<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 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
SUMMIT BANK CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
SUMMIT BANK CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 25, 1998
The Annual Meeting of Shareholders (the "Meeting") of Summit Bank
Corporation (the "Company") will be held at the Atlanta Marriott Perimeter
Center, 246 Perimeter Center Parkway, N.E. Atlanta, Georgia 30346, on the 25th
day of April 1998, at 10:00 a.m. (Atlanta time) for the following purposes:
1. To elect six members to the Board of Directors;
2. To approve the Summit Bank Corporation 1998 Stock Incentive
Plan; and
3. To consider such other matters as properly may come before the
Meeting or any adjournment of the Meeting.
Only holders of record of the Company's Common Stock at the close of
business on March 13, 1998 will be entitled to notice of and to vote at the
Meeting. The stock transfer books will remain open.
A Proxy Statement and a Proxy solicited by the Board of Directors are
enclosed. Please sign, date, and return the Proxy promptly to the Company in the
enclosed reply envelope. This will assist us in preparing for the Meeting.
All shareholders are cordially invited to attend the Meeting.
By Order of the Board of Directors:
/s/ Gary K. McClung
-----------------------------
Gary K. McClung
Secretary
- ---------------------
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, AND SIGN
THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER TO
ASSURE REPRESENTATION OF YOUR SHARES AT THE MEETING.
<PAGE> 3
SUMMIT BANK CORPORATION
4360 CHAMBLEE-DUNWOODY ROAD
ATLANTA, GEORGIA 30341
MARCH 20, 1998
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 25, 1998
This Proxy Statement is furnished in connection with the solicitation of Proxies
by the Board of Directors of Summit Bank Corporation (the "Company") for use at
the Annual Meeting of Shareholders (the "Meeting") to be held on Saturday, April
25, 1998, at 10:00 a.m. (Atlanta time), and at any adjournment thereof, for the
purposes set forth in the accompanying Notice of Annual Meeting of Shareholders.
The Meeting will be held at the Atlanta Marriott Perimeter Center, 246 Perimeter
Center Parkway, N.E., Atlanta, Georgia 30346. All Proxies will be voted in
accordance with the instructions contained in the Proxies. If no choice is
specified, Proxies will be voted "FOR" the election to the Board of Directors of
all the nominees listed below under "ELECTION OF DIRECTORS," "FOR" the approval
of the Company's 1998 Stock Incentive Plan and in accordance with the best
judgment of the Proxy holder on any other matters which may come before the
Meeting. Any shareholder may revoke a Proxy given pursuant to this solicitation
prior to the Meeting by delivering an instrument revoking it or a duly executed
Proxy bearing a later date to the Secretary of the Company or by attending the
Meeting and voting in person. All written notices of revocation or other
communications relating to Proxies or the Meeting should be delivered to the
Company at its principal executive offices, 4360 Chamblee Dunwoody Road,
Atlanta, Georgia 30341, Attention:
Gary McClung. The telephone number for such offices is (770) 454-0400.
The Company has fixed March 13, 1998 as the record date (the "Record Date") for
determining the shareholders entitled to notice of and to vote at the Meeting.
At the close of business on the Record Date, there were outstanding and entitled
to vote 1,815,363 shares of Common Stock of the Company, $.01 par value per
share (the "Common Stock"), held by approximately 369 shareholders of record.
Each share of Common Stock is entitled to one vote. A majority of the
outstanding shares of Common Stock represented at the Meeting, in person or by
Proxy, will constitute a quorum.
Directors are elected by a plurality of the shares present in person or by Proxy
and entitled to vote. Only those votes actually cast will be counted for the
purpose of determining whether a particular nominee received sufficient votes to
be elected. Accordingly, any abstentions and broker non-votes, which occur when
a broker submits a Proxy card without exercising discretionary voting authority
on a non-routine matter, will not be included in vote totals and will not be
considered in determining the outcome of the vote.
Approval of the Summit Bank Corporation 1998 Stock Incentive Plan and all other
matters that may properly come before the Meeting require the affirmative vote
of a majority of shares of Common Stock present in person or by Proxy and
entitled to vote on such matter. Abstentions will be counted in determining the
minimum number of votes required for approval and will, therefore, have the
effect of negative votes. Broker non-votes will not be counted as votes for or
against approval of any other matter properly brought before the Meeting.
This Proxy Statement and the accompanying form of Proxy were first mailed to the
shareholders on or about March 20, 1998. An Annual Report to Shareholders,
consisting of a letter to shareholders from the Chairman of the Board of the
Company, the Company's audited financial statements for the fiscal year ended
December 31, 1997, Management's Discussion and Analysis of Financial Condition
and Results of Operations for the 1997 fiscal year, and certain other
information, is included in the package with this Proxy Statement.
<PAGE> 4
ELECTION OF DIRECTORS
Article Fourteen of the Company's Amended and Restated Articles of Incorporation
provides that the Board of Directors shall be divided into three classes with
each class to be as nearly equal in number as possible. Article Fourteen also
provides that the three classes of directors are to have staggered terms, so
that the terms of only approximately one-third of the Board will expire at each
Annual Meeting of Shareholders and each director serves a three-year term. The
current Class I directors are Aaron I. Alembik, Jack N. Halpern, Sion Nyen
(Francis) Lai, Shih Chien (Raymond) Lo, W. Clayton Sparrow, Jr., and Pin Pin
Chau. The current Class II directors are Peter M. Cohen, Donald R. Harkleroad,
Daniel T. Huang, Shafik H. Ladha, Paul C. Y. Chu, Cecil M. Phillips, Howard H.
L. Tai, and P. Carl Unger. The current Class III directors are Gerald L.
Allison, James S. Lai, Nack Y. Paek, Carl L. Patrick, Jr., and David Yu. The
terms of the class III directors expire this year. Messrs. Allison, Lai, Paek,
Patrick, and Yu have been nominated for re-election as Class III directors. In
addition, Mr. Jose Gonzalez is nominated as a new class III director.
The table below sets forth certain information about the nominees, including the
class of directors for which the nominee is being nominated, the nominee's age,
his position with the Company and his position with the Company's principal
operating subsidiary, The Summit National Bank (the "Bank"). It is the intention
of the persons named in the accompanying Proxy to vote for the election of the
nominees identified below to serve for a three-year term, expiring at the 2001
Annual Meeting of Shareholders. If any nominee is unable or fails to accept
nomination or election (which is not anticipated), the persons named in the
Proxy, unless specifically instructed otherwise in the Proxy, will vote for the
election in his stead of such other person as management may recommend.
<TABLE>
<CAPTION>
DIRECTOR POSITION WITH POSITION WITH
NAME CLASS AGE THE COMPANY THE BANK
---- -------- --- ------------- -------------
<S> <C> <C> <C> <C>
Gerald L. Allison III 60 Director Director
Jose Gonzalez III 43 Nominee None
James S. Lai III 60 Director Vice Chairman of the
Board of Directors
Nack Paek III 56 Director Director
Carl L. Patrick, Jr. III 51 Director None
David Yu III 47 Director, President Chairman of the Board
and Chief Executive of Directors
Officer
</TABLE>
Gerald L. Allison became a director of the Company in April 1989, and served as
Vice Chairman of the Board of Directors of the Company from February 1990 to May
1992. Mr. Allison is the CEO and Chairman of AJC International, Inc., a major
Atlanta-based export and import trading company for food and agricultural
products. Mr. Allison obtained his B.A. in Economics from Northern Illinois
University and has been a resident of Atlanta since 1967.
Jose Ignacio Gonzalez is being nominated as a new director for the Company. Mr.
Gonzalez is a founding partner for PanAmerican Logistics, LLC, a third party
total logistics provider for the cut flower industry. Mr. Gonzalez is also the
licensed southeast agent for ACES Airlines, the second largest Colombian airline
owned by the Colombian Federation of Coffee Growers and the Colombian ocean
freight line, Grancolombiana. In 1992, Mr. Gonzalez founded Arcoffee
Corporation, an importer/wholesaler of premium coffee brands, and served as its
President and CEO until 1997. Prior to 1992, Mr. Gonzalez served as Executive
Director of the Atlanta Hispanic Chamber of Commerce.
2
<PAGE> 5
Mr. Gonzalez received his Bachelor of Science degree in Management from Purdue
University and his Masters in Business Administration from Mercer University. He
is the current Chairman of the Dekalb Chamber of Commerce, and a board member of
the metro Atlanta Chamber of Commerce, the Atlanta Hispanic Chamber of Commerce
and a former member of the Best Practices Committee of the United Way of
Metropolitan Atlanta.
James S. Lai, a director of the Company since its inception in July 1987, is a
Professor of Civil Engineering at the Georgia Institute of Technology. Mr. Lai
has served as Vice Chairman of the Bank since April 1996. He taught at the
University of Utah from 1967 to 1975, and has been at the Georgia Institute of
Technology since 1975. Dr. Lai is the sole owner of Pavtec Engineering
Technology, Inc. which specializes in engineering consulting. Dr. Lai was
elected President of the Association of Chinese Scholars in the Southeastern
United States in 1985. Dr. Lai received his Ph.D. from Brown University in 1967.
Nack Y. Paek, a director of the Company since its inception in July 1987, served
as Chairman of the Board from May 1992 to April 1994. He is President of
Government Loan Service Corp. which specializes in originating and servicing SBA
loans. Mr. Paek obtained a B.S. degree from Seoul National University and an
M.B.A. from Northern Illinois University. His business experience includes
management positions with Korea Explosive Manufacturing Co., Seoul, and
Continental Insurance Co., Atlanta, where he was Director of Regional Auditing.
From 1980 to 1990, Mr. Paek was sole owner of the local accounting firm of Nack
Y. Paek, P.C. with its clientele being predominantly members of the Korean,
Chinese and Japanese immigrant communities. Mr. Paek is a member of the American
Institute of Certified Public Accountants and the Georgia Society of Certified
Public Accountants.
Carl L. Patrick, Jr. has been a director since the inception of the Company in
July 1987 and served as Chairman of the Board of Directors of the Company from
February 1990 to May 1992. Mr. Patrick is a lawyer and a certified public
accountant (CPA) with degrees from Duke University, Georgia State University and
the University of Georgia School of Law. As a CPA with Arthur Andersen & Co. and
with Arthur Young & Co. for an aggregate of approximately ten years, Mr. Patrick
had extensive exposure to the accounting and tax aspects of real estate,
banking, small business, and international transactions. Mr. Patrick is a member
of the American and Georgia Bar Associations. He is a director and principal
shareholder of Carmike Cinemas, Inc., a publicly-owned company whose shares are
traded on the NYSE, and Co-Chairman of PGL Entertainment Corporation, a local
motion picture production company in Atlanta.
David Yu is the founder and organizer of Summit Bank Corporation and The Summit
National Bank. He served as President and CEO of the Company until December
1989, at which time he was elected Chairman of the Board of Directors of the
Bank. Before organizing Summit Bank Corporation and The Summit National Bank,
Mr. Yu worked for The Citizens and Southern National Bank (C&S) and First
National Bank of Atlanta. From 1976 to 1980, Mr. Yu was employed as an Assistant
National Bank Examiner by the Office of the Comptroller of the Currency in
Atlanta. Mr. Yu is founder and Chairman of the Board of the Chinese Community
Center and a member of the Chinese American Lions Club of Atlanta. Mr. Yu serves
on the Board of the Atlanta Chamber of Commerce, Zoo Atlanta, Arts and Business
Council, Latin American Association, and Leadership Atlanta. Mr. Yu also serves
on the Georgia Human Relations Commission and Atlanta Sister Cities Commission.
Mr. Yu received his MBA degree in International Business from Georgia State
University and his BS degree in Business Administration from Virginia
Commonwealth University.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF THE SIX
NOMINEES NAMED ABOVE.
3
<PAGE> 6
The following persons are currently directors in classes indicated with terms
expiring in 1999 and 2000, respectively.
CLASS II DIRECTORS - TERM EXPIRES IN 2000:
Peter M. Cohen, 50, has been a director of the Company since its inception in
July 1987, and served as Vice Chairman of the Board of Directors and Secretary
of the Company from December 1987 until February 1990. Since 1984, Mr. Cohen has
been President of Trident Corporate Services Inc., a member of the International
Trident Trust Group, which provides international corporate, trust & mutual fund
administration services to foreign and U.S. clients. He is also the President of
Trident Trust Company (V.I.) Limited, located in St. Thomas, U.S. Virgin
Islands, which provides trust and management services to U.S. exporters
including various Fortune 500 companies.
Mr. Cohen has practiced as an attorney both abroad and in the U.S. He was
associated with the Atlanta-based office of the Wildman, Harrold, Allen, Dixon &
Branch law firm from 1980 until 1984 and is a member of the Atlanta, Georgia,
American and International Bar Associations. Mr. Cohen also has been a member of
the adjunct faculty of Emory Law School in the areas of international law and
international tax. Mr. Cohen, who is a naturalized citizen, holds degrees from
Rhodes University, the University of Stellenbosch Law School and University
College, University of London.
