<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
PROFESSIONAL BANCORP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
PROFESSIONAL BANCORP, INC.
606 BROADWAY
SANTA MONICA, CALIFORNIA 90401
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 19, 1996
---------------------
NOTICE IS HEREBY GIVEN TO THE SHAREHOLDERS OF PROFESSIONAL BANCORP, INC.
(the "Company") that, pursuant to the Bylaws of the Company and the call of its
Board of Directors, the Annual Meeting of Shareholders (the "Meeting") of the
Company will be held at the main office of First Professional Bank, N.A., 606
Broadway, Santa Monica, CA 90401, Wednesday, June 19, 1996 at 5:30 p.m., for the
purpose of considering and voting upon the following matters:
1. ELECTION OF DIRECTORS. Electing the following seven persons to the Board
of Directors to serve until the 1997 Annual Meeting of Shareholders and until
their successors are elected and have qualified:
Richard A. Berger Joel W. Kovner, Dr., P.H., MPH
James B. Jacobson Lynn O. Poulson
Ronald L. Katz, M.D. David G. Rodeffer, MPH
Anthony R. Kovner, Ph.D.
2. APPROVING THE 1996 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN. Approving
the Company's 1996 Non-Employee Director Stock Option Plan covering 50,000
shares of the Company's Common Stock, as more fully described in this Proxy
Statement.
3. APPROVING APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS. Approving the
appointment of the firm of KPMG Peat Marwick LLP as independent public
accountants for 1996.
4. OTHER BUSINESS. Transacting such other business as may properly come
before the Meeting and any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on April 26, 1996, as
the record date for determination of shareholders entitled to notice of, and to
vote at, the Meeting.
By Order of the Board of Directors
Joel W. Kovner
CHAIRMAN OF THE BOARD
Dated: April 29, 1996
<PAGE>
Section 3.3 of the Bylaws of the Company provides for the nomination of
directors in the following manner:
"NOMINATION OF DIRECTORS. Nominees for election to the Board shall be
selected by the Board or a committee of the Board to which the Board has
delegated the authority to make such selections pursuant to these Bylaws.
The Board or such committee, as the case may be, will consider written
recommendations from shareholders for nominees for election to the Board
provided such recommendations, together with (i) such information regarding
each nominee as would be required to be included in a proxy statement filed
pursuant to the Exchange Act, (ii) a description of all arrangements or
other understandings among the recommending shareholder and each nominee and
any other person with respect to such nomination and (iii) the consent of
each nominee to serve as a director are received by the Secretary of the
Corporation, in the case of an annual meeting of shareholders, not later
then the date specified in the most recent proxy statement of the
Corporation as the date by which shareholder proposals for consideration at
the next annual meeting of shareholders must be received, and, in the case
of a special meeting of shareholders, not later then the tenth day after the
giving of notice of such meeting. Only persons duly nominated for election
to the Board in accordance with this [Bylaw] and with respect to whose
nominations proxies have been solicited pursuant to a proxy statement filed
pursuant to the Exchange Act shall be eligible for election to the Board.
Each notice to shareholders of a meeting of shareholders at which directors
are to be elected shall contain a statement to the effect set forth in this
[Bylaw]."
YOU ARE URGED TO VOTE IN FAVOR OF THE PROPOSALS OF THE COMPANY'S BOARD OF
DIRECTORS BY SIGNING AND RETURNING THE ENCLOSED PROXY AS PROMPTLY AS
POSSIBLE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON. THE
ENCLOSED PROXY IS SOLICITED BY THE COMPANY'S BOARD OF DIRECTORS. ANY
SHAREHOLDER GIVING A PROXY MAY REVOKE IT PRIOR TO THE TIME IT IS VOTED BY
NOTIFYING THE SECRETARY OF THE COMPANY IN WRITING OF REVOCATION, OR BY
FILING A DULY EXECUTED PROXY BEARING A LATER DATE, OR BY ATTENDING THE
MEETING AND VOTING IN PERSON. PLEASE INDICATE ON THE PROXY WHETHER OR NOT
YOU EXPECT TO ATTEND THE MEETING.
<PAGE>
PROFESSIONAL BANCORP, INC.
606 BROADWAY
SANTA MONICA, CALIFORNIA 90401
------------------------
PROXY STATEMENT
---------------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 19, 1996
---------------------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
Proxies for use at the Annual Meeting of Shareholders (the "Meeting") of
Professional Bancorp, Inc. (the "Company") to be held at the main office of
First Professional Bank, N.A., 606 Broadway, Santa Monica, CA 90401, Wednesday,
June 19, 1996 at 5:30 p.m., and at any and all adjournments.
It is anticipated that this Proxy Statement will be mailed to shareholders
eligible to receive notice of and vote at the Meeting on or about April 29,
1996.
The matters to be considered and voted upon at the Meeting will be:
1. ELECTION OF DIRECTORS. Electing the following seven persons to the Board
of Directors of the Company (the "Board") to serve until the 1997 Annual Meeting
of Shareholders and until their successors are elected and have qualified:
Richard A. Berger Joel W. Kovner, Dr., P.H., MPH
James B. Jacobson Lynn O. Poulson, J.D.
Ronald L. Katz, M.D. David G. Rodeffer, MPH
Anthony R. Kovner, Ph.D.
2. APPROVING THE 1996 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN. Approving
the Company's 1996 Non-Employee Director Stock Option Plan covering 50,000
shares of the Company's Common Stock, as more fully described in this Proxy
Statement.
3. APPROVING APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS. Approving the
appointment of the firm of KPMG Peat Marwick LLP as independent public
accountants for 1996.
REVOCABILITY OF PROXIES
A form of Proxy for voting your shares at the Meeting is enclosed. Any
shareholder who executes and delivers such a Proxy has the right to and may
revoke it at any time before it is exercised by filing with the Secretary of the
Company an instrument revoking it or a duly executed Proxy bearing a later date.
In addition, the powers of the Proxy Holders will be revoked if the person
executing the Proxy is present at the Meeting and elects to vote in person by
advising the Chairman of the Meeting of his/her election to vote in person, and
by voting in person at the Meeting. Subject to such revocation all shares
represented by a properly executed Proxy received in time for the Meeting will
be voted by the Proxy Holders in accordance with the instructions on the Proxy.
IF NO INSTRUCTION IS SPECIFIED WITH RESPECT TO A PROPOSAL TO BE ACTED UPON, THE
SHARES REPRESENTED BY YOUR EXECUTED PROXY WILL BE VOTED IN FAVOR OF THE ELECTION
OF THE NOMINEES FOR DIRECTOR SET FORTH HEREIN, IN FAVOR OF APPROVING THE 1996
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN, AND IN FAVOR OF RATIFYING THE
APPOINTMENT OF KPMG PEAT MARWICK LLP AS INDEPENDENT PUBLIC ACCOUNTANTS FOR 1996.
IF ANY OTHER BUSINESS IS PROPERLY PRESENTED AT THE MEETING, THE PROXY WILL BE
VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD.
<PAGE>
PERSONS MAKING THE SOLICITATION
This solicitation of Proxies is being made by the Board. The expense of
preparing, assembling, printing and mailing this Proxy Statement and the
materials used in the solicitation of Proxies for the Meeting will be borne by
the Company. It is contemplated that Proxies will be solicited principally
through the use of the mail, but officers, directors and employees of the
Company and its subsidiary, First Professional Bank, N.A. (the "Bank"), may
solicit Proxies personally or by telephone, without receiving special
compensation therefor. Although there is no formal agreement to do so, the
Company may reimburse banks, brokerage houses and other custodians, nominees and
fiduciaries for their reasonable expenses in forwarding these Proxy Materials to
shareholders whose shares of the Company's Common Stock are held of record by
such entities.
VOTING SECURITIES
There were issued and outstanding 1,300,650 shares of the Company's Common
Stock on April 26, 1996, which has been fixed as the record date for the purpose
of determining the shareholders entitled to notice of and to vote at the
Meeting. Each holder of Common Stock will be entitled to one vote, in person or
by Proxy, for each share of Common Stock held of record on the books of the
Company as of the record date for the Meeting on any matter submitted to the
vote of the shareholders, except that in connection with the election of
directors, the shares may be voted cumulatively if a shareholder present and
voting at the Meeting gives notice at the Meeting and prior to the voting of his
or her intention to so vote. If any shareholder gives such notice, all
shareholders may cumulate their votes for nominees. Cumulative voting means that
a shareholder has the right to vote the number of shares he or she owns as of
the record date, multiplied by the number of directors to be elected. This total
number of votes may be cast for one nominee or it may be distributed among
nominees in any manner as the shareholder sees fit. If cumulative voting is
declared at the Meeting, votes represented by Proxies delivered pursuant to this
Proxy Statement may be cumulated in the discretion of the Proxy Holders, in
accordance with the recommendations of the Board, and discretionary authority to
do so is included in the Proxy.
