<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement [ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
ORANGE NATIONAL BANCORP
- --------------------------------------------------------------------------------
(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] Fee not required.
[ ] 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:
------------------------------------------------------------------------
Definitive Proxy Materials will be forwarded to shareholders on April 21, 1997.
<PAGE> 2
ORANGE NATIONAL BANCORP
1201 EAST KATELLA AVENUE
ORANGE, CALIFORNIA 92667
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 19, 1997
TO THE SHAREHOLDERS OF
ORANGE NATIONAL BANCORP:
NOTICE IS HEREBY GIVEN that, pursuant to the call of its board of directors, the
Annual Meeting of Shareholders (the "Meeting") of Orange National Bancorp (the
"Bancorp") will be held at the Bancorp's main office located at 1201 East
Katella Avenue, Orange, California, on Monday, May 19, 1997 at 7:30 a.m. for the
purpose of considering and voting upon the following matters:
1. ELECTION OF DIRECTORS. To elect nine (9) persons to the board of directors
to serve until the 1998 Annual Meeting of Shareholders and until their
successors are elected and have been qualified. The persons nominated by
management to serve as directors are:
Michael W. Abdalla, M.D. Gerald R. Holte
Michael J. Christianson James E. Mahoney
Kenneth J. Cosgrove Wayne F. Miller
Robert W. Creighton San E. Vaccaro
Charles R. Foulger
2. ADOPTION OF STOCK OPTION PLAN. To adopt the Orange National Bancorp 1997
Stock Option Plan.
3. RATIFICATION OF APPOINTMENT OF ACCOUNTANTS. To ratify the appointment of
McGladrey & Pullen, LLP as the Bancorp's independent certified public
accountants for the year 1997.
4. TRANSACTION OF OTHER BUSINESS. To transact such other business as may
properly come before the Meeting or any adjournment thereof.
The board of directors has fixed the close of business on April 4, 1997 as the
record date for determination of shareholders entitled to notice of, and to vote
at, the Meeting or any adjournment thereof.
The Bylaws of the Bancorp set forth the following procedures for nominations to
the board of directors:
Nominations for election of members of the Board of Directors may be made
by the Board of Directors or by any holder of any outstanding class of
capital stock of the Company entitled to vote for the election of
Directors. Notice of Intention to make
<PAGE> 3
any nominations (other than for persons named in the Notice of any meeting
called for the election of Directors) are required to be made in writing
and to be delivered or mailed to the President of the Company by the later
of: (i) the close of business 21 days prior to any meeting of stockholders
called for the election of Directors or (ii) 10 days after the date of
mailing of notice of the meeting to stockholders. Such notification must
contain the following information to the extent known to the notifying
stockholder: (a) the name and address of each proposed nominee; (b) the
principal occupation of each proposed nominee; (c) the number of shares of
capital stock of the Company owned by each proposed nominee; (d) the name
and residence address of the notifying stockholder; (e) the number of
shares of capital stock of the Company owned by the notifying stockholder;
(f) the number of shares of capital stock of any bank, bank holding
company, savings and loan association or other depository institution
owned beneficially by the nominee or by the notifying stockholder and the
identities and locations of any such institutions; and, (g) whether the
proposed nominee has ever been convicted of or pleaded nolo contendere to
any criminal offense involving dishonesty or breach of trust, filed a
petition in bankruptcy or been adjudged bankrupt. The notification shall
be signed by the nominating stockholder and by each nominee, and shall be
accompanied by a written consent to be named as a nominee for election as
a Director from each proposed nominee. Nominations not made in accordance
with these procedures shall be disregarded by the chairman of the meeting,
and upon his instructions, the inspectors of election shall disregard all
votes cast for each such nominee. The foregoing requirements do not apply
to the nomination of a person to replace a proposed nominee who has become
unable to serve as a Director between the last day for giving notice in
accordance with this paragraph and the date of election of Directors if
the procedure called for in this paragraph was followed with respect to
the nomination of the proposed nominee.
BY ORDER OF THE BOARD OF DIRECTORS
April 21, 1997 Robert W. Creighton, Secretary
YOU ARE URGED TO VOTE IN FAVOR OF MANAGEMENT'S PROPOSALS 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 BANCORP'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 BANCORP IN WRITING OF
REVOCATION OF THE PROXY, 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 SO THAT WE CAN ARRANGE FOR
ADEQUATE ACCOMMODATIONS.
2
<PAGE> 4
ORANGE NATIONAL BANCORP
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MAY 19, 1997
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of Proxies
for use at the 1997 Annual Meeting of Shareholders (the "Meeting") of Orange
National Bancorp (the "Bancorp") to be held at the Bancorp's main office located
at 1201 East Katella Avenue, Orange, California, on Monday, May 19, 1997 at 7:30
a.m., and at any and all adjournments thereof.
It is anticipated that this Proxy Statement and the accompanying Notice and form
of Proxy will be mailed on or about April 21, 1997 to shareholders eligible to
receive notice of, and to vote at, the Meeting.
REVOCABILITY OF PROXIES
A form of Proxy for voting your shares at the Meeting is enclosed. Any
shareholder who executes and delivers such Proxy has the right to and may revoke
it at any time before it is exercised by filing with the Secretary of the
Bancorp an instrument revoking it or a duly executed Proxy bearing a later date.
In addition, the powers of the proxyholders will be suspended 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 or her election to vote in person,
and votes in person at the Meeting. Subject to such revocation or suspension,
all shares represented by a properly executed Proxy received in time for the
Meeting will be voted by the proxyholders in accordance with the instructions
specified on the Proxy. UNLESS OTHERWISE DIRECTED IN THE ACCOMPANYING PROXY, THE
SHARES REPRESENTED BY YOUR EXECUTED PROXY WILL BE VOTED "FOR" THE NOMINEES FOR
ELECTION OF DIRECTORS NAMED HEREIN, "FOR" ADOPTION OF THE ORANGE NATIONAL
BANCORP 1997 STOCK OPTION PLAN AND "FOR" RATIFICATION OF THE APPOINTMENT OF
MCGLADREY & PULLEN, LLP AS THE BANCORP'S INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS FOR 1997. IF ANY OTHER BUSINESS IS PROPERLY PRESENTED AT THE
MEETING, THE PROXY WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF
MANAGEMENT.
PERSONS MAKING THE SOLICITATION
This solicitation of Proxies is being made by the board of directors (the
"Board") of the Bancorp. 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 Bancorp. It is contemplated that
Proxies will be solicited principally through the use of the mail, but
directors, officers and
<PAGE> 5
employees of the Bancorp and its subsidiary, Orange National Bank (the "Bank")
may solicit Proxies personally or by telephone, without receiving special
compensation therefore. Although there is no formal agreement to do so, the
Bancorp may reimburse banks, brokerage houses and other custodians, nominees and
fiduciaries for their reasonable expenses in forwarding these Proxy materials to
shareholders whose stock in the Bancorp is held of record by such entities. In
addition, the Bancorp may use the services of individuals or companies it does
not regularly employ in connection with this solicitation of Proxies, if
management determines it to be advisable.
VOTING SECURITIES
There were issued and outstanding 1,960,921 shares of the Bancorp's common stock
("Common Stock") on April 4, 1997, which has been fixed as the record date for
the purpose of determining shareholders entitled to notice of, and to vote at,
the Meeting (the "Record Date"). On any matter submitted to the vote of the
shareholders, each holder of Common Stock will be entitled to one vote, in
person or by Proxy, for each share of Common Stock he or she held of record on
the books of the Bancorp as of the Record Date. In connection with the election
of directors, shares may be voted cumulatively if a shareholder present at the
Meeting gives notice at the Meeting, prior to the voting for election of
directors, of his or her intention to vote cumulatively. If any shareholder of
the Bancorp gives such notice, then all shareholders eligible to vote will be
entitled to cumulate their shares in voting for election of directors.
Cumulative voting allows a shareholder to cast a number of votes equal to the
number of shares held in his or her name as of the Record Date, multiplied by
the number of directors to be elected. These votes may be cast for any one
nominee, or may be distributed among as many nominees 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 proxyholders, in accordance with management's recommendation.
The effect of broker nonvotes is that such votes are not counted as being voted;
however such votes are counted for purposes of determining a quorum. The effect
of a vote of abstention on any matter is that such vote is not counted as a vote
for or against the matter, but is counted as an abstention.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
Management of the Bancorp knows of no person who owns, beneficially or of
record, either individually or together with associates, 5 percent or more of
the outstanding shares of Common Stock, except as set forth in the table below.
The following table sets forth, as of February 15, 1997, the number and
percentage of shares of the Bancorp's outstanding Common Stock beneficially
owned, directly or indirectly, by each of the Bancorp's directors and named
executive officers and by the directors and named executive officers of the
Bancorp as a group. The shares "beneficially owned" are determined under
Securities and Exchange Commission rules, and do not necessarily indicate
ownership for any other purpose. In general, beneficial ownership includes
shares over which a director or named executive officer has sole or shared
voting or investment power and shares which such person has the right to acquire
within 60 days of February 15, 1997. Unless otherwise indicated, the persons
listed below have sole voting and investment powers. Management is not aware of
any arrangements which may, at a subsequent date, result in a change of control
of the Bancorp.