Donald R. Harkleroad, 54, a director of the Company since its inception in July
1987, is the senior partner of Harkleroad & Hermance, P.C., a law firm
specializing in taxation, corporate acquisitions and financing, financial
institutions, investment law, and international practice. Mr. Harkleroad is also
president of The Bristol Company, a diversified investment and management
holding company with interests in food, technology, and natural resources. Mr.
Harkleroad is a graduate of the University of Georgia, and of New York
University School of Law, where he was Editor-in-Chief of The Journal of
International Law & Politics and is a Weinfeld Associate. Mr. Harkleroad is past
Chairman of the International Law Section and of the Corporation and Banking Law
Section of the State Bar of Georgia, as well as Chairman of the Taxation
Committee of the American Bar Association's Business Law Section. He is a
director of the Society of International Business Fellows, and is a member of
the World Economic Forum.
Daniel T. Huang, 48, a director of the Company since April 1994, is President of
Polyarn Corporation of Norcross, Georgia. Polyarn manufactures nylon
monofilament replacement line for distribution to Central and South America and
Europe in addition to the United States. Prior to establishing the United States
operations of Polyarn in 1992, Mr. Huang served as General Manager for Polyarn
in Taiwan. Prior to 1992, Mr. Huang served as manager of export and import
operation for M/S San Yuan Industries, Ltd., of Taiwan. Prior to 1976, Mr. Huang
managed the Research and Development Division of M/S Formosa Fishing Tackle Co.
Shafik H. Ladha, 51, has been a director of the Company since February 1988 and
served as Vice Chairman of the Company from April 1994 to April 1996. Mr. Ladha
has been the President/CEO of Ladha Holdings, Inc. and its wholly owned
subsidiaries, a closely held business engaged in the import, export and
distribution of domestic and foreign products, in the ownership and operation of
hotels, and the purchase and sale of real estate. Mr. Ladha has been
President/CEO of International Realty Properties (IRP), a closely held
corporation engaged primarily in the business of owning and operating hotels,
since 1979. The assets and liabilities of International Realty Properties, Inc.
were acquired by Ladha Holdings, Inc. as of April 2, 1989. Mr. Ladha is a
nationalized American citizen and is past chairman (1987-1990) of the Aga Khan
Foundation, USA National Committee, and past member of the Board of Governors of
the International Club of Atlanta, 1994 and 1995.
Paul C.Y. Chu, 47, a director of the Company since May 1993, is the Chairman of
the Novax Group of computer software development companies. Novax was organized
to provide financial management software such as accounting and point of sale
for specific vertical market applicators.
4
<PAGE> 7
Trained as an attorney at law and certified public accountant, Mr. Chu spent
three years from 1976 to 1979 with Ernst & Young as an auditor and tax
consultant. From 1980 to 1983, he worked for Amerex Trading Co. as President in
charge of its Taiwan operation. From 1983 to 1987 he served as chief of
investments for the Ministry of Economic Affairs of Taiwan responsible for
attracting foreign investments.
Mr. Chu received his Juris Doctor degree from Pace University Law School and his
MBA in finance from Columbia University Business School. He graduated from
Soochaw University in Taiwan with a B.A. in Economics.
Cecil M. Phillips, 51, has been a director of the Company since its inception in
July 1987, and was Chairman of the Board of Directors of the Company from July
1987 until December 1989. Mr. Phillips is the principal of Phillips
International L.P., a merchant banking and investment firm established in 1983
which focuses on off-shore financings, reverse investments and exporting and
importing. Mr. Phillips received his B.A. from the University of Missouri and
J.D. degree from the University of Michigan.
Mr. Phillips began practicing law in 1971 with the Atlanta law firm of Alston &
Bird. From 1979 to 1983 he was also the Executive Assistant to Governor George
Busbee. Mr. Phillips previously served as Vice President and General Counsel of
Rock Tenn Company. Mr. Phillips is a member and past Chairman of the Board of
the International Business Council, and a past member of the Board of Directors
of Fortune Financial Group, Inc. He currently is a Director of U.K. Capital,
Inc. and Regina, PLC. He is also a member of the Council on Foreign Relations.
Howard H. L. Tai, 66, a director of the Company since its inception in July
1987, served as Executive Vice President of the Company from October 1987 until
September 1988. Mr. Tai has been an Atlanta-based real estate investor since
1981. Mr. Tai is a graduate of the College of Law of the National University of
Taiwan and holds a master of law degree from Waseda University of Tokyo, Japan.
Prior business experience includes serving as Executive Vice President of
Shin-kong Synthetic Fibers Corporation located in Taiwan, the Republic of China.
Dr. P. Carl Unger, 70, has been Chairman of the Company since April 1996 and was
Vice Chairman of the Bank from May 1992 through April 1996. He has been a
director of the Company since its inception in July 1987, has been self-employed
since 1985 as a consultant specializing in the field of human resources with
clients in Europe, Australia, Canada and the United States. From 1978 to 1985,
he was employed by the Campbell Soup Company. Dr. Unger was educated at Cheshunt
College Cambridge, Liverpool University and Columbia Pacific University. He is a
member of the Royal Society of Health, the Institute of Marketing, the British
Marketing Association, the American Marketing Association, and is an
Incorporated Business Counsellor (UK).
CLASS I DIRECTORS - TERM EXPIRES IN 1999:
Aaron I. Alembik, 67, a director of the Company since its inception in July
1987, is a former partner in the Atlanta law firm of Alembik and Alembik. Since
1958, he has been actively engaged in the practice of real estate, business and
corporate law. Mr. Alembik retired from his practice in 1998.
Mr. Alembik is involved in the ownership, management and operation of numerous
real estate ventures. Mr. Alembik, who was born in France, is a naturalized U.S.
citizen, and has been a resident of Atlanta since 1957. Mr. Alembik is a
graduate of the School of Foreign Service, Georgetown University and the
National Law Center of George Washington University. Mr. Alembik is a member of
the Atlanta, Georgia, Virginia and American Bar Associations, the Atlanta
Lawyers Club, and the Southern Center for International Studies.
5
<PAGE> 8
Jack N. Halpern, 48, Vice Chairman of the Company since April 1996, has been a
director of the Company since its inception in July 1987. Mr. Halpern is the
President of Halpern Enterprises, Inc., an Atlanta-based owner, operator and
manager of various commercial real estate ventures. His companies currently
control in excess of three million square feet of retail and office space in the
Atlanta area. In his capacity as a principal of Halpern Enterprises, Inc., Mr.
Halpern has assisted numerous Asian and Hispanic immigrants in the establishment
of retail businesses in the Atlanta area. Mr. Halpern holds degrees from Harvard
University and the University of Georgia Law School. He is active in various
civic organizations, including serving as Campaign Chairman of the Atlanta
Jewish Federation and as a Trustee of the Epstein School.
Sion Nyen (Francis) Lai, 43, a director of the Company since December 1987, has
been President and principal shareholder of Fulton Beverage Center, Inc. since
1984. Prior to 1984, Mr. Lai worked with Hock Hua Bank Berhad in Sabah,
Malaysia. Mr. Lai earned an Associates Degree from New York State University,
and B.A. in Economics and M.B.A. degrees from Mercer University in Atlanta.
Shih Chien (Raymond) Lo, 52, a director of the Company since December 1987, is
the President of Lo Brothers Associates, an exporter of American Hardwood and
forest products. Prior to that, Mr. Lo was employed by Roberts and Company,
architects, and by Portman and Associates. Mr. Lo earned a Masters Degree in
Architecture from the Georgia Institute of Technology.
W. Clayton Sparrow, Jr., 51, Chairman of the Board from April 1994 through April
1996, has been a director of the Company since its inception in July 1987 and is
a partner in the Atlanta law firm of McCullough and Sherrill, LLP. Mr. Sparrow's
corporate and business law practice includes the general counsel representation
of domestic and multinational sales and manufacturing businesses. His
professional activities include membership in the American and International Bar
Associations, the State Bar of Georgia, and past Chairman of the International
Transactions Section and Director of the Atlanta Bar Association. Mr. Sparrow is
a graduate of the Georgia Institute of Technology (BS Physics), Georgia State
University (MBA Finance) and the University of Georgia Law School. He is a
Director and past President of the Georgia State University Alumni Association,
and has held Director and officer positions with the Dekalb Chamber of Commerce,
the Japan-American Society, the Korea U.S. Chamber of Commerce and the Georgia
Tech Alumni Association. He retired from the Naval Reserve in the rank of
Captain.
Pin Pin Chau, 58, has served as President and Chief Executive Officer of the
Bank and Executive Vice President of the Company since February 1993. Prior to
joining the Bank, Mrs. Chau was President, Chief Executive Officer and Director
of the United Orient Bank, a Manhattan based bank serving New York's Chinese
Community. Her previous experience at United Orient Bank included Executive Vice
President and Chief Operating Officer from July 1988 to April 1989, and
Executive Vice President and Chief Lending Officer from November 1987 to July
1988.
Mrs. Chau began her banking career in 1970 at National Westminster Bank USA
where she remained until 1987. Her experience included, at various times,
commercial lending for small and middle market clients, metropolitan New York
branch management, management of international lending and marketing for Asia,
and international trade finance for Fortune 500 companies in West and Northwest
United States.
Mrs. Chau serves on the Board of Directors for various community and educational
organizations including the Dekalb Chamber of Commerce, the Atlanta College of
Art, the Georgia Council on Economic Education, Consumer Credit Counseling
Service, Georgia Korean American Community Center Foundation and Georgia Council
of International Visitors. She is a member of the Board of Deacons of the
Atlanta Chinese Christian Church.
A naturalized U.S. citizen, Mrs. Chau is a native of Hong Kong and holds a B.A.
degree from Coe College, Cedar Rapids, Iowa and an M.A. degree from Yale
University, New Haven, Connecticut.
6
<PAGE> 9
THE FOLLOWING PERSONS ARE EXECUTIVE OFFICERS OF THE COMPANY:
H.A. Dudley, Jr., 49, has served as Executive Vice President and Senior Lending
Officer of the Bank since January 1991 and was elected Executive Vice President
of the Company in April 1995. Prior to joining the Bank, Mr. Dudley was a Vice
President of the Wachovia Bank and Trust where he served from 1983 to 1991 as a
District Manager in the Atlanta Retail Bank. From 1977 to 1983, Mr. Dudley was a
Vice President and Branch Coordinator of the Trust Company Bank of Columbus,
Columbus, Georgia. From 1973 to 1977, Mr. Dudley served at various times as
Assistant to the President and Management Auditor with First Southern Savings
and Loan Association, Mobile Alabama. Mr. Dudley began his banking career in
1971 with Citizens and Southern Bank of Atlanta. Active in various community
organizations, Mr. Dudley previously has served on the Board of Directors of the
Sandy Springs Chamber of Commerce and the Rotary Club of Dunwoody. Mr. Dudley
received his B.S. in Business Administration from Auburn University in 1971.
Gary K. McClung, 42, has served as Executive Vice President, Chief Financial
Officer and Secretary of the Company, and Executive Vice President, Chief
Financial Officer of the Bank since April 1992. Prior to joining the Company,
Mr. McClung served as the Senior Vice President/Chief Financial Officer of
Fidelity National Bank and Fidelity National Corporation, its parent holding
company, in Decatur, Georgia from 1986 to 1992. Mr. McClung also served as the
Controller/Corporate Secretary of Fidelity National Bank from 1983 to 1986.
From 1978 to 1983, Mr. McClung served as Assistant Cashier of the Bank of
Sissonville in Sissonville, West Virginia. Mr. McClung began his banking career
in 1972 with One Valley Bank in Charleston, West Virginia. Mr. McClung received
his B.S. in Business Administration/Accounting from West Virginia State College.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain officers and directors of the Company and their affiliates, including
corporations and firms of which they are officers or in which they and/or their
families have an ownership interest, have deposit accounts with the Bank and may
have other transactions with the Company or the Bank, including loans in the
ordinary course of business. In the opinion of the Board of Directors of the
Company, the terms of all of the transactions with such persons and entities
were no less favorable to the Company and the Bank than terms available in
comparable transactions from others and such terms were as favorable as terms
that could have been obtained in arms length transactions with independent third
parties. The Company and the Bank expect to have such transactions or similar
terms with its directors, executive officers and their affiliates in the future.
All commitments, loans or other extensions of credit made by the Bank or the
Company to officers, directors, and principal shareholders of the Company and to
affiliates of such persons have been made in the ordinary course of business on
terms, including interest rates and collateral, deemed by the Bank or the
Company to be substantially the same as those prevailing at the time for
comparable transactions with independent third parties and do not involve more
than the normal risk of collectibility or present other unfavorable features.
The aggregate amount of loans outstanding by the Bank to the Company's
directors, executive officers, and their affiliates as of December 31, 1997 was
approximately $192,000, which represented less than 1% of the Company's
consolidated shareholder equity on that date.
During the last fiscal year, the Company retained the following law firms (as
well as others) to provide certain legal services to the Company, and may employ
each of the firms during the current fiscal year: Alembik and Alembik, of which
Mr. Alembik, a director of the Company and the Bank, was a partner; Harkleroad &
Hermance, P.C., of which Mr. Harkleroad, a director of the Company, is a
partner; and McCullough & Sherrill, LLP, of which Mr. Sparrow, a director of the
Company, is a partner.