VOTING
The presence, in person or by Proxy, of the holders of at least a majority
of the total number of outstanding shares of Common Stock is necessary to
constitute a quorum at the Meeting. At the Meeting, directors will be elected by
a plurality of the votes cast. Therefore, the seven nominees receiving the
highest number of affirmative votes shall be elected directors of the Company at
the conclusion of the tabulation of the votes. The actual number of directors
elected may be less than seven in the event that fewer than seven nominees
receive any affirmative votes under the rules of cumulative voting (see "VOTING
SECURITIES" herein). Shares represented by Proxies which are marked "authority
withheld" or Proxies marked to deny discretionary authority with respect to the
election of any one or more nominees for election as directors will be counted
for the purpose of determining the number of shares represented at the meeting,
but will not be considered as a vote for or as a vote against the respective
nominee or nominees and thus will have no effect on the election of such nominee
or nominees as director. Each other matter presented at the Meeting will be
decided by a majority of the votes cast on that matter. Shares voted on one
proposal but not all proposals on the Proxies returned by brokers will be
counted for the purpose of determining the number of shares represented at the
meeting, but will not be considered as a vote for or against any matter not
voted on. Abstentions will also be counted for the purpose of determining the
number of shares represented at the meeting, but will not be considered as a
vote for or against any matter as to which the abstention is effective.
2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of April 10, 1996,
concerning the beneficial ownership of the Company's outstanding Common Stock by
each director and executive officer of the Company, by each nominee to the Board
of Directors, by all directors and executive officers of the Company as a group
and by principal shareholders.
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY
OWNED AND
NATURE OF PERCENT OF
NAME AND ADDRESS (1) OWNERSHIP (2) CLASS (3)
- -------------------------------------------------- -------------- ----------
<S> <C> <C>
Richard A. Berger 23,402(4) 1.80%
James B. Jacobson 12,021(5) 0.92%
Ronald L. Katz, M.D. 17,824(6) 1.37%
Anthony R. Kovner, Ph.D (7) 1,200 0.09%
Joel W. Kovner, Dr., P.H., MPH 403,064(8) 24.60%
Lynn O. Poulson 21,154(9) 1.62%
Daniel S. Rader 34,274(10) 2.58%
David G. Rodeffer, MPH 54,242(11) 4.10%
All Directors and Executive Officers
(8 in Number) 567,181(12) 33.46%
Robert H. Leshner (13)
(holds no office) 111,825(14) 7.96%
</TABLE>
- ------------------------
(1) Address for all individuals other than Mr. Leshner and Dr. A. Kovner is c/o
Professional Bancorp, Inc., 606 Broadway, Santa Monica, California 90401.
(2) Unless otherwise indicated, the persons named herein have sole and/or joint
voting power over shares reported and such shares are owned directly.
(3) Options and Warrants to purchase shares of Common Stock held by directors,
officers and other individuals that were exercisable within 60 days after
April 26, 1996 ("Exercisable Option Shares" or Exercisable Warrant
shares"), are treated as outstanding for the purpose of computing the
number and percentage of outstanding securities of the class owned by such
person but not for the purpose of computing the percentage of the class
owned by any other person.
(4) Includes 1,785 Exercisable Option Shares.
(5) Includes 595 Exercisable Option Shares.
(6) Includes 1,785 Exercisable Option Shares.
(7) Anthony R. Kovner, Ph.D. is the brother of Joel W. Kovner, Dr., P.H., MPH.
Dr. A. Kovner's business address is 40 West Fourth Street, 600 Tisch Hall,
New York, New York, 10012.
(8) Includes 337,695 Exercisable Option Shares.
(9) Includes 1,785 Exercisable Option Shares.
(10) Includes 30,000 Exercisable Option Shares.
(11) Includes 21,000 Exercisable Option Shares.
(12) Includes 394,645 Exercisable Option Shares.
(13) Mr. Leshner's business address is 312 Walnut Street, Cincinnati, OH
45202-3874.
(14) Includes 105,000 Exercisable Warrant Shares.
3
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
NOMINEES
The Company's Bylaws provide that the Board shall consist of one or more
directors as determined by the Board. The Board has fixed the number at seven.
The seven persons named below who are currently members of the Company's Board
will be nominated for election as directors to serve until the 1997 Annual
Meeting of Shareholders and until their successors are elected and have
qualified. Votes will be cast in such a way as to effect the election of all
seven nominees, or as many thereof as possible under the rules of cumulative
voting (see "VOTING SECURITIES" herein). In the event that any of the nominees
should be unable to serve as a director, it is intended that the Proxy will be
voted for the election of such substitute nominees, if any, as shall be
designated by the Board. The Board has no reason to believe that any of the
nominees will be unavailable to serve if elected. Additional nominations can
only be made by complying with the notice provision set forth in the Bylaws of
the Company, an extract of which is included in the Notice of Annual Meeting of
Shareholders accompanying this Proxy Statement. This Bylaw provision is designed
to give the Board advance notice of competing nominations, if any, and the
qualifications of competing nominees, and may have the effect of precluding
third-party nominations if the notice provisions are not followed.
IDENTIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS
None of the directors or executive officers of the Company was selected
pursuant to any arrangement or understanding, other than with the directors and
executive officers of the Company and the Bank acting within their capacities as
such. There are no family relationships between the directors and executive
officers of the Company except that Anthony R. Kovner, Ph.D. is the brother of
Joel W. Kovner, Dr., P.H., MPH.
The following table sets for the names and certain information as of April
26, 1996, concerning the persons to be nominated by the Board for election as
directors of the Company and the one executive officer of the Company who is not
nominated for election as a director:
<TABLE>
<CAPTION>
YEAR YEAR
APPOINTED APPOINTED
OR ELECTED OR ELECTED
NAME AND TITLE BUSINESS EXPERIENCE DURING DIRECTOR OF DIRECTOR OF
(OTHER THAN DIRECTOR) AGE THE PAST FIVE YEARS THE COMPANY THE BANK
- ------------------------------------ --- ----------------------------------------- --------------- ---------------
<S> <C> <C> <C> <C>
Richard A. Berger 64 President, Richard A. Berger Associates, 1981 1981
Inc. (Realtors); past President and
Chief Financial Officer, California
Culinary Institute
James B. Jacobson 73 President, JBJ Management Inc. (personal 1990 1990
services corporation)
Ronald L. Katz 63 Professor of anesthesiology, USC Medical 1984 1984
Center; Professor and past Chairman of
Anesthesiology, UCLA Medical Center;
past Chief of Staff, UCLA Medical Center
Anthony R. Kovner, Ph.D. 62 Professor, Wagner Graduate School of 1996 1996
Public Service, New York University;
past Director, Hospital Community
Benefit Standards Program, New York
University
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
YEAR YEAR
APPOINTED APPOINTED
OR ELECTED OR ELECTED
NAME AND TITLE BUSINESS EXPERIENCE DURING DIRECTOR OF DIRECTOR OF
(OTHER THAN DIRECTOR) AGE THE PAST FIVE YEARS THE COMPANY THE BANK
- ------------------------------------ --- ----------------------------------------- --------------- ---------------
<S> <C> <C> <C> <C>
Joel W. Kovner, Dr. P.H., MPH 54 Chief Executive Officer, First 1981 1981
Chairman of the Board of Directors, Professional Bank, N.A.; Medical
President and Chief Executive Economist
Officer (1)
Lynn O. Poulson, J.D. 58 Partner of Johnson & Poulson (law firm) 1982 1982
Secretary (1)
Daniel S. Rader 36 Executive Vice President, Chief N/A N/A
Chief Financial Officer and Investment Officer (since 1994), Chief
Treasurer (1) Financial Officer (since 1993),
Controller (since 1987), First
Professional Bank, N.A.