2
<PAGE> 6
<TABLE>
<CAPTION>
Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class(1)
- ---------------- -------------------- -----------
<S> <C> <C>
Directors and Named Executive Officers:
- --------------------------------------
Michael W. Abdalla, M.D. 97,291(2) 5.0%
Fred L. Barrera 34,844(3) 1.8%
Michael J. Christianson 48,987(4) 2.5%
Kenneth J. Cosgrove 67,328(5) 3.4%
Robert W. Creighton 32,752(6) 1.7%
Armand Durante 33,865(7) 1.7%
Charles R. Foulger 75,835(8) 3.9%
William S. Frantz 45,984(9) 2.4%
Gerald R. Holte 25,421(10) 1.3%
James E. Mahoney 88,381(11) 4.5%
Wayne F. Miller 67,398(12) 3.4%
Harlan A. Smith, O.D. 26,583(13) 1.4%
San E. Vaccaro 30,586(14) 1.6%
Frank A. Del Giorgio 15,527(15) *
Larry A. Sallinger 3,150(16) *
All Directors and Named Executive
Officers as a Group (numbering 15) 693,932 35.1%
</TABLE>
* Less than one percent.
(1) Includes shares subject to options held by Messrs. Cosgrove, Creighton,
Del Giorgio and Sallinger that are exercisable within 60 days of February
15, 1997. These are treated as issued and outstanding for the purpose of
computing the percentages of Messrs. Cosgrove, Creighton, Del Giorgio and
Sallinger and the directors and named executive officers as a group, but
not for the purpose of computing the percentage of class of any other
person.
(2) Dr. Abdalla's address is c/o Orange National Bancorp, 1201 East Katella
Avenue, Orange, California 92667.
(3) Mr. Barrera has shared voting and investment powers as to 28,386 of these
shares.
(4) Mr. Christianson has shared voting and investment powers as to 34,923 of
these shares.
(5) Mr. Cosgrove has shared voting and investment powers as to 2,017 of these
shares, has shared voting and no investment powers as to 735 of these
shares and has 2,500 shares acquirable by exercise of stock options.
(6) Mr. Creighton has 3,333 shares acquirable by exercise of stock options.
(7) Mr. Durante has shared voting and investment powers as to 24,605 of these
shares.
(8) Mr. Foulger has shared voting and investment powers as to all of these
shares.
(9) Mr. Frantz has shared voting and investment powers as to 36,130 of these
shares and has shared voting and no investment powers as to 4,393 of these
shares.
(Footnotes continued on the following page.)
3
<PAGE> 7
(10) Mr. Holte has shared voting and investment powers as to 16,567 of these
shares.
(11) Mr. Mahoney has shared voting and investment powers as to all of these
shares.
(12) Mr. Miller has shared voting and investment powers as to 59,093 of these
shares and has shared voting and no investment powers as to 2,971 of these
shares.
(13) Dr. Smith has shared voting and investment powers as to 25,335 of these
shares.
(14) Mr. Vaccaro has shared voting and investment powers as to 393 of these
shares.
(15) Mr. Del Giorgio has 5,250 shares acquirable by exercise of stock options.
(16) Mr. Sallinger has 3,150 shares acquirable by exercise of stock options.
SECTION 16(a) BENEFICIAL OWNERSHIP COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Bancorp's
directors and certain executive officers and persons who own more than ten
percent of a registered class of the Bancorp's equity securities (collectively,
the "Reporting Persons"), to file reports of ownership and changes in ownership
with the Securities and Exchange Commission. The Reporting Persons are required
by Securities and Exchange Commission regulation to furnish the Bancorp with
copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from the Reporting Persons that no Forms 5 were required
for those persons, the Bancorp believes that, during 1996 the Reporting Persons
complied with all filing requirements applicable to them.
PROPOSAL 1:
ELECTION OF DIRECTORS
NOMINEES
The Bancorp's Bylaws presently provide that the number of directors of the
Bancorp shall not be less than nine (9) nor more than seventeen (17) until
changed by an amendment to the Bylaws adopted by the Bancorp's shareholders. The
Bylaws further provide that the exact number of directors shall be nine (9)
until changed by a Bylaw amendment duly adopted by the Bancorp's shareholders or
the Board.
The persons named below, all of whom are currently members of the Board, have
been nominated for election as directors to serve until the 1998 Annual Meeting
of Shareholders and until their successors are elected and have qualified.
Unless otherwise instructed, the proxyholders will vote the Proxies received by
them for the election of the nominees named below. Votes of the proxyholders
will be cast in such a manner as to effect, if possible, the election of all
nine (9) nominees, as appropriate, (or as many thereof as possible under the
rules of cumulative voting). The nine nominees for directors receiving the most
votes will be elected directors. 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 nominee, if any, as shall be designated by the
Board. The Board has no reason to believe that any of the nominees named below
will be unable to serve if elected. Additional nominations for directors may
only be made by complying with the nomination
4
<PAGE> 8
procedures which are included in the Notice of Annual Meeting of Shareholders
accompanying this Proxy Statement.
The following table sets forth as of February 15, 1997, the names of, and
certain information concerning, the persons nominated by the Board for election
as directors of the Bancorp.
<TABLE>
<CAPTION>
Year First
Name and Title Appointed Principal Occupation During the
Other Than Director Age Director Past Five Years
------------------- --- ----------- ---------------------------------
<S> <C> <C> <C>
Michael W. Abdalla, M.D. 63 1986 Orthopedic Surgeon and Vice President of
Orange Orthopedic Medical Group, Inc.
Michael J. Christianson 55 1986 Tax Attorney in the law firm of Michael J.
Christianson, Inc.; Consultant with
Christianson International, Inc.; and
associated with Adventure Travel Group.
Kenneth J. Cosgrove 49 1986 President and Chief Executive Officer of the
President, Chief Bancorp and the Bank. Former Executive
Executive Officer Vice President of the Bank.
Robert W. Creighton 58 1986 Chief Financial Officer of the Bancorp and
Secretary, Chief Executive Vice President and Chief Financial
Financial Officer Officer of the Bank.
Charles R. Foulger 63 1986 President and Owner of Foulger Acura and
Villa Honda, Mazda and Volkswagen.
Former principal of Fougler Ford.
Gerald R. Holte 59 1986 Partner in G.R. Holte & Associate, floor
covering dealer/contractor.
James E. Mahoney 68 1986 President of Mahoney Enterprises, Inc.,
business development corporation.
Wayne F. Miller 63 1986 Owner and President of WFM Business
Enterprises, Inc. and Consultant to the Bank.
Former President and Chief Executive
Officer of the Bancorp and the Bank.
San E. Vaccaro 63 1986 Sole proprietor of the Law Offices of San E.
Chairman of the Vaccaro. Former Partner in the law firm of
Board of Directors Curtis & Vaccaro.
</TABLE>
5
<PAGE> 9
All of the nominees named above have served as members of the Bancorp's Board
since its inception. All nominees will continue to serve if elected at the
Meeting until the 1998 Annual Meeting of Shareholders and until their successors
are elected and have qualified. None of the directors were selected pursuant to
any arrangement or understanding other than with the directors and executive
officers of the Bancorp acting within their capacities as such. There are no
family relationships among any of the directors and executive officers of the
Bancorp. No director or executive officer of the Bancorp serves as a director of
any company which has a class of securities registered under, or which is
subject to the periodic reporting requirements of, the Securities Exchange Act
of 1934, or of any company registered as an investment company under the
Investment Company Act of 1940.
THE BOARD OF DIRECTORS AND COMMITTEES
The Bancorp's Board held thirteen (13) meetings during 1996. None of the
directors attended less than 75 percent of all Board meetings and committee
meetings (of which they were a member) that were held in 1996.
There were no standing committees of the Bancorp's Board in 1996. However, in
1996, the Bank had a standing Audit Committee and a standing Directors Review
Committee.
The Bank's Audit Committee, which consisted of Messrs. Christianson and Durante
and Dr. Smith met six (6) times in 1996. The Audit Committee's functions include
making recommendations to the Board on the selection of the Bancorp's and the
Bank's independent certified public accountants, reviewing the arrangements for
the independent certified public accountants' examination, review of internal
accounting controls and reporting, and any other duties assigned by the Board.
The Bank's Directors Review Committee, which consisted of Messrs. Christianson,
Durante, Holte, Mahoney and Vaccaro met eight (8) times in 1996. The Directors
Review Committee's function is to evaluate and recommend to the Board policies
regarding the Bank's officers' compensation, employee benefits, retirement and
other internal administrative matters.
COMPENSATION OF DIRECTORS
The directors of the Bancorp who are not employees of the Bank received a fee of
$300 per meeting for attendance at the Bancorp's Board meetings and $235 per
meeting for up to two meetings if such director did not attend the meeting. The
Chairman of the Bancorp's Board received a fee of $450 per meeting for
attendance at the Bancorp's Board meetings. In addition, the directors of the
Bancorp who are not employees of the Bank received a fee of $900 per meeting for
attendance at the Bank's board of directors meetings and $700 per meeting for up
to two meetings if such director did not attend the meeting. The Chairman of the
Bank's board of directors received a fee of $1,350 per meeting for attendance at
the Bank's board of directors meetings and an automobile allowance of $300 per
month. Directors of the Bancorp who are employees of the Bank received a fee of
$500 per month for attendance at the Bank's board of directors meetings. In
addition, directors who were members of the Bank's Directors Review Committee
and Audit Committee received a fee of $300 per meeting for each meeting they
attended. The Chairmen of the Bank's Directors Review Committee and Audit
Committee received a fee of $500 per meeting for each meeting they attended. In
1997, the directors will receive the same compensation as that received during
1996.