7
<PAGE> 10
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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
("SEC") initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Directors, executive
officers and greater than 10% shareholders are required by SEC regulation to
furnish the Company the copies of all Section 16(a) reports they file.
To the Company's knowledge, based solely on a 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, 1997, at no time was a
Form 3 or Form 4 filed late by any Company directors or executive officers or
beneficial owners of over 10% of the Company's outstanding Common Stock, nor
were there any known failures to file required forms.
BOARD COMMITTEES, MEETINGS AND COMPENSATION
The Company has an Audit Committee of the Board of Directors consisting of
Messrs. Allison (Chairman), Paek, and Unger. This Committee reviews significant
audit, accounting, and other principles, policies and practices, the activities
of independent auditors and of the Company's internal auditor, and the
conclusions and recommendations of auditors and the reports of regulatory
examiners upon completion of their respective audits and examinations.
The Company has a Nominating Committee, consisting of P. Carl Unger (Chairman),
Nack Y. Paek, Carl L. Patrick, Jr., and W. Clayton Sparrow, Jr. The Company's
By-Laws provide that shareholders wishing to nominate directors for election may
do so by sending a written notice to the President of the Bank not less than 14
days nor more than 50 days prior to any meeting of shareholders called for the
election of directors, provided, however, that if less than 21 days' notice of
the meeting is given to the shareholders, such nominees shall be mailed or
delivered to the President of the Bank not later than the close of business on
the seventh day following the day on which the notice of meeting was mailed.
Such notification shall contain, to the extent known to the shareholder, (a) the
name and address of each proposed nominee, (b) the principal occupation of each
proposed nominee, (c) the total number of shares of capital stock of the Company
that will be voted for each proposed nominee, (d) the name and residence address
of the notifying shareholder. Nominations not made in accordance with this
procedure may, in his/her discretion, be disregarded by the chairperson of the
meeting, and upon his/her instructions, the vote teller may disregard all votes
cast for each such nominee.
The Company's Compensation Committee consists of Messrs. James Lai (Chairman),
Francis Lai, Aaron Alembik, and Carl L. Patrick, Jr. This Committee reviews the
compensation of the Chief Executive Officer and senior officers of the Company
and the Bank.
In 1997, the Board of Directors of the Company met 4 times, the Board of
Directors of the Bank met 12 times, the Audit Committee met 12 times, the
Nominating Committee met 5 times and the Compensation Committee met 5 times.
During 1997, each director attended at least 75% of the aggregate of (i) the
total number of meetings of the Board of Directors and (ii) the total number of
meetings held by all Committees of the Board on which he or she served, except
Messrs. Patrick and Unger.
During 1997 each non-employee director received an attendance fee at the rate of
$500 for each meeting of the Board of Directors of the Company and the Board of
Directors of the Bank, as well as $100 for each committee meeting thereof
attended. A director who is an employee of the Company or the Bank receives no
fees or other compensation for serving as a director or as a member of a Board
Committee from either the Company or the Bank. Pursuant to this arrangement,
total fees of $28,000 were paid to Company directors, and total fees of $55,000
were paid to Bank directors in 1997.
8
<PAGE> 11
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
SUMMARY OF COMPENSATION
The following table shows the cash compensation paid by the Company during the
years ended December 31, 1997, 1996, and 1995, to the Company's Chief Executive
Officer and each of the other executive officers of the Company who earned more
than $100,000 in compensation during the year ended December 31, 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION AWARDS
------------ ------
SECURITIES
NAME AND PRINCIPAL COMPANY OTHER ANNUAL UNDERLYING ALL OTHER
OR SUBSIDIARY POSITION YEAR SALARY BONUS COMPENSATION OPTIONS/SARS COMPENSATION
---------------------- ---- ------ ----- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
DAVID YU 1997 $109,200 $36,656 -- 6,000 $16,230(3)
President and Chief Executive 1996 107,200 36,872 -- -- 1,770(4)
Officer of the Company; 1995 103,100 41,544 -- -- 2,577(4)
Chairman of the Bank
PIN PIN CHAU 1997 131,250 73,312 $9,707(1) 8,000 $ 7,681(2)
Executive Vice President of the 1996 131,250 73,744 9,711(1) -- 6,588(2)
Company; President and Chief 1995 130,729 83,088 9,611(1) -- 7,681(2)
Executive Officer of the Bank
GARY K. MCCLUNG 1997 90,000 36,656 -- 4,000 $ 1,127(4)
Executive Vice President and 1996 88,000 36,872 -- -- 1,551(4)
Chief Financial Officer 1995 83,900 41,544 -- -- 2,097(4)
of the Company and the Bank
H.A. DUDLEY, JR. 1997 87,000 36,656 -- 4,000 $ 2,175(4)
Executive Vice President 1996 85,000 36,872 -- -- 1,406(4)
of the Company and the Bank 1995 81,400 41,544 -- -- 2,035(4)
==============================================================================================================================
</TABLE>
(1) Non-cash compensation representing personal use of a vehicle provided by
the Company.
(2) Consists of $4,400 deferred compensation paid by the Company each year and
401k contributions paid by the Company of $3,281, $2,188, and $3,281 in
1997, 1996 and 1995, respectively.
(3) Consists of $13,500 deferred compensation paid by the Company for stock
options granted at below market and $2,730 401k contributions paid by the
Company.
(4) Consists of 401k contributions paid by the Company
9
<PAGE> 12
STOCK OPTION GRANTs
The following table contains information regarding the grant of stock options
during 1997 to the named executive officers listed in the Summary Compensation
Table under the Company's 1987 Stock Incentive Plan.
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS GRANTED
UNDERLYING OPTIONS TO EMPLOYEES IN EXERCISE EXPIRATION GRANT DATE
NAME GRANTED (#) FISCAL YEAR PRICE ($/SH) DATE VALUE1/
---- ----------- ----------- ------------ ---- -------
<S> <C> <C> <C> <C> <C>
DAVID YU 4,000 27.3% $16.75 7/7/04 $20,200
2,000 $10.00 7/7/04 $16,240
PIN PIN CHAU 8,000 36.3% $16.75 7/7/04 $40,400
GARY K. MCCLUNG 4,000 18.2% $16.75 7/7/04 $20,200
H.A. DUDLEY, JR. 4,000 18.2% $16.75 7/7/04 $20,200
</TABLE>
1/ The per share weighted-average fair value of stock options granted with
an exercise price equal to market and the per share weighted-average fair
value of stock options granted with an exercise price below market during
1997 were $5.05 and $8.12, respectively, using the Black Scholes
option-pricing model with the following weighted-average assumptions:
<TABLE>
<S> <C>
Expected life of the options 5 years
Risk-free interest rate 5.45%
Expected annual dividend rate 2.00%
Expected volatility 31%
Annual forfeiture rate 0%
</TABLE>
The expected life of the options is an estimate of when, on average, the options
are expected to be exercised. The risk-free interest rate is the rate on
zero-coupon U.S. government issues with a remaining term equal to the expected
life of the options. The expected dividend rate is based on the Company's recent
dividend rate. Expected volatility is a measure of the variability in the
Company's stock price. Annual forfeiture rate is the percentage of options
expected to be forfeited prior to vesting.
10
<PAGE> 13
OPTION EXERCISES AND HOLDINGS
The following table sets forth information with respect to the executive
officers listed in the Summary Compensation Table concerning unexercised options
held as of the end of 1997. There were no options exercised during the year
ended December 31, 1997.
1997 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-MONEY
OPTIONS AT 1997 YEAR END OPTIONS AT 1997 YEAR END(1)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLe
---- ------------------------- -------------------------
<S> <C> <C>
David Yu 17,000/0 $130,250/0
Pin Pin Chau 18,000/0 $112,500/0
Gary K. McClung 6,000/0 $ 28,500/0
H.A. Dudley, Jr. 9,000/0 $ 56,250/0
</TABLE>
(1) Based on the quoted market value per share of the Company's Common
Stock on December 31, 1997 of $19.25 per share.
SEVERANCE AGREEMENTs
The Company has severance agreements with each of the four (4) executive
officers of the Bank. The agreements generally provide that in the event of
involuntary termination or a change in the executive's position or compensation
resulting from a change in the control of the Company due to a merger,
consolidation or reorganization, each executive would be entitled to receive an
amount equal to 100% of the executive's base salary. These agreements have
continuing three (3) year terms.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee consists of James S. Lai, Aaron I. Alembik,
Carl L. Patrick, Jr., and Sion Nyen (Francis) Lai. No member of the Compensation
Committee is an employee of the Company or the Bank. See "Certain Relationships
and Related Transactions."
COMPENSATION OF EXECUTIVE OFFICERS
Under rules established by the SEC, the Company is required to provide certain
data and information regarding the compensation and benefits provided to its
Chief Executive Officer and other executive officers, including the three most
highly compensated executive officers who receive more than $100,000 in
compensation. Collectively, for purposes hereof, these four executive officers
are referred to as the "executive officers." The disclosure requirements for the
executive officers include the use of tables and a report explaining the
rationale and considerations that led to fundamental executive compensation
decisions affecting these individuals. The Compensation Committee of the Bank
has prepared the following report for inclusion in this Proxy Statement in
response to such requirements.
The Compensation Committee either approves or recommends to the Bank's Board of
Directors payment amounts and award levels for executive officers of the Bank.
The report reflects the Company's compensation philosophy as endorsed by the
Bank's and Company's Board of Directors and the Compensation Committee and
resulting actions taken by the Company for the reporting periods shown in the
various compensation tables supporting the report.
11
<PAGE> 14
COMPENSATION COMMITTEE REPORT
GENERAL
The Compensation Committee of the Bank is composed of four independent,
non-employee Bank directors who have no "interlocking" relationships as defined
by the SEC. The Compensation Committee fully supports the Company's philosophy
that the relationship between pay and individual performance is the cornerstone
of the salary administration program, and the reward of consistent, superior
performance is equally important to the control of salary expense in the
management of the Bank's operating overhead. Pay for performance relating to
executive officer compensation in these areas is based not only on individual
performance and contributions but also on total Company performance relative to
profitability and shareholder interests. The Compensation Committee makes
recommendations to the Bank's Board of Directors with a view to: (i) ensuring
that a competitive and fair total compensation package is provided the
directors, officers and employees in order to recruit and retain quality
personnel, (ii) ensuring that written performance evaluations are made not less
frequently than annually, and (iii) periodically reviewing and revising salary
ranges and total compensation programs for directors, officers and employees
using information provided by current surveys of peer group market salaries for
specific jobs.
BASE SALARY AND INCREASES
In establishing executive officer salaries and increases, the Compensation
Committee considers individual performance and the relationship of total
compensation to the defined salary market. The decision to increase base pay is
recommended by the chief executive officer of the Bank and approved by the
Compensation Committee using performance results documented and measured
annually through a formal evaluation process. Information regarding salaries
paid by other financial institutions is obtained through formal salary surveys
and other means and is used in the decision process to ensure competitiveness
with the Company's peers and competitors.
The Company's general philosophy is to provide base pay competitive with other
banks and bank holding companies of similar size in the Southeast. Annual cash
incentives are paid based on the Company's achievement of defined financial
goals.
CHIEF EXECUTIVE PAY
The Company's Compensation Committee formally reviews the compensation paid to
the chief executive officers of the Company and the Bank in July of each year.
Changes in base salary and the awarding of cash incentives are based on overall
financial performance and profitability related to objectives stated in the
Company's strategic performance plan and the initiatives taken to direct the
Company. Information from Proxy Statement surveys is used in formulating
recommendations regarding changes in the chief executive officers' compensation
to ensure that the chief executive officers' total compensation is comparable
with industry peers. Final approval is made by the Bank's Board of Directors.
After review of market information, specific accomplishments and the financial
performance of Summit, the base salary of Mr. David Yu, Chief Executive Officer
of the Company remain unchanged at $109,200 in 1997 compared to the prior year.
The salary of Ms. Pin Pin Chau, Chief Executive Officer of the Bank, remain
unchanged at $131,250 in 1997 compared to the prior year. In lieu of adjustments
to the base salary, the Committee awarded certain stock options to the chief
executive officers under the Company's Key Employee Incentive Stock Option Plan.
ANNUAL CASH INCENTIVES
The Company utilizes cash incentives to better align pay with individual and
Company performance. Funding for the Cash Incentive Plan depends on the Company
first attaining defined performance
12
<PAGE> 15
thresholds for pretax earnings and asset growth. These performance thresholds
promote a group effort by all key managers. Once these thresholds are attained,
the Compensation Committee, based in part upon recommendations from the Bank's
chief executive officer, may approve awards to those officers who have made
superior contributions to Company profitability as measured and reported through
individual performance goals established at the beginning of the year. This
philosophy, when fully implemented, will better control overall expenses
associated with future performance. Market information regarding salaries will
be used to establish competitive rewards that are adequate to motivate strong
individual performance during the year.
