seminars, which were well attended by
clients and the community. The Company has identified which clients represent
the most exposure to the Company and has a systematic calling program in place
to assess the client's degree of preparedness. The results of these calls will
help the Company determine the amount of exposure to the loan portfolio and to
the liquidity needs of the Company. To date the Company has not made any Y2K
specific loan loss reserve allocation.
Page 11
<PAGE>
The Company has formulated plans to increase liquidity for the Y2K event. Such
plans include additional lines of credit with various lenders including the
Federal Reserve, the Federal Home Loan Bank and correspondent banks. The Company
presently has in excess of $80,000 in overnight or term credit available. In
addition the Company will consider asset sales and out of area liability
acquisition to supplement core deposit growth. It is hoped that local and
national education programs will calm any growing panic among consumers, which
will alleviate the need for exceptional liquidity measures.
The discussion above regarding the century date change for the year 2000
includes certain "forward looking statements" concerning the future operations
of the Company. The Company desires to take advantage of the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995 as they apply
to forward looking statements. This statement is for the express purpose of
availing the Company of the protection of such safe harbor with respect to all
"forward looking statements". Management's ability to predict results of the
effect of future plans is inherently uncertain, and is subject to factors that
may cause actual results to differ materially from those projected. Factors that
could effect the actual results include the Company's success in identifying
systems and programs that are not Year 2000 compliant; the possibility that
systems modifications will not operate as intended; unexpected costs associated
with remediation, including labor and consulting costs; the uncertainty
associated with the impact of the century change on the Company's clients,
vendors and third-party service providers; and the economy in general.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company's results of operations are largely dependent upon its ability to
manage market risks. Changes in interest rates can have a significant effect on
the Company's financial condition and results of operations. Other types of
market risk such as foreign currency exchange rate risk and commodity price risk
do not arise in the normal course of the Company's business activities. The
Company does not use derivatives such as forward and futures contracts, options,
or interest rate swaps to manage interest rate risk.
Interest rate risk generally arises when the maturity or repricing structure of
the Company's assets and liabilities differ significantly. Asset and liability
management, which among other things, addresses such risk, is the process of
developing, testing and implementing strategies that seek to maximize net
interest income while maintaining sufficient liquidity. This process includes
monitoring contractual maturity and prepayment expectations together with
expected repricing of assets and liabilities under different interest rate
scenarios. Generally the Company seeks a structure that insulates net interest
income from large deviations attributable to changes in market rates by
balancing the repricing characteristics of assets and liabilities.
The Company's liability structure is composed primarily of noninterest bearing
corporate checking accounts and non-maturing saving and money market deposit
accounts. Other liabilities include time deposits with various maturities of
generally one year or less and borrowings.
The Company's assets are primarily composed of loans and investment securities.
Investment securities generally have fixed rates with maturities of less than
five years. The loan portfolio is made up of two distinct interest rate risk
profiles. Approximately half of the Company's loans are variable rate loans
subject to immediate change. In many cases these loans have interest rate floors
which insulate the Company from declining market rates. The other portion of the
loan portfolio is comprised of fixed rate installment loans and commercial real
estate loans with interest rates fixed for up to five years.
Interest rate risk is managed through the monitoring of the Company's balance
sheet by subjecting various asset and liability categories to interest rate
shocks and gradual interest rate movements over a one year period of time.
Interest rate shocks use an instantaneous adjustment in market rates of large
magnitudes on a static balance sheet to determine the effect such a change in
interest rates would have on the Company's net interest income and capital for
the succeeding twelve-month period. Such an extreme change in interest rates and
the assumption that management would take no steps to restructure the balance
sheet does limit the usefulness of this type of analysis. This type of analysis
tends to provide a best case or worst case scenario. A more
Page 12
<PAGE>
reasonable approach utilizes gradual interest rate movements over a one year
period of time to determine the effect on the Company's net interest income.
The Company utilizes the services of The Federal Home Loan Bank's
asset/liability modeling software to determine the effect of a simultaneous
shift in interest rates. Forecasts are prepared quarterly based upon data
provided by the bank to the Federal Home Loan Bank. Interest rate shock
scenarios are modeled in 100 basis point increments for shifts of plus or minus
4 percent in the federal funds rate. The more realistic forecast assumes a
gradual interest rate movement of plus or minus 2.40% change in the federal
funds rate over a one year period of time with rates moving up or down 0.60%
each quarter. The model used is based on the concept that all rates do not move
by the same amount. Although certain assets and liabilities may have similar
repricing characteristics, they may not react correspondingly to changes in
market interest rates. In the event of a change in interest rates, prepayment of
loans and early withdrawal of time deposits would likely deviate from those
previously assumed. Increases in market rates may also affect the ability of
certain borrowers to make scheduled principal payments.
The model attempts to account for such limitations by imposing weights on the
differences between repricing assets and repricing liabilities within each time
segment. These weights are based on the ratio between the amount of rate change
of each category of asset or liability, and the amount of change in the federal
funds rate. Certain non-maturing liabilities such as checking accounts and money
market deposit accounts are allocated among the various repricing time segments
to meet local competitive conditions and management's strategies.
The Company strives to manage the balance sheet so that net interest income is
not negatively impacted more than 15% given a change in interest rates of plus
or minus 200 basis points. Current evaluations show the Bank is within its
established guidelines.
The following table shows the estimated impact of the various interest rate
scenarios used in the software modeling based on data provided by the Company to
the Federal Home Loan Bank as of March 31, 1999. The table shows estimates of
changes in net interest income. For illustrative purposes the base figure of
$14,627 used is the annualized actual net interest income for the first quarter
of 1999. Due to the various assumptions used for this modeling, no assurance can
be given that projections will reflect actual results.
Interest Rate Shock Analysis
Net Interest Income and Market Value Performance
(dollars in thousands)
<TABLE>
<CAPTION>
Projected Net Interest Income
Interest Estimated $ Change % Change
Rate Change Value from Base from Base
- -------------------- -------------------------------------------------------------
<S> <C> <C> <C>
+200 15,935 1,305 8.92%
+100 15,276 649 4.44%
Base 14,627 0 0.00%
-100 14,038 (589) -4.03%
-200 13,258 (1,369) -9.36%
- ---------------------------------------------------------------------------------------
</TABLE>
Gradual Interest Rate Movement Forecast
Net Interest Income and Market Value Performance
(dollars, in thousands)
<TABLE>
<CAPTION>
Projected Net Interest Income
Interest Estimated $ Change % Change
Rate Change Value from Base from Base
-------------------- -----------------------------------------------
<S> <C> <C> <C>
Rising 2.40% 14,737 110 0.75%
Base 14,627 0 0.00%
Declining 2.40% 14,545 (82) -0.56%
--------------------------------------------------------------------------
</TABLE>
Page 13
<PAGE>
PART II
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Bank's annual shareholder meeting was held on April 22, 1999 at its
headquarters in Eugene, Oregon.
(b) Not Applicable.
(c) A brief description of each matter voted upon at the Annual Shareholders'
Meeting and the number of votes cast for, against or withheld, including a
separate tabulation with respect to each nominee for office and each matter
is presented below:
(1) Approval of a Plan and Agreement of Reorganization and Share Exchange
dated December 9, 1998 (the "Agreement") between the Bank and Pacific
Continental Corporation, a newly-formed corporation (the "Company") which
provides that the Bank become a wholly owned subsidiary of the Company.
Effective June 7, 1999, each outstanding whole share of Bank common stock was
exchanged for one share of Company stock.
Votes cast for: 3,468,012
---------
Votes cast against: 18,743
---------
Votes abstaining: 24,863
---------
(2) Election of three directors with terms expiring in 2002 or until their
successors have been elected and qualified:
Michael S. Holcomb--
Votes cast for: 4,016,071
---------
Votes cast against: 15,939
---------
Votes withheld: 11,459
---------
Donald G. Montgomery--
Votes cast for: 4,016,071
---------
Votes cast against: 15,939
---------
Votes withheld: 11,459
---------
Kevin G. Murphy--
Votes cast for: 4,016,071
---------
Votes cast against: 15,939
---------
Votes withheld: 11,459
---------
(3) Adoption of an Employee Stock Option Plan, which allows for the grant
of stock options to purchase up to 500,000 shares of common stock.
Votes cast for: 3,221,456
---------
Votes cast against: 205,429
---------
Votes abstaining: 84,733
---------
(4) Adoption of a Director Stock Option Plan, which allows for the grant
of stock options to purchase up to 100,000 shares of common stock.
Page 14
<PAGE>
Votes cast for: 3,209,137
---------
Votes cast against: 219,342
---------
Votes abstaining: 83,139
---------
(d) None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
3.1 Articles of Incorporation
3.2 Bylaws
10.1 1992 Incentive Stock Option Plan
10.2 1995 Incentive Stock Option Plan
10.3 1999 Employee Stock Option Plan
10.4 1995 Directors' Stock Option Plan
10.5 1999 Directors' Stock Option Plan
10.6 Form of Executive Severance Agreements for Messrs. Riddle,
Brown, Gyde, Hagstrom and Hansen and Ms. Thompson.
27.1 Financial Data Schedule
(b) Reports on Form 8-K
A Report on Form 8-K was filed by Pacific Continental Corporation on June
7, 1999 as the successor registrant under Section 12(g) pursuant to SEC Rule
12g-3 to Pacific Continental Bank, pursuant to the holding company
reorganization.
Page 15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PACIFIC CONTINENTAL CORPORATION
(Registrant)
Dated August 6, 1999 /s/ J. Bruce Riddle
------------------ -------------------------------------
J. Bruce Riddle
President and Chief Executive Officer
Dated August 6, 1999 /s/ Hal Brown
------------------- -------------------------------------
Hal Brown
Senior Vice President
and Chief Financial Officer
Page 16
<PAGE>
EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
PACIFIC CONTINENTAL CORPORATION
ARTICLE I.
NAME
The name of this corporation is PACIFIC CONTINENTAL CORPORATION.
ARTICLE II
INITIAL REGISTERED OFFICE
The initial registered office and the principal place of business of
the corporation is 111 West 7/th/ Street, Eugene, Lane County, Oregon. The
corporation's initial registered agent at that address will be J. Bruce Riddle.
ARTICLE III.
DURATION
The duration of this corporation will be perpetual.
ARTICLE IV.
PURPOSE
The purpose for which this corporation is formed is to engage in any
business activity now or hereafter permissible by the laws of the State of
Oregon and the United States.
ARTICLE V.
CAPITALIZATION
The aggregate number of shares which this corporation will have
authority to issue is ten million (10,000,000) shares of the One Dollar ($1.00)
par value common stock and twenty thousand (20,000) shares of the One Hundred
Dollar ($100.00) par value preferred stock.
A. The preferred stock will have the following preferences, rights and
limitations:
1. Each share of preferred stock will be entitled to a dividend from
funds legally available for the payment thereof which will have priority to
the payment of dividends on common stock.
2. The dividend on preferred shares will be cumulative on a daily
basis from the date of issue of such shares. So long as there are any
accrued but unpaid dividends on the preferred shares, there will be no
distribution to or on behalf of the common shares, either by way of
dividend, purchase thereof by the corporation, or otherwise.
3. Upon the dissolution of the corporation, each share of preferred
stock will receive out of the assets of the corporation the amount
determined by the Board of Directors for the applicable series and no more
in priority to payment on the common shares.
1
<PAGE>
4. Preferred shares will be convertible into shares of common stock
but only if authorized by the Board of Directors of the corporation for the
applicable series and upon the terms and conditions adopted by the Board of
Directors.
5. Preferred shares will have no vote on any matter except on those
matters which by law a vote cannot be denied.
6. The holders of preferred shares will have no preemptive rights as
to preferred or common shares.
B. The common stock will have the following preferences, rights and
limitations:
1. The common shares will have full voting rights. each share to
entitle the holder thereof to one vote.
2. After all cumulative but unpaid dividends on preferred shares have
been paid or set apart for payment, the holders of the common shares will
be entitled to receive dividends from funds legally available for the
payment thereof, but only when and as such dividends will be declared by
the Board of Directors.
3. Upon the dissolution of the corporation, after payment in full to
the holders of preferred shares of the sums which such holders are entitled
to receive, the holders of common shares will receive and be paid all
remaining assets of the corporation.
4. The common shares will have no preemptive rights as to either the
preferred shares, or as to the common shares into which the preferred
shares may be convertible, or any other common shares or options for common
shares
C. The preferred shares may be divided into and issued in series. Each
series will be so designated by the Board of Directors as to distinguish the
shares thereof from the shares of all other series and classes. All preferred
shares will be identical, except as to the following relative rights and
preferences, as to which there may be variations between different series:
1. The rate of dividend.
2. Whether shares can be redeemed, and if so, the redemption price
and the terms and conditions of redemption.
3. The amount payable upon shares in event of voluntary or
involuntary liquidation.
4. Sinking fund provisions, if any, for the redemption or purchase of
shares.
5. The terms and conditions, if any, on which shares may be
converted.
Authority is expressly vested in the Board of Directors to divide any or
all of preferred shares into series and within the limitations set forth by law
and in these Articles of Incorporation, fix and determine the relative rights
and preferences of the shares of any series so established by resolution or
resolutions setting forth the designation of the series and fixing and
determining the relative rights and preferences thereof. Any such resolution or
resolutions will be adopted by the Board of Directors before any shares of that
series are issued. The Board of Directors may, from time to time, increase the
number of preferred shares of any then existing series by making all unissued
preferred shares a part of such
2
<PAGE>
series. The Board of Directors may decrease (but not below the number of such
shares then outstanding) the number of preferred shares of any then existing
series by requiring that all unissued shares previously assigned to such series
will no longer constitute a part thereof. The Board of Directors is hereby
empowered to classify or reclassify any unissued preferred shares by fixing or
altering the terms thereof in respect of the above mentioned particulars and by
assigning the same to an existing newly created series from time to time before
the issuance of such shares.