6
<PAGE> 10
Directors of the Bancorp and the Bank also have the option of participating in
the Bank's Deferred Fee Program. Pursuant to the Deferred Fee Program, directors
make an initial deferral election by filing with the Bank a signed Election Form
which sets forth the amount of the director's fees to be deferred. The Bank then
establishes a Deferral Account on its books for the director and credits to the
Deferral Account the fees deferred by the director and interest on the account
balance at an annual rate determined prospectively by the Bank's board of
directors in December of each year. The Deferral Account is not a trust fund of
any kind and the director is a general unsecured creditor of the Bank for the
payment of the benefits. Benefits under the Deferred Fee Program are payable
upon the director's termination of service. If termination of service occurs
after the director attains the age of 65, the amount of benefit payable is the
Deferral Account balance at the date of termination of service. This amount may
be paid by the Bank in either one lump sum within 60 days of termination of
service or in 120 monthly installments commencing on the first day of the month
following the director's termination of service. If termination of service
occurs before the director attains the age of 65, the amount of benefit payable
is also the Deferral Account balance at the date of termination of service. This
amount may be paid by the Bank in either one lump sum within 60 days of
termination of service or in 120 monthly installments commencing on the first
day of the month following the director's termination of service. If termination
of service occurs due to disability before the director attains the age of 65 or
due to a change in control of the Bank, the amount of benefit payable is also
the Deferral Account balance at the date of termination of service. This amount
shall be paid by the Bank in one lump sum within 60 days of termination of
service. Finally, if termination of service occurs due to the death of the
director, the amount of benefit payable is the greater of the Deferral Account
balance at the date of termination of service or the amount set forth in the
individual Deferral Fee Agreement. This amount shall also be paid by the Bank in
one lump sum within 60 days of termination of service.
Messrs. Cosgrove, Creighton, Foulger, Holte, Mahoney and Vaccaro have all
entered into Deferred Fee Agreements with the Bank. Mr. Cosgrove's agreement
provides for a minimum death benefit of $227,315; Mr. Creighton's agreement
provides for a minimum death benefit of $68,411; Mr. Foulger's agreement
provides for a minimum death benefit of $191,901; Mr. Holte's agreement provides
for a minimum death benefit of $224,035; Mr. Mahoney's agreement provides for a
minimum death benefit of $56,442; and Mr. Vaccaro's agreement provides for a
minimum death benefit of $774,146.
DIRECTOR EMERITUS PLAN
During 1995, the Bancorp and the Bank each established a Directors Emeritus
Plan. Those outside directors who have satisfactorily served ten or more
consecutive years as an outside director and any outside directors who have
satisfactorily served five or more consecutive years as an outside director and
immediately prior thereto served five or more consecutive years as an inside
director, qualify and are entitled to participate under the Directors Emeritus
Plans. In 1997, four outside directors, Messrs. Barrera, Durante and Frantz and
Dr. Smith, elected to participate in the Directors Emeritus Plans and these four
directors are not standing for reelection. The Directors Emeritus Plans are
scheduled to terminate on January 1, 1998, however, the Bancorp's Board and the
Bank's board of directors may extend such termination dates. Director Emeritus
status shall be for a period of five years from the date of retirement as an
outside director of the Bancorp and/or the Bank, subject to reduction for the
period of time a director serves beyond the mandatory retirement age of 72,
provided the director meets all of the requirements under the Directors Emeritus
Plans.
7
<PAGE> 11
A Director Emeritus shall receive a monthly sum equal to a percent of the base
director fee such director was receiving for attending a Board meeting of the
Bancorp and/or a board meeting of the Bank at the time such director became a
Director Emeritus. The percentage received shall be on a sliding scale as
follows: 1st year, 80%; 2nd year, 75%; 3rd year, 70%; 4th year, 65%; and 5th
year, 60%. In addition, a Director Emeritus can participate in existing medical
plans of the Bank subject to eligibility and the Director Emeritus paying all of
the premiums for such coverage. In order to qualify for remuneration under the
Directors Emeritus Plans, a Director Emeritus must comply with the provisions of
the Director Emeritus Plans.
Director Emeritus status can terminate upon any of the following events: (i)
death of the Director Emeritus; (ii) inability of the Director Emeritus to
provide service to the Bancorp or the Bank; (iii) upon the fifth year
anniversary of the date of retirement as an outside director; (iv) resignation
as Director Emeritus; (v) determination by the Bancorp's Board and/or the Bank's
board of directors that the Director Emeritus has not fulfilled his or her
service requirements; (vi) reelection or appointment of the Director Emeritus as
a director of the Bancorp and/or the Bank; or (vii) the failure of the Director
Emeritus to maintain a minimum ownership of 5,000 shares of Common Stock.
In the event of any Acquisition of the Bank, as defined in the Directors
Emeritus Plans, the terms of the Directors Emeritus Plans shall continue and be
in full force and effect unless the resulting corporation terminates the
Directors Emeritus Plans, in which case the resulting corporation shall pay the
Director Emeritus a lump sum amount in cash equal to 75% of the remaining
benefits due such Director Emeritus under the Directors Emeritus Plans.
EXECUTIVE OFFICERS
The following table sets forth information, as of February 15, 1997, concerning
executive officers of the Bancorp and certain executive officers of the Bank:
<TABLE>
<CAPTION>
Position and Principal Occupation
Name Age For the Past Five Years
---- --- ---------------------------------
<S> <C> <C>
Kenneth J. Cosgrove 49 President and Chief Executive Officer of the
Bancorp and the Bank. Former Executive Vice
President of the Bank.
Robert W. Creighton 58 Chief Financial Officer of the Bancorp and
Executive Vice President and Chief Financial
Officer of the Bank.
Frank A. Del Giorgio 52 Senior Vice President and Loan Administrator of
the Bank.
Larry A. Sallinger 54 Senior Vice President and Branch Administrator
of the Bank.
Former Executive Vice President - Interim
President/Chief Executive Officer of Frontier
Bank, N.A. from 1993 through 1994. Prior to that
time, Senior Vice President/Loan Administrator of
Frontier Bank, N.A.
</TABLE>
8
<PAGE> 12
EXECUTIVE COMPENSATION
During 1996, the Bancorp did not pay any cash compensation to its executive
officers and no such cash compensation is expected to be paid during 1997.
However, the persons serving as the executive officers of the Bancorp received
during 1996, and are expected to receive in 1997, cash compensation in their
capacities as executive officers of the Bank.
The following Summary Compensation Table indicates the compensation of the
Bancorp's executive officers, and certain of the Bank's executive officers.
9
<PAGE> 13
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation
Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other
Annual Restricted All Other
Name and Compen- Stock LTIP Compen-
Principal Salary Bonus sation Award(s) Options/ Payouts sation
Position Year ($) ($) ($) ($) SARs ($) ($)(1)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Kenneth J. Cosgrove 1996 142,834 52,399 0 0 0 0 1,800
President and Chief 1995 140,050 62,041 0 0 15,750 0 1,800
Executive Officer of 1994 128,000 18,671 0 0 0 0 1,800
the Bancorp and the
Bank
Robert W. Creighton 1996 115,917 31,131 0 0 5,000 0 1,800
Chief Financial Officer 1995 118,000 38,217 0 0 0 0 1,800
of the Bancorp; Executive 1994 118,000 7,598 0 0 0 0 1,800
Vice President and CFO of
the Bank
Frank A. Del Giorgio 1996 96,300 25,639 0 0 0 0 1,800
Senior Vice President 1995 92,100 35,033 0 0 0 0 1,800
of the Bank 1994 88,500 9,335 0 0 5,250 0 1,800
Larry A. Sallinger 1996 94,583 12,000 0 0 0 0 1,800
Senior Vice President of 1995 90,000 15,000 0 0 5,250 0 1,800
the Bank
</TABLE>
(1) The Bank's contribution to its 401(k) plan for employees of 3% of salary
to a maximum of $1,800.
10
<PAGE> 14
OPTION/SAR GRANTS TABLE
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
% of Total
Options/SARs
Options/SARs Granted to Exercise or
Granted Employees in Base Price Expiration
Name (#) Fiscal Year ($/Share) Date
<S> <C> <C> <C> <C>
Robert W. Creighton 5,000 Options 100% $9.92 January 1, 2001
</TABLE>
OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND YEAR-END
OPTION/SAR VALUE
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Value of
Number of Unexercised In-
Unexercised the-Money
Options/SARs at Options/SARs at
Year-End (#) Year-End ($)
Shares Acquired on Value Realized Exercisable/ Exercisable/
Name Exercise (#) ($) Unexercisable Unexercisable
<S> <C> <C> <C> <C>
Kenneth J. Cosgrove 2,500 $15,725 Options Only Options Only
5,500/5,250 $38,775/$37,013
Robert W. Creighton 0 N/A Options Only Options Only
1,666/3,334 $5,698/$11,402
Frank A. Del Giorgio 0 N/A Options Only Options Only
5,250/0 $39,637/$0
Larry A. Sallinger 0 N/A Options Only Options Only
2,100/3,150 $15,855/$23,782
</TABLE>
N/A - means not applicable.