LONG-TERM INCENTIVES
The Company maintains the 1987 Key Employee Incentive Stock Option Plan, and
150,000 shares of the Company's Common Stock are reserved for issue under this
Plan. On July 9, 1997, the Compensation Committee granted an option to purchase
6,000 shares of the Company's Common Stock to Mr. David Yu, Chief Executive
Officer of the Company. Of these shares, 2,000 were granted at an exercise price
of $10 per share and the remaining 4,000 were granted at the then current market
price of $16.75 per share. At the same time, the Committee granted an option to
purchase 8,000 shares to Ms. Pin Pin Chau, Chief Executive Officer of the Bank.
These options were granted at an exercise price equal to the then current market
price of $16.75 per share. The options expire on July 7, 2004. The 1987 Key
Employee Incentive Stock Option Plan expired on July 11, 1997. See "Approval of
Summit Bank Corporation 1998 Stock Incentive Plan."
EMPLOYMENT AND SEVERANCE CONTRACTS
The Company presently has no employment contracts with any officer or employee
of the Company or any subsidiary. The Company has severance agreements with each
of the four (4) executive officers of the Company. The agreements basically
provide that in the event of involuntary termination or a change in the
executive's position or compensation resulting from a change in the control of
the Company due to a merger, consolidation or reorganization, each executive
would be entitled to receive an amount equal to 100% of the executive's base
salary. These agreements have continuing three (3) year terms.
$1 MILLION DEDUCTION LIMIT
At this time, the Company does not appear to be at risk of losing deductions
under the $1 million deduction limit on executive pay established under Section
162(m) of the Internal Revenue Code of 1986. As a result, the Committee has not
established a policy regarding this limit.
SUMMARY
In summary, the Company's overall executive compensation program is designed to
reward managers for superior individual, Company and share value performance.
The executive compensation program incorporates a shareholder point of view in
several different ways and contains significant protections for shareholders.
The Compensation Committee monitors the various program guidelines and may
adjust these as it deems appropriate. The Compensation Committee believes that
the compensation of the Company's officers and employees, including the
executive officers, is reasonable and competitive with compensation paid by
other financial institutions of similar size and financial performance. The
Company's total personnel expense (which includes base salaries, cash bonuses,
401(k) matching contributions, health care coverage and all other benefits) as a
percentage of average assets was 2.19% for the year ended December 31, 1997.
This concludes the report of the Compensation Committee.
<TABLE>
<S> <C> <C> <C>
James S. Lai, Ph.D. Aaron I. Alembik Sion Nyen (Francis) Lai Carl L. Patrick, Jr.
</TABLE>
13
<PAGE> 16
PERFORMANCE GRAPH
The following line graph compares the cumulative, total return of the Company's
Common Stock from December 31, 1992 to December 31, 1997, with that of the
Nasdaq Composite Index (an average of all stocks traded on the Nasdaq Stock
Market) and the SNL Bank Index, provided by SNL Securities, LP, for our peer
group (an average of all Banks in the Southeast with assets less than $250
million). Cumulative, total return represents the change in stock price and the
amount of dividends received over the indicated period assuming the reinvestment
of dividends.
[GRAPH]
<TABLE>
<CAPTION>
PERIOD ENDING
=====================================================
INDEX 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
=========================================================================================
<S> <C> <C> <C> <C> <C> <C>
Summit Bank Corporation 100.00 161.62 166.67 212.97 366.91 417.61
NASDAQ - Total US 100.00 114.80 112.21 158.70 195.19 139.53
SNL Banks (Southeast <250M) Index 100.00 130.58 143.70 227.52 275.63 438.82
</TABLE>
14
<PAGE> 17
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 13, 1998, the number of shares of
Common Stock of the Company beneficially owned by each person known to the
Company to own more than 5% of the outstanding shares of Common Stock, by each
director and executive officer of the Company, and by all of the directors and
executive officers of the Company as a group. Except where otherwise indicated,
each individual has sole voting and investment power over the Common Stock
listed by his or her name.
<TABLE>
<CAPTION>
Number of Shares Percent of Class
Beneficial Owner Beneficially Owned (1) Beneficially Owned
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
P. Carl Unger 30,123 1.64%
Jack N. Halpern 35,000 (2) 1.91%
David Yu 53,719 (3) 2.92%
James S. Lai 20,000 1.09%
Pin Pin Chau 21,500 (4) 1.17%
Aaron I. Alembik 20,980 (5) 1.14%
Gerald L. Allison 6,602 .36%
Peter M. Cohen 16,543 .90%
Paul C.Y. Chu 131,188 (6) 7.15%
H.A. Dudley, Jr. 9,000 (7) .49%
Donald R. Harkleroad 31,300 (8) 1.71%
Daniel T. Huang 130,100 (9) 7.09%
Shafik H. Ladha 20,000 (10) 1.09%
Sion Nyen (Francis) Lai 27,500 (11) 1.50%
Shih Chien (Raymond) Lo 2,708 .15%
Gary K. McClung 7,000 (12) .38%
Nack Y. Paek 15,600 .85%
Carl L. Patrick, Jr. 38,990 2.12%
W. Clayton Sparrow, Jr. 12,637 .69%
Howard H.L. Tai 20,000 1.09%
All directors and executive
officers as a group (20 people) 650,490 (13) 35.44%
</TABLE>
(1) Based on 1,815,363 shares outstanding as of March 13, 1998, and in the
case of beneficial owners who hold options for shares exercisable
within 60 days, includes as outstanding the number of shares subject to
such options. Information relating to beneficial ownership of Common
Stock by directors is based upon information furnished by each person
using "beneficial ownership" concepts set forth in rules of the SEC
under the Securities Exchange Act of 1934, as amended ("1934 Act").
Under such rules, a person is deemed to be a "beneficial owner" of a
security if that person has or shares "voting power," which includes
the power to vote or direct the voting of such security, or "investment
power," which includes the power to dispose of or to direct the
disposition of such security. The person is also deemed to be a
beneficial owner of any security of which that person has a right to
acquire beneficial ownership within 60 days. Under such rules, more
than one person may be deemed to be a beneficial owner of the same
securities, and a person may be deemed to be a beneficial owner of
securities as to which he or she may disclaim any beneficial ownership.
Accordingly, nominees are named as beneficial owners of shares as to
which they may disclaim any beneficial interest. Except as indicated in
other notes to this table describing special relationships with other
persons and specifying shared voting or investment power, directors
possess sole voting and investment power with respect to all shares of
Common Stock set forth opposite their names.
(2) Includes 20,000 shares held by Halpern Enterprises of which Mr. Halpern
is President
15
<PAGE> 18
(3) Represents 49,719 shares held by Mr. Yu and his wife, and 4,000 shares
subject to options received under the Company's Key Employee Stock
Option Plan.
(4) Includes 8,000 shares subject to options received under the Company's
Key Employee Stock Option Plan.
(5) Includes 4,380 shares held by Mr. Alembik's wife.
(6) Includes 95,000 shares held by May Foong Corporation of which Mr. Chu
is President. Mr. Chu's address is 23 Northdale Road, White Plains, New
York.
(7) Includes 4,000 shares subject to options received under The Company's
Key Employee Stock Option Plan.
(8) Includes 30,000 shares held by Bristol Summit Company and 1,200 shares
held by The Bristol Company, as to both of which Mr. Harkleroad is
President.
(9) Represents shares held by Mr. Huang, his wife and various family
members. Mr. Huang's address is 5500 Chelson Wood Drive, Duluth,
Georgia.
(10) Represents shares held by Ladha Holdings Inc. of which Mr. Ladha is
President.
(11) Includes 20,000 shares held by U.S. Pacific Investment Group of which
Mr. Lai is President.
(12) Includes 4,000 shares subject to options received under the Company's
Key Employee Stock Option Plan.
(13) Includes 20,000 shares subject to stock options received under the
Company's Key Employee Stock Option Plan exercisable within 60 days.
APPROVAL OF SUMMIT BANK CORPORATION
1998 STOCK INCENTIVE PLAN
INTRODUCTION
On February 23, 1998, the Board of Directors approved the Summit Bank
Corporation 1998 Stock Incentive Plan (the "Stock Plan"), the full text of which
is set forth in Appendix A to this Proxy Statement.
The Stock Plan provides the Company with increased flexibility to grant
equity-based compensation to key employees, officers, directors and consultants
of the Company and its affiliates for the purpose of giving them a proprietary
interest in the Company and providing the Company with a mechanism to attract
and retain key personnel. The Board of Directors has reserved 200,000 shares of
Common Stock for issuance pursuant to awards that may be made under the Stock
Plan, subject to adjustment as provided in the Stock Plan.
Applicable provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), restrict the Company's ability in the absence of stockholder approval
to grant incentive stock options under Code Section 421 and to claim deductions
which may otherwise be associated with the grant of nonqualified options and
stock appreciation rights under Code Section 162(m).
The following description of the Stock Plan is qualified in its entirety by
reference to the applicable provisions of the plan document.
16
<PAGE> 19
TERMS OF THE STOCK PLAN
ADMINISTRATION
Awards under the Stock Plan will be determined by the Board of Directors of the
Company or a subcommittee of the Board of Directors, the members of which are
selected by the Board of Directors (the "Committee"). The Board of Directors
will consider the advisability of complying with the disinterested standards
contained in both Section 162(m) of the Code and Rule 16(b)(3) (promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) when
appointing members to the Committee. The Committee will have at least two
members. At the present time, the full membership of the Board of Directors
constitutes the Committee.
AWARDS
The Stock Plan permits the Committee to make awards of shares of Common Stock,
awards of derivative securities related to the value of the Common Stock and
certain cash awards to eligible persons. These discretionary awards may be made
on an individual basis or pursuant to a program approved by the Committee for
the benefit of a group of eligible persons. The Stock Plan permits the Committee
to make awards of a variety of equity-based incentives, including (but not
limited to) stock awards, options to purchase shares of Common Stock and to sell
shares of Common Stock back to the Company, stock appreciation rights, so-called
"cashout" or "limited stock appreciation rights" (which the Committee may make
exercisable in the event of a certain changes in control of the Company or other
events), phantom shares, performance incentive rights, dividend equivalent
rights and similar rights (collectively, "Stock Incentives").
The number of shares of Common Stock as to which a Stock Incentive is granted
and to whom any Stock Incentive is granted will be determined by the Committee,
subject to the provisions of the Stock Plan. Stock Incentives issuable may be
made exercisable or settled at such prices and may be made forfeitable or
terminable under such terms as are established by the Committee, to the extent
not otherwise inconsistent with the terms of the Stock Plan. No participant who
is a "covered employee", within the meaning of Section 162(m) of the Code,
however, may be granted during any single fiscal year of the Company rights to
shares of Common Stock under options and stock appreciation rights which, in the
aggregate, exceed 50,000 shares of Common Stock.
Stock Incentives generally are not transferable or assignable during a holder's
lifetime.
OPTIONS
The Stock Plan provides for incentive stock options and non-qualified stock
options. The Committee will determine whether an option is an incentive stock
option or a non-qualified stock option at the time the option is granted, and
the option will be evidenced by a Stock Incentive Agreement. Options may be made
exercisable pursuant to such terms as are established by the Committee, to the
extent not otherwise inconsistent with the terms of the Stock Plan.
The exercise price of an option shall be set forth in the applicable Stock
Incentive Agreement. The exercise price of an incentive stock option may not be
less than the fair market value of the Common Stock on the date of the grant (or
less than 110% of the fair market value if the participant owns more than 10% of
the Company's outstanding Common Stock). At the time the incentive stock option
is exercised, the Company will be entitled to place a legend on the certificates
representing the shares of Common Stock purchased pursuant to the option to
identify them as shares of Common Stock purchased upon the exercise of an
incentive stock option. Non-qualified stock options may be made exercisable at a
price equal to, less than or more than the fair market value of the Common Stock
on the date that the option is awarded, based upon an average fair market value
of the Common Stock at the time the option is awarded, or based upon any other
reasonable measure of fair market value. The Committee may permit an option
exercise price to be paid in cash or by the delivery of previously-owned shares
of
17
<PAGE> 20
Common Stock, or to be satisfied through a cashless exercise executed through
a broker or by having a number of shares of Common Stock otherwise issuable at
the time of exercise withheld.
The term of an option shall be specified in the applicable Stock Incentive
Agreement. The term of an incentive stock option may not exceed ten years from
the date of grant; however, any incentive stock option granted to a participant
who owns more than 10% of the Common Stock will not be exercisable after the
expiration of five (5) years after the date the option is granted. Subject to
any further limitations in a Stock Incentive Agreement, in the event of a
participant's termination of employment, the term of an incentive stock option
will expire, terminate and become unexercisable no later than three months after
the date of such termination of employment; provided, however, that if such
termination of employment is due to death or disability, one year will be
substituted for the three-month period.
STOCK APPRECIATION RIGHTS
Stock appreciation rights may be granted separately or in connection with
another Stock Incentive, and the Committee may provide that they are exercisable
at the discretion of the holder or that they will be paid at a time or times
certain or upon the occurrence or non-occurrence of certain events. Stock
appreciation rights may be settled in shares of Common Stock or in cash,
according to terms established by the Committee with respect to any particular
award.
STOCK AWARDS
The Committee may grant shares of Common Stock to a participant, subject to such
restrictions and conditions, if any, as the Committee shall determine.