ARTICLE VI.
INDEMNIFICATION AND DIRECTOR LIABILITY
Section 1 - Definitions. As used in this Article:
-----------------------
(a) The term "Egregious Conduct" by a person will mean acts or omissions
that involve intentional misconduct or a knowing violation of law, participation
in any transaction from which the person will personally receive a benefit in
money, property, or services to which the person is not legally entitled, an
unlawful distribution under the Oregon Bank Act, and conduct for which the
person is adjudged liable to the corporation.
(b) The term "Finally Adjudged" will mean stated in a judgment by a court
having jurisdiction, from which there is no further right to appeal.
(c) The term "Director" will mean any person who is a director of the
corporation and any person who, while a director of the corporation, is serving
at the request of the corporation as a director, officer, manager, partner,
trustee, employee, or agent of another foreign or domestic corporation, limited
liability company, partnership, joint venture, trust, or other enterprise, or is
a fiduciary or party in interest in relation to any employee benefit plan
covering any employee of the corporation or of any employer in which it has an
ownership interest; and "conduct as a Director" will include conduct while a
Director is acting in any of such capacities.
(d) The term "Officer-Director" will mean any person who is simultaneously
both an officer and director of the corporation and any person who, while
simultaneously both an officer and director of the corporation, is serving at
the request of the corporation as a director, officer, manager, partner,
trustee, employee, or agent of another foreign or domestic corporation, limited
liability company, partnership, joint venture, trust, or other enterprise, or is
a fiduciary or party in interest in relation to any employee benefit plan
covering any employee of the corporation or of any employer in which it has an
ownership interest; and "conduct as an Officer-Director" will include conduct
while such a person is acting as an officer of the corporation or in any of such
other capacities.
(e) The term "Subsidiary Corporation" will mean any corporation or limited
liability company at least eighty percent of the voting interests of which is
held beneficially by this corporation.
(f) The term "Subsidiary Outside Director" will mean any person who, while
not principally employed by this corporation or any Subsidiary Corporation, is a
director or manager of a Subsidiary Corporation and any such person who, while a
director or manager of a Subsidiary Corporation, is serving at the request of
such corporation as a director, officer, manager, partner, trustee, employee, or
agent of another foreign or domestic corporation, limited liability company,
partnership, joint venture, trust, or other enterprise, or is a fiduciary or
party in interest in relation to any employee benefit plan covering any employee
of such corporation or of any employer in which it has an ownership interest;
and "conduct as a Subsidiary Outside Director" will include conduct while such a
person is acting in any of such capacities.
3
<PAGE>
Section 2 - Liability of Directors. No Director, Officer-Director, former
----------------------------------
Director or former Officer-Director will be personally liable to the corporation
or its shareholders for monetary damages for conduct as a Director or Officer-
Director occurring after the effective date of this Article unless the conduct
is Finally Adjudged to have been Egregious Conduct.
Section 3 - Liability of Subsidiary Outside Directors. No Subsidiary
-----------------------------------------------------
Outside Director or former Subsidiary Outside Director will be personally liable
in any action brought directly by this corporation as a shareholder of the
Subsidiary Corporation or derivatively on behalf of the Subsidiary Corporation
(or by any shareholder of this corporation double-derivatively on behalf of this
corporation and the Subsidiary Corporation) for monetary damages for conduct as
a Subsidiary Outside Director occurring after the effective date of this Article
unless the conduct is Finally Adjudged to have been Egregious Conduct.
Section 4 - Mandatory Indemnification of Directors. Subject to Sections 7
--------------------------------------------------
and 8 of this Article, the corporation will indemnify any person who is, or is
threatened to be made, a party to any action, suit, or proceeding, whether
civil, criminal, administrative, or investigative, and whether formal or
informal, and whether by or in the right of the corporation or its shareholders
or by any other party, by reason of the fact that the person is or was a
Director, Officer-Director, or Subsidiary Outside Director against judgments,
penalties or penalty taxes, fines, settlements (even if paid or payable to the
corporation or its shareholders or to a Subsidiary Corporation) and reasonable
expenses, including attorneys' fees, actually incurred in connection with such
action, suit or proceeding unless the liability and expenses were on account of
conduct Finally Adjudged to be Egregious Conduct.
Section 5 - Advancing Expenses. Except as prohibited by Sections 7 and 8
------------------------------
of this Article, the reasonable expenses, including attorneys' fees, of a
Director, Officer-Director, Subsidiary Outside Director, or person formerly
serving in any such capacities, incurred in connection with an action, suit or
proceeding in which the individual is entitled to indemnification under Section
4 will be paid or reimbursed by the corporation, upon request of such person, in
advance of the final disposition of such action, suit or proceeding upon receipt
by the corporation of a written, unsecured promise by the person to repay such
amount if it will be Finally Adjudged that the person is not eligible for
indemnification. All expenses incurred by such person in connection with such
action, suit or proceeding will be considered reasonable unless Finally Adjudged
to be unreasonable.
Section 6 - Procedure. Except as required by Sections 7 and 8 of this
---------------------
Article, no action by the Board of Directors, the shareholders, independent
counsel, or any other person or persons will be necessary or appropriate to the
determination of the corporation's indemnification obligation under this Article
in any specific case, to the determination of the reasonableness of any expenses
incurred by a person entitled to indemnification under this Article, nor to the
authorization of indemnification in any specific case.
Section 7 - Exception for Internal Claims. Notwithstanding anything else
-----------------------------------------
in these Articles, the corporation will not be obligated to indemnify any person
for any expenses, including attorneys' fees, incurred to assert any claim
against the corporation (except a claim to enforce rights to indemnification) or
any person related to or associated with it, including any person who would be
entitled hereby to indemnification in connection with the claim.
Section 8 - Exception for State Law. Notwithstanding anything else in
-----------------------------------
these Articles, the corporation will not be obligated to indemnify any person
for any expenses, including attorneys' fees, incurred as a result of any action
listed in ORS (S) 60.047 (2)(d).
4
<PAGE>
Section 9 - Exception for Regulatory Claims.
-------------------------------------------
(a) Regulatory Proceedings Generally. Notwithstanding anything else
--------------------------------
in these Articles, indemnification of any Director, Officer-Director or
Subsidiary Outside Director, or any person formerly serving in any such
capacities, and advancement of expenses in connection with either an
administrative proceeding or a civil action instituted by a federal banking
agency ("Regulatory Proceedings") will be governed by this Section.
(b) Banking Regulations Defined. The term "Banking Regulations" will
---------------------------
mean any state or federal laws or regulations applicable to the
corporation, or any formal policies adopted by a regulatory agency having
jurisdiction over the corporation.
(c) Indemnification in Regulatory Proceedings. The corporation will
-----------------------------------------
provide indemnification and advancement of expenses in connection with
Regulatory Proceedings to the extent permitted, and in the manner
prescribed by Banking Regulations. Insurance and other means to ensure
payment of costs and expenses in Regulatory Proceedings may be obtained or
provided to the extent permitted and in the manner prescribed by Banking
Regulations.
Section 10 - Enforcement of Rights. The corporation will indemnify any
----------------------------------
person granted indemnification rights under this Article against any reasonable
expenses incurred by the person to enforce such rights.
Section 11 - Set-off of Claims. Any person granted indemnification rights
------------------------------
herein may directly assert such rights in set-off of any claim raised against
the person by or in the right of the corporation and will be entitled to have
the same tribunal which adjudicates the corporation's claim adjudicate the
person's entitlement to indemnification by the corporation.
Section 12 - Continuation of Rights. The indemnification rights provided
-----------------------------------
in this Article will continue as to a person who has ceased to be a Director,
Officer-Director, or Subsidiary Outside Director and will inure to the benefit
of the heirs, executors, and administrators of such person.
Section 13 - Effect of Amendment or Repeal. Any amendment or repeal of
------------------------------------------
this Article will not adversely affect any right or protection of a Director,
Officer-Director, or Subsidiary Outside Director or person formerly serving in
any of such capacities existing at the time of such amendment or repeal with
respect to acts or omissions occurring prior to such amendment or repeal.
Section 14 - Severability of Provisions. Each of the substantive
---------------------------------------
provisions of this Article is separate and independent of the others, so that if
any provision hereof will be held to be invalid or unenforceable for any reason,
such invalidity or unenforceability will not affect the validity or
enforceability of the other provisions.
ARTICLE VII.
FAIR PRICE PROVISION
Section 1. For purposes of this Article:
---------
(a) An interested shareholder transaction means any transaction between a
corporation, or any subsidiary thereof, and an interested shareholder of such
corporation or an affiliated person to an interested shareholder, that must be
authorized pursuant to applicable law by a vote of the shareholders.
5
<PAGE>
(b) An interested shareholder:
(1) Includes any person or group of affiliated persons who
beneficially own twenty percent or more of the outstanding voting shares of a
corporation. An affiliated person is any person who either acts jointly or in
concert with, or directly or indirectly controls, is controlled by, or is under
common control with another person; and
(2) Excludes any person who, in good faith and not for the purpose of
circumventing this Article, is an agent, custodial bank, broker, nominee, or
trustee for another person, if such other person is not an interested
shareholder under Section 1(b)(1) of this Article.
Section 2. Except as provided in Section 3 of this Article, an interested
---------
shareholder transaction must be approved by the affirmative vote of the holders
of two-thirds of the shares entitled to be counted under this Section 2, or if
any class of shares is entitled to vote thereon as a class, then by the
affirmative vote of two-thirds of the shares of each class entitled to be
counted under this Section 2 and of the total shares entitled to be counted
under this Section 2. All outstanding shares entitled to vote under applicable
law or the Articles of Incorporation will be entitled to be counted under this
Section 2, except shares owned by or voted under the control of an interested
shareholder may not be counted to determine whether shareholders have approved a
transaction for purposes of this Section 2. The vote of the shares owned by or
voted under the control of an interested shareholder, however, will be counted
in determining whether a transaction is approved under other provisions of
applicable law and for purposes of determining a quorum.
Section 3. This Article will not apply to a transaction:
---------
(a) Approved by a majority vote of the board of directors. For such
purpose, the vote of directors whose votes are otherwise entitled to be counted
under the Articles of Incorporation and applicable law who are directors or
officers of, or have a material financial interest in, an interested
shareholder, or who were nominated for election as a director as a result of an
arrangement with an interested shareholder and first elected as a director
within twenty-four months of the proposed transaction, will not be counted in
determining whether the transaction is approved by such directors; or
(b) In which a majority of directors whose votes are entitled to be
counted under Section 3(a) determines that the fair market value of the
consideration to be received by noninterested shareholders for shares of any
class of which shares are owned by any interested shareholder is not less than
the highest fair market value of the consideration paid by any interested
shareholder in acquiring shares of the same class within twenty-four months of
the proposed transaction.
Section 4. This Article may be amended or repealed only by the affirmative
---------
vote of the holders of two-thirds of the shares entitled to be counted under
this Section 4. All outstanding shares entitled to vote under applicable law or
the Articles of Incorporation will be entitled to be counted under this Section
4, except shares owned by or voted under the control of an interested
shareholder may not be counted to determine whether shareholders have voted to
approve the amendment or repeal. The vote of the shares owned by or voted under
the control of an interested shareholder, however, will be counted in
determining whether the amendment or repeal is approved under other provisions
of applicable law and for purposes of determining a quorum.
Section 5. The requirements imposed by this Article are to be in addition
---------
to, and not in lieu of, requirements imposed on any transaction by any provision
of applicable law, or any other provision of the Articles of Incorporation, or
the Bylaws or otherwise.
6
<PAGE>
ARTICLE VIII.
CONSIDERATION OF NON-MONETARY FACTORS
The Board of Directors of the corporation, when evaluating any offer of
another party to (a) make a tender or exchange offer for any equity security of
the corporation, (b) merge or consolidate the corporation with another
corporation, or (c) purchase or otherwise acquire all or substantially all of
the properties and assets of the corporation, will, in connection with the
exercise of its judgment in determining what is in the best interests of the
corporation and its stockholders, give due consideration to all relevant
factors, including without limitation the social and economic effects on the
employees, customers, suppliers, and other constituents of the corporation and
its subsidiaries and on the communities in which the corporation and its
subsidiaries operate or are located.
ARTICLE IX.
INCORPORATORS
The Incorporators of the corporation and their addresses are as follows:
Name Address
J. Bruce Riddle 111 West 7/th/ Street
P.O. Box 10727
Eugene, Oregon 97440-2727
Hal Brown 111 West 7/th/ Street
P.O. Box 10727
Eugene, Oregon 97440-2727
ARTICLE X.