David G. Rodeffer, MPH 51 Executive Vice President and Chief 1994 1994
Operating Officer, First Professional
Bank, N.A., (since 1994); formerly
Partner of Coopers and Lybrand
(Healthcare division)
</TABLE>
- ------------------------
(1) All indicated officer positions have been held for the past five years or
longer.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
OF "AUTHORITY GIVEN" ON THIS PROPOSAL 1.
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
During 1995, the Board held fourteen meetings. The Audit Committee of the
Board oversees the Company's outside independent public accountants. The Audit
Committee consists of Mr. Berger and Dr. Katz and met ten times during 1995.
The Board does not have a standing nominating or compensation committee;
however, the Board of Directors of First Professional Bank, N.A. has a
compensation committee which performs those functions and will be referred to
herein as the Compensation Committee.
During 1995, no director of the Company who is standing for election at the
Annual Meeting attended less than 75% of the aggregate meetings of the Board
and, if applicable, the committee of the Board on which he or she served.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of
the Company's Common Stock, to file with the Securities and Exchange Commission
and the American Stock Exchange initial reports of ownership and reports of
changes in ownership of Common Stock of the Company. Officers, directors and
greater than ten percent shareholders are required by SEC regulation to furnish
the Company with copies of all Section 16(a) reports they file.
To the Company's knowledge, based solely upon review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the year ended December 31, 1995 all Section 16(a)
filing requirements applicable to its officers, directors and greater than ten
percent beneficial owners were fulfilled in a timely manner.
5
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
---------------------------------
AWARDS
-----------------------
SECURITIES PAYOUTS
ANNUAL COMPENSATION RESTRICTED UNDERLYING -------
-------------------- STOCK OPTIONS #/ LTIP ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (1) AWARDS SARS (2) PAYOUTS COMPENSATION (3)
- --------------------------------------------- ---- -------- ---------- ---------- ---------- ------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Joel W. Kovner, Dr., P.H. 1995 $208,500 $240,000 -0- -0- -0- $ 4,500
Chairman of the Board and Chief 1994 203,000 249,400 -0- -0- -0- 3,000
Executive Officer of the Company 1993 197,000 288,000 -0- 10,500 -0- 8,728
Melinda McIntyre-Kolpin (4) 1995 140,500 125,000 -0- -0- -0- -0-
President of First 1994 136,500 125,000 -0- -0- -0- -0-
Professional Bank, N.A. 1993 132,500 125,000 -0- 6,500 -0- -0-
David G. Rodeffer, MPH 1995 154,500 75,000 -0- -0- -0- 4,500
Executive Vice President 1994 150,000 75,000 -0- 25,000 -0- 75,816
and Chief Operating Officer of 1993 N/A N/A N/A N/A N/A N/A
First Professional Bank, N.A.
Daniel S. Rader 1995 100,000 35,000 -0- -0- -0- 4,050
Chief Financial Officer and 1994 86,000 35,000 -0- -0- -0- 2,320
Treasurer of the Company 1993 79,500 30,000 -0- 2,000 -0- 2,040
</TABLE>
- ------------------------
(1) Includes bonuses accrued in 1995, 1994 and 1993 and paid in 1996, 1995 and
1994, respectively, except for Melinda McIntyre-Kolpin; $97,500 of Ms.
McIntyre-Kolpin's bonus earned in 1995 was paid in 1995, $87,500 of her
bonus earned in 1994 was paid in 1994 and $67,500 of her bonus earned in
1993 was paid in 1993.
(2) Reflects options only; no stock appreciation rights ("SARs") have been
issued.
(3) Reflects the Bank's contribution to the officer's savings plan account
pursuant to Section 401(k) of the Internal Revenue Code, and a $75,000
signing bonus paid to David G. Rodeffer, who joined the Company in January,
1994.
(4) Melinda McIntyre-Kolpin resigned as an officer and director effective
February 9, 1996 at which time she was paid $42,000 for accrued vacation
time.
There were no options or SARs granted in 1995.
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR
VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS/SARS OPTIONS/SARS
AT FY-END (#) AT FY-END ($)
------------- -------------
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) VALUE REALIZED ($) UNEXERCISABLE UNEXERCISABLE
- ----------------------------- ----------------- ------------------- ------------- -------------
<S> <C> <C> <C> <C>
Joel W. Kovner, Dr. P.H. -- -- 385,000/0 490,715/0
Melinda McIntyre-Kolpin -- -- 81,500/0 156,503/0
David G. Rodeffer, MPH -- -- 21,000/0 22,470/0
0/5,250(1) 5,618/0
Daniel S. Rader 4,602 41,648 30,000/0 7,260/0
</TABLE>
- ------------------------
(1) These 5,250 options become exercisable on August 1, 1996.
6
<PAGE>
COMPENSATION OF DIRECTORS
Compensation is paid to outside directors only. During 1995, each outside
director of the Company received a monthly fee of $1,000. Additionally,
compensation was paid based on committee membership as follows: members of the
Audit Committee received $250 per month (Ronald L. Katz, M.D.) with the
committee chairman receiving $400 per month (Richard A. Berger); members of the
Bank's Loan Committee receive $750 per month (Messrs. James B. Jacobson, and
Lynn O. Poulson, J.D.); Chairman of the Bank's Community Reinvestment Act
Oversight Committee received $700 per month (Richard A. Berger).
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
SALARY CONTINUATION PLAN
In February 1992, the Bank discontinued an existing term life insurance
policy provided as an employee benefit to Dr. Kovner and established in its
place a Salary Continuation Plan (the "SCP"). The term life policy provided
that, in the event of Dr. Kovner's death, his estate would receive a $1,500,000
death benefit. The SCP is a nonqualified, executive benefit plan pursuant to
which the Bank will pay Dr. Kovner an annual retirement benefit of $150,000 per
year for 15 years upon his retirement from active daily service at or after
reaching age 60 in return for his continued current satisfactory performance as
an employee of the Bank. If Dr. Kovner dies while the SCP is in effect, his
estate will receive the payments under the SCP which he was entitled to receive
at the time of his death. Dr. Kovner's right to receive benefits under the SCP
vested on September 1, 1992 representing his completion of ten years of
continuous service since the Bank commenced operations. The SCP is an unfunded
plan; however, as a deferred compensation plan, the Bank is required to accrue
sufficient expenses so that the present value of the benefit to be paid to Dr.
Kovner at age 60 is reflected as a liability on the Bank's books by that time.
During 1996, the Bank will accrue such liability at a rate of approximately
$11,000 per month. The SCP is not an employment contract. In the event Dr.
Kovner's employment with the Bank is terminated, voluntarily or involuntarily,
for any other reason the Bank shall commence paying benefits to Dr. Kovner as
called for under the SCP. In order to fund its obligation under the SCP, the
Bank has purchased a single premium universal life policy under which Dr. Kovner
is the insured while the Bank is the owner and beneficiary thereof. If
assumptions as to mortality experience, policy dividends and other factors are
realized, the Bank will receive earnings under the new policy equal to the
expense accruals for the SCP retirement benefits. There can be no assurance that
such assumptions will be realized.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following persons served on the Company's Compensation Committee during
1995: Messrs. Richard A. Berger, H. Leon Brooks, M.D., Chairman, James B.
Jacobson, Ronald L. Katz, M.D., Ray T. Oyakawa, M.D. and Lynn O. Poulson. All of
the above persons other than James B. Jacobson, have had banking transactions
with the Bank which have included extensions of credit during 1995. In
management's opinion, all loans and commitments to lend included in such
transactions were made in compliance with applicable laws on substantially the
same terms, including interest rates, collateral and repayment terms as those
prevailing for comparable transactions with other persons of similar
creditworthiness and did not involve more than a normal risk of collectibility
or present other unfavorable terms. As of April 26, 1996, all such loans were
current.
7
<PAGE>
COMMON STOCK PERFORMANCE GRAPH
The Comparison Stock Performance Graph below shall not be deemed
incorporated by reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act of 1933 or under
the Securities Exchange Act of 1934, except to the extent the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
The following graph shows a five year comparison of cumulative total returns
for the Company, S&P 500 Index and Peer Group Index. The Peer Group Index
consists of commercial banks listed on the American Stock Exchange (AMEX) and
was provided to the Company by SNL Securities.