OTHER STOCK INCENTIVES
Dividend equivalent rights, performance units and phantom shares may be granted
in such numbers or units and may be subject to such conditions or restrictions
as the Committee will determine and will be payable in cash or shares of Common
Stock, as the Committee may determine.
CERTAIN CASH AWARDS
The Committee may make cash awards designed to cover tax obligations of
employees that result from the receipt or exercise of a Stock Incentive.
The terms of particular Stock Incentives may provide that they terminate, among
other reasons, upon the holder's termination of employment or other status with
respect to the Company or any affiliate of the Company, upon a specified date,
upon the holder's death or disability, or upon the occurrence of a change in
control of the Company. Stock Incentives may include exercise, conversion or
settlement rights to a holder's estate or personal representative in the event
of the holder's death or disability. At the Committee's discretion, Stock
Incentives that are subject to termination may be cancelled, accelerated, paid
or continued, subject to the terms of the applicable Stock Incentive Agreement
and to the provisions of the Stock Plan.
CERTAIN REORGANIZATIONS
The number of shares of Common Stock reserved for issuance in connection with
the grant or settlement of Stock Incentives or to which a Stock Incentive is
subject, as the case may be, and the exercise price of each option are subject
to adjustment in the event of any recapitalization of the Company effected
without the receipt of consideration.
In the event of certain corporate reorganizations, Stock Incentives may be
substituted, cancelled, accelerated, cashed-out or otherwise adjusted by the
Committee, provided such adjustment is not inconsistent with the terms of the
Stock Plan or any agreement reflecting the terms of a Stock Incentive.
18
<PAGE> 21
AMENDMENTS OR TERMINATION
Although the Stock Plan may be amended by the Board of Directors without
stockholder approval, the Board of Directors also may condition any such
amendment upon stockholder approval if stockholder approval is deemed necessary
or appropriate in consideration of tax, securities or other laws. No such action
by the Board of Directors may adversely affect the rights of a holder of a Stock
Incentive without the holder's consent.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion outlines generally the federal income tax consequences
of participation in the Stock Plan. Individual circumstances may vary and each
participant should rely on his or her own tax counsel for advice regarding
federal income tax treatment under the Stock Plan.
INCENTIVE STOCK OPTIONS
A participant who exercises an incentive stock option will not be taxed at the
time he or she exercises his or her option or a portion thereof. Instead, the
participant will be taxed at the time he or she sells the shares of Common Stock
purchased pursuant to the incentive stock option. The participant will be taxed
on the difference between the price he or she paid for the Common Stock and the
amount for which he or she sells the Common Stock. If the participant does not
sell the shares of Common Stock prior to two years from the date of grant of the
incentive stock option and one year from the date the Common Stock is
transferred to him or her, the gain will be capital gain and the Company will
not get a corresponding deduction. If the participant sells the shares of Common
Stock at a gain prior to that time, the difference between the amount the
participant paid for the Common Stock and the lesser of fair market value on the
date of exercise or the amount for which the stock is sold will be taxed as
ordinary income. If the participant sells the shares of Common Stock for less
than the amount he or she paid for the stock prior to the one- or two-year
period indicated, no amount will be taxed as ordinary income and the loss will
be taxed as a capital loss. Exercise of an incentive stock option may subject a
participant to, or increase a participant's liability for, the alternative
minimum tax.
NON-QUALIFIED OPTIONS
A participant will not recognize income upon the grant of a non-qualified option
or at any time prior to the exercise of the option or a portion thereof. At the
time the participant exercises a non-qualified option or portion thereof, he or
she will recognize compensation taxable as ordinary income in an amount equal to
the excess of the fair market value of the Common Stock on the date the option
is exercised over the price paid for the Common Stock, and the Company will then
be entitled to a corresponding deduction.
Depending upon the period shares of Common Stock are held after exercise, the
sale or other taxable disposition of shares acquired through the exercise of a
non-qualified option generally will result in a short- or long-term capital gain
or loss equal to the difference between the amount realized on such disposition
and the fair market value of such shares when the non-qualified option was
exercised.
Special rules apply to a participant who exercises a non-qualified option by
paying the exercise price, in whole or in part, by the transfer of shares of
Common Stock to the Company.
OTHER STOCK INCENTIVES
A participant will not recognize income upon the grant of a stock appreciation
right, dividend equivalent right, performance unit award or phantom share (the
"Equity Incentives"). Generally, at the time a participant receives payment
under any Equity Incentive, he or she will recognize compensation taxable as
ordinary income in an amount equal to the cash or the fair market value of the
Common Stock received, and the Company will then be entitled to a corresponding
deduction.
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<PAGE> 22
A participant will not be taxed upon the grant of a stock award if such award is
not transferable by the participant or is subject to a "substantial risk of
forfeiture," as defined in the Code. However, when the shares of Common Stock
that are subject to the stock award are transferable by the participant and are
no longer subject to a substantial risk of forfeiture, the participant will
recognize compensation taxable as ordinary income in an amount equal to the fair
market value of the stock subject to the stock award, less any amount paid for
such stock, and the Company will then be entitled to a corresponding deduction.
However, if a participant so elects at the time of receipt of a stock award, he
or she may include the fair market value of the stock subject to the stock
award, less any amount paid for such stock, in income at that time and the
Company also will be entitled to a corresponding deduction at that time.
STOCKHOLDER APPROVAL
The Board of Directors seeks stockholder approval because such approval is
required under the Code as a condition to incentive stock option treatment and
will maximize the potential for deductions associated with any non-qualified
options and stock appreciation rights granted under the Stock Plan.
Approval of the Stock Plan requires the affirmative vote of the holders of at
least a majority of the outstanding shares of Common Stock of the Company
present, or represented and entitled to vote, at the Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE 1998 STOCK
INCENTIVE PLAN.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
KPMG Peat Marwick LLP, Atlanta, Georgia, acted as the Company's principal
independent certified public accountants for the fiscal year ended December 31,
1997. No company has been selected by the Board of Directors to act as the
Company's independent certified public accountants for the current year, and it
is anticipated that there will be no change in same. The Board of Directors will
make this decision later in the year. Representatives of KPMG Peat Marwick LLP
are expected to be present at the Shareholders' Meeting and will have the
opportunity to make a statement if they desire to do so and to respond to
appropriate questions.
OTHER MATTERS
Management is not aware of any other matters to be presented for action at the
Meeting other than those mentioned in the Notice of Annual Meeting of
Shareholders and referred to in this Proxy Statement. If any other matters come
before the Meeting, it is the intention of the persons named in the enclosed
Proxy to vote on such matters in accordance with their judgment.
SHAREHOLDERS PROPOSALS FOR 1999 ANNUAL MEETING
Proposals of shareholders of the Company intended to be presented at the 1999
Annual Meeting of Shareholders must be received by the Company at its principal
executive offices on or before December 31, 1998 in order to be included in the
Company's Proxy Statement and Proxy related to the 1999 Annual Meeting of
Shareholders. Only proper proposals which are timely received will be included
in the Proxy Statement and Proxy.
20
<PAGE> 23
OTHER INFORMATION
PROXY SOLICITATION COSTS
The cost of soliciting Proxies for the 1998 Annual Meeting will be paid by the
Company. In addition to the solicitation of shareholders of record by mail,
telephone, facsimile or personal contact, the Company will be contacting
brokers, dealers, banks, or voting trustees or their nominees who can be
identified as record holders of Common Stock; such holders, after inquiry by the
Company, will provide information concerning quantities of Proxy materials and
1997 Annual Reports needed to supply such information to beneficial owners, the
Company will reimburse them for the reasonable expense of mailing Proxy
materials and 1997 Annual Reports to such persons.
ANNUAL REPORT ON FORM 10-K
Upon the written request of any person whose Proxy is solicited by this Proxy
Statement, the Company will furnish to such persons without charge (other than
for exhibits) a copy of the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1997, including the financial statements and schedules
thereto, as filed with the Securities and Exchange Commission. Requests may be
made to Summit Bank Corporation, 4360 Chamblee Dunwoody Road, Atlanta, Georgia,
30341, Attention: Gary McClung, Secretary.
By Order of the Board of Directors,
/s/ Gary K. McClung
--------------------------------
Gary K. McClung
Secretary
March 20, 1998
21
<PAGE> 24
APPENDIX A
SUMMIT BANK CORPORATION
1998 STOCK INCENTIVE PLAN
<PAGE> 25
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 1 DEFINITIONS........................................................ A-3
1.1 Definitions.................................................... A-3
SECTION 2 THE STOCK INCENTIVE PLAN........................................... A-6
2.1 Purpose of the Plan............................................ A-6
2.2 Stock Subject to the Plan...................................... A-6
2.3 Administration of the Plan..................................... A-6
2.4 Eligibility and Limits......................................... A-7
SECTION 3 TERMS OF STOCK INCENTIVES.......................................... A-7
3.1 Terms and Conditions of All Stock Incentives................... A-7
3.2 Terms and Conditions of Options................................ A-8
(a) Option Price.......................................... A-8
(b) Option Term........................................... A-9
(c) Payment............................................... A-9
(d) Conditions to the Exercise of an Option............... A-9
(e) Termination of Incentive Stock Option................. A-9
(f) Special Provisions for Certain Substitute Options..... A-9
3.3 Terms and Conditions of Stock Appreciation Rights.............. A-10
(a) Settlement............................................ A-10
(b) Conditions to Exercise................................ A-10
3.4 Terms and Conditions of Stock Awards........................... A-10
3.5 Terms and Conditions of Dividend Equivalent Rights............. A-10
(a) Payment............................................... A-10
(b) Conditions to Payment................................. A-10
3.6 Terms and Conditions of Performance Unit Awards................ A-11
(a) Payment............................................... A-11
(b) Conditions to Payment................................. A-11
3.7 Terms and Conditions of Phantom Shares......................... A-11
(a) Payment............................................... A-11
(b) Conditions to Payment................................. A-11
3.8 Treatment of Awards Upon Termination of Service................ A-11
SECTION 4 RESTRICTIONS ON STOCK.............................................. A-12
4.1 Escrow of Shares............................................... A-12
4.2 Forfeiture of Shares........................................... A-12
4.3 Restrictions on Transfer....................................... A-12
SECTION 5 GENERAL PROVISIONS................................................. A-12
5.1 Withholding.................................................... A-12
5.2 Changes in Capitalization; Merger; Liquidation................. A-13
5.3 Cash Awards.................................................... A-13
5.4 Compliance with Code........................................... A-13
5.5 Right to Terminate Service..................................... A-13
5.6 Restrictions on Delivery and Sale of Shares; Legends........... A-14
5.7 Non-alienation of Benefits..................................... A-14
5.8 Termination and Amendment of the Plan.......................... A-14
5.9 Stockholder Approval........................................... A-14
5.10 Choice of Law.................................................. A-14
5.11 Effective Date of Plan......................................... A-14
</TABLE>
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<PAGE> 26
SUMMIT BANK CORPORATION
1998 STOCK INCENTIVE PLAN
SECTION 1 DEFINITIONS
1.1 Definitions. Whenever used herein, the masculine pronoun shall
be deemed to include the feminine, and the singular to include the plural,
unless the context clearly indicates otherwise, and the following capitalized
words and phrases are used herein with the meaning thereafter ascribed:
(a) "Board of Directors" means the board of directors of
the Company.
(b) "Cause" has the same meaning as provided in the
employment agreement between the Participant and the Company or, if applicable,
any affiliate of the Company on the date of Termination of Service, or if no
such definition or employment agreement exists, "Cause" means conduct amounting
to (1) fraud or dishonesty against the Company or its affiliates, (2)
Participant's willful misconduct, repeated refusal to follow the reasonable
directions of the board of directors of the Company or its affiliates, or
knowing violation of law in the course of performance of the duties of
Participant's service with the Company or its affiliates, (3) repeated absences
from work without a reasonable excuse, (4) repeated intoxication with alcohol or
drugs while on the Company or affiliates' premises during regular business
hours, (5) a conviction or plea of guilty or nolo contendere to a felony or a
crime involving dishonesty, or (6) a breach or violation of the terms of any
agreement to which Participant and the Company or its affiliates are party.