BOARD OF DIRECTORS
Section 1 The names and addresses of the initial board of directors of the
---------
corporation are as follows:
Name Address
Kevin G. Murphy 111 West 7/th/ Street
P.O. Box 10727
Eugene, Oregon 97440-2727
J. Bruce Riddle 111 West 7/th/ Street
P.O. Box 10727
Eugene, Oregon 97440-2727
Robert A. Ballin 111 West 7/th/ Street
P.O. Box 10727
Eugene, Oregon 97440-2727
Donald A. Bick 111 West 7/th/ Street
7
<PAGE>
P.O. Box 10727
Eugene, Oregon 97440-2727
Larry G. Campbell 111 West 7/th/ Street
P.O. Box 10727
Eugene, Oregon 97440-2727
Michael Holcomb 111 West 7/th/ Street
P.O. Box 10727
Eugene, Oregon 97440-2727
Robert Holcomb 111 West 7/th/ Street
P.O. Box 10727
Eugene, Oregon 97440-2727
Donald G. Montgomery 111 West 7/th/ Street
P.O. Box 10727
Eugene, Oregon 97440-2727
James W. Putney 111 West 7/th/ Street
P.O. Box 10727
Eugene, Oregon 97440-2727
Ronald F. Taylor 111 West 7/th/ Street
P.O. Box 10727
Eugene, Oregon 97440-2727
Section 2 The Board of Directors will consist of not fewer than six
---------
individuals. The exact number will be fixed by the Bylaws and may be changed
from time to time in the manner provided in the Bylaws.
Section 3 The Board of Directors will be divided into three classes: Class
---------
1, Class 2, and Class 3. Each such Class will consist, as nearly as possible,
of one-third of the total number of directors constituting the entire Board of
Directors. Each director will serve for a term ending on the date of the third
annual meeting of shareholders following the annual meeting at which such
director was elected; provided, however, that each initial director in Class 1
-------- -------
will hold office until the annual meeting of shareholders in 2000; each initial
director in Class 2 will hold office until the annual meeting of shareholders in
the year 2001; and each initial director in Class 3 will hold office until the
annual meeting of shareholders in the year 2002.
Section 4 In the event of an increase or decrease in the authorized number
---------
of directors, (a) each director then serving as such will nevertheless continue
as a director of the Class in which he or she is a member until the expiration
of his or her current term, or his or her earlier resignation, removal from
office or death, and (b) the newly created or eliminated directorships resulting
from such increase or decrease will be apportioned by the Board of Directors
among the three Classes of directors so as to maintain such Classes as nearly
equal as possible.
8
<PAGE>
Section 5 No director may be removed from office without cause except by a
---------
vote of two-thirds of the shares then entitled to vote at an election of
directors. Except as otherwise provided by law, cause for removal will exist
only if the Board of Directors has reasonable grounds to believe that the
corporation has suffered or will suffer substantial injury as a result of the
gross negligence or dishonesty of the director whose removal is proposed.
ARTICLE XI.
AMENDMENT TO ARTICLES
Section 1 The corporation reserves the right to amend, alter, change or
---------
repeal any provision of its Articles of Incorporation to the extent permitted by
the laws of the State of Oregon. All rights of shareholders are granted subject
to this reservation.
Section 2 The Board of Directors will have full power to adopt, alter,
---------
amend or repeal the Bylaws of the corporation or to adopt new Bylaws. Nothing
herein, however, will deny the concurrent power of the shareholders to adopt,
alter, amend or repeal the Bylaws.
* * * * *
We, the undersigned, declare under the penalties of perjury that we have
examined the foregoing and to the best of our knowledge and belief, it is true,
correct and complete.
DATED this 4th day of December, 1998.
PACIFIC CONTINENTAL CORPORATION
By /s/ Bruce Riddle
-----------------------------
J. Bruce Riddle, Incorporator
By /s/ Hal Brown
-----------------------------
Hal Brown, Incorporator
9
<PAGE>
EXHIBIT 3.2
AMENDED AND RESTATED BYLAWS OF
PACIFIC CONTINENTAL CORPORATION
<PAGE>
Table of Contents
-----------------
<TABLE>
<S> <C>
ARTICLE I. SHAREHOLDERS..................................................................................1
SECTION 1. ANNUAL MEETINGS......................................................................1
SECTION 2. ADJOURNED MEETINGS...................................................................1
SECTION 3. SPECIAL MEETINGS.....................................................................1
SECTION 4. PLACE OF MEETINGS....................................................................1
SECTION 5. NOTICE OF MEETINGS...................................................................1
SECTION 6. QUORUM...............................................................................1
SECTION 7. SHAREHOLDERS OF RECORD...............................................................2
SECTION 8. VOTING OF SHARES.....................................................................2
SECTION 9. PROXIES..............................................................................3
ARTICLE II. DIRECTORS....................................................................................3
SECTION 1. NUMBER...............................................................................3
SECTION 2. ORGANIZATION.........................................................................3
SECTION 3. MEETINGS.............................................................................3
SECTION 4. SPECIAL MEETINGS.....................................................................4
SECTION 5. PLACE OF MEETINGS....................................................................4
SECTION 6. WAIVER OF NOTICE.....................................................................4
SECTION 7. QUORUM...............................................................................4
SECTION 8. INVESTMENTS..........................................................................4
SECTION 9. DUTIES OF THE CHAIRMAN OF THE BOARD .................................................4
SECTION 10. OTHER DUTIES OF DIRECTORS...........................................................5
SECTION 11. RETIREMENT OF DIRECTORS.............................................................5
SECTION 12. VACANCIES...........................................................................5
SECTION 13. COMPENSATION........................................................................5
SECTION 14. ELECTION OF DIRECTORS...............................................................5
ARTICLE III. OFFICERS....................................................................................6
SECTION 1. DESIGNATION AND QUALIFICATION........................................................6
SECTION 2. TERM.................................................................................6
SECTION 3. REMOVAL..............................................................................6
SECTION 4. DUTIES OF THE PRESIDENT..............................................................6
SECTION 5. DUTIES OF THE VICE PRESIDENT.........................................................6
SECTION 6. DUTIES OF THE SECRETARY..............................................................6
SECTION 7. RESPONSIBILITY OF OFFICERS AND EMPLOYEES.............................................6
SECTION 8. OFFICIAL BONDS.......................................................................7
ARTICLE IV. CORPORATE SEAL...............................................................................7
SECTION 1. SEAL.................................................................................7
ARTICLE V. CERTIFICATES AND TRANSFER OF SHARES...........................................................7
SECTION 1. CERTIFICATES FOR SHARES..............................................................7
SECTION 2. STOCK TRANSFER BOOK..................................................................7
</TABLE>
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<TABLE>
<S> <C>
SECTION 3. TRANSFER ON THE BOOKS................................................................7
SECTION 4. LOST, STOLEN OR DESTROYED CERTIFICATES...............................................7
ARTICLE VI. GENERAL PROVISIONS...........................................................................8
SECTION 1. CONVEYANCE OF REAL ESTATE OWNED......................................................8
SECTION 2. EXECUTION OF DOCUMENTS...............................................................8
ARTICLE VII. AMENDMENTS..................................................................................8
SECTION 1. AMENDMENT OF BYLAWS..................................................................8
</TABLE>
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<PAGE>
BYLAWS OF
PACIFIC CONTINENTAL CORPORATION
ARTICLE I. SHAREHOLDERS
SECTION 1. ANNUAL MEETINGS. An annual meeting of the shareholders will be
held in the State of Oregon within one hundred twenty (120) days after the close
of the fiscal year of the corporation. At the annual meeting, the shareholders
will elect a Board of Directors and transact any other business that may legally
come before the meeting.
SECTION 2. ADJOURNED MEETINGS. If for any cause an election of directors
is not held at the annual meeting provided for in Section 1, such meeting may be
adjourned to a future date not to exceed thirty (30) days from the date of the
annual meeting.
SECTION 3. SPECIAL MEETINGS. Special meetings of the shareholders may be
called by the President, by a majority of the Board of Directors, or by not less
than three (3) shareholders holding in the aggregate not less than one-third
(1/3) of the outstanding capital stock of the corporation. The record date for
determining shareholders entitled to entitled to demand a special meeting is the
date the first shareholder signs a demand. The Board of Directors will have the
authority to designate the time and place of such a meeting. However, any such
meeting will be held not later than forty-five (45) days after the call for the
meeting. No business other than that stated in the notice of the meeting will be
transacted at any special meeting, unless all shareholders are present either in
person or by proxy, and not less two-thirds (2/3) of all shareholders consent.
SECTION 4. PLACE OF MEETINGS. Meetings of the shareholders will be held
at the principal office of the corporation or any other place in the State of
Oregon designated by the Board of Directors.
SECTION 5. NOTICE OF MEETINGS. Written or printed notice stating the
place, date and hour of the meeting and, in case of a special meeting, the
purpose or purposes for which the meeting is called, will be delivered not less
than ten (10) nor more than fifty (50) days before the date of the meeting,
either personally or by mail, by or at the direction of the President, the
Secretary, the Board of Directors or the persons calling the meeting, to each
shareholder of record entitled to vote at the meeting. If mailed, the notice
will be deemed to be given when deposited in the United States mail, with
postage prepaid, addressed to the shareholder at that shareholder's address as
it appears on the stock transfer books of the corporation.
SECTION 6. QUORUM.
a. A majority of the shares entitled to vote, represented in person
or by proxy, will constitute a quorum for the transaction of business at any
shareholders' meeting. If a person attends a meeting for the express purpose of
objecting to the transaction of any business on the grounds that the meeting is
not lawfully called or convened, the shares held by that person
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or represented by a proxy given to that person will not be included for purposes
of determining whether a quorum is present. The persons present at a duly
organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough persons to leave less than a quorum.
b. In the absence of a quorum, a majority of the shares represented
in person or by proxy may adjourn the meeting from time to time until a quorum
will attend. Any business which might have been transacted at the original
meeting may be transacted at the adjourned meeting if a quorum exists.
SECTION 7. SHAREHOLDERS OF RECORD. The persons entitled to receive notice
of and to vote at any shareholders' meeting or any adjournment thereof will be
those persons designated as shareholders in the stock transfer books of the
corporation on the date of mailing of the notice of the meeting or on such other
date as determined in advance by the Board of Directors, which date will be not
more than fifty (50) nor less than ten (10) days before the meeting. Such a
determination of shareholders entitled to vote at any meeting of shareholders
will apply to any adjournment thereof.
SECTION 8. VOTING OF SHARES.
a. Each shareholder will be entitled to one (1) vote on each matter
submitted to a vote at a meeting of the shareholders for each share of voting
stock standing in the name of the shareholder on the stock transfer books of the
corporation.
b. Shares held in the name of another corporation may be voted by
such officer, agent or proxy as the bylaws of such corporation may prescribe or,
in the absence of such provision, as the board of directors of such corporation
may determine.
c. Shares held by a personal representative, administrator,
executor, guardian or conservator may be voted by that person, either in person
or by proxy, without a transfer of such shares into the name of that person.
Shares held in the name of a trustee may be voted by the trustee, either in
person or by proxy, but no trustee will be entitled to vote shares held by that
trustee without a transfer of such shares into the name of the trustee.
d. Shares standing in the name of a receiver may be voted by such
receiver, and shares, held by or under the control of a receiver may be voted by
such receiver without the transfer thereof into that receiver's name if
authority to do so is contained in an appropriate order of the court by which
such receiver was appointed.
e. A shareholder whose shares are pledged will be entitled to vote
such shares until the shares have been transferred into the name of the pledgee,
and thereafter the pledgee will be entitled to vote the shares so transferred.
f. Redeemable shares will not be entitled to vote on or after the
date on which notice of redemption is mailed to the holders of redeemable shares
and a sum sufficient to redeem such shares has been deposited with a
corporation, trust company or other financial
2
<PAGE>
institution with irrevocable instructions and authority to pay the redemption
price to the holder, upon surrender of the shares.
g. Shares of its own stock held by the corporation in a fiduciary
capacity, or shares held by another corporation if a majority of the shares
entitled to vote for the election of directors of such other corporation is held
by the corporation, will not be voted at any meeting or included in determining
the total number of outstanding shares at any given time, unless under the terms
of the trust in which such shares are held the manner in which such shares will
be voted may be determined by the trustee, by a donor or beneficiary of the
trust or by some other person named in the trust and unless such shares are
actually voted in the manner determined or directed by the trustee, donor,
beneficiary or other person so authorized.
SECTION 9. PROXIES. A shareholder may vote in person or by proxy executed
in writing by the shareholder or by the duly authorized attorney-in-fact of the
shareholder. No proxy will be valid after eleven (11) months from the date of
its execution unless otherwise provided in the proxy. All proxies will be filed
with the Secretary of the corporation within five (5) days from the date it is
signed and in no event less than one (1) full business day prior to the
shareholders meeting at which the proxy is to be voted.
ARTICLE II. DIRECTORS
SECTION 1. NUMBER. The business and affairs of the corporation will be
managed and controlled by a board of nine (9) directors. Each director will hold
office in staggered terms as set forth in the Articles of Incorporation, and
until that director's successor has been elected and qualified, or until that
director's death or until that director resigns or is removed in accordance with
the provisions of these bylaws. At least one-half (1/2) of the directors, at the
time of their election and during their continuance in office, will be citizens
of the United States and residents of the State of Oregon.
SECTION 2. ORGANIZATION. Within one (1) week from the time of their
election, the directors will meet for the purpose of organization and election
of a Chairman of the Board and executive officers hereinafter specified, and to
conduct such other business as may come before the meeting. No director may
transact any business whatsoever prior to qualifying and taking the oath of
office as required by law. The Chairman of the Board will preside at all
meetings of the Board of Directors and will perform such other duties as the
Board of Directors may, from time to time, prescribe.
SECTION 3. MEETINGS. The Board of Directors will meet on a regular basis.
Each director will be charged with notice of the time and place of such regular
meetings unless the time and place of such meeting is changed at a meeting in
which the directors are not all present. In such case, any absent director will
be entitled to the notice provided for special meetings under Section 4 of this
Article. A director who is absent from a meeting of the Board of Directors may
record his approval or disapproval of actions taken at that meeting by so
indicating on the minutes of that meeting, and affixing his signature thereto.