[CHART]
<TABLE>
<CAPTION>
12/31/91 12/31/92 12/31/93 12/31/94 12/31/95
<S> <C> <C> <C> <C> <C>
S & P 500 Stock Index 100.00 140.41 154.57 156.29 210.57
SNL AMEX Index 100.00 138.10 147.28 159.30 235.58
Professional Bancorp, Inc.
Common Stock 100.00 237.50 220.84 129.17 218.76
</TABLE>
- ------------------------
(1) Assumes $100 invested on 12/31/90 in Professional Bancorp, Inc. Common
Stock, S&P 500 Index, and the SNL AMEX Bank Index. Also assumes reinvestment
of all dividends.
CERTAIN TRANSACTIONS
Some of the current directors and executive officers of the Company, and
companies with which they are associated, are customers of, and have had banking
transactions with, the Bank in the ordinary course of the Bank's business and
the Bank expects to have banking transactions with such persons in the future.
In management's opinion, all loans and commitments to lend included in such
transactions were made in compliance with applicable laws on substantially the
same terms, including interest rates, collateral and repayment terms as those
prevailing for comparable transactions with other persons of similar
creditworthiness and did not involve more than a normal risk of collectibility
or present other unfavorable terms. As of April 26, 1996, all such loans were
current.
In addition, the board permits certain executive officers to obtain
short-term loans from the Company. During 1995, Dr. Joel W. Kovner, Chairman of
the Board and Chief Executive Officer of the Company, received loans between May
and December totaling $162,500 at an interest rate of 6.8%. At December 31,
1995, the balance was $162,500.
8
<PAGE>
PROPOSAL 2
APPROVAL OF 1996 STOCK OPTION PLAN
INTRODUCTION
On March 20, 1996, the Board adopted, subject to shareholder approval, the
Professional Bancorp 1996 Stock Option Plan (the "1996 Plan"). The 1996 Plan is
a "formula" stock option plan and provides for the grant of non-qualified stock
options to all non-employee directors, of which there are currently five. The
1996 Plan is not subject to any of the provisions of the Employee Retirement
Income Security Act of 1974, as amended.
The 1996 Plan provides for the issuance of up to 50,000 shares of the
Company's Common Stock to non-employee directors by an initial grant of 1,800
option shares to each non-employee director and a grant of 1,250 option shares
to each non-employee director who is re-elected on the date of the Company's
annual meeting each year through the year 2000. On March 20, 1996, with the
exception of Anthony R. Kovner, Ph.D., each director received an initial option
grant of 1,800 option shares at an exercise price of $12.00, the fair market
value of the shares on the date of grant. On April 24, 1996 Anthony R. Kovner,
Ph.D. was appointed to the Board and received an initial option grant of 1,800
option shares at an exercise price of $11.00, the fair market value of the
shares on the date of grant. Previously, on November 15, 1995, the Board
canceled certain options granted in January 1993 to each non-employee director
under the 1990 Stock Option Plan, each grant in the amount of 1,785.
The 1996 Plan is designed to provide performance incentives to participating
non-employee directors without rendering such participants unable to act as
disinterested directors with respect to other compensation plans of the Company,
in compliance with Rule 16b-3 of the Securities and Exchange Commission. The
only options granted to non-employee directors will be from the 1996 Plan. The
Board believes it is advisable for the shareholders to approve the adoption of
the 1996 Plan.
SUMMARY OF THE 1996 PLAN
The following description of the 1996 Plan is intended to highlight and
summarize the principal terms of the 1996 Plan, and is qualified in its entirety
by the text of the 1996 Plan, a copy of which is attached hereto as Exhibit A.
The 1996 Plan will be administered by the Board. Options may be granted only
to non-employee directors of the Company.
ELIGIBLE PARTICIPANTS. Each individual who is a non-employee director on
the date of adoption of the Plan by the Board shall receive an initial option
grant of 1,800 option shares at an exercise price equal to the fair market value
thereof on the date of grant. Such initial option grants shall be made subject
to approval by the Company's shareholders of this Plan. Any individual who is
not a director at the time of the initial option grants, but who becomes a
non-employee director, shall automatically receive an initial option grant
effective the date such individual becomes a non-employee director. Beginning
with the first annual meeting of the shareholders of the Company which is
subsequent to the date the Plan is adopted by the Board, and provided that a
sufficient number of shares remain available under the Plan, each year, prior to
termination of the Plan, on the date of the annual meeting of the shareholders
of the Company there shall automatically be awarded to each non-employee
director who is re-elected to the Board on such date an annual option grant of
1,250 option shares at an exercise price equal to the fair market value thereof
on the date of grant.
SHARES SUBJECT TO THE 1996 PLAN. 50,000 shares are covered by the 1996
Plan, which will constitute approximately 3.84% of the current issued and
outstanding shares. Options shall be granted at the fair market value of the
Company's Common Stock on the date of the grant of the option.
NON-QUALIFIED STOCK OPTIONS. The 1996 Plan provides only for the grant of
non-qualified options.
TERMS AND CONDITIONS OF OPTIONS. The term of each stock option granted
pursuant to the 1996 Plan shall be ten (10) years from the date of granting
thereof. Within such ten-year limit, each stock option granted pursuant to the
1996 Plan shall be exercisable ratably over a four-year period commencing on the
9
<PAGE>
first anniversary of the date the stock option was granted (i.e., one-fourth of
the total number of option shares may be acquired by exercise of the stock
option upon and after the first anniversary, another one-forth of the total
number of option shares may be acquired upon exercise of the stock option upon
and after the second anniversary, etc.). If an optionee does not exercise an
increment of an option in any period during which such increment becomes
exercisable, the unexercised increment may be exercised at any time prior to
expiration of the option.
Options granted under the 1996 Plan may not be transferred otherwise than by
will or by the laws of descent and distribution, and during his or her lifetime,
only the optionee or, in the event of the disability of the optionee, his or her
guardian or the conservator of his or her estate may exercise the option.
EXERCISE OF OPTIONS. Subject to the restrictions set forth in the 1996
Plan, an option may be exercised in accordance with the terms of the individual
stock option agreement. Full payment by the optionee for all shares as to which
the option is being exercised is due and payable at the time of exercise of the
option. Payment must be in cash and/or, with the prior written approval of the
Board, and subject to prior regulatory approval, in shares of Common Stock of
the Company.
An option may be exercised with respect to whole shares only, although
fractional share interests may be accumulated and exercised from time to time as
whole shares during the term of the option. Options may only be exercised with
respect to a minimum of ten (10) whole shares, unless fewer than ten (10) shares
remain subject to the option at the time of exercise. Any shares subject to an
option which expires or terminates without being exercised become available
again for issuance under the 1996 Plan.
Neither an eligible participant nor an optionee has any rights as a
shareholder with respect to the shares of Common Stock covered by any option
which may be or has been granted to such person, and which is thereafter
exercised, until the date of issuance of the stock certificate by the Company to
such person.
STOCK OPTION AGREEMENT. The 1996 Plan provides that every grant of an
option will be evidenced by a written stock option agreement executed by the
Company and the optionee. Subject to the terms and conditions of the 1996 Plan,
the stock option agreement will contain the terms and provisions pertaining to
each option so granted, such as exercise price, permissible date or dates of
exercise, termination date, and such other terms and conditions as the Board
deems desirable and not inconsistent with the 1996 Plan. Termination of
Affiliation. In the event an optionee ceases to be affiliated with the Company
or a subsidiary of the Company for any reason other than disability, death or
termination for cause, the stock options granted to such optionee shall expire
at the earlier of the expiration dates specified for the options, or three (3)
months after the optionee ceases to be so affiliated. During such period after
cessation of affiliation, the optionee may exercise the option to the extent
that it was exercisable as of the date of such termination, and thereafter the
option expires in its entirety.
The 1996 Plan, and all stock options previously granted under the 1996 Plan,
shall terminate upon the dissolution or liquidation of the Company, upon a
consolidation, reorganization, or merger as a result of which the Company is not
the surviving corporation, or upon a sale of all or substantially all of the
assets of the Company. However, all options theretofore granted shall
immediately exercisable in their entirety upon the occurrence of any of the
foregoing, and any options not exercised immediately upon the occurrence of any
of the foregoing events will terminate unless provision is made for the
assumption or substitution thereof. As a result of this acceleration provision,
even if an outstanding option were not fully vested as to all increments at the
time of the event, that option will become fully vested and exercisable.