(c) "Change in Control" means any one of the following
events which may occur without the approval of the Board of Directors:
(1) the acquisition by any person, entity or
"group," within the meaning of Section 13(d)(3) or Section 14(d)(2) of the
Securities Exchange Act of 1934 (excluding, for this purpose, any employee
benefit plan maintained by the Company or any affiliate), which acquires
beneficial ownership of voting securities of the Company (or of such other
Company affiliates as may be identified in the Stock Incentive Agreement or
otherwise designated by the Committee) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934) of
more than fifty percent (50%) of either the then outstanding shares of Stock or
the combined voting power of the Company's (or of such other Company
affiliates') (as may be identified in the Stock Incentive Agreement or otherwise
designated by the Committee) then outstanding voting securities entitled to vote
generally in the election of directors;
(2) the acquisition by any person, entity or
"group," within the meaning of Section 13(d)(3) or Section 14(d)(2) of the
Securities Exchange Act of 1934 (excluding, for this purpose, any employee
benefit plan maintained by the Company or any affiliate), which acquires
beneficial ownership of voting securities of the Company (or of such other
Company affiliates as may be identified in the Stock Incentive Agreement or
otherwise designated by the Committee) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934) of
more than thirty percent (30%) or more of either the then outstanding shares of
Stock or the combined voting power of the Company's (or of such other Company
affiliates') (as may be identified in the Stock Incentive Agreement or otherwise
designated by the Committee) then outstanding voting securities entitled to vote
generally in the election of directors and the failure for any reason of
individuals who constitute the Incumbent Board to continue to constitute at
least two-thirds of the Board of Directors within any thirteen (13) month
period. For purposes of this Section 1.1(c)(2), the term "Incumbent Board" shall
mean the members of the Board of Directors as of the date this Plan is adopted
by the Board of Directors and any person becoming a member of the Board of
Directors after that date whose election, or whose nomination for election by
the Company's stockholders was approved by a vote of at least two-thirds of the
directors then comprising the
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<PAGE> 27
Incumbent Board (other than an election or nomination of an individual whose
initial assumption of office is in connection with an actual or threatened
election contest relating to the election of directors of the Company, as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under the Securities
Exchange Act of 1934); or
(3) the approval by the stockholders of the
Company (or of such other Company affiliates as may be identified in the Stock
Incentive Agreement or otherwise designated by the Committee) of a
reorganization, merger or consolidation, with respect to which persons who were
the stockholders of the Company (or of such other Company affiliates as may be
identified in the Stock Incentive Agreement or otherwise designated by the
Committee) immediately prior to such reorganization, merger or consolidation do
not, immediately thereafter, own more than fifty percent (50%) of the combined
voting power entitled to vote generally in the election of directors of the
reorganized, merged or consolidated company's then outstanding voting
securities, or a liquidation or dissolution of the Company (or of such other
Company affiliates as may be identified in the Stock Incentive Agreement or
otherwise designated by the Committee) or the sale of all or substantially all
of the assets of the Company (or of such other Company affiliates as may be
identified in the Stock Incentive Agreement or otherwise designated by the
Committee).
(d) "Code" means the Internal Revenue Code of 1986, as
amended.
(e) "Committee" means the committee appointed by the
Board of Directors to administer the Plan pursuant to Plan Section 2.3. In the
absence of any such appointment, the full membership of the Board of Directors
shall serve as the Committee.
(f) "Company" means Summit Bank Corporation, a Georgia
corporation.
(g) "Disability" has the same meaning as provided in the
long-term disability plan or policy maintained or, if applicable, most recently
maintained, by the Company or, if applicable, any affiliate of the Company for
the Participant. If no long-term disability plan or policy was ever maintained
on behalf of the Participant or, if the determination of Disability relates to
an Incentive Stock Option, Disability shall mean that condition described in
Code Section 22(e)(3), as amended from time to time. In the event of a dispute,
the determination of Disability shall be made by the Board of Directors and
shall be supported by advice of a physician competent in the area to which such
Disability relates.
(h) "Disposition" means any conveyance, sale, transfer,
assignment, pledge or hypothecation, whether outright or as security, inter
vivos or testamentary, with or without consideration, voluntary or involuntary.
(i) "Dividend Equivalent Rights" means certain rights to
receive cash payments as described in Plan Section 3.5.
(j) "Fair Market Value" refers to the determination of
value of a share of Stock. If the Stock is actively traded on any national
securities exchange or any Nasdaq quotation or market system, Fair Market Value
shall mean the closing price at which sales of Stock shall have been sold on the
most recent trading date immediately prior to the date of determination, as
reported by any such exchange or system selected by the Committee on which the
shares of Stock are then traded. If the shares of Stock are not actively traded
on any such exchange or system, Fair Market Value shall mean the arithmetic mean
of the bid and asked prices for the shares of Stock on the most recent trading
date within a reasonable period prior to the determination date as reported by
such exchange or system. If there are no bid and asked prices within a
reasonable period or if the shares of Stock are not traded on any exchange or
system as of the determination date, Fair Market Value shall mean the fair
market value of a share of Stock as determined by the Committee taking into
account such facts and circumstances deemed to be material by the Committee to
the value of the Stock in the hands of the Participant; provided that, for
purposes of granting awards other than Incentive Stock
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<PAGE> 28
Options, Fair Market Value of a share of Stock may be determined by the
Committee by reference to the average market value determined over a period
certain or as of specified dates, to a tender offer price for the shares of
Stock (if settlement of an award is triggered by such an event) or to any other
reasonable measure of fair market value and provided further that, for purposes
of granting Incentive Stock Options, Fair Market Value of a share of Stock shall
be determined in accordance with the valuation principles described in the
regulations promulgated under Code Section 422.
(k) "Incentive Stock Option" means an incentive stock
option, as defined in Code Section 422, described in Plan Section 3.2.
(l) "Non-Qualified Stock Option" means a stock option,
other than an option qualifying as an Incentive Stock Option, described in Plan
Section 3.2.
(m) "Option" means a Non-Qualified Stock Option or an
Incentive Stock Option.
(n) "Over 10% Owner" means an individual who at the time
an Incentive Stock Option is granted owns Stock possessing more than 10% of the
total combined voting power of the Company or one of its Parents or
Subsidiaries, determined by applying the attribution rules of Code Section
424(d).
(o) "Parent" means any corporation (other than the
Company) in an unbroken chain of corporations ending with the Company if, with
respect to Incentive Stock Options, at the time of granting of the Option, each
of the corporations other than the Company owns stock possessing 50% or more of
the total combined voting power of all classes of stock in one of the other
corporations in the chain.
(p) "Participant" means an individual who receives a
Stock Incentive hereunder.
(q) "Performance Unit Award" refers to a performance unit
award described in Plan Section 3.6.
(r) "Phantom Shares" refers to the rights described in
Plan Section 3.7.
(s) "Plan" means the Summit Bank Corporation 1998 Stock
Incentive Plan.
(t) "Stock" means the Company's common stock, $.01 par
value.
(u) "Stock Appreciation Right" means a stock appreciation
right described in Plan Section 3.3.
(v) "Stock Award" means a stock award described in Plan
Section 3.4.
(w) "Stock Incentive Agreement" means an agreement
between the Company and a Participant or other documentation evidencing an award
of a Stock Incentive.
(x) "Stock Incentive Program" means a written program
established by the Committee pursuant to which Stock Incentives, other than
Options or Stock Appreciation Rights, are awarded under the Plan under uniform
terms, conditions and restrictions set forth in such written program and
distributed among eligible officers, employees and directors.
(y) "Stock Incentives" means, collectively, Dividend
Equivalent Rights, Incentive Stock Options, Non-Qualified Stock Options,
Performance Unit Awards, Phantom Shares, Stock Appreciation Rights and Stock
Awards.
A-5
<PAGE> 29
(z) "Subsidiary" means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company if,
with respect to Incentive Stock Options, at the time of the granting of the
Option, each of the corporations other than the last corporation in the unbroken
chain owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in the chain.
(aa) "Termination of Service" means the termination of the
service relationship, whether employment or otherwise, between a Participant and
the Company and its affiliates, regardless of the fact that severance or similar
payments are made to the Participant for any reason, including, but not by way
of limitation, a termination by resignation, discharge, death, Disability or
retirement. The Committee shall, in its absolute discretion, determine the
effect of all matters and questions relating to Termination of Service,
including, but not by way of limitation, the question of whether a leave of
absence constitutes a Termination of Service, or whether a Termination of
Service is for Cause.
SECTION 2 THE STOCK INCENTIVE PLAN
2.1 Purpose of the Plan. The Plan is intended to (a) provide
incentive to officers, employees, directors and consultants of the Company and
its affiliates to stimulate their efforts toward the continued success of the
Company and to operate and manage the business in a manner that will provide for
the long-term growth and profitability of the Company; (b) encourage stock
ownership by officers, employees, directors and consultants by providing them
with a means to acquire a proprietary interest in the Company by acquiring
shares of Stock or to receive compensation which is based upon appreciation in
the value of Stock; and (c) provide a means of obtaining and rewarding key
personnel.
2.2 Stock Subject to the Plan. Subject to adjustment in accordance
with Section 5.2, 200,000 shares of Stock (the "Maximum Plan Shares") are hereby
reserved exclusively for issuance pursuant to Stock Incentives. At no time shall
the Company have outstanding Stock Incentives and shares of Stock issued in
respect of Stock Incentives in excess of the Maximum Plan Shares. The shares of
Stock attributable to the nonvested, unpaid, unexercised, unconverted or
otherwise unsettled portion of any Stock Incentive that is forfeited or
cancelled or expires or terminates for any reason without becoming vested, paid,
exercised, converted or otherwise settled in full shall again be available for
purposes of the Plan. All other plans maintained by the Company that provided
for the reservation of shares of Stock for stock incentives have been
terminated.
2.3 Administration of the Plan. The Plan shall be administered by
the Committee. The Committee shall have full authority in its discretion to
determine the officers, employees, directors and consultants of the Company or
its affiliates to whom Stock Incentives shall be granted and the terms and
provisions of Stock Incentives, subject to the Plan. Subject to the provisions
of the Plan, the Committee shall have full and conclusive authority to interpret
the Plan; to prescribe, amend and rescind rules and regulations relating to the
Plan; to determine the terms and provisions of the respective Stock Incentive
Agreements or Stock Incentive Programs and to make all other determinations
necessary or advisable for the proper administration of the Plan. The
Committee's determinations under the Plan need not be uniform and may be made by
it selectively among persons who receive, or are eligible to receive, awards
under the Plan (whether or not such persons are similarly situated). The
Committee's decisions shall be final and binding on all Participants.
As to any matter involving a Participant who is not a "reporting
person" for purposes of Section 16 of the Securities Exchange Act of 1934, the
Committee may delegate to any member of the Board of Directors or officer of the
Company the administrative authority to (a) interpret the provisions of the
Participant's Stock Incentive Agreement and (b) determine the treatment of Stock
Incentives upon a Termination of Service, as contemplated by Plan Section 3.8.
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<PAGE> 30
The Committee shall consist of at least two members of the Board of
Directors. The Board of Directors shall consider the advisability of complying
with the disinterested standards contained in both Code Section 162(m) and Rule
16b-3(b)(3) (promulgated under the Securities Exchange Act of 1934) when
appointing members to, or otherwise considering the composition of, the
Committee. The Board of Directors may from time to time remove members from or
add members to the Committee. Vacancies on the Committee shall be filled by the
Board of Directors.
2.4 Eligibility and Limits. Stock Incentives may be granted only
to officers, employees, directors and consultants of the Company or an
affiliate; provided, however, that an Incentive Stock Option may only be granted
to an employee of the Company or any Parent or Subsidiary. In the case of
Incentive Stock Options, the aggregate Fair Market Value (determined as at the
date an Incentive Stock Option is granted) of stock with respect to which stock
options intended to meet the requirements of Code Section 422 become exercisable
for the first time by an individual during any calendar year under all plans of
the Company and its Parents and Subsidiaries shall not exceed $100,000; provided
further, that if the limitation is exceeded, the Incentive Stock Option(s) which
cause the limitation to be exceeded shall be treated as Non-Qualified Stock
Option(s); except as the terms of the Stock Incentive Agreement may expressly
provide otherwise. To the extent required under Code Section 162(m) and
regulations thereunder for compensation to be treated as qualified
performance-based compensation, the maximum number of shares Stock with respect
to which Options or Stock Appreciation Rights may be granted during any single
fiscal year of the Company to any Participant who is a "covered employee,"
within the meaning of Code Section 162(m) and the regulations promulgated
thereunder (a "Covered Employee"), shall not exceed 50,000.
SECTION 3 TERMS OF STOCK INCENTIVES
3.1 Terms and Conditions of All Stock Incentives.
(a) The number of shares of Stock as to which a Stock
Incentive shall be granted shall be determined by the Committee in its sole
discretion, subject to the provisions of Section 2.2 as to the total number of
shares available for grants under the Plan. If a Stock Incentive Agreement so
provides, a Participant may be granted a new Option to purchase a number of
shares of Stock equal to the number of previously owned shares of Stock tendered
in payment of the Exercise Price (as defined below) for each share of Stock
purchased pursuant to the terms of the Stock Incentive Agreement.
(b) Each Stock Incentive shall be evidenced either by a
Stock Incentive Agreement in such form and containing such terms, conditions and
restrictions as the Committee may determine is appropriate or be made subject to
the terms of a Stock Incentive Program, containing such terms, conditions and
restrictions as the Committee may determine is appropriate. Each Stock Incentive
Agreement or Stock Incentive Program shall be subject to the terms of the Plan
and any provision in a Stock Incentive Agreement or Stock Incentive Program that
is inconsistent with the Plan shall be null and void.
(c) The date a Stock Incentive is granted shall be the
date on which the Committee has approved the terms and conditions of the Stock
Incentive Agreement or Stock Incentive Program and has determined the recipient
of the Stock Incentive and the number of shares covered by the Stock Incentive
and has taken all such other action necessary to complete the grant of the Stock
Incentive.