3
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SECTION 4. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be held from time to time upon the call of the Chairman of the Board,
President, Vice President, Secretary, or upon the call of not less than one-half
(1/2) of the duly elected, qualified and acting directors. Notice of such
meeting will be given by the person or persons calling the meeting by mail not
later than two (2) days before the time for such meeting or in person, or by
telephone no later than twenty-four (24) hours before the time fixed for such
meeting. The presence or consent of any director will constitute a waiver of the
notice of such meeting.
SECTION 5. PLACE OF MEETINGS. Meetings of the Board of Directors will be
at the registered office of the corporation or any other place designated by the
Board of Directors. Meetings of the Board of Directors may he held by means of
conference telephone or similar communications equipment which allows all
persons participating in the meeting to hear each other. Participation in a
meeting pursuant to the provisions of the preceding sentence will constitute
presence in person at the meeting.
SECTION 6. WAIVER OF NOTICE. Attendance of a director at a meeting will
constitute a waiver of notice of that meeting, except where a director attends a
meeting for the express purpose of objecting to the transaction of any business
because the meeting was not lawfully called or convened.
SECTION 7. QUORUM. A quorum of the Board of Directors will consist of a
majority of the members of the Board of Directors. Less than a quorum may
adjourn any meeting of the Board of Directors.
SECTION 8. INVESTMENTS. The funds of the corporation will be invested
pursuant to law and in such manner and upon such security as the Board of
Directors may determine.
SECTION 9. DUTIES OF THE CHAIRMAN OF THE BOARD OF DIRECTORS
a. Chair, whenever present, all Board Meetings.
b. Chair, whenever present, all Executive Committee Meetings.
c. Appoint Board members to serve on any existing committees each
year. Member appointed to these committees will designate a Chairperson.
d. Assign projects with specific corporation policy objectives to
committees. Completed committee assignments will be presented at a regularly
scheduled Board meeting for deliberation and resolution. Whenever possible the
recommendation of the committees will submit their work to the Chairman and the
Chief Executive Officer five days prior to the time it is to presented for the
Board to hear.
e. Represent the Board during discussions with the Chief Executive
Officer, other than committee or Board meetings. The Chairman will report to the
Board at the next scheduled meeting a recap and review of matters discussed.
4
<PAGE>
SECTION 10. OTHER DUTIES OF DIRECTORS. The Board of Directors will have
the power to establish rules and regulation and fix the hours for the
transaction of business, prescribe the form of books or accounts to be used, and
the general or particular manner in which the business and affairs of the
corporation will be conducted.
SECTION 11. RETIREMENT OF DIRECTORS. No person who has attained the age
of sixty-five (65) will be eligible for election as a director. The Board of
Directors may permit a person who served as a director during previous year to
be nominated and elected to serve as a director for additional one (1) year
periods, regardless of the age restriction stated herein.
SECTION 12. VACANCIES. A vacancy in the Board of Directors will exist
upon the death, resignation or removal of any director. Vacancies in the Board
of Directors may be filled by the affirmative vote of a majority of the
remaining directors, though less than a quorum, at a meeting of the Board of
Directors after the vacancy occurs. Each director so elected and approved will
hold office for the balance of the unexpired term of such director's predecessor
and until such director's qualified successor is elected and accepts office.
SECTION 13. COMPENSATION. By resolution of the Board of Directors, the
directors may be paid attendance fees and their expenses, if any, of attendance
at each meeting of the Board of Directors.
SECTION 14. ELECTION OF DIRECTORS. Nominations for election to the Board
of Directors may be made by the Board of Directors or any shareholder of the
capital stock of the corporation entitled to vote for the election of the
directors. Nominations will be made in writing and be delivered or mailed to the
President of the corporation not less than ten (10) nor more than fifty (50)
days prior to any meeting of shareholders called for the election of directors,
provided however, that if less than twenty-one (21) days notice is given to
shareholders, such nomination will be mailed or delivered to the President of
the Bank no later than the close of business on the seventh (7th) day following
the day on which the notice of meeting, was mailed. Such notification will
contain the following information to the extent known by the nominating
shareholder:
a. The name and address of each proposed nominee;
b. The principal occupation of each proposed nominee;
c. The total number of shares of capital stock of the corporation
that would be voted for each proposed nominee;
d. The name and address of the nominating shareholder;
e. The number of shares of capital stock of the corporation owned
by the nominating shareholder.
Nominations not made in accordance herewith will be disregarded by the Chairman
of the meeting and upon his/her instruction the vote tellers will disregard all
votes cast for such nominee. If no nominations are filed by either the Board of
Directors or shareholders, the
5
<PAGE>
persons presently serving as directors at the date of such election will
automatically be placed in nomination.
ARTICLE III. OFFICERS
SECTION 1. DESIGNATION AND QUALIFICATION. The officers of the corporation
will be a President, who will also be a director. One (1) or more vice
presidents, a Secretary and all necessary officers who may, at any time, be
elected by the Board of Directors. If there is more than one (1) vice president,
one (1) vice president will be designated by the Board of Directors as the
executive vice president.
SECTION 2. TERM. The President, Vice President and Secretary will hold
office until the successor for that officer has been elected and qualified or
until the officer's death or until that officer resigns, or is removed in
accordance with the provisions of these bylaws. Any vacancy occurring in any
such office will be filled by the Board of Directors.
SECTION 3. REMOVAL. Any officer or agent elected or appointed by the
Board of Directors may be removed by the Board of Directors, with or without
cause, whenever in its judgment the best interests of the corporation will
thereby be served. Such removal will be without prejudice to the contract
rights, if any, of the person so removed. Election or appointment of an officer
or agent will not, of itself, create contract rights.
SECTION 4. DUTIES OF THE PRESIDENT. It will be the duty of the President
to preside at all meetings of the shareholders and to preside at all meetings of
the directors in the absence of the Chairman of the Board. The President will be
the chief executive officer of the corporation. The President will perform all
such other duties as the Board of Directors may, from time to time, prescribe or
as maybe required by law.
SECTION 5. DUTIES OF THE VICE PRESIDENT. The Executive Vice President
will perform the duties of the President in the event of the absence of the
President, his/her disqualification or inability to perform the duties of the
office of President. The Executive Vice President will keep a complete record of
the proceedings of all shareholders and directors meetings. The Executive Vice
President will perform such other duties as the Board of Directors may, from
time to time, prescribe or as required by law. Other vice presidents appointed
by the Board of Directors will perform such duties as the Board of Directors may
prescribe.
SECTION 6. DUTIES OF THE SECRETARY. The Secretary will have the custody
of the corporate seal, if in existence, and will attest the signature of the
corporation and affix the seal when required to do so in the usual course of
business and pursuant to law. The Secretary will be in charge of all corporation
operations and will be the custodian of all securities, monies, property and
other assets and all paper owned by the corporation or under its charge. The
Secretary will perform such other duties as the Board of Directors may, from
time to time, prescribe or as may be required by law.
SECTION 7. RESPONSIBILITY OF OFFICERS AND EMPLOYEES. Each officer and
employee will be responsible for all funds and property of every description
which may be
6
<PAGE>
entrusted to his/her care or placed in his/her charge or under his/her control
or which may otherwise come into his/her possession.
SECTION 8. OFFICIAL BONDS. Satisfactory bonds for the faithful
performance of duties may be required for all officers and employees. Such bonds
will be approved by the Board of Directors.
ARTICLE IV. CORPORATE SEAL
SECTION 1. SEAL. If the Board of Directors elects to use a corporate seal
for the corporation, such seal will be a circle, in the margin of which will
appear the words "Pacific Continental Corporation, Eugene, Oregon", and in the
center the words "Corporate Seal."
ARTICLE V. CERTIFICATES AND TRANSFER OF SHARES
SECTION 1. CERTIFICATES FOR SHARES. The shares of stock of the
corporation will be represented by stock certificates. Each certificate will be
signed by the President or Vice President and the Secretary of the corporation.
Each certificate for shares will state upon its face all information required by
law. Each stock certificate will state on its face that it is transferable only
on the books of the corporation.
SECTION 2. STOCK TRANSFER BOOK. The corporation will keep a stock
transfer book. Certificates of stock will be numbered consecutively and
registered in the order in which they are issued. The stock transfer book will
show the name, residence, the date of issuance and number of shares held by each
shareholder. The stock transfer book will show all transfers of stock, stating
the date when made, the number of shares transferred, and to whom transferred.
All certificates returned to the corporation for transfer or sale will be voided
by nullifying the corporate seal and attaching the cancelled certificate to the
cancelled stub in the stock transfer book.
SECTION 3. TRANSFER ON THE BOOKS. The shares of stock of the corporation
will be transferable and assignable only upon the books of the corporation. Upon
surrender to the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, the corporation will issue a new certificate to the person entitled to
that certificate, cancel the old certificate and record the transaction upon its
stock transfer book.
SECTION 4. LOST, STOLEN OR DESTROYED CERTIFICATES. In the event a
certificate is lost, stolen or destroyed, the President or Cashier may, upon
satisfactory proof of such loss, theft or destruction, and upon receipt of
satisfactory indemnity from the shareholder, authorized the issuance of a new
certificate.
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<PAGE>
ARTICLE VI. GENERAL PROVISIONS
SECTION 1. CONVEYANCE OF REAL ESTATE OWNED. All instruments for the
purpose of transferring and conveying real estate owned by the corporation or
any contract or agreement, will be executed in the name of the corporation under
authority of a resolution by the Board of Directors, signed by the President or
Vice President and Secretary.
SECTION 2. EXECUTION OF DOCUMENTS. All checks, drafts, vouchers or other
obligations representing the current expenses and current business transactions
of the corporation will be signed by the President, Vice President or Secretary
or such officer of the corporation as the Board of Directors may by resolution
determine.
ARTICLE VII. AMENDMENTS
SECTION 1. AMENDMENT OF BYLAWS. These bylaws may be altered, amended or
repealed by a majority vote of the Board of Directors at any regular meeting of
the Board of Directors or any special meeting called for that purpose.
These bylaws were adopted by a resolution of the Board of Directors
effective December 9, 1998, and amended by resolution of the Board of Directors
on February 9, 1999.
8
<PAGE>
EXHIBIT 10.1
1992 INCENTIVE STOCK OPTION PLAN
OF
PACIFIC CONTINENTAL BANK
1. PURPOSE. The purpose of this 1992 Incentive Stock Option Plan (Plan)
is to secure for Pacific Continental Bank (Bank) and its shareholders the
benefits which flow from providing employees of the Bank with the incentive
inherent in common stock ownership. It is generally recognized that incentive
stock option plans aid in retaining competent employees, furnish a device to
attract employees of exceptional ability to the Bank, and provide incentive to
employees to make the Bank successful.
2. AMOUNT OF STOCK. The total number of shares to be subject to options
granted on and after final adoption of the Plan shall not exceed sixty thousand
(60,000) shares of the Two Dollar ($2) par value common stock of the Bank. The
total number of shares shall be subject to appropriate increase or decrease in
the event of a stock dividend, stock split or reclassification of the shares
covered by this Plan. If options granted under this Plan lapse or are cancelled
without being exercised in whole or in part, other options may be granted
covering the shares not purchased under such lapsed or cancelled options.
3. STOCK OPTION COMMITTEE. The Board of Directors shall constitute the
stock option committee (hereinafter referred to as Committee), to serve under
this Plan. Any employees who are eligible to participate under the Plan, and
who are also directors, shall be disqualified from voting on any issue
concerning this Plan or from participating in the administration of the Plan.
4. ELIGIBILITY AND PARTICIPATION. Options may be granted pursuant to the
Plan to employees of the Bank. From time to time the Committee shall select,
from among all the Bank's employees, the employees to whom options shall be
granted. The Committee shall determine the terms of each option, including, but
not limited to, the number of shares to be covered by the option, the purchase
price per share under each option, and the option period. Future as well as
present employees shall be eligible to participate in the Plan. No option may
be granted under the Plan more than ten (10) years after the date of the
adoption of the Plan by the Board of Directors or the date of approval of the
Plan by the shareholders, whichever is earlier. No option may be granted under
the Plan to an employee who immediately before the option is
Page 1--1992 INCENTIVE STOCK OPTION PLAN OF PACIFIC CONTINENTAL BANK
granted, owns stock representing more than ten percent (10%) of the voting power
of all classes of stock of the Bank or any parent or subsidiary of the Bank.
For the purposes of this preceding
<PAGE>
sentence, each employee shall be considered as owning the stock owned directly
or indirectly by or for himself or herself; the stock which the employee may
purchase under outstanding options; any stock owned, directly or indirectly, by
or for the employee's brothers and sisters (whether of the whole or half blood),
spouse, ancestors and lineal descendents. Stock owned directly or indirectly, by
or for a corporation, partnership, estate or trust shall be considered as being
owned proportionately by or for its shareholders, partners, or beneficiaries.
5. OPTION AGREEMENT. The terms and provisions of options granted pursuant
to the Plan shall be set forth in an agreement, herein called Option Agreement,
between the Bank and the employee receiving the option. The Option Agreement
may be in such form, not inconsistent with the terms of this Plan, as shall be
approved by the Committee.
6. PRICE. The purchase price per share under options granted pursuant to
the Plan shall be not less than one hundred percent (100%) of the fair market
value at the time the options are granted. The fair market value shall be
determined using the same method as is used for determining the price per share
in connection with the Bank's dividend reinvestment plan, or if that plan is
discontinued, using any reasonable method. The full purchase price of shares
purchased shall be paid upon exercise of the option.