AMENDMENT AND TERMINATION OF THE 1996 PLAN. The Board may at any time
suspend, amend or terminate the 1996 Plan, and may, with the consent of the
respective optionee, make such modifications to the terms and conditions of
outstanding options as it shall deem advisable. Without shareholder approval,
however, the Board may not materially increase the maximum number of shares of
Common Stock which may be issued under the 1996 Plan (except as described under
"ADJUSTMENTS UPON CHANGES IN CAPITALIZATION" below), modify the requirements as
to eligibility for participation in the 1996 Plan or make any other change for
which shareholder approval is required under Rule 16b-3 of the Securities and
Exchange Commission.
10
<PAGE>
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. The total number of shares
covered by the 1996 Plan and the price, kind and number of shares subject to
outstanding options thereunder, will be appropriately and proportionately
adjusted by the Board if the outstanding shares of Common Stock of the Company
are increased, decreased, changed into or exchanged for a different number or
kind of shares or securities of the Company through reorganization, merger,
recapitalization, reclassification, stock split, stock dividend, stock
consolidation or otherwise, without consideration to the Company as provided in
the 1996 Plan. Fractional share interests of such adjustments may be
accumulated, although no fractional shares of stock will be issued under the
1996 Plan.
FEDERAL INCOME TAX CONSEQUENCES. The 1996 Plan provides only for the grant
of non-qualified stock options. If such options are exercised, the excess of the
fair market value of the acquired shares at the time of exercise over the option
exercise price will be treated as ordinary income to the optionee in the year of
exercise. Upon exercise of a non-qualified stock option, the optionee's basis in
the shares of Common Stock received will be the sum of the option exercise price
and the amount of ordinary income recognized by the optionee from the exercise
of the stock option. The optionee's holding period in the shares of Common Stock
received will begin on the date received. Upon exercise of such a stock option
by transfer of shares of Common Stock already owned by the optionee, under
Internal Revenue Service Revenue Ruling 80-244, the optionee will be deemed to
have received an equivalent number of shares of Common Stock in a non-taxable
exchange (the "Substituted Common Stock") and the remainder, if any, of the
shares of Common Stock will be deemed to have been received in a taxable
transaction (the "Non-Substituted Common Stock"). The optionee's basis in the
Substituted Common Stock will generally be the same as his basis in the
previously owned shares, and his holding period will include the holding period
of the previously owned shares. The Non-Substituted Common Stock will have a
holding period which begins on the date when it is received.
On the disposition of shares of Common Stock received upon exercise of a
non-qualified stock option, the difference between the amount realized and the
optionee's basis in the shares will be (if the shares constitute a capital asset
in the hands of the optionee) a long-term or short-term capital gain (or loss)
depending on whether the optionee's holding period of the shares is more than 12
months prior to their disposition.
The Company will be entitled to claim a deduction at the same time and in
the same amount as income is recognized by the optionee exercising a
non-qualified stock option provided that applicable income tax withholding
requirements are satisfied. No income will be recognized by the optionee, and no
deduction shall be allowable to the Company, by reason of the grant of
non-qualified stock options.
CERTAIN INFORMATION CONCERNING ALL OPTIONS
In addition to the foregoing, the Tax Reform Act of 1984 enacted an excise
tax of twenty percent (20%) and the disallowance of a deduction to a corporation
for compensation to its employees, officers, Shareholders, and others that
results in an "excess parachute payment" within the meaning of Code Section 280G
(b).
The Tax Reform Act of 1986 repealed the net long-term capital gains
deduction for individuals. thus, capital gains are now taxable to individuals at
ordinary income rates but not more than 28%. capital losses, whether long-term
or short-term, are fully deductible against capital gains and up to $3,000 of
ordinary income. Any unused capital losses may be carried forward indefinitely.
The specific state tax consequences to each optionee under the 1996 Plan may
vary, depending upon the laws of the various states and the individual
circumstances of each optionee (and under legislation currently being considered
by Congress). It is suggested that each optionee consult his or her personal tax
advisor regarding both the federal and state tax consequences of the grant and
exercise of options.
VOTE REQUIRED
Assuming the presence of a quorum at the Meeting, Proposal 2 will be
approved upon approval by holders of a majority of the shares of the Company's
common Stock represented and voting at the Meeting.
11
<PAGE>
NEW PLAN BENEFITS
The following table sets forth the stock options that the individuals and
groups referred to below will receive in 1996 if the 1996 Non-Employee Director
Stock Option Plan is approved by the Company's stockholders at the Annual
Meeting. Executive officers and employee-directors are not eligible to
participate in the 1996 Plan.
NEW PLAN BENEFITS
PROFESSIONAL BANCORP, INC. 1996 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
<TABLE>
<CAPTION>
NAME AND POSITION DOLLAR VALUE ($) NUMBER OF UNITS
- ------------------------------------------------ --------------------- ---------------
<S> <C> <C>
Joel W. Kovner, Dr., P.H., MPH -0- -0-
Chairman of the Board of Directors,
Chief Executive Officer
Melinda McIntyre-Kolpin (1) -0- -0-
President of First Professional Bank, N.A.
David G. Rodeffer, MPH -0- -0-
Executive Vice President and
Chief Operating Officer,
First Professional Bank, N.A.
Daniel S. Rader -0- -0-
Chief Financial Officer,
Treasurer
Executive Group -0- -0-
Non-Executive Director Group (2) 15,250
Non-Executive Officer Employee Group -0- -0-
</TABLE>
- ------------------------
(1) Melinda McIntyre-Kolpin resigned as an officer and director effective
February 9, 1996.
(2) Dollar value is dependent upon the future share price of Company Common
Stock.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL 2.
PROPOSAL 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The firm of KPMG Peat Marwick LLP served as independent public accountants
for the Company and the Bank for 1995 and has been selected by the Board of
Directors to continue to serve in that capacity for 1996.
It is anticipated that a representative of KPMG Peat Marwick LLP will be
present at the Meeting, will have an opportunity to make a statement if so
desired, and will be available to respond to appropriate questions from
shareholders.
Shareholder ratification of the selection of auditors is not required under
the laws of the State of Pennsylvania, but the Board nevertheless decided to
ascertain the views of the shareholders in this regard. If the selection of KPMG
Peat Marwick LLP is not ratified at the Meeting, the Board will consider the
selection of other auditors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL 3.
12
<PAGE>
SHAREHOLDER PROPOSALS TO BE PRESENTED AT NEXT ANNUAL MEETING
Proposals of shareholders intended to be presented at the next Annual
Meeting of Shareholders of the Company (i) must be received by the Company at
its offices at 606 Broadway, Santa Monica, California 90401, no later than
December 9, 1996 and (ii) must satisfy the conditions established by the
Securities and Exchange Commission for shareholder proposals to be included in
the Company's Proxy Statement for that meeting.
OTHER MATTERS
The Company's Board of Directors does not know of any matters to be
presented at the Meeting other than those set forth above. However, if other
matters come before the Meeting, it is the intention of the persons named in the
accompanying Proxy to vote said Proxy in accordance with the recommendations of
the Company's Board of Directors on such matters, and discretionary authority to
do so is included in the Proxy.
BY ORDER OF THE BOARD OF DIRECTORS
Joel W. Kovner
Chairman of the Board
Dated: April 29, 1996
MANAGEMENT OF THE COMPANY WILL SUPPLY WITHOUT COST, UPON WRITTEN REQUEST, A
COPY OF THE COMPANY'S MOST RECENT ANNUAL REPORT ON FORM 10K INCLUDING FINANCIAL
STATEMENTS AND SCHEDULES. SUCH REQUEST SHOULD BE DIRECTED TO DANIEL S. RADER,
CHIEF FINANCIAL OFFICER, PROFESSIONAL BANCORP, INC., 606 BROADWAY, SANTA MONICA,
CALIFORNIA 90401.
13
<PAGE>
EXHIBIT A
PROFESSIONAL BANCORP 1996 NON-EMPLOYEE DIRECTOR
STOCK OPTION PLAN
1. PURPOSE
The purpose of the Professional Bancorp 1996 Non-Employee Director Stock
Option Plan (the "Plan") is to strengthen Professional Bancorp (the
"Corporation") by providing performance incentives to participating directors.