11
<PAGE> 15
EMPLOYMENT CONTRACTS
The executive officers of the Bank have, or had during 1996, employment
contracts with the Bank as described below.
Kenneth J. Cosgrove has a three year employment contract with the Bank beginning
July 1, 1995 and expiring June 30, 1998. In addition, unless the employment
contract is otherwise terminated, the term of the employment contract shall
automatically extend in annual increments of one year so as to always remain a
three year employment contract. Mr. Cosgrove's annual salary was fixed at
$140,000 for the first year of the employment contract, was renegotiated to
$147,000 as of July 1, 1996 and shall be renegotiated in each subsequent year.
Mr. Cosgrove also agreed to an $8,000 per year salary deduction for a period of
eight (8) years beginning March 1, 1996, in consideration of Mr. Cosgrove's
salary continuation agreement which is described below. Under the terms of the
employment contract, Mr. Cosgrove is entitled to a two-part bonus: Part 1 is 8%
to 20% of his annual salary calculated on the Bancorp's Return on Equity as
described below; and Part 2 is 1% of the Bancorp's pre-tax earnings, subject to
a minimum earnings of $500,000. Mr. Cosgrove's employment contract provides that
in the event he becomes disabled, he shall be entitled to 100% of his salary for
ninety days and after such ninety day period, he shall be entitled to 100% of
his salary, less any disability benefits received under any income
continuation/disability plans sponsored by the Bank, for a period not to exceed
730 days, but in no event beyond the term of the employment contract. In
addition, if the Bank or Bancorp is merged, sold or acquired and the merging,
purchasing or acquiring entity elects not to employ Mr. Cosgrove under the terms
of an agreement acceptable to Mr. Cosgrove, he shall have the right to continue
to receive his base salary plus certain other employee benefits for a period of
two years following the merger, sale or acquisition.
In addition Mr. Cosgrove has a salary continuation agreement with the Bank which
provides that the Bank will pay him $154,056 per year for 15 years following his
retirement from the Bank at age 65 or later. In the event of earlier retirement
before age 60, Mr. Cosgrove will receive salary continuation payments beginning
at age 65 with the amount of the salary continuation payment being based on
years of service and up to a maximum of $8,556 per month for 180 months. In the
event of earlier retirement after age 60 and before age 65, Mr. Cosgrove will
receive salary continuation payments beginning at the time of such early
retirement with the amount of the salary continuation payment based on years of
service up to a maximum of $12,838 per month for 180 months. In the event of
disability of Mr. Cosgrove prior to February 21, 2001, Mr. Cosgrove would
receive a one time lump sum disability benefit based on years of service and up
to a maximum of $133,125. In the event of disability of Mr. Cosgrove after
February 21, 2001, Mr. Cosgrove would receive salary continuation benefits based
on years of service up to a maximum of $12,838 per month for 180 months or until
the time Mr. Cosgrove recovered and returned to active service. In the event Mr.
Cosgrove dies while in active service of the Bank, his beneficiary will receive
from the Bank a benefit amount of $154,056 per year for 15 years beginning one
month after his death. In the event of termination with cause, Mr. Cosgrove will
forfeit any benefits from the salary continuation agreement. In the event of a
change of control of the Bank whereby Mr. Cosgrove's employment is terminated or
adversely affected, Mr. Cosgrove will receive salary continuation benefits up to
a maximum of $12,838 per month for 180 months beginning after the change of
control. The benefits under the salary continuation agreement for Mr. Cosgrove
will also be reduced in the event such payments are not deductible under Section
280G of the Internal Revenue Code of 1986, as amended (the "Code").
12
<PAGE> 16
Robert W. Creighton has an employment contract with the Bank which began April
1, 1996 and was extended to expire March 31, 1998. Mr. Creighton's annual salary
is fixed at $117,000. Mr. Creighton also agreed to an $8,000 per year salary
deduction for a period of eight (8) years beginning March 1, 1996, in
consideration of Mr. Creighton's salary continuation agreement which is
described below. Under the employment contract, Mr. Creighton is entitled to a
two-part bonus: Part 1 is 8% to 20% of his annual salary calculated on the
Bancorp's Return on Equity as described below; and Part 2 is one-half of 1% of
the Bancorp's pre-tax earnings, subject to a minimum earnings of $750,000. Mr.
Creighton's employment contract provides that in the event he becomes disabled,
he will be entitled to 100% of his salary for ninety days and after such ninety
day period, he will be entitled to 100% of his salary, less any disability
benefits received under any income continuation/disability plans sponsored by
the Bank, for a period not to exceed 275 days, but in no event beyond the term
of the employment contract. In addition, if the Bancorp is merged, sold or
acquired and the merging, purchasing or acquiring entity elects not to employ
Mr. Creighton under the terms of an agreement acceptable to Mr. Creighton, he
will be entitled to receive his base salary plus certain other employee benefits
for the remaining period of the employment contract, less any payments received
from the salary continuation agreement between Mr. Creighton and the Bank.
In addition Mr. Creighton has a salary continuation agreement with the Bank
which provides that the Bank will pay him $60,000 per year for 15 years
following his retirement from the Bank at age 65 or later. In the event of
earlier retirement before age 60, Mr. Creighton will receive salary continuation
payments beginning at age 65 with the amount of the salary continuation payment
being based on years of service and up to a maximum of $2,304 per month for 180
months. In the event of earlier retirement after age 60 and before age 65, Mr.
Creighton will receive salary continuation payments beginning at the time of
such early retirement with the amount of the salary continuation payment based
on years of service up to a maximum of $5,000 per month for 180 months. In the
event of disability of Mr. Creighton prior to February 21, 2001, Mr. Creighton
would receive a one time lump sum disability benefit based on years of service
and up to a maximum of $492,967. In the event of disability of Mr. Creighton
after February 21, 2001, Mr. Creighton would receive salary continuation
benefits based on years of service up to a maximum of $5,000 per month for 180
months or until the time Mr. Creighton recovered and returned to active service.
In the event Mr. Creighton dies while in active service of the Bank, his
beneficiary will receive from the Bank a benefit amount of $60,000 per year for
15 years beginning after his death. In the event of termination with cause, Mr.
Creighton will forfeit any benefits from the salary continuation agreement. In
the event of a change of control of the Bank whereby Mr. Creighton's employment
is terminated or adversely affected, Mr. Creighton will receive salary
continuation benefits up to a maximum of $5,000 per month for 180 months
beginning after the change of control. The benefits under the salary
continuation agreement for Mr. Creighton will also be reduced in the event such
payments are not deductible under Section 280G of the Code.
Frank A. Del Giorgio has an employment contract with the Bank which began April
1, 1996 and was extended to expire March 31, 1998. Mr. Del Giorgio's annual
salary was fixed at $92,100 for the April 1, 1996 through March 31, 1997 period
and has been increased to $96,100 for the April 1, 1997 through March 31, 1998
period. Under the employment contract, Mr. Del Giorgio is entitled to a two-part
bonus: Part 1 is 8% to 20% of his annual salary calculated on the Bancorp's
Return on Equity as described below; and Part 2 is 0.35% of the Bancorp's
pre-tax earnings, subject to a minimum earnings of $750,000. Mr. Del Giorgio's
contract provides that in the event he becomes disabled, he will be entitled to
100% of his salary for ninety days and after such ninety day period, he will be
entitled to 100% of his salary, less any disability benefits received under any
income
13
<PAGE> 17
continuation/disability plans sponsored by the Bank, for a period not to exceed
275 days, but in no event beyond the term of the employment contract. In
addition, if the Bancorp is merged, sold or acquired and the merging, purchasing
or acquiring entity elects not to employ Mr. Del Giorgio under the terms of an
agreement acceptable to Mr. Del Giorgio, he will be entitled to receive his base
salary plus certain other employee benefits for the remaining period of the
employment contract.
The earnings bonus is the officer's specified percentage of the amount of the
Bancorp's pre-tax earnings after allowances for the Bank's loan loss reserves.
No bonus is paid unless the applicable pre-tax earnings amount is more than
$500,000 for Mr. Cosgrove and $750,000 for Messrs.
Creighton and Del Giorgio.
The Return on Equity bonus is paid only if the Bancorp realizes at least 10%
Return on Equity. Return on Equity is the Bancorp's net income divided by
shareholders' equity at the end of the prior fiscal year. The bonus amount is a
scaled percentage of the officer's salary from 8% to 20%, varying with the
amount of Return on Equity, as follows:
<TABLE>
<CAPTION>
Percent Bonus Percent Bonus
Return Percent Return Percent
on Equity of Salary on Equity of Salary
--------- --------- --------- ---------
<S> <C> <C> <C>
10 8 16.1 14
11.1 9 17.1 15
12.1 10 18.1 16
13.1 11 19.1 18
14.1 12 20.1 20
15.1 13
</TABLE>
Each executive officer is entitled to employee benefits made available by the
Bank to all its employees plus, use of an automobile supplied by the Bank, life,
health and disability insurance fully paid by the Bank, and participation in the
Bank's deferred compensation plan. Each executive officer is also entitled to
participate in the Bancorp's 1993 Incentive Stock Option Plan.