7. OPTION PERIOD. No option granted pursuant to the Plan shall be
exercisable after theexpiration of ten (10) years from the date the option is
first granted. The expiration date set forth in each Option Agreement is
hereinafter referred to as the Expiration Date.
8. TERMINATION OF EMPLOYMENT. The Option Agreement shall provide that:
a. If, prior to the Expiration Date, the employee ceases to be
employed by the Bank, for any reason other than death or total and permanent
disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code
of 1986, as amended), then any unexercised portion of the option granted shall
automatically terminate three (3) months after the date on which the employee
ceases to be an employee;
b. If, prior to the Expiration Date, the employee ceases to be an
employee of the Bank because of total and permanent disability (within the
meaning of Section 22 (e) (3) of the Internal Revenue Code of 1986, as amended),
then any unexercised portion of
Page 2--1992 INCENTIVE STOCK OPTION PLAN OF PACIFIC CONTINENTAL BANK
the option granted shall automatically terminate one (1) year after the date
such employee ceases service;
<PAGE>
C. If, prior to the Expiration Date, the employee dies, the legal
representative of the employee's estate or any devisee or heir of the employee
shall have the privilege, for a period of six (6) months after the date of
death, of exercising all or any part of the then unexercised portion of the
option.
The provisions set forth in this Paragraph 8 shall not be construed as extending
the time for exercising any option granted pursuant to this Plan beyond the
Expiration Date.
9. ASSIGNABILITY. The Option Agreement shall provide that the option
granted is not transferable by the employee other than by will or the laws of
descent and distribution, and is exercise-able, during the employee's lifetime,
only by the employer.
10. ADJUSTMENT IN CASE OF STOCK SPLITS, STOCK DIVIDENDS OR REORGANIZATION.
The Option Agreement may contain such provisions as the Committee may approve as
equitable concerning the effect upon the option granted thereby, and upon the
per share option price, of any stock dividends, stock splits or reclassification
of the stock upon reorganization.
11. AMENDMENT OF THE PLAN. The Board of Directors may, from time to time
(subject to obtaining approval from the shareholders of the Bank or the
Department of Insurance and Finance for the State of Oregon, to the extent
required by Oregon law) , alter, amend, suspend or discontinue the Plan and make
rules for its administration, except that the Board of Directors shall not amend
the Plan in any manner which would have the effect of preventing options issued
under the Plan from being "incentive stock options" as defined in Section 422 of
the Internal Revenue Code of 1986, as amended.
12. OPTIONS DISCRETIONARY. The granting of options under the Plan shall
be entirely discretionary and nothing in the Plan shall be deemed to give any
employee any right to participate in the Plan or to receive options.
13. SHAREHOLDER APPROVAL. The Plan, and the amendment to the articles of
incorporation necessary to implement the Plan, shall be submitted to the
shareholders of the Bank for approval by the holders of at least two-thirds
(2/3) of the issued and outstanding shares of the Bank. If the shareholders of
the Bank f ail to approve the Plan or fail to adopt the necessary amendment to
the articles of incorporation, the Plan shall be null and void.
14. APPROVAL OF THE DEPARTMENT OF INSURANCE AND FINANCE. The Plan shall
be submitted to the Department of Insurance and Finance.
Page 3--1992 INCENTIVE STOCK OPTION PLAN OF PACIFIC CONTINENTAL BANK
<PAGE>
EXHIBIT 10.2
1995 INCENTIVE STOCK OPTION PLAN
OF
PACIFIC CONTINENTAL BANK
1. PURPOSE. The purpose of this 1995 Incentive Stock Option Plan (Plan)
is to secure for Pacific Continental Bank (Bank) and its shareholders the
benefits which flow from providing employees of the Bank with the incentive
inherent in common stock ownership. It is generally recognized that incentive
stock option plans aid in retaining competent employees, furnish a device to
attract employees of exceptional ability to the Bank, and provide incentive to
employees to make the Bank successful.
2. AMOUNT OF STOCK. The total number of shares to be subject to options
granted on and after final adoption of the Plan shall not exceed one hundred
thousand (100,000) shares of the One Dollar ($l) par value common stock of the
Bank. The total number of shares shall be subject to appropriate increase or
decrease in the event of a stock dividend, stock split or reclassification of
the shares covered by this Plan. If options granted under this Plan lapse or
are cancelled without being exercised in whole or in part, other options may be
granted covering the shares not purchased under such lapsed or cancelled
options.
3. STOCK OPTION COMMITTEE. The Board of Directors shall constitute the
stock option committee (hereinafter referred to as Committee), to serve under
this Plan. Any employees who are eligible to participate under the Plan, and
who are also directors, shall be disqualified from voting on any issue
concerning this Plan or from participating in the administration of the Plan.
4. ELIGIBILITY AND PARTICIPATION. Options may be granted pursuant to the
Plan to employees of the Bank. From time to time the Committee shall select,
from among all the Bank's employees, the employees to whom options shall be
granted. The Committee shall determine the terms of each option, including, but
not limited to, the number of shares to be covered by the option, and the option
period. Future as well as present employees shall be eligible to participate in
the Plan. No option may be granted under the Plan more than ten (10) years
after the date of the adoption of the Plan by the Board of Directors or the date
of approval of the Plan by the shareholders, whichever is earlier. No option
may be granted under the Plan to an employee who immediately before the option
is granted, owns stock representing more than ten percent (10%) of the voting
power of all classes of stock of the Bank or any parent or subsidiary of the
Bank. For the purposes of
Page 1--1995 INCENTIVE STOCK OPTION PLAN OF PACIFIC CONTINENTAL BANK
<PAGE>
this preceding sentence, each employee shall be considered as owning the stock
owned directly or indirectly by or for himself or herself; the stock which the
employee may purchase under outstanding options; any stock owned, directly or
indirectly, by or for the employee's brothers and sisters (whether of the whole
or half blood), spouse, ancestors and lineal descendants. Stock owned directly
or indirectly, by or for a corporation, partnership, estate or trust shall be
considered as being owned proportionately by or for its shareholders, partners,
or beneficiaries.
5. OPTION AGREEMENT. The terms and provisions of options granted pursuant
to the Plan shall be set forth in an agreement, herein called Option Agreement,
between the Bank and the employee receiving the option. The Option Agreement
may be in such form, not inconsistent with the terms of this Plan, as shall be
approved by the Committee.
6. PRICE. The purchase price per share under options granted pursuant to
the Plan shall be the fair market value of a share at the time the options are
granted. The fair market value shall be determined using the same method as is
used for determining the price per share in connection with the Bank's dividend
reinvestment plan, or if that plan is discontinued, using any reasonable method.
The full purchase price of shares purchased shall be paid upon exercise of the
option.
7. OPTION PERIOD. No option granted pursuant to the Plan shall be
exercisable after the expiration of ten (10) years from the date the option is
first granted. The expiration date set forth in each Option Agreement is
hereinafter referred to as the Expiration Date.
8. TERMINATION OF EMPLOYMENT. The Option Agreement shall provide that:
a. If, prior to the Expiration Date, the employee ceases to be
employed by the Bank, for any reason other than death or total and permanent
disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code
of 1986, as amended), then any unexercised portion of the option granted shall
automatically terminate three (3) months after the date on which the employee
ceases to be an employee;
b. If, prior to the Expiration Date, the employee ceases to be an
employee of the Bank because of total and permanent disability (within the
meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended),
then any unexercised portion of the option granted shall automatically terminate
one (1) year after the date such employee ceases service;
Page 2--1995 INCENTIVE STOCK OPTION PLAN OF PACIFIC CONTINENTAL BANK
<PAGE>
C. If, prior to the Expiration Date, the employee dies, the legal
representative of the employee's estate or any devisee or heir of the employee
shall have the privilege, for a period of six (6) months after the date of
death, of exercising all or any part of the then unexercised portion of the
option.
The provisions set forth in this Paragraph 8 shall not be construed as extending
the time for exercising any option granted pursuant to this Plan beyond the
Expiration Date.
9. ASSIGNABILITY. The Option Agreement shall provide that the option
granted is not transferable by the employee other than by will or the laws of
descent and distribution, and is exercisable, during the employee's lifetime,
only by the employee.
10. PERMITTED ADJUSTMENTS. The Option Agreement may contain such
provisions as the Committee may approve as equitable concerning the effect upon
the option granted thereby, and upon the per share option price, of any stock
dividends, stock splits or reclassification of the stock upon reorganization.
11. AMENDMENT OF THE PLAN. The Board of Directors may, from time to time
(subject to obtaining approval from the shareholders of the Bank or the
Department of Insurance and Finance for the State of Oregon, to the extent
required by Oregon law), alter, amend, suspend or discontinue the Plan and make
rules for its administration, except that the Board of Directors shall not amend
the Plan in any manner which would have the effect of preventing options issued
under the Plan from being "incentive stock options" as defined in Section 422 of
the Internal Revenue Code of 1986, as amended.
12. OPTIONS DISCRETIONARY. The granting of options under the Plan shall
be entirely discretionary and nothing in the Plan shall be deemed to give any
employee any right to participate in the Plan or to receive options.
13. SHAREHOLDER APPROVAL. The Plan, and the amendment to the articles of
incorporation necessary to implement the Plan, shall be submitted to the
shareholders of the Bank for approval by the holders of at least two-thirds
(2/3) of the issued and outstanding shares of the Bank. If the shareholders of
the Bank fail to approve the Plan or fail to adopt the necessary amendment to
the articles of incorporation, the Plan shall be null and void.
14. APPROVAL OF THE DEPARTMENT OF CONSUMER AND BUSINESS SERVICES. The
Plan shall be submitted to the Department of Consumer and Business Services for
the State of Oregon for approval. If the department fails to approve the Plan,
the Plan shall be null and void.
Page 3--1995 INCENTIVE STOCK OPTION PLAN OF PACIFIC CONTINENTAL BANK
<PAGE>
15. INTERPRETATION. This Plan shall be interpreted to conform to the
requirements of Sections 421 through 424 of the Internal Revenue Code of 1986,
as amended, and regulations issued or to be issued thereunder.
Page 4--1995 INCENTIVE STOCK OPTION PLAN OF PACIFIC CONTINENTAL BANK
<PAGE>
EXHIBIT 10.3
PACIFIC CONTINENTAL BANK
1999 EMPLOYEE STOCK OPTION PLAN
-------------------------------
1. Purpose of the Plan. The purpose of this Employee Stock Option Plan
("Plan") is to secure for Pacific Continental Bank ("Bank") and its
shareholders the benefits which flow from providing key employees of the
Bank with incentive inherent in common stock ownership. It is generally
recognized that stock options plans aid in retaining competent employees,
furnish a device to attract employees of exceptional ability, and provide
incentive to employees to make the Bank successful. The Bank intends that
Options issued pursuant to this Plan shall constitute either Incentive
Stock Options within the meaning of Section 422 of the Code or Nonqualified
Stock Options.
2. Definitions. As used in this Plan, the following definitions apply:
a. "Bank" has the meaning set forth in paragraph 1 of this Plan.
b. "Board" means the Board of Directors of the Bank.
c. "Code" means the Internal Revenue Code of 1986, as amended.
d. "Common Stock" means the Bank's common stock, currently with a par
value of $1.00 per share.
e. "Committee" has the meaning set forth in subparagraph 4(a) of this
Plan.
f. "Continuous Status as Employee" means the absence of any interruption
or termination of service as an Employee. Continuous Status as an
Employee shall not be considered interrupted in the case of sick
leave, military leave or any other approved leave of absence.
g. "Date of Grant" of an Option means the date on which the Committee
makes the determination granting such Option, or such later date as
the Committee may designate. The Date of Grant shall be specified in
the Option agreement.
h. "Employee" means any person employed by the Bank, or a Subsidiary of
the Bank which is currently in existence or is hereafter organized or
is acquired by the Bank.
i. "Exercise Price" has the meaning set forth in subparagraph 4(b)(2) of
this Plan.
j. "Option" means a stock option granted under this Plan. Options shall
include both Incentive Stock Options as defined under Section 422 of
the Code and Nonqualified Stock Options, which refer to all stock
options other than Incentive Stock Options.
1
<PAGE>
k. "Optionee" means an Employee who receives an Option.
l. "Plan" has the meaning set forth in paragraph 1 of this Plan.
m. "Parent" means any corporation owning at least eighty percent (80%) of
the total voting power of the issued and outstanding stock of the
Bank, and eighty percent (80%) of the total value of the issued and
outstanding stock of the Bank.
n. "Shareholder-Employee" means an Employee who owns stock representing
more than ten percent (10%) of the total combined voting power of all
classes of stock of the Bank or of any Subsidiary or parent company.
For this purpose, the attribution of stock ownership rules provided in
Section 424(d) of the Code shall apply.
o. "Subsidiary" means any corporation of which not less than fifty
percent (50%) of the voting shares are held by the Bank or a
Subsidiary, whether or not such corporation now exists or is hereafter
organized or acquired by the Bank or a Subsidiary.
3. Stock Subject to Options.
a. Number of Shares Reserved. The maximum number of shares which may be
-------------------------
optioned and sold under this Plan is five hundred thousand (500,000)
shares of the Common Stock of the Bank (subject to adjustment as
provided in subparagraph 6(j) of this Plan). During the term of this
Plan, the Bank will at all times reserve and keep available a
sufficient number of shares of its Common Stock to satisfy the
requirements of this Plan.
b. Expired Options. If any outstanding Option expires or becomes
---------------
unexercisable for any reason without having been exercised in full,
the shares of Common Stock allocable to the unexercised portion of
such Option will again become available for other Options.