(d) The Committee may provide in any Stock Incentive
Agreement or pursuant to any Stock Incentive Program (or subsequent to the award
of a Stock Incentive but prior to its expiration or cancellation, as the case
may be) that, in the event of a Change in Control, the Stock Incentive shall or
may be cashed out on the basis of any price not greater than the highest price
paid for a share of Stock in any transaction reported by any market or system
selected by the Committee on which the shares of Stock are then actively traded
during a specified period immediately preceding
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<PAGE> 31
or including the date of the Change in Control or offered for a share of Stock
in any tender offer occurring during a specified period immediately preceding or
including the date the tender offer commences; provided that, in no case shall
any such specified period exceed one (1) year (the "Change in Control Price").
For purposes of this Subsection, the cash-out of a Stock Incentive shall be
determined as follows:
(1) Options shall be cashed out on the basis of
the excess, if any, of the Change in Control Price (but not more than the Fair
Market Value of the Stock on the date of the cash-out in the case of Incentive
Stock Options) over the Exercise Price with or without regard to whether the
Option may otherwise be exercisable only in part;
(2) Stock Awards and Phantom Shares shall be
cashed out in an amount equal to the Change in Control Price with or without
regard to any conditions or restrictions otherwise applicable to any such Stock
Incentive; and
(3) Stock Appreciation Rights, Dividend
Equivalent Rights and Performance Unit Awards shall be cashed out with or
without regard to any conditions or restrictions otherwise applicable to any
such Stock Incentive and the amount of the cash out shall be determined by
reference to the number of shares of Stock that would be required to pay the
Participant in kind for the value of the Stock Incentive as of the date of the
Change in Control multiplied by the Change in Control Price.
(e) Any Stock Incentive may be granted in connection with
all or any portion of a previously or contemporaneously granted Stock Incentive.
Exercise or vesting of a Stock Incentive granted in connection with another
Stock Incentive may result in a pro rata surrender or cancellation of any
related Stock Incentive, as specified in the applicable Stock Incentive
Agreement or Stock Incentive Program.
(f) Stock Incentives shall not be transferable or
assignable except by will or by the laws of descent and distribution and shall
be exercisable, during the Participant's lifetime, only by the Participant; in
the event of the Disability of the Participant, by the legal representative of
the Participant; or in the event of the death of the participant, by the
personal representative of the Participant's estate or if no personal
representative has been appointed, by the successor in interest determined under
the Participant's will.
3.2 Terms and Conditions of Options. Each Option granted under the
Plan shall be evidenced by a Stock Incentive Agreement. At the time any Option
is granted, the Committee shall determine whether the Option is to be an
Incentive Stock Option or a Non-Qualified Stock Option, and the Option shall be
clearly identified as to its status as an Incentive Stock Option or a
Non-Qualified Stock Option. At the time any Incentive Stock Option is exercised,
the Company shall be entitled to place a legend on the certificates representing
the shares of Stock purchased pursuant to the Option to clearly identify them as
shares of Stock purchased upon exercise of an Incentive Stock Option. An
Incentive Stock Option may only be granted within ten (10) years from the
earlier of the date the Plan is adopted by the Board of Directors or approved by
the Company's stockholders.
(a) Option Price . Subject to adjustment in accordance
with Section 5.2 and the other provisions of this Section 3.2, the exercise
price (the "Exercise Price") per share of Stock purchasable under any Option
shall be as set forth in the applicable Stock Incentive Agreement. With respect
to each grant of an Incentive Stock Option to a Participant who is not an Over
10% Owner or to each grant of any Option to a Participant who is then a Covered
Employee, the Exercise Price per share shall not be less than the Fair Market
Value on the date the Option is granted. With respect to each grant of an
Incentive Stock Option to a Participant who is an Over 10% Owner, the Exercise
Price shall not be less than 110% of the Fair Market Value on the date the
Option is granted.
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(b) Option Term. The term of an Option shall be as
specified in the applicable Stock Incentive Agreement; provided, however that
any Incentive Stock Option granted to a Participant who is not an Over 10% Owner
shall not be exercisable after the expiration of ten (10) years after the date
the Option is granted and any Incentive Stock Option granted to an Over 10%
Owner shall not be exercisable after the expiration of five (5) years after the
date the Option is granted.
(c) Payment. Payment for all shares of Stock purchased
pursuant to exercise of an Option shall be made in any form or manner authorized
by the Committee in the Stock Incentive Agreement or by amendment thereto,
including, but not limited to, cash or, if the Stock Incentive Agreement
provides, (1) by delivery to the Company of a number of shares of Stock which
have been owned by the holder for at least six (6) months prior to the date of
exercise having an aggregate Fair Market Value of not less than the product of
the Exercise Price multiplied by the number of shares the Participant intends to
purchase upon exercise of the Option on the date of delivery; (2) in a cashless
exercise through a broker; or (3) by having a number of shares of Stock
withheld, the Fair Market Value of which as of the date of exercise is
sufficient to satisfy the Exercise Price. In its discretion, the Committee also
may authorize (at the time an Option is granted or thereafter) Company financing
to assist the Participant as to payment of the Exercise Price on such terms as
may be offered by the Committee in its discretion. Payment shall be made at the
time that the Option or any part thereof is exercised, and no shares shall be
issued or delivered upon exercise of an option until full payment has been made
by the Participant. The holder of an Option, as such, shall have none of the
rights of a stockholder.
(d) Conditions to the Exercise of an Option. Each Option
granted under the Plan shall be exercisable by whom, at such time or times, or
upon the occurrence of such event or events, and in such amounts, as the
Committee shall specify in the Stock Incentive Agreement; provided, however,
that subsequent to the grant of an Option, the Committee, at any time before
complete termination of such Option, may accelerate the time or times at which
such Option may be exercised in whole or in part, including, without limitation,
upon a Change in Control and may permit the Participant or any other designated
person to exercise the Option, or any portion thereof, for all or part of the
remaining Option term notwithstanding any provision of the Stock Incentive
Agreement to the contrary.
(e) Termination of Incentive Stock Option. With respect
to an Incentive Stock Option, in the event of the Termination of Service of a
Participant, the Option or portion thereof held by the Participant which is
unexercised shall expire, terminate, and become unexercisable no later than the
expiration of three (3) months after the date of Termination of Service;
provided, however, that in the case of a holder whose Termination of Service is
due to death or Disability, one (1) year shall be substituted for such three (3)
month period. For purposes of this Subsection (e), Termination of Service of the
Participant shall not be deemed to have occurred if the Participant is employed
by another corporation (or a parent or subsidiary corporation of such other
corporation) which has assumed the Incentive Stock Option of the Participant in
a transaction to which Code Section 424(a) is applicable.
(f) Special Provisions for Certain Substitute Options.
Notwithstanding anything to the contrary in this Section 3.2, any Option issued
in substitution for an option previously issued by another entity, which
substitution occurs in connection with a transaction to which Code Section
424(a) is applicable, may provide for an exercise price computed in accordance
with such Code Section and the regulations thereunder and may contain such other
terms and conditions as the Committee may prescribe to cause such substitute
Option to contain as nearly as possible the same terms and conditions (including
the applicable vesting and termination provisions) as those contained in the
previously issued option being replaced thereby.
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3.3 Terms and Conditions of Stock Appreciation Rights. Each Stock
Appreciation Right granted under the Plan shall be evidenced by a Stock
Incentive Agreement. A Stock Appreciation Right may be granted in connection
with all or any portion of a previously or contemporaneously granted Stock
Incentive or not in connection with a Stock Incentive. A Stock Appreciation
Right shall entitle the Participant to receive the excess of (a) the Fair Market
Value of a specified or determinable number of shares of the Stock at the time
of payment or exercise over (b) a specified price (1) which, in the case of a
Stock Appreciation Right granted in connection with an Option, shall be not less
than the Exercise Price for that number of shares and (2) which, in the case of
a Stock Appreciation Right that is granted to a Participant who is then a
Covered Employee, shall not be less than the Fair Market Value of the Stock at
the time of the award. A Stock Appreciation Right granted in connection with a
Stock Incentive may only be exercised to the extent that the related Stock
Incentive has not been exercised, paid or otherwise settled. The exercise of a
Stock Appreciation Right granted in connection with a Stock Incentive shall
result in a pro rata surrender or cancellation of any related Stock Incentive to
the extent the Stock Appreciation Right has been exercised.
(a) Settlement. Upon settlement of a Stock Appreciation
Right, the Company shall pay to the Participant the appreciation in cash or
shares of Stock (valued at the aggregate Fair Market Value on the date of
payment or exercise) as provided in the Stock Incentive Agreement or, in the
absence of such provision, as the Committee may determine.
(b) Conditions to Exercise. Each Stock Appreciation Right
granted under the Plan shall be exercisable or payable at such time or times, or
upon the occurrence of such event or events, and in such amounts, as the
Committee shall specify in the Stock Incentive Agreement; provided, however,
that subsequent to the grant of a Stock Appreciation Right, the Committee, at
any time before complete termination of such Stock Appreciation Right, may
accelerate the time or times at which such Stock Appreciation Right may be
exercised or paid in whole or in part.
3.4 Terms and Conditions of Stock Awards. The number of shares of
Stock subject to a Stock Award and restrictions or conditions on such shares, if
any, shall be as the Committee determines, and the certificate for such shares
shall bear evidence of any restrictions or conditions. Subsequent to the date of
the grant of the Stock Award, the Committee shall have the power to permit, in
its discretion, an acceleration of the expiration of an applicable restriction
period with respect to any part or all of the shares awarded to a Participant.
The Committee may require a cash payment from the Participant in an amount no
greater than the aggregate Fair Market Value of the shares of Stock awarded
determined at the date of grant in exchange for the grant of a Stock Award or
may grant a Stock Award without the requirement of a cash payment.
3.5 Terms and Conditions of Dividend Equivalent Rights. A Dividend
Equivalent Right shall entitle the Participant to receive payments from the
Company in an amount determined by reference to any cash dividends paid on a
specified number of shares of Stock to Company stockholders of record during the
period such rights are effective. The Committee may impose such restrictions and
conditions on any Dividend Equivalent Right as the Committee in its discretion
shall determine, including the date any such right shall terminate and may
reserve the right to terminate, amend or suspend any such right at any time.
(a) Payment. Payment in respect of a Dividend Equivalent
Right may be made by the Company in cash or shares of Stock (valued at Fair
Market Value on the date of payment) as provided in the Stock Incentive
Agreement or, in the absence of such provision, as the Committee may determine.
(b) Conditions to Payment. Each Dividend Equivalent Right
granted under the Plan shall be payable at such time or times, or upon the
occurrence of such event or events, and in such amounts, as the Committee shall
specify in the Stock Incentive Agreement or Stock Incentive Program; provided,
however, that subsequent to the grant of a Dividend Equivalent Right, the
Committee, at any time before complete termination of such Dividend Equivalent
Right, may
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accelerate the time or times at which such Dividend Equivalent Right may be paid
in whole or in part.
3.6 Terms and Conditions of Performance Unit Awards. A Performance
Unit Award shall entitle the Participant to receive, at a future date, payment
of an amount equal to all or a portion of the value of a number of units (stated
in terms of a designated dollar amount per unit) granted by the Committee, all
as the Committee shall specify in the Stock Incentive Agreement or Stock
Incentive Program. At the time of the grant, the Committee must determine the
base value of each unit, the number of units subject to a Performance Unit
Award, the performance factors applicable to the determination of the ultimate
payment value of the Performance Unit Award and the period over which Company
performance shall be measured. The Committee may provide for an alternate base
value for each unit under certain specified conditions.
(a) Payment. Payment in respect of Performance Unit
Awards may be made by the Company in cash or shares of Stock (valued at Fair
Market Value on the date of payment) as provided in the Stock Incentive
Agreement or Stock Incentive Program or, in the absence of such provision, as
the Committee may determine.
(b) Conditions to Payment. Each Performance Unit Award
granted under the Plan shall be payable at such time or times, or upon the
occurrence of such event or events, and in such amounts, as the Committee shall
specify in the Stock Incentive Agreement or Stock Incentive Program; provided,
however, that subsequent to the grant of a Performance Unit Award, the
Committee, at any time before complete termination of such Performance Unit
Award, may accelerate the time or times at which such Performance Unit Award may
be paid in whole or in part.
3.7 Terms and Conditions of Phantom Shares. Phantom Shares shall
entitle the Participant to receive, at a future date, payment of an amount equal
to all or a portion of the Fair Market Value of a number of shares of Stock at
the end of a certain period, all as the Committee shall specify in the Stock
Incentive Agreement or Stock Incentive Program. At the time of the grant, the
Committee shall determine the factors which will govern the portion of the
rights so payable, including, at the discretion of the Committee, any
performance criteria that must be satisfied as a condition to payment.
(a) Payment. Payment in respect of Phantom Shares may be
made by the Company in cash or shares of Stock (valued at Fair Market Value on
the date of payment) as provided in the Stock Incentive Agreement or Stock
Incentive Program or, in the absence of such provision, as the Committee may
determine.
(b) Conditions to Payment. Each Phantom Share granted
under the Plan shall be payable at such time or times, or upon the occurrence of
such event or events, and in such amounts, as the Committee shall specify in the
Stock Incentive Agreement or Stock Incentive Program; provided, however, that
subsequent to the grant of a Phantom Share, the Committee, at any time before
complete termination of such Phantom Share, may accelerate the time or times at
which such Phantom Share may be paid in whole or in part.