PROPOSAL 2:
ADOPTION OF THE
ORANGE NATIONAL BANCORP 1997 STOCK OPTION PLAN
INTRODUCTION
The Orange National Bancorp 1997 Stock Option Plan (the "Plan"), subject to
approval by the Bancorp's shareholders, provides for the granting of options to
purchase shares of Common Stock at option prices per share which must not be
less than one hundred percent (100%) of the fair market value per share of
Common Stock at the time each option is granted. It is intended that options
granted pursuant to the Plan qualify for treatment either as "incentive stock
options" within the meaning of Section 422 of the Code, or as "nonqualified
stock options," as shall be determined and designated upon the grant of each
option. The Plan provides that 414,250 shares of the Bancorp's authorized but
unissued Common Stock will be available for issuance under the Plan. The summary
14
<PAGE> 18
below is subject to the provisions of the Plan, a copy of which is attached to
this Proxy Statement as Exhibit A.
The Bancorp is unable to make any stock option grants to its outside directors
in that the Orange National Bancorp 1993 Incentive Stock Option Plan only
provides for the grant of incentive stock options. There are currently 123,006
shares left under the Orange National Bancorp 1993 Incentive Stock Option Plan
available for grant to officers and key employees of the Bancorp. The Board
believes it is advisable for the shareholders to adopt the Plan in order to have
options available as an additional means of retaining and attracting competent
directors and personnel for the Bancorp and its subsidiaries, and for inducing
high levels of performance and efforts for the benefit of the Bancorp and its
shareholders.
SUMMARY OF THE PLAN
The Plan will be administered by the Board. All options under the Plan will be
granted at an exercise price of not less than 100 percent of the fair market
value of the shares of Common Stock on the date of grant, except for an
incentive stock option granted to an optionee who at the time of the grant owns
more than 10% of the total combined voting power of all classes of stock of the
Bancorp or a subsidiary of the Bancorp in which case the option price shall not
be less than 110% of the fair market value of such stock. The purchase price of
any shares purchased upon exercise is payable in full in cash or, subject to
applicable law, with Common Stock previously acquired by the optionee and held
by the optionee for a period of at least six months. The equivalent dollar value
of shares used to effect a purchase shall be the fair market value of the Common
Stock on the date of exercise.
Options granted pursuant to the Plan shall be for a term of up to ten (10)
years, except for certain incentive stock options described below. Each option
shall be exercisable in installments and upon such conditions as the Board shall
determine. Options granted shall vest over a period no greater than five years,
and no less than 20% of such option shall vest annually. Optionees shall have
the right to exercise all or a portion of the option at any time or from time to
time with respect to the vested part of their stock options. If any option shall
expire without being exercised in full, the shares will again become available
for granting of stock options under the Plan. The Plan shall expire on February
19, 2007.
Incentive stock options may be granted to full-time salaried officers and
management level employees of the Bancorp or a subsidiary. No director who is
not also a full-time salaried officer or management level employee may be
granted an incentive stock option pursuant to the Plan. No incentive stock
option with a term of more than five (5) years may be granted to any person who
at the time of grant owns stock possessing more than 10% of the total combined
voting power or value of all classes of stock of the Bancorp or a subsidiary of
the Bancorp. Nonqualified stock options may be granted to directors, full-time
salaried officers and management level employees of the Bancorp or its
subsidiaries.
TAX CONSEQUENCES TO THE OPTIONEE
The following describes, generally, the major federal income tax consequences
relating to stock options issued under the Plan. If all of the requirements of
the Plan are met, generally no taxable income will result to an optionee upon
the grant of an incentive or nonqualified stock option.
15
<PAGE> 19
INCENTIVE STOCK OPTIONS. If the optionee is employed by the Bancorp (or a
subsidiary) continuously from the date of grant until at least three months
before the option is exercised and otherwise satisfies the requirements of the
Plan and applicable law, the optionee will not recognize taxable income upon
exercise of the option. If the optionee is not employed by the Bancorp (or a
subsidiary) continuously from the date of grant until at least three months
before the option is exercised for reason other than death or disability, the
optionee will recognize ordinary income at the time the option is exercised. The
Bancorp will be allowed a deduction for federal income tax purposes only if and
to the extent that the optionee recognizes ordinary income. Upon exercise of an
incentive stock option, the excess of the fair market value of the shares
received over the option price at the time of exercise is treated as an item of
tax preference which may result in the imposition of the alternative minimum
tax.
On a subsequent sale of shares acquired by the exercise of an incentive stock
option, gain or loss will be recognized in an amount equal to the difference
between the amount realized on the sale and the optionee's tax basis of the
shares sold. If a disposition (generally a sale, exchange, gift or similar
lifetime transfer of legal title) of stock received pursuant to an incentive
stock option does not take place until more than two years after the grant of
such option and more than one year after the exercise of such option, any gain
or loss realized on such disposition will be treated as long-term capital gain
or loss. Under such circumstances, the Bancorp will not be entitled to a
deduction for income tax purposes in connection with the exercise of the option.
If a disposition of stock received pursuant to an exercise of an incentive stock
option occurs within two years after the grant of such option or one year after
the exercise of such option, the optionee must treat any gain realized as
ordinary income to the extent of the lesser of (i) the fair market value of such
stock as of the date of exercise less the option price, or (ii) the amount
realized on disposition of the stock less the option price. Such ordinary income
realized is deductible by the Bancorp for federal income tax purposes. Any
additional amount realized on the disposition will be taxable as either
long-term or short-term capital gain, depending on the holding period.
NONQUALIFIED STOCK OPTIONS. In general, when an optionee exercises a
nonqualified stock option, the optionee recognizes ordinary income in the amount
of the excess of the fair market value of the shares received upon exercise over
the aggregate amount paid for those shares, and the Bancorp may deduct as an
expense the amount of income so recognized by the optionee. For capital gains
purposes, the holding period of the shares begins upon the exercise of the
option, and the optionee's basis in the shares is equal to the fair market value
of the shares on the date of exercise.
If, upon exercise of a nonqualified option, the optionee pays all or part of the
purchase price by delivering to the Bancorp shares of already-owned stock, there
are no federal income tax consequences to the optionee or the Bancorp to the
extent of the number of shares so delivered. As to any additional shares issued,
the optionee recognizes ordinary income equal to the aggregate fair market value
of the additional shares received, less any cash paid to the Bancorp, and the
Bancorp is allowed to deduct as an expense the amount of such income. For
purposes of calculating tax upon disposition of the shares acquired, the holding
period and basis of the new shares, to the extent of the number of old shares
delivered, is the same as for those old shares. The holding period for the
additional shares begins on the date the option is exercised, and the basis in
those additional shares is equal to the taxable income recognized by the
optionee, plus the amount of any cash paid to the Bancorp.
16
<PAGE> 20
Upon a subsequent disposition of the shares received on exercise, the difference
between the amount realized on such disposition and the fair market value of the
shares on the date of exercise generally will be treated as a separate capital
gain or loss.
EXCISE TAX. In addition, the exercise of outstanding options that become
exercisable upon certain major corporate events may result in all or a portion
of the difference between the fair market value of the option shares and the
exercise price of any shares issuable in respect to such options being
characterized "parachute payments." A 20% excise tax is imposed on the optionee
on any amount so characterized and the Bancorp will be denied any tax deduction
for such amount.
WITHHOLDING TAXES. The Bancorp is generally required to withhold applicable
payroll taxes with respect to compensation income recognized by optionees. The
Bancorp is also generally required to make certain information reports to the
Internal Revenue Service with respect to any income of an optionee attributable
to transactions involving the grant or exercise of options and/or the
disposition of shares acquired on exercise of options.
OTHER TERMS AND CONDITIONS
Options under the Plan shall not be transferable by the optionee during the
optionee's lifetime. In the event of termination of employment or cessation as a
director as a result of the optionee's death or disability, to the extent
exercisable on the date employment or directorship terminates, the option shall
remain exercisable for up to one (1) year (but not beyond the end of the
original option term) by the disabled optionee or, in the event of death of the
optionee, by the person or persons to whom rights under the option shall have
passed by will or the laws of descent and distribution. In addition, if an
optionee dies during the three month period referred to below, the option shall
expire one year after the date of such death.
If an optionee's employment is terminated, unless termination was for cause or
if an optionee's directorship is terminated, the optionee shall have the right,
for a three-month period after such termination, to exercise that portion of the
option which was exercisable immediately prior to such termination. If an
optionee's employment is terminated for cause (which shall include malfeasance
or gross misfeasance in the performance of duties or conviction of a crime
involving moral turpitude), the option shall expire within 30 days of the date
of termination. However, in no event may the option be exercised after the end
of the original option term.