The Plan seeks to accomplish this purpose by providing a means whereby such
directors may purchase shares of the Common Stock of the Corporation pursuant to
Stock Options granted in accordance with this Plan. Stock Options granted
pursuant to this Plan are not intended to be Incentive Stock Options.
2. DEFINITIONS
For purposes of this Plan, the following terms shall have the following
meanings:
(a) "ANNUAL OPTION GRANT." This term shall mean a Stock Option to
purchase 1,250 shares of Common Stock granted under Section 6(a)(ii) below.
(b) "COMMON STOCK." This term shall mean shares of the Corporation's
$.008 par value common stock, subject to adjustment pursuant to Section 13
(Adjustment Upon Changes in Capitalization) hereunder.
(c) "CORPORATION." This term shall mean Professional Bancorp, Inc. a
Pennsylvania corporation.
(d) "FAIR MARKET VALUE." This term shall mean the fair market value of
the Common Stock as determined in accordance with any reasonable valuation
method selected by the Board of Directors, including the valuation methods
described in Treasury Regulations Section 20.2031-2.
(e) "INITIAL OPTION GRANT." This term shall mean a Stock Option to
purchase 1,800 shares of Common Stock granted under Section 6(a)(i).
(f) "NON-EMPLOYEE DIRECTOR." This term shall mean a member of the
Board of Directors of the Corporation who is not also an employee of the
Corporation.
(g) "OPTION SHARES." This term shall mean Common Stock covered by and
subject to any outstanding unexercised Stock Option granted pursuant to this
Plan.
(h) "OPTIONEE." This term shall mean any Non-Employee Director to whom
a Stock Option has been granted pursuant to this Plan, provided that at
least part of the Stock Option is outstanding and unexercised.
(i) "PLAN." This term shall mean the Professional Bancorp 1996
Non-Employee Director Stock Option Plan as embodied herein and as may be
amended from time to time in accordance with the terms hereof and applicable
law.
(j) "STOCK OPTION." This term shall mean the right to purchase Common
Stock under this Plan in a specified number of shares, at a price and upon
the terms and conditions set forth herein, and shall refer to both Initial
Option Grants and Annual Option Grants unless the context clearly indicates
otherwise.
3. ADMINISTRATION
(a) BOARD OF DIRECTORS. This Plan shall be administered by the Board
of Directors of the Corporation.
(b) DECISIONS AND DETERMINATIONS. Subject to the express provisions of
the Plan, the Board of Directors shall have the authority to construe and
interpret this Plan, to define the terms used herein, to
A-1
<PAGE>
prescribe, amend, and rescind rules and regulations relating to the
administration of the Plan, and to make all other determinations necessary
or advisable for administration of the Plan. Any action of the Board of
Directors with respect to the administration of the Plan shall be valid and
binding.
4. SHARES SUBJECT TO THE PLAN
Subject to adjustment as provided in Section 13 hereof, the maximum number
of shares of Common Stock which may be issued upon exercise of all Stock Options
granted under this Plan is limited to fifty thousand (50,000) shares, in the
aggregate. If any Stock Option shall be canceled, surrendered, or expire for any
reason without having been exercised in full, the unpurchased Option Shares
represented thereby shall again be available for grants of Stock Options under
this Plan.
5. ELIGIBILITY
Only Non-Employee Directors shall be eligible to receive grants of Stock
Options under this Plan.
6. GRANTS OF STOCK OPTIONS
(a) GRANTS.
(i) Each individual who is a Non-Employee Director on the date of the
adoption of this Plan by the Board of Directors shall receive an Initial
Option Grant on that date. Such Initial Option Grants shall be made
subject to approval by the Corporation's shareholders of this Plan. Any
individual who is not a Director at the time of the Initial Option
Grants, but who becomes a Non-Employee Director, shall automatically
receive an Initial Option Grant effective the date such individual
becomes a Non-Employee Director.
(ii) Beginning with the first annual meeting of shareholders of the
Corporation which is subsequent to the date the Plan is adopted by the
Board of Directors, and provided that a sufficient number of shares
remain available under the Plan, each year, prior to termination of the
Plan, on the date of the annual meeting of the shareholders of the
Corporation there shall automatically be awarded to each Non-Employee
Director who is re-elected to the Board of Directors on such date an
Annual Option Grant.
(b) TERMS.
(i) The per share purchase price of the Common Stock subject to each
Option granted hereunder shall be equal to the Fair Market Value of the
Common Stock on the date of the grant of the Option.
(ii) The term of each Stock Option granted pursuant to the Plan shall
be ten (10) years from the date of granting thereof. Within such ten year
limit, Stock Options will be exercisable as provided herein.
(iii) Each Stock Option granted pursuant to the Plan shall be
exercisable ratably over a four year period commencing on the first
anniversary of the date the Stock Option was granted (I.E., one-fourth of
the total number of Option Shares may be acquired by exercise of the
Stock Option upon and after the first anniversary, another one-fourth of
the total number of Option Shares may be acquired upon exercise of the
Stock Option upon and after the second anniversary, etc.).
7. EXERCISE OF STOCK OPTIONS
(a) EXERCISE. Each Stock Option shall be exercisable as provided
herein. If an Optionee shall not exercise any part of a Stock Option which
has become vested, the Optionee's right to exercise such part of the Stock
Option shall continue until expiration of the Stock Option. No Stock Option
or part thereof shall be exercisable except with respect to whole shares of
Common Stock, and fractional share interests shall be disregarded except
that they may be accumulated.
(b) NOTICE AND PAYMENT. Stock Options granted hereunder shall be
exercised by written notice delivered to the Corporation specifying the
number of Option Shares with respect to which the Stock
A-2
<PAGE>
Option is being exercised, together with concurrent payment in full of the
exercise price as hereinafter provided. If the Stock Option is being
exercised by any person or persons other than the Optionee, said notice
shall be accompanied by proof, satisfactory to the counsel for the
Corporation, of the right of such person or persons to exercise the Stock
Option. The Corporation's receipt of a notice of exercise without concurrent
receipt of the full amount of the exercise price shall not be deemed an
exercise of a Stock Option by an Optionee, and the Corporation shall have no
obligation to an Optionee for any Option Shares unless and until full
payment of the exercise price is received by the Corporation and all of the
terms and provisions of the Plan and the related Stock Option agreement have
been fully complied with.
(c) PAYMENT OF EXERCISE PRICE. The exercise price of any Option Shares
purchased upon the proper exercise of a Stock Option shall be paid in full
at the time of each exercise of a Stock Option in cash, (or bank, cashier's
or certified check) and/or, with the prior written approval of the Board of
Directors at or before the time of exercise, in Common Stock of the
Corporation which, when added to the cash payment, if any, which has an
aggregate Fair Market Value equal to the full amount of the exercise price
of the Stock Option, or part thereof, then being exercised. Payment by an
Optionee as provided herein shall be made in full concurrently with the
Optionee's notification to the Corporation of his intention to exercise all
or part of a Stock Option. If all or any part of a payment is made in shares
of Common Stock as heretofore provided, such payment shall be deemed to have
been made only upon receipt by the Corporation of all required share
certificates, and all stock powers and all other required transfer documents
necessary to transfer the shares of Common Stock to the Corporation.
(d) MINIMUM EXERCISE. Not less than ten (10) Option Shares may be
purchased at any one time upon exercise of a Stock Option unless the number
of shares purchased is the total number which remain to be purchased under
the Stock Option.
(e) COMPLIANCE WITH LAW. No shares of Common Stock shall be issued
upon exercise of any Stock Option, and an Optionee shall have no right or
claim to such shares, unless and until: (i) payment in full as provided
hereinabove has been received by the Corporation; (ii) in the opinion of the
counsel for the Corporation, all applicable requirements of law and of
regulatory bodies having jurisdiction over such issuance and delivery have
been fully complied with; and (iii) if required by federal or state law or
regulation, the Optionee shall have paid to the Corporation the amount, if
any, required to be withheld on the amount deemed to be compensation to the
Optionee as a result of the exercise of his or her Stock Option, or made
other arrangements satisfactory to the Corporation, in its sole discretion,
to satisfy applicable income tax withholding requirements.