4. Administration of the Plan.
a. The Committee. The Board will administer this Plan directly, acting
-------------
as a Committee of the whole, or if the Board elects, by a separate
Committee appointed by the Board for that purpose and consisting of at
least three Board members. All references in the Plan to the
"Committee" refers to this separate Committee, if any is established,
or if none is then in existence, refers to the Board as a whole. Once
appointed, any Committee will continue to serve until otherwise
directed by the Board. From time to time, the Board may increase the
size of the Committee and appoint additional members, remove members
(with or without cause), appoint new members in substitution, and fill
vacancies however caused. The Committee will select one of its members
as chairman, and will hold meetings at such times and places as the
chairman or a majority of the Committee may determine. At all times,
the Board will have the power to remove all
2
<PAGE>
members of the Committee and thereafter to directly administer this
Plan as a Committee of the whole.
(1) Members of the Committee who are eligible for Options or who have
been granted Options will be counted for all purposes in
determining the existence of a quorum at any meeting of the
Committee and will be eligible to vote on all matters before the
Committee respecting the granting of Options or administration of
this Plan.
b. Powers of the Committee. All actions of the Committee must be either
-----------------------
(i) by a majority vote of the members of the full Committee at a
meeting of the Committee, or (ii) by unanimous written consent of all
members of the full Committee without a meeting. All decisions,
determinations and interpretations of the Committee will be final and
binding on all persons, including all Optionees and any other holders
or persons interested in any Options, unless otherwise expressly
determined by a vote of the majority of the entire Board. No member of
the Committee or of the Board will be liable for any action or
determination made in good faith with respect to the Plan or any
Option. Subject to all provisions and limitations of the Plan, the
Committee will have the authority and discretion:
(1) to determine the persons to whom Options are to be granted, the
Dates of Grant, and the number of shares to be represented by
each Option;
(2) to determine the price at which shares of Common Stock are to be
issued under an Option, subject to subparagraph 6(b) of this Plan
("Exercise Price");
(3) to determine all other terms and conditions of each Option
granted under this Plan (including specification of the dates
upon which Options become exercisable, and whether conditioned on
performance standards, periods of service or otherwise), which
terms and conditions can vary between Options;
(4) to modify or amend the terms of any Option previously granted, or
to grant substitute Options, subject to subparagraphs 6(l) and
6(m) of this Plan;
(5) to authorize any person or persons to execute and deliver Option
agreements or to take any other actions deemed by the Committee
to be necessary or appropriate to effect the grant of Options by
the Committee;
(6) to interpret this Plan and to make all other determinations and
take all other actions which the Committee deems necessary or
appropriate to administer this Plan in accordance with its terms
and conditions.
5. Eligibility. Options may be granted only to Employees. Granting of Options
under this Plan will be entirely discretionary with the Committee. Adoption
of this Plan will not confer on any Employee any right to receive any
Option or Options under this Plan unless
3
<PAGE>
and until said Options are granted by the Committee in its sole discretion.
Neither the adoption of this Plan nor the granting of any Options under
this Plan will confer upon any Employee or Optionee any right with respect
to continuation of employment, nor will the same interfere in any way with
his or her right or with the right of the Bank or any Subsidiary to
terminate his or her employment at any time.
6. Terms and Conditions of Options. All Options granted under this Plan must
be authorized by the Committee, and must be documented in written Option
agreements in such form as the Committee will approve from time to time,
which agreements must comply with and be subject to all of the following
terms and conditions:
a. Number of Shares; Annual Limitation. Each Option agreement must state
-----------------------------------
whether the Option is intended to be an Incentive Stock Option or a
Nonqualified Stock Option and the number of shares subject to Option.
Any number of Options may be granted to an Employee at any time;
except that, in the case of Incentive Stock Options, the aggregate
fair market value (determined as of each Date of Grant) of all shares
of Common Stock with respect to which Incentive Stock Options become
exercisable for the first time by such Employee during any one
calendar year (under all incentive stock option plans of the Company
and all of its Subsidiaries taken together) shall not exceed $100,000.
Any portion of an Option in excess of the $100,000 limitation shall be
treated as a Nonqualified Stock Option
b. Exercise Price and Consideration. The Exercise Price shall be the
--------------------------------
price determined by the Committee, subject to subparagraphs (1) and
(2) below.
(1) In the case of Incentive Stock Options, the Exercise Price shall
in no event be less than the fair market value of the Common
Stock on the Date of Grant. In the case of an Incentive Stock
Option granted to a Employee who, immediately before the grant of
such Incentive Stock Option, is a Shareholder-Employee, the
Exercise Price shall be at least 110% of the fair market value of
the Common Stock on the Date of Grant.
(2) In all cases, the Exercise Price shall be no less than the
greater of (i) the fair market value of the Common Stock or (ii)
the net book value of the Common Stock at the time of grant, as
is determined by the Committee.
(3) In all cases, the Exercise Price shall be payable either (i) in
United States dollars upon exercise of the Option, or (ii) if
approved by the Board, other consideration including without
limitation Common Stock of the Bank, services, debt instruments
or other property.
c. Term of Option. No Option shall in any event be exercisable after the
--------------
expiration of ten (10) years from the Date of Grant. Further, no
Incentive Stock Option granted to a Employee who, immediately before
such Incentive Stock Option is granted, is a Shareholder-Employee
shall be exercisable after the expiration of
4
<PAGE>
five (5) years from the Date of Grant. Subject to the foregoing and
other applicable provisions of the Plan including but not limited to
subparagraphs 6(g), 6(h) and 6(i), the term of each Option will be
determined by the Committee in its discretion.
d. Non-transferability of Options. No Option may be sold, pledged,
------------------------------
assigned, hypothecated, transferred, or disposed of in any manner
other than by will or by the laws of descent or distribution and may
be exercised, during the lifetime of the Optionee, only by the
Optionee.
e. Manner of Exercise. An Option will be deemed to be exercised when
------------------
written notice of exercise has been given to the Bank in accordance
with the terms of the Option by the person entitled to exercise the
Option, together with full payment for the shares of Common Stock
subject to said notice.
f. Rights as Shareholder. An Optionee shall have none of the rights of
---------------------
a shareholder with respect to any shares covered by his or her Option
unless and until the Optionee has exercised such Option and submitted
full payment for the shares.
g. Death of Optionee. An Option shall be exercisable at any time prior
-----------------
to termination under subparagraphs (1) or (2), below, by the
Optionee's estate or by such person or persons who have acquired the
right to exercise the Option by bequest or by inheritance or by reason
of the death of the Optionee. In the event of the death of an Holder,
(1) an Incentive Stock Option shall terminate no later than the
earliest of (i) one year after the date of death of the Optionee
if the Optionee had been in Continuous Status as an Employee
since the Date of Grant of the Option, or (ii) the date specified
under subparagraph 6(i) of this Plan if the Optionee's status as
an Employee was terminated prior to his or her death, or (iii)
the expiration date otherwise provided in the applicable Option
agreement; and
(2) a Nonqualified Stock Option shall terminate no later than the
earlier of (i) one year after the date of death of the Optionee,
or (ii) the expiration date otherwise provided in the Option
agreement, except that if the expiration date of a Nonqualified
Stock Option should occur during the 180-day period immediately
following the Optionee's death, such Option shall terminate at
the end of such 180-day period.
h. Disability of Optionee. If an Optionee's status as an Employee is
----------------------
terminated at any time during the Option period by reason of a
disability (within the meaning of Section 22(e)(3) of the Code) and if
said Optionee had been in Continuous Status as an Employee at all
times between the date of grant of the Option and the termination of
his or her status as an Employee, his or her Option shall terminate no
later than the earlier of (i) one year after the date of termination
of his or her
5
<PAGE>
status as an Employee, or (ii) the expiration date otherwise provided
in his or her Option agreement.
i. Termination of Status as an Employee.
------------------------------------
(1) If an Optionee's status as an Employee is terminated at any time
after the grant of an Option to such Employee for any reason
other than death or disability (as described in subparagraphs
6(g) and 6(h) above) and not for cause, as provided in
subparagraph (2) below, then such Option shall terminate no later
than the earlier of (i) the same day of the third month after the
date of termination of his or her status as an Employee, or (ii)
the expiration date otherwise provided in his or her Option
agreement.
(2) If an Optionee's status as an Employee is terminated for cause at
any time after the grant of an Option to such Employee, then such
Option shall terminate immediately upon notice to the Employee of
termination of his or her status as an Employee. Solely for this
purpose, "cause" will be deemed to exist only if the Board has
reasonable grounds to believe that the Bank has suffered or will
suffer substantial injury as a result of the gross negligence or
dishonesty of the Optionee who is removed
j. Adjustments Upon Changes in Capitalization. Subject to any required
------------------------------------------
action by the shareholders of the Bank, the number of shares of Common
Stock covered by each outstanding Option, the number of shares of
Common Stock available for grant of additional Options, and the per-
share Exercise Price in each outstanding Option, will be
proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from any stock split or other
subdivision or consolidation of shares, the payment of any stock
dividend (but only on the Common Stock) or any other increase or
decrease in the number of such shares of Common Stock effected without
receipt of consideration by the Bank; provided, however, that
--------
conversion of any convertible securities of the Bank will not be
deemed to have been "effected without receipt of consideration." Such
adjustment will be made by the Committee, whose determination in that
respect will be final, binding and conclusive.
(1) Except as otherwise expressly provided in this subparagraph 6(j),
no Optionee will have any rights by reason of any stock split or
the payment of any stock dividend or any other increase or
decrease in the number of shares of Common Stock, and no issuance
by the Bank of shares of stock of any class, or securities
convertible into shares of stock of any class, will affect the
number of shares or Exercise Price subject to any Options, and no
adjustments in Options will be made by reason thereof. The grant
of an Option under this Plan will not affect in any way the right
or power of the Bank to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure.
6
<PAGE>
k. Conditions Upon Issuance of Shares. Shares of Common Stock will not be
----------------------------------
issued with respect to an Option granted under this Plan unless the
exercise of such Option and the issuance and delivery of such shares
pursuant thereto will comply with all applicable provisions of law,
including applicable federal and state securities laws. As a condition
to the exercise of an Option, the Bank may require the person
exercising such Option to represent and warrant at the time of
exercise that the shares of Common Stock are being purchased only for
investment and without any present intention to sell or distribute
such Common Stock if, in the opinion of counsel for the Bank, such a
representation is required by any of the aforementioned relevant
provisions of law.
l. Corporate Sale Transactions. In the event of the merger or
---------------------------
reorganization of the Bank with or into any other corporation, the
sale of substantially all of the assets of the Bank, or a dissolution
or liquidation of the Bank (collectively, "Sale Transaction"), (1) all
outstanding Options that are not then fully exercisable will become
exercisable upon the date of closing of any sale transaction or such
earlier date as the Committee may fix; and (2) the Committee may, in
the exercise of its sole discretion, terminate all outstanding Options
as of a date fixed by the Committee. In such event, however, the
Committee must notify each Optionee of such action in writing not less
than sixty (60) days prior to the termination date fixed by the
Committee, and each Optionee must have the right to exercise his or
her Option prior to said termination date.
m. Substitute Stock Options. In connection with an internal
------------------------
reorganization of the Bank (e.g., formation of a holding company), the
Committee is authorized, in its discretion, to substitute for any
unexercised Option, a new option for shares of the resulting entity's
stock.
n. Tax Compliance. The Bank, in its sole discretion, may take actions
--------------
reasonably believed by it to be required to comply with any local,
state, or federal tax laws relating to the reporting or withholding of
taxes attributable to the grant or exercise of any Option or the
disposition of any shares of Common Stock issued upon exercise of an
Option, including, but not limited to (i) withholding from any
Optionee exercising an Option a number of shares of Common Stock
having a fair market value equal to the amount required to be withheld
by the Bank under applicable tax laws, and (ii) withholding from any
form of compensation or other amount due an Optionee, or holder, of
shares of Common Stock issued upon exercise of an Option any amount
required to be withheld by the Bank under applicable tax laws.
Withholding or reporting will be considered required for purposes of
this subparagraph if the Committee, in its sole discretion, so
determines.
o. Holding Period for Incentive Stock Options. With regard to shares of
------------------------------------------
Common Stock issued pursuant to an Incentive Stock Option granted
under the Plan, if the Optionee (or such other person who may exercise
the Option pursuant to subparagraph 6(g) of this Plan) makes a
disposition of such shares within two
7
<PAGE>
years from the Date of Grant of such Option, or within one year from
the date of issuance of such shares to the Optionee upon the exercise
of such Option, then the Optionee must notify the Company in writing
of such disposition and must cooperate with the Company in any tax
compliance relating to such disposition.
p. Other Provisions. Option agreements executed under this Plan may
----------------
contain such other provisions as the Committee will deem advisable.
7. Term of the Plan. This Plan will become effective and Options may be
granted upon the Plan's approval by the Board, subject to shareholder
approval. Unless sooner terminated as provided in subparagraph 7(a) of this
Plan, this Plan will terminate on the tenth (10th) anniversary of its
effective date. Options may be granted at any time after the effective date
and prior to the date of termination of this Plan.
a. Amendment or Early Termination of the Plan. The Board may terminate
------------------------------------------
this Plan at any time. The Board may amend this Plan at any time and
from time to time in such respects as the Board may deem advisable,
except that, without approval of the shareholders, no revision or
amendment will increase the number of shares of Common Stock subject
to this Plan other than in connection with an adjustment under
subparagraph 6(j) of this Plan.
b. Effect of Amendment or Termination. No amendment or termination of
----------------------------------
this Plan will affect Options granted prior to such amendment or
termination, and all such Options will remain in full force and effect
notwithstanding such amendment or termination.