In the event of certain changes in the outstanding Common Stock, such as stock
dividends, stock splits, recapitalization, reclassification, reorganization,
merger, stock consolidation or otherwise, appropriate and proportionate
adjustments shall be made in the number, kind and exercise price of shares
covered by any unexercised options or portions thereof. In the event of
liquidation of the Bancorp or upon a reorganization, merger or consolidation of
the Bancorp with one or more corporations, the result of which the Bancorp is
not the surviving corporation or the Bancorp becomes a subsidiary of another
corporation, a sale of substantially all of the assets of the Bancorp to another
corporation, or upon a sale representing more than 80% of equity securities
voting power of the Bancorp to any person or entity (any one of which shall be
referred to as a "Terminating Event"), the Plan shall terminate and all options
theretofore granted shall completely vest and become immediately exercisable.
All outstanding options not exercised by the time of the Terminating Event shall
at such time terminate. However, any options not exercised at the time of
17
<PAGE> 21
a Terminating Event shall not terminate if they have been assumed or substituted
by the successor corporation.
The Board reserves the right to suspend, amend or terminate the Plan, and, with
the consent of the optionee, make such modifications of the terms and conditions
of his/her option as it deems advisable, except that the Board may not, without
further approval of a majority of the shareholders, increase the maximum number
of shares covered by the Plan, change the minimum option price, increase the
maximum term of options under the Plan or permit options to be granted to anyone
other than a director, officer or management level employee.
No option granted pursuant to the Plan shall be exercisable until all necessary
regulatory and shareholder approvals are obtained. No grants under the Plan have
been made; however, it is anticipated that options may be granted to directors
and executive officers of the Bancorp in the near future.
Adoption of the Plan requires the affirmative vote of a majority of the
outstanding shares of Common Stock represented and voting at the Meeting.
MANAGEMENT RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" ADOPTION OF THE ORANGE
NATIONAL BANCORP 1997 STOCK OPTION PLAN.
PROPOSAL 3:
RATIFICATION OF APPOINTMENT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The firm of McGladrey & Pullen, LLP, Anaheim, California, served as independent
certified public accountants for the Bancorp and the Bank through the year 1996.
The Bancorp has selected McGladrey & Pullen, LLP to serve as the Bancorp's
independent certified public accountants for the year 1997. All services
rendered by McGladrey & Pullen, LLP were approved by the Board, which has
determined the firm of McGladrey & Pullen, LLP to be independent. It is expected
that one or more representatives of McGladrey & Pullen, LLP will be present at
the Meeting and will be given the opportunity to make a statement, if desired,
and to respond to appropriate questions.
In the event shareholders do not ratify the appointment of McGladrey & Pullen,
LLP as the Bancorp's independent certified public accountants for the
forthcoming fiscal year, such appointment will be reconsidered by the Bank's
Audit Committee and the Board.
Ratification of the appointment of McGladrey & Pullen, LLP as the Bancorp's
independent certified public accountants for fiscal year 1997 requires the
affirmative vote of a majority of the outstanding shares of Common Stock
represented and voting at the meeting.
MANAGEMENT RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF MCGLADREY & PULLEN, LLP AS THE BANCORP'S INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS FOR 1997.
18
<PAGE> 22
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Some of the Bancorp's directors and executive officers and their immediate
families as well as the companies with which they are associated are customers
of, or 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 and collateral, as
those prevailing for comparable transactions with other persons of similar
creditworthiness and, in the opinion of management, did not involve more than a
normal risk of collectibility or present other unfavorable features.
San E. Vaccaro, a director and nominee, is the sole proprietor of the Law
Offices of San E. Vaccaro. The Bank retained the Law Offices of San E. Vaccaro
to perform legal services for the Bank in connection with a variety of banking,
operational and loan matters. Services of the Law Offices of San E. Vaccaro are
expected to continue in 1997. The total amount of fees paid to the Law Offices
of San E. Vaccaro in 1996 was $101,000.
SHAREHOLDER PROPOSALS
The deadline for shareholders to submit proposals to be considered for inclusion
in the Proxy Statement for the Bancorp's 1998 Annual Meeting of Shareholders is
December 31, 1997.
19
<PAGE> 23
OTHER MATTERS
Management 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 as
proxyholders to vote the shares represented by the Proxy in accordance with the
recommendations of management on such matters, and discretionary authority to do
so is included in the Proxy.
ORANGE NATIONAL BANCORP
Robert W. Creighton
Dated: April 21, 1997 Secretary
The Annual Report to Shareholders for the fiscal year ended December 31, 1996
has been previously mailed to the Bancorp's shareholders.
A COPY OF THE BANCORP'S 1996 ANNUAL REPORT TO THE SECURITIES AND EXCHANGE
COMMISSION ON FORM 10-K WILL BE PROVIDED TO THE BANCORP'S SHAREHOLDERS WITHOUT
CHARGE UPON WRITTEN REQUEST TO THE SECRETARY, ORANGE NATIONAL BANCORP, 1201 EAST
KATELLA AVENUE, ORANGE, CALIFORNIA 92667.
20
<PAGE> 24
EXHIBIT A
ORANGE NATIONAL BANCORP
1997 STOCK OPTION PLAN
1. PURPOSE
The purpose of the Orange National Bancorp 1997 Stock Option Plan (the
"Plan") is to strengthen Orange National Bancorp (the "Bancorp") and those
corporations which are or hereafter become subsidiary corporations of the
Bancorp by providing an additional means of attracting and retaining competent
directors, officers and management level employees and by providing to
participating directors, officers and management level employees added incentive
for high levels of performance. The Plan seeks to accomplish these purposes and
achieve these results by providing a means whereby such directors, officers and
management level employees may purchase shares of the common stock of the
Bancorp pursuant to options granted in accordance with the Plan.
Options granted pursuant to the Plan are intended to be either "incentive
stock options" within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended from time to time (the "Code"), or "nonqualified stock
options", as shall be determined and designated upon the grant of each option
hereunder.
2. ADMINISTRATION
The Plan shall be administered by the Board of Directors (the "Board").
Any action of the Board with respect to the administration of the Plan shall be
taken pursuant to a majority vote, or the unanimous written consent, of its
members. Subject to the express provisions of the Plan, the Board shall have the
authority to construe and interpret the Plan, define the terms used herein,
prescribe, amend and rescind, the rules and regulations relating to
administration of the Plan, and make all other determinations necessary or
advisable for administration of the Plan.
All decisions, determinations, interpretations or other actions by the
Board shall be final, conclusive and binding on all persons, optionees,
grantees, subsidiary corporations of the Bancorp and any successors-in-interest
to such parties.
3. INCENTIVE STOCK OPTIONS
All options granted which are designated at the time of grant as an
"incentive stock option" shall be deemed an incentive stock option.
<PAGE> 25
(a) Incentive stock options granted under the Plan are intended to be
qualified under Section 422 of the Code.
(b) Full-time salaried officers and management level employees of the
Bancorp or a subsidiary corporation (as that term is defined in Section 424(f)
of the Code), shall be eligible for selection to participate in the incentive
stock option portion of the Plan. No director of the Bancorp who is not also a
full-time salaried officer or employee of the Bancorp or a subsidiary
corporation, may be granted an incentive stock option hereunder. Subject to the
express provisions of the Plan, the Board shall (i) select from the eligible
class of employees and determine to whom incentive stock options shall be
granted, (ii) determine the discretionary terms and provisions of the respective
incentive stock option agreements (which need not be identical), (iii) determine
the times at which such incentive stock options shall be granted, (iv) determine
the number of shares subject to each incentive stock option, and (v) grant such
incentive stock options to such individuals. An individual who has been granted
an incentive stock option may, if he or she is otherwise eligible under the
Plan, be granted additional incentive stock options if the Board shall so
determine.
(c) Except as described in subsection (e) below, the Board shall not grant
an incentive stock option to purchase shares of the Bancorp's common stock to
any individual who, at the time of the grant, owns stock possessing more than
10% of the total combined voting power or value of all classes of stock of the
Bancorp or a subsidiary corporation. The attribution rules of Section 424(d) of
the Code shall apply in the determination of ownership of stock for these
purposes.
(d) The aggregate fair market value (determined as of the time the
incentive stock option is granted) of stock with respect to which incentive
stock options are exercisable for the first time by an individual during any
calendar year (under all plans of the Bancorp and its subsidiary corporations,
if any) shall not exceed $100,000, plus any greater amount as may be permitted
under subsequent amendments to the Code.
(e) The purchase price of stock subject to each incentive stock option
shall be determined by the Board but shall not be less than one hundred percent
(100%) of the fair market value of such stock at the time such option is
granted, except, in the case of optionees who at the time of the grant own more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Bancorp or a subsidiary corporation, in which case the purchase
price of the stock shall not be less than one hundred ten percent (110%) of the
fair market value of such stock at the time such option is granted and the term
of such option shall be for no more than five (5) years. The fair market value
2
<PAGE> 26
of such stock shall be determined in accordance with any reasonable valuation
method, including the valuation methods described in Treasury Regulation Section
20.2031-2.
4. NONQUALIFIED STOCK OPTIONS
(a) All options granted which are (i) in excess of the aggregate fair
market value limitations set forth in Section 3(d) hereof, (ii) designated at
the time of the grant as "nonqualified", or (iii) intended to be incentive stock
options but do not meet the requirements of incentive stock options, shall be
deemed nonqualified stock options. Nonqualified stock options granted hereunder
shall be so designated in the nonqualified stock option agreement entered into
between the Bancorp and the optionee.