(f) REORGANIZATION. Notwithstanding any provision herein pertaining to
the time of exercise of a Stock Option, or part thereof, upon adoption by
the requisite holders of the outstanding shares of Common Stock of any plan
of dissolution, liquidation, reorganization, merger, consolidation or sale
of all or substantially all of the assets of the Corporation to another
corporation which would, upon consummation, result in termination of a Stock
Option in accordance with Section 14 hereof, all Stock Options previously
granted shall become immediately exercisable as to all unexercised Option
Shares for such period of time as may be determined by the Board of
Directors, but in any event not less than 30 days, on the condition that the
terminating event described in Section 14 hereof is consummated. If such
terminating event is not consummated, Stock Options granted pursuant to the
Plan shall be exercisable in accordance with their original terms.
8. NONTRANSFERABILITY OF STOCK OPTIONS
Each Stock Option shall, by its terms, be nontransferable by the Optionee
other than by will or the laws of descent and distribution, and shall be
exercisable during the Optionee's lifetime only by the Optionee.
9. CONTINUATION OF AFFILIATION
Nothing contained in this Plan (or in any Stock Option Agreement) shall
confer on any Optionee the right to remain a member of the Corporation's Board
of Directors.
A-3
<PAGE>
10. CESSATION OF AFFILIATION
If, for any reason other than disability or death, an Optionee ceases to be
affiliated with the Corporation, the Stock Options granted to such Optionee
shall expire on the expiration dates specified for said Stock Options at the
time of their grant, or three (3) months after the Optionee ceases to be so
affiliated, whichever is earlier. During such period after cessation of
affiliation, such Stock Options shall be exercisable only as to those
increments, if any, which had become exercisable as of the date on which such
Optionee ceased to be affiliated with the Corporation, and any Stock Options or
increments which had not become exercisable as of such date shall expire
automatically on such date.
11. DEATH OF OPTIONEE
If an Optionee dies while affiliated with the Corporation, or during the
three-month period referred to in Section 10 hereof, the Stock Options granted
to such Optionee shall expire on the expiration dates specified for said Stock
Options at the time of their grant, or one (1) year after the date of such
death, whichever is earlier. After such death, but before such expiration,
subject to the terms and provisions of the Plan and the related Stock Option
Agreements, the person or persons to whom such Optionee's rights under the Stock
Options shall have passed by will or by the applicable laws of descent and
distribution, or the executor or administrator of the Optionee's estate, shall
have the right to exercise such Stock Options to the extent that increments, if
any, had become exercisable as of the date on which the Optionee died.
12. DISABILITY OF OPTIONEE
If an Optionee is disabled while affiliated with the Corporation or during
the three-month period referred to in Section 10 hereof, the Stock Options
granted to such Optionee shall expire on the expiration dates specified for said
Stock Options at the time of their grant, or one (1) year after the date such
disability occurred, whichever is earlier. After such disability occurs, but
before such expiration, the Optionee or the guardian or conservator of the
Optionee's estate, as duly appointed by a court of competent jurisdiction, shall
have the right to exercise such Stock Options to the extent that increments, if
any, had become exercisable as of the date on which the Optionee became disabled
or ceased to be affiliated with the Corporation as a result of the disability.
An Optionee shall be deemed to be "disabled" if it shall appear to the Board of
Directors, upon written certification delivered to the Corporation of a
qualified licensed physician, that the Optionee has become permanently and
totally unable to engage in any substantial gainful activity by reason of a
medically determinable physical or mental impairment which can be expected to
result in the Optionee's death, or which has lasted or can be expected to last
for a continuous period of not less than twelve (12) months.
13. ADJUSTMENT UPON CHANGES IN CAPITALIZATION
If the outstanding shares of Common Stock of the Corporation are increased,
decreased, or changed into or exchanged for a different number or kind of shares
or securities of the Corporation, through a reorganization, merger,
recapitalization, reclassification, stock split, stock dividend, stock
consolidation, or otherwise, without consideration to the Corporation, an
appropriate and proportionate adjustment shall be made in the number and kind of
shares as to which Stock Options may be granted. A corresponding adjustment
changing the number or kind of Option Shares and the exercise prices per share
allocated to unexercised Stock Options, or portions thereof, which shall have
been granted prior to any such change, shall likewise be made. Such adjustments
shall be made without change in the total price applicable to the unexercised
portion of the Stock Option, but with a corresponding adjustment in the price
for each Option Share subject to the Stock Option. Adjustments under this
Section shall be made by the Board of Directors, whose determination as to what
adjustments shall be made, and the extent thereof, shall be final and
conclusive. No fractional shares of stock shall be issued or made available
under the Plan on account of such adjustments, and fractional share interests
shall be disregarded, except that they may be accumulated.
14. TERMINATION EVENTS
Upon consummation of a plan of dissolution or liquidation of the
Corporation, or upon consummation of a plan of reorganization, merger or
consolidation of the Corporation with one or more corporations, as a
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result of which the Corporation is not the surviving entity, or upon the sale of
all or substantially all the assets of the Corporation to another corporation,
subject to the provisions of Section 7(f) hereof the Plan shall automatically
terminate and all Stock Options theretofore granted shall be terminated, unless
provision is made in connection with such transaction for assumption of Stock
Options theretofore granted, or substitution for such Stock Options with new
stock options covering stock of a successor employer corporation, or a parent or
subsidiary corporation thereof, solely at the discretion of such successor
corporation, or parent or subsidiary corporation, with appropriate adjustments
as to number and kind of shares and prices.
15. AMENDMENT AND TERMINATION
The Board of Directors of the Corporation may at any time and from time to
time suspend, amend, or terminate the Plan and may, with the consent of an
Optionee, make such modifications of the terms and conditions of that Optionee's
Stock Option as it shall deem advisable; provided, however, that the Board of
Directors may not change the award provisions of Section 6(a) more than once
every six months, and provided further that, except as permitted under the
provisions of Section 14 hereof, no amendment or modification may be adopted
without the Corporation having first obtained the approval of the holders of a
majority of the Corporation's outstanding shares of Common Stock present, or
represented, and entitled to vote at a duly held meeting of shareholders of the
Corporation, or by written consent, if the amendment or modification would:
(a) materially increase the number of shares of Common Stock for which
options may be issued under the Plan;
(b) modify the requirements as to eligibility for participation in the
Plan; or
(c) make any other change for which shareholder approval is required
under Rule 16b-3 of the Securities and Exchange Commission.
No Stock Option may be granted during any suspension of the Plan or after
termination of the Plan. Amendment, suspension, or termination of the Plan shall
not (except as otherwise provided in Section 14 hereof), without the consent of
the Optionee, alter or impair any rights or obligations under any Stock Option
theretofore granted.
16. PRIVILEGES OF STOCK OWNERSHIP; REGULATORY LAW COMPLIANCE; NOTICE OF
SALE
No Optionee shall be entitled to the privileges of stock ownership as to any
Option Shares not actually issued and delivered. No Option Shares may be
purchased upon the exercise of a Stock Option unless and until all then
applicable requirements of all regulatory agencies having jurisdiction and all
applicable requirements of the securities exchanges upon which securities of the
Corporation are listed (if any) shall have been fully complied with.
17. EFFECTIVE DATE OF THE PLAN
The Plan shall be deemed adopted as of March 20, 1996, and shall be
effective immediately, subject to approval of the Plan by the holders of at
least a majority of the Corporation's outstanding shares of Common Stock.
18. TERMINATION
Unless previously terminated as aforesaid, the Plan shall terminate five (5)
years from the earliest date of: (i) adoption of the Plan by the Board of
Directors of the Corporation; or (ii) approval of the Plan by holders of at
least a majority of the outstanding shares of Common Stock. No Stock Options
shall be granted under the Plan thereafter, but such termination shall not
affect any Stock Option theretofore granted.
19. OPTION AGREEMENT
Each Stock Option granted under the Plan shall be evidenced by a written
Stock Option Agreement executed by the Corporation and the Optionee, and shall
contain each of the provisions and agreements herein specifically required to be
contained therein, and such other terms and conditions not inconsistent with
this Plan.
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20. STOCK OPTION PERIOD
Each Stock Option and all rights and obligations thereunder shall expire ten
(10) years from the date such Stock Option is granted, and shall be subject to
earlier termination as provided elsewhere in this Plan.