8. Shareholder Approval. Adoption of this Plan will be subject to
ratification by affirmative vote of shareholders owning at least a majority
of the outstanding Common Stock of the Bank at a duly convened meeting
within twelve (12) months after the date of the Board's adoption of this
Plan.
* * * * *
8
<PAGE>
CERTIFICATE OF ADOPTION
I certify that the foregoing Employee Stock Option Plan was approved by the
Board of Directors of Pacific Continental Bank on February 9, 1999.
/s/ John M. Gyde
___________________________________
John M. Gyde, Secretary
I certify that the foregoing Employee Stock Option Plan was approved by the
shareholders of Pacific Continental Bank on April 22, 1999.
/s/ John M. Gyde
___________________________________
John M. Gyde, Secretary
9
<PAGE>
EXHIBIT 10.4
1995 DIRECTORS' STOCK OPTION PLAN
OF
PACIFIC CONTINENTAL BANK
1. PURPOSE. The purpose of this 1995 Directors' Stock Option Plan (Plan)
is to secure for the Pacific Continental Bank (Bank) and its shareholders the
benefits which flow from providing directors of the Bank with the incentive
inherent in common stock ownership. It is generally recognized that stock option
plans aid in retaining competent directors, furnish a device to attract
directors of exceptional ability to the Bank and provide incentive to directors
to make the Bank successful.
2. AMOUNT OF STOCK. The total number of shares to be subject to options
granted on and after final adoption of the Plan shall not exceed twenty thousand
(20,000) shares of the One Dollar ($1) par value common stock of the Bank. The
total number of shares shall be subject to appropriate increase or decrease in
the event of a stock dividend, stock split or reclassification of the shares
covered by this Plan. If options granted under this Plan lapse or are cancelled
without being exercised in whole or in part, other options may be granted
covering and the shares not purchased under such lapsed or cancelled options.
3. STOCK OPTION COMMITTEE. The Board of Directors shall constitute the
stock option committee (hereinafter referred to as Committee), to serve under
this Plan.
4. ELIGIBILITY AND PARTICIPATION. Options may be granted pursuant to the
Plan to directors who are not employees of the Bank. From time to time the
Committee shall select the directors to whom options shall be granted and the
Committee shall determine the terms of each option, including, but not limited
to, the number of shares to be covered by the option, and the option period.
Future as well as present directors shall be eligible to participate in the
Plan. No option may be granted under the Plan more than ten (10) years after the
date of the adoption of the Plan by the Board of Directors or the date of
approval of the Plan by the shareholders, whichever is earlier.
5. OPTION AGREEMENT. The terms and provisions of options granted
pursuant to the Plan shall be set forth in an agreement, herein called Option
Agreement, between the Bank and the director receiving the option. The Option
Agreement may be in such form, not inconsistent with the terms of this Plan, as
shall be approved by the Committee.
Page 1--1995 DIRECTORS' STOCK OPTION PLAN OF PACIFIC CONTINENTAL BANK
<PAGE>
6. PRICE. The purchase price per share under options granted pursuant to
the Plan shall be the fair market value of a share at the time the options are
granted. The fair market value shall be determined using the same method as is
used for determining the price per share in connection with the Bank's dividend
reinvestment plan, or if that plan is discontinued, using any reasonable method.
The full purchase price of shares purchased shall be paid upon exercise of the
option.
7. OPTION PERIOD. No option granted pursuant to the Plan shall be
exercisable after the expiration of ten (10) years from the date the option is
first granted. The expiration date set forth in each Option Agreement is
hereinafter referred to as the Expiration Date.
8. TERMINATION OF SERVICE. The Option Agreement shall provide that:
a. If, prior to the Expiration Date, the director ceases to be a
director of the Bank, for any reason other than death or total and permanent
disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code
of 1986, as amended), then any unexercised portion of the option granted shall
automatically terminate three (3) months after the date on which the director
ceases to be a director;
b. If, prior to the Expiration Date, the director ceases to be a
director of the Bank because of total and permanent disability (within the
meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended),
then any unexercised portion of the option granted shall automatically terminate
one (1) year after the date such director ceases service;
c. If, prior to the Expiration Date, the director dies, the legal
representative of the director's estate or any devisee or heir of the director
shall have the privilege, for a period of six (6) months after the date of
death, or exercising all or any part of the then unexercised portion of the
option.
The provisions set forth in this Paragraph 8 shall not be construed as extending
the time for exercising any option granted pursuant to this Plan beyond the
Expiration Date.
9. ASSIGNABILITY. The Option Agreement shall provide that the option
granted is not transferable by the director other than by will or the laws of
descent and distribution, and is exercisable, during the director's lifetime,
only by the director.
10. PERMITTED ADJUSTMENTS. The Option Agreement may contain such
provisions as the Committee may approve as equitable concerning the effect upon
the option granted thereby, and upon the
Page 2--1995 DIRECTORS' STOCK OPTION PLAN OF PACIFIC CONTINENTAL BANK
<PAGE>
per share option price, of any stock dividends, stock splits or reclassification
of the stock upon reorganization.
11. AMENDMENT OF THE PLAN. The Board of Directors may, from time to time
(subject to obtaining approval from the shareholders of the Bank or the
Department of Insurance and Finance for the State of Oregon, to the extent
required by Oregon law), alter, amend, suspend or discontinue the Plan and make
rules for its administration.
12. OPTIONS DISCRETIONARY. The granting of options under the Plan shall
be entirely discretionary and nothing in the Plan shall be deemed to give any
director any right to participate in the Plan or to receive options.
13. SHAREHOLDER APPROVAL. The Plan, and the amendment to the articles of
incorporation necessary to implement the Plan, shall be submitted to the
shareholders of the Bank for approval by the holders of at least two-thirds
(2/3) of the issued and outstanding shares of the Bank. If the shareholders of
the Bank fail to approve the plan or fail to adopt the necessary amendment to
the articles of incorporation, the Plan shall be null and void.
14. APPROVAL OF THE DEPARTMENT OF CONSUMER AND BUSINESS SERVICES. The
Plan shall be submitted to the Department of Consumer and Business Services for
the State of Oregon. If the department disapproves the Plan, the Plan shall be
null and void.
Page 3--1995 DIRECTORS' STOCK OPTION PLAN OF PACIFIC CONTINENTAL BANK
<PAGE>
EXHIBIT 10.5
PACIFIC CONTINENTAL BANK
1999 DIRECTOR STOCK OPTION PLAN
-------------------------------
1. Purpose of the Plan. The purpose of this 1999 Director Stock Option Plan
("Plan") is to secure for Pacific Continental Bank ("Bank") and its
shareholders the benefits which flow from providing Directors of the Bank
with incentive inherent in common stock ownership. It is generally
recognized that stock options plans aid in retaining competent directors,
furnish a device to attract directors of exceptional ability, and provide
incentive to Directors to make the Bank successful. The Bank intends that
Options issued under this Plan will constitute nonqualified stock options.
2. Definitions. As used in this Plan, the following definitions apply:
a. "Bank" has the meaning set forth in paragraph 1 of this Plan.
b. "Board" means the Board of Directors of the Bank.
c. "Code" means the Internal Revenue Code of 1986, as amended.
d. "Common Stock" means the Bank's common stock, currently with a par
value of $1.00 per share.
e. "Committee" has the meaning set forth in subparagraph 4(a) of this
Plan.
f. "Continuous Status as a Director" means the absence of any
interruption or termination of service as a Director.
g. "Date of Grant" of an Option means the date on which the Committee
makes the determination granting such Option, or such later date as
the Committee may designate. The Date of Grant shall be specified in
the Option agreement.
h. "Director" means any person serving as a member of the Board of the
Bank, or a Subsidiary of the Bank which is currently in existence or
is hereafter organized or is acquired by the Bank.
i. "Exercise Price" has the meaning set forth in subparagraph 4(b)(2) of
this Plan.
j. "Option" means a stock option granted under this Plan, which
constitutes a Nonqualified Stock Option.
k. "Optionee" means a Director who receives an Option.
l. "Plan" has the meaning set forth in paragraph 1 of this Plan.
1
<PAGE>
m. "Parent" means any corporation owning at least eighty percent (80%) of
the total voting power of the issued and outstanding stock of the
Bank, and eighty percent (80%) of the total value of the issued and
outstanding stock of the Bank.
n. "Subsidiary" means any corporation of which not less than fifty
percent (50%) of the voting shares are held by the Bank or a
Subsidiary, whether or not such corporation now exists or is hereafter
organized or acquired by the Bank or a Subsidiary.
3. Stock Subject to Options.
a. Number of Shares Reserved. The maximum number of shares which may be
-------------------------
optioned and sold under this Plan is one hundred thousand (100,000)
shares of the Common Stock of the Bank (subject to adjustment as
provided in subparagraph 6(j) of this Plan). During the term of this
Plan, the Bank will at all times reserve and keep available a
sufficient number of shares of its Common Stock to satisfy the
requirements of this Plan.
b. Expired Options. If any outstanding Option expires or becomes
---------------
unexercisable for any reason without having been exercised in full,
the shares of Common Stock allocable to the unexercised portion of
such Option will again become available for other Options.
4. Administration of the Plan.
a. The Committee. The Board will administer this Plan directly, acting
-------------
as a Committee of the whole, or if the Board elects, by a separate
Committee appointed by the Board for that purpose and consisting of at
least three Board members. All references in the Plan to the
"Committee" refers to this separate Committee, if any is established,
or if none is then in existence, refers to the Board as a whole. Once
appointed, any Committee will continue to serve until otherwise
directed by the Board. From time to time, the Board may increase the
size of the Committee and appoint additional members, remove members
(with or without cause), appoint new members in substitution, and fill
vacancies however caused. The Committee will select one of its members
as chairman, and will hold meetings at such times and places as the
chairman or a majority of the Committee may determine. At all times,
the Board will have the power to remove all members of the Committee
and thereafter to directly administer this Plan as a Committee of the
whole.
(1) Members of the Committee who are eligible for Options or who have
been granted Options will be counted for all purposes in
determining the existence of a quorum at any meeting of the
Committee and will be eligible to vote on all matters before the
Committee respecting the granting of Options or administration of
this Plan.
2
<PAGE>
b. Powers of the Committee. All actions of the Committee must be either
-----------------------
(i) by a majority vote of the members of the full Committee at a
meeting of the Committee, or (ii) by unanimous written consent of all
members of the full Committee without a meeting. All decisions,
determinations and interpretations of the Committee will be final and
binding on all persons, including all Optionees and any other holders
or persons interested in any Options, unless otherwise expressly
determined by a vote of the majority of the entire Board. No member of
the Committee or of the Board will be liable for any action or
determination made in good faith with respect to the Plan or any
Option. Subject to all provisions and limitations of the Plan, the
Committee will have the authority and discretion:
(1) to determine the Directors to whom Options are to be granted, the
Dates of Grant, and the number of shares to be represented by
each Option;
(2) to determine the price at which shares of Common Stock are to be
issued under an Option, subject to subparagraph 6(b) of this Plan
("Exercise Price");
(3) to determine all other terms and conditions of each Option
granted under this Plan (including specification of the dates
upon which Options become exercisable, and whether conditioned on
performance standards, periods of service or otherwise), which
terms and conditions can vary between Options;
(4) to modify or amend the terms of any Option previously granted, or
to grant substitute Options, subject to subparagraphs 6(l) and
6(m) of this Plan;
(5) to authorize any person or persons to execute and deliver Option
agreements or to take any other actions deemed by the Committee
to be necessary or appropriate to effect the grant of Options by
the Committee;
(6) to interpret this Plan and to make all other determinations and
take all other actions which the Committee deems necessary or
appropriate to administer this Plan in accordance with its terms
and conditions.
5. Eligibility. Options may be granted only to Directors. Granting of Options
under this Plan will be entirely discretionary with the Committee. Adoption
of this Plan will not confer on any Director any right to receive any
Option or Options under this Plan unless and until said Options are granted
by the Committee, in its sole discretion. Neither the adoption of this Plan
nor the granting of any Options under this Plan will confer upon any
Director or Optionee any right with respect to continuation of status as a
Director, nor will the same interfere in any way with his or her right or
with the right of the shareholders of the Bank or any Subsidiary to
terminate his or her status as a Director at any time.
3
<PAGE>
6. Terms and Conditions of Options. All Options granted under this Plan must
be authorized by the Committee, and must be documented in written Option
agreements in such form as the Committee will approve from time to time,
which agreements must comply with and be subject to all of the following
terms and conditions:
a. Number of Shares. Each Option agreement must state the number of
----------------
shares subject to Option. Any number of Options may be granted to a
single eligible Director at any time and from time to time.
b. Exercise Price and Consideration. Each option agreement must state
--------------------------------
the Exercise Price for the shares of Common Stock to be issued under
the Option, which price must be not less than the greater of (1) the
fair market value of the Common Stock or (2) the net book value of the
Common Stock at the time of grant, as is determined by the Committee.