(b) Directors, full-time salaried officers and management level employees
of the Bancorp or a subsidiary corporation shall be eligible for selection to
participate in the nonqualified stock option portion of the Plan. Subject to the
express provisions of the Plan, the Board shall (i) select from the eligible
class of individuals and determine to whom nonqualified stock options shall be
granted, (ii) determine the discretionary terms and provisions of the respective
nonqualified stock option agreements (which need not be identical), (iii)
determine the times at which such nonqualified stock options shall be granted,
(iv) determine the number of shares subject to each nonqualified stock option
and (v) grant such nonqualified stock options to such individuals. An individual
who has been granted a nonqualified stock option may, if he or she is otherwise
eligible under the Plan, be granted additional nonqualified stock options if the
Board shall so determine.
(c) The purchase price of stock subject to each nonqualified stock option
shall be determined by the Board but shall not be less than one hundred percent
(100%) of the fair market value of such stock at the time such option is
granted. The fair market value of such stock shall be determined in accordance
with any reasonable valuation method, including the valuation methods described
in Treasury Regulation 20.2031-2.
5. STOCK SUBJECT TO THE PLAN
Subject to adjustments as provided in Section 12, hereof, the stock to be
offered under the Plan shall be shares of the Bancorp's authorized but unissued
common stock (hereinafter called "stock") and the aggregate amount of stock to
be delivered upon exercise of all options granted under the Plan shall not
exceed 414,250 shares. If any option shall be canceled, surrendered or
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<PAGE> 27
expire for any reason without having been exercised in full, the underlying
shares subject thereto shall again be available for purposes of the Plan.
6. CONTINUATION OF EMPLOYMENT
Nothing contained in the Plan (or in any option agreement) shall obligate
the Bancorp or a subsidiary corporation to employ any optionee for any period or
interfere in any way with the right of the Bancorp or a subsidiary corporation
to reduce the optionee's compensation. However, the Bancorp may not reduce the
terms of any option without the approval of the optionee.
7. EXERCISE OF OPTIONS
No option shall be exercisable until all necessary regulatory and
shareholder approvals of the Plan are obtained. Except as otherwise provided in
this section, each option shall be exercisable in such installments, which need
not be equal, and upon such contingencies as the Board shall determine;
provided, however, that if an optionee shall not in any given installment period
purchase all of the shares which the optionee is entitled to purchase in such
installment period, the optionee's right to purchase any shares not purchased in
such installment period shall continue until expiration or termination of such
option. Notwithstanding the foregoing, the options shall vest at the rate of at
least 20% per year over a five year period from the date the option is granted.
Fractional share interests shall be disregarded, except that they may be
accumulated. Not less than ten (10) shares may be purchased at any one time
unless the number of shares purchased is the total number of shares which is
exercisable at such time. Options may be exercised by written notice delivered
to the Bancorp stating the number of shares with respect to which the option is
being exercised, together with the full purchase price for such shares. Payment
of the option price in full, for the number of shares to be delivered, must be
made (a) in cash or (b) subject to applicable law, with the Bancorp's stock
previously acquired by the optionee and held by the optionee for a period of at
least six months. Notwithstanding the foregoing, in the event an optionee who
has an incentive stock option does exercise the incentive stock option by
utilizing (b) above, the optionee should obtain tax advice as to the
consequences of such action. The equivalent dollar value of shares used to
effect a purchase shall be the fair market value of the shares on the date of
exercise. If the option is being exercised by any person other than the
optionee, said notice shall be accompanied by proof, satisfactory to counsel for
the Bancorp, of the right of such person to exercise the option. Optionees will
have no rights as shareholders with respect to stock of the
4
<PAGE> 28
Bancorp subject to their stock option agreements until the date of issuance of
the stock certificate to them.
8. NONTRANSFERABILITY OF OPTIONS
Each 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 his or her lifetime only by the optionee.
9. CESSATION OF DIRECTORSHIP OR EMPLOYMENT
Except as provided in Sections 10 and 20 hereof, if an optionee ceases to
be a director or an employee of the Bancorp or a subsidiary corporation for any
reason other than his or her disability (as defined in Section 22(e)(3) of the
Code) or death, the optionee's option shall expire three (3) months after the
date of termination of such directorship or employment. During the period after
cessation of directorship or employment, such option shall be exercisable only
as to those installments, if any, which have accrued and/or vested as of the
date on which the optionee ceased to be a director or an employee of the Bancorp
or a subsidiary corporation. If an optionee is both a director and an employee,
then unless otherwise provided for in the optionee's option grant or option
agreement, such option shall expire three (3) months after the latter of the
date of termination of the optionee's directorship or employment.
10. TERMINATION OF EMPLOYMENT FOR CAUSE
If the stock option agreement so provides and if an optionee's employment
by the Bancorp or a subsidiary corporation is terminated for cause, the
optionee's option shall expire thirty (30) days from the date of such
termination. Termination for cause shall include, but not be limited to,
termination for malfeasance or gross misfeasance in the performance of duties or
conviction of a crime involving moral turpitude, and, in any event, the
determination of the Board with respect thereto shall be final and conclusive.
11. DISABILITY OR DEATH OF OPTIONEE
If any optionee dies while serving as a director or an employee of the
Bancorp or a subsidiary corporation, the option shall expire one (1) year after
the date of such death, except as provided in Section 20 hereof. After such
death but before such expiration, the persons to whom the optionee's
5
<PAGE> 29
rights under the option shall have passed by will or by the laws of descent and
distribution or the executor or administrator of optionee's estate shall have
the right to exercise such option to the extent that installments, if any, had
accrued and/or vested as of the date on which the optionee ceased to be a
director or an employee of the Bancorp or a subsidiary corporation.
If the optionee shall terminate his or her directorship or employment
because of disability (as defined in Section 22(e)(3) of the Code), the optionee
may exercise this option to the extent he or she is entitled to do so at the
date of termination, at any time within one (1) year of the date of termination,
except as provided in Section 20 hereof.
If any optionee dies during the three (3) month period referred to in
Section 9 hereof, the option shall expire one (1) year after the date of such
death, except as provided in Section 20 hereof.
12. ADJUSTMENT UPON CHANGES IN CAPITALIZATION
If the outstanding shares of the stock of the Bancorp are increased,
decreased, changed into or exchanged for a different number or kind of shares or
securities of the Bancorp through reorganization, merger, recapitalization,
reclassification, stock split, stock dividend, stock consolidation or otherwise,
without consideration to the Bancorp, an appropriate and proportionate
adjustment shall be made in the number and kind of shares as to which options
may be granted. A corresponding adjustment changing the number or kind of shares
and the exercise price per share allocated to unexercised options or portions
thereof, which shall have been granted prior to any such change shall likewise
be made. Any such adjustment, however, in an outstanding option shall be made
without change in the total price applicable to the unexercised portion of the
option, but with a corresponding adjustment in the price for each share subject
to the option. Any adjustment under this Section 12 shall be made by the Board,
whose determination as to what adjustments shall be made, and the extent
thereof, shall be final and conclusive. No fractional shares of stock shall be
issued or made available under the Plan on account of any such adjustment, and
fractional share-interests shall be disregarded, except that they may be
accumulated.
13. TERMINATING EVENTS
A Terminating Event shall be defined as any one of the following events:
(i) a dissolution or liquidation of the Bancorp; (ii) a reorganization, merger
or consolidation of the Bancorp with one or more corporations, the result of
which (A) the Bancorp is not the surviving corporation, or (B) the Bancorp
becomes a subsidiary of another corporation (which shall be deemed to have
occurred
6
<PAGE> 30
if another corporation shall own directly or indirectly, over 80% of the
aggregate voting power of all outstanding equity securities of the Bancorp);
(iii) a sale of substantially all the assets of the Bancorp to another
corporation; or (iv) a sale of the equity securities of the Bancorp representing
more than 80% of the aggregate voting power of all outstanding equity securities
of the Bancorp to any person or entity, or any group of persons and/or entities
acting in concert. When the Bancorp knows that a Terminating Event will occur
(i) the Bancorp shall deliver to each optionee no less than thirty (30) days
prior to the Terminating Event, written notification of the Terminating Event
and the optionee's right to exercise all options granted pursuant to the Plan,
whether or not vested under the Plan or applicable stock option agreement, and
(ii) all outstanding options granted pursuant to the Plan shall completely vest
and become immediately exercisable as to all shares granted pursuant to the
option immediately prior to such Terminating Event. This right of exercise shall
be conditional upon execution of a final plan of dissolution or liquidation or a
definitive agreement of consolidation or merger. Upon the occurrence of the
Terminating Event all outstanding options and the Plan shall terminate;
provided, however, that any outstanding options not exercised as of the
occurrence of the Terminating Event shall not terminate if there is a successor
corporation which assumes the outstanding options or substitutes for such
options, new options covering the stock of the successor corporation with
appropriate adjustments as to the number and kind of shares and prices.