21. AGREEMENT AND REPRESENTATIONS OF OPTIONEE
Unless the shares of Common Stock covered by this Plan have been registered
with the Securities and Exchange Commission pursuant to the registration
requirements under the Securities Act of 1933, each Optionee shall: (i) by and
upon accepting a Stock Option, represent and agree in writing, for himself or
herself and his or her transferees by will or the laws of descent and
distribution, that the Option Shares will be acquired for investment purposes
and not for resale or distribution; and (ii) by and upon the exercise of a Stock
Option, or a part thereof, furnish evidence satisfactory to counsel for the
Corporation, including written and signed representations, to the effect that
the Option Shares are being acquired for investment purposes and not for resale
or distribution, and that the Option Shares being acquired shall not be sold or
otherwise transferred by the Optionee except in compliance with the registration
provisions under the Securities Act of 1933, as amended, or an applicable
exemption therefrom. Furthermore, the Corporation, at its sole discretion, to
assure itself that any sale or distribution by the Optionee complies with this
Plan and any applicable federal or state securities laws, may take all
reasonable steps, including placing stop transfer instructions with the
Corporation's transfer agent prohibiting transfers in violation of the Plan and
affixing the following legend (and/or such other legend or legends as the Board
of Directors shall require) on certificates evidencing the shares:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR
OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT WITH RESPECT TO THEM UNDER THE ACT OR A WRITTEN OPINION
OF COUNSEL FOR THE HOLDER THEREOF, WHICH OPINION SHALL BE
ACCEPTABLE TO PROFESSIONAL BANCORP, THAT REGISTRATION IS NOT
REQUIRED."
Unless the shares of Common Stock covered by this Plan have been registered with
the Securities and Exchange Commission pursuant to the registration requirements
under the Securities Act of 1933, at any time that an Optionee contemplates the
disposition of any of the Option Shares (whether by sale, exchange, gift or
other form of transfer), he or she shall first notify the Corporation of such
proposed disposition and shall thereafter cooperate with the Corporation in
complying with all applicable requirements of law which, in the opinion of
counsel for the Corporation, must be satisfied prior to the making of such
disposition. Before consummating such disposition, the Optionee shall provide to
the Corporation an opinion of Optionee's counsel, of which both such opinion and
such counsel shall be satisfactory to the Corporation, that such disposition
will not result in a violation of any state or federal securities laws or
regulations. The Corporation shall remove any legend affixed to certificates for
Option Shares pursuant to this Section if and when all of the restrictions on
the transfer of the Option Shares, whether imposed by this Plan or federal or
state law, have terminated.
22. NOTICES
All notices and demands of any kind which the Board of Directors, any
Optionee, or other person may be required or desires to give under the terms of
this Plan shall be in writing and shall be delivered in hand to the person or
persons to whom addressed (in the case of the Corporation, with the Chief
Executive Officer, Chief Financial Officer or Secretary of the Corporation), by
leaving a copy of such notice or demand at the address of such person or persons
as may be reflected in the records of the Corporation, or by mailing a copy
thereof, properly addressed as above, by certified or registered mail postage
prepaid, with return receipt requested. Delivery by mail shall be deemed made
upon receipt by the notifying party of the return receipt request acknowledging
receipt of the notice or demand.
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23. LIMITATION ON OBLIGATIONS OF THE CORPORATION
All obligations of the Corporation arising under or as a result of this Plan
or Stock Options granted hereunder shall constitute the general unsecured
obligations of the Corporation, and not of the Board of Directors of the
Corporation, any member thereof, any officer of the Corporation, or any other
person, and none of the foregoing, except the Corporation, shall be liable for
any debt, obligation, cost or expense hereunder.
24. SEVERABILITY
If any provision of this Plan as applied to any person or to any
circumstance shall be adjudged by a court of competent jurisdiction to be void,
invalid, or unenforceable, the same shall in no way affect any other provision
hereof, the application of any such provision in any other circumstances, or the
validity or enforceability hereof.
25. CONSTRUCTION
Where the context or construction requires, all words applied in the plural
herein shall be deemed to have been used in the singular and vice versa, and the
masculine gender shall include the feminine and the neuter and vice versa.
26. HEADINGS
The headings of the several paragraphs herein are inserted solely for
convenience of reference and are not intended to form a part of and are not
intended to govern, limit or aid in the construction of any term or provision
hereof.
27. SUCCESSORS
This Plan shall be binding upon the respective successors, assigns, heirs,
executors, administrators, guardians and personal representatives of the
Corporation and Optionees.
28. GOVERNING LAW
To the extent not governed by the laws of the United States, this Plan shall
be governed by and construed in accordance with the laws of the State of
California.
29. CONFLICT
In the event of any conflict between the terms and provisions of this Plan,
and any other document, agreement or instrument, including, without meaning any
limitation, any Stock Option Agreement, the terms and provisions of this Plan
shall control.
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<PAGE>
PROXY
PROFESSIONAL BANCORP, INC.
ANNUAL MEETING OF SHAREHOLDERS
JUNE 19, 1996
The undersigned shareholder of Professional Bancorp, Inc. (the "Company")
hereby nominates, constitutes and appoints Joel W. Kovner and Lynn O. Poulson,
and each of them, the attorney, agent and proxy of the undersigned, with full
powers of substitution, to vote all the stock of the Company which the
undersigned is entitled to vote at the Annual Meeting of Shareholders of the
Company to be held at the Main office of First Professional Bank, N.A., 606
Broadway, Santa Monica, CA 90401, on Wednesday, June 19, 1996 at 5:30 p.m. and
at any and all adjournments thereof, as fully and with the same force and effect
as the undersigned might or could do if personally present as follows:
1. ELECTION OF DIRECTORS.
To elect the seven persons named below and in the Proxy Statement dated
April 29, 1996, accompanying the Notice of said Meeting, to serve until the 1997
Annual Meeting of Shareholders and until their successors are elected and have
qualified:
Richard A. Berger, James B. Jacobson, Ronald L. Katz, M.D., Anthony R. Kovner,
Ph.D.
Joel W. Kovner, Dr., P.H., MPH, Lynn O. Poulson, J.D., David G. Rodeffer, MPH
AUTHORITY GIVEN / / AUTHORITY WITHHELD / /
IF YOU WISH TO WITHHOLD AUTHORITY TO VOTE FOR SOME BUT NOT ALL OF THE
NOMINEES NAMED ABOVE, YOU SHOULD CHECK THE BOX MARKED "AUTHORITY GIVEN" AND YOU
SHOULD ENTER THE NAME(S) OF THE NOMINEE(S) WITH RESPECT TO WHOM YOU WISH TO
WITHHOLD AUTHORITY TO VOTE IN THE SPACE PROVIDED BELOW:
- --------------------------------------------------------------------------------
2. APPROVING THE 1996 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN. Approving
the Company's 1996 Non-Employee Director Stock Option Plan covering 50,000
shares of the Company's Common Stock.
FOR / / AGAINST / / ABSTAIN / /
- --------------------------------------------------------------------------------
3. RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS. Ratifying
the appointment of the firm of KPMG Peat Marwick LLP as independent public
accountants of the Company for 1996.
FOR / / AGAINST / / ABSTAIN / /
PLEASE SIGN AND DATE ON THE REVERSE SIDE
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE OF "AUTHORITY GIVEN" ON PROPOSAL 1
AND "FOR" ON PROPOSAL 2 AND PROPOSAL 3. THE PROXY CONFERS AUTHORITY AND SHALL BE
VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS UNLESS A
CONTRARY INSTRUCTION IS INDICATED, IN WHICH CASE THE PROXY SHALL BE VOTED IN
ACCORDANCE WITH SUCH INSTRUCTIONS. IN ALL OTHER MATTERS, IF ANY, PRESENTED AT
THE MEETING, THIS PROXY SHALL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF
THE BOARD OF DIRECTORS.
(Number of DATED: , 1996 (Please Print Your Name)
Shares)
(Signature of Shareholder)
(Please Print Your Name)
(Signature of Shareholder)
(Please date this Proxy and sign your
name as it appears on the stock
certificates. Executors, administrators,
trustees, etc., should give their full
titles. All joint owners should sign.)
I do do not expect to attend the
Meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS, AND MAY
BE REVOKED PRIOR TO ITS EXERCISE BY FILING WITH THE CORPORATE SECRETARY OF THE
COMPANY AN INSTRUMENT REVOKING THIS PROXY OR A DULY EXECUTED PROXY BEARING A
LATER DATE, OR BY APPEARING IN PERSON AND VOTING AT THE MEETING.