The Exercise Price is payable either (i) in United States dollars upon
exercise of the Options, or (ii) if approved by the Board or
Committee, other consideration including without limitation Common
Stock of the Bank, services, debt instruments or other property.
c. Term of Option. No Option shall in any event be exercisable after the
--------------
expiration of ten (10) years from the Date of Grant. Subject to other
applicable provisions of this Plan including but not limited to
subparagraphs 6(g), 6(h) and 6(i), the term of each Option will be
determined by the Committee in its discretion.
d. Non-transferability of Options. No Option may be sold, pledged,
------------------------------
assigned, hypothecated, transferred, or disposed of in any manner
other than by will or by the laws of descent or distribution and may
be exercised, during the lifetime of the Optionee, only by the
Optionee.
e. Manner of Exercise. An Option will be deemed to be exercised when
------------------
written notice of exercise has been given to the Bank in accordance
with the terms of the Option by the person entitled to exercise the
Option, together with full payment for the shares of Common Stock
subject to said notice.
f. Rights as Shareholder. An Optionee shall have none of the rights of a
---------------------
shareholder with respect to any shares covered by his or her Option
unless and until the Optionee has exercised such Option and submitted
full payment for the shares.
g. Death of Optionee. In the event of the death of an Optionee who at
-----------------
the time of his or her death was a Director and who had been in
Continuous Status as a Director since the Date of Grant of the Option,
the Option will terminate on the earlier of (i) one year after the
date of death of the Optionee, or (ii) the expiration date otherwise
provided in the Option agreement, except that if the expiration date
should occur during the 180-day period immediately following the
Optionee's death, such Option will terminate at the end of such 180-
day period. The Option will be exercisable at any time prior to such
termination by the Optionee's estate,
4
<PAGE>
or by such person or persons who have acquired the right to exercise
the Option by bequest or by inheritance or by reason of the death of
the Optionee.
h. Disability of Optionee. If an Optionee's status as a Director is
----------------------
terminated at any time during the Option period by reason of a
disability (within the meaning of Section 22(e)(3) of the Code) and if
said Optionee had been in Continuous Status as a Director at all times
between the Date of Grant of the Option and the termination of his or
her status as a Director, his or her Option will terminate on the
earlier of (i) one year after the date of termination of his or her
status as a Director, or (ii) the expiration date otherwise provided
in his or her Option agreement.
i. Termination of Status as a Director.
-----------------------------------
(1) If an Optionee's status as a Director is terminated at any time
after the grant of an Option to such Director for any reason
other than death or disability, as provided in subparagraphs 6(g)
and 6(h) of this Plan, and excepting if the Director is removed
for cause, as provided in subparagraph (2) below, such Option
will terminate on the earlier of (i) the same day of the third
month after the date of termination of his or her status as a
Director, or (ii) the expiration date otherwise provided in his
or her Option agreement.
(2) If an Optionee is removed as a Director for cause at any time
after the grant of an Option to such Director, then such Option
will terminate immediately upon notice to the Director of
termination of his or her status as a Director. Solely for this
purpose, "cause" will be deemed to exist only if the Board has
reasonable grounds to believe that the Bank has suffered or will
suffer substantial injury as a result of the gross negligence or
dishonesty of the Director who is removed.
j. Adjustments Upon Changes in Capitalization. Subject to any required
------------------------------------------
action by the shareholders of the Bank, the number of shares of Common
Stock covered by each outstanding Option, the number of shares of
Common Stock available for grant of additional Options, and the per-
share Exercise Price in each outstanding Option, will be
proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from any stock split or other
subdivision or consolidation of shares, the payment of any stock
dividend (but only on the Common Stock) or any other increase or
decrease in the number of such shares of Common Stock effected without
receipt of consideration by the Bank; provided, however, that
--------
conversion of any convertible securities of the Bank will not be
deemed to have been "effected without receipt of consideration." Such
adjustment will be made by the Committee, whose determination in that
respect will be final, binding and conclusive.
5
<PAGE>
(1) Except as otherwise expressly provided in this subparagraph 6(j),
no Optionee will have any rights by reason of any stock split or
the payment of any stock dividend or any other increase or
decrease in the number of shares of Common Stock, and no issuance
by the Bank of shares of stock of any class, or securities
convertible into shares of stock of any class, will affect the
number of shares or Exercise Price subject to any Options, and no
adjustments in Options will be made by reason thereof. The grant
of an Option under this Plan will not affect in any way the right
or power of the Bank to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure.
k. Conditions Upon Issuance of Shares. Shares of Common Stock will not be
----------------------------------
issued with respect to an Option granted under this Plan unless the
exercise of such Option and the issuance and delivery of such shares
pursuant thereto will comply with all applicable provisions of law,
including applicable federal and state securities laws. As a condition
to the exercise of an Option, the Bank may require the person
exercising such Option to represent and warrant at the time of
exercise that the shares of Common Stock are being purchased only for
investment and without any present intention to sell or distribute
such Common Stock if, in the opinion of counsel for the Bank, such a
representation is required by any of the aforementioned relevant
provisions of law.
l. Corporate Sale Transactions. In the event of the merger or
---------------------------
reorganization of the Bank with or into any other corporation, the
sale of substantially all of the assets of the Bank, or a dissolution
or liquidation of the Bank (collectively, "Sale Transaction"), (1) all
outstanding Options that are not then fully exercisable will become
exercisable upon the date of closing of any sale transaction or such
earlier date as the Committee may fix; and (2) the Committee may, in
the exercise of its sole discretion, terminate all outstanding Options
as of a date fixed by the Committee. In such event, however, the
Committee must notify each Optionee of such action in writing not less
than sixty (60) days prior to the termination date fixed by the
Committee, and each Optionee must have the right to exercise his or
her Option prior to said termination date.
m. Substitute Stock Options. In connection with an internal
------------------------
reorganization of the Bank (e.g., formation of a holding company), the
Committee is authorized, in its discretion, to substitute for any
unexercised Option, a new option for shares of the resulting entity's
stock.
n. Tax Compliance. The Bank, in its sole discretion, may take actions
--------------
reasonably believed by it to be required to comply with any local,
state, or federal tax laws relating to the reporting or withholding of
taxes attributable to the grant or exercise of any Option or the
disposition of any shares of Common Stock issued upon exercise of an
Option, including, but not limited to (i) withholding from any
Optionee exercising an Option a number of shares of Common Stock
having a fair market value equal to the amount required to be withheld
by the Bank under
6
<PAGE>
applicable tax laws, and (ii) withholding from any form of
compensation or other amount due an Optionee, or holder, of shares of
Common Stock issued upon exercise of an Option any amount required to
be withheld by the Bank under applicable tax laws. Withholding or
reporting will be considered required for purposes of this
subparagraph if the Committee, in its sole discretion, so determines.
o. Other Provisions. Option agreements executed under this Plan may
----------------
contain such other provisions as the Committee will deem advisable.
7. Term of the Plan. This Plan will become effective and Options may be
granted upon the Plan's approval by the Board, subject to shareholder
approval. Unless sooner terminated as provided in subparagraph 7(a) of this
Plan, this Plan will terminate on the tenth (10th) anniversary of its
effective date. Options may be granted at any time after the effective date
and prior to the date of termination of this Plan.
a. Amendment or Early Termination of the Plan. The Board may terminate
------------------------------------------
this Plan at any time. The Board may amend this Plan at any time and
from time to time in such respects as the Board may deem advisable,
except that, without approval of the shareholders, no revision or
amendment will increase the number of shares of Common Stock subject
to this Plan other than in connection with an adjustment under
subparagraph 6(j) of this Plan.
b. Effect of Amendment or Termination. No amendment or termination of
----------------------------------
this Plan will affect Options granted prior to such amendment or
termination, and all such Options will remain in full force and effect
notwithstanding such amendment or termination.
8. Shareholder Approval. Adoption of this Plan will be subject to
ratification by affirmative vote of shareholders owning at least a majority
of the outstanding Common Stock of the Bank at a duly convened meeting.
* * * * *
7
<PAGE>
CERTIFICATE OF ADOPTION
I certify that the foregoing Director Stock Option Plan was approved by the
Board of Directors of Pacific Continental Bank on February 9, 1999.
/s/ John M. Gyde
______________________________________
John M. Gyde, Secretary
I certify that the foregoing Director Stock Option Plan was approved by the
shareholders of Pacific Continental Bank on April 22, 1999.
/s/ John M. Gyde
______________________________________
John M. Gyde, Secretary
8
<PAGE>
EXHIBIT 10.6
EXHIBIT A
EXECUTIVE SEVERANCE AGREEMENT
This Agreement is made and entered into by and between PACIFIC CONTINENTAL
BANK, a Washington banking corporation (hereinafter called the "Bank") and
__________________ (hereinafter called the "Executive").
WHEREAS, the Executive is employed by the Bank in a key managerial
capacity, presently holding the position of _________________ of the Bank; and
WHEREAS, the Bank wishes to ensure that the Executive will be available to
assist the Board of Directors of the Bank (the "Board") in responding to and, if
deemed appropriate by the Board, completing any proposed change in control of
the Bank;
NOW, THEREFORE, the Bank and the Executive agree to the following
provisions:
1. Change in Control. For purposes of this Agreement, the term "Change
-----------------
in Control" shall mean a change "in the ownership or effective control" or "in
the ownership of a substantial portion of the assets" of the Bank, with the
quoted phrases of this sentence having the same meaning as when used in Section
280G(b)(2)(A) of the Internal Revenue Code of 1986, as amended ("Code");
provided, however, that the formation of a one-bank holding company to hold the
- --------
stock of the Bank or similar reorganization to insert a one-bank holding company
between the Bank and its then-existing shareholders shall not by itself
constitute a Change in Control.
2. Commitment of Executive. In the event any person extends any proposal
-----------------------
or offer which could result in a Change in Control, the Executive will, at the
Board's request, assist the Board in evaluating such proposal or offer.
Further, the Executive specifically agrees that he will not resign his position
with the Bank during any period from the receipt of a specific Change in Control
proposal up to the closing or termination of the transaction contemplated by the
proposal.
3. Severance Payment Events. In the event of --
------------------------
a. the voluntary or involuntary termination (excluding
termination due to death, disability or commission of a crime) of the
Executive's employment with the Bank within three (3) years after a
Change in Control; or
b. the involuntary termination (excluding termination due to
death, disability, or commission of a crime) by the Bank of the
Executive's employment on or after the date that any party announces
(or should announce) any prospective Change in Control transaction, if
a Change in Control does occur within Fifteen (15) months of such
termination,
<PAGE>
then the Bank shall pay to Executive a severance payment, in the amount
determined pursuant to the next paragraph, payable on the later of the date of
termination or the date of the Change in Control.
4. Amount of the Severance Payments. The severance payment shall be an
--------------------------------
amount equal to three (3) times the highest compensation (as reportable on the
Executive's IRS W-2 form) received by the Executive from the Bank during any of
the most recent three (3) calendar years ending before, or simultaneously with,
the date on which the Change in Control occurs; provided, however, that the
--------
severance payment shall be less than the amount which would cause the payment to
be a "parachute payment" as defined in Section 280G(b)(2)(A) of the Code; and
provided, further, that such severance payment shall be reduced by any
- --------
compensation (as reportable on the Executive's IRS W-2 form) received from the
Bank or its successor in interest after the Change in Control.
5. Revocability. This Agreement may be terminated unilaterally by the
------------
Bank, but (i) only as of a prospective effective date which follows by at least
15 months the date that written notice is given to Executive that the Bank, by a
vote of at least a majority of its directors, has determined to terminate the
Agreement, and (ii) only if no Change in Control occurs prior to such effective
date; provided, however, that this Agreement shall automatically terminate if,
--------
at any time prior to the closing of a Change in Control transaction, the
Executive (a) voluntarily terminates his employment with the Bank, or (b) is
terminated by the Bank for cause (i.e., acts of dishonesty, disloyalty,
illegality or moral turpitude adversely impacting the Bank; repeated failure or
refusal to follow reasonable directions from the Board following a written
warning). If not earlier terminated, this Agreement will terminate three (3)
years after any Change in Control occurs.
6. Addition of Holding Company. In the event of the formation of a one-
---------------------------
bank holding company to hold the stock of the Bank or similar reorganization to
insert a one-bank holding company between the Bank and its then-existing
shareholders, the bank holding company shall be automatically a party to this
Agreement and the term "Change in Control" shall also include a Change in
Control of such bank holding company. Without limiting the foregoing, the Bank
and the Executive agree to take such other steps as may be reasonably requested
to give effect to this Paragraph 6.
IN WITNESS WHEREOF, the parties have executed this Agreement this _____ day
of ___________, 1997.
PACIFIC CONTINENTAL BANK EXECUTIVE
By:________________________ _____________________________
Kevin G. Murphy Name
Chairman of the Board Title
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 11,692
<INT-BEARING-DEPOSITS> 151,189
<FED-FUNDS-SOLD> 618
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 31,108
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<LOANS> 196,250
<ALLOWANCE> 2,478
<TOTAL-ASSETS> 252,738
<DEPOSITS> 210,430
<SHORT-TERM> 3,800
<LIABILITIES-OTHER> 603
<LONG-TERM> 9,000
0
0
<COMMON> 19,601
<OTHER-SE> 9,304
<TOTAL-LIABILITIES-AND-EQUITY> 252,738
<INTEREST-LOAN> 9,798
<INTEREST-INVEST> 1,005
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<INTEREST-TOTAL> 10,818
<INTEREST-DEPOSIT> 2,655
<INTEREST-EXPENSE> 3,164
<INTEREST-INCOME-NET> 7,654
<LOAN-LOSSES> 500
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<INCOME-PRETAX> 4,199
<INCOME-PRE-EXTRAORDINARY> 4,199
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,580
<EPS-BASIC> 0
<EPS-DILUTED> 0.53
<YIELD-ACTUAL> 6.94
<LOANS-NON> 824
<LOANS-PAST> 149
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,078
<CHARGE-OFFS> 103
<RECOVERIES> 11
<ALLOWANCE-CLOSE> 2,478
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<ALLOWANCE-FOREIGN> 0
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</TABLE>