3.8 Treatment of Awards Upon Termination of Service. Except as
otherwise provided by Plan Section 3.2(e), any award under this Plan to a
Participant who suffers a Termination of Service may be cancelled, accelerated,
paid or continued, as provided in the Stock Incentive Agreement or Stock
Incentive Program or, in the absence of such provision, as the Committee may
determine. The portion of any award exercisable in the event of continuation or
the amount of any payment due under a continued award may be adjusted by the
Committee to reflect the Participant's period of service from the date of grant
through the date of the Participant's Termination of Service or such other
factors as the Committee determines are relevant to its decision to continue the
award.
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SECTION 4 RESTRICTIONS ON STOCK
4.1 Escrow of Shares. Any certificates representing the shares of
Stock issued under the Plan shall be issued in the Participant's name, but, if
the Stock Incentive Agreement or Stock Incentive Program so provides, the shares
of Stock shall be held by a custodian designated by the Committee (the
"Custodian"). Each applicable Stock Incentive Agreement or Stock Incentive
Program providing for transfer of shares of Stock to the Custodian shall appoint
the Custodian as the attorney-in-fact for the Participant for the term specified
in the applicable Stock Incentive Agreement or Stock Incentive Program, with
full power and authority in the Participant's name, place and stead to transfer,
assign and convey to the Company any shares of Stock held by the Custodian for
such Participant, if the Participant forfeits the shares under the terms of the
applicable Stock Incentive Agreement or Stock Incentive Program. During the
period that the Custodian holds the shares subject to this Section, the
Participant shall be entitled to all rights, except as provided in the
applicable Stock Incentive Agreement or Stock Incentive Program, applicable to
shares of Stock not so held. Any dividends declared on shares of Stock held by
the Custodian shall, as the Committee may provide in the applicable Stock
Incentive Agreement or Stock Incentive Program, be paid directly to the
Participant or, in the alternative, be retained by the Custodian until the
expiration of the term specified in the applicable Stock Incentive Agreement or
Stock Incentive Program and shall then be delivered, together with any proceeds,
with the shares of Stock to the Participant or to the Company, as applicable.
4.2 Forfeiture of Shares. Notwithstanding any vesting schedule set
forth in any Stock Incentive Agreement or Stock Incentive Program, in the event
that the Participant violates a noncompetition agreement as set forth in the
Stock Incentive Agreement or Stock Incentive Program, all Stock Incentives and
shares of Stock issued to the holder pursuant to the Plan shall be forfeited;
provided, however, that the Company shall return to the holder the lesser of any
consideration paid by the Participant in exchange for Stock issued to the
Participant pursuant to the Plan or the then Fair Market Value of the Stock
forfeited hereunder.
4.3 Restrictions on Transfer. The Participant shall not have the
right to make or permit to exist any Disposition of the shares of Stock issued
pursuant to the Plan except as provided in the Plan or the applicable Stock
Incentive Agreement or Stock Incentive Program. Any Disposition of the shares of
Stock issued under the Plan by the Participant not made in accordance with the
Plan or the applicable Stock Incentive Agreement or Stock Incentive Program
shall be void. The Company shall not recognize, or have the duty to recognize,
any Disposition not made in accordance with the Plan and the applicable Stock
Incentive Agreement or Stock Incentive Program, and the shares so transferred
shall continue to be bound by the Plan and the applicable Stock Incentive
Agreement or Stock Incentive Program.
SECTION 5 GENERAL PROVISIONS
5.1 Withholding. The Company shall deduct from all cash
distributions under the Plan any taxes required to be withheld by federal, state
or local government. Whenever the Company proposes or is required to issue or
transfer shares of Stock under the Plan or upon the vesting of any Stock Award,
the Company shall have the right to require the recipient to remit to the
Company an amount sufficient to satisfy any federal, state and local withholding
tax requirements prior to the delivery of any certificate or certificates for
such shares or the vesting of such Stock Award. A Participant may pay the
withholding tax in cash, or, if the applicable Stock Incentive Agreement or
Stock Incentive Program provides, a Participant may elect to have the number of
shares of Stock he is to receive reduced by, or with respect to a Stock Award,
tender back to the Company, the smallest number of whole shares of Stock which,
when multiplied by the Fair Market Value of the shares of Stock determined as of
the Tax Date (defined below), is sufficient to satisfy federal, state and local,
if any, withholding taxes arising from exercise or payment of a Stock Incentive
(a "Withholding Election"). A Participant may make a Withholding Election only
if both of the following conditions are met:
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(a) The Withholding Election must be made on or prior to
the date on which the amount of tax required to be withheld is determined (the
"Tax Date") by executing and delivering to the Company a properly completed
notice of Withholding Election as prescribed by the Committee; and
(b) Any Withholding Election made will be irrevocable;
however, the Committee may in its sole discretion disapprove and give no effect
to the Withholding Election.
5.2 Changes in Capitalization; Merger; Liquidation.
(a) The number of shares of Stock reserved for the grant
of Options, Dividend Equivalent Rights, Performance Unit Awards, Phantom Shares,
Stock Appreciation Rights and Stock Awards; the number of shares of Stock
reserved for issuance upon the exercise or payment, as applicable, of each
outstanding Option, Dividend Equivalent Right, Performance Unit Award, Phantom
Share and Stock Appreciation Right and upon vesting or grant, as applicable, of
each Stock Award; the Exercise Price of each outstanding Option and the
specified number of shares of Stock to which each outstanding Dividend
Equivalent Right, Phantom Share and Stock Appreciation Right pertains shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Stock resulting from a subdivision or combination of shares or the
payment of an ordinary stock dividend in shares of Stock to holders of
outstanding shares of Stock or any other increase or decrease in the number of
shares of Stock outstanding effected without receipt of consideration by the
Company.
(b) In the event of any merger, consolidation,
extraordinary dividend (including a spin-off), reorganization or other change in
the corporate structure of the Company or its Stock or tender offer for shares
of Stock, the Committee, in its sole discretion, may make such adjustments with
respect to awards and take such other action as it deems necessary or
appropriate to reflect or in anticipation of such merger, consolidation,
extraordinary dividend, reorganization, other change in corporate structure or
tender offer, including, without limitation, the substitution of new awards, the
termination or adjustment of outstanding awards, the acceleration of awards or
the removal of restrictions on outstanding awards. Any adjustment pursuant to
this Section 5.2 may provide, in the Committee's discretion, for the elimination
without payment therefor of any fractional shares that might otherwise become
subject to any Stock Incentive.
(c) The existence of the Plan and the Stock Incentives
granted pursuant to the Plan shall not affect in any way the right or power of
the Company to make or authorize any adjustment, reclassification,
reorganization or other change in its capital or business structure, any merger
or consolidation of the Company, any issue of debt or equity securities having
preferences or priorities as to the Stock or the rights thereof, the dissolution
or liquidation of the Company, any sale or transfer of all or any part of its
business or assets, or any other corporate act or proceeding.
5.3 Cash Awards. The Committee may, at any time and in its
discretion, grant to any holder of a Stock Incentive the right to receive, at
such times and in such amounts as determined by the Committee in its discretion,
a cash amount which is intended to reimburse such person for all or a portion of
the federal, state and local income taxes imposed upon such person as a
consequence of the receipt of the Stock Incentive or the exercise of rights
thereunder.
5.4 Compliance with Code. All Incentive Stock Options to be
granted hereunder are intended to comply with Code Section 422, and all
provisions of the Plan and all Incentive Stock Options granted hereunder shall
be construed in such manner as to effectuate that intent.
5.5 Right to Terminate Service. Nothing in the Plan or in any
Stock Incentive Agreement or Stock Incentive Program shall confer upon any
Participant the right to continue as an employee,
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officer, director or consultant of the Company or any of its affiliates or
affect the right of the Company or any of its affiliates to terminate the
Participant's service at any time.
5.6 Restrictions on Delivery and Sale of Shares; Legends. Each
Stock Incentive is subject to the condition that if at any time the Committee,
in its discretion, shall determine that the listing, registration or
qualification of the shares covered by such Stock Incentive upon any securities
exchange or under any state or federal law is necessary or desirable as a
condition of or in connection with the granting of such Stock Incentive or the
purchase or delivery of shares thereunder, the delivery of any or all shares
pursuant to such Stock Incentive may be withheld unless and until such listing,
registration or qualification shall have been effected. If a registration
statement is not in effect under the Securities Act of 1933 or any applicable
state securities laws with respect to the shares of Stock purchasable or
otherwise deliverable under Stock Incentives then outstanding, the Committee may
require, as a condition of exercise of any Option or as a condition to any other
delivery of Stock pursuant to a Stock Incentive, that the Participant or other
recipient of a Stock Incentive represent, in writing, that the shares received
pursuant to the Stock Incentive are being acquired for investment and not with a
view to distribution and agree that the shares will not be disposed of except
pursuant to an effective registration statement, unless the Company shall have
received an opinion of counsel that such disposition is exempt from such
requirement under the Securities Act of 1933 and any applicable state securities
laws. The Company may include on certificates representing shares delivered
pursuant to a Stock Incentive such legends referring to the foregoing
representations or restrictions or any other applicable restrictions on resale
as the Company, in its discretion, shall deem appropriate.
5.7 Non-alienation of Benefits. Other than as specifically
provided with regard to the death of a Participant, no benefit under the Plan
shall be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge; and any attempt to do so shall be
void. No such benefit shall, prior to receipt by the Participant, be in any
manner liable for or subject to the debts, contracts, liabilities, engagements
or torts of the Participant.
5.8 Termination and Amendment of the Plan. The Board of Directors
at any time may amend or terminate the Plan without stockholder approval;
provided, however, that the Board of Directors may condition any amendment on
the approval of stockholders of the Company if such approval is necessary or
advisable with respect to tax, securities or other applicable laws. No such
termination or amendment without the consent of the holder of a Stock Incentive
shall adversely affect the rights of the Participant under such Stock Incentive.
5.9 Stockholder Approval. The Plan shall be submitted to the
stockholders of the Company for their approval within twelve (12) months before
or after its adoption by the Board of Directors. If such approval is not
obtained, any Stock Incentive granted under the Plan shall be void.
5.10 Choice of Law. The laws of the State of Georgia shall govern
the Plan, to the extent not preempted by federal law.
5.11 Effective Date of Plan. The Plan shall become effective upon
the date the Plan is approved by the Board of Directors.
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IN WITNESS WHEREOF, the Company has caused this Plan to be executed
this ___________ day of __________________________, 1998.
SUMMIT BANK CORPORATION
By:
-----------------------------------
Title:
--------------------------------
Attest:
- ------------------------------
Secretary
[CORPORATE SEAL]
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APPENDIX B
SUMMIT BANK CORPORATION
PROXY
This Proxy is solicited by the Board of Directors for the Annual
Meeting (the "Meeting") to be held at the Atlanta Marriott Perimeter Center, 246
Perimeter Center Parkway, N.E. Atlanta, Georgia 30346, on the 25th day of April
1998, at 10:00 a.m. (Atlanta time).
The undersigned hereby appoints Pin Pin Chau and David Yu, or either of
them with individual power of substitution, proxies to vote all shares of Common
Stock of Summit Bank Corporation which the undersigned may be entitled to vote
at the Meeting and at all adjournments thereof.
All Proxies will be voted in accordance with the instructions contained
in the Proxies. If no choice is specified, Proxies will be voted "FOR" the
election to the Board of Directors of all the nominees listed on the reverse
side, "FOR" the approval of the Company's 1998 Stock Incentive Plan and in
accordance with the best judgment of the Proxy holder on any other matters which
may come before the Meeting.
PLEASE COMPLETE, DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING ON APRIL
25, 1998. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH,
EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR PROXY.
SEE REVERSE SIDE
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<PAGE> 40
<TABLE>
<S> <C> <C> <C>
1. ELECTION OF DIRECTORS
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY INSTRUCTION: To withhold authority to vote for
to vote for all nominees listed below any nominee, write that nominee's name below:
Gerald L. Allison Nack Paek David Yu
James S. Lai Carl L. Patrick, Jr. Jose Ignacio Gonzalez
------------------------------
II. APPROVAL OF THE COMPANY'S 1998 STOCK INCENTIVE PLAN
[ ] FOR [ ] AGAINST [ ] ABSTAIN
III. IN ACCORDANCE WITH THEIR BEST JUDGEMENT UPON SUCH OTHER MATTERS AS MAY
COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
IF NO PREFERENCE IS INDICATED, THIS PROXY WILL BE VOTED "FOR" PROPOSALS I AND II.
- ---------------------------------------- -----------------------------------
Print Name of Shareholder Signature of Shareholder
Important: Please sign this proxy
exactly as your name(s) appear(s)
hereon. If shares are held by more
than one owner, each must sign.
Executors, administrators,
trustees, guardians, and others
signing in a representative
capacity should give their full
name.
Dated: , 1998
-------------------------
BE SURE TO DATE THIS PROXY
- ----------------------------------------------------------------------------------------
FOLD AND DETACH HERE
</TABLE>