14. AMENDMENT AND TERMINATION
The Board may at any time suspend, amend or terminate the Plan and may,
with the consent of the optionee, make such modification of the terms and
conditions of the option as it shall deem advisable; provided that, except as
permitted under the provisions of Sections 12 and 13 hereof, no amendment or
modification which would:
(a) increase the maximum number of shares which may be purchased
pursuant to options granted under the Plan either in the aggregate
or by an individual;
(b) change the minimum option price;
(c) increase the maximum term of options provided for herein; or
7
<PAGE> 31
(d) permit options to be granted to anyone other than directors,
full-time salaried officers or management level employees of the
Bancorp or a subsidiary corporation;
may be adopted without the Bancorp having first obtained any necessary
regulatory and shareholder approvals required by law.
No option may be granted during any suspension or after termination of the
Plan. Amendment, suspension or termination of the Plan shall not (except as
otherwise provided in Section 12 hereof), without the consent of the optionee,
alter or impair any rights or obligations under any option theretofore granted.
15. TIME OF GRANTING OPTIONS
The time an option is granted, sometimes referred to as the date of grant,
shall be the day of the action of the Board described in Sections 3(b) and 4(b)
hereof; provided, however, that if appropriate resolutions of the Board indicate
that an option is granted as of and on some future date, the time such option is
granted shall be such future date. If action by the Board is taken by unanimous
written consent of its members, the action of the Board shall be deemed to be at
the time the last member of the Board signs the consent.
16. PRIVILEGES OF STOCK OWNERSHIP;
SECURITIES LAW COMPLIANCE; NOTICE OF SALE
No optionee shall be entitled to the privileges of stock ownership as to
any shares of stock not actually issued. No shares shall be purchased upon the
exercise of any option unless and until the Bancorp has fully complied with all
applicable requirements of any regulatory agency having jurisdiction over the
Bancorp including registration of the stock options and underlying shares, as
necessary, and all applicable requirements of any exchange upon which stock of
the Bancorp may
8
<PAGE> 32
be listed. The optionee shall give the Bancorp notice of any sale or disposition
of any such shares not more than five (5) days after such sale or disposition.
17. EFFECTIVE DATE OF THE PLAN
The Plan shall be deemed adopted by the Board as of February 19, 1997 and
shall be effective immediately subject to approval by the shareholders of the
Bancorp within twelve months of the date the Plan is adopted, by the vote of a
majority of the outstanding shares represented and voting at a duly held meeting
of shareholders at which a quorum is present, or by the written consent vote of
the holders of a majority of the outstanding shares of the Bancorp's stock. No
option under the Plan shall be exercised prior to the shareholders' approval of
the Plan.
18. TERMINATION
Unless previously terminated by the Board, the Plan shall terminate at the
close of business on February 19, 2007. No options shall be granted under the
Plan thereafter, but such termination shall not affect any option theretofore
granted.
19. OPTION AGREEMENT
Each option shall be evidenced by a written stock option agreement
executed by the Bancorp 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 as are deemed desirable and are not
inconsistent with the Plan. Each incentive stock option agreement shall contain
such terms and provisions as the Board may determine to be necessary in order to
qualify such option as an incentive stock option within the meaning of Section
422 of the Code.
9
<PAGE> 33
20. OPTION PERIOD
Each option and all rights and obligations thereunder shall expire on such
date as the Board may determine, but not later than ten (10) years from the date
such option is granted, and shall be subject to earlier termination as provided
elsewhere in the Plan.
21. EXCULPATION AND INDEMNIFICATION
To the extent permitted by applicable law in effect from time to time, no
member of the Board shall be liable for any act or omission of any other member
of the Board nor for any act or omission on the member's own part, except the
member's own willful misconduct or gross negligence. The Bancorp and its
subsidiary corporations shall pay expenses incurred by, and satisfy a judgment
or fine rendered or levied against, a present or former member of the Board in
any action brought by a third party against such person (whether or not the
Bancorp is joined as a party defendant) to impose a liability or penalty on such
person while a member of the Board arising with respect to the Plan or
administration thereof or out of membership on the Board or all or any
combination of the preceding; provided, the Board determines in good faith that
such member of the Board was acting in good faith, within what such member of
the Board reasonably believed to be the scope of his or her employment or
authority, and for a purpose which he or she reasonably believed to be in the
best interests of the Bancorp or its shareholders. Payments authorized hereunder
include amounts paid and expenses incurred in settling any such action or
threatened action. This Section 21 does not apply to any action instituted or
maintained in the right of the Bancorp by a shareholder or holder of a voting
trust certificate representing shares of the Bancorp or a subsidiary corporation
thereof. The provisions of this Section 21 shall apply to the estate, executor,
administrator, heirs, legatees or devisees of a member of the Board and the term
"person"
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<PAGE> 34
as used in this Section 21 shall include the estate, executor, administrator,
heirs, legatees or devisees of such person.
22. AGREEMENT AND REPRESENTATIONS OF OPTIONEE
Unless the shares of stock covered by the Plan have been registered with
the Securities Exchange Commission, each optionee shall, by accepting an option,
represent and agree, for himself or herself and his or her transferees by will
or the laws of descent and distribution, that all stock will be acquired for
investment and not for resale or distribution. Upon such exercise of any portion
of an option, the person entitled to exercise the same shall, upon request of
the Bancorp, furnish evidence satisfactory to the Bancorp (including a written
and signed representation) to the effect that the stock is being acquired in
good faith for investment and not for resale or distribution. Furthermore, the
Bancorp, at its sole discretion, may take all reasonable steps, including
affixing the following legend (and/or such other legend or legends as counsel
shall require) on certificates embodying the shares:
The shares represented by this certificate have not been
registered under the Securities Act of 1933 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 Securities Act of 1933
or a written opinion of counsel for the optionee which opinion
shall be acceptable to counsel for the Bancorp that registration
is not required.
to assure itself against any sale or distribution by the optionee which does not
comply with the Plan or any federal or state securities laws.
11
<PAGE> 35
The Bancorp agrees to remove any legend affixed to the certificates
embodying the shares pursuant to this Section 22 when all of the restrictions on
the transfer of the shares, whether imposed by the Plan or federal or state law,
have terminated.
23. INFORMATION TO EMPLOYEES
The Bancorp shall provide optionees with financial statements of the
Bancorp at least annually.
12
<PAGE> 36
<TABLE>
<S> <C>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS. The undersigned hereby appoints Messrs.
Gerald R. Holte and Wayne F. Miller as proxyholders, with full
PROXY power of substitution, to represent, vote and act with respect to all
shares of common stock of Orange National Bancorp (the
ORANGE NATIONAL BANCORP "Bancorp") which the undersigned would be entitled to vote at the
meeting of shareholders to be held on May 19, 1997 at 7:30 a.m.
at the Bancorp's main office located at 1201 East Katella Avenue,
Orange, California or any adjournments thereof, with all the
powers the undersigned would possess if personally present as
follows:
</TABLE>
1. Election of nine (9) persons to be directors.
Michael W. Abdalla, M.D. Robert W. Creighton James E. Mahoney
Michael J. Christianson Charles R. Foulger Wayne F. Miller
Kenneth J. Cosgrove Gerald R. Holte San E. Vaccaro
[ ] FOR ALL NOMINEES LISTED ABOVE [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below)
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name on the space below:)
--------------------------------------------------------------------------
2. Adoption of the Orange National Bancorp 1997 Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Ratification of the appointment of McGladrey & Pullen, LLP as the
Bancorp's independent certified public accountants for 1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Transaction of such other business as may properly come before the
meeting and any adjournment or adjournments thereof.
<PAGE> 37
PLEASE SIGN AND DATE BELOW
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE MATTERS LISTED ABOVE.
The Proxy confers authority to vote and shall be voted in accordance with such
recommendation unless a contrary instruction is indicated, in which case, the
shares represented by the Proxy will be voted in accordance with such
instruction. IF NO INSTRUCTION IS SPECIFIED WITH RESPECT TO A MATTER TO BE ACTED
UPON, THE SHARES REPRESENTED BY THE PROXY WILL BE VOTED IN ACCORDANCE WITH THE
RECOMMENDATIONS OF MANAGEMENT. IF ANY OTHER BUSINESS IS PRESENTED AT THE
MEETING, THIS PROXY CONFERS AUTHORITY TO AND SHALL BE VOTED IN ACCORDANCE WITH
THE RECOMMENDATIONS OF MANAGEMENT.
(Please date this Proxy and sign your name exactly as it appears on your stock
certificates. Executors, administrators, trustees, etc., should give their full
title. If a corporation, please sign in full corporate name by the president or
other authorized officer. If a partnership, please sign in partnership name by
an authorized person. All joint owners should sign.)
[ ] I DO [ ] DO NOT EXPECT TO ATTEND THE MEETING.
---------------------------------------
(Number of Shares)
---------------------------------------
(Please Print Your Name)
---------------------------------------
(Please Print Your Name)
---------------------------------------
(Date)
---------------------------------------
(Signature of Shareholder)
---------------------------------------
(Signature of Shareholder)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE REVOKED
PRIOR TO ITS EXERCISE BY NOTIFYING THE SECRETARY OF THE BANCORP IN WRITING OF
REVOCATION OF THE PROXY, BY FILING A DULY EXECUTED PROXY BEARING A LATER DATE OR
BY ATTENDING THE MEETING AND VOTING IN PERSON.
